<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM----------TO---------
COMMISSION FILE NUMBER 333-03283
TRAVIS BOATS & MOTORS.INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2024798
(State or other jurisdiction of Incorporation (I.R.S Employee Identification
or organization) No.)
13045 Research Blvd, Austin, Tx 78750
(Address of principal executive offices) (Zip Code)
(512) 250-8103
(Registrant's telephone number, including area code)
Not applicable
(Former Name, Former telephone Number and Former Year. If Changed Since Last
Report)
Indicate by a check mark whether the registrant (1) has filed all reports
required 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 requirements
for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $.01 per value = 4,136,306 shares as of August 1, 1996
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Part I. Financial Information
Item 1. Financial Statements
Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands except share data)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
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(Unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ - $ 996
Amounts due from underwriters 10,286 -
Accounts receivable 4,066 1,047
Inventories 22,724 14,270
Prepaid expenses 105 49
Deferred tax asset 76 115
----------- ------------
Total current assets 37,257 16,477
Property and equipment:
Land 1,816 1,816
Buildings and improvements 4,881 4,184
Furniture, fixtures and equipment 1,729 1,351
----------- ------------
8,426 7,351
Less accumulated depreciation (1,884) (1,560)
----------- ------------
6,542 5,791
Intangibles and other assets, net 1,103 1,089
----------- ------------
$44,902 $23,357
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Bank overdraft $599 $ -
Accounts payable 445 462
Accrued liabilities 1,982 1,188
Federal income taxes payable 649 576
Unearned revenue 1,947 -
Current portion of notes payable and other short-term obligations 18,532 11,443
----------- ------------
Total current liabilties 24,154 13,669
Notes payable, less current portion 4,700 4,876
Stockholders' equity
Common Stock, $.01 par value, 50,000,000 shares authorized 3,996,006 and
2,635,865 shares issued and outstanding at June 30, 1996 and at
September 30, 1995, respectively 40 27
Paid-in capital 9,703 139
Retained earnings 6,305 4,646
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Total stockholders' equity 16,048 4,812
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Total liabilities and stockholders' equity $44,902 $23,357
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</TABLE>
See notes to condensed consolidated financial statements
2
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Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share amounts and store data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30 June 30
----------------------------- -----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales.................................................... $26,445 $17,048 $48,462 $33,675
Cost of goods sold........................................... 19,832 12,748 36,278 25,601
------------- ------------- ------------- -------------
Gross profit................................................. 6,613 4,300 12,184 8,074
Selling, general and administrative expenses................. 3,767 2,346 8,068 5,564
Depreciation and amortization................................ 141 70 404 206
------------- ------------- ------------- -------------
3,908 2,416 8,472 5,770
Operating income............................................. 2,705 1,884 3,712 2,304
Interest expense............................................. (424) (264) (1,092) (635)
Other income................................................. 17 16 49 126
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Income before income taxes................................... 2,299 1,635 2,669 1,795
Provision for income taxes................................... 883 590 1,010 651
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Net income................................................... $1,416 $1,045 $1,659 $1,144
============= ============= ============= =============
Net income per common share.................................. $0.52 $0.39 $0.61 $0.43
Weighted average common shares outstanding................... 2,741,193 2,683,506 2,702,661 2,638,492
============= ============= ============= =============
Stores open at end of period................................. 12 9 12 9
============= ============= ============= =============
</TABLE>
See notes to condensed consolidated financial statements
3
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Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended June 30,
---------------------------------
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $1,659 $1,144
Adjustments to reconcile net income to net cash (used in)
operating activities:
Depreciation and amortization 404 207
Changes in operating assets and liabilities
(Increase) in amounts due from underwriters (10,286) -
