UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended October 31, 1995
Commission File Number 33-7870-NY
Travel Ports of America, Inc.
New York 16-1128554
3495 Winton Place, Building C, Rochester, New York 14623
716-272-1810
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
[ X ] Yes [ ] No
Class Outstanding at October 31, 1995
Common Stock, Par Value
$.01 Per Share 5,236,924
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, October 31, 1995 (unaudited) and
April 30, 1995.............................. 3
Statement of Income (unaudited), quarter ended
October 31, 1995 and 1994................... 4
Statement of Cash Flows (unaudited), three months
ended October 31, 1995 and 1994............. 5
Notes to Financial Information.................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 7
PART II Other Information
Index to Exhibits and Legal Proceedings........... 10
Signatures.......................................... 14
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
10/31/95 4/30/95
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 2,236,368 $ 7,593,798
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF
$213,186 AT OCTOBER 1995
AND $214,052 AT APRIL 1995 4,131,346 3,683,235
NOTES RECEIVABLE 48,898 332,655
INVENTORIES 5,781,883 5,790,823
PREPAID AND OTHER CURRENT ASSETS 882,237 532,904
DEFERRED TAXES - CURRENT 381,900 381,900
TOTAL CURRENT ASSETS 13,462,632 18,315,315
NOTES RECEIVABLE, DUE AFTER ONE YEAR 2,097,155 1,390,600
PROPERTY, PLANT AND EQUIPMENT, NET 30,510,157 27,052,462
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 2,000,591 2,032,686
OTHER ASSETS, NET 2,468,593 2,579,747
$50,539,128 $51,370,810
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
CURRENT PORTION OF LONG-TERM DEBT $ 2,384,674 $ 2,360,015
ACCOUNTS PAYABLE 6,000,474 6,897,323
ACCOUNTS PAYABLE - AFFILIATE 637,919 597,100
INCOME TAXES PAYABLE 90,055
ACCRUED COMPENSATION 843,454 1,335,305
ACCRUED SALES AND FUEL TAX 1,589,288 1,047,649
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 908,998 1,057,679
TOTAL CURRENT LIABILITIES 12,454,862 13,295,071
LONG TERM DEBT 19,073,914 20,328,957
CONVERTIBLE SUBORDINATED DEBENTURES 4,650,000 4,650,000
DEFERRED INCOME TAXES 747,200 747,200
TOTAL LIABILITIES 36,925,976 39,021,228
SHAREHOLDERS EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES,
ISSUED AND OUTSTANDING AT OCTOBER
1995 - 5,236,924 AND
APRIL 1995 - 5,209,924 52,369 52,099
ADDITIONAL PAID-IN CAPITAL 3,809,411 3,767,741
RETAINED EARNINGS 9,751,372 8,529,742
TOTAL SHAREHOLDERS EQUITY 13,613,152 12,349,582
$50,539,128 $51,370,810
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
1995 1994 1995 1994
NET SALES AND OPERATING
REVENUE $39,619,638 $39,075,621 $77,746,306 $77,251,347
COST OF GOODS SOLD 29,855,321 28,982,789 58,251,951 57,380,188
GROSS PROFIT 9,764,317 10,092,832 19,494,355 19,871,159
OPERATING EXPENSE 7,307,127 7,462,708 14,604,285 14,990,124
GENERAL AND ADMINISTRATIVE
EXPENSE 891,828 912,716 1,865,663 1,773,288
INTEREST EXPENSE 610,460 522,274 1,287,659 998,970
OTHER INCOME, NET (93,661) (21,777) (392,782) (61,584)
8,715,754 8,875,921 17,364,825 17,700,798
INCOME BEFORE TAXES 1,048,563 1,216,911 2,129,530 2,170,361
PROVISION FOR TAXES ON INCOME 447,200 502,800 907,900 895,000
NET INCOME $ 601,363 $ 714,111 $ 1,221,630 $ 1,275,361
PER SHARE DATA:
NET INCOME PER SHARE - PRIMARY $0.11 $0.14 $0.23 $0.24
NET INCOME PER SHARE -
