United States 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 July 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXHANGE ACT
For the transition period from [ ] to [ ]
Commission File Number 0-21451
BOWLIN Outdoor Advertising & Travel Centers Incorporated
(Exact name of registrant as specified in its charter)
NEVADA 85-0113644
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
150 LOUISIANA NE, ALBUQUERQUE, NM 87108
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 505-266-5985
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
As of September 11, 1998, 4,384,848 shares of the issuer's common stock were
outstanding.
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
July 31, 1998 and January 31, 1998..............................2
Consolidated Statements of Income for the
Three Months Ended and Six Months Ended
July 31, 1998 and 1997..........................................4
Consolidated Statements of Stockholders'
Equity for the Six months ended July 31, 1998...................5
Consolidated Statements of Cash Flows for the
Six Months Ended July 31, 1998 and 1997.........................6
Notes to the Consolidated Financial Statements .................8
Item 2. Management's Discussion and Analysis or
Plan of Operation .............................................10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk....................................................14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................14
Item 2. Changes in Securities and Use of Proceeds ....................14
Item 3. Defaults Upon Senior Securities................................14
Item 4. Submission of Matters to a Vote of Security Holders............14
Item 5. Other Information..............................................15
Item 6. Exhibits and Reports on Form 8-K ..............................15
Signatures ....................................................15
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
(In thousands, except share data)
<TABLE>
<S> <C> <C>
July 31, January 31,
1998 1998
(Unaudited) (Unaudited)
-------------------- --------------------
Current assets:
Cash and cash equivalents $ 1,524 $ 4,054
Accounts receivable, net 811 579
Notes receivable, related parties - current maturities 11 30
Inventories 3,871 3,623
Prepaid expenses 576 448
Income taxes 125 90
Other current assets 8 11
-------------------- --------------------
Total current assets 6,926 8,835
Notes receivable, related parties, less current
maturities 3 20
Property & equipment, net 20,368 15,728
Intangible assets, net 1,246 1,200
Other assets 73 76
-------------------- --------------------
Total assets 28,616 25,859
==================== ====================
</TABLE>
(Continued)
2
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
(In thousands, except share data)
<TABLE>
<S> <C> <C>
July 31, January 31,
1998 1998
(Unaudited) (Unaudited)
-------------------- ---------------------
Current liabilities:
Short-term borrowing, bank $ 359 $ 745
Accounts payable 1,208 1,351
Long-term debt, current maturities 1,095 779
Accrued liabilities 575 456
-------------------- ---------------------
Total current liabilities 3,237 3,331
Deferred income taxes 256 177
Long-term debt, less current maturities 10,312 8,124
-------------------- ---------------------
Total liabilities 13,805 11,632
Stockholders' equity
Common stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding 4,384,848 shares 4 4
Additional paid-in capital 11,604 11,604
Retained earnings 3,203 2,619
-------------------- ---------------------
Total stockholders' equity 14,811 14,227
-------------------- ---------------------
Total liabilities and stockholders' equity $ 28,616 $ 25,859
==================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except share and per share data)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
-------------------------------- ------------------------------
July 31, July 31, July 31, July 31,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------- ------------- ------------- -------------
Gross sales 8,628 7,923 15,752 14,575
Less discounts on sales 73 78 135 155
------------- ------------- ------------- -------------
Net sales 8,555 7,845 15,617 14,420
Cost of goods sold 5,270 5,032 9,817 9,491
------------- ------------- ------------- -------------
Gross profit 3,285 2,813 5,800 4,929
General and administrative expenses (1,890) (1,773) (3,577) (3,312)
Other income 2 38 3 70
Depreciation and amortization (453) (310) (862) (528)
------------- ------------- ------------- -------------
Operating income 944 768 1,364 1,159
Other non-operating income (expense):
Interest income 33 63 61 145
Gain on sale of property and - 84 4 189
equipment
Interest expense (260) (194) (474) (348)
------------- ------------- ------------- -------------
Total other non-operating (227) (47) (409) (14)
income (expense), net
------------- ------------- ------------- -------------
Income before taxes 717 721 955 1,145
Income taxes 278 288 371 458
------------- ------------- ------------- -------------
Net income 439 433 584 687
============= ============= ============= =============
Weighted average common shares 4,384,848 4,384,848 4,384,848 4,384,848
Weighted average common and potential
dilutive common shares 4,394,801 4,384,848 4,389,824 4,384,848
Earnings per share
Basic $ 0.10 $ 0.10 $ 0.13 $ 0.16
============= ============= ============= =============
Diluted $ 0.10 $ 0.10 $ 0.13 $ 0.16
============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(In thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
For the Six Months Ended
Unaudited
Common Additional
Number stock, paid-in Retained
of shares at par capital earnings Total
---------------------------------------------------------------------------
Balance at January 31, 1998 4,384,848 $ 4 $ 11,604 $ 2,619 $ 14,227
Net income 584 584
---------------------------------------------------------------------------
Balance at July 31, 1998 4,384,848 $ 4 $ 11,604 $ 3,203 $ 14,811
===========================================================================
See accompanying notes to consolidated financial statements.
