UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
Bowlin Travel Centers Inc.
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(Exact name of registrant as specified in its charter)
Nevada 85-0473277
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
150 Louisiana NE, Albuquerque, NM 87108
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (505) 266-5985
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock $.001 Par Value
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(Title of class)
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PRELIMINARY STATEMENT
This registration statement is being filed by Bowlin Travel Centers, Inc.,
a Nevada corporation. The effectiveness of this registration statement subjects
Bowlin Travel Centers to the periodic reporting requirements imposed by Section
13(a) of the Securities Exchange Act.
We will electronically file with the Securities Exchange Commission the
following periodic reports:
* Annual reports on Form 10-K with audited financial statements;
* Quarterly reports on Form 10-Q;
* Periodic reports on Form 8-K of matters of material interest to
shareholders; and
* Annual proxy statements to be sent to our shareholders in the notices
of our annual shareholders' meetings.
The public may read and copy any materials we file with the Commission at
its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site (http://www.sec.gov) that contains
reports, proxy and information statements, and other information regarding
issuers that electronically file reports with the Commission.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. BUSINESS
COMPANY OVERVIEW
We are a regional leader in the operation of travel centers dedicated to serving
the traveling public in rural and smaller metropolitan areas of the Southwestern
United States. Our tradition of serving the public dates back to 1912, when the
founder, Claude M. Bowlin, started trading goods and services with Native
Americans in New Mexico. Our first travel center was opened in 1953 and we
currently operate fifteen full-service travel centers along interstate highways
in Arizona and New Mexico. We advertise our travel centers through a network of
approximately 300 outdoor advertising display faces. Our travel centers offer
brand name food, gasoline and a variety of unique Southwestern merchandise to
the traveling public.
Prior to August 8, 2000 our travel centers were owned and operated as a business
segment of Bowlin Outdoor Advertising and Travel Centers, Inc. ("Bowlin").
Bowlin operated two business segments; travel centers and outdoor advertising.
Bowlin Travel Centers, Inc. was formed on August 8, 2000 as a wholly owned
subsidiary of Bowlin. Bowlin contributed substantially all of the assets and
liabilities directly related to its travel centers business to Bowlin Travel
Centers.
RECENT DEVELOPMENTS
On October 3, 2000, Bowlin entered into an Agreement and Plan of Merger with
Lamar Advertising Company, pursuant to which, Bowlin plans to merge its outdoor
advertising business with Lamar. The merger is subject to approval under the
Hart-Scott-Rodino Antitrust Improvements Act, shareholder approval and the
satisfaction of various other closing conditions. Bowlin formed Bowlin Travel
Centers in anticipation of a distribution of the shares of Bowlin Travel Centers
to the shareholders of Bowlin. Bowlin intends to "spin-off" Bowlin Travel
Centers in a tax-free distribution immediately prior to the closing of the
merger.
Bowlin will not distribute the shares of Bowlin Travel Centers until the SEC has
declared this registration statement effective. Bowlin intends to distribute an
Information Statement to the shareholders prior to, or contemporaneously with
the distribution of the shares of Bowlin Travel Centers.
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INDUSTRY OVERVIEW
The travel services industry in which we compete includes convenience stores
that may or may not offer gasoline, and fast food and full-service restaurants
located along rural interstate highways. We believe that the current trend in
the travel services industry is toward strategic pairings of complementary
products that are noncompetitive at a single location, 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.
BUSINESS STRATEGY
Our business strategy is to capture a greater market share of the interstate
traveler market in Arizona and New Mexico by offering name brand recognized food
service operations and gasoline, and unique Southwestern souvenirs and gifts, at
a single location and at competitive prices delivered with a high standard of
service.
Our 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 our travel centers offer food and
beverages, ranging from drinks and snack foods at some locations to full-service
restaurants at others. Our food service operations at seven of the fifteen
travel centers operate under the Dairy Queen/Brazier or Dairy Queen trade names.
Four of our 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.
Our travel centers offer brand name gasoline such as CITGO, EXXON, and Diamond
Shamrock. We are an authorized distributor of CITGO and EXXON petroleum
products. Two of our locations are EXXON stations and eight are CITGO stations.
We intend to continue marketing CITGO and EXXON products to other retailers.
Our billboard advertising for our 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 our 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, and other gifts.
GROWTH STRATEGY
TRAVEL CENTERS.
* We are committed to expanding our travel center operations through internal
development.
* We believe that the co-branding concept implemented at our travel centers
has resulted in increased revenues, and we intend to pursue opportunities
to acquire rights to additional brand name products.
* We intend to continue to offer high quality brand name food and products in
a clean, safe environment designed to appeal to travelers on interstate
highways.
* We intend 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 our
travel center outlets.
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GASOLINE WHOLESALING. We are an authorized CITGO and EXXON distributor. CITGO
and EXXON are petroleum producers in the United States. The CITGO distribution
agreement allows us to streamline our 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 us 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 us, or termination by CITGO or EXXON of its petroleum marketing
activities in our distribution area. The terms of the distribution agreements
require us to purchase certain minimum quantities of gasoline during the term of
the agreement, which includes gasoline purchased for sale at our travel centers.
Since the effective date of the CITGO distribution agreement, our purchases of
CITGO products have exceeded the required minimum quantities. Since the
effective date of the EXXON agreement, we have met the minimum quantities.
BUSINESS OPERATIONS
We sell food, gasoline and merchandise through our fifteen travel centers
located along interstate highways I-10, I-40, and US 70, 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 our travel centers are open every day of the year except
Christmas.
Each of our travel centers maintains a distinct, theme-oriented atmosphere. In
addition to Southwestern merchandise, we also import 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. We have long-standing relationships with many of our vendors and
suppliers.
We sell food under the Dairy Queen and Dairy Queen/Brazier brand names and sell
snacks and souvenir merchandise under the Stuckey's brand name. The terms of our
agreements with Stuckey's and Dairy Queen obligate us 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 to comply with
certain provisions governing the operation of the franchised stores.
We continuously monitor and upgrade our 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.
COMPETITION
We face competition at our 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 we compete 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. Our 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 we do. Although we face substantial competition, we believe that few of our
competitors offer the same breadth of products and services dedicated to the
traveling public.
EMPLOYEES
As of September 1, 2000, Bowlin Travel Centers had approximately 222 full-time
and part-time employees; 48 were located in Arizona, and 174 were located in New
Mexico. None of Bowlin Travel Center's employees are covered by a collective
bargaining agreement and we believe that relations with our employees are good.
3
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REGULATION
Each of our food service operations is subject to licensing and regulation by a
number of governmental authorities relating to health, safety, cleanliness and
food handling. Our food service operations are also subject to Federal and state
laws governing such matters as working conditions, overtime, tip credits and
minimum wages. We believe that operations at our 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 our operating costs.
Historically, we have 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 our gasoline
dispensing operations.
Our travel center operations are also subject to extensive laws and regulations
governing the sale of tobacco, and in our New Mexico travel centers, the sale of
fireworks. 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 our travel centers as a result of such
changes.
TRADEMARKS
We operate our travel centers under a number of our own trademarks such as The
Thing, Trails West and Bowlin's Running Indian, as well as certain trademarks
owned by third parties and licensed to us, such as the Dairy Queen, Dairy
Queen/Brazier, Stuckey's, CITGO and EXXON trademarks. We believe that our
trademark rights will not materially limit competition with our travel centers.
We also believe that none of the trademarks we own are material to our overall
business; however, the loss of one or more of our licensed trademarks could have
an adverse effect.
ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
The selected data presented below under the captions "Selected Statement of
Income Data" and "Selected Balance Sheet Data" for, and as of the end of, each
of the years in the three-year period ended January 31, 2000, are derived from
the audited financial statements of Bowlin Travel Centers. The financial
statements as of January 31, 2000, and 1999, and for each of the years in the
three-year period ended January 31, 2000, and the report thereon, are included
elsewhere in this Form 10.
The selected data presented below under the captions "Selected Statement of
Income Data" and "Selected Balance Sheet Data" for, and as of the end of the
fiscal year ended January 31, 1996 and 1995, are derived from the unaudited
financial statements of Bowlin Travel Centers. In the opinion of management, the
following unaudited data reflect all adjustments, consisting of normal recurring
adjustments, necessary to fairly present the Company's financial position and
results of operations for the periods presented in accordance with generally
accepted accounting principles.
Because Bowlin Travel Centers did not operate independently of Bowlin, and
was a segment of the business operations of Bowlin during the periods reflected
in the following selected financial data, it might have recorded different
results had it been operated independently of Bowlin. Therefore, the financial
information presented below is not necessarily indicative of the results of
operations or financial position that would have resulted if Bowlin Travel
Centers had been a separate, stand-alone business during the periods shown, or
of its future performance as a separate, stand-alone business.
4
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BOWLIN TRAVEL CENTERS, INC.