FULLY DILUTED $0.09 $0.14 $0.19 $0.24
WEIGHTED AVERAGE SHARES
OUTSTANDING - PRIMARY 5,439,066 5,271,111 5,399,919 5,275,741
WEIGHTED AVERAGE SHARES
OUTSTANDING -
FULLY DILUTED 6,991,823 5,745,232 5,299,342 5,303,489
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED OCTOBER 31
1995 1994
OPERATING ACTIVITIES:
NET INCOME $1,221,630 1,275,361
DEPRECIATION AND AMORTIZATION 1,299,342 1,216,607
PROVISION FOR LOSSES ON ACCOUNT RECEIVABLE 34,118 60,091
(GAIN) LOSS ON SALE OF ASSETS (193,880) 27,974
CHANGES IN OPERATING ASSETS AND
LIABILITIES - ACCOUNTS RECEIVABLE (482,229) (412,674)
INVENTORIES 8,940 (505,738)
PREPAID AND OTHER CURRENT ASSETS (347,959) (112,523)
ACCOUNTS PAYABLE (856,030) (64,973)
ACCRUED COMPENSATION (491,851) (48,716)
ACCRUED SALES AND FUEL TAX 541,639 (248,660)
ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES (148,681) 21,534
CHANGES IN INCOME TAXES PAYABLE 90,055 655,987
CHANGES IN OTHER NON-CURRENT ASSETS 29,220 61,678
NET CASH PROVIDED BY OPERATING ACTIVITIES 704,314 1,925,948
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT &
EQUIPMENT (5,319,963) (1,168,022)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 269,461 94,997
NET PROCEEDS RECEIVED ON NOTES RECEIVABLE 177,202 40,139
NET CASH USED IN INVESTING ACTIVITIES (4,873,300) (1,032,886)
FINANCING ACTIVITIES:
NET SHORT-TERM PAYMENTS (1,752,000)
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (1,230,384) (6,861,310)
PROCEEDS FROM LONG-TERM BORROWING 10,500,000
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 41,940 40,020
NET CASH (USED) PROVIDED IN
FINANCING ACTIVITIES (1,188,444) 1,926,710
NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS (5,357,430) 2,819,772
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 7,593,798 1,177,400
CASH AND EQUIVALENTS - END OF PERIOD $2,236,368 $3,997,172
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $1,283,090 $ 884,766
INCOME TAXES PAID $ 764,326 $ 231,800
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
OCTOBER 31, 1995
NOTE 1 BASIS OF PRESENTATION
The unaudited financial information has been prepared in
accordance with the Summary of Accounting Policies of the
Company as outlined in Form 10-K filed for the year ended
April 30, 1995, and should be read in conjunction with the
Notes to Financial Statements appearing therein. In the
opinion of management, the unaudited financial information
contains all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the
Company's financial position as of October 31, 1995 and
April 30, 1995, and for the three months and six months
ended October 31, 1995 and 1994. The financial information
is based in part on estimates and has not been audited by
independent accountants. The annual statements will be
audited by Price Waterhouse LLP.
NOTE 2 INVENTORIES
Major classifications of inventories are as follows:
October 31, 1995 April 30,1995
At first-in, first-out (FIFO) cost:
Petroleum Products $1,488,794 $1,467,754
Store Merchandise 1,840,740 1,708,595
Parts for repairs
and tires 2,113,934 2,138,790
Other 338,415 475,684
$5,781,883 $5,790,823
NOTE 3 EARNINGS PER SHARE
Primary earnings per share is computed by dividing net
income by the weighted average number of common, and when
applicable, common equivalent shares outstanding during the
period. Fully diluted earnings per share include the
dilutive impact of common equivalent shares and the
convertible debentures.