5
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
For the Six Months Ended
------------------------------------------
July 31, July 31,
1998 1997
(Unaudited) (Unaudited)
----------------- ---------------
Cash flows from operating activities:
Net income $ 584 $ 687
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 862 528
Gain on sales of property and equipment (4) (189)
Deferred income taxes 79 31
Imputed interest 16 -
Changes in operating assets and (602) (258)
liabilities
----------------- ---------------
Net cash provided by operating activities 935 799
Cash flows from investing activities:
Proceeds from sale of assets 8 423
Business acquisitions (note 2) (2,090) (4,865)
Purchases of property and equipment, net (1,741) (1,371)
Proceeds (disbursements) on notes receivable, net 36 (3)
----------------- ---------------
Net cash used in investing activities (3,787) (5,816)
Cash flows from financing activities:
Borrowings on short-term debt 359 3,457
Borrowings on long-term debt 1,128 -
Payments on short-term debt (745) (404)
Payments on long-term debt (420) -
----------------- ---------------
Net cash provided by financing activities 322 3,053
Net decrease in cash and cash equivalents (2,530) (1,964)
Cash and cash equivalents at beginning of period 4,054 7,519
----------------- ---------------
Cash and cash equivalents at end of period 1,524 5,555
================= ===============
</TABLE>
(Continued)
6
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(In thousands)
<TABLE>
<S> <C> <C>
July 31, July 31,
1998 1997
(Unaudited) (Unaudited)
----------------- -----------------
Supplemental disclosure of cash flow information:
Noncash investing and financing activities:
Acquisition of outdoor advertising assets in
exchange for long-term debt $ 1,650 $ 2,775
================= =================
Acquisition of covenants not-to-compete
in exchange for long-term debt $ 130 $ -
================= =================
Exchange of property and equipment and note
payable on sale of partnership investment $ - $ 1,284
================= =================
Acquisitions:
Fair value of assets acquired and liabilities
assumed at the date of the acquisitions were
as follows:
Accounts receivable $ 34 $ 74
Prepaid expenses 31 15
Billboards 1,970 3,200
Vehicles and equipment 55 63
Goodwill - 863
Accounts payable - (15)
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. The consolidated financial statements for the six months ended July 31,
1998 and July 31, 1997 are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the financial position
and operating results for the interim periods. The condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes, together with management's discussion and
analysis of financial condition and results of operations, contained in the
Company's annual report on Form 10-K for the fiscal year ended January 31,
1998. Results of operations for interim periods are not necessarily
indicative of results that may be expected for the year as a whole. Certain
amounts in the January 31, 1998 financial statements have been reclassified
to conform with the July 31, 1998 presentation.
2. Earnings per Share. The following table is a reconciliation of the
numerators and denominators of the basic and diluted per share computations
for income from continuing operations.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three months ended July 31
--------------------------------------------------------------------------------
1998 1997
-------------------------------------- -----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Basic EPS $ 439,000 4,384,848 $ 0.10 $ 433,000 4,384,848 $ 0.10
--------- --------
Income available to
common stockholders
Effect if Dilutive Securities:
Stock options 9,953
---------- --------- --------- ---------
Diluted EPS
Income available to common
stockholders plus assumed
conversions $ 439,000 4,394,801 $ 0.10 $ 433,000 4,384,848 $ 0.10
---------- --------- --------- --------- --------- --------
Six months ended July 31,
---------------------------------------------------------------------------------
1998 1997
-------------------------------------- -----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Basic EPS $ 584,000 4,384,848 $ 0.13 $ 687,000 4,384,848 $ 0.16
--------- --------
Income available to
common stockholders
Effect if Dilutive Securities:
Stock options 4,976
---------- --------- --------- ---------
Diluted EPS
Income available to common
stockholders plus assumed
conversions $ 584,000 4,389,824 $ 0.13 $ 687,000 4,384,848 $ 0.16
---------- --------- --------- --------- --------- --------
</TABLE>
8
<PAGE>
3. Acquisitions. On February 1, 1998, the Company acquired the outdoor
advertising assets of Big-Tex Outdoor Advertising (Big-Tex) for $1,559,000.
The Company paid $559,000 from the proceeds of the initial public offering
and financed $1,000,000 with bank debt. Big-Tex owned and operated
approximately 285 poster and painted faces in the Brownwood, Texas metro
area. The Company also entered into a non-compete agreement with the former
principals of Big-Tex for a period of ten years from the date of the
acquisition, payable in ten annual installments of $10,000 beginning in
February 1999. The acquisition was accounted for as a purchase. The results
of Big-Tex's operations have been combined with the Company's since the
date of acquisition. The purchase price was allocated to the assets
acquired based on their estimated fair values and no goodwill was recorded
in connection with the purchase.
On March 3, 1998, the Company acquired the outdoor advertising assets of
Norwood Outdoor, Inc. (Norwood) for $1,006,000. The Company paid $350,000
from the proceeds of the initial public offering, $6,000 cash and financed
$650,000 with bank debt. Norwood owned and operated approximately 140
poster and painted bulletin faces in the Brady, Texas metro area. The
acquisition was accounted for as a purchase. The results of Norwood's
operations have been combined with the Company's since the date of
acquisition. The purchase price was allocated to the assets acquired based
on their estimated fair values and no goodwill was recorded in connection
with the purchase.
On May 1, 1998 the Company purchased the outdoor advertising assets of
Edgar Outdoor Advertising Co. for $900,000. The Company paid $900,000 at
closing from the proceeds of the initial public offering. Edgar owned and
operated approximately 62 painted bulletin faces in central Texas. The
acquisition was accounted for as a purchase. The results of Edgar's
operations have been combined with the Company's since the date of
acquisition. The purchase price was allocated to the assets acquired based
on their estimated fair values and no goodwill was recorded in connection
with the purchase.
On June 1, 1998 the Company purchased the outdoor advertising assets of J &
J Sign Company, located in Silver City, New Mexico. The Company paid
$275,000 from the proceeds of the initial public offering and recorded a
payable of $100,000 to the former owner of J & J. J & J owned and operated
approximately 40 painted bulletin faces in Southwestern New Mexico. The
acquisition was accounted for as a purchase. The purchase price was
allocated to the assets acquired based on their estimated fair values and
no goodwill was recorded in connection with the purchase.
