UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 31, 2000 OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO _____________
COMMISSION FILE NO. 0-21451
BOWLIN Outdoor Advertising & Travel Centers Incorporated
(Name of the registrant as specified in its charter)
NEVADA 85-0113644
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
150 LOUISIANA NE, ALBUQUERQUE, NM 87108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 505-266-5985
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT:
Title of each class Name of each exchange on which registered
Common Stock, $.001 Par Value AMEX
- ----------------------------- -----------------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
NONE
--------------------------------------------------------------------
(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 the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained in herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K___
The aggregate market value of the voting and non-voting common stock held by
non-affiliates of the registrant at April 18, 2000 was $9,609,303.
The number of shares of Common Stock, $.001 par value, outstanding as of April
18, 2000: 4,384,848
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's definitive proxy statement relating to the 2000
Annual Meeting of Stockholders are incorporated herein by reference.
<PAGE>
Forward-Looking Statements
Certain statements in this Annual Report on Form 10-K constitute
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and should be read in conjunction with the
Consolidated Financial Statements of BOWLIN Outdoor Advertising & Travel Centers
Incorporated, a Nevada Corporation (the "Company" or "BOWLIN"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause the Company's actual results to differ materially
from those contained in these forward-looking statements, including those set
forth under the heading "RISK FACTORS" under ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and the risks and
other factors described elsewhere. The cautionary factors, risks and other
factors presented should not be construed as exhaustive. The Company assumes no
obligation to update these forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting such
forward-looking statements.
PART I
ITEM 1. BUSINESS
Company Overview
The Company is a regional leader in the operation of travel centers and
outdoor advertising displays dedicated to serving the traveling public in rural
and smaller metropolitan areas of the Southwestern United States. The Company's
tradition of serving the public dates back to 1912, when the Company's founder,
Claude M. Bowlin, started trading goods and services with Native Americans in
New Mexico. BOWLIN currently operates fifteen full-service travel centers along
interstate highways in Arizona and New Mexico. The Company advertises its travel
centers through a network of over 350 outdoor advertising display faces. The
Company's travel centers offer brand name food, gasoline and a variety of unique
Southwestern merchandise to the traveling public.
In addition to its travel centers, the Company operates over 4,000
revenue-generating outdoor advertising display faces for third party customers
such as hotels and motels, restaurants and consumer product companies. These
display faces are strategically situated primarily along interstate highways in
Arizona, New Mexico and Texas and, to a lesser extent, in Colorado, Oklahoma and
Arkansas. The Company provides a comprehensive range of outdoor advertising
services to its clients, including customized design and production services.
Recent Developments
The Company made two acquisitions of outdoor advertising assets in fiscal
year 2000. Each of the acquisitions was accounted for as a purchase. In each
case, the purchase price was allocated to the assets acquired based on their
estimated fair values and no goodwill was recorded.
On March 1, 1999, the Company purchased the outdoor advertising assets of
GDM Outdoor Advertising (GDM) located in Tyler, Texas for $1,353,376. The
Company financed $1,350,000 of the purchase price with bank debt and paid the
remaining $3,376 in cash. GDM owned and operated approximately eighty-six
painted bulletin faces in central Texas.
On April 30, 1999 the Company purchased the outdoor advertising assets of
Borderline Outdoor Advertising, Inc. (Borderline) located in Bedford, Texas for
$162,575. The Company financed $150,000 of the purchase price with bank debt and
paid the remaining $12,575 in cash. Borderline owned and operated approximately
nine painted bulletin faces in central Texas.
2
<PAGE>
Industry Overview
Travel Services Industry. The travel services industry in which the Company
competes includes convenience stores that may or may not offer gasoline, and
fast food and full-service restaurants located along rural interstate highways.
The Company believes that the current trend in the travel services industry is
toward strategic pairings at a single location of complementary products that
are noncompetitive, such as brand name gasoline and brand name fast food
restaurants. This concept, known as "co-branding," has recently seen greater
acceptance by both traditional operators and larger petroleum companies. The
travel services industry has also been characterized in recent periods by
consolidation or closure of smaller operators. The convenience store industry
includes both traditional operators that focus primarily on the sale of food and
beverages but also offer gasoline, and large petroleum companies that offer food
and beverages primarily to attract gasoline customers.
The restaurant segment of the travel services industry is highly
competitive, most notably in the areas of consistency of quality, variety,
price, location speed of service, and effectiveness of marketing. The major
chains are aggressively increasing market penetration by opening new
restaurants, including restaurants at "special sites" such as retail centers,
travel centers and gasoline outlets. Smaller quick-service restaurant chains and
franchise operations are focusing on brand and image enhancement and co-branding
strategies.
Outdoor Advertising Industry. According to recent estimates by the Outdoor
Advertising Association of America ("OAAA"), outdoor advertising generated total
billboard revenues of approximately $2.88 billion in 1999. Outdoor advertising
offers repetitive impact and a relatively low cost-per-thousand impressions as
compared to broadcast media, newspapers, magazines and direct mail marketing,
making it attractive to both local businesses targeting a specific geographic
area or set of demographic characteristics and national advertisers seeking mass
market support. Because outdoor advertising reaches potential customers close to
the point-of-sale, restaurants, motels, service stations and similar businesses
find outdoor advertising particularly effective. Repeated viewing by people
traveling the same route on a daily basis makes outdoor advertising especially
suitable for companies such as banks, insurance companies and soft drink
manufacturers that sell their products by promoting a particular image. Outdoor
advertising services have recently expanded beyond billboards to include a wide
variety of out-of-home advertising media, including advertising displays in
shopping centers, malls, airports, stadiums, movie theaters and supermarkets, as
well as on taxis, trains, buses and subways. Recent estimates published by the
OAAA report that total out-of-home advertising revenues, including traditional
billboard advertising, was approximately $4.8 billion in 1999, representing
growth of 9.4% over 1998.
The outdoor advertising industry uses three standardized display formats:
traditional bulletin-style painted billboards (with a typical face size of 14
feet by 48 feet), 30-sheet posters (with a typical face size of 12 feet by 25
feet) and junior or 8-sheet posters (with a typical face size of 6 feet by 12
feet). The physical advertising structure is generally owned by the outdoor
advertising company and is built on locations either owned or leased by the
operator or on which it has a permanent easement. Traditionally, outdoor
advertising displays are leased to advertisers on a unit basis. Advertising
rates for outdoor advertising media are based on such factors as the size of the
advertising display, visibility, cost of leasing, construction and maintenance
and the number of people who have the opportunity to see the advertising
message.
The outdoor advertising market is highly fragmented but is dominated in
large designated market areas by a few sizable firms, several of which are
subsidiaries of diversified companies. In addition to the large outdoor
advertising firms, there are many smaller regional and local companies operating
a limited number of displays in a single or a few local markets. There has been
a trend toward consolidation in the outdoor advertising industry in recent years
and the Company expects this trend to continue.
3
<PAGE>
Business Strategy
Travel Services Business Strategy. The Company opened its first travel
center in 1953 and has since expanded to fifteen travel centers. The Company's
travel centers are strategically located along well-traveled interstate highways
in Arizona and New Mexico where there are generally few gas stations,
convenience stores or restaurants. Most of the Company's travel centers offer
food and beverages, ranging from drinks and snack foods at some locations to
full-service restaurants at others. The Company's food service operations at
seven of the Company's fifteen travel centers operate under the Dairy
Queen/Brazier or Dairy Queen trade names. Four of the Company's travel centers
operate under the Stuckey's brand name. The Stuckey's specialty stores are
family oriented shops that feature the Stuckey's line of pecan confectioneries.
Stuckey's is well known among travelers as a place to shop for souvenirs, gifts,
and toys and travel games for children.
The Company's travel centers offer brand name gasoline such as CITGO,
EXXON, Chevron, and Diamond Shamrock. The Company is an authorized distributor
of CITGO and EXXON petroleum products. Two of the Company's locations are EXXON
stations and eight of its locations are CITGO "superpumper" stations. The
Company intends to continue marketing CITGO and EXXON products to other
retailers in Arizona and New Mexico.
The Company's billboard advertising for its travel centers emphasizes the
wide range of unique Southwestern souvenirs and gifts available at the travel
centers, as well as the availability of gasoline and food. Merchandise at each
of the Company's stores is offered at prices intended to suit the budgets and
tastes of a diverse traveling population. The merchandise ranges from
inexpensive Southwestern gifts and souvenirs to unique hand-crafted jewelry,
rugs, pottery, kachina dolls and other gifts crafted especially for the Company
by several Native American tribes.
Outdoor Advertising Business Strategy. The Company operates over 4,000
revenue-generating advertising display faces, primarily in Arizona, New Mexico
and Texas and, to a lesser extent, in Colorado, Oklahoma and Arkansas.
Approximately 68% of these display faces are traditional bulletin style and 32%
are assorted poster styles. The Company's bulletin style displays are located
primarily on interstate highways, while the smaller poster sizes are typically
used in local settings by advertisers who prefer to change the display message
regularly. The Company's outdoor advertising displays are strategically located
in rural and smaller metropolitan areas throughout the Southwest, where the
dispersion of population, outdoor lifestyles and leading tourist destinations
have created a strong dependence on highway travel.
The Company began its outdoor advertising operations in 1980 and has grown
into a regional leader in small to medium-sized outdoor advertising markets. The
Company offers its outdoor advertising customers a complete full-service source
for graphic design and painting for the outdoor billboards operated by the
Company. As a result, the Company is able to attract advertisers that have
historically relied on other media in marketing their products and services. The
Company believes it is one of the largest outdoor advertising companies in rural
interstate markets in the Southwest.
Growth Strategy
Travel Centers. The Company is committed to expanding its travel center
operations through internal development. The Company believes that the
co-branding concept implemented at its travel centers has resulted in increased
revenues, and the Company intends to pursue opportunities to acquire rights to
additional brand name products. The Company intends to continue to offer high
quality brand name food and products in a clean, safe environment designed to
appeal to travelers on interstate highways. The Company also intends to continue
to increase sales at existing locations through ongoing renovation and upgrading
of facilities, including gasoline sales by focusing on the marketing of CITGO
and EXXON gasoline brands through the Company's travel center outlets.
4
<PAGE>
Gasoline Wholesaling. The Company is an authorized CITGO and EXXON
distributor. CITGO and EXXON are among the top five petroleum producers in the
United States. The CITGO distribution agreement allows the Company to streamline
its gasoline supply arrangements and take advantage of volume-driven pricing by
consolidating purchases from CITGO. The CITGO distribution agreement had an
initial three-year term that expired September 30, 1998, and automatically
renewed for a three-year term through 2001. The EXXON distribution agreement has
a three-year term that expires July 14, 2001. CITGO's and EXXON's ability to
terminate or refuse to renew the agreement with the Company is subject to the
occurrence of certain events set forth in the Petroleum Marketing Practices Act,
which include bankruptcy, or breach of the agreement by the Company, or
termination by CITGO or EXXON of its petroleum marketing activities in the
Company's distribution area. The terms of the distribution agreements require
the Company to purchase certain minimum quantities of gasoline during the term
of the agreement, which includes gasoline purchased for sale at the Company's
travel centers. Since the effective date of the CITGO distribution agreement,
the Company's purchases of CITGO products have substantially exceeded the
required minimum quantities. Since the effective date of the EXXON agreement,
the Company has met the minimum quantities.
The Company intends to continue to grow gasoline sales by focusing on the
marketing of the CITGO and EXXON lines of petroleum products as a wholesale
provider to other gasoline retailers in the Southwest.
Outdoor Advertising. The Company plans to increase its outdoor advertising
operations through internal development as well as acquisitions. The Company
increased its inventory of billboard faces by 300 in fiscal 2000 and 951 in
fiscal year 1999. The Company anticipates that it will be adding approximately
200 new billboard faces per year to its operations through internal development,
subject to the availability of necessary working capital and the Company's
ability to comply with applicable regulations.
In addition to internal development, the Company plans to continue to focus
on the expansion of its outdoor advertising operations through aggressive
acquisitions at prices that reflect prudent cash flow multiples. The Company
routinely engages in discussions with third parties regarding potential
acquisitions. Any such acquisitions 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, including the receipt of
third party consents.
Consistent with its past practices, the Company intends to pursue expansion
into markets that are not included in the fifty largest designated market areas.
The Company believes that expansion along interstate highways and in smaller
metropolitan areas permits the Company to operate in areas where competition for
site acquisitions is less intense, purchase prices are more favorable and
government regulations are generally less onerous.
The Company's advertising customers consist largely of local and regional
advertisers, resulting in a diverse client base and limiting reliance on
national advertising clients. The following table sets forth the categories of
industries from which the Company derived its outdoor advertising net revenues
for the fiscal year ended January 31, 2000, and the respective percentages of
such net revenues. The top three business categories accounted for approximately
65% of the Company's total outdoor advertising net revenues. No single
advertiser accounted for more than 3.0% of the Company's total outdoor
advertising net revenues in such period.
5
<PAGE>
Percentage of Net
Advertising Revenues by Category
Hotels and Motels 27%
Restaurants 21
Travel & Entertainment 17
Retail/Consumer Products 11
Government 8
Services 5
Automotive 3
Alcohol *
Other 8
----
TOTAL 100%
====
*Less than 1%
The Company plans to expand its outdoor advertising operations primarily
by:
- Continuing to develop the Company's presence along interstate
highways in its existing markets throughout the Southwest.
- Increasing revenues from existing billboards by implementing
programs that maximize advertising rates and occupancy levels.
- Expanding its operations within current markets through new
billboard construction.
- Making strategic acquisitions of existing outdoor advertising assets
of small to medium-sized outdoor advertising operations in the less
populated areas of the United States.