NOTE 4 FINANCING AGREEMENTS
The Companys primary lending institution has renewed its
commitment for the Companys existing line of credit until
August 31, 1996. The line of credit is limited to the lesser
of $2,750,000 or the sum of 80% of the Companys accounts
receivable under 90 days old, plus 45% of the Companys
inventory.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Second Quarter ended October 31, 1995 and 1994
Sales from operations were $39,619,638 for the second
quarter of fiscal 1996, up $544,017, or 1.4%, from the
second quarter of last year. In comparing to last year, this
year we did not have the facility in Fairplay, South
Carolina and a small restaurant in Phelps, New York. The
impact from the disposition of these two locations was a
$880,000 reduction in sales as compared to the second
quarter of 1995. In addition a customer, who previously
purchased diesel fuel directly from the Company, is now
storing its own fuel at certain of the Companys facilities
and is charged a pumping fee. There is no impact on gross
profit but sales declined $335,000. After accounting for the
change in locations and the diesel sales to this customer,
the increase in sales for same units was almost $1,759,000
or 4.7%.
Gross profit for the second quarter was $9,764,317, a
decrease of $328,515, or 3.2%, from the prior year. The two
locations we no longer have accounted for $299,000 of this
decline.
Operating expenses of $7,307,127 for the second quarter were
$155,581 or 2.1% less than last year. Increases in
utilities, advertising and depreciation offset the decrease
of $261,000 from the two locations we no longer have.
General and administrative expenses for the quarter of
$891,828 decreased $20,828 or 2.2% from last year. Other
income increased $72,000 from last year, primarily as a
result of greater interest income from notes receivable and
invested cash. Interest expense increased from last year by
$88,186 as a result of the higher prime rate and increased
level of debt as compared to October 1994.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Companys cash position decreased by $5,537,430 to
$2,236,368 during the six months ended October 31, 1995.
Accounts receivable increased $482,229 from greater sales
activity. Accounts payable decreased $856,030 as a result of
payments on capital expenditures. Accrued compensation
decreased $491,851 due to the payment of bonuses. Accrued
sales and fuel taxes increased $541,639 due to amount and
timing of tax payments. Overall operating activities for the
six months ended October 31, 1995, provided $704,314 in cash
compared to last year's $1,914,289.
Investing activities resulted in a net use of $4,873,300.
Capital expenditures during the first six months of 1996
were $5,319,963. The renovation projects and the
construction of a travel plaza on land owned by the Company
in Harborcreek, Pennsylvania accounted for these
expenditures. The construction of the Harborcreek facility
has been funded to date from operations and the existing
cash position. The Company is working with its primary
lender on interim and permanent financing of the project.
Proceeds from notes receivable provided cash of $177,202 and
$269,461 was received from the sale of properties and
equipment.
Financing activities for the first six months of 1996
resulted in a net use of $1,188,444 for principal repayment.
Last year a refinancing provided $1,926,710 after repayment
of principal.
The Companys primary lending institution has renewed its
commitment for the Companys existing line of credit until
August 31, 1996. The line of credit is limited to the lesser
of $2,750,000 or the sum of 80% of the Companys accounts
receivable under 90 days old, plus 45% of the Companys
inventory. As of October 31, 1995, the Company has utilized
$200,000 of its available line of credit as collateral for
various letters of credit.
Authorized, but unissued stock is available for financing
needs; however, there are no current plans to use this
source.
TRAVEL PORTS OF AMERICA, INC.
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
United Petroleum Marketing Inc. and United Petroleum
Realty Corp., a petroleum retailer and real estate company,
initiated a suit against the Company alleging damages of
$2,395,000, claiming violations of an Agreement of Sale and
various agreements signed in connection with the Agreement
of Sale of twenty-three gasoline stations to the plaintiff
in 1987. At the time of closing, there was an escrow set up
with respect to several stations. The escrow is now closed,
two of the stations were conveyed back to the Company and
United Petroleum received the sum of $264,793, which will be
credited to the Company should there be any recovery in the
Company's action discussed in the next paragraph. The claim
is for the entire purchase price. The plaintiff is currently
operating all the stations and has not requested a
rescission of the Agreement. The largest part of the
plaintiff's claim relates to alleged misrepresentation of
fuel sold at the various stations. As a result of discovery
and investigation, the Company is vigorously defending the
claim and believes it has a defense to substantially all of
the claims.