The following unaudited proforma consolidated results of operations have
been prepared as if the acquisitions of Big-Tex, Norwood and Edgar occurred
on February 1, 1998 and 1997. The effect of the Company's acquisition of
the assets of J & J are not material to the combined results of operations
of the Company.
(in thousands except per share amounts)
Six Months Ended
July 31
(unaudited)
1998 1997
---- ----
Gross sales $ 15,882 $ 15,204
Net income 611 745
Earnings per basic and
diluted share $ .14 $ .17
========== ==========
9
<PAGE>
The proforma information is presented for informational purposes only and
is not necessarily indicative of the results of operations that actually
would have been achieved had the acquisition been consummated as of that
time, nor is it intended to be a projection of future results.
4. Subsequent Events: On August 14, 1998 the Company purchased the outdoor
advertising assets of T & C Outdoor for $160,000 cash. T & C owned and
operated approximately 20 faces in central Texas.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
The following is a discussion of the consolidated financial condition and
results of operations of the Company as of and for the two fiscal periods ended
July 31, 1998 and 1997. This discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes included
in the Company's Form 10-KSB for the fiscal year ended January 31, 1998.
The Company operates in two industry segments, travel centers and outdoor
advertising. In order to perform a meaningful evaluation of the Company's
performance in each of its operating segments, the Company has presented
selected operating data which separately sets forth the revenue, expenses and
operating income attributable to each segment, and also separately sets forth
the corporate expenses of the Company which are not properly allocable to either
of the Company's segments for purposes of determining their respective operating
income. The discussion of results of operations which follows compares such
selected operating data and corporate expense data for the interim periods
presented.
The forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, which reflect management's
best judgment based on factors currently known, involve risks and uncertainties.
Actual results could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including but not
limited to those discussed.
10
<PAGE>
Results of Operations
The following table presents certain income and expense items derived from the
Consolidated Statements of Income for the six months ended July 31 (unaudited
and amounts in thousands):
<TABLE>
<S> <C> <C> <C>
% Incr/
1998 1997 (Decr)
---- ---- ------
Travel centers:
Gross sales 12,452 12,315 1.1%
Discounts on sales 135 155 (12.9)%
---------------- ----------------
Net sales 12,317 12,160 1.3%
Cost of sales 8,358 8,247 1.3%
---------------- ----------------
3,959 3,913 1.2%
General and administrative expenses 2,867 2,716 5.6%
Depreciation and amortization 286 207 38.2%
---------------- ----------------
Operating income 806 990 (18.6)%
Outdoor advertising:
Gross sales 3,300 2,260 46.0%
Direct operating expenses 1,459 1,244 17.3%
---------------- ----------------
1,841 1,016 81.2%
General and administrative expenses 482 354 36.2%
Depreciation and amortization 522 252 107.1%
---------------- ----------------
Operating income 837 410 104.1%
Corporate and other:
General and administrative expenses (228) (242) (5.8)%
Depreciation and amortization (54) (69) (21.7%)
Interest expense (474) (348) 36.2%
Other income, net 68 404 (83.2%)
---------------- ----------------
Income before taxes 955 1,145 (16.6)%
Income taxes 371 458 (19.0)%
---------------- ----------------
Net income $ 584 $ 687 (15.0)%
================ ================
</TABLE>
11
<PAGE>
Comparison of the Six Months Ended July 31, 1998 and July 31, 1997
Travel Centers. Gross sales at the Company's Travel Centers increased by 1.1% to
$12.452 million for the six months ended July 31, 1998 from $12.315 million for
the six months ended July 31, 1997. This increase is primarily attributable to a
7.0% increase in merchandise sales which were $4.122 million for the six months
ended July 31,1998 compared with $3.851 million for the six months ended July
31,1997. Gasoline sales decreased 1.6% to $6.206 million for the six months
ended July 31, 1998 from $6.306 million for the same period in 1997. Wholesale
gasoline sales increased 48.7% to $614,000 for the six months ended July 31,
1998, as compared to $413,000 for the six months ended July 31, 1997. Restaurant
sales decreased by 13.4% to $1.510 million for the six months ended July 31,
1998 compared with $1.744 for the six months ended July 31, 1997. Cost of goods
sold for the travel centers increased 1.3% to $8.358 million for the six months
ended July 31, 1998 from $8.247 million for the six months ended July 31, 1997,
primarily as a result of an increase in merchandise sales.
General and administrative expenses for travel centers consist of salaries,
bonuses and commissions for travel center personnel, property costs and repairs
and maintenance. General and administrative expenses for the travel centers
increased to $2.867 million for the six months ended July 31 1998 from $2.716
million for the six months ended July 31, 1997.
Depreciation and amortization expense increased by 38.2% to $286,000 for the six
months ended July 31, 1998 as compared to $207,000 for the six months ended July
31, 1997. The increase is attributable to additions of depreciable assets during
the current period.
The above factors contributed to an overall decrease in travel center operating
income of 18.6% to $806,000 for the six months ended July 31,1998 from $990,000
for the six months ended July 31, 1997. This decrease is primarily attributable
to increases in depreciation and general and administrative expenses.
Outdoor Advertising. Gross sales from the Company's Outdoor Advertising
increased 46.0% to $3.300 million for the six months ended July 31, 1998 from
$2.260 million for the six months ended July 31, 1997. The increase was
primarily attributable to the continual assimilation of the Company's
acquisitions, increased usage of available sign inventory, and increases in
rates.
Direct operating expenses related to outdoor advertising consist of rental
payments to property owners for the use of land on which advertising displays
are located, production expenses and selling expenses. Production expenses
include salaries for operations personnel and real estate representatives,
property taxes, materials and repairs and maintenance of advertising displays.
Selling expenses consist primarily of salaries and commissions for salespersons
and travel and entertainment related to sales. Direct operating costs increased
17.3% to $1.459 million for the six months ended July 31, 1998 from $1.244
million for the six months ended July 31, 1997, principally due additional
direct operating costs associated with the acquisitions.