(Increase) in accounts receivable (3,019) (1,677)
(Increase) in inventories (8,454) (2,682)
(Increase) in prepaid assets (56) (30)
(Increase) in other assets (3) 10
(Increase) decrease in deferred tax asset 60 (137)
(Increase) in unearned revenue 1,947 -
(Decrease) in accounts payable (17) (44)
Increase in accrued liabilities 794 450
Increase (decrease) in income taxes payable 73 (249)
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Net cash (used in) provided by operating activities (16,898) (3,008)
------------ -------------
INVESTING ACTIVITIES:
Purchase of business (88) -
Purchases of property and equipment (1,100) (1,204)
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Net cash used in investing activities (1,188) (1,204)
FINANCING ACTIVITIES:
Net increase in notes payable and other short-term obligations 6,913 4,323
Issuance of common stock 9,578 92
Net proceeds on notes receivable from stockholders - 127
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Net cash provided by financing activities 16,491 4,542
Increase in cash and cash equivalents (1,595) 330
Cash and cash equivalents, beginning of period 996 525
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Cash and cash equivalents, end of period ($599) $855
============ =============
</TABLE>
See notes to condensed consolidated financial statements
4
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared from the records of Travis Boats & Motors, Inc. and subsidiaries
(collectively, the "Company") without audit. In the opinion of management, such
financial statements include all adjustments (consisting of only recurring
accruals) necessary to present fairly the financial position at June 30, 1996;
and the interim results of operations and cash flows for the three month and the
nine month periods ended June 30, 1996 and 1995. The condensed consolidated
balance sheet at September 30, 1995, presented herein, has been prepared from
the audited consolidated financial statements of the Company for the fiscal year
then ended.
Accounting policies followed by the Company are described in Note 1 to the
audited consolidated financial statements for the fiscal year ended September
30, 1995. Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted for purposes of the
condensed consolidated interim financial statements. The condensed consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements, including the notes thereto, for the fiscal year ended
September 30, 1995.
The results of operations for the three month period and the nine month period
ended June 30, 1996 are not necessarily indicative of the results to be expected
for the full year.
NOTE 2 - NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of common
shares outstanding during the periods. The effect of common stock equivalents is
not significant.
NOTE 3 - INITIAL PUBLIC OFFERING OF COMMON STOCK
On June 27, 1996, the Company consummated an initial public offering of
1,750,000 shares of common stock at the price of $9.00 per share. Of the
1,750,000 shares sold, 1,312,500 shares were sold by the Company and 437,500
shares by certain selling shareholders. Net proceeds to the Company are
approximately $10.3 million.
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NOTE 4 - STOCKHOLDERS' EQUITY
In November 1995, the Board of Directors of the Company approved a 15 for 1
stock dividend for stockholders of record as of November 8, 1995.
Effective December 14, 1995, the Company changed the stated par value of each
share of common stock from $.10 to $.01. The condensed consolidated financial
statements have been restated to retroactively reflect the above change in par
value.
In May 1996, the Board of Directors of the Company approved a 1 for 3 stock
dividend for stockholders of record as of May 3, 1996.
All share amounts presented in these condensed consolidated financial statements
have been restated to retroactively reflect the above stock dividends and change
in par value.
NOTE 5 - ACQUISITION
Effective December 1, 1995, the Company acquired certain assets of Clay's Boats
& Motors, Inc. ("Clay's") in New Iberia, Louisiana. The assets acquired
included furniture, fixtures and equipment, all parts and accessories, all
leasehold improvements and certain other miscellaneous assets. The purchase
price was $328,741, of which $262,687 was paid in cash and $66,054 was financed
by the issuance of a note payable to the seller.
The acquisition has been accounted for using the purchase method of accounting
and, accordingly, the operating results of Clay's have been included in the
condensed consolidated financial statements from the date of acquisition. The
purchase price ($328,741) has been allocated to the tangible assets acquired
($240,669) and the resulting excess purchase price ($88,072) was assigned to
goodwill.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS.
General
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Travis Boats is a leading multi-state superstore retailer of recreational boats,
motors, trailers and related marine accessories in the southern United States.
