<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD OF ________ TO ________.
Commission File Number 0-20757
TRAVIS BOATS & MOTORS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2024798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5000 Plaza on the Lake, Suite 250, Austin, Texas 78746
(Address of principal executive offices)
Registrant's telephone number, including area code: (512) 347-8787
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
(Title of class)
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 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 the number of shares outstanding of each of the issuer's
classes of Common Stock as of the latest practicable date.
Common Stock $.01 par value - 4,253,471 shares as of February 13, 1998.
<PAGE>
Item 1. Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Item 1. Financial Statements
Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
( in thousands, except share data )
December 31, September 30,
1997 1997
(unaudited)
------- -------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $5,866 $5,816
Accounts receivable 3,278 3,915
Inventories 51,037 34,450
Prepaid expenses and other 625 544
------- -------
Total current assets 60,806 44,725
Property and equipment:
Land 1,991 1,991
Buildings and improvements 6,569 6,366
Furniture, fixtures and equipment 3,421 3,162
------- -------
11,981 11,519
Less accumulated depreciation (2,976) (2,750)
------- -------
9,005 8,769
Intangibles and other assets :
Goodwill and noncompete agreements, net 5,549 5,376
Other assets 340 251
------- -------
Total assets $75,700 $59,121
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $905 $2,238
Accrued liabilities 3,180 4,631
Income taxes payable 657 1,081
Unearned revenue 1,305 522
Current portion of notes payable and other
short-term obligations 41,950 21,447
------- -------
Total current liabilities 47,997 29,919
Notes payable, less current portion 4,801 5,145
Stockholders' equity
Common Stock, $.01 par value, 50,000,000 authorized
4,224,867 issued and outstanding at
September 30,1997 and December 31, 1997 42 42
Paid-in capital 13,004 13,004
Retained earnings 9,856 11,011
------- -------
Total stockholders' equity 22,902 24,057
------- -------
Total liabilities and stockholders' equity $75,700 $59,121
======= =======
</TABLE>
See notes to unaudited condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
Travis Boats & Motors, Inc.and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share data and stores open)
Three months ended
December 31,
1997 1996
<S> <C> <C>
Net sales...................................... $10,142 $5,451
Cost of goods sold............................. 7,531 4,110
---------- ----------
Gross profit................................... 2,611 1,341
Selling, general and administrative............ 3,694 2,140
Depreciation and amortization.................. 333 184
---------- ----------
4,027 2,324
Operating income/(loss)........................ (1,416) (983)
Interest expense............................... (461) (214)
Other income/(loss)............................ 13 (3)
---------- ----------
Loss before income taxes....................... (1,864) (1,200)
Income tax benefit............................. (708) (456)
---------- ----------
Net Income/(Loss).............................. ($1,156) ($744)
========== ==========
Basic Earnings/(Loss) Per Share................ ($0.27) ($0.18)
Diluted Earnings/(Loss) Per Share.............. ($0.27) ($0.18)
Weighted avg common shares outstanding......... 4,224,867 4,136,506
Weighted avg dilutive common shares outstanding 4,224,867 4,136,506
Stores open at end of period................... 21 15
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
Travis Boats & Motors, Inc.and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flow
(in thousands)
Three months ended
December 31,
1997 1996
-------- --------
<S> <C> <C>
Operating activities:
Net Loss ($1,156) ($744)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization......................... 333 184
Changes in operating assets and liabilities
Decrease in accounts receivable.................... 637 398
(Increase) in prepaid expenses..................... (81) (125)
(Increase) in inventories.......................... (15,202) (9,938)
(Increase) in other assets......................... (89) (5)
(Decrease)/Increase in accounts payable............ (1,362) 7
(Decrease) in accrued liabilities.................. (21) (433)
(Decrease) in income taxes payable................. (424) (417)
Increase/(Decrease) in unearned revenue............ 783 (166)
-------- --------
Net cash used in operating activities................. (16,582) (11,239)
Investing Activities:
Purchase of businesses................................ (2,987) (3,428)
Purchase of property and equipment.................... (356) (170)
-------- --------
Net cash used in investing activities (3,343) (3,598)
Financing activities:
Net increase in notes payable and other short term
obligations 19,975 16,973
-------- --------
Net cash provided by financing activities............. 19,975 16,973
Increase in cash and cash equivalents................. 50 2,136
Cash and cash equivalents, beginning of period........ 5,816 1,533
-------- --------
Cash and cash equivalents, end of period.............. $5,866 $3,669
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 December 31, 1997; and the interim results of
operations and cash flows for the three month periods ended December 31,
1997 and 1996. The condensed consolidated balance sheet at September
30, 1997, 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, 1997. 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,
1997 included in the Company's annual report on Form 10-K..