General and administrative expenses for outdoor advertising consist of salaries
and wages for administrative personnel, insurance, legal fees, association dues
and subscriptions and other indirect operating expenses. General and
administrative expenses increased 36.2% to $482,000 for the six months ended
July 31, 1998 from $354,000 for the six months ended July 31, 1997.
Depreciation and amortization expense increased 107.1% to $522,000 for the six
months ended July 31, 1998 from $252,000 for the six months ended July 31, 1997.
The increase is attributable to scheduled depreciation of advertising display
structures and machinery and equipment primarily associated with acquisitions as
well as the amortization of goodwill and non-compete covenants.
12
<PAGE>
The above factors contributed to the increase in outdoor advertising operating
income of 104.1% to $837,000 for the six months ended July 31, 1998 from
$410,000 for the six months ended July 31, 1997. In addition, earnings before
interest, taxes, depreciation and amortization (EBITDA) for outdoor advertising
increased 105.3% to $1.359 million for the six months ended July 31, 1998 from
$662,000 for the six months ended July 31, 1997. The EBITDA margin for outdoor
advertising increased to 41.2% for the six months ended July 31, 1998 as
compared to 29.3% for the six months ended July 31, 1997.
Corporate and Other. General and administrative expenses for corporate and other
operations of the Company consist primarily of executive and administrative
compensation and benefits, accounting, legal and investor relations fees.
General and administrative expenses decreased slightly to $228,000 for the six
months ended July 31, 1998 as compared to $242,000 for the six months ended July
31, 1997.
Depreciation and amortization expenses for the Company's corporate and other
operations consist of depreciation associated with the corporate headquarters,
furniture and fixtures and vehicles. Depreciation and amortization expenses
decreased to $54,000 for the six months ended July 31, 1998 as compared to
$69,000 for the six months ended July 31, 1997.
Interest expense increased by 36.2% to $474,000 for the six months ended July
31, 1998 as compared to $348,000 for the six months ended July 31, 1997. The
increase is primarily attributable to the increase in debt associated with the
Company's acquisitions.
Other income, net, primarily includes operating rental revenues from the
Company's former subsidiary, gains and/or losses from the sales of assets, and
interest income. Other income, net, decreased 83.2% to $68,000 for the six
months ended July 31, 1998 as compared to $404,000 for the six months ended July
31, 1997. The decrease is due to certain non-operating gains in 1997 not present
in 1998 and a decrease in interest income due to use of IPO proceeds for
acquisitions.
Income before taxes decreased 16.6% to $955,000 for the six months ended July
31, 1998 as compared to $1.145 million for the six months ended July 31, 1997.
As a percentage of gross revenues, income before taxes decreased slightly to
6.1% for the six months ended July 31, 1998 as compared to 7.9% for the six
months ended July 31, 1997.
Income taxes were $371,000 for the six months ended July 31, 1998 as compared to
$458,000 for the six months ended July 31, 1997, as the result of lower pretax
income.
The foregoing factors contributed to a decrease in the Company's net income for
the six months ended July 31, 1998 to $584,000 as compared to $687,000 for the
six months ended July 31, 1997.
Liquidity and Capital Resources
At July 31,1998, the Company had working capital of $3.689 million and a current
ratio of 2.1:1, compared to working capital of $5.504 million and a current
ratio of 2.7:1 at January 31, 1998. Working capital and the current ratio
decreased for the six months ended July 31, 1998 as a result of IPO proceeds
used in the current period but present at January 31, 1998.
Net cash provided by operating activities was $935,000 for the six months ended
July 31, 1998 as compared to net cash provided by operating activities of
$799,000 for the six months ended July 31, 1997. Net cash provided in the
current period is primarily attributable to increased depreciation and
amortization from acquisitions and decreases in gains on sales of property and
equipment as well as an increase in cash used to fund operating assets and
liabilities.
13
<PAGE>
Net cash used for investing activities for the six months ended July 31, 1998
was $3.787 million, of which $2.090 million was used in the purchase of the
outdoor advertising assets of Big-Tex, Norwood, Edgar and J & J, and $1.741
million was used for purchases of property and equipment. For the six months
ended July 31, 1997, net cash used for investing activities was $5.816 million,
of which $4.865 million was used for acquisitions. In addition, $300,000 was
used for the purchase of land for the construction of a new travel center
complex.
Net cash provided by financing activities for the six months ended July 31, 1998
was $322,000 as compared to $3.053 million for the six months ended July 31,
1997. At July 31, 1998 and 1997 financing activities were a result of borrowings
and payments on debt.
On May 1, 1998 the Company purchased the outdoor advertising assets of Edgar
Outdoor Advertising Co. for $900,000 with the proceeds of the initial public
offering. Edgar owned and operated approximately 62 painted bulletin faces in
central Texas.
On June 1, 1998 the Company purchased the outdoor advertising assets of J & J
Sign Company, located in Silver City, New Mexico. The Company paid $275,000 from
the proceeds of the initial public offering and recorded a payable of $100,000
to the former owner of J & J. J & J owned and operated approximately 40 painted
bulletin faces in Southwestern New Mexico.
On August 14, 1998 the Company purchased the outdoor advertising assets of T & C
Outdoor for $160,000 cash. T & C owned and operated approximately 20 faces in
central Texas.
The construction of a new travel center located approximately 20 miles west of
Albuquerque, New Mexico, on Interstate 40 is proceeding and is scheduled to open
in the third fiscal quarter of this year. In addition, the Company completed the
upgrade of one travel center.