The Company currently operates 12 superstores in Texas, Arkansas and Louisiana
under the name Travis Boating Center. Founded in 1979 in Austin, Texas, Travis
Boats differentiates itself from competitors by providing customers a unique
superstore shopping experience that showcases a broad selection of high quality
boats, motors, trailers and marine products at firm, clearly posted low prices.
Results of Operations
- ---------------------
Net sales increased $9.4 million or 55.3% to $26.4 million in the quarter ended
June 30, 1996 from $17.0 million in the quarter ended June 30, 1995. For the
nine months ended June 30, 1996 net sales of $48.5 million were $14.8 million,
or 43.9% higher than for the nine months ended June 30, 1995. Approximately
81.0% or $7.6 million and 75.7% or $11.2 million of the increase in the net
sales for the quarter ended June 30, 1996 and the nine months ended June 30,
1996, respectively, is attributable to the 3 store locations acquired late in
the 1995 calendar year. During the quarter ended June 30, 1996, the Company also
participated in 22 boat shows in 4 states at the parking lots of Sams Wholesale
Club, Wal Mart and K Mart store locations. These parking lot shows generated
approximately $1.7 million or 18.1% and $2.4 million or 16.2%, of the increase
in net sales for the quarter and the nine months ended June 30, 1996,
respectively. Net sales from comparable stores increased 12.1% for the quarter
ended June 30, 1996 and 4.2% for the nine months ended June 30, 1996. The
calculation for comparable store sales includes 5 stores for the quarter and 4
stores for the nine months ended June 30, 1996, respectively. Net sales also
benefitted from the actual and percentage increase of sales related to
parts/accessories, used boats and finance and insurance products.
The gross profit margin was 25.0% for the quarter ended June 30, 1996 which
reflects a decline from the 25.2% level for the same quarter last year. The
reduced gross profit margin for the third quarter was primarily related to the
sales from parking lot shows which have somewhat lower profit margins (several
basis points) due to certain promotional enticements (such as $250-$500 in free
accessories) pre-arranged with the retailers hosting the show as a condition to
holding the parking lot shows. However, for the nine months ended June 30,
1996, the gross profit margin was 25.14% which reflected an increase from
23.98% for the same period last year.
Selling, general and administrative expenses as a percent of net sales were
14.2% for the quarter ended June 30, 1996 as compared to 13.8% for the same
quarter last year. For the nine months ended June 30, 1996 and 1995, selling,
general and administrative
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expenses were 16.7% and 16.5%, respectively, of net sales. The increases have
been primarily attributable to increased expenses associated with the operation
of a larger store network.
Depreciation and amortization expenses increased in the quarter and for the nine
months ended June 30,1996, primarily as a result of the expenses attributable to
the acquisitions which occurred in late calendar year 1995 as well as the newly
constructed superstore facility in Dallas, Texas.
Interest expense, as a percent of net sales, increased to 1.60% for the quarter
ended June 30, 1996 compared to 1.55% for the same quarter last year. For the
nine months ended June 30, 1996 interest expense, as a percent of net sales,
increased to 2.25% from 1.88% in the same period of last year. The increased
interest expense reflects costs associated with higher inventory levels to
support growth in net sales as well as the interest related to the indebtedness
incurred in the acquisition of 3 store locations in calendar year 1995.
Net income increased 35.4% in the quarter ended June 30, 1996 to $1.4 million,
up approximately $370 thousand over the same quarter last year. For the nine
months ended June 30, 1996, net income of $1.7 million was $515 thousand, or
45.0% higher than the same period of last year. The improved net income has
been the result of the Company generating higher net sales levels while
attaining higher gross profit margins and containing selling, general and
administrative expenses.
Liquidity and Capital Resources
- -------------------------------
The Company's primary sources of capital have been income from operations and
bank borrowings. During the nine months ended June 30, 1996, higher net income
was offset by increases in accounts receivable and inventories, both of which
are attributable to the Company's growth in net sales.