Business Operations
Travel Center Operations. The Company sells food, gasoline and merchandise
through its fifteen travel centers located along two interstate highways (I-10
and I-40) in Arizona and New Mexico. These are key highways for travel to
numerous tourist and recreational destinations as well as arteries for regional
traffic among major Southwestern cities. All of the Company's travel centers are
open every day of the year except Christmas.
Each of the Company's travel centers maintains a distinct, theme-oriented
atmosphere. In addition to the Southwestern merchandise it purchases from Native
American tribes, the Company also imports some 650 items from Mexico, including
handmade blankets, earthen pottery and wood items. Additional goods, novelties
and imprinted merchandise are imported from several Pacific Rim countries. The
Company has long-standing relationships with many of its vendors and suppliers.
The Company sells food under the Dairy Queen and Dairy Queen/Brazier brand
names and sells snacks and souvenir merchandise under the Stuckey's brand name.
The terms of its agreements with Stuckey's and Dairy Queen obligate the Company
to pay these franchisers a franchise royalty and in some instances a promotion
fee, each equal to a percentage of gross sales revenues from products sold, as
well as comply with certain provisions governing the operation of the franchised
stores.
The Company continuously monitors and upgrades its travel center facilities
to maintain a high level of comfort, quality and appearance. Improvements
include new awnings and facings, new signage and enhanced lighting, furnishings
and parking lot improvements.
6
<PAGE>
Outdoor Advertising Operations. The outdoor advertising operations of the
Company include leasing of sites, construction of display structures, sales of
advertising space and production and design of display faces. The Company's
leasing department responsible for coordinating land leases with owners for the
right to construct and maintain billboard structures on the landowner's
property. The leasing department also monitors the Company's compliance with all
government regulations regarding lease rights, construction and sales of outdoor
structures. The Company's construction department erects billboard structures on
sites acquired by the Company without a pre-existing structure, with the goal of
maximizing the amount of leaseable area on a particular site.
The Company's sales department, through its account representatives, sells
advertising space to the Company's clients from its inventory of approximately
4,000 display faces. The account representatives work with the Company's
clients, their advertising agencies and the Company's production department to
provide clients with high quality design and artwork for their billboards.
Although the Company's consistent expansion of its outdoor advertising inventory
results in an advertising occupancy rate of less than 100%, the Company
generally has approximately 70% of its inventory under advertising agreements at
any time.
The Company's production staff performs a full range of activities required
to create and install outdoor advertising. Production work includes creating the
advertising copy design and layout, painting the design or coordinating its
printing, and installing the design displays. Billboards have historically been
composed of several painted plywood sheets, but recently vinyl facing has
replaced plywood in the majority of advertising produced. The increased use of
vinyl and pre-printed advertising copy furnished to the Company by the
advertiser or its agency results in less labor-intensive production work. The
Company believes that this trend may reduce future operating expenses associated
with the Company's production activities.
Competition
Travel Services Competition. The Company faces competition at its travel
centers from quick-service and full-service restaurants, convenience stores,
gift shops and, to some extent, from truck stops located along interstate
highways in Arizona and New Mexico. Some of the travel centers that the Company
competes with are operated by large petroleum companies, while many others are
small independently owned operations that do not offer brand name food service
or gasoline. Giant Industries, Inc., a refiner and marketer of petroleum
products, operates two travel centers, one in Arizona and one in New Mexico,
which are high volume diesel fueling and large truck repair facilities that also
include small shopping malls, full-service restaurants, convenience stores, fast
food restaurants and gift shops. The Company's principal competition from truck
stops includes Love's Country Stores, Inc., Petro Corporation and Flying J. Many
convenience stores are operated by large, national chains that are substantially
larger, better capitalized and have greater name recognition and access to
greater financial and other resources than the Company. Although the Company
faces substantial competition, the Company believes that few of its competitors
offer the same breadth of products and services dedicated to the traveling
public.
Outdoor Advertising Competition. The Company competes in all of its markets
with other outdoor advertisers as well as other media, including broadcast and
cable television, radio, newspaper and direct mail marketers. The Company has
little competition in its rural markets from other outdoor advertisers, but
encounters direct competition in its smaller metropolitan markets from larger
outdoor media companies, including CBS/Infinity, Lamar Advertising Company and
Donrey Outdoor Advertising, each of which have large national networks and
greater resources than the Company. The Company believes that by concentrating
on interstate and tourist oriented advertising in markets other than the largest
fifty designated market areas it will be able to compete more effectively. As
the Company expands geographically, however, it may encounter increased
competition from other outdoor advertising firms, some of whom are substantially
larger and have greater name recognition and access to substantially greater
resources than the Company.
7
<PAGE>
Employees
As of January 31, 2000, the Company had approximately 196 full-time and 104
part-time employees; 48 were located in Arizona, 237 were located in New Mexico
and 15 were located in Texas. None of the Company's employees are covered by a
collective bargaining agreement and the Company believes that relations with its
employees are good.
Regulation
Travel Centers. Each of the Company's food service operations is subject to
licensing and regulation by a number of governmental authorities relating to
health, safety, cleanliness and food handling. The Company's food service
operations are also subject to federal and state laws governing such matters as
working conditions, overtime, tip credits and minimum wages. The Company
believes that operations at its fifteen travel centers comply in all material
respects with applicable licensing and regulatory requirements; however, future
changes in existing regulations or the adoption of additional regulations could
result in material increases in the Company's operating costs.
Historically, the Company has incurred ongoing costs to comply with
federal, state and local environmental laws and regulations, primarily relating
to underground storage tanks. These costs include assessment, compliance, and
remediation costs, as well as certain ongoing capital expenditures relating to
the Company's gasoline dispensing operations.
The Company's travel center operations are also subject to extensive laws
and regulations governing the sale of alcohol and tobacco, and fireworks in its
New Mexico travel centers. Such regulations include certain mandatory licensing
procedures and ongoing compliance measures, as well as special sales tax
measures. These regulations are subject to change and future modifications may
result in decreased revenues or profit margins at the Company's travel centers
as a result of such changes.
Outdoor Advertising. The outdoor advertising industry is subject to
governmental regulation at the federal, state and local levels. Federal law,
principally the Highway Beautification Act of 1965, as amended (the
"Beautification Act"), encourages states, by the threat of withholding federal
appropriations for the construction and improvement of highways within such
states, to implement legislation to regulate billboards located within 660 feet
of, or visible from, interstate and primary highways except in commercial or
industrial areas. All of the states have implemented regulations at least as
restrictive as the Beautification Act, including some prohibition on the
construction of new billboards adjacent to federally aided highways. The
Beautification Act, and the various state statutes implementing it, requires the
payment of just compensation whenever governmental authorities require legally
erected and maintained billboards to be removed from federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size, and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain. Thus far, the Company
has been able to obtain satisfactory compensation for any of its structures
removed at the direction of governmental authorities, although there is no
assurance that it will be able to continue to do so in the future.
8
<PAGE>
Amortization of billboards has also been adopted in varying forms in
certain jurisdictions. Amortization permits the billboard owner to operate its
billboard as a non-conforming use for a specified period of time until it has
recouped its investment, after which it must remove or otherwise conform its
billboard to the applicable regulations without any compensation. Amortization
and other regulations requiring the removal of billboards without compensation
have been subject to vigorous litigation in state and federal courts and cases
have reached differing conclusions as to the constitutionality of these
regulations. To date, amortization and other regulations in the Company's
markets have not materially adversely affected its business or results of
operations.
Trademarks
The Company operates its travel centers under a number of its own
trademarks, as well as certain trademarks owned by third parties and licensed to
the Company, such as the Dairy Queen, Dairy Queen/Brazier, Stuckey's, CITGO and
EXXON trademarks. The Company believes that its trademark rights will not
materially limit competition with its travel centers. The Company also believes
that none of the trademarks it owns are material to the Company's overall
business; however, the loss of one or more of the Company's licensed trademarks
could have an adverse effect on the Company.
ITEM 2. PROPERTIES
As of January 31, 2000, the Company operated fifteen travel centers. The
Company owns the real estate and improvements where eight of its travel centers
are located. The properties at which three of the travel centers owned by the
Company are operated are subject to mortgages. Seven of the Company's existing
travel are located on real estate that the Company leases from various third
parties. These leases have terms ranging from five to forty years, assuming
exercise by the Company of all renewal options available under certain leases.
As of January 31, 2000, the Company operated over 4,000 revenue generating
outdoor display faces throughout the Southwest. The Company typically owns the
billboard and related assets and enters into operating leases with the owners of
the real property upon which the billboards are located. These leases typically
have a term of 5 to 10 years and provide for minimum annual rents. As of January
31, 2000, the Company also owned and operated 55 and 295 non-revenue generating
display faces in Arizona and New Mexico, respectively, which are exclusively
dedicated to the advertisement of its fifteen travel centers. Listed below are
the locations of the Company's inventory of revenue generating display faces as
of January 31, 2000.
<TABLE>
<S>
<C> <C> <C> <C> <C>
Billboards 30-sheet Posters 8-sheet Posters Total
---------- ---------------- --------------- -----
Arizona 133 -- -- 133
Arkansas 6 -- -- 6
Colorado 12 -- -- 12
New Mexico 1,886 203 720 2,809
Oklahoma 4 -- -- 4
Texas 682 345 27 1,054
----- --- --- -----
TOTAL 2,723 548 747 4,018
===== === === =====
</TABLE>
The Company's principal executive offices occupy approximately 20,000
square feet of space owned by the Company in Albuquerque, New Mexico. The
Company's principal office space is subject to a mortgage, which matures on
November 1, 2005, and the principal balance accrues interest at the bank's prime
rate (8.5% at January 31, 2000). The Company owns outdoor advertising production
plant and warehouse facilities consisting of approximately 10,000 square feet in
Albuquerque, New Mexico and a central warehouse and distribution facility
occupying 27,000 square feet in Las Cruces, New Mexico. The Las Cruces property
is subject to a mortgage that matures on December 1, 2014 and accrues interest
on the unpaid principal balance at a rate of 8.65% per annum. The Company
believes that its headquarters and warehouse facilities are adequate for its
operations for the foreseeable future.
9
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company from time to time is involved in litigation in the ordinary
course of business, including disputes involving advertising contracts, site
leases, employment claims and construction matters. The Company is also involved
in routine administrative and judicial proceedings regarding billboard permits,
fees and compensation for condemnations. The Company is not a party to any
lawsuit or proceeding which, in the opinion of management, is likely to have a
material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders in the
fourth quarter of fiscal 2000.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the American Stock Exchange under
the symbol "BWN." On April 18, 2000, there were approximately 449 holders of
record of the Company's Common Stock. The following table sets forth the high
and low sales prices for the Company's Common Stock for each quarter during the
past two fiscal years.
<TABLE>
<S>
<C> <C> <C>
Fiscal Year Ended
January 31, 1999 High Low
- ----------------- ---- ---
Fiscal Quarter Ended 4/30 $10.8750 $ 4.7500
Fiscal Quarter Ended 7/31 $ 9.9375 $ 7.5000
Fiscal Quarter Ended 10/31 $ 7.7500 $ 3.5000
Fiscal Quarter Ended 1/31 $ 6.6250 $ 4.7500
Fiscal Year Ended
January 31, 2000 High Low
- ----------------- ---- ---
Fiscal Quarter Ended 4/30 $ 7.0000 $ 5.7500
Fiscal Quarter Ended 7/31 $ 7.2500 $ 5.3750
Fiscal Quarter Ended 10/31 $ 5.7500 $ 4.5000
Fiscal Quarter Ended 1/31 $ 5.8750 $ 3.4375
</TABLE>
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below are derived from
the audited consolidated financial statements of the Company for the five years
ended January 31, 2000. The data presented below should be read in conjunction
with the audited consolidated financial statements, related notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included herein.
<TABLE>
<S>
<C> <C> <C> <C> <C> <C>
YEARS ENDED JANUARY 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------
STATEMENT OF INCOME DATA:
Net sales $ 34,617,835 $ 30,294,751 $ 27,159,455 $ 24,847,931 $ 22,944,684
Cost of goods sold (22,350,258) (18,848,146) (17,531,203) (16,340,375) (15,002,736)
------------ ------------ ------------ ------------ ------------
Gross profit 12,267,577 11,446,605 9,628,252 8,507,556 7,941,948
General and administrative expenses (8,069,072) (7,479,568) (6,567,940) (6,115,350) (6,407,736)
Depreciation and amortization (2,525,571) (1,895,035) (1,149,694) (779,571) (856,608)
Other operating income 30,661 7,345 89,732 379,228 489,653
----------- ------------ ------------- ----------- ------------
Income from operations 1,703,595 2,079,347 2,000,350 1,991,863 1,167,257
Interest expense (1,934,395) (1,108,263) (722,117) (677,746) (611,590)
Other income (loss), net 813,388 139,026 469,155 194,564 80,769
----------- ------------ ------------- ----------- ------------
Income before income taxes 582,588 1,110,110 1,747,388 1,508,681 636,436
Income taxes 244,500 437,500 678,200 603,472 252,817
----------- ------------ ------------ ------------ ------------
$ 338,088 $ 672,610 $ 1,069,188 $ 905,209 $ 383,619
============ ============ ============ ============ ============
Basic and diluted earnings per share $ 0.08 $ 0.15 $ 0.24 $ 0.26 $ 0.11
=========== ============ ============ =========== ============
BALANCE SHEET DATA (at end of period)
Property & equipment $ 30,556,073 $ 26,424,741 $ 16,197,471 $ 9,970,546 $ 8,910,470
=========== =========== =========== =========== ===========
Total assets $ 40,780,870 $ 37,489,356 $ 25,859,316 $ 21,842,717 $ 13,597,846
=========== =========== =========== =========== ===========
Long-term debt, including current
installments $ 22,388,229 $ 20,252,124 $ 8,902,915 $ 6,694,592 $ 6,577,432
=========== =========== =========== =========== ===========
</TABLE>
11
<PAGE>
ITEM 7. 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 three fiscal years ended
January 31, 2000. This discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes included
elsewhere in this Form 10-K. References to specific years refer to the Company's
fiscal year ending January 31 of such year.