Although the Company does not have any agreements in place, it will continue
discussions with acquisition candidates throughout the Southwestern United
States. The Company has not executed a letter of intent or other agreement,
binding or non-binding, to make such acquisitions. Any such acquisition would be
subject to the negotiation and execution of definitive agreements, appropriate
financing arrangements, performance of due diligence, approval of the Company's
Board of Directors, and the satisfaction of other customary closing conditions.
The Company would likely finance any such acquisitions with cash, additional
indebtedness or a combination of the two. Any commercial financing obtained for
purposes of acquiring additional assets is likely to impose certain financial
and other restrictive covenants upon the Company and increase the Company's
interest expense.
Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not
required.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities and Use of Proceeds.
The use of IPO proceeds for the quarter ended July 31, 1998 totaled $1.279
million. Of the total used, $1.175 million was used for the acquisitions of
Edgar Outdoor Advertising and J & J Sign Company. The remaining $104,000 was
used for the purchase of real estate for the expansion of the outdoor
advertising division.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submissions of Matters to a Vote of Security Holders. None.
14
<PAGE>
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a). Exhibit No. Exhibit Name
----------- ------------
2.6 Purchase Agreement dated June 1, 1998
between the Registrant and J & J Signs.
27 Financial Data Schedule
(b). No reports were filed on Form 8-K during the six months ended
July 31, 1998.
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: September 11, 1998
BOWLIN
Outdoor Advertising & Travel Centers Incorporated
/s/ Michael L. Bowlin
-----------------------------------------
Michael L. Bowlin, Chairman of the Board,
President and Chief Executive Officer
/s/ Nina J. Pratz
-----------------------------------------
Nina J. Pratz, Chief Financial Officer
(Principal Financial and Accounting Officer)
15
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is hereby made this, June 1st, 1998 by and between John Mahl,
d/b/a J&J Signs, a sole proprietorship ("J&J", "Mahl", "Company" and "Owner"),
and Bowlin Outdoor Advertising & Travel Centers Incorporated, a Nevada
corporation ("Bowlin").
Purpose of Agreement
Bowlin desires to purchase and J&J desires to sell certain tangible and
intangible assets that comprise a certain portion of J&J's business known as
"J&J Signs" engaged in outdoor advertising. Therefore, in consideration of the
premises and of the mutual representations, warranties and covenants herein
contained, the parties hereby agree as follows:
Terms and Conditions
Purchase Price
The purchase price shall be a total of $275,000 paid at closing and warrants for
shares of common stock in Bowlin's equal to a value of $100,000.**
In addition to the amount specified above, Bowlin will pay to J&J at closing:
(a) an amount equal to the amount of any prepaid rents, leases, permits and
taxes as specified in attached Exhibit E and incorporated for all purposes
herein
The purchase price, and payments noted above, shall be the sole considerations
paid by Bowlin under this agreement.
Date of Closing
The parties contemplate that Closing shall take place on June 1, 1998. If
Closing does not occur by that date, it will occur as soon thereafter as Bowlin
is able to complete its due diligence investigation. The parties agree that
Bowlin's obligation to complete this purchase is contingent upon Bowlin being
satisfied, in its sole discretion, that all representations made to it
concerning J&J's assets are true; that the financial condition, books, and
accounts of J&J are sound; that the land leases, outdoor advertising permits and
advertising contracts are of satisfactory condition to Bowlin; and that the
value of the assets being transferred is not less than the purchase price.
Transfer of Assets to Bowlin, and Transfer of Funds to John Mahl shall take
place on June 1, 1998.
**Per legal counsel cash of $100,000 will be paid to John Mahl, d/b/a/ J&J Signs
in lieu of the common stock.
1
<PAGE>
Transfer of Assets
At closing, J&J will sell, transfer, assign, convey and deliver to Bowlin free
and clear of any liens, debts, or encumbrances, and Bowlin will purchase, accept
and acquire from J&J all of the Assets listed in Exhibit A attached hereto and
incorporated for all purposes herein.
Instruments of Transfer
(a) J&J Deliveries. At the closing, J&J shall deliver to Bowlin:
i. A bill of sale transferring to Bowlin title to the Assets as
provided herein, in form and substance acceptable to Bowlin;
ii. A five (5) year non-competition agreement for John Mahl (See
attached Exhibit B);
iii. Letter(s) from J&J to the New Mexico Department of Transportation
regarding transfer of the applicable outdoor advertising permits
from John Mahl to Bowlin in the form of attached Exhibit F;
iv. Assignment of land lease agreements pertinent to sign sites
located on property owned by third parties (See attached Exhibit
G);
v. A land lease agreement acceptable to Bowlin pertinent to signs
located on land currently occupied, used, and owned by John Mahl
and/or J&J Signs (See attached Exhibit D).
vi. Such other bills of sale, titles and other instruments of
assignment, transfer and conveyance as Bowlin shall reasonably
request, in recordable form, where appropriate, and properly
executed, evidenced and notarized where appropriate in such form
as shall be necessary or appropriate to vest in Bowlin good title
to the Assets.
(b) Bowlin's Deliveries. At the closing, Bowlin shall deliver to J&J:
i. A wire transfer or cashiers check for the cash portion of the
purchase price as specified herein;
ii. Checks in an amount sufficient to pay the net amount due for
items listed in Exhibit E.
iii. Warrants to be redeemed in Bowlin's shares within a 180 day
period from the date of closing. The number of shares will be
determined by the closing value of Bowlin's shares (BWN: Amex) on
the date of this Agreement's closing divided into $100,000.**
**Reference note, page 1
2
<PAGE>
(c) Other Transfer Instruments. Following the Closing, at the request of
Bowlin, J&J shall deliver any further Instruments and take all
reasonable action as may be necessary or appropriate to vest in Bowlin
all of J&J's title to the assets. This will specifically include all
historical and current files and documentation related to structures,
advertisers, permits, licenses, lighting and any other pertinent data.