The results of operations for the three month period ended December 31,
1997 are not necessarily indicative of the results to be expected for
the full year.
NOTE 2 - NET INCOME PER COMMON SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Statement
128 replaced the previously reported primary and fully diluted earnings
per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants, and convertible securities. Diluted
earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all
periods have been presented, and where necessary, restated to conform to
the Statement 128 requirements.
Statement 128 requires the calculation of earnings per share to exclude
common stock equivalents when the inclusion of such would be anti-
dilutive. In the quarters ended December 31, 1997 and 1996, the
inclusion of common stock equivalents would have been anti-dilutive
based upon the net loss posted by the Company. As such, all common
stock equivalents were excluded.
The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended Three Months Ended
December 31, 1997 December 31, 1996
Numerator:
Net loss $(1,156,000) $(744,000)
__________________________________________
Denominator:
Denominator for basic
Earnings per share -
Weighted avg. shares 4,224,867 4,136,506
Effect of dilutive securities:
Employee stock options ------- -------
__________________________________________
Dilutive potential common shares ------- ------
- -
Denominator for diluted earnings
Per share - adjusted
Weighted average shares 4,224,867 4,136,506
And assumed conversions
__________________________________________
Basic loss per share $(0.27) $(0.18)
__________________________________________
Diluted loss per share $(0.27) $(0.18)
__________________________________________
NOTE 3 - YEAR 2000 ISSUES
The Year 2000 issue is the result of computer programs being written
using two digits rather than four (for example, "97" for 1997) to define
the applicable year. Any of the Company's programs that have time-
sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. In some cases, the new date will cause
computers to stop operating, while in other cases, incorrect output may
result. Since the Company is currently in the process of replacing and
upgrading its computer hardware and software systems to year 2000
compliance platforms, the Company believes that there is little business
risk attributable to the Year 2000 issue.
NOTE 4 - ACQUISITIONS
Included in the new store acquisitions are the following transactions:
On December 12, 1997, effective as of September 30, 1997, the Company
consummated the acquisition of Adventure Marine, a retail boating
organization with store locations in Fort Walton Beach, Florida and Key
Largo, Florida, through the acquisition of 100% of the common stock of
three companies, Adventure Marine & Outdoors, Inc., Adventure Boat
Brokerage, Inc. and Adventure Marine South, Inc. (collectively the three
companies are referred to as "Adventure Marine"). The total
consideration for Adventure Marine consisted of $729,643 in cash,
$115,000 in notes payable to the sellers, the assumption of $5,535,861
in liabilities and $1,477,392 paid via the issuance of 88,361 shares of
common stock of the Company. An additional $700,000 in cash was paid to
a principal of Adventure Marine in exchange for an agreement not to
compete.
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the operating results of Adventure Marine
have been included in the consolidated financial statements from the
date of acquisition. The purchase price ($3,022,035), related
acquisition costs ($145,000) and liabilities assumed ($5,058,826) have
been allocated to the tangible net assets acquired ($5,535,861) based on
their respective fair values at the date of acquisition. The resulting
excess purchase price ($2,690,000) was allocated to noncompete
agreements and
to goodwill.
Prior to the acquisition, the shareholders of Adventure Marine consisted
of three persons, John Reinhold, Paul ("Joey") Roberts, and Frederic
Pace, none of whom had any relationship to the Company, its affiliates,
any officers or directors of the Company or any associate of any
officers or directors of the Company.
The purchase of the Adventure Marine was funded through internally
generated working capital and borrowings under the Company's floor plan
and revolving lines of credit.
Effective November 20, 1997, the Company acquired certain assets of
Southeastern Marine Group, Inc. ("Southeastern"). This acquisition
included boat, motor and trailer inventory, as well as parts and
accessories inventory of the sellers. The purchase price was $1,741,292
of which $184,000 was financed by the issuance of notes payable to the
sellers.