The Company operates in two industry segments, outdoor advertising and
travel centers. 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 management does not allocate 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 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 judgement 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.
Rest of page intentionally left blank
12
<PAGE>
The following table presents certain income and expense items derived from
the Consolidated Statements of Income for the years ended January 31:
<TABLE>
<S>
<C> <C> <C>
(in thousands)
---------------------------------------------------
2000 1999 1998
---------------------------------------------------
Travel Centers
Gross sales $ 27,243 $ 23,803 $ 22,584
Discounts on sales 387 283 280
----------- ----------- -----------
Net sales 26,856 23,520 22,304
Cost of goods 18,660 15,802 15,042
----------- ----------- -----------
8,196 7,718 7,262
General & administrative expenses 6,402 5,937 5,307
Depreciation and amortization 582 611 369
----------- ----------- -----------
Operating income 1,212 1,170 1,586
Outdoor Advertising
Gross sales 7,762 6,775 4,856
Direct operating expenses 3,690 3,046 2,489
----------- ----------- -----------
4,072 3,729 2,367
General & administrative expenses 1,102 1,056 781
Depreciation and amortization 1,807 1,178 660
----------- ----------- -----------
Operating income 1,163 1,495 926
Corporate and Other
General & administrative expenses (565) (487) (480)
Depreciation and amortization (137) (106) (121)
Interest expense (1,934) (1,108) (722)
Other income, net 844 146 558
----------- ----------- -----------
Income before income taxes 583 1,110 1,747
Income taxes
245 437 678
---------- ----------- ----------
Net income $ 338 $ 673 $ 1,069
=========== =========== ==========
EBITDA(1) - Travel Centers $ 1,794 $ 1,781 $ 1,955
========== =========== ==========
EBITDA - Outdoor Advertising $ 2,970 $ 2,673 $ 1,586
========== =========== ==========
EBITDA - Total Company $ 4,199 $ 3,967 $ 3,061
========== =========== ==========
EBITDA margin - Travel Centers 6.6% 7.5% 8.7%
========== =========== ==========
EBITDA margin - Outdoor Advertising 38.3% 39.5% 32.7%
========== =========== ==========
EBITDA margin - Total Company 12.0% 13.0% 11.2%
========== =========== ==========
</TABLE>
(1) Earnings before interest, taxes, depreciation and amortization
(EBITDA) is defined as operating income before depreciation and
amortization. It represents a measure which management believes
is customarily used to evaluate the financial performance of
companies in the media industry. However, EBITDA is not a measure
of financial performance under generally accepted accounting
principals and should not be considered an alternative to
operating income or net income as an indicator of the Company's
operating performance or to net cash provided by operating
activities as a measure of its liquidity.
13
<PAGE>
Fiscal Year Ended January 31, 2000 (Fiscal 2000) Compared to Fiscal Year Ended
January 31, 1999 (Fiscal 1999)
Outdoor Advertising. Gross sales from the Company's outdoor advertising
increased 14.6% to $7.762 million for fiscal 2000, from $6.775 million in fiscal
1999. The increase was primarily attributable to the continual assimilation of
the Company's acquisitions, internal development and overall rate increases.
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 and repairs and maintenance of advertising displays. Selling
expenses consist primarily of salaries and commissions for salespersons and
travel related to sales. Direct operating expenses increased 21.1% to $3.690
million for fiscal 2000, from $3.046 million for fiscal 1999. The increase is
principally due to increases in sign rent, sign repairs, cost of paper
production, permits and property taxes, and utilities, most of which are due to
the assimilation of direct operating costs associated with acquisitions. Direct
operating expenses as a percentage of gross revenues for fiscal 2000 was 47.5%,
compared to 45.0% for fiscal 1999.
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 expenses. General and
administrative expenses increased 4.4% slightly to $1.102 million for fiscal
2000, from $1.056 for fiscal 1999.
Depreciation and amortization expenses increased 53.4% to $1.807 million
for fiscal 2000, from $1.178 million for fiscal 1999. The increase was primarily
attributable to scheduled depreciation of advertising display structures
primarily associated with acquisitions as well as the amortization of goodwill
and non-compete covenants.
The above factors contributed to the decrease in outdoor advertising
operating income of 22.2% to $1.163 million for fiscal 2000, as compared to
$1.495 million for fiscal 1999.
EBITDA for outdoor advertising increased 11.1% to $2.970 million for fiscal
2000 from $2.673 million for fiscal 1999. The EBITDA margin for outdoor
advertising decreased slightly to 38.3% for fiscal 2000, as compared to 39.5%
for fiscal 1999.
Travel Centers. Gross sales at the Company's travel centers increased 14.5%
to $27.243 million for fiscal 2000 from $23.803 million for fiscal 1999. This
increase is primarily attributable to the new travel center completed in
February 1999 located approximately 20 miles west of Albuquerque on Interstate
40. The new travel center contributed gross sales of $1.790 million for fiscal
year 2000. Merchandise sales increased 21.6% to $9.783 million for fiscal year
2000 from $8.042 million for fiscal year 1999, with the new travel center
contributing $631,000 of merchandise sales. Gasoline sales increased 11.2% to
$13.035 million for fiscal year 2000 from $11.720 million for fiscal year 1999
with the new travel center contributing $1.159 million of gasoline sales.
Restaurant sales decreased 2.1% to $2.753 million for fiscal 2000 from $2.812
million for fiscal 1999. Wholesale gasoline sales increased 36.0% to $1.672
million for fiscal year 2000 as compared to $1.229 million for fiscal year 1999.
The increase is attributable to an additional wholesale location.
Cost of goods sold for the travel centers increased 18.1% to $18.660
million for fiscal 2000 from $15.802 million for fiscal 1999. This increase is
primarily a result of the new travel center which contributed $1.395 million to
cost of goods, of which $353,000 was merchandise and $1.042 million was
gasoline. The new travel center accounted for approximately one-half of the cost
of goods increase for fiscal year 2000. Cost of goods sold as a percentage of
gross revenues for fiscal year 2000 was 68.5% compared to 66.4% for fiscal year
1999.
14
<PAGE>
Gross profit for the travel centers increased 6.2% to $8.196 million for
fiscal year 2000 from $7.718 million for the fiscal year 1999. Lower margins on
convenience store items as well as lower gasoline margins and a decrease in
gasoline sales volume measured in gallons as a result of extraordinary high
gasoline prices, negatively impacted gross profit.
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 7.8% to $6.402 million for fiscal year 2000, from $5.937 for fiscal
year 1999. The increase is primarily due general and administrative expenses
attributable to the new travel center and, to a lesser extent, increases in
travel center rents and sign repairs.
Depreciation and amortization expenses decreased by 4.7% to $582,000 for
fiscal year 2000 from $611,000 for fiscal year 1999.
The above factors contributed to an increase in travel centers operating
income of 3.6% to $1.212 million for fiscal year 2000, as compared to $1.170
million for fiscal year 1999.
EBITDA for travel centers increased to $1.794 million for fiscal year 2000,
as compared to $1.781 million for fiscal year 1999. The EBITDA margin for travel
centers decreased to 6.6% for fiscal 2000, as compared to 7.5% for fiscal 1999.
Corporate and Other. General and administrative expenses for corporate and
other operations of the Company consist primarily of executive and
administrative compensation and benefits, investor relations and accounting and
legal fees. General and administrative expenses increased 16.0% to $565,000 for
fiscal 2000, compared to $487,000 for fiscal 1999.
For fiscal 2000, the Company's President and its Chief Operating Officer
increased their annual base salaries to $195,000 and $145,000 respectively, as
provided for in their respective employment agreements effective February 1,
1997. Each of the agreements has a perpetual five-year term, such that on any
given date, each agreement has a five-year remaining term.
Depreciation and amortization expenses for the Company's corporate and
other operations consist of depreciation associated with the corporate
headquarters and furniture and fixtures related thereto. Depreciation and
amortization increased 29.2% to $137,000 for fiscal 2000, compared to $106,000
for fiscal 1999.
Interest expense increased 74.5% to $1.934 million for fiscal 2000, from
$1.108 million for fiscal 1999. The increase is primarily attributable to the
increase in debt associated with the Company's acquisitions and the new travel
center.
Non-operating income, net, includes gains and/or losses from the sale of
assets, interest income, and a casualty gain from insurance coverage.
Non-operating income, net, increased 478.1% (9.6% excluding the one-time gain
from insurance proceeds of $712,000) to $844,000 in fiscal 2000 as compared to
$146,000 in fiscal 1999.
Income before income taxes decreased 47.5% to $583,000 for fiscal 2000,
from $1.110 million for fiscal 1999. As a percentage of gross revenues, income
before income taxes decreased to 1.7% for fiscal year 2000, from 3.6% for fiscal
1999 primarily as a result of increased depreciation, amortization and interest
expense partially offset by a gain from insurance proceeds.
Income taxes were $245,000 for fiscal 2000 compared to $437,000 for fiscal
year 1999, as a result of lower pre-tax income. The effective tax rate for
fiscal year 2000 was 42.0% as compared to 39.4% for fiscal year 1999.
15
<PAGE>
The foregoing factors contributed to the Company's decrease in net income
for fiscal 2000 to $338,000, compared to $673,000 for fiscal 1999.
Increases in depreciation and amortization as well as interest expense have
been substantial during fiscal 2000. Management expects depreciation and
amortization, and interest expense to continue to be high which may lead to
future net losses.
Fiscal Year Ended January 31, 1999 (Fiscal 1999) Compared to Fiscal Year Ended
January 31, 1998 (Fiscal 1998)
Outdoor Advertising. Gross sales from the Company's outdoor advertising
increased 39.5% to $6.775 million for fiscal 1999, from $4.856 million in fiscal
1998. The increase was primarily attributable to certain acquired assets,
including the outdoor advertising assets of Big Tex Outdoor Advertising,
(Brownwood), Norwood Outdoor Advertising, Edgar Outdoor Advertising, J & J
Outdoor Advertising, T & C Outdoor Advertising, Faris Outdoor Advertising, and
Big Tex Outdoor Advertising (Granbury), as well as overall rate increases.
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, and repairs and maintenance of advertising displays. Selling
expenses consist primarily of salaries and commissions for salespersons and
travel related to sales. Direct operating expenses increased 22.4% to $3.046
million for fiscal year 1999, from $2.489 million for fiscal 1998, principally
due to the addition of sales and production personnel, sign rent and repairs and
maintenance of advertising displays from acquisitions. Direct operating expenses
as a percentage of gross revenue for fiscal year 1999 was 45.0% compared to
51.3% for fiscal year 1998.
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 expenses. General and
administrative expenses increased 35.2% to $1.056 million for the fiscal year
ended January 31, 1999 from $781,000 for fiscal 1998. The increase was primarily
attributable to increases in administrative personnel and insurance due to the
acquisitions.
Depreciation and amortization expenses increased 78.5% to $1.178 million
for fiscal 1999, from $660,000 for fiscal 1998. The increase was primarily
attributable to scheduled depreciation of advertising display structures
primarily associated with acquisitions of outdoor advertising assets throughout
the current year as well as the amortization of goodwill and non-compete
covenants.
The above factors contributed to the increase in outdoor advertising
operating income of 61.4% to $1.495 million for fiscal 1999 as compared to
$926,000 for fiscal year 1998.
EBITDA for outdoor advertising increased 68.5% to $2.673 million for fiscal
1999, from $1.586 million for fiscal 1998. The EBITDA margin for outdoor
advertising increased to 39.5% for fiscal 1999, compared to 32.7% for fiscal
1998.
16
<PAGE>
Travel Centers. Gross sales at the Company's travel centers increased 5.4%
to $23.803 million for fiscal 1999, from $22.584 million for fiscal 1998.
Merchandise sales increased 14.1% to $8.042 million for fiscal 1999, from $7.050
million for fiscal 1998. Gasoline sales increased 0.7% to $11.720 million for
fiscal year 1999, from $11.641 million for fiscal year 1998. Restaurant sales
decreased 5.7% to $2.812 million for fiscal 1999, from $2.981 million for fiscal
1998. Wholesale gasoline sales increased 33.9% to $1.229 million for fiscal
1999, as compared to $917,000 for fiscal 1998. Delays in opening the new travel
center until February 1999 negatively impacted revenues.
Cost of goods sold for the travel centers increased 5.1% to $15.802 million
for fiscal 1999, from $15.042 million for fiscal 1998. As a percentage of gross
sales, cost of goods sold decreased slightly to 66.4% from 66.6% for the
respective fiscal periods.
Gross profit for the travel centers increased 6.3% to $7.718 million for
fiscal 1999, from $7.262 million for fiscal 1998. During the fourth quarter of
fiscal year 1999, travel center revenues were negatively impacted by the lowest
gasoline prices in a decade and a corresponding reduction in gross profit.
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 11.8% to $5.937 million for fiscal 1999, from $5.307 for fiscal 1998.
Increases in general and administration are primarily due to additional middle
management for fiscal year 1999, compared to fiscal year 1998.
Depreciation and amortization expenses increased by 65.6% to $611,000 for
fiscal 1999, from $369,000 for fiscal 1998. The increase is primarily
attributable to capital expenditures for gasoline tanks and equipment for
federal mandates as well as image upgrades for branded fuel.