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,*
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2000 1999 1998 1997 1996
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<S> <C> <C> <C> <C> <C>
Selected Statement of Income Data:
Net sales $ 26,855,781 23,519,909 22,303,645 21,388,899 20,174,971
============ ============ ============ ============ ==========
Net income $ 487,366 253,672 596,123 672,729 183,222
============ ============ ============ ============ ==========
Pro forma basic and diluted earnings
per share** $ 0.11 0.06 0.14 0.15 0.04
============ ============ ============ ============ ==========
Selected Balance Sheet Data
(at end of period)
Total Assets $ 16,990,676 16,163,671 12,045,789 11,501,644 8,958,046
============ ============ ============ ============ ==========
Long Term debt, including current
installments $ 6,723,555 6,769,025 3,068,374 3,186,357 3,626,115
============ ============ ============ ============ ==========
</TABLE>
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* The company did not operate independently during any of the fiscal years
shown.
** The pro forma earnings per share amounts are based on the 4,390,098 shares
of Bowlin Outdoor Advertising & Travel Centers Incorporated outstanding at
September 1, 2000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
The following is a discussion of the financial condition and results of
operations of Bowlin Travel Centers as of and for the three fiscal years ended
January 31, 2000, 1999 and 1998 and for the six-month periods ended July 31,
2000 and 1999. This discussion should be read in conjunction with the financial
statements of the company and the related notes included elsewhere in this Form
10. References to specific years refer to Bowlin Travel Center's fiscal year
ending January 31 of such year.
The forward-looking statements included in Management's Discussion and
Analysis of Financial Condition and Results of Operations, which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated in
these forward-looking statements as a result of a number of factors, including
but not limited to, those discussed.
SIX-MONTH PERIOD ENDED JULY 31, 2000 COMPARED TO SIX-MONTH PERIOD ENDED JULY 31,
1999
Gross sales increased by 4.8% to $14.753 million for the six months ended
July 31, 2000, from $14.072 million for the six months ended July 31, 1999.
Merchandise sales increased 1.1% to $5.257 million for the six months ended July
31, 2000, from $5.200 million for the six months ended July 31, 1999. Gasoline
sales increased 8.6% to $7.114 million for the six months ended July 31, 2000,
from $6.551 million for the same period in 1999. Wholesale gasoline sales
increased 16.2% to $945,000 for the six months ended July 31, 2000, from
$813,000 for the six months ended July 31, 1999. Restaurant sales decreased 4.7%
to $1.437 million for the six months ended July 31, 2000, from $1.508 million
for the six months ended July 31, 1999.
5
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Cost of goods sold increased 7.3% to $10.171 million for the six months
ended July 31, 2000, from $9.475 million for the six months ended July 31, 1999.
Merchandise cost of goods increased 0.5% to $2.350 million for the six months
ended July 31, 2000, from $2.338 million for the six months ended July 31, 1999.
Gasoline cost of goods increased 10.4% to $6.520 millions for the six months
ended July 31, 2000, from $5.905 million for the six months ended July 31, 1999.
Wholesale gasoline cost of goods increased 17.1% to $917,000 for the six months
ended July 31, 2000, from $783,000 for the six months ended July 31, 1999.
Restaurant cost of goods decreased 14.5% to $384,000 for the six months ended
July 31, 2000, from $449,000 for the six months ended July 31, 1999. Cost of
goods sold as a percentage of gross revenues for the six months ended July 31,
2000 was 68.9% compared to 67.3% for the six months ended July 31, 1999.
Gross profit slightly decreased 0.8% to $4.380 million for the six months
ended July 31, 2000, from $4.416 million for the six months ended July 31, 1999.
Lower margins on convenience store product sales and gasoline sales for the six
months ended July 31, 2000 continued to negatively impact gross profit.
General and administrative expenses consist of salaries, bonuses and
commissions for travel center personnel, property costs and repairs and
maintenance. General and administrative expenses also include executive and
administrative compensation and benefits, accounting, legal and investor
relations fees. General and administrative expenses decreased 3.3% to $3.402
million for the six months ended July 31, 2000, from $3.519 million for the six
months ended July 31, 1999.
Depreciation and amortization expense increased 6.2% to $377,000 for the
six months ended July 31, 2000, from $355,000 for the six months ended July 31,
1999.
Management fee income consists of reimbursements for certain corporate
general and administrative functions performed on the behalf of Bowlin including
treasury, accounting, tax, human resources, and other support services.
Management fee income decreased to $103,000 during the six months ended July 31,
2000 from $104,000 during the six months ended July 31, 1999. Bowlin Travel
Centers and Bowlin have entered into a management services agreement, however,
Bowlin may discontinue such cost sharing in future periods.
The above factors contributed to an overall increase in operating income of
9.3% to $705,000 for the six months ended July 31, 2000, from $645,000 for the
six months ended July 31, 1999.
EBITDA (earnings before interest, taxes, depreciation and amortization) is
defined as operating income before depreciation and amortization. It represents
a measure which management believes is customarily used to evaluate financial
performance. However, EBITDA is not a measure of financial performance under
generally accepted accounting principles 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.
EBITDA for travel centers increased 8.1% to $1.081 million for the six
months ended July 31, 2000, from $1.000 million for the six months ended July
31, 1999. The EBITDA margin for travel centers increased to 7.3% for the six
months ended July 31, 2000, compared to 7.1% for the six months ended July 31,
1999.
Interest expense increased 8.5% to $318,000 for the six months ended July
31, 2000, from $293,000 for the six months ended July 31, 1999.
Other income, net, includes gains and/or losses from the sales of assets
and interest income. Other income, net, decreased to $189,000 for the six months
ended July 31, 2000, from $282,000 for the six months ended July 31, 1999. The
decrease is primarily due to a one-time gain of $227,000 from insurance proceeds
in fiscal year 2000 not present in fiscal year 2001 partially offset by gains on
sales of assets in fiscal 2001.
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Income before income taxes decreased 9.2% to $575,000 for the six months
ended July 31, 2000, from $633,000 for the six months ended July 31, 1999. As a
percentage of gross revenues, income before income taxes decreased to 3.9% for
the six months ended July 31, 2000, from 4.5% for the six months ended July 31,
1999.
Income taxes were $221,000 for the six months ended July 31, 2000, compared
to $244,000 for the six months ended July 31, 1999, as the result of lower
pretax income.
The foregoing factors contributed to a decrease in net income for the six
months ended July 31, 2000 to $354,000 compared to $390,000 for the six months
ended July 31, 1999.
FISCAL YEAR ENDED JANUARY 31, 2000 (FISCAL 2000) COMPARED TO FISCAL YEAR ENDED
JANUARY 31, 1999 (FISCAL 1999)
Gross sales at our travel centers increased 14.4% to $27.242 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
$8.043 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 $2.752 million for fiscal 2000 from $2.811 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 18.0% to $18.660
million for fiscal 2000 from $15.818 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 66.5% for fiscal year
1999.
Gross profit for the travel centers increased 6.4% to $8.196 million for
fiscal year 2000 from $7.702 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 also include executive and
administrative compensation and benefits, investor relations and accounting and
legal fees 1999. General and administrative expenses for the travel centers
increased 8.9% to $7.129 million for fiscal year 2000, from $6.546 for fiscal
year 1999. The increase is primarily due to general and administrative expenses
attributable to the new travel center and, to a lesser extent, increases in
travel center rents and sign repairs.
For fiscal year 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 increased by .3% to $719,000 for
fiscal year 2000 from $717,000 for fiscal year 1999.
Management fee income consists of reimbursements for certain corporate
general and administrative functions performed on the behalf of Bowlin including
treasury, accounting, tax, human resources, and other support services.
Management fee income increased 10.7% to $207,000 during fiscal 2000 from
$187,000 during fiscal 1999. Bowlin Travel Centers and Bowlin have entered into
a management services agreement, however, Bowlin may discontinue such cost
sharing in future periods.
The above factors contributed to a decrease in travel centers operating
income of 7.6% to $586,000 for fiscal year 2000, as compared to $634,000 for
fiscal year 1999.
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<PAGE>
EBITDA for travel centers decreased to $1.305 million for fiscal year 2000,
as compared to $1.350 million for fiscal year 1999. The EBITDA margin for travel
centers decreased to 4.8% for fiscal 2000, as compared to 5.7% for fiscal 1999.
Interest expense increased 92.3% to $598,000 for fiscal 2000, from $311,000
for fiscal 1999. The increase is primarily attributable to the increase in debt
associated with the company's new travel center as well as updates to existing
travel centers.
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 to $808,000 in fiscal 2000 as compared to
$93,000 in fiscal 1999, primarily due to a one-time gain from insurance proceeds
of $712,000. Excluding the one-time gain from insurance proceeds, non-operating
income, net, increased to $96,000 in fiscal 2000, compared to $93,000 in fiscal
1999.
Income before income taxes increased 91.3% to $796,000 for fiscal 2000,
from $416,000 for fiscal 1999. As a percentage of gross revenues, income before
income taxes increased to 2.9% for fiscal year 2000, from 1.7% for fiscal 1999
primarily as a result of the gain from insurance proceeds, partially offset by
increased depreciation, amortization and interest expense.
Income taxes were $309,000 for fiscal 2000 compared to $162,000 for fiscal
year 1999, as a result of higher pre-tax income. The effective tax rate for
fiscal year 2000 was 38.8% as compared to 38.9% for fiscal year 1999.
The foregoing factors contributed to the company's increase in net income
for fiscal 2000 to $487,000, compared to $254,000 for fiscal 1999.