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the operating results of Southeastern have
been included in the consolidated financial statements from the date of
acquisition. The purchase price ($1,741,292) has been allocated to the
tangible net assets acquired ($1,489,887) based on their respective fair
values at the date of acquisition. The resulting excess purchase price
($280,000) was allocated to noncompete agreements and goodwill.
Effective December 15, 1997, the Company acquired certain assets of
Worthen Marine Sales and Service, Inc. ("Worthen"). This acquisition
included boat, motor and trailer inventory, as well as parts and
accessories inventory of the seller. The purchase price of $286,666 was
paid in cash.
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the operating results of Worthen have been
included in the consolidated financial statements from the date of
acquisition. The purchase price ($286,666) has been allocated to the
tangible net assets acquired ($141,666) based on their respective fair
values at the date of acquisition. The resulting excess purchase price
($145,000) was allocated to noncompete agreements and goodwill.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
General
Travis Boats & Motors, Inc. (''Travis Boats'' or the ''Company'') is a
leading multi-state superstore retailer of recreational boats, motors,
trailers and related marine accessories in the southern United States.
The Company, which currently operates 21 stores under the name Travis
Boating Center in Texas, Arkansas, Louisiana, Alabama, Tennessee,
Mississippi, Florida and Georgia, differentiates itself from competitors
by providing customers a unique superstore shopping experience that
showcases a broad selection of high quality boats, motors, trailers and
related marine accessories at firm, clearly posted low prices. Each
superstore also offers complete customer service and support, including
in-house financing programs and full-service repair facilities staffed
by factory-trained mechanics.
Travis Boats was incorporated as a Texas corporation in 1979. As used
herein and unless otherwise required by the context, the terms ''Travis
Boats'' and the ''Company'' shall mean Travis Boats & Motors, Inc. and
its direct and indirect subsidiaries.
Since its founding as a single retail store in Austin, Texas, the
Company has grown both through acquisitions and the establishment of new
store locations. During the 1980's, the Company expanded into San
Antonio, Texas with the construction of a new store facility. The
Company subsequently made acquisitions of boat retailers operating
within the Texas markets of Midland, Dallas and Abilene. It was during
this initial period of expansion that the Company began developing the
systems necessary to manage a multi-store operation and leveraging the
economies of scale associated with volume purchasing. The Company's
success in these areas led to the proprietary Travis Edition packaging
concept and the Company's pricing philosophy. Since 1990, Travis Boats
has opened or acquired 16 additional store locations in the following
states: Texas (3), Arkansas (2), Louisiana (3), Alabama (2), Tennessee
(2), Mississippi (1), Florida (2) and Georgia (1).
The Company sells approximately 50 different models of brand-name
fishing, water-skiing and general recreational boats, along with motors,
trailers, accessories and related equipment. Personal watercraft, off-
shore fishing boats and cabin cruisers are also offered for sale at
selected store locations. During fiscal 1997, substantially all of the
boats sold range in size from 16 to 23 feet at prices ranging from
$7,500 to $23,000 with gross profit margins between approximately 21%
and 23%. Approximately 4.5% of new boat sales are personal watercraft
with retail
prices generally ranging from $5,000 to $10,000 and approximately 3.2%
of new boat sales are off-shore fishing boats and cruisers with lengths
of 27 feet or greater and ranging in retail price from $50,000 to
$300,000.
The Company custom designs and pre-packages combinations of popular
brand-name boats, such as Larson, Sprint, Pro-Line and Sea Ark boats
with Johnson outboard and other motors, trailers and numerous
accessories, under its proprietary Travis Edition product line. These
signature Travis Edition packages, which account for the vast majority
of total new boat sales, have been designed and developed in
coordination with the manufacturers and often include distinguishing
features and accessories that have historically been unavailable to, or
listed as optional by, many competitors. These factors enable the
Company to provide the customer with an exceptional product that is
conveniently packaged for immediate enjoyment and competitively priced.
The Company believes that it offers a selection of boat, motor and
trailer packages that fall within the price range of the majority of all
boats, motors and trailers sold in the United States. The Company's
product line generally consists of boat packages priced from $7,500-
$23,000 with approximate even distribution within this price range. As
the Company continues to operate in Florida and enters other coastal
type markets along the Gulf of Mexico or the Atlantic coast, management
believes that the distribution of off-shore fishing boats and cabin
cruisers will increase as a percentage of net sales. Management
believes that by combining flexible financing arrangements with an even
distribution of products through a broad price range, the Company is
able to offer boat packages to customers with different purchasing
budgets and varying income levels.