In late June 1996, the Company completed an initial public offering of
1,312,500 shares of common stock at $9.00 per share. Net proceeds of
approximately $10.3 million are reflected in the receivable category "Amount due
from underwriters" as the proceeds were not received until July 3, 1996. The
bank overdraft of $599 thousand at June 30, 1996 was primarily the result of the
Company beginning the repayment of short term debt in anticipation of the
forthcoming IPO proceeds. The Company, as stated in the Prospectus dated June
27, 1996, plans to use the net proceeds to reduce approximately $1.0 million in
long term debt and the remainder to reduce short term revolving debt. The
Company plans to use reborrowings under its revolving lines of credit for
general corporate purposes, including working capital, expansion into new
markets and for the financing of possible acquisitions.
As of June 30, 1996 (prior to receipt of the IPO proceeds), the Company had
borrowings of $17.5 million under its revolving and other short term lines of
credit at rates ranging to
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prime plus .50% (8.75% at June 30, 1996) with banks and finance companies. The
various lines of credit contain certain financial covenants and other
restrictions.
Travis Boats' primary capital requirements are related to expenditures for new
stores, including acquisition expenses, remodeling and leasehold improvement
cost, fixtures, and merchandise inventories. Through the remainder of fiscal
1996 (September 30, 1996) the Company does not anticipate significant capital
expenditures or new store acquisitions. The Company plans to acquire 3 to 5
additional stores and to remodel certain store locations during the first
quarter of fiscal 1997 which will require total aggregate capital expenditures
(net of payables) of approximately $2.2 million. Although the Company has no
current commitments with respect to the acquisition of any entity, the Company
in the ordinary course of business, is in ongoing discussions with numerous
other boat dealers. Management believes that cash flows from operations, cash on
hand, bank financing through its lines of credit and proceeds from the IPO will
be adequate to fund its anticipated needs through at least the end of fiscal
1997.
Seasonality
- -----------
The Company's business, as well as the entire recreational boating industry, is
highly seasonal. Strong sales typically begin in January with the onset of the
public boat and recreation shows, and continue through July. During the twelve
month period ended September 30, 1995, approximately 68.0% of the Company's net
sales and an even higher percentage of net income occurred, collectively, during
the three month periods ended March 30 and June 30. These quarters represent
the peak recreational boating periods in most of the Company's existing market
areas.
Cautionary Statement for purposes of the Safe Harbor Provisions of the Private
- ------------------------------------------------------------------------------
Securities Litigation Reform Act of 1995.
- -----------------------------------------
The statements in this filing or in documents incorporated by reference herein
that relate to future plans, events, expectation, objectives or performances
(or assumptions underlying such matters) are forward-looking statements that
involve a number of risks or uncertainties.
Factors which may influence the Company's financial results include the impact
of seasonality and weather, general economic conditions and the level of
discretionary consumer spending, the identification of new markets and the
Company's ability to integrate new stores and personnel into existing
operations. These and numerous other risk factors were identified in the
Prospectus dated June 27, 1996, filed in connection with the Company's initial
public offering.
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PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereto duly authorized.
Date: August 13, 1996 TRAVIS BOATS & MOTORS, INC.
By:_________________________________
Mark T. Walton
President and Chairman of the Board
By:_________________________________
Michael B. Perrine
Chief Financial Officer, Treasurer and Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 14,352
<ALLOWANCES> 0
<INVENTORY> 22,724
<CURRENT-ASSETS> 37,257
<PP&E> 8,426
<DEPRECIATION> 1,884
<TOTAL-ASSETS> 44,902
<CURRENT-LIABILITIES> 24,154
<BONDS> 4,700
0
0
<COMMON> 40
<OTHER-SE> 16,008
<TOTAL-LIABILITY-AND-EQUITY> 44,902
<SALES> 48,462
<TOTAL-REVENUES> 48,462
<CGS> 36,278
<TOTAL-COSTS> 8,068
<OTHER-EXPENSES> 404
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,092
<INCOME-PRETAX> 2,669
<INCOME-TAX> 1,010
<INCOME-CONTINUING> 2,669
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,659
<EPS-PRIMARY> .61
<EPS-DILUTED> .61
</TABLE>