FISCAL YEAR ENDED JANUARY 31, 1999 (FISCAL 1999) COMPARED TO FISCAL YEAR ENDED
JANUARY 31, 1998 (FISCAL 1998)
Gross sales at our travel centers increased 5.4% to $23.803 million for
fiscal 1999, from $22.584 million for fiscal 1998. Merchandise sales increased
14.2% to $8.043 million for fiscal 1999, from $7.045 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 $2.811
million for fiscal 1999, from $2.981 million for fiscal 1998. Wholesale gasoline
sales increased 34.0% 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 5.2% to $15.818 million
for fiscal 1999, from $15.042 million for fiscal 1998. As a percentage of gross
sales, cost of goods sold decreased slightly to 66.5% from 66.6% for the
respective fiscal periods.
Gross profit for the travel centers increased 6.1% to $7.702 million for
fiscal 1999, from $7.261 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 also include executive and
administrative compensation and benefits, investor relations and accounting and
legal fees 1999. General and administrative expenses for the travel centers
increased 10.5% to $6.546 million for fiscal 1999, from $5.925 million for
fiscal 1998. Increases in general and administration are due in part to
increases in middle management personnel.
For fiscal year 1999, the President and Chief Operating Officer of Bowlin
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 increased by 53.5% to $717,000 for
fiscal 1999, from $467,000 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.
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<PAGE>
Management fee income consists of reimbursements for certain corporate
general and administrative functions performed on the behalf of Bowlin including
treasury, accounting, tax, human resources, and other support services.
Management fee income increased 1.6% to $187,000 during fiscal 1999 from
$184,000 during fiscal 1998. Bowlin Travel Centers and Bowlin have entered into
a management services agreement, however, Bowlin may discontinue such cost
sharing in future periods.
The above factors contributed to a decrease in travel centers operating
income of 41.7% to $634,000 for fiscal 1999, compared to $1.088 million for
fiscal year 1998.
EBITDA for travel centers decreased by 13.2% to $1.350 million for fiscal
1999, compared to $1.555 million for fiscal 1998. The EBITDA margin for travel
centers decreased to 5.7% for fiscal 1999, compared to 6.9% for fiscal 1998.
Interest expense increased 15.6% to $311,000 for fiscal year 1999 from
$269,000 for fiscal 1998. The increase is a result of borrowings to fund the
continued conversion of travel centers to CITGO and EXXON branding.
Non-operating income, net decreased to $93,000 in fiscal 1999 from $150,000
or 38.0%. This decrease was due to fewer gains on the sale of assets.
Income before income taxes decreased 57.1% to $416,000 for fiscal year
1999, from $969,000 for fiscal 1998. As a percentage of gross revenues, income
before income taxes decreased to 1.7% for the fiscal year ended 1999 from 4.3%
for the same fiscal period 1998 primarily as a result of increased depreciation
and interest expense partially offset by a decrease in non-operating income,
net.
Income taxes were $162,000 for fiscal 1999, compared to $373,000 for fiscal
1998, as a result of lower pre-tax income. The effective tax rate for fiscal
1999 was 38.9% as compared to 38.5% for fiscal 1998.
The foregoing factors contributed to the company's decrease in net income
for fiscal 1999 to $254,000, compared to $596,000 for fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
JULY 31, 2000
At July 31, 2000, the company had working capital of $4.050 million
compared to working capital of $3.687 million at January 31, 2000. At July 31,
2000, the company had a current ratio of 2.9:1 compared to a current ratio of
2.8:1 at January 31, 2000. The increase in working capital and the current ratio
are primarily attributable to increases in cash of $664,000, offset by decreases
in accounts receivable of $300,000. The net cash provided by operating
activities was $931,000 for the six-month period ended July 31, 2000, compared
to $1.612 million for the six-month period ended July 31, 1999. Net cash
provided by investing activities was $4,700 for the six-month period ended July
31, 2000, compared to net cash used of $1.106 million for the six-month period
ended July 31, 1999. The increase is due primarily to purchases of property and
equipment of $205,000 for the six-month period ended July 31, 2000, compared to
$1.724 million during the six-month period ended July 31, 1999. Increases in
property and equipment were offset by proceeds from the sale of assets of
$202,000 in the six-month period ended July 31, 2000, compared to proceeds of
$16,000 in the six-month period ended July 31, 1999, as well as $599,000 in
insurance proceeds received during the six-month period ended July 31, 1999.
Net cash used by financing activities was $273,000 for the six-month period
ended July 31, 2000 compared to net cash provided of $18,000 in the six-month
period ended July 31, 1999. The decrease is due primarily to a decrease in net
borrowings of $250,000, and an increase in payments on long-term debt of
$41,000, in the six-month period ended July 31, 2000 compared to the six-month
period ended July 31, 1999.
As of July 31, 2000, the company was indebted to various banks and
individuals in an aggregate principal amount of approximately $6.451 million
under various loans and promissory notes. Land, buildings, equipment and
inventories of the company secure many of the loans and promissory notes. The
loans and promissory notes mature at dates from the current fiscal year to
October 2013 and accrue interest at rates ranging from 7.75 % to 10% per annum.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of July 31, 2000, approximately $5.750 million of the company's total
indebtedness accrued interest at variable rates tied to LIBOR or 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 that could impact the company's ability to
finance internal development and growth of the business.
JANUARY 31, 2000
At January 31, 2000, the company had working capital of $3.687 million
compared to working capital of $4.646 million at January 31, 1999. At January
31, 2000, the company had a current ratio of 2.8:1 compared to a current ratio
of 3.3:1 at January 31, 1999. The decrease in working capital and the current
ratio are primarily attributable to decreases in cash of $403,000, accounts
receivable of $93,000 and inventory of $155,000, a decrease in income taxes
receivable of $224,000, and a decrease in current installments of long-term debt
of $11,000. The net cash provided by operating activities was $1.422 million for
fiscal 2000, compared to net cash used of $230,000 for fiscal 1999. During
fiscal 2000, there were increases in deferred income taxes of $362,900. Deferred
income taxes increased primarily as a result of book-tax timing differences on
depreciation of assets placed in service in fiscal 1999 and 2000. Net cash used
in investing activities decreased to $1.779 million in fiscal 2000 from $2.029
million in fiscal 1999. The decrease is due primarily to purchases of property
and equipment of $2.909 million in fiscal 2000, compared to $2.061 million in
fiscal 1999. Increases in property and equipment were partially offset by
proceeds from the sale of certain assets of $139,000 in fiscal 2000 compared to
proceeds of $13,000 in fiscal 1999 as well as insurance proceeds of $1.087
million in fiscal 2000.
Net cash used by financing activities was $45,000 in fiscal 2000 compared
to net cash provided of $3.406 million in fiscal 1999. The change is primarily
due to a decrease in proceeds from borrowings of $3.536 million in fiscal 2000,
as well as payments for debt issuance costs totaling $295,000 in fiscal 1999 not
present in fiscal 2000. New debt in fiscal 2000 is a result of 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 $6.724 million
under various loans and promissory notes. Land, buildings, equipment and
inventories of the company secure many of the loans and promissory notes. The
loans and promissory notes mature at dates from the current fiscal year to
October 2013, and accrue interest at rates ranging from 7.75% to 10% per annum.
The company made capital expenditures of approximately $2.909 million and
$2.061 million during the fiscal years ended 2000 and 1999, respectively. For
fiscal 2000, these expenditures were made for upgrades to existing travel
centers. For fiscal 1999, these expenditures were primarily for upgrades to the
company's travel centers, including the new warehouse facility. 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of January 31, 2000, approximately $5.934 million of the company's total
indebtedness accrued interest at variable rates tied to LIBOR or 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
finance internal development and growth of the business.
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RISK FACTORS
We do not provide forecasts of potential future financial performance.
While our management is optimistic about long-term prospects, the following
issues and uncertainties, among others, should be considered in evaluating our
growth outlook.
This registration statement contains forward-looking statements that
involve risks and uncertainties. You should not rely on these forward-looking
statements. We use words such as "anticipate," "believe," "plan," "expect,"
"future," "intend" and similar expressions to identify such forward-looking
statements. This information statement also contains forward-looking statements
attributed to certain third parties relating to their estimates regarding the
travel center industry, among other things. You should not place undue reliance
on those forward-looking statements. Our actual results could differ materially
from those anticipated in the forward-looking statements for many reasons,
including the risks faced by us described below and elsewhere in this
registration statement.
THERE IS NO TRADING MARKET FOR OUR SHARES OF COMMON STOCK AND THERE MIGHT
NEVER BE ONE, AND IF A TRADING MARKET DOES DEVELOP OUR SHARES OF COMMON STOCK
WILL LIKELY BE SUBJECT TO SIGNIFICANT PRICE VOLATILITY AND AN ILLIQUID MARKET.
We are not applying to any exchange to list our shares of common stock. We
anticipate that one or more potential Market Makers might apply to quote prices
for, and trade in, our shares of common stock on the OTC Bulletin Board.
However, there can be no assurance that any Market Maker will ever apply to the
OTC Bulletin Board to trade in our shares of common stock, or that even if
accepted by the OTC Bulletin Board, that a market will ever result. Even if our
shares begin trading on the OTC Bulletin Board, or through any other market or
system, the market price of the common stock could also be subject to
significant fluctuations in response to such factors as variations in our
anticipated or actual results of operations or of other companies engaged in
similar businesses, changes in conditions affecting the economy generally,
analyst reports, general trends in the industry or changes in the stock markets
generally. It is likely that any market in our common shares that develops will
be very illiquid making it difficult to buy or sell our shares.
OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF OUR
RESULTS AS A SEPARATE COMPANY.
The historical financial information we have included in this information
statement may not reflect what our results of operations, financial position and
cash flows would have been had we been a separate, stand-alone entity during the
periods presented or what our results of operations, financial position and cash
flows will be in the future. This is because:
* we have made adjustments and allocations, primarily with respect to
corporate-level expenses and administrative functions, because Bowlin
did not account for us as, and we were not operating as, a separate
stand-alone business for all periods presented; and
* the information does not reflect changes that may occur in the future
as a result of our separation from Bowlin.
For additional information, see "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
WE MIGHT INCUR GREATER COSTS AND EXPENSES IN PROPORTION TO OUR REVENUES
OPERATING AS A STAND-ALONE ENTITY THAT COULD ADVERSELY AFFECT OUR PROFITABILITY.
We have not operated as a stand-alone entity separate from Bowlin. We may have
benefited from operating as a division of Bowlin by sharing some expenses,
personnel and other costs. Our general and administrative costs, as a percentage
of revenue, could increase as a result of our operating independently of Bowlin.
If the costs and expenses of operating independently are substantially greater
than the costs and expenses of operating as a division of Bowlin, it could have
a negative affect on our profitability and an adverse affect on our business
operations and financial condition.
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WE MIGHT NOT BE ABLE TO SECURE ADDITIONAL FINANCING.
We have been able to secure financing for the purchase of additional assets from
commercial lenders in amounts up to 100% of the fair market value of the
acquired assets. However, this financing was obtained by Bowlin as a single
consolidated entity. We might not be able to obtain additional financing as a
stand-alone company without the outdoor advertising segment of Bowlin. If
obtainable, there can be no assurance that any additional financing will be
available in the future on terms acceptable to us. We anticipate that any
financing that we do secure could impose certain financial and other restrictive
covenants upon our operations and us.
THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO SUCCESSFULLY EXPAND OUR
BUSINESS.
We intend to continue to explore the possibilities of acquiring or building
additional travel centers. Although our existing operations are based primarily
in the Southwest, our 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 we will likely 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. There can be no assurance that we will be able to
complete such acquisitions, obtain acceptable financing, or any required consent
of our bank lenders, or that such acquisitions, if completed, can be integrated
successfully into our existing operations. The success of our expansion program
will depend on a number of factors, including the availability of sufficient
capital, the identification of appropriate expansion opportunities, our ability
to attract and retain qualified employees and management, and the continuing
profitability of existing operations. There can be no assurance that we will
achieve our planned expansion or that any expansion will be profitable.
OUR USE OF PETROLEUM PRODUCTS SUBJECTS US TO VARIOUS LAWS AND REGULATIONS,
AND EXPOSES US TO SUBSTANTIAL RISKS.
We are subject to federal, state and local laws and regulations governing the
use, storage, handling, and disposal of petroleum products. While we believe
that we are compliant with environmental laws and regulations, the risk of
accidental contamination to the environment or injury cannot be eliminated. In
the event of such an accident, we could be held liable for any damages that
result and any such liability could exceed our available resources. We could be
required to incur significant costs to comply with environmental laws and
regulations that may be enacted in the future.
BECAUSE ALL OF OUR TRAVEL CENTERS ARE LOCATED IN ARIZONA AND NEW MEXICO, A
DOWNTURN IN THE ECONOMIC CONDITIONS IN THE SOUTHWESTERN UNITED STATES COULD
ADVERSELY AFFECT OUR BUSINESS OPERATIONS AND FINANCIAL CONDITIONS.
Our travel centers are located only in Arizona and New Mexico. We rely on the
business generated from travelers and patrons within these two states, and those
traveling through these states. Our risks from economic downturns are not
diversified or spread out across several regions. Because of the geographic
concentration of our travel centers, our business may be adversely affected in
the event of a downturn in general economic conditions in the Southwestern
United States generally, or in Arizona or New Mexico.
WE DEPEND ON THIRD PARTY RELATIONSHIPS.
We are dependent on a number of third party relationships under which we offer
brand name and other products at our travel centers. These brand name
relationships include distributorship relationships with CITGO and EXXON and
existing franchise agreements with Dairy Queen/Brazier and Stuckey's. Our
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 us from offering additional products
or services that are competitive to those of its suppliers. Although we do 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 us from pursuing opportunities that
management would otherwise deem advisable. We also rely upon several at-will
relationships with various third parties for much of our souvenir and gift
merchandise. Although we believe we have good relationships with our suppliers,
there can be no assurance that we will be able to maintain relationships with
suppliers of suitable merchandise at appropriate prices and in sufficient
quantities.
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IF WE ARE NOT ABLE TO SUCCESSFULLY COMPETE IN OUR INDUSTRY IT COULD HAVE AN
ADVERSE IMPACT ON OUR BUSINESS OPERATIONS OR FINANCIAL CONDITION.
Our 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.
Some of our 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 we do. There can be no
assurance that our travel centers will be able to compete successfully in their
respective markets in the future.
OUR BUSINESS IS SEASONAL AND OUR REVENUES FLUCTUATE QUARTERLY.
Our 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. Our revenues and earnings may experience substantial
fluctuations from quarter to quarter. These fluctuations could result in periods
of decreased cash flow that might cause us to use our lending sources, or to
secure additional financing, in order to cover our expenses during those
periods. This could increase the interest expense of our operations and decrease
net income and have a material adverse effect on our business and results of
operations.
WE ARE SUBJECT TO NUMEROUS GOVERNMENTAL REGULATIONS, INCLUDING THOSE
RELATED TO FOOD HANDLING, FIREWORKS SALES, TOBACCO SALES, AND UNDERGROUND
STORAGE TANKS.
Each of our 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. Our travel center operations are also subject to extensive laws and
regulations governing the sale of tobacco and fireworks in our New Mexico travel
centers. In addition, we have 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
our gasoline dispensing operations.
Such regulations include certain mandatory licensing procedures and the ongoing
compliance measures, as well as special sales tax measures. We believe that
operations at our fifteen travel centers comply with all applicable licensing
and regulatory requirements. However, any failure to comply with applicable
regulations, or the adoption of additional regulations or changes in existing
regulations could impose additional compliance costs, require a cessation of
certain activities or otherwise have a material adverse effect on our business
and results of operations.
OUR CURRENT CAPITALIZATION COULD DELAY, DEFER OR PREVENT A CHANGE OF
CONTROL.
Our Board of Directors has the authority to issue up to ten million (10,000,000)
shares of common stock, $.001 par value, and up to one million (1,000,000)
shares of preferred stock, $.001 par value, in one or more series, and to
determine the price, rights, preferences and privileges of the shares of each
such series without any further vote or action by the stockholders. The rights
of the holders of common stock will be subject to, and may be adversely affected
by, the rights of the holders of any shares of preferred stock that may be
issued in the future. The issuance of preferred stock could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the company, thereby delaying, deferring or
preventing a change of control of the company. In addition, certain provisions
in our Articles of Incorporation and Bylaws relating to supermajority
stockholder approval of certain business combinations, restrictions on calling
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special meetings of stockholders, and restrictions on amendments to the Bylaws
may discourage or make more difficult any attempt by a person or group of
persons to obtain control of the company.
ITEM 3. PROPERTIES.
As of January 31, 2000, we operated fifteen travel centers. We own the real
estate and improvements where eight of our travel centers are located. The
properties at which three of the travel centers are operated are subject to
mortgages. Seven of our existing travel centers are located on real estate that
we lease from various third parties. These leases have terms ranging from five
to forty years, assuming we exercise all renewal options available under certain
leases.
Bowlin Travel Center's principal executive offices occupy approximately 20,000
square feet of space that we own in Albuquerque, New Mexico. The 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). We own 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. We believe that our headquarters
and warehouse facilities are adequate for our operations for the foreseeable
future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Bowlin is the sole shareholder of Bowlin Travel Centers. They hold 1,000 shares
of our common stock, which constitutes 100% of the issued and outstanding common
stock of Bowlin Travel Centers.
However, the following table sets forth the number of shares of our common stock
that we expect will be beneficially owned after the spin-off by (i) all persons
known by the company to be the beneficial owners of more than five percent of
the outstanding shares of common stock; (ii) each Director of the company; (iii)
the executive officers of the company; and (iv) all Directors and executive
officers of the company as a group.
All of the holdings listed below, and referred to in the footnotes to this
table, are holdings of shares of common stock of Bowlin Outdoor Advertising and
Travel Centers Incorporated.
NAME OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) CLASS (3)
-------------------- ------------------------ ---------
Michael L. Bowlin (4) 1,687,613 38.5%
C. Christopher Bess (5) 488,623 11.1%
William J. McCabe 101,590 2.3%
Monica A. Bowlin (6) 1,687,613 38.5%
The Francis W. McClure and Evelyn
Hope McClure Revocable Trust 371,695 8.5%
Wellington Management Company, LLP 228,000 5.2%
All directors and executive officers
as a group (3 persons) (4)(5)(6) 2,277,826 51.9%
----------
* Less than 1.0%
(1) All of the holders have an address at c/o Bowlin Travel Centers, Inc., 150
Louisiana NE, Albuquerque, NM, 87108.