The above factors contributed to a decrease in travel centers operating
income of 26.2% to $1.170 million for fiscal 1999, compared to $1.586 million
for fiscal year 1998.
EBITDA for travel centers decreased by 8.9% to $1.781 million for fiscal
1999, compared to $1.955 million for fiscal 1998. The EBITDA margin for travel
centers decreased to 7.5% for fiscal 1999, compared to 8.7% for fiscal 1998.
Corporate and Other. General and administrative expenses for corporate and
other operations of the Company consist primarily of executive and
administrative compensation and benefits, investor relations and accounting and
legal fees. General and administrative expenses increased 1.5% to $487,000 for
fiscal 1999, from $480,000 for fiscal 1998.
17
<PAGE>
For fiscal year 1999, the Company's President and its Chief Operating
Officer elected to accept annual base salaries of $145,000 and $90,000,
respectively, which are less than the $195,000 and $145,000 salaries provided
for in their respective employment agreements effective February 1, 1997. Each
of the agreements has a perpetual five-year term, such that on any given date,
each agreement has a five-year remaining term.
Depreciation and amortization expenses for the Company's corporate and
other operations consist of depreciation associated with the corporate
headquarters and furniture and fixtures related thereto. Depreciation and
amortization decreased 12.4% to $106,000 for fiscal 1999, compared to $121,000
for fiscal 1998.
Interest expense increased 53.5% to $1.108 million for fiscal year 1999
from $722,000 for fiscal 1998. The increase is a result of borrowings to fund
outdoor advertising expansion and the continued conversion of travel centers to
CITGO and EXXON branding.
Non-operating income, net decreased to $146,000 in fiscal 1999 from
$558,000 or 73.8%. This decrease was due to one-time gains on the sale of assets
and a subsidiary in fiscal 1998 not present in 1999.
Income before income taxes decreased 36.5% to $1.110 million for fiscal
year 1999, from $1.747 million for fiscal 1998. As a percentage of gross
revenues, income before income taxes decreased to 3.6% for the fiscal year ended
1999 from 6.4% for the same fiscal period 1998 primarily as a result of
increased depreciation and interest expense partially offset by a decrease in
other income.
Income taxes were $437,000 for fiscal 1999, compared to $678,000 for fiscal
1998, as a result of lower pre-tax income. The effective tax rate for fiscal
1999 was 39.4% as compared to 38.8% for fiscal 1998.
The foregoing factors contributed to the Company's decrease in net income
for fiscal 1999 to $673,00, compared to $1.069 million for fiscal 1998.
Liquidity and Capital Resources
At January 31, 2000, the Company had working capital of $4.166 million
compared to working capital of $5.495 million at January 31, 1999. At January
31, 2000, the Company had a current ratio of 2.11:1 compared to a current ratio
of 2.74:1 at January 31, 1999. The decrease in working capital and the current
ratio are primarily attributable to decreases in cash of $639,000, accounts
receivable of $234,000 and inventory of $155,000 and an increase in short-term
borrowings and current installments of long-term debt of $497,000 partially
offset by an increase in income taxes receivable of $319,000. The net cash
provided by operating activities was $2.718 million for fiscal 2000, compared to
$930,000 for fiscal 1999. During fiscal 2000, there were increases in
depreciation and amortization of $631,000, deferred income taxes of $221,000,
and changes in other operating assets and liabilities of $92,000 net. The
increase in depreciation and amortization in fiscal 2000 was primarily due to
additional display structures associated with acquisitions and structures built,
and buildings, machinery and equipment associated with renovations at several
travel centers and corporate headquarters. Deferred income taxes increased
primarily as a result of book-tax timing differences.
18
<PAGE>
Net cash used in investing activities decreased to $5.724 million in fiscal
2000 from $6.640 million in fiscal 1999. The decrease is due primarily to asset
acquisitions totaling $1.516 million in fiscal 2000, compared to $2.312 million
in fiscal 1999. There were also purchases of property and equipment of $5.391
million in fiscal 2000, compared to $4.366 million in fiscal 1999. Increases in
property and equipment were offset by proceeds from the sale of certain assets
of $192,000 as well as insurance proceeds of $1.087 million in fiscal 2000,
compared to proceeds of $21,000 in fiscal 1999.
Net cash provided by financing activities decreased to $2.368 million in
fiscal 2000 from $3.855 million in fiscal 1999. The decrease is due primarily to
an decrease in net borrowings of $2.430 million in fiscal 2000 compared to
fiscal 1999, as well as payments for debt issuance costs totaling $942,000 in
fiscal 1999. New debt in fiscal 2000 is a result of continued expansion of
outdoor advertising operations through development and acquisition as well as
continued renovations and upgrades at the Company's travel centers.
As of January 31, 2000, the Company was indebted to various banks and
individuals in an aggregate principal amount of approximately $22.630 million
under various loans and promissory notes. Land, buildings, equipment, billboards
and inventories of the Company secure many of the loans and promissory notes.
The loans and promissory notes mature at dates from August 2001 to December 2014
and accrue interest at rates ranging from 7.9 % to 9.18% per annum.
The Company made capital expenditures of approximately $5.391 million and
$4.366 million during the fiscal years ended 2000 and 1999, respectively. For
fiscal 2000, these expenditures were made for upgrades to existing travel
centers and for the construction and acquisition of additional billboard
structures. For fiscal 1999, these expenditures were primarily for upgrades to
the Company's travel centers, including the new warehouse facility, and for the
construction and acquisition of additional billboard structures. During the next
twelve months, the Company anticipates incurring capital expenditures of
approximately $300,000 related to travel center operations for upgrades and
improvements to existing facilities. With regard to outdoor advertising
operations, the Company has plans to build approximately 200 new billboard faces
during the fiscal year ending January 31, 2001, at an estimated cost of
approximately $1.500 million.
As of January 31, 2000, approximately $21.777 million of the Company's
total indebtedness accrued interest at variable rates tied to the respective
bank's prime lending rate. As such, the Company is subject to fluctuations in
interest rates that could have a negative impact on the net income of the
Company. In addition, it is likely that future indebtedness incurred by the
Company will be at variable rates which could impact the Company's ability to
consummate significant acquisitions in the future.
Risk Factors
The Company does not provide forecasts of potential future financial
performance. While the Company's management is optimistic about the Company's
long-term prospects, the following issues and uncertainties, among others,
should be considered in evaluating its growth outlook.
No Assurance of Successful Expansion. The Company intends to expand its
outdoor advertising operations, and to continue to expand its gasoline
wholesaling activities. Although the Company's existing operations are based
primarily in the Southwest, the Company's current expansion plans include
consideration of acquisition opportunities in both the Southwest and other
geographic regions of the United States. However, there can be no assurance that
suitable acquisitions can be identified, and the Company is likely to face
competition from other companies for available acquisition opportunities. Any
such acquisition would be subject to negotiation of definitive agreements,
appropriate financing arrangements and performance of due diligence.
19
<PAGE>
There can be no assurance that the Company will be able to complete such
acquisitions, obtain acceptable financing, or any required consent of its bank
lenders, or that such acquisitions, if completed, can be integrated successfully
into the Company's existing operations. The success of the Company's expansion
program will depend on a number of factors, including the availability of
sufficient capital, the identification of appropriate expansion opportunities,
the Company's ability to attract and retain qualified employees and management,
and the continuing profitability of existing operations. There can be no
assurance that the Company will achieve its planned expansion or that any
expansion will be profitable.
Need for Additional Financing. In order to successfully implement the
Company's growth strategy, the Company may need to seek additional financing
from external sources. The Company has been able to secure financing for the
acquisition of additional assets from commercial lenders in amounts up to 100%
of the fair market value of the acquired assets. However, there can be no
assurance that such additional financing will be available in the future on
terms acceptable to the Company. The Company anticipates that any financing
which it does secure may impose certain financial and other restrictive
covenants upon the Company and its operations.
Impact of Acquisitions. Any acquisition by the Company may result in
potentially dilutive issuances of equity securities, the incurrence of
additional debt, and amortization of expenses related to goodwill and intangible
assets, all of which could adversely effect the Company's profitability.
Acquisitions involve numerous risks, such as the diversion of the attention of
the Company's management from other business concerns, the entrance of the
Company into markets in which it has had no or only limited experience, and the
potential loss of key employees of the acquired company, all of which could have
a material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will be able
to successfully integrate any acquired companies or assets into its existing
operations, which could increase the Company's operating expenses in the
short-term and materially and adversely affect the Company's results of
operations.
Dependence on Third Party Relationships. The Company is dependent on a
number of third party relationships under which it offers brand name and other
products at its travel centers. These brand name relationships include the
Company's distributorship relationships with CITGO and EXXON and its existing
franchise agreements with Dairy Queen/Brazier and Stuckey's. The Company's
existing operations and plans for future growth anticipate the continued
existence of such relationships. There can be no assurance that the agreements
that govern these relationships will not be terminated. Several of these
agreements contain provisions that prohibit the Company from offering additional
products or services that are competitive to those of its suppliers. Although
the Company does not currently anticipate having to forego a significant
business opportunity in order to comply with such agreements, there can be no
assurance that adherence to existing agreements will not prevent the Company
from pursuing opportunities that management would otherwise deem advisable. The
Company also relies upon several at-will relationships with various third
parties for much of its souvenir and gift merchandise. Although the Company
believes it has good relationships with its suppliers, there can be no assurance
that the Company will be able to maintain relationships with suppliers of
suitable merchandise at appropriate prices and in sufficient quantities.
Possible Adverse Impact of Competition. The Company's travel centers face
competition from major and independent oil companies; independent service
station operators; national and independent operators of restaurants, diners and
other eating establishments; and national and independent operators of
convenience stores and other retail outlets. In its outdoor advertising
operations, the Company faces competition for advertising revenues from other
outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other out-of-home advertising media, the range and
diversity of which has increased substantially over the past several years,
including advertising displays in shopping centers and malls, airports,
stadiums, movie theaters and supermarkets.
20
<PAGE>
Some of the Company's competitors, including major oil companies and convenience
store operators, are substantially larger, better capitalized, and have greater
name recognition and access to greater resources than the Company. There can be
no assurance that the Company's travel centers and outdoor advertising
operations will be able to compete successfully in their respective markets in
the future.
Seasonality and Other Factors; Quarterly Fluctuations. The Company's travel
center operations are subject to seasonal fluctuations, and revenues may be
affected by many factors, including weather, holidays and the price of
alternative travel modes. The Company's revenues and earnings may experience
substantial fluctuations from quarter to quarter.
Potential Adverse Effects of Government Regulation of Travel Centers. Each
of the Company's food service operations is subject to licensing and regulation
by a number of governmental authorities, including regulations relating to
health, safety, cleanliness and food handling, as well as federal and state laws
governing such matters as working conditions, overtime, tip credits and minimum
wages. The Company's travel center operations are also subject to extensive laws
and regulations governing the sale of tobacco and fireworks in its New Mexico
travel centers. Such regulations include certain mandatory licensing procedures
and the ongoing compliance measures, as well as special sales tax measures. The
Company believes that operations at its fifteen travel centers comply with all
applicable licensing and regulatory requirements. Any failure to comply with
applicable regulations, or the adoption of additional regulations or changes in
existing regulations could impose additional compliance costs on the Company,
require a cessation of certain activities or otherwise have a material adverse
effect on the Company's business and results of operations.
Environmental Risks. The Company is subject to federal, state and municipal
laws and regulations governing the use, storage, handling, and disposal of its
petroleum products. While the Company believes that it is compliant with
environmental laws and regulations, the risk of accidental contamination to the
environment or injury can not be eliminated. In the event of such an accident,
the Company could be held liable for any damages that result and any such
liability could exceed the available resources of the Company. The Company could
be required to incur significant costs to comply with environmental laws and
regulations that may be enacted in the future.
Potential Adverse Effects of Government Regulation of Outdoor Advertising.
Outdoor advertising displays are subject to regulation by federal, state and
local governmental agencies. These regulations, in some cases, limit the height,
size, and location of billboards and, in limited circumstances, regulate the
content of the advertising copy displayed on the billboards, particularly with
respect to tobacco advertising. Some governmental regulations prohibit the
construction of new billboards or the replacement, relocation, enlargement, or
upgrading of existing structures. Some cities have adopted amortization
ordinances under which, after the expiration of a specified period of time,
billboards must be removed at the owner's expense and without the payment of
compensation. Due to the location of its billboard structures outside smaller
metropolitan and rural areas, the Company has not been materially affected by
such ordinances to date. However, there can be no assurance that the Company's
billboard structures will not become subject to similar ordinances in the
future. Ordinances requiring the removal of a billboard without compensation,
whether through amortization or otherwise, are being challenged in various state
and federal courts with conflicting results. Although, to date, the Company has
been adequately compensated for any of its structures removed at the direction
of governmental authorities, future changes in such regulations as well as
others applicable to the Company's outdoor advertising operations, could have a
material adverse effect on the Company's business and results of operations.
Other Uncertainties
Other operating, financial or legal risks or uncertainties are discussed in
this Form 10-K in specific context and the Company is subject to the financial
or legal risks or uncertainties discussed in other documents filed by the
Company with the Securities and Exchange Commission. In addition, the Company is
also subject to general economic risks, and other risks and uncertainties.
21
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal market risks to which the Company is exposed to are interest
rates on the Company's debt. The Company's interest sensitive liabilities are
its debt instruments. Variable interest on short-term debt equals LIBOR plus the
applicable margin. Long-term debt bears interest at variable rates based
primarily on the prime rate. Because the prime rate or LIBOR may increase or
decrease at any time, the Company is exposed to market risk as a result of the
impact that changes in these base rates may have on the interest rate applicable
to borrowings. Increases (decreases) in the interest rates applicable to
borrowings would result in increased (decreased) interest expense and a
reduction (increase) in the Company's net income and cash flow. Management does
not, however, believe that any risk inherent in the variable rate nature of its
debt is likely to have a material effect on the Company's financial position or
results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Following on next page.
