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 July 31, 1996
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 July 31, 1996
Common Stock, Par Value
$.01 Per Share 5,254,424
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, July 31, 1996 (unaudited) and
April 30, 1996............................ 3
Statement of Income (unaudited), quarter ended
July 31, 1996 and 1995.................... 4
Statement of Cash Flows (unaudited), three months
ended July 31, 1996 and 1995.............. 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............ 9
Signatures......................................... 13
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
7/31/96 4/30/96
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 1,945,274 $ 1,667,062
ACCOUNTS RECEIVABLE, LESS
ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF
$256,000 AT JULY 1996 AND
$208,000 AT APRIL 1996 4,276,076 4,357,246
NOTES RECEIVABLE 50,783 56,915
INVENTORIES 5,781,183 5,333,829
PREPAID AND OTHER
CURRENT ASSETS 1,354,929 1,052,626
DEFERRED TAXES - CURRENT 371,800 371,800
TOTAL CURRENT ASSETS 13,780,045 12,839,478
NOTES RECEIVABLE, DUE AFTER
ONE YEAR 2,067,949 2,071,671
PROPERTY, PLANT AND
EQUIPMENT, NET 39,019,589 35,976,800
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 1,952,448 1,968,496
OTHER ASSETS, NET 2,349,460 2,422,159
$59,169,491 $55,278,604
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
SHORT-TERM DEBT DUE BANKS $ $
CURRENT PORTION OF
LONG-TERM DEBT 2,848,155 2,756,102
ACCOUNTS PAYABLE 7,682,590 5,994,740
ACCOUNTS PAYABLE - AFFILIATE 1,084,229 747,939
INCOME TAXES PAYABLE 315,092
ACCRUED COMPENSATION 1,438,534 1,460,862
ACCRUED SALES AND FUEL TAX 2,003,025 1,247,586
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 901,101 1,156,856
TOTAL CURRENT
LIABILITIES 16,272,726 13,364,085
LONG TERM DEBT 22,552,832 22,284,257
CONVERTIBLE SUBORDINATED
DEBENTURES 4,650,000 4,650,000
DEFERRED INCOME TAXES 894,200 894,200
TOTAL LIABILITIES 44,369,758 41,192,542
SHAREHOLDERS' EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES,
ISSUED AND OUTSTANDING AT JULY
1996 - 5,254,424 AND
APRIL 1996 -5,239,124 52,544 52,391
ADDITIONAL PAID-IN CAPITAL 3,836,546 3,813,429
RETAINED EARNINGS 10,910,643 10,220,242
TOTAL SHAREHOLDERS'
EQUITY 14,799,733 14,086,062
$59,169,491 $55,278,604
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED
JULY 31
1996 1995
NET SALES AND OPERATING REVENUE $ 46,488,936 $ 38,126,668
COST OF GOODS SOLD 34,840,378 28,396,630
GROSS PROFIT 11,648,558 9,730,038
OPERATING EXPENSE 8,740,139 7,297,158
GENERAL AND ADMINISTRATIVE EXPENSE 1,150,698 973,835
INTEREST EXPENSE 614,004 677,199
OTHER INCOME, NET (54,384) (299,121)
10,450,457 8,649,071
INCOME BEFORE TAXES 1,198,101 1,080,967
PROVISION