The Company has filed a suit against United Petroleum
Realty Corp. and United Petroleum Marketing, Inc., seeking
reimbursement for gasoline taxes paid to the Commonwealth of
Pennsylvania by the Company that the Company claims were the
responsibility of the defendants in connection with the
purchase of the stations. The Company is asking for damages
in excess of $50,000 and punitive damages in excess of
$50,000. The matters discussed in this and the preceding
paragraph may be consolidated for trial.
The Company is not presently a party to any other
litigation (i) that is not covered by insurance or (ii)
which singly or in the aggregate would have a material
adverse effect on the Company's financial condition and
results of operations, and management has no knowledge that
any other litigation has been threatened.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 24, 1995, at the annual meeting of the
Companys shareholders, the shareholders voted to adopt the
1995 Employee Incentive Stock Option Plan and reserve
200,000 shares of the Companys Common Stock for issuance
under the Plan. The results of the voting were as follows:
In Favor 4,568,853
Against 66,750
Abstain 14,310
Not Voted 560,011
Item 5. OTHER INFORMATION
On November 17, 1995, the Securities and Exchange
Commission declared effective a Registration Statement filed
by the Company on Form S-3 for the underlying shares related
to the convertible debentures and warrants issued in January
and February 1995. The Company will not receive any
additional cash if and when the shares covered by the
Registration Statement are sold or upon the conversion of
the debentures related to most of the shares. However, the
Company could receive up to $334,800 in cash upon the
exercise of warrants related to some of the shares.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
(2) Plan of acquisition, reorganization, agreement,
liquidation, or
succession
Not applicable
(3) Articles of Incorporation and By-laws
Exhibit 3-a and exhibit 3-b to the Company's
Registration Statement on Form S-18, File No. 33-7870-
NY are incorporated herein by reference with respect to
the Restated Certificate of Incorporation and By-laws
of the Company.
Certificate of Amendment of Certificate of
Incorporation changing the name of the Corporation, is
incorporated herein by reference to Exhibit 3-c of the
Companys report of Form 10-K dated July 27, 1993.
(4) Instruments defining the rights of security
holders, including
indentures
Exhibit 4-a, Form of Common Stock Certificate, to
the Company's Registration Statement on Form S-18, File
No. 33-7870-NY is incorporated herein by reference with
respect to instruments defining the rights of security
holders.
Exhibit 4-c, Form of Indenture dated as of January
24, 1995, between Travel Ports of America, Inc. and
American Stock Transfer and Trust Company, as Trustee,
with respect to up to $5,000,000 principal amount of
8.5% Convertible Senior Subordinated Debentures due
January 15, 2005 is incorporated by reference to
Exhibit 4-c to the Companys Current Report on Form 8-K
dated February 15, 1995.
Exhibit 4-d, Form of Warrant to purchase Common
Stock is incorporated by reference to Exhibit 4-d to
the Companys Current Report on Form 8-K dated February
15, 1995.
(11) Statement re: computation of earnings per share
Computation of earnings per share is set forth in
Exhibit (11) on page 12 of this report.
(15) Letter re: unaudited interim financial information
Not applicable
(18) Letter re: change in accounting principals
Not applicable
(19) Previously unfiled documents
None
(20) Report furnished to security holders
Not applicable
(23) Published report regarding matters submitted to
vote of security holders
None
(24) Consents of experts and counsel
Not applicable
(25) Power of attorney
None
(26) Additional exhibits
None
(27) Supplemental Financial Information
Exhibit (27) on page 15 of this report.