Results of Operations
Quarter Ended, December 31, 1997 Compared to the Quarter Ended, December
31, 1996
Net sales. Net sales increased by 86.1% to $10.1 million in the first
quarter of fiscal 1998 from $5.5 million in the first quarter of fiscal
1997. The increase in net sales during the first quarter of fiscal 1998
was attributable to the sales results of the seven store locations
acquired in fiscal 1997 (six of which are not yet includable in the
comparable store base) and the two store locations acquired thus far in
fiscal 1998.
Comparable store sales (eleven stores in the base) during the quarter
ended December 31, 1997, declined by approximately 1.9%. For the same
quarterly period of fiscal 1997, comparable store sales (eight stores in
the base) increased by 14.4%. Historically, the Company's first fiscal
quarter is the weakest quarter in terms of sales demand. The quarter
typically accounts for less than 10% of the Company's annual sales
volume. Comparable store sales were impacted by the historically low
sales volume in the first quarter and the difficult comparison to the
comparable store sales growth in the first quarter of the prior fiscal
year. The Company's planned acquisition strategy and subsequent
renovation of stores to superstore standards is expected to continue to
negatively impact the number of stores includable in comparable store
base calculations in relationship to the total number of store locations
operated. As such, comparable store performance is expected to remain
unstable until higher percentages of the Company's stores are includable
in comparable store calculations.
Gross profit. Gross profit increased by 94.7% to $2.6 million in the
first quarter of fiscal 1998 from $1.3 million in the same quarter of
fiscal 1997, while gross profit as a percent of sales increased to 25.7%
from 24.6% during the same periods. The increase in gross profit as a
percent of sales was primarily related to enhanced revenues attributable
to traditionally higher gross profit sales categories such as: Finance
and Insurance (F&I) income, over the counter sales of parts &
accessories and service labor, as well as an overall favorable mix of
new and used boats sold.
Net sales attributable to F&I Products, which have a significant impact
on the gross profit margin, contributed $368,000, or 14.1%, of total
gross profit in the first quarter of fiscal 1998, as compared to
$174,000 or 12.9%, of
total gross profit for the first quarter of the prior fiscal year. Net
sales attributable to F&I Products are reported on a net basis,
therefore, all of such sales contribute directly to the Company's gross
profit. The costs associated with the sale of F&I Products are included
in selling, general and administrative expenses.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by 72.6% to $3.7 million in first
quarter of fiscal 1998 from $2.1 million for the first quarter of fiscal
1997. Selling, general and administrative expenses as a percent of net
sales decreased to 36.4% in the first quarter of fiscal 1998 from 39.3%
for the first quarter of fiscal 1997. The decrease in selling, general
and administrative expenses as a percent of net sales was the result of
the economies of operating a larger store base with an expanded regional
market presence, particularly in terms of wage/salary expense.
Depreciation and amortization expenses, as a percent of net sales,
decreased in the first quarter of fiscal 1998, to 3.3% from 3.4% in the
same quarter of the prior fiscal year. These expenses have not declined
at the same rate as the selling, general and administrative expenses
primarily as a result of the amortization costs of the acquisitions
which occurred in fiscal 1997 and thus far in fiscal 1998, and through
the capitalization of costs such as leasehold or building improvements
associated with the conversion of certain existing stores to superstore
standards.
Interest expense. Interest expense increased by 115.4% to $461,000 in
the first quarter of fiscal 1998 from $214,000 in the first quarter of
fiscal 1997. This resulted in an increase in interest expense as a
percent of net sales to 4.6% in the first quarter of fiscal 1998 from
3.9% in the same quarter of the prior fiscal year. The increase was
primarily the result of the additional debt incurred in the acquisitions
occuring during fiscal fiscal 1998 and 1997 as well as higher balances
on the Company's floor plan and revolving bank lines necessary to
support inventory requirements for the larger store network. See
"Liquidity and Capital Resources", "Seasonality".