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(2) Unless otherwise noted and subject to community property laws, where
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock as shown
beneficially owned by them.
(3) The shares and percentages shown include the shares of common stock
actually owned as of September 1, 2000.
(4) Includes 425,687 shares held by Mr. Bowlin's wife and 171,332 shares held
by each of three daughters. Mr. Bowlin disclaims beneficial ownership of an
aggregate of 513,996 of such shares, which are held by three of his
daughters.
(5) Includes 48,006 shares held by Mr. Bess' wife and 26,623 shares held by Mr.
Bess' minor daughter.
(6) Includes 747,930 shares held by Mrs. Bowlin's husband and 171,332 shares
held by each of her three daughters. Mrs. Bowlin disclaims beneficial
ownership of an aggregate of 513,996 of such shares, which are held by
three of her daughters.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth information regarding the officers and directors
of Bowlin Travel Centers. A summary of the background and experience of each of
these individuals is set forth after the table.
Name Age Position
---- --- --------
Michael L. Bowlin 57 Chairman of the Board, President and Chief
Executive Officer
C. Christopher Bess 53 Executive Vice President, Chief Operating Officer
and Director
William J. McCabe 49 Senior Vice President, Management Information
Systems and Assistant Secretary and Director
Michael L. Bowlin. Mr. Bowlin has served as Chairman of the Board and Chief
Executive Officer of Bowlin since 1991 and as President since 1983. Mr. Bowlin
has been employed by Bowlin since 1968. Mr. Bowlin is the past Chairman of the
Board for the Outdoor Advertising Association of America and has served on the
Board of Directors in various capacities for twenty years. Mr. Bowlin also
served as President and a member of the Board of Directors of Stuckey's
Incorporated, a restaurant and specialty store franchisor (including specialty
stores located at four of the company's travel centers) from 1986 to July of
2000; however, substantially all of Mr. Bowlin's professional time is devoted to
his duties at Bowlin. Mr. Bowlin holds a Bachelor's degree in Business
Administration from Arizona State University.
C. Christopher Bess. Mr. Bess has served as Bowlin's Executive Vice President
and Chief Operating Officer since 1983. Mr. Bess has served as a member of
Bowlin's Board of Directors since 1974. During his 28 years with Bowlin, Mr.
Bess has also served in such capacities as Internal Auditor, Merchandiser for
Travel Center Operations, Travel Center Operations Manager and as Development
Manager. Mr. Bess is a certified public accountant and holds a Bachelor's degree
in Business Administration from the University of New Mexico.
William J. McCabe. Mr. McCabe has served as Bowlin's Senior Vice President,
Management Information Systems since 1997 and as Assistant Secretary since 1996.
Mr. McCabe served as a member of the Board of Directors from 1983 until August
1996. Prior to 1997, Mr. McCabe served as Senior Vice President - Advertising
Services from 1993, Vice President of Outdoor Operations from 1988 and as Vice
President of Accounting from 1984 to 1987. Mr. McCabe has been employed by
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Bowlin since 1976 in such additional capacities as a Staff accountant and
Controller. Mr. McCabe holds a Bachelor's degree in Business Administration from
New Mexico State University.
ITEM 6. EXECUTIVE COMPENSATION.
The following table summarizes all compensation paid by Bowlin to our Chief
Executive Officer and Chief Operating Officer for services rendered to Bowlin
during the fiscal years ended January 31, 2000, 1999 and 1998. We have no other
executive officer whose total annual salary and bonus paid to them by Bowlin
exceeded $100,000. All information set forth in this table reflects compensation
earned by these individuals for services with Bowlin. We anticipate that our
Chief Executive Officer and Chief Operating Officer will be compensated at
levels consistent with their compensation at Bowlin.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
-------------
Annual Compensation Awards
------------------------------------------------ -------------
Other Securities
Annual Underlying All Other
Name and Principal Position Fiscal Salary($)(1) Bonus($) Compensation($) Options/SARs# Compensation($)
--------------------------- ------ ------------ -------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Bowlin 2000 195,000 -- 17,779 (2) -- --
Chairman of the Board, 1999 144,700 -- 14,458 (2) -- --
President & CEO 1998 136,000 -- 14,535 (2) -- --
C. Christopher Bess 2000 145,000 -- 4,143 (3) -- --
Executive Vice President, 1999 95,000 -- 3,754 (3) -- --
COO & Director 1998 90,000 -- 4,967 (3) -- --
</TABLE>
----------
(1) Includes amounts deferred at the election of the CEO and COO to be
contributed to his 401(k) Profit Sharing Plan account.
(2) Amount for 2000 includes (i) $1,950 of Bowlin's discretionary matching
contributions allocated to Mr. Bowlin's 401(k) Profit Sharing Plan account;
(ii) $11,506 for premiums on term life, auto and disability insurance
policies of which Mr. Bowlin or his wife is the owner; and (iii) $4,323 for
Mr. Bowlin's use of a company owned vehicle. Amount for 1999 includes (i)
$1,775 of Bowlin's discretionary matching contributions allocated to Mr.
Bowlin's 401(k) Profit Sharing Plan account; (ii) $11,449 for premiums on
term life, auto and disability insurance policies of which Mr. Bowlin or
his wife is the owner; and (iii) $1,234 for Mr. Bowlin's use of a company
owned vehicle. Amount for 1998 includes (i) $2,901 of Bowlin's
discretionary matching contributions allocated to Mr. Bowlin's 401(k)
Profit Sharing Plan account; (ii) $10,426 for premiums on term life, auto
and disability insurance policies of which Mr. Bowlin or his wife is the
owner; and (iii) $1,208 for Mr. Bowlin's use of a company owned vehicle.
(3) Amount for 2000 includes (i) $1,700 of Bowlin's discretionary matching
contributions allocated to Mr. Bess' 401(k) Profit Sharing Plan account;
and (ii) $2,443 for premiums on term life, auto and disability insurance
policies of which Mr. Bess or his wife is the owner. Amount for 1999
includes (i) $1,775 of Bowlin's discretionary matching contributions
allocated to Mr. Bess' 401(k) Profit Sharing Plan account; and (ii) $1,979
for premiums on term life, auto and disability insurance policies of which
Mr. Bess or his wife is the owner. Amount for 1998 includes (i) $2,888 of
Bowlin's discretionary matching contributions allocated to Mr. Bess' 401(k)
Profit Sharing Plan account; and (ii) $2,079 for premiums on term life,
auto and disability insurance policies of which Mr. Bess or his wife is the
owner.
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COMPENSATION OF DIRECTORS
Directors who are not employees of the company are entitled to receive $1,000
per each meeting of the Board of Directors, or any committee thereof, attended
plus reimbursement of reasonable expenses. Currently, none of the directors is a
non-employee director.
To date, no stock options have been granted to the named executive officers of
the company. The company does not anticipate having a stock option plan for its
directors, officers or employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Michael L. Bowlin was the President and Chairman of the Board of, and until July
of 2000, a 25% stockholder in, Stuckey's Corporation ("Stuckey's"), a franchiser
of restaurants and specialty stores, including specialty stores located at four
of the company's travel centers. In fiscal year 2000, aggregate franchise and
other related fees paid by Bowlin to Stuckey's equaled approximately $34,029. We
expect to continue the relationship with Stuckey's as a stand-alone company.
Bowlin did not have any other transactions during fiscal 2000 with any director,
director nominee, executive officer or security holder known to Bowlin to own of
record or beneficially more than five percent of Bowlin's common stock, or any
member of the immediate family of any of the foregoing persons, in which the
amount involved exceeded $60,000.
ITEM 8. LEGAL PROCEEDINGS.
We anticipate that Bowlin Travel Centers will, from time to time, be involved in
litigation in the ordinary course of business. Historically, Bowlin, from time
to time has been involved in litigation in the ordinary course of business,
including disputes involving employment claims and construction matters. Bowlin
is not a party to any lawsuit or proceeding which, in the opinion of management,
is likely to have a material adverse effect on Bowlin Travel Centers.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
As of September 1, 2000, there were 1,000 shares of common stock of Bowlin
Travel Centers outstanding. There are no outstanding options or warrants to
purchase, or securities convertible into shares of common stock of Bowlin Travel
Centers.