22
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Consolidated Financial Statements
January 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Table of Contents
Page
Independent Auditors' Report F1
Financial Statements:
Consolidated Balance Sheets F2
Consolidated Statements of Income F3
Consolidated Statements of Stockholders' Equity F4
Consolidated Statements of Cash Flows F5-F6
Notes to Consolidated Financial Statements F7-F23
<PAGE>
Independent Auditors' Report
The Board of Directors
BOWLIN Outdoor Advertising
& Travel Centers Incorporated:
We have audited the accompanying consolidated balance sheets of BOWLIN Outdoor
Advertising & Travel Centers Incorporated and subsidiaries as of January 31,
2000 and 1999, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the years in the three-year period ended
Januar 31, 2000. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of BOWLIN Outdoor
Advertising & Travel Centers Incorporated and subsidiaries as of January 31,
2000 and 1999, and the results of their operations and their cash flows for each
of the years in the three-year period ended January 31, 2000, in conformity with
generally accepted accounting principles.
KPMG LLP
April 11, 2000
Albuquerque, New Mexico
F1
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Consolidated Balance Sheets
January 31, 2000 and 1999
<TABLE>
<S> <C> <C>
Assets 2000 1999
----------------- -----------------
Current assets:
Cash and cash equivalents $ 1,559,412 2,198,520
Accounts receivable, net 1,153,786 1,461,745
Accounts receivable - related parties 122,121 48,412
Inventories 3,534,130 3,688,992
Prepaid expenses 679,386 703,321
Income taxes 849,471 530,796
Notes receivable - related parties, current maturities (note 2) 13,512 12,637
Other current assets 13,328 9,051
----------------- -----------------
Total current assets 7,925,146 8,653,474
----------------- -----------------
Notes receivable - related parties, less current maturities (note 2) -- 875
Property and equipment, net (notes 3, 5 and 7) 30,556,073 26,424,741
Intangibles, net (note 4) 2,024,141 2,338,229
Other assets 275,510 72,037
----------------- -----------------
Total assets $ 40,780,870 37,489,356
================= =================
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings, bank (note 6) $ 241,963 --
Current installments of long-term debt (note 7) 1,502,814 1,248,078
Accounts payable 1,417,326 1,393,100
Accrued salaries 211,295 176,588
Accrued liabilities 243,341 218,760
Deferred income 142,294 121,550
----------------- -----------------
Total current liabilities 3,759,033 3,158,076
Deferred income taxes (note 10) 898,100 427,000
Long-term debt, less current installments (note 7) 20,885,415 19,004,046
----------------- -----------------
Total liabilities 25,542,548 22,589,122
----------------- -----------------
Stockholders' equity:
Common stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding 4,384,848 shares 4,385 4,385
Additional paid-in capital 11,604,303 11,604,303
Retained earnings 3,629,634 3,291,546
----------------- -----------------
Total stockholders' equity 15,238,322 14,900,234
Commitments and contingencies (notes 11 and 12)
----------------- -----------------
Total liabilities and stockholders' equity $ 40,780,870 37,489,356
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
F2
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Income
<TABLE>
<S>
<C> <C> <C>
Year ended January 31,
-----------------------------------------------------------
2000 1999 1998
----------------- ------------------ ------------------
Gross sales $ 35,004,457 30,578,015 27,439,398
Less discounts on sales 386,622 283,264 279,943
----------------- ------------------ ------------------
Net sales 34,617,835 30,294,751 27,159,455
Cost of goods sold 22,350,258 18,848,146 17,531,203
----------------- ------------------ ------------------
Gross profit 12,267,577 11,446,605 9,628,252
General and administrative expense (8,069,072) (7,479,568) (6,567,940)
Depreciation and amortization (2,525,571) (1,895,035) (1,149,694)
Other operating income 30,661 7,345 89,732
----------------- ------------------ ------------------
Operating income 1,703,595 2,079,347 2,000,350
Other income (expense):
Interest income 95,570 128,446 268,555
Gain on sale of property and equipment 6,013 10,580 200,600
Gain from insurance proceeds 711,805 -- --
Interest expense (1,934,395) (1,108,263) (722,117)
----------------- ------------------ ------------------
Total other income (expense) (1,121,007) (969,237) (252,962)
----------------- ------------------ ------------------
Income before income taxes 582,588 1,110,110 1,747,388
Income taxes (note 10) 244,500 437,500 678,200
----------------- ------------------ ------------------
Net income $ 338,088 672,610 1,069,188
================= ================== ==================
Basic and diluted earnings per share $ 0.08 0.15 0.24
================= ================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
F3
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended January 31, 2000, 1999 and 1998
<TABLE>
<S>
<C> <C> <C> <C>
Common Additional
Number of stock, paid-in Retained
shares at par capital earnings Total
------------- ------------- ------------- ------------- -------------
Balance at January 31, 1997 4,384,848 $ 4,385 11,604,303 1,549,748 13,158,436
Net income -- -- -- 1,069,188 1,069,188
------------- ------------- ------------- ------------- -------------
Balance at January 31, 1998 4,384,848 4,385 11,604,303 2,618,936 14,227,624
Net income -- -- -- 672,610 672,610
------------- ------------- ------------- ------------- -------------
Balance at January 31, 1999 4,384,848 4,385 11,604,303 3,291,546 14,900,234
Net income -- -- -- 338,088 338,088
------------- ------------- ------------- ------------- -------------
Balance at January 31, 2000 4,384,848 $ 4,385 11,604,303 3,629,634 15,238,322
============= ============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements
F4
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<S>
<C> <C> <C>
Year ended January 31,
---------------------------------------------------
2000 1999 1998
---------------- --------------- ---------------
Cash flows from operating activities:
Net income $ 338,088 672,610 1,069,188
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,525,571 1,895,035 1,149,694
Income from partnership investment (1,408) (3,025) --
Gain on sale of assets (6,013) (10,580) (200,600)
Gain from insurance proceeds (711,805) -- --
Deferred income taxes 471,100 249,700 134,700
Imputed interest 10,402 27,049 --
Minority interest -- -- (205,366)
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable 234,250 (874,690) (139,851)
Inventories 154,862 (535,304) (397,098)
Prepaid expenses and other (82,891) (153,711) 28,230
Accounts payable and accrued liabilities 83,514 58,602 221,884
Deferred income 20,744 44,919 (27,556)
Income taxes (318,675) (440,803) (235,065)
---------------- --------------- ---------------
Net cash provided by operating activities 2,717,739 929,802 1,398,160
---------------- --------------- ---------------
Cash flows from investing activities:
Capital received from (contributed to) partnership 21,400 -- (4,205)
Proceeds from sale/condemnation of assets 191,545 20,813 703,201
Proceeds from insurance 1,086,865 -- --
Business acquisitions (1,515,951) (2,312,232) (5,845,000)
Purchases of property and equipment (5,390,906) (4,366,462) (2,208,435)
Franchise fee payments -- (25,000) --
Notes receivable, net (117,466) 43,196 6,168
---------------- --------------- ---------------
Net cash used in investing activities (5,724,513) (6,639,685) (7,348,271)
---------------- --------------- ---------------
Cash flows from financing activities:
Short-term borrowings, net 241,963 (745,000) 745,000
Payments on long-term debt (1,558,534) (665,720) (1,015,530)
Payments for debt issuance costs -- (941,649) --
Proceeds from borrowings 3,684,237 6,207,442 2,755,000
---------------- --------------- ---------------
Net cash provided by financing activities 2,367,666 3,855,073 2,484,470
---------------- --------------- ---------------
Net decrease in cash and cash equivalents (639,108) (1,854,810) (3,465,641)
Cash and cash equivalents at beginning of period 2,198,520 4,053,330 7,518,971
---------------- --------------- ---------------
Cash and cash equivalents at end of period $ 1,559,412 2,198,520 4,053,330
================ =============== ===============
</TABLE>
(Continued)
F5
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<S>
<C> <C> <C>
Year ended January 31,
---------------------------------------------------
2000 1999 1998
---------------- --------------- ---------------
Supplemental disclosure of cash flow information:
Interest paid $ 2,004,924 1,040,446 722,986
================ =============== ===============
Income taxes paid $ 92,000 628,603 778,565
================ =============== ===============
Noncash investing and financing activities:
Acquisition of land and outdoor advertising
assets in exchange for long-term debt $ -- 5,570,000 1,275,000
================ =============== ===============
Disposition of land and buildings in exchange for
assumption of long-term debt of subsidiary $ -- -- (1,090,910)
================ =============== ===============
Acquisition of covenants not-to-compete in exchange for
long-term debt $ -- 210,438 284,763
================ =============== ===============
Acquisitions - fair value of assets acquired and liabilities assumed at
the date of the acquisitions were as follows:
Accounts receivable $ 3,451 56,251 73,941
Prepaid expenses -- 99,065 15,057
Billboards 1,462,500 2,051,916 4,735,000
Machinery and equipment -- 55,000 163,500
Excess of purchase price over fair value of
assets acquired -- -- 863,000
Covenants not-to-compete 50,000 50,000 10,000
Accounts payable -- -- (15,498)
================ =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F6
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(1) Summary of Significant Accounting Policies
(a) Description of Business
BOWLIN Outdoor Advertising & Travel Centers Incorporated and
subsidiaries (the Company) are located in Albuquerque, New Mexico. On
August 28, 1996, BOWLIN Outdoor Advertising & Travel Centers, Inc.
(BOATC) was incorporated in the state of Nevada. BOATC's articles of
incorporation authorize 10,000,000 shares of preferred stock ($.001
par value) which can be issued at the discretion of the Board of
Directors. Pursuant to an agreement and plan of merger effective
September 27, 1996, Bowlin's, Inc. (BI), which was incorporated in the
state of New Mexico on February 20, 1953, was merged with and into
BOATC.
The Company's principal business activities include the operation of
outdoor billboard advertising displays which are situated on
interstate highways, primarily in the Southwestern United States. In
addition to the outdoor billboard advertising displays, the Company
operates full-service travel centers and restaurants which offer brand
name food and gasoline, and a unique variety of Southwestern
merchandise to the traveling public in the Southwestern United States.
The Company previously held a majority general partnership interest in
the Los Cuatros Apartments Limited Partnership (Los Cuatros) together
with a limited partnership interest. The partnership owned and leased
an apartment complex in Las Cruces, New Mexico. The partnership was
formed in January 1991 and had a December 31 fiscal year end. On June
16, 1997, the Company sold Los Cuatros to an unrelated third party.
(b) Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company, its wholly owned subsidiary BMI, Inc. and its
majority owned subsidiary Los Cuatros. Los Cuatros is included from
February 1, 1997 through June 16, 1997. All material intercompany
transactions have been eliminated.
(c) Cash and Cash Equivalents
The Company considers all liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
(d) Accounts Receivable and Allowance for Doubtful Accounts
Trade receivables are stated at face amount less the related allowance
for doubtful accounts.
(Continued)
F7
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(e) Inventories
Inventories consist primarily of merchandise and gasoline for resale
and are stated at the lower of cost or market value, with cost being
determined using the first-in, first-out (FIFO) method.
(f) Property and Equipment
Property and equipment are carried at cost. Maintenance and repairs,
including the replacement of minor items, are expensed as incurred,
and major additions to property and equipment are capitalized.
Depreciation is provided by the Company using primarily straight-line,
as well as accelerated methods.
(g) Intangible Assets
Goodwill, which represents the excess of purchase price over fair
value of net assets acquired, is amortized on a straight-line basis
over the expected periods to be benefited, generally 5 to 15 years.
The Company assesses the recoverability of this intangible asset by
determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating
cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future
operating cash flows using a discount rate reflecting the Company's
average cost of funds.
Covenants not-to-compete are amortized over the life of the respective
covenants using the straight-line method, ranging from one to ten
years.
Debt issuance costs are deferred and amortized over the terms of the
respective borrowings on a straight-line basis for the revolving
portion and the interest method for the term note portion.
Franchise fees are amortized on a straight-line basis over the shorter
of the life of the related franchise agreements or the periods
estimated to be benefited, ranging from fifteen to twenty-five years.
(h) Sales and Cost Recognition
Sales of merchandise are recognized at the time of sale and the
associated costs of the merchandise are included in cost of sales.
Revenues from rental of billboard space are recognized on an accrual
basis ratably over the terms of the contracts as advertising services
are provided.
(i) Deferred Income
Deferred income consists principally of advertising revenue received
in advance. Deferred advertising revenue is recognized in income as
services are provided over the term of the contract.
(Continued)
F8
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(j) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
(k) Stock Option Plan
The Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretation.
As such, compensation expense is recorded on the date of grant only if
the current market price of the underlying stock exceeds the exercise
price. SFAS No. 123, Accounting for Stock-Based Compensation, permits
entities to continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and pro forma earnings per share
disclosures for employee stock option grants as if the
fair-value-based method defined in SFAS No. 123 has been applied. The
Company has elected to continue to apply the provisions of the APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS
No. 123.
(l) Impairment of Long-lived Assets and Long-lived Assets to Be Disposed
Of
The Company reviews its long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount of fair value less costs to sell.
(m) Financial Instruments
The Company's financial instruments are cash and cash equivalents,
accounts receivable, notes receivable, accounts payable, accrued
liabilities, short-term borrowings, and long-term debt. The carrying
amounts of cash and cash equivalents, accounts receivable, notes
receivable, accounts payable, accrued liabilities, short-term
borrowings, and long-term debt approximate fair value.