No Assumption of Liabilities
It is expressly understood and agreed by the parties hereto that Bowlin
assumes no debts, liabilities (including tax liabilities) or obligations
(contractual or otherwise) of J&J or John Mahl or any other debts,
liabilities or obligations related to the conduct of J&J's business.
Representations and Warranties
John Mahl represents and warrants to Bowlin as of the date hereof and on
the closing date as follows (all representations and warranties being joint
and several):
(a) Authority. J&J has the legal authority to sell, transfer, and deliver
to Bowlin the tangible and intangible assets of the outdoor
advertising business known as "J&J Signs"
(b) Title. J&J has good and indefeasible title to all properties, assets
and leasehold estates, real and personal, tangible and intangible, to
be transferred pursuant to this Agreement subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance or charge
except for mortgages, liens or encumbrances on the real property fee
simple estates of the ground lessors.
(c) Insurance. J&J carries insurance, which it believes to be adequate in
character and amount, with reputable insurers in respect of assets
being acquired and such insurance policies are still in full force and
effect, and shall be in effect without interruption until closing has
occurred.
3
<PAGE>
(d) Violations, Suits, Claims, etc. J&J is not in default under any law or
regulation, or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality wherever located, and to J&J's knowledge and
belief there are (1) no claims, actions, suits or proceedings
instituted or filed and (2) no claims actions, suits or proceedings
threatened presently or which in the future may be threatened or
asserted against or affecting J&J at law or in equity, or before or by
any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality wherever located,
and (3) there are no potential claims, demands, liens, encumbrances,
or debts with regard to the assets that are the subject of this sale
or that may create for Bowlin any environmental or regulatory
liability.
(e) Tax Returns. J&J has filed or will file all requisite federal, state
and other tax returns due for all fiscal periods ended on or before
the date of this agreement. There are no claims against J&J for
federal, state or other taxes for any period or periods to and
including the date of this agreement.
(f) Authorizations and Enforceability. J&J has all requisite power and
authority to execute, deliver and perform this Agreement and the other
agreements and instruments delivered pursuant hereto and to consummate
the transactions contemplated hereby. This Agreement and the other
agreements and instruments delivered pursuant hereto have been duly
and validly authorized, executed and delivered by J&J and constitutes
the valid and binding obligations of J&J, fully enforceable in
accordance with their terms.
(g) Effect of Agreement. The execution, delivery and performance of this
Agreement by J&J and John Mahl and the consummation of the
transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both: (a) violate any material
provision of law, statute, rule or regulation to which Company is
subject; (b) violate any judgment, order, writ or decree of any court,
arbitrator or governmental agency applicable to Company; or (c) result
in a material breach of or material conflict with any term, covenant,
condition or provision of, result in the modification or termination
of, constitute a material default under, or result in the creation or
imposition of, any lien, security interest, charge or encumbrance upon
any of the Assets pursuant to any charter, bylaw, commitment, contract
or other agreement or instrument, to which Company is a party or by
which any of its Assets is bound.
4
<PAGE>
(h) Permits, Licenses, Compliance with Applicable Laws and Court Orders.
Company has all requisite power and authority, and all permits,
licenses and approvals of governmental and administrative authorities,
to own, lease and operate its properties and to carry on its business
as presently conducted; all such permits, licenses and approvals
material to the conduct of the business of Company are in full force
and effect. Company's conduct of its business does not materially
violate or infringe any applicable law, statute, ordinance or
regulation. Company is not in default in any respect under any
executive, legislative, judicial, administrative or private (such as
arbitration) ruling, order, writ, injunction or decree.
(i) Agreements, Plans, Arrangements, etc. Except as set forth in Exhibit
A, Company is not a party to, nor is Company or any of the Assets
bound or affected by, any oral or written:
(1) lease agreement (whether as lessor or lessee) relating to real or
personal property;
(2) license agreement, assignment or other contract (whether as
licensor or licensee, assignor or assignee) relating to
trademarks, trade names, patents, copyrights (or applications
therefor);
(3) agreement with any business broker with respect to this
transaction;
(4) agreement with any supplier, distributor, franchisor, dealer,
sales agent or representative;
(5) joint venture or partnership agreement with any other person;
(6) agreement with any bank, factor, finance company or similar
organization regarding the financing of accounts receivable or
other extensions of credit;
(7) agreement granting any lien, security interest or mortgage on any
Asset or other property of Company, including, without
limitation, any factoring agreement for the assignment of
accounts receivable;
(8) agreement for the Construction or modification of any Asset or
leasehold interest of Company;
(9) agreement with any employee, consultant, or independent
contractor providing personal services to Company.
(j) Acquisition Agreements. There are no agreements relating to the
acquisition of the business or Assets of Company to which Company is a
party, other than this Agreement.
5
<PAGE>
(k) Status of Real Property. Company has not received any notice of
noncompliance with respect to real property on which any of the Assets
are located (the "Real Property") with any applicable statutes, laws,
codes, ordinances, regulations or requirements relating to fire,
safety, health or environmental matters or noncompliance with any
covenants, conditions and restrictions (whether or not of record) or
local, municipal, regional, state or federal requirements or
regulations. To the best of Company's and Owner's knowledge, there has
been no release or discharge on or under the Real Property by the
Company of any toxic or hazardous substance, material or waste which
is or has been regulated by any governmental or quasi-governmental
authority or is or has been listed as toxic or hazardous under any
applicable local, state or federal law. To the best of the Company's
and Owner's knowledge, there are no subsurface or other conditions
related to toxic or hazardous waste affecting the Real Property or any
portion or component thereof, and there are no underground storage
tanks located on the Real Property.