Currently, there is no market for the common stock of Bowlin Travel Centers. We
cannot predict with any certainty what the price of shares of common stock would
trade at, if traded at all, on any exchange.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
We are authorized to issue up to 10,000,000 shares of common stock, par value
$.001 per share. Holders of shares of common stock are entitled to one vote per
share on all matters to be voted on by stockholders and do not have cumulative
voting rights. Subject to the rights of holders of outstanding shares of
preferred stock, if any, the holders of common stock are entitled to receive
such dividends, if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available therefor, and upon
liquidation, dissolution, or winding up are entitled to receive all assets
available for distribution to the stockholders. The common stock has no
preemptive or other subscription rights, and there are no conversion rights or
redemption or sinking fund provisions with respect to such shares. All of the
outstanding shares of common stock are fully paid and nonassessable.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Articles of Incorporation and Bylaws provide for the company to indemnify
our directors and officers to the fullest extent provided by Nevada law. Under
Nevada corporation law, a corporation is authorized to indemnify officers,
17
<PAGE>
directors, employees and agents who are made or threatened to be made parties to
any civil, criminal, administrative or investigative suit or proceeding by
reason of the fact that they are or were a director, officer, employee or agent
of the corporation or are or were acting in the same capacity for another entity
at the request of the corporation. The indemnification may include expenses
(including attorneys' fees), judgment, fines and amounts paid in settlement
actually and reasonably incurred by such persons if they acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the corporation, or, with respect to any criminal action or proceeding, if they
had no reasonable cause to believe their conduct was unlawful.
In the case of any action or suit by or in the right of the corporation against
such persons, the corporation is authorized to provide similar indemnification,
provided that, should any such persons be adjudged to be liable for negligence
or misconduct in the performance of duties to the corporation, the court
conducting the proceeding must determine that such persons are nevertheless
fairly and reasonably entitled to indemnification. To the extent any such
persons are successful on the merits in defense of any such action, suit or
proceeding, Nevada law provides that they shall be indemnified against
reasonable expenses, including attorney fees.
A corporation is authorized to advance anticipated expenses for such suits or
proceedings upon an undertaking by the person to whom such advance is made to
repay such advances if it is ultimately determined that such person is not
entitled to be indemnified by the corporation.
Indemnification and payment of expenses provided by Nevada law are not deemed
exclusive of any other rights by which an officer, director, employee or agent
may seek indemnification or payment of expenses or may be entitled to under any
by-law, agreement, or vote of shareholders or disinterested directors. In such
regard, a Nevada corporation is empowered to, and may, purchase and maintain
liability insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation. As a results of such corporation law, the
company may, at some future time, be legally obligated to pay judgments
(including amounts paid in settlement) and expenses in regard to civil or
criminal suits or proceedings brought against one or more of its officers,
directors, employees or agents.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions or otherwise, the company has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial information required by Item 13 is attached to this registration
statement. The historical financial information may not be indicative of Bowlin
Travel Centers' future performance and does not necessarily reflect what the
financial position and results of operations of Bowlin Travel Centers would have
been had it operated as a separate, stand-alone entity during the period
covered.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The following financial statements are attached to this report and filed as
a part thereof:
* Balance Sheets as of July 31, 2000, January 31, 2000 and January 31,
1999;
* Statements of Income and Parent's Equity in Division for fiscal years
ended January 31, 2000, January 31, 1999 and January 31, 1998, and for
the six-month periods ended July 31, 2000 and July 31, 1999;
* Statements of Cash Flows for fiscal years ended January 31, 2000,
January 31, 1999 and January 31, 1998, and for the six-month periods
ended July 31, 2000 and July 31, 1999; and
* Notes to Financial Statements.
(Information as of July 31, 2000 and for the six-month periods ended
July 31, 2000 and 1999 is unaudited)
18
<PAGE>
(b) Exhibits
3.1 Form of Certificate of Incorporation of Bowlin Travel Centers, Inc.
3.2 Bylaws of Bowlin Travel Centers, Inc.
10.1 Management Services Agreement, between Bowlin Outdoor Advertising and
Travel Centers Incorporated and Bowlin Travel Centers, dated August 1,
2000.
10.2 Distributor Franchise Agreement, dated as of July 19, 1995, between
the Registrant and CITGO Petroleum Corporation
10.3 Distributor Sales Agreement, dated as of April 1, 1999, between the
Registrant and Exxon Company, U.S.A. (a division of Exxon Corporation)
10.8 Lease, dated as of January 12, 1987, between Janet Prince and the
Registrant
10.9 Commercial Lease, dated as of September 21, 1996, between the State of
Arizona and the Registrant, as amended
10.10 Commercial Lease, dated as of March 16, 2000, between the New Mexico
Commissioner of Public Lands and the Registrant, as amended
10.12 Lease Agreement, dated as of June 23, 1989, between the Registrant and
Rex Kipp, Jr., as amended 10.13 Lease, dated as of September 29, 1983,
between J.T. and Ira M. Turner and the Registrant
10.14 Business Lease, dated as of October 1, 1996, between the Registrant
and the New Mexico Commission of Public Lands
10.15 Commercial Lease, dated as of September 21, 1996, between the
Registrant and the State of Arizona, as amended
10.19 "Dairy Queen" Operating Agreement, dated as of March 10, 1983, between
Interstate Dairy Queen Corporation and the Registrant d/b/a DQ/B of
Edgewood, NM, together with amendments and ancillary agreements
related thereto
10.20 "Dairy Queen" Operating Agreement, dated as of May 1, 1982, between
Interstate Dairy Queen Corporation and the Registrant d/b/a DQ/B of
Flying C, New Mexico, together with amendments and ancillary
agreements related thereto
10.21 "Dairy Queen" Store Operating Agreement, dated as of November 18,
1986, between Dairy Queen of Southern Arizona, Inc. and the
Registrant, together with amendments and ancillary agreements related
thereto
10.22 "Dairy Queen" Operating Agreement, dated as of September 1, 1982,
between Interstate Dairy Queen Corporation and the Registrant d/b/a DQ
of Bluewater, New Mexico, together with amendments and ancillary
agreements related thereto
10.23 "Dairy Queen" Store Operating Agreement, dated as of February 1, 1984,
between Dairy Queen of Arizona, Inc. and the Registrant, together with
amendments and ancillary agreements related thereto
10.24 "Dairy Queen" Operating Agreement, dated as of October 30, 1985,
between Interstate Dairy Queen Corporation and the Registrant, as
amended
10.25 "Dairy Queen" Operating Agreement, dated as of June 7, 1989, between
Interstate Dairy Queen Corporation and the Registrant d/b/a "DQ" at
Butterfield Station, together with amendments and ancillary agreements
related thereto
10.26 Letter of Agreement, dated as of March 1, 1987, between Stuckey's
Corporation and the Registrant confirming franchise of Benson, AZ
Stuckey's Pecan Shoppe
10.27 Franchise Agreement, dated as of February 22, 1982, between Stuckey's,
Inc. and the Registrant, together with a related Personal Guaranty and
Indemnity
10.28 Credit Agreement with First Security Bank, dated as of November 10,
1998 granting the Registrant funds available in the aggregate amount
of $30,000,000 Company and the Registrant
10.29 Lease Agreement between BOWLIN Outdoor Advertising and Travel Centers
Incorporated and the Registrant, dated August 1, 2000
27 Financial Data Schedule
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
BOWLIN TRAVEL CENTERS INC.
(Registrant)
Date: October __, 2000 By: /s/
---------------- -------------------------------------
(Signature)*
* Print name and title of the signing officer under his signature.
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Bowlin Travel Centers Inc.:
We have audited the accompanying balance sheets of Bowlin Travel Centers Inc. as
of January 31, 2000 and 1999, and the related statements of income and parent's
equity in division, and cash flows for each of the years in the three-year
period ended January 31, 2000. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Bowlin Travel Centers Inc. as
of January 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the years in the three-year period ended January 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ KPMG LLP
August 15, 2000
Albuquerque, New Mexico
F-1
<PAGE>
BOWLIN TRAVEL CENTERS, INC.
Balance Sheets
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JANUARY 31,
2000 2000 1999
----------- ----------- -----------
ASSETS (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,052,572 1,388,934 1,792,008
Accounts receivable, net 259,380 558,944 726,070
Accounts receivable - related parties 123,567 122,121 48,412
Inventories 3,444,266 3,529,690 3,684,552
Prepaid expenses 229,722 105,512 181,743
Income taxes -- -- 223,976
Notes receivable - related parties 13,512 13,512 13,512
Other current assets 23,426 13,329 9,051
----------- ----------- -----------
Total current assets 6,146,445 5,732,042 6,679,324
----------- ----------- -----------
Property and equipment, net 10,363,964 10,760,855 9,017,149
Intangible assets, net 313,534 328,268 395,161
Other assets 325,405 169,511 72,037
----------- ----------- -----------
Total assets $17,149,348 16,990,676 16,163,671
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 482,926 491,701 502,487
Accounts payable 1,186,396 1,218,265 1,273,155
Accrued salaries 155,723 152,019 130,236
Accrued liabilities 271,173 183,013 127,697
----------- ----------- -----------
Total current liabilities 2,096,218 2,044,998 2,033,575
Deferred income taxes 610,300 592,800 229,900
Long-term debt, less current installments 5,968,126 6,231,854 6,266,538
----------- ----------- -----------
Total liabilities 8,674,644 8,869,652 8,530,013
----------- ----------- -----------
Parent's equity in division 8,474,704 8,121,024 7,633,658
----------- ----------- -----------
Commitments and contingencies (notes 6 and 7)
Total liabilities and stockholders' equity $17,149,348 16,990,676 16,163,671
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
BOWLIN TRAVEL CENTERS, INC.