(Continued)
F9
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(n) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
consolidated financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(o) Reclassification
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation.
(p) Earnings Per Share
Basic earnings per share of common stock is computed by dividing net
income by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share is calculated in the
same manner as basic earnings per share except that the denominator is
increased to include the number of additional common shares that would
have been outstanding, assuming the exercise of all employee stock
options that would have had a dilutive effect on earnings per share. A
reconciliation of the number of shares used in the calculation of
basic and diluted earnings per share for the years ended January 31,
2000, 1999 and 1998 follows:
<TABLE>
<S> <C> <C> <C>
2000
-------------------------------------------------------
Income Shares Per share
(numerator) (denominator) amount
------------------ ------------------- ---------------
Basic EPS - net income $ 338,088 4,384,848 $ .08
Effect of dilutive securities - ===============
stock options -- 4,715
------------------ -------------------
Diluted EPS - net income $ 338,088 4,389,563 $ .08
================== =================== ===============
</TABLE>
(Continued)
F10
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
<TABLE>
<S> <C> <C> <C>
1999
-------------------------------------------------------
Income Shares Per share
(numerator) (denominator) amount
------------------ ------------------- ---------------
Basic EPS - net income $ 672,610 4,384,848 $ .15
Effect of dilutive securities - ===============
stock options -- 2,488
------------------ -------------------
Diluted EPS - net income $ 672,610 4,387,336 $ .15
================== =================== ===============
1998
-------------------------------------------------------
Income Shares Per share
(numerator) (denominator) amount
------------------ ------------------- ---------------
Basic EPS - net income $ 1,069,188 4,384,848 $ .24
Effect of dilutive securities -
stock options -- --
------------------ -------------------
Diluted EPS - net income $ 1,069,188 4,384,848 $ .24
================== =================== ===============
</TABLE>
Options to purchase 247,000, 259,000 and 301,500 shares of common
stock were outstanding during the years ended January 31, 2000,
1999 and 1998, respectively, but were not included in the
computation of diluted EPS because the options' exercise price was
greater than the average market price of the common shares. The
options, which expire December 2006, were still outstanding at
January 31, 2000.
(2) Notes Receivable - Related Parties
Notes receivable - related parties consist of the following at January 31:
<TABLE>
<S> <C> <C>
2000 1999
--------------- ---------------
Stockholder, due on demand, plus interest at 7%, unsecured $ 10,012 10,012
Employees, receivable in annual installments totaling $875 plus interest
at 10%, unsecured 3,500 3,500
--------------- ---------------
Subtotal 13,512 13,512
Less current maturities 13,512 12,637
=============== ===============
$ -- 875
=============== ===============
</TABLE>
(Continued)
F11
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(3) Property and Equipment
Property and equipment, at cost, consists of the following at January 31:
<TABLE>
<S> <C> <C> <C>
Estimated life 2000 1999
(years)
---------------------- ------------------- -------------------
Land --- $ 3,239,255 2,371,490
Buildings and improvements 10 - 40 8,391,938 6,502,420
Machinery and equipment 3 - 10 6,915,401 5,901,088
Autos, trucks and mobile homes 3 - 10 2,077,036 2,047,988
Billboards on operating leases 15 - 20 23,632,676 19,886,104
Billboards 15 - 20 941,274 817,819
====================== ------------------- -------------------
Subtotal, at cost 45,197,580 37,526,909
Less accumulated depreciation (15,268,102) (13,119,953)
Construction in progress 626,595 2,017,785
=================== ===================
$ 30,556,073 26,424,741
=================== ===================
</TABLE>
Through January 31, 2000, the Company received proceeds from insurance
totaling $1,086,865 to replace assets destroyed by a fire at the Company's
headquarters during November 1998 which resulted in recognition of a
$711,805 gain.
During the year ended January 31, 1998, the Company determined the actual
lives for approximately $214,100 of billboard expenditures were generally
longer than the estimated useful lives previously established for
depreciation purposes. Therefore, effective February 1, 1997, the Company
extended the estimated useful lives of those assets up to 7 years. The
effect of this change in accounting estimate increased net income by
$105,400 ($.02 per basic and diluted share).
(4) Intangible Assets
Intangible assets, at cost, consist of the following at January 31:
<TABLE>
<S> <C> <C>
2000 1999
----------------- -----------------
Excess of purchase price over fair value of assets acquired $ 863,000 863,000
Covenants not-to-compete 645,093 555,201
Franchise fees 183,000 234,500
Debt issuance costs 941,649 941,649
----------------- -----------------
2,632,742 2,594,350
Less accumulated amortization (608,601) (256,121)
================= =================
Intangible assets, net $ 2,024,141 2,338,229
================= =================
</TABLE>
(Continued)
F12
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(5) Billboard Rental Income
Included in property and equipment in the consolidated balance sheets of
the Company are billboards on operating leases. The billboards are owned by
the Company and the advertising space is leased to others. See note 12
regarding land leased from others by the Company for billboard use.
Minimum future rental income on noncancelable billboard leases in effect as
of January 31, 2000 is as follows:
<TABLE>
<S>
<C> <C>
Year ending January 31:
--------------------------------------------
2001 $ 5,349,260
2002 1,671,779
2003 177,052
2004 23,942
2005 9,090
------------------
Total $ 7,231,123
==================
</TABLE>
(6) Short-term Borrowing, Bank
In November 1998, the Company entered into a credit agreement with one of
its existing lenders including a line of credit in the amount of
$10,000,000 to fund purchases of existing outdoor advertising business
and/or billboard properties and a working capital line of $2,000,000. Each
note will bear interest based on the LIBOR 90 day rate index (7.90 percent
at January 31, 2000). As of January 31, 2000, there was $241,963 drawn on
this credit agreement.
(7) Long-term Debt
Long-term debt is as follows:
<TABLE>
<S> <C> <C>
2000 1999
----------------- -----------------
Due bank, maturity November 2005, variable interest (8.50% at
January 31, 2000), monthly installments of $143,114, secured by
buildings, equipment, and billboards $ 11,088,869 11,858,362
Due bank, maturity November 2005, variable interest (8.50% at
January 31, 2000), monthly installments of $15,000, secured by
billboards 2,472,812 2,500,000
Due bank, maturity January 2006, variable interest (8.43% at
January 31, 2000), interest only through January 2000, monthly
installments of $8,300, secured by billboards 1,500,000 1,500,000
Due bank, maturity March 2006, variable interest (8.68% at
January 31, 2000), interest only through March 2000, monthly
installments of $8,700 secured by billboards 1,350,000 --
Due bank, maturity January 31, 2007, variable interest (8.47% at
January 31, 2000), interest only through January 2000, monthly
installments of $9,938, secured by billboards 1,408,037 --
</TABLE>
(Continued)
F13
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
<TABLE>
<S>
<C> <C>
----------------- -----------------
Due bank, maturity October 2013, variable interest (8.50% at
January 31, 2000), monthly installments of $9,860, secured by
land and buildings $ 941,732 978,428
Due bank, maturity October 2013, variable interest (8.50% at
January 31, 1999), monthly installments of $6,329, secured by
land and buildings 606,494 629,740
Due bank, maturity January 2005, variable interest at index rate
(8.00% at January 31, 2000), monthly installments of $6,883
secured by buildings and equipment 667,858 694,792
Due bank, maturity May 2005, variable interest at index rate plus .5
(8.50% at January 31, 2000), monthly installments of $8,614,
secured by buildings and equipment 732,194 774,006
Due banks and other financing companies, with maturity dates ranging
from 2000 to 2013. Most bear interest at adjustable rate of
7.75% with certain fixed rate notes at 8.9%. Monthly payments
totaling $19,188. Secured by land, buildings, equipment, and 1,361,407 933,811
inventories
Due individuals, various payment schedules with maturity dates in
2003, including interest ranging from 8.00% to 10.00%. Monthly
payments totaling $3,818. Secured by land and buildings 136,539 168,234
Due individuals, maturity dates in 2008, including imputed interest
at 8.50%, annual payments totaling $20,000; unsecured 122,287 214,751
----------------- -----------------
22,388,229 20,252,124
Less current maturities 1,502,814 1,248,078
----------------- -----------------
$ 20,885,415 19,004,046
================= =================
</TABLE>
Future maturities of long-term debt are as follows:
<TABLE>
<S> <C> <C>
2001 $ 1,502,814
2002 1,772,744
2003 1,898,835
2004 1,983,089
2005 2,063,792
Thereafter 13,166,955
-----------------
Total $ 22,388,229
=================
</TABLE>
On November 10, 1998, the Company entered into a credit agreement with one
of its existing lenders for a new term note in the amount of $12,000,000
which was used to refinance approximately $8,500,000 of existing borrowings
and to provide funds for working capital.
(Continued)
F14
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(8) Stockholders' Equity
In December 1996, the Company completed an initial public offering of
1,100,000 shares of common stock at $8.00 per share. Concurrent with the
closing of the initial public offering, the Company issued a five-year
nonredeemable option to purchase up to 93,500 shares of common stock at an
exercise price equal to 120 percent of the offering price, or $9.60 per
share to the underwriter. The option became exercisable in December 1997.
As of January 31, 2000, the option has not been exercised.
(9) Stock Option Plan
On September 27, 1996, the Company adopted the 1996 Stock Option Plan (the
Plan) pursuant to which the Company's board of directors may grant stock
options to officers and key employees. The Plan authorizes grants of
options to purchase shares of authorized but unissued common stock up to an
amount equal to ten percent of issued and outstanding shares of common
stock (438,485 shares as of January 31, 2000). Stock options are granted
with an exercise price equal to the stock's fair market value at the date
of grant. All stock options expire in ten years and vest, and become fully
exercisable as determined by the board at time of grant.
At January 31, 2000, there were 485 additional shares available for grant
under the Plan. The per share weighted-average fair value of stock options
granted during 2000 was $1.69 on the date of grant using the Black Scholes
option-pricing model with the following weighted-average assumptions:
expected dividend yield 0.0 percent, expected volatility of 70 percent,
risk-free interest rate of 7 percent, and an expected life of 2 years.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below for the
years ended January 31:
<TABLE>
<S> <C> <C> <C>
2000 1999 1998
--------------- --------------- ---------------
Net income (loss) As reported $ 338,088 672,610 1,069,188
Pro forma (194,888) 410,971 764,626
Earnings (loss) per basic and As reported .08 .15 .24
diluted share Pro forma (.04) .09 .17
=============== =============== ===============
</TABLE>
(Continued)
F15
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
Stock option activity during the periods indicated is as follows
<TABLE>
<S> <C> <C>
Number of Weighted-average
shares exercise price
---------------- --------------------
Balance at January 31, 1997 362,000 $ 8.20
Forfeited (60,500) 8.00
----------------
Balance at January 31, 1998 301,500 8.24
Forfeited (42,500) 8.00
----------------
Balance at January 31, 1999 259,000 8.28
Granted 191,000 4.00
Forfeited (12,000) 8.00
================
Balance at January 31, 2000 438,000 $ 6.42
================
</TABLE>
At January 31, 2000, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $4.00 - $8.80 and
8.05 years, respectively.
At January 31, 2000, 1999 and 1998, the number of options exercisable was
438,000, 16,000 and 8,000, respectively, and the weighted-average exercise
price of those options was $6.42, $8.00 and $8.00, respectively.
(10) Income Taxes
Income taxes consist of the following for the years ended January 31:
<TABLE>
<S> <C> <C> <C>
Current Deferred Total
------------------- --------------------- --------------------
2000:
U.S. Federal $ (188,800) 392,500 203,700
State and local (37,800) 78,600 40,800
------------------- --------------------- --------------------
$ (226,600) 471,100 244,500
=================== ===================== ====================
1999:
U.S. Federal $ 156,500 208,000 364,500
State and local 31,300 41,700 73,000
------------------- --------------------- --------------------
$ 187,800 249,700 437,500
=================== ===================== ====================
1998:
U.S. Federal $ 452,800 112,200 565,000
State and local 90,700 22,500 113,200
------------------- --------------------- --------------------
$ 543,500 134,700 678,200
=================== ===================== ====================
</TABLE>
(Continued)
F16
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
Income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 34 percent to pretax income as a result of the
following factors:
<TABLE>
<S>
<C> <C> <C>
Year ended January 31,
-------------------------------------------------------------
2000 1999 1998
------------------- ------------------- -------------------
Computed "expected" tax $ 198,080 377,437 594,112
State income taxes, net of federal 26,926 48,175 74,682
tax benefit
Other 19,494 11,888 9,406
------------------- ------------------- -------------------
Total $ 244,500 437,500 678,200
=================== =================== ===================
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as
follows at January 31:
<TABLE>
<S>
<C> <C>
2000 1999
------------------ -------------------
Deferred tax assets:
Compensated absences, principally due to accrual for
financial reporting purposes $ 45,730 18,540
Other 15,600 15,600
------------------ -------------------
Total gross deferred tax assets 61,330 34,140
Less valuation allowance -- --
------------------ -------------------
Net deferred tax assets 61,330 34,140
------------------ -------------------
Deferred tax liabilities:
Property and equipment, principally due to
differences in depreciation (954,430) (456,040)
Other (5,000) (5,100)
------------------ -------------------
Total gross deferred liabilities (959,430) (461,140)
------------------ -------------------
Net deferred tax liability $ (898,100) (427,000)
================== ===================
</TABLE>
There was no valuation allowance for deferred tax assets as of February 1,
1999, 1998 or 1997. Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes it is more likely
than not the Company will realize the benefits of these deductible
differences.
(Continued)
F17
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
(11) Profit Sharing Plan
The Company maintains a qualified defined contribution profit sharing plan
that covers substantially all employees. The plan year end is December 31.