(l) Defects. To the best of Company's and Owner's knowledge, there are no
structural or operational defects in any of the Assets.
(m) Leases Current. All obligations of the Company under all existing
lease agreements which are required by such agreements to have been
performed by Company have been fulfilled by the Company, including the
payment by the Company of all lease payments due and payable through
the date hereof.
Bowlin represents and warrants to J&J and John Mahl as of the date hereof and
the Closing date as follows:
(a) Organization. Bowlin is a validly existing corporation organized under
the laws of the State of Nevada and has all requisite corporate power
and authority to own, operate and lease its properties and assets.
(b) Authority. Bowlin has full corporate power, authority and legal rights
to execute and deliver, and to perform its obligations under this
Agreement, and has taken all necessary action to authorize the
purchase hereunder on the terms and conditions of this Agreement and
to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed by Bowlin, and
constitutes a legal, valid and binding obligation of Bowlin
enforceable in accordance with its terms.
6
<PAGE>
(c) Compliance with Instruments, Consents, Adverse Agreements. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with or result in any
violation of or constitute a default under the articles of
incorporation or the by-laws of Bowlin, or any Law, Instrument, lien
or other Contract by which Bowlin is bound. Bowlin is not a party or
subject to any Contract, or subject to any article or other corporate
restriction or any Law which materially and adversely affect the
business operation, prospects, properties, assets or condition,
financial or otherwise, of Bowlin.
(d) Litigation. There is no suit, action or litigation, administrative,
arbitration, or other proceeding or governmental investigation pending
or, to the knowledge of Bowlin, threatened which might, severally or
in the aggregate materially and adversely affect the financial
condition or prospects of Bowlin or Bowlin's ability to acquire the
Assets as contemplated by this Agreement.
(e) Brokers. All negotiations relative to the Agreement and the
transactions contemplated hereby have been carried on by Bowlin is
such manner without giving rise to any valid claim against J&J for a
finder's fee, brokerage commission or other like payment.
Covenants
Between the date of this agreement and the closing date:
(a) J&J and John Mahl will cause Company to:
(1) Carry on its outdoor advertising business in substantially the
same manner as it has heretofore and not introduce any material
new method of management, operation or accounting;
(2) Maintain their properties and facilities in as good working order
and condition as at present, ordinary wear and tear excepted;
(3) Perform all material obligations under agreements relating to or
affecting its assets, properties and rights;
(4) Maintain adequate insurance; and
(5) Use its best efforts to maintain and preserve its assets intact,
and maintain its relationships with suppliers, customers and
others having business relations with it.
(b) J&J will not permit without the prior written consent of Bowlin to:
(1) Enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures except in the
normal course of business as to the assets purchased pursuant to
this agreement.
7
<PAGE>
(2) Create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties transferred
under this agreement, whether now owned or hereafter acquired; or
(3) Sell, assign, lease or otherwise transfer or dispose of any
property or equipment subject to this agreement except in the
normal course of business.
Competition
Simultaneously with the execution of this Agreement, John Mahl will execute
and deliver to Bowlin a Non-Competition Agreement in the form and on the
terms as set forth in Exhibit B attached hereto and incorporated by
reference herein for all purposes.
Conditions to Bowlin's Obligations
The obligations of Bowlin hereunder are subject to the fulfillment, at or
prior to the Closing, of each of the following conditions, any or all of
which may be waived in writing by Bowlin, in its sole discretion:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties of J&J and John Mahl contained in this
Agreement shall be true on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date, except
as affected by transactions contemplated hereby.
(b) Performance of Covenants. J&J shall have performed and complied with
all covenants, obligations and agreements to be performed or complied
with by it on or before the Closing Date pursuant to this Agreement.
(c) No Litigation or Claims. No claim, action, suit, proceeding,
arbitration, investigation or hearing or notice of hearing shall be
pending or threatened against or affecting J&J which: (a) might
foreseeably result, or has resulted, either in an action to enjoin or
prevent or delay the consummation of the transactions contemplated by
this Agreement or in such an injunction; or (b) could, in the
determination of Bowlin, have an adverse effect on the assets to be
transferred hereunder.
(d) No Violations. No material violation of J&J shall exist, or be alleged
by any governmental authority to exist, of any law, statute, ordinance
or regulation, the enforcement of which would adversely affect the
financial condition, results of operations, properties or business of
J&J.
8
<PAGE>
(e) Consents and Assignments. J&J shall have delivered to Bowlin all
consents and assignments of all persons and entities necessary for the
performance of the transactions contemplated by this Agreement,
including the transfer of all assets and the assignment of leases, and
J&J shall have obtained the consents of: any lender to J&J, or, in the
alternative, the release of all liens held by such lender, with
respect to the sale and transfer of the assets; and any other consents
of third parties deemed necessary or appropriate by Bowlin.
(f) Certificate. Bowlin shall have received a certificate signed by John
Mahl, dated the Closing Date, satisfactory in form and substance to
Bowlin and its counsel, certifying as to the fulfillment of the
conditions specified above.
(g) Satisfactory Completion of Due Diligence. Bowlin shall be satisfied in
its sole discretion with the content of the final Exhibits hereto and
other related documents for closing and shall otherwise be satisfied
in its sole discretion with the results of its due diligence review,
including the right to terminate this agreement with no penalty in the
event that the land leases, outdoor advertising permits and
advertising contracts are not of satisfactory condition to Bowlin.
Indemnification
(a) Indemnification of Bowlin by John Mahl. John Mahl agrees to indemnify
and hold harmless Bowlin and any person claiming by or through it or
its successors and assigns from, against and in respect of any and all
losses, claims, and liabilities incurred by or asserted against Bowlin
or its successors or assigns in connection with any breach of any
representation or warranty of J&J or John Mahl;
(i) any breach of any representation or warranty of J&J or John Mahl;
(ii) any breach of any covenant or agreement made by J&J or John Mahl
in this Agreement;
(iii)any liability, debt or obligation of J&J or lien or encumbrance
on the Assets or
(iv) any claim arising out of the use, sale or operation of the Assets
by J&J or John Mahl and/or the operation of the business of J&J
or John Mahl prior to the Closing.