Statements of Income and Parent's Equity in Division
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31,
(UNAUDITED) YEARS ENDED JANUARY 31,
---------------------------- -------------------------------------------
2000 1999 2000 1999 1998
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Gross sales $ 14,752,567 14,071,987 27,242,403 23,803,173 22,583,588
Less discounts on sales 201,385 181,286 386,622 283,264 279,943
------------ ----------- ----------- ----------- -----------
Net sales 14,551,182 13,890,701 26,855,781 23,519,909 22,303,645
Cost of goods sold 10,171,372 9,475,026 18,660,049 15,817,507 15,042,323
------------ ----------- ----------- ----------- -----------
Gross profit 4,379,810 4,415,675 8,195,732 7,702,402 7,261,322
General and administrative expense (3,401,607) (3,519,248) (7,128,511) (6,546,116) (5,925,026)
Depreciation and amortization (376,622) (355,187) (719,085) (716,640) (467,420)
Management fee income 102,939 103,566 207,390 186,867 183,522
Other operating income -- -- 30,661 7,345 35,335
------------ ----------- ----------- ----------- -----------
Operating income 704,520 644,806 586,187 633,858 1,087,733
Other income (expense):
Interest income 57,493 48,721 95,570 85,696 48,340
Gain on sale of property and equipment 131,235 5,816 1,024 7,180 101,770
Gain from insurance proceeds -- 227,362 711,805 -- --
Interest expense (318,468) (293,216) (598,420) (310,762) (268,720)
------------ ----------- ----------- ----------- -----------
Total other income (expense) (129,740) (11,317) 209,979 (217,886) (118,610)
------------ ----------- ----------- ----------- -----------
Income before income taxes 574,780 633,489 796,166 415,972 969,123
Income taxes (note 5) 221,100 243,900 308,800 162,300 373,000
------------ ----------- ----------- ----------- -----------
Net income 353,680 389,589 487,366 253,672 596,123
Parent's equity in division -
beginning of period 8,121,024 7,633,658 7,633,658 7,379,986 6,783,863
------------ ----------- ----------- ----------- -----------
Parent's equity in division -
end of period $ 8,474,704 8,023,247 8,121,024 7,633,658 7,379,986
============ =========== =========== =========== ===========
Pro forma earnings per share (unaudited):
Weighted average common shares 4,390,098 4,390,098 4,390,098
============ =========== ===========
Basic and diluted earnings per share $ 0.08 0.09 0.11
============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
BOWLIN TRAVEL CENTERS, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31,
(UNAUDITED) YEARS ENDED JANUARY 31,
------------------------ -------------------------------------
2000 1999 2000 1999 1998
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 353,680 389,589 487,366 253,672 596,123
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 376,622 355,187 719,085 716,640 467,420
Income from partnership investment -- -- (1,408) (3,025) --
Gain on sale of assets (131,235) (5,816) (1,024) (7,180) (101,770)
Gain from insurance proceeds -- (227,362) (711,805) -- --
Deferred income taxes 17,500 154,300 362,900 81,300 106,100
Changes in operating assets and liabilities:
Accounts receivable 298,118 114,007 93,417 (595,942) 14,667
Inventories 85,424 151,635 154,862 (530,864) (445,195)
Prepaid expenses and other (128,633) 77,806 71,953 (74,859) (13,251)
Accounts payable and accrued liabilities 59,995 378,341 22,209 82,259 104,877
Income taxes -- 223,976 223,976 (151,583) (217,365)
----------- ---------- ---------- ---------- ----------
Net cash from operating activities 931,471 1,611,663 1,421,531 (229,582) 511,606
----------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Capital received from (contributed to) partnership -- -- 21,400 -- (4,205)
Proceeds from sale of assets 202,428 16,000 138,828 13,413 231,147
Proceeds from insurance -- 599,332 1,086,865 -- --
Purchases of property and equipment (204,939) (1,723,853) (2,908,762) (2,060,507) (1,774,280)
Franchise fee payments -- -- -- (25,000) --
Notes receivable, net 7,181 2,625 (117,466) 43,196 6,168
----------- ---------- ---------- ---------- ----------
Net cash from investing activities 4,670 (1,105,896) (1,779,135) (2,028,898) (1,541,170)
----------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Payments on long-term debt (272,503) (231,946) (821,670) (611,151) (372,983)
Payments for debt issuance costs -- -- -- (294,868) --
Proceeds from borrowings -- 250,000 776,200 4,311,802 255,000
----------- ---------- ---------- ---------- ----------
Net cash from financing activities (272,503) 18,054 (45,470) 3,405,783 (117,983)
----------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 663,638 523,821 (403,074) 1,147,303 (1,147,547)
Cash and cash equivalents at beginning of period 1,388,934 1,792,008 1,792,008 644,705 1,792,252
----------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 2,052,572 2,315,829 1,388,934 1,792,008 644,705
=========== ========== ========== ========== ==========
Supplemental disclosure of cash flow information:
Non-cash investing activities - Sale of property
and equipment in exchange for note receivable $ 168,749 -- -- -- --
=========== ========== ========== ========== ==========
Interest paid $ 318,468 293,216 618,105 291,944 269,589
=========== ========== ========== ========== ==========
Income taxes paid $ 203,600 (134,376) (270,376) 232,583 484,265
=========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
Bowlin Travel Centers Inc. (BTC or the Company) is located in
Albuquerque, New Mexico. For all periods presented in these financial
statements, the Company has operated as a separate division of Bowlin
Outdoor Advertising & Travel Centers, Inc. (BOATC), a public company
traded on the American Stock Exchange.
On August 8, 2000, the Company was incorporated in the state of
Nevada. BTC's articles of incorporation authorize 10,000,000 shares of
common stock ($.001 par value) and 1,000,000 shares of preferred stock
($.001 par value) which can be issued at the discretion of the Board
of Directors.
The Company is a wholly-owned subsidiary of BOATC. Inter-company
transactions have generally been limited to management fees, federal
and state income tax allocations, cash advances and cash distributions
and are recorded and funded through an inter-company
receivable/payable account.
The Company's principal business activities include the operation of
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.
(b) CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
(c) 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.
(d) 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.
(e) INTANGIBLE ASSETS
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.
(f) 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.
F-5
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
(g) INCOME TAXES
The Company is included in the federal income tax return of BOATC. The
Company's U.S. federal and state income tax liabilities are computed
as if BTC filed separate tax returns.
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.
(h) 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.
(i) FINANCIAL INSTRUMENTS
The Company's financial instruments are cash and cash equivalents,
accounts receivable, notes receivable, accounts payable, accrued
liabilities, and long-term debt. The carrying amounts of cash and cash
equivalents, accounts receivable, notes receivable, accounts payable,
accrued liabilities, and long-term debt approximate fair value.
(j) 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.
(k) PRO FORMA EARNINGS PER SHARE
Pro forma earnings per share of common stock, both basic and diluted,
are computed by dividing net income by the weighted average common
shares outstanding for the Company's parent, BOATC. Diluted earnings
per share is calculated in the same manner as basic earnings per share
as there were no dilutive potential securities outstanding for all
periods presented.
F-6
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
ESTIMATED JULY 31, JANUARY 31, JANUARY 31,
LIFE (YEARS) 2000 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Land -- $ 2,470,861 2,610,341 1,954,218
Buildings and improvements 10 - 40 8,150,829 8,203,173 6,309,657
Machinery and equipment 3 - 10 6,328,961 6,653,358 5,736,501
Autos, trucks and mobile homes 3 - 10 1,425,321 1,451,987 1,394,915
Billboards 15 - 20 1,050,500 951,026 827,570
======= ----------- ----------- -----------
Subtotal, at cost 19,426,472 19,869,885 16,222,861
Less accumulated depreciation (9,114,942) (9,129,271) (8,597,517)
Construction in progress 52,434 20,241 1,391,805
----------- ------------ -----------
$10,363,964 10,760,855 9,017,149
=========== ============ ===========
</TABLE>
In May 2000, the Company sold certain assets, including land and equipment,
to a third party for $25,000 cash and a note receivable for $400,000. The
note receivable has a stated rate of interest of 8 percent and is payable
in annual installments of $37,500 through 2004 with the balance due in
2005. The assets sold had a carrying value of $170,258 and the costs
incurred to sell the assets was $6,043. The gain on the sale of the
property was $248,699, of which $14,625 was recognized initially and
$234,074 was deferred and will be recognized into income using the
installment method as payments are received. The deferred gain is reflected
as a reduction to the note receivable in the accompanying balance sheet.
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.