The elected salary reduction is subject to limits as defined by the
Internal Revenue Code. The Company provides a matching contribution and
additional discretionary contributions as determined by resolution of the
board of directors. Legal and accounting expenses related to the plan are
absorbed by the Company. The Company's contributions to the profit sharing
plan were $77,739, $54,419 and $56,974 in fiscal 2000, 1999 and 1998,
respectively.
(12) Commitments and Contingencies
The Company leases land at several of its retail operating locations.
Included in general and administrative expenses in the accompanying
consolidated statements of income is rental expense for these land leases
of $419,176, $370,761 and $306,283 for the years ended January 31, 2000,
1999 and 1998, respectively.
The leasing agreements for the various locations include 5-35 year leases
with remaining lives on those leases ranging from approximately 5-25 years
at January 31, 1999. Renewal options vary, with the most extensive
including three 5-year renewal options. Contingent rentals are generally
based on percentages of specified gross receipts. Several leases include
terms for computation of rent expense as the greater of a percent of gross
receipts or a percent of land value as defined by the lease. In most cases,
the Company is responsible for certain repairs and maintenance, insurance,
property taxes or property tax increases, and utilities.
Future minimum rental payments under these leases are as follows:
<TABLE>
<S> <C> <C>
Year ending January 31:
--------------------------------------------
2001 $ 126,658
2002 114,658
2003 114,658
2004 84,658
2005 84,658
Thereafter 370,658
------------------
Total $ 895,948
==================
</TABLE>
(Continued)
F18
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
The Company has entered into various land operating leases for billboard
space. These leases require minimum annual rentals and range from terms of
1-5 years. Rent expense was $1,222,604, $872,946 and $753,926 for the years
ended January 31, 2000, 1999 and 1998, respectively. At January 31, 2000
and 1999, the Company had prepaid on these leases in the amounts of
$609,817 and $426,128, respectively. See note 5 regarding billboard
advertising space leased to others by the Company.
Minimum future rental payments under these leases are as follows:
<TABLE>
<S>
<C> <C>
Year ending January 31:
--------------------------------------------
2001 $ 1,018,724
2002 801,265
2003 668,698
2004 583,274
2005 499,963
Thereafter 446,799
------------------
Total $ 4,018,723
==================
</TABLE>
(13) Related Party Transactions (See note 2)
An individual who is an officer and stockholder in the Company is also an
officer and stockholder in Stuckey's Corporation (Stuckey's). The Company
paid Stuckey's franchise fees for four stores in the amount of $34,029,
$36,356 and $35,690 for January 31, 2000, 1999 and 1998, respectively.
Franchise fees are included in general and administrative expenses in the
accompanying consolidated statements of income.
During the years ended January 31, 2000, 1999 and 1998, wholesale gasoline
distribution sales totaling $1,328,418, $1,227,681 and $916,733 were sold
to a Stuckey's franchise travel center not owned by the Company. The travel
center is owned by the daughter of an individual who is a stockholder in
the Company. As of January 31, 2000 and 1999, amounts due from this travel
center totaled $122,121 and $48,412, respectively.
(14) Segment Information
Travel center operations, which represents 78% of net sales of the Company,
and outdoor advertising operations, which represents 22% of net sales, are
the Company's reportable segments under SFAS No. 131, Disclosure about
Segments of an Enterprise and Related Information (SFAS 131). The travel
center segment provides for the retail sale of merchandise, food and
gasoline to the traveling public while the outdoor advertising segment
operates billboard advertising displays which are situated on interstate
highways, primarily in the Southwestern United States. No single customer
accounted for as much as 10% of consolidated revenue in any year.
(Continued)
F19
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
Summarized financial information concerning the Company's reportable
segments for the respective years ended January 31, is shown in the
following table. Prior period information has been restated to conform to
the segments described above, which are based on the structure and internal
organization of the Company as of January 31, 2000.
<TABLE>
<S>
<C> <C> <C> <C> <C>
Outdoor
Travel Center Advertising Corporate and
(in thousands) Operations Operations other (1) Total
---------------- --------------- ---------------- ----------------
Net sales (2)
2000 $ 26,856 7,762 -- 34,618
1999 23,520 6,775 -- 30,295
1998 22,303 4,856 -- 27,159
Segment operating income (3)
2000 1,212 1,163 (671) 1,704
1999 1,170 1,495 (586) 2,079
1998 1,586 926 (512) 2,000
Depreciation and amortization
2000 582 1,807 137 2,526
1999 611 1,178 105 1,895
1998 369 660 121 1,150
Segment assets
2000 15,027 20,305 5,449 40,781
1999 14,578 17,670 5,241 37,489
1998 11,023 9,525 5,311 25,859
Expenditures for segment assets
2000 1,547 4,721 586 6,854
1999 2,546 9,217 280 12,043
1998 1,760 6,526 96 8,382
</TABLE>
(1) Corporate functions include certain members of executive management,
the corporate accounting and finance function and other typical
administrative functions.
(2) There were no inter-segment sales during the years ended January 31,
2000, 1999 or 1998.
(3) Management does not allocate interest expense, interest income, other
non-operating income and expense amounts or income tax expense in the
determination of the operating performance of the reportable segments.
Therefore, the total segment operating income reported agrees to
consolidated operating income for the Company.
(Continued)
F20
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
During the years ended January 31, 2000, 1999 and 1998, $1,671,810,
$1,227,681 and $916,733 of net sales and $69,478, $63,678 and $33,606 of
operating income, respectively, related to wholesale gasoline distribution
sales are included in travel center operations.
(15) Acquisitions
The Company completed the acquisitions described below during the years
ended January 31, 2000, 1999 and 1998. All of the acquisitions have been
accounted for as purchases whereby the results of operations of the
acquired company have been combined with the Company's since the dates of
acquisition. The purchase price has been allocated to the assets acquired
based on their estimated fair values with goodwill, if any, representing
the excess of cost over the purchase price as indicated below.
On April 1, 1997, the Company acquired all of the tangible and intangible
assets and certain liabilities of the outdoor advertising division of The
McCarty Company (McCarty) known as Pony Panels for $4.2 million. A member
of the Company's Board of Directors is the majority shareholder of the
McCarty Company. The Company paid $1.7 million in cash and financed $2.5
million with bank debt. Pony Panels owns and operates approximately 750
8-sheet poster panels in the Albuquerque, New Mexico metro area. The
Company also entered into a non-compete agreement with the former
principals of McCarty for a period of five years from the date of the
acquisition. The excess of the purchase price over fair value of the net
assets acquired (goodwill) of $863,000 recorded in connection with the
purchase will be amortized over the estimated benefit period of 15 years.
On April 26, 1997, the Company purchased the outdoor advertising assets of
General Outdoor Advertising (General) for $240,000 in cash. General owns
and operates approximately 56 painted bulletin faces in the Alamogordo, New
Mexico market. No goodwill was recorded in connection with the purchase.
On April 29, 1997, the Company purchased the outdoor advertising assets of
Mesa Outdoor Advertising (Mesa) for $150,000 in cash and a note payable to
the former owner in the amount of $275,000. Mesa owns and operates
approximately 57 30-sheet poster faces in the Farmington, New Mexico
market. No goodwill was recorded in connection with the purchase.
On December 9, 1997, the Company acquired certain assets of Sweezy Outdoor
Advertising (Sweezy) for $1,245,000. The Company paid $245,000 in cash and
financed $1 million with bank debt. Sweezy owns and operates approximately
68 painted bulletin faces in the Killeen/Fort Hood area of Texas. No
goodwill was recorded in connection with the purchase. In conjunction with
the Sweezy acquisition, the Company entered into non-compete agreements
with the former principals of Sweezy. One of the principals entered into an
agreement for a period of ten years, payable by the Company in ten annual
installments of $40,000 beginning in January 1998. The note payable,
discounted for imputed interest costs computed at 8.5 percent, is included
in long-term debt in the accompanying consolidated balance sheets. Two
principals were paid $5,000 each for a non-compete period of one year from
the date of acquisition.
(Continued)
F21
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
On February 1, 1998, the Company acquired the outdoor advertising assets of
Big-Tex Outdoor Advertising (Big-Tex) for $1,575,283. The Company paid
$575,283 in cash 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 note payable, discounted for imputed interest costs
computed at 8.5 percent, is included in long-term debt in the accompanying
consolidated balance sheets. 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 $1,020,768. The Company paid $370,768
in 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. 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. (Edgar) for $933,661, paid in cash at
closing. Edgar owned and operated approximately 62 painted bulletin faces
in central Texas. The Company also entered into a non-compete agreement
with the former principals of Edgar for a period of ten years from the date
of the acquisition. 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 (J & J), located in Silver City, New Mexico. The Company
paid $347,947 in cash at closing. J & J owned and operated approximately 40
painted bulletin faces in Southwestern New Mexico. No goodwill was recorded
in connection with the purchase.
On August 14, 1998, the Company purchased the outdoor advertising assets of
T & C Outdoor (T & C) in Crowley, Texas for $171,614 in cash. T & C owned
and operated approximately 20 faces in central Texas. No goodwill was
recorded in connection with the purchase.
On November 16, 1998, the Company purchased the outdoor advertising assets
of Faris Outdoor Advertising (Faris) for $2,563,408. The Company paid
$63,408 in cash and financed $2,500,000 with bank debt. Faris owned and
operated approximately 132 painted bulletin faces in Fort Worth, Texas. No
goodwill was recorded in connection with the purchase.
On January 4, 1999, the Company purchased the outdoor advertising assets of
Big-Tex Outdoor Advertising (Big-Tex Granbury) in Granbury, Texas for
$1,549,507. The Company paid $49,507 in cash and financed $1,500,000 with
bank debt. Big-Tex Granbury owned and operated approximately 83 painted
bulletin faces in the Granbury, Texas area. The Company also entered into a
non-compete agreement with the former principals of Big-Tex Granbury for a
period of 10 years from the date of the purchase. No goodwill was recorded
in connection with the purchase.
(Continued)
F22
<PAGE>
BOWLIN OUTDOOR ADVERTISING
& TRAVEL CENTERS INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 31, 2000 and 1999
On March 1, 1999, the Company purchased the outdoor advertising assets of
GDM Outdoor Advertising (GDM) in Tyler, Texas for $1,353,376. The Company
paid $3,376 in cash and financed $1,350,000 with bank debt. GDM owned and
operated approximately 86 painted bulletin faces in the Tyler, Texas area.
The Company also entered into a non-compete agreement with the former
principals of GDM for a period of 10 years from the date of purchase. No
goodwill was recorded in connection with the purchase.
On April 30, 1999, the Company purchased the outdoor advertising assets of
Borderline Outdoor Advertising, Inc. (Borderline) located in Bedford, Texas
for $162,575. The Company financed $150,000 and paid $12,575 in cash.
Borderline owned and operated approximately nine painted bulletin faces in
central Texas. No goodwill was recorded in connection with the purchase.
The following unaudited pro forma information presents the combined results
of operations for the years ended January 31, 2000 and 1999, as though the
acquisitions of Norwood, Edgar, Faris, Big-Tex Granbury and GDM had
occurred on February 1, 1998. The unaudited pro forma results do not
purport to be indicative of what would have occurred had the acquisitions
actually been made as of such date or of results which may occur in the
future.
<TABLE>
<S>
<C> <C>
2000 1999
----------------- ----------------
Net sales $ 35,013 31,317
================= ================
Net income $ 329 423
================= ================
Earnings per basic and diluted share $ .07 .10
================= ================
</TABLE>
Adjustments made in arriving at the pro forma unaudited results of
operations include increased interest expense on acquisition debt,
depreciation on fixed assets acquired, amortization of goodwill and related
tax adjustments.
The effects of the Company's acquisitions of J & J, T & C and Borderline
are not material to the combined results of operations of the Company for
the years ended January 31, 2000 and 1999.
F23
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information required by Part III is incorporated by reference to
the Company's definitive proxy statement pursuant to Regulation 14A ("Proxy
Statement") relating to the 2000 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
Certain information required by Part III is incorporated by reference to
the Company's definitive Proxy Statement under the section entitled
"Compensation of Executive Officers."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain information required by this item is incorporated by reference to
the corresponding section of the Company's definitive Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain information required by this item is incorporated by reference to
the corresponding section of the Company's definitive Proxy Statement under the
section entitled "Certain Transactions and Relationships".
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits as indexed below are included as part of this Form 10-K.
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the three months ended January
31, 2000.