9
<PAGE>
(b) Indemnification of J&J and John Mahl by Bowlin. Bowlin agrees to
indemnify and hold harmless J&J and John Mahl and any person claiming
by or through it or its successors and assigns from, against and in
respect of any and all losses, claims, and liabilities incurred by or
asserted against J&J or John Mahl or its successors or assigns in
connection with:
(i) any breach of any representation or warranty of Bowlin;
(ii) any breach of any covenant or agreement made by Bowlin in this
Agreement;
(iii) any act or omission of Bowlin after Closing, and
(iv) any claim arising out of the use, sale or operation of the Assets
by Bowlin and/or the operation of the business by Bowlin after
Closing.
Taxes
Real Estate and personal property taxes, if any, assessed or to be assessed
for the current calendar or fiscal year, regardless of when payable, shall
be prorated between Bowlin and J&J as of the closing date.
Risk of Loss
The risk of loss or destruction of or damage to the assets transferred
hereunder from any cause whatsoever at all times on or subsequent to the
execution of this document but before closing shall be borne by J&J.
Bowlin's Remedies
Bowlin shall be entitled, without limitation, to all incidental and
consequential damages resulting from a breach of any warranty or
representation or covenant of J&J or John Mahl made herein including, but
not limited to, all costs of litigation incurred, including reasonable
attorney's fees.
Arbitration Dispute Resolution
In the event of any dispute arising from this agreement, New Mexico law
shall apply. Any claims or controversy between J&J or John Mahl, on the one
hand, and Bowlin, on the other hand, arising out of or relating to this
agreement or the sale and purchase of assets, shall be decided by
arbitration at Albuquerque, New Mexico in accordance with Commercial
Arbitration Rules of the American Arbitration Association by a single
arbitrator appointed in accordance with the rules in effect when
arbitration is first demanded by any party. The award rendered by the
arbitrator shall be final and judgment may be entered into any court having
jurisdiction.
10
<PAGE>
Miscellaneous
(a) Expenses. Except as otherwise provided herein, whether or not the
transactions contemplated by this Agreement are consummated, each
party hereto shall pay its own expenses and the fees and expenses of
its counsel and accountants and other experts. Furthermore, Bowlin
shall be responsible for payment to the business broker retained by
it.
(b) Survival of Representations and Warranties. The representations,
warranties, covenants and agreements set forth in this Agreement and
any other written representation in any ancillary document shall
survive the Closing.
(c) Waivers. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
(d) Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
(e) Notices. All notices, requests, demands and other communications which
are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in
person or transmitted by fax or five (5) days after deposit in the
U.S. mails by certified or registered first class mail, postage
prepaid, return receipt requested, addressed to the party to whom the
same is so given or made.
if to J&J to:
John Mahl
#2 Shasta St.
Silver City, NM 88061
if to Bowlin to:
Bowlin Outdoor Advertising and Travel Centers Incorporated
150 Louisiana Blvd. N.E.
Albuquerque, New Mexico 87108
Attention: Michael L. Bowlin, President
or to such other address or Fax Number as any party may designate by giving
notice to the other parties hereto.
11
<PAGE>
(f) Further Assurances. John Mahl shall, from time to time at or after the
Closing, at the request of Bowlin, and without further consideration,
execute and deliver such other instruments and take such other actions
as may be required to confer to Bowlin and its assignees the benefits
contemplated by this Agreement.
(g) Entire Agreement. This document contains the entire agreement between
the parties and supersedes all prior agreements between the parties,
if any, written or oral, with respect to the subject matter thereof.
AGREED and ACCEPTED:
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED
By: /s/ C. C. Bess, E.V.P
------------------------------------
C. C. Bess, Executive Vice President
J&J Signs
By: /s/ John Mahl
------------------------------------
John Mahl, Sole Proprietor
12
<PAGE>
Acknowledgment for Corporations
STATE OF New Mexico )
) ss.
COUNTY OF [ ] )
The foregoing instrument was acknowledged before me this [ ] day of
[ ], 199[ ], by C. C. Bess, Executive Vice President of Bowlin
Outdoor Advertising & Travel Centers Incorporated, a Nevada Corporation, on
behalf of the corporation.
--------------------------------
Notary Public
My commission expires:
- ----------------------
Acknowledgment for Individual
STATE OF New Mexico )
) ss.
COUNTY OF [ ] )
The foregoing instrument was acknowledged before me this [ ] day of
[ ], 199[ ] by John Mahl, Individually.
--------------------------------
Notary Public
My commission expires:
- ----------------------
13
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-31-1997
<CASH> 1524000
<SECURITIES> 0
<RECEIVABLES> 811000
<ALLOWANCES> 0
<INVENTORY> 3871000
<CURRENT-ASSETS> 6926000
<PP&E> 32670000
<DEPRECIATION> 12302000
<TOTAL-ASSETS> 28616000
<CURRENT-LIABILITIES> 3237000
<BONDS> 0
0
0
<COMMON> 4385
<OTHER-SE> 14811000
<TOTAL-LIABILITY-AND-EQUITY> 28616000
<SALES> 1561700
<TOTAL-REVENUES> 1575200
<CGS> 9817000
<TOTAL-COSTS> 9817000
<OTHER-EXPENSES> 3577000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 474000
<INCOME-PRETAX> 955000
<INCOME-TAX> 371000
<INCOME-CONTINUING> 584000
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<NET-INCOME> 584000
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