(3) INTANGIBLE ASSETS
Intangible assets, at cost, consist of the following:
JULY 31, JANUARY 31, JANUARY 31,
2000 2000 1999
--------- -------- --------
Franchise fees $ 183,000 183,000 234,500
Debt issuance costs 295,267 295,267 294,668
--------- -------- --------
478,267 478,267 529,168
Less accumulated amortization (164,733) (149,999) (134,007)
--------- -------- --------
Intangible assets, net $ 313,534 328,268 395,161
========= ======== ========
F-7
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
(4) LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JANUARY 31,
2000 2000 1999
--------- --------- ---------
<S> <C> <C> <C>
Due bank, maturity November 2005, variable interest
(8.50% at January 31, 2000), monthly installments
of $34,347, secured by buildings and equipment $2,570,493 2,661,329 2,846,007
Due bank, maturity October 2013, variable interest
(8.50% at January 31, 2000), monthly installments
of $9,860, secured by land and buildings
Due bank, maturity October 2013, variable interest
(8.50% at January 31, 2000), monthly installments
of $6,329, secured by land and buildings 925,698 941,732 978,428
Due bank, maturity January 2005, variable interest
at index rate (8.00% at January 31, 2000), monthly
installments of $4,818 secured by buildings and
equipment 547,151 606,494 629,740
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 460,011 467,501 486,355
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
inventories 713,923 732,194 774,006
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 1,114,104 1,177,768 886,256
119,672 136,537 168,233
---------- ---------- ----------
6,451,052 6,723,555 6,769,025
Less current maturities 482,926 491,701 502,487
---------- --------- ---------
$5,968,126 6,231,854 6,266,538
========== ========= =========
</TABLE>
F-8
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
Future maturities of long-term debt for the years ending January 31 are as
follows:
2001 $ 491,701
2002 528,349
2003 554,293
2004 524,976
2005 476,743
Thereafter 4,147,493
----------
Total $6,723,555
==========
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 $2,884,000
which was used to refinance existing borrowings and provide funds for
working capital.
(5) INCOME TAXES
Income taxes consist of the following for the years ended January 31:
CURRENT DEFERRED TOTAL
--------- -------- --------
2000:
U.S. Federal $ (45,000) 302,300 257,300
State and local (9,100) 60,600 51,500
--------- -------- --------
$ (54,100) 362,900 308,800
========= ======== ========
1999:
U.S. Federal $ 67,500 67,700 135,200
State and local 13,500 13,600 27,100
--------- -------- --------
$ 81,000 81,300 162,300
========= ======== ========
1998:
U.S. Federal $ 222,400 88,400 310,800
State and local 44,500 17,700 62,200
--------- -------- --------
$ 266,900 106,100 373,000
========= ======== ========
F-9
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
Income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 34 percent to pre-tax income as a result of the
following for the years ended January 31:
2000 1999 1998
-------- ------- -------
Computed "expected" tax $270,696 141,430 329,502
State income taxes, net of federal
tax benefit 34,014 17,872 41,084
Other 4,090 2,998 2,414
-------- ------- -------
Total $308,800 162,300 373,000
======== ======= =======
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:
2000 1999
-------- -------
Deferred tax assets:
Compensated absences, principally due to
accrual for financial reporting purposes $ 37,519 15,056
Other -- 7,800
-------- -------
Total gross deferred tax assets 37,519 22,856
Less valuation allowance -- --
-------- -------
Net deferred tax assets 37,519 22,856
-------- -------
Deferred tax liabilities:
Property and equipment, principally due to
differences in depreciation 625,375 247,436
Other 4,944 5,320
-------- -------
Total gross deferred liabilities 630,319 252,756
-------- -------
Net deferred tax liability $592,800 229,900
======== =======
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 that the Company will realize the benefits of these deductible
differences.
F-10
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
(6) 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 $42,237, $29,083 and $37,386 in fiscal 2000, 1999 and 1998,
respectively.
(7) COMMITMENTS AND CONTINGENCIES
The Company leases land at several of its retail operating locations.
Included in general and administrative expenses in the accompanying
statements of income and parent's equity in division 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 Company also leases land
where several of its retail billboards are located and rent expense for
these leases was $91,148, $43,809 and $54,099 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, 2000. 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:
YEAR ENDING JANUARY 31:
-----------------------
2001
$ 151,383
2002 132,783
2003 128,783
2004 98,783
2005 98,233
Thereafter 383,733
---------
Total $ 993,698
=========
(8) RELATED PARTY TRANSACTIONS
Notes receivable - related parties consist of the following:
JULY 31, JANUARY 31, JANUARY 31,
2000 2000 1999
-------- ------- -------
Stockholder, plus interest at
7%, unsecured $ 10,012 10,012 10,012
Employees, receivable in annual
installments totaling $875
plus interest at 10%, unsecured 3,500 3,500 3,500
-------- ------- -------
Total $ 13,512 13,512 13,512
======== ======= =======
F-11
<PAGE>
BOWLIN TRAVEL CENTERS INC.
Notes to Financial Statements
January 31, 2000 and 1999
(information as of July 31, 2000 and for the six months
ended July 31, 2000 and 1999 is Unaudited)
The Company and BOATC have entered into an agreement whereby the Company is
reimbursed for certain corporate general and administrative functions
performed on behalf of BOATC. These fees are included in the caption
"management fees" in the accompanying statements of income and parent's
equity in division and they include treasury, accounting, tax, human
resources, and other support services. Management fees receivable from
BOATC are based on actual amounts incurred on behalf of BOATC as well as a
proportionate amount of the Company's general and administrative expenses
determined based on the level of effort necessary to provide such services.
While Company management has no practical means to estimate the costs that
would not have been received for such services had it been a stand-alone
company, management believes the amount of such allocations are reasonable.
However, BOATC may discontinue such cost sharing in the future which would
have the effect of reducing BTC's net income and earnings per share to the
pro forma (unaudited) amounts that follow:
PRO FORMA
EXCLUDING
AS MANAGEMENT MANAGEMENT
UNAUDITED REPORTED FEE FEE
--------- --------- -----------
Net income:
Year ended January 31, 2000 $ 487,366 (207,390) 279,976
Six months ended July 31, 2000 353,680 (102,939) 250,741
--------- --------- ---------
Pro forma earnings per share:
Year ended January 31, 2000 $ 0.11 (0.05) 0.06
Six months ended July 31, 2000 0.08 (0.02) 0.06
--------- --------- ---------
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 the years ended January 31, 2000, 1999 and 1998,
respectively. Franchise fees are included in general and administrative
expenses in the accompanying statements of income and parent's equity in
division.
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.
F-12
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
3.1 Form of Certificate of Incorporation of Bowlin Travel Centers, Inc.
3.2 Bylaws of Bowlin Travel Centers, Inc.
10.1 Management Services Agreement, between Bowlin Outdoor Advertising and
Travel Centers Incorporated and Bowlin Travel Centers, dated August 1,
2000.
10.6 Distributor Franchise Agreement, dated as of July 19, 1995, between
the Registrant and CITGO Petroleum Corporation
10.7 Distributor Sales Agreement, dated as of April 1, 1999, between the
Registrant and Exxon Company, U.S.A. (a division of Exxon Corporation)
10.8 Lease, dated as of January 12, 1987, between Janet Prince and the
Registrant
10.9 Commercial Lease, dated as of September 21, 1996, between the State of
Arizona and the Registrant, as amended
10.10 Commercial Lease, dated as of March 16, 2000, between the New Mexico
Commissioner of Public Lands and the Registrant, as amended
10.12 Lease Agreement, dated as of June 23, 1989, between the Registrant and
Rex Kipp, Jr., as amended
10.13 Lease, dated as of September 29, 1983, between J.T. and Ida M. Turner
and the Registrant
10.14 Business Lease, dated as of October 1, 1996, between the Registrant
and the New Mexico Commission of Public Lands
10.15 Commercial Lease, dated as of September 21, 1996, between the
Registrant and the State of Arizona, as amended
10.19 "Dairy Queen" Operating Agreement, dated as of March 10, 1983, between
Interstate Dairy Queen Corporation and the Registrant d/b/a DQ/B of
Edgewood, NM, together with amendments and ancillary agreements
related thereto
10.20 "Dairy Queen" Operating Agreement, dated as of May 1, 1982, between
Interstate Dairy Queen Corporation and the Registrant d/b/a DQ/B of
Flying C, New Mexico, together with amendments and ancillary
agreements related thereto
10.21 "Dairy Queen" Store Operating Agreement, dated as of November 18,
1986, between Dairy Queen of Southern Arizona, Inc. and the
Registrant, together with amendments and ancillary agreements related
thereto
10.22 "Dairy Queen" Operating Agreement, dated as of September 1, 1982,
between Interstate Dairy Queen Corporation and the Registrant d/b/a DQ
of Bluewater, New Mexico, together with amendments and ancillary
agreements related thereto
10.23 "Dairy Queen" Store Operating Agreement, dated as of February 1, 1984,
between Dairy Queen of Arizona, Inc. and the Registrant, together with
amendments and ancillary agreements related thereto
10.24 "Dairy Queen" Operating Agreement, dated as of October 30, 1985,
between Interstate Dairy Queen Corporation and the Registrant, as
amended
10.25 "Dairy Queen" Operating Agreement, dated as of June 7, 1989, between
Interstate Dairy Queen Corporation and the Registrant d/b/a "DQ" at
Butterfield Station, together with amendments and ancillary agreements
related thereto
10.26 Letter of Agreement, dated as of March 1, 1987, between Stuckey's
Corporation and the Registrant confirming franchise of Benson, AZ
Stuckey's Pecan Shoppe
10.27 Franchise Agreement, dated as of February 22, 1982, between Stuckey's,
Inc. and the Registrant, together with a related Personal Guaranty and
Indemnity
10.28 Credit Agreement with First Security Bank, dated as of November 10,
1998 granting the Registrant funds available in the aggregate amount
of $30,000,000 Company and the Registrant
10.29 Lease Agreement between Bowlin Outdoor Advertising and Travel Centers
Incorporated and the Registrant, dated August 1, 2000
27 Financial Data Schedule