23
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<S>
<C> <C> <C>
- ------------------ ------------------------------------------------ ----------------------------------------------------
EXHIBIT METHOD
NUMBER DESCRIPTION OF FILING
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.1 Purchase Agreement dated April 1, 1997 between (Incorporated by reference; previously filed as
the Registrant and the McCarty Company Exhibit 2.1 to the Registrant's Report Form 8-K
dated April 15, 1997)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.2 Purchase Agreement dated December 9, 1997 (Incorporated by reference; previously filed as
between the Registrant and Sweezy Outdoor Exhibit 2.2 to the Registrant's Report Form 10-QSB
Advertising, Inc. dated December 15, 1997)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.3 Purchased Agreement dated February 1, 1998 (Incorporated by reference; previously filed as
between the Registrant and Big-Tex Outdoor Exhibit 2.3 to the Registrant's Report Form 10-KSB
Advertising, Inc. dated April 26, 1998)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.4 Purchase Agreement dated March 2, 1998 between (Incorporated by reference; previously filed as
the Registrant and Norwood Outdoor, Inc. Exhibit 2.4 to the Registrant's Report Form
10-KSB dated April 26, 1998)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.5 Purchase Agreement dated May 1, 1998 between (Incorporated by reference; previously filed as
the Registrant and Edgar Outdoor Advertising Exhibit 2.5 to the Registrant's Report Form 10-Q
Co. dated June 12, 1998)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.6 Purchase Agreement dated June 1, 1998 between (Incorporated by reference; previously filed as
the Registrant and J & J Signs. Exhibit 2.6 to the Registrant's Report Form 10-Q
dated September 11, 1998)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.7 Purchase Agreement dated March 2, 1998 between (Incorporated by reference; previously filed as
the Registrant and Faris Outdoor Advertising, Exhibit 2.7 to the Registrant's Report
Inc. Form 10-Q dated December 14, 1998)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.8 Purchase Agreement dated January 4, 1999 (Incorporated by reference; previously filed as
between the Registrant and Big-Tex Outdoor Exhibit 2.8 to the Registrant's Report Form 10-K
Advertising Inc. of Granbury, Texas. dated April 30, 1999)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.9 Purchase Agreement dated March 1, 1999 between (Incorporated by reference; previously filed as
the Registrant and GDM Outdoor Advertising, Exhibit 2.9 to the Registrant's Report
Inc. Form 10-K dated April 30, 1999)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
2.10 Purchase Agreement dated April 30, 1999 (Incorporated by reference; previously filed as
between the Registrant and Borderline Exhibit 2.9 to the Registrant's Report
Outdoor Advertising, Inc. Form 10-K dated April 30, 1999)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
3.1 Articles of Incorporation of Registrant (Incorporated by reference; previously filed as
Exhibit 3.1 to the Registrant's Form SB-2
Registration Statement, File No. 333-12957 (the
"Form SB-2")
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
3.2 By-laws of Registrant (Incorporated by reference; previously filed as
Exhibit 3.2 to the Form SB-2
- ------------------ ------------------------------------------------ ----------------------------------------------------
24
<PAGE>
- ------------------ ------------------------------------------------ ----------------------------------------------------
EXHIBIT METHOD
NUMBER DESCRIPTION OF FILING
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
4 Specimen of Common Stock Certificate (Incorporated by reference; previously filed as
Exhibit 4 to the Form SB-2)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.1 Form of Billboard Outdoor Advertising (Incorporated by reference; previously filed as
Agreement Exhibit 10.1 to the Form SB-2)
----------------- ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.2 Form of Poster Outdoor Advertising Agreement (Incorporated by reference; previously filed as
Exhibit 10.2 to the Form SB-2)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.3 Distributor Franchise Agreement, dated as of (Incorporated by reference; previously filed as
July 19, 1995, between the Registrant and Exhibit 10.3 to the Form SB-2)
CITGO Petroleum Corporation
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.4 Form of Representative's Option (Incorporated by reference; previously filed as
Exhibit 10.4 to the Form SB-2)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.5 Form of Employment Agreement, dated as of (Incorporated by reference; previously filed as
September 27, 1996, between the Registrant and Exhibit 10.5 to the Form SB-2)
Michael L. Bowlin
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.6 Form of Employment Agreement, dated as of (Incorporated by reference; previously filed as
September 27, 1996, between the Registrant and Exhibit 10.6 to the Form SB-2)
C. Christopher Bess
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.7 Loan Agreement, dated as of January 31, 1995, (Incorporated by reference; previously filed as
between the Registrant and First Security Exhibit 10.7 to the Form SB-2)
Bank of New Mexico, ("First Security Bank")
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.8 Loan Agreement, dated as of May 16, 1995, (Incorporated by reference; previously filed as
between the Registrant and First Security Exhibit 10.8 to the Form SB-2)
Bank
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.9 Promissory Note, dated as of May 16, 1995, (Incorporated by reference; previously filed as
payable to First Security Bank in the Exhibit 10.9 to the Form SB-2)
aggregate principal amount of $900,000
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.10 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.11 Revision Agreement, dated as of May 16, 1995, (Incorporated by reference; previously filed as
between the Registrant and First Security Exhibit 10.11 to the Form SB-2)
Bank
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.12 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
25
<PAGE>
- ------------------ ------------------------------------------------ ----------------------------------------------------
EXHIBIT METHOD
NUMBER DESCRIPTION OF FILING
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.13 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.14 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.15 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.16 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.17 Lease, dated as of November 22, 1966, between (Incorporated by reference; previously filed as
Clara May Basset and the Registrant, as Exhibit 10.17 to the Form SB-2)+
amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.18 Lease, dated as of January 12, 1987, between (Incorporated by reference; previously filed as
Janet Prince and the Registrant Exhibit 10.18 to the Form SB-2)+
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.19 Commercial Lease, dated as of September 21, (Incorporated by reference; previously filed as
1986, between the State of Arizona and the Exhibit 10.19 to the Form SB-2)
Registrant, as amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.20 Business Lease, dated as of March 16, 1995, (Incorporated by reference; previously filed as
between the New Mexico Commissioner of Exhibit 10.20 to the Form SB-2)
Public Lands and the Registrant, as amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.21 Lease, dated as of June 3, 1974, between the (Incorporated by reference; previously filed as
Registrant and Elbert and Ina Jean Roundy, Exhibit 10.21 to the Form SB-2) +
as amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.22 Lease Agreement, dated as of June 23, 1989, (Incorporated by reference; previously filed as
between the Registrant and Rex Kipp, Jr., as Exhibit 10.22 to the Form SB-2)+
amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.23 Lease, dated as of September 29, 1983, between (Incorporated by reference; previously filed as
J.T. and Idra M. Turner and the Registrant Exhibit 10.23 to the Form SB-2)+
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.24 Business Lease, dated as of October 1, 1991, (Incorporated by reference; previously filed as
between the Registrant and the New Mexico Exhibit 10.24 to the Form SB-2)
Commissioner of Public Lands
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.25 Commercial Lease, dated as of September 21, (Incorporated by reference; previously filed as
1986, between the Registrant and the State of Exhibit 10.25 to the Form SB-2)
Arizona, as amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
26
<PAGE>
- ------------------ ------------------------------------------------ ----------------------------------------------------
EXHIBIT METHOD
NUMBER DESCRIPTION OF FILING
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.26 Commercial Lease, dated as of June 11, 1986, (Incorporated by reference; previously filed as
between the Registrant and the State of Exhibit 10.26 to the Form SB-2)
Arizona, as amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.27 1996 Stock Option Plan (Incorporated by reference; previously filed as
Exhibit 10.27 to the Form SB-2)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.28 Profit-Sharing 401(k) Plan and Trust (Incorporated by reference; previously filed as
Exhibit 10.28 to the Form SB-2)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.29 Letter of Agreement, dated as of April 26, (Incorporated by reference; previously filed as
1996, between the Registrant and Miller Exhibit 10.29 to the Form SB-2)
Capital Corporation, as amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.30 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.31 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.32 "Dairy Queen" Operating Agreement, dated as of (Incorporated by reference; previously filed as
March 10, 1983, between Interstate Dairy Queen Exhibit 10.32 to the Form SB-2)
Corporation and the Registrant d/b/a DQ/B
of Edgewood, NM, together with amendments
and ancillary agreements related thereto
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.33 "Dairy Queen" Operating Agreement, dated as of (Incorporated by reference; previously filed as
May 1, 1982, between Interstate Dairy Queen Exhibit 10.33 to the Form SB-2)
Corporation and the Registrant d/b/a DQ/B of
Flying C, New Mexico, together with amendments
and ancillary agreements related thereto
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.34 "Dairy Queen" Store Operating Agreement, dated (Incorporated by reference; previously filed as
as of November 18,1986, between Dairy Queen of Exhibit 10.34 to the Form SB-2)
Southern Arizona, Inc. and the Registrant,
together with amendments and ancillary
agreements related thereto
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.35 "Dairy Queen" Operating Agreement, dated as of (Incorporated by reference; previously filed as
September 1, 1982, between Interstate Dairy Exhibit 10.35 to the Form SB-2)
Queen Corporation and the Registrant d/b/a DQ
of Bluewater, New Mexico, together with
amendments and ancillary agreements related
thereto
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.36 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
27
<PAGE>
- ------------------ ------------------------------------------------ ----------------------------------------------------
EXHIBIT METHOD
NUMBER DESCRIPTION OF FILING
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.37 "Dairy Queen" Store Operating License (Incorporated by reference; previously filed as
Agreement, dated as of February 1, 1984, Exhibit 10.37 to the Form SB-2)
between Dairy Queen of Arizona, Inc.
and the Registrant, together with amendments
and ancillary agreements related thereto
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.38 "Dairy Queen" Operating Agreement dated as of (Incorporated by reference; previously filed as
October 30, 1985, between Interstate Dairy Exhibit 10.38 to the Form SB-2)
Queen Corporation and the Registrant, as
amended
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.39 "Dairy Queen" Operating Agreement, dated as of (Incorporated by reference; previously filed as
June 7, 1989, between Interstate Dairy Queen Exhibit 10.39 to the Form SB-2)
Corporation and the Registrant d/b/a "DQ" at
Butterfield Station, together with amendments
and ancillary agreements related thereto
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.40 Letter of Agreement, dated as of March 1, (Incorporated by reference; previously filed as
1987, between Stuckey's Corporation and the Exhibit 10.40 to the Form SB-2)
Registrant confirming franchise of Benson, AZ
Stuckey's Pecan Shoppe
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.41 Franchise Agreement, dated as of February 22, (Incorporated by reference; previously filed as
1982, between Stuckey's, Inc. and the Exhibit 10.41 to the Form SB-2)
Registrant, together with a related Personal
Guaranty and Indemnity
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.42 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.43 [Intentionally omitted]
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.44 Credit Agreement with First Security Bank, (Incorporated by reference; previously filed as
dated as of November 25, 1997, granting the Exhibit 10.44 to theRegistrant's Report
Registrant funds in the aggregate Form 10-QSB dated December 15, 1997)
principal amount of $10,500,000
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
10.45 Credit agreement with First Security Bank, (Incorporated by reference; previously filed as
dated as of November 10, 1998 granting the Exhibit 10.44 to the Registrant's Report Form 10-Q
Registrant funds available in the aggregate dated December 14, 1998)
amount of $30,000,000.
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
21 List of Subsidiaries (Incorporated by reference; previously filed as
Exhibit 21 to the Registrant's Report Form 10-KSB
dated May 1, 1997)
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
23.1 Consent of KPMG LLP Filed herewith
- ------------------ ------------------------------------------------ ----------------------------------------------------
- ------------------ ------------------------------------------------ ----------------------------------------------------
27 Financial Data Schedule Filed herewith
- ------------------ ------------------------------------------------ ----------------------------------------------------
+ Confidential treatment granted as to certain portions of this exhibit.
</TABLE>
28
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BOWLIN Outdoor Advertising
& Travel Centers Incorporated
By: /s/ MICHAEL L. BOWLIN
-----------------------
Michael L. Bowlin, Chairman
of the Board, President and
Chief Executive Officer
Date: April 28, 2000
In accordance with the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the Company and in the
capacities and on the dates indicated:
Signature Date
By: /s/ MICHAEL L. BOWLIN April 28, 2000
-----------------------------------------------
Michael L. Bowlin, Chairman of the Board,
President, CEO and Director (Principal
Executive Officer)
By: /s/ C. CHRISTOPHER BESS April 28, 2000
-----------------------------------------------
C. Christopher Bess, Executive Vice President,
Chief Operating Officer, and Director
By: /s/ NINA J. PRATZ April 28, 2000
-----------------------------------------------
Nina J. Pratz, Senior Vice President, Chief
FinancialOfficer, Treasurer and Secretary,
and Director
By: /s/ JACK AYERS April 28, 2000
-----------------------------------------------
Jack Ayers, Director
By: /s/ ROBERT L. BECKETT April 28, 2000
-----------------------------------------------
Robert L. Beckett, Director
By: /s/ JAMES A. CLARK April 28, 2000
-----------------------------------------------
James A. Clark, Director
By: /s/ HAROLD VAN TONGEREN April 28, 2000
-----------------------------------------------
Harold Van Tongeren, Director
The Board of Directors
BOWLIN Outdoor Advertising & Travel Centers, Incorporated:
We consent to incorporation by reference in the registration statement (No.
333-94025) on Form S-8 of BOWLIN Outdoor Advertising & Travel Centers,
Incorporated of our report dated April 11, 2000, relating to the consolidated
balance sheets of BOWLIN Outdoor Advertising & Travel Centers, Incorporated and
subsidiaries as of January 31, 2000, and 1999, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the years
in the three year period ended January 31, 2000, which report appears in the
January 31, 2000, annual report on Form 10-K of BOWLIN Outdoor Advertising &
Travel Centers, Incorporated.
/S/ KPMG LLP
Albuquerque, New Mexico
April 28, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S JANUARY 31, 2000 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 1599412
<SECURITIES> 0
<RECEIVABLES> 1315907
<ALLOWANCES> 40000
<INVENTORY> 3534130
<CURRENT-ASSETS> 7925146
<PP&E> 45824175
<DEPRECIATION> 15268102
<TOTAL-ASSETS> 40780780
<CURRENT-LIABILITIES> 3759033
<BONDS> 20885415
0
0
<COMMON> 4385
<OTHER-SE> 15233937
<TOTAL-LIABILITY-AND-EQUITY> 40780870
<SALES> 34617835
<TOTAL-REVENUES> 35004457
<CGS> 22350258
<TOTAL-COSTS> 22350258
<OTHER-EXPENSES> 10543982
<LOSS-PROVISION> 20000
<INTEREST-EXPENSE> 1934395
<INCOME-PRETAX> 582588
<INCOME-TAX> 244500
<INCOME-CONTINUING> 338088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 338088
<EPS-BASIC> .08
<EPS-DILUTED> .08
</TABLE>