(b) REPORT ON FORM 8-K
None
EXHIBIT (11)
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE QUARTER ENDED OCTOBER 31, 1995
Net income per share was computed by dividing net income by
the weighted average number of common shares outstanding and
common stock equivalents.
Total Options Average Average
Qtr. Ended Below Market Option Price Market Price Shares
10/31/95 493,738 $2.19 $3.71 202,142
Average number of shares outstanding 5,236,924
5,439,066
Net income per common and common equivalent shares $.11
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE QUARTER ENDED OCTOBER 31, 1995
Net income per share was computed by dividing net income by
the weighted average number of common shares outstanding,
common stock equivalents, and the assumed conversion of the
convertible debentures.
Total Options
and Warrants Average
Qtr. Ended Below Market Exercise Price Market Price * Shares
10/31/95 586,738 $2.41 $3.71 204,899
Additional shares due to assumed exercise of convertible
debentures 1,550,000
Average number of shares outstanding 5,236,924
6,991,823
Net income for quarter ended 7/31/95 $601,363
Interest on convertible debentures 59,288
$660,651
Net income per common and common equivalent shares - fully
diluted $.09
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED OCTOBER 31, 1995
Net income per share was computed by dividing net income by
the weighted average number of common shares outstanding and
common stock equivalents.
Total Options Average Average
Qtr. Ended Below Market Option Price Market Price Shares
7/31/95 420,738 $1.87 $2.65 123,847
10/31/95 493,738 $2.19 $3.71 202,142
Total for Two Quarters 325,989
Average common stock equivalents outstanding during
six months ended October 31, 1995 162,995
Average number of shares outstanding 5,236,924
5,399,919
Net income per common and common equivalent shares $.23
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED OCTOBER 31, 1995
Net income per share was computed by dividing net income by
the weighted average number of common shares outstanding,
common stock equivalents, and the assumed conversion of the
convertible debentures.
Total Options
and Warrants Average
Qtr. Ended Below Market Exercise Price Market Price * Shares
7/31/95 420,738 $1.87 $2.875 147,082
10/31/95 586,738 $2.41 $3.71 204,899
Total for Two Quarters 351,981
Average common stock equivalents outstanding during
six months ended October 31, 1995 175,991
Additional shares due to assumed exercise of convertible
debentures 1,550,000
Average number of shares outstanding 5,236,924
6,962,915
Net income for six months ended 10/31/95 $1,221,990
Interest on convertible debentures 118,576
$1,340,566
Net income per common and common equivalent shares - fully
diluted $.19
* Amount reflects higher of average or period end market
price.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
TRAVEL PORTS OF AMERICA, INC.
Date: December 13, 1995 s/ John M. Holahan
John M. Holahan, President
Date: December 13, 1995 s/ William Burslem III
William Burslem III
Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> OCT-31-1995
<CASH> 2,236,368
<SECURITIES> 0
<RECEIVABLES> 4,131,346
<ALLOWANCES> 213,186
<INVENTORY> 5,781,883
<CURRENT-ASSETS> 13,462,632
<PP&E> 49,498,451
<DEPRECIATION> 18,988,294
<TOTAL-ASSETS> 50,539,128
<CURRENT-LIABILITIES> 11,394,478
<BONDS> 26,106,588
<COMMON> 52,369
0
0
<OTHER-SE> 13,560,783
<TOTAL-LIABILITY-AND-EQUITY> 50,359,128
<SALES> 77,746,306
<TOTAL-REVENUES> 77,746,306
<CGS> 58,251,951
<TOTAL-COSTS> 58,251,951
<OTHER-EXPENSES> 16,469,948
<LOSS-PROVISION> 34,118
<INTEREST-EXPENSE> 1,287,659
<INCOME-PRETAX> 2,129,530
<INCOME-TAX> 907,900
<INCOME-CONTINUING> 1,221,630
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,221,630
<EPS-PRIMARY> .23
<EPS-DILUTED> .19
</TABLE>