Net Income. The Company experienced a net loss of $1.2 million for the
first quarter of fiscal 1998. This represents an increase of 55.4% from
the net loss of $744,000 in the first quarter of fiscal 1997. The net
loss as a percentage of net sales was 11.4% and 13.7% for the first
quarter of fiscal 1998 and 1997, respectively. The reduction in net
loss as a percent of net sales was the result of the Company generating
higher net sales levels while attaining higher gross profit margins and
containing selling, general and administrative expenses. However, while
the net loss as a percent of sales improved, the Company expects to
continue to experience higher levels of net losses in the first fiscal
quarter based upon the seasonality of the recreational boating industry.
See "Liquidity and Capital Resources", "Seasonality".
Liquidity and Capital Resources
The Company's short-term cash needs are primarily for working capital to
support operations, including inventory requirements, off-season
liquidity and store expansion. These short-term cash needs have
historically been financed with cash from operations and borrowings
under the Company's credit facilities. At December 31, 1997, the Company
had working capital of $12.8 million, centered in $51.0 million in
inventories, offset by $40.9 million in short-term revolving/floorplan
credit lines outstanding. As of December 31, 1997, the aggregate
maximum borrowing limits under floor plan and revolving lines of credit
were approximately $85.0 million, of which the Company was eligible to
borrow approximately $55.0 million pursuant to the Company's borrowing
formula.
Operating activities utilized cash flows of $16.6 million for the first
three months of fiscal 1998 due primarily to the net increases of $15.2
million in inventories and the reported seasonal net loss. The first
quarter historically represents the off selling season for the Company
(see "Seasonality"). Inventory growth traditionally builds during the
first quarter in preparation for the selling season which begins with
boat and recreation shows occurring in January and February in certain
market areas in which the Company conducts business. This inventory
level generally falls to an annual low point during the fourth fiscal
quarter.
The Company used net cash in investing activities of approximately $3.3
million in the first three months of fiscal 1998. During the first three
months of fiscal 1998, the Company acquired substantially all of the
assets of Southeastern Marine Group, Inc. (net cash used of $1.6
million) and funded $1.4 million due on the September 30, 1997
acquisitions of Adventure Marine and Outdoor, Inc., Adventure Marine
South, Inc. and Adventure Boat Brokerage, Inc. The Company also
continued to renovate stores to superstore standards and updated certain
facilities with its standard superstore trade dress awnings and neon.
Financing activities for the three months ended December 31, 1997
provided $20.0 million of cash inflows primarily from the net proceeds
of advances under the Company's revolving and floorplan lines of credit.
These advances were used to fund the increase in inventories, certain
acquisition related and other capital expenditures. Effective October
31, 1997, the Company increased its revolving line of credit agented by
NationsBank of Texas, N.A. from $15.0 million to $55.0 million. This
line provides for borrowing pursuant to a borrowing formula based upon
certain of the Company's inventory and account receivables. Collateral
consists of a security interest in specific inventories (and proceeds
thereof), accounts receivable and contracts in transit. This line is
renewable on October 31, 1999. Pricing is at the prime rate minus
.375%, with a fee of .125% on the unfunded portion to be assessed
quarterly. A comprehensive loan agreement governs the line of credit.
The loan agreement contains financial covenants regulating debt service
coverages, tangible net worth, operating leverage and restrictions on
dividends or distributions. As of December 31, 1997, $20.3 million was
drawn on the revolving line and management believes the Company to be in
compliance with the terms and conditions of this loan agreement.
The Company also maintains floor plan lines of credit with various
finance companies providing approximately $30.0 million in credit
limits. These floor plan lines generally have no stated maturity and
utilize subsidies from manufacturers to provide for certain interest
free periods each calendar year (usually August through May). Certain of
these floor plan lines of credit with finance companies are governed by
loan agreements containing various financial covenants concerning, among
others, ratios governing tangible net worth and leverage. As of December
31, 1997, approximately $20.7 million was outstanding under these floor
plan lines and management believes the Company was in compliance with
the terms and conditions of these loan agreements.
Merchandise inventories were $51.0 million and $34.4 million as of
December 31, 1997 and September 30, 1997, respectively.
The Company's revolving credit facility, floor plan lines of credit and
internally generated working capital are expected by the Company's
management to be sufficient to meet the Company's cash requirements at
least through the remainder of fiscal 1998.
Seasonality
The Company's business, as well as the sales demand for various types of
boats, tends to be highly seasonal. Strong sales typically begin in
January with the onset of the public boat and recreation shows, and
continue through July. During fiscal years 1997 and 1996 collectively,
the average annual net sales for the quarterly periods ended March 31
and June 30 represented in excess of 27% and 40%, respectively, of the
Company's annual net sales. With regard to net income, the Company
historically generates profits in three of its fiscal quarters and
experiences operating losses in the quarter ended December 31 due to a
broad seasonal slowdown in sales. During the quarter ended September 30,
inventory typically reaches its lowest levels and accumulated cash
reserves reach the highest levels. During the quarter ended December 31,
the Company generally builds inventory levels in preparation for the
upcoming selling season which begins with boat and recreation shows
occurring during January through March in certain market areas in which
the Company conducts business. Travis Boats' operating results would be
materially
and adversely affected if net sales were to fall significantly below
historical levels during the months of January through June.
The Company's business is also significantly affected by weather
patterns. Weather conditions that are unseasonable or unusual may
adversely affect the Company's results of operations. For example,
drought conditions or merely reduced rainfall levels, as well as
excessive rain, may affect the Company's sale of boating packages and
related products and accessories. While management believes that the
Company's quarterly net sales will continue to be impacted by
seasonality, quarterly results may become less susceptible to certain
regional weather conditions as expansion occurs throughout the southern
United States.
Quarterly results may fluctuate as a result of the expenses
associated with new store openings or acquisitions. The Company, prior
to fiscal 1997, had attempted to concentrate expansion during the
seasonal slowdown generally occurring in the quarter ending December 31.
During fiscal 1997, the Company modified its acquisition strategy to
acquire store locations through-out the fiscal year. This was done to
allow the Company the opportunity to derive in-season sales from the
acquisitions as well as to provide a longer period in which to integrate
the acquired store's operations. Accordingly, the results for any
quarterly period may not be indicative of the expected results for any
other quarterly period.
Cautionary Statement for purposes of the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995.
Other than statements of historical fact, all statements contained in
this Report on Form 10-Q, including statements in ''Item 1. Business'',
and ''Management's Discussion and Analysis of Financial Condition and
Results of Operations'', are forward-looking statements as that term is
defined in Section 21E of the Exchange Act that involve a number of
uncertainties. The actual results of the future events described in the
forward-looking statements in this Report on Form 10-Q could differ
materially from those stated in such forward-looking statements. Among
the factors that could cause actual results to differ materially are:
general economic conditions, competition and government regulations, as
well as the risks and uncertainties discussed in this Report on Form 10-
Q, including without limitation, the matters discussed in ''Risk
Factors'' and the uncertainties set forth from time to time in the
Company's other public reports, filings and public statements. All
forward-looking statements in this Report on Form 10-Q are expressly
qualified in their entirety by the cautionary statements in this
paragraph.
PART II. OTHER INFORMATION
Item 2.
(c) Securities Issued by Registrant
On December 12, 1997, effective as of September 30, 1997, the Company
consummated the acquisition of Adventure Marine, a retail boating
organization with store locations in Ft. Walton Beach, Florida and Key
Largo, Florida, through the acquisition of 100% of the common stock of
three companies, Adventure Marine & Outdoors, Inc., Adventure Boat
Brokerage, Inc. and Adventure Marine South, Inc. (collectively the three
companies are referred to as "Adventure Marine"). The total
consideration for Adventure Marine consisted of cash and newly issued
shares of Common Stock of the Company. The Company issued an aggregate
of 88,361 shares of its Common Stock, with a value of $1,477,392 to
Frederic Pace and John Reinhold, who received 2,177 and 86,184 shares of
Common Stock, respectively.
On December 31, 1997 the Company issued 3,604 shares of its Common Stock
to Kevin T. Knight for services rendered to the Company. The value of
such services was approximately $54,000.
The securities were issued in reliance upon Section 4(2) of the
Securities Act, as not involving any public offering. Such securities
are subject to restrictions on transfer and appropriate restrictive
legends have been affixed to the certificates issued in each
transaction.
Item 6. Exhibits and reports on Form 8 - K
(a) Exhibits
None
(b) Reports on Form 8 - K
No reports on Form 8 - K have been filed during the quarter for which
this report is filed.
<PAGE>
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: February 13, 1998 Travis Boats & Motors, Inc.
By:______________________________
Michael B. Perrine
Chief Financial Officer, Treasurer and Secretary
(Principal Accounting and Financial Officer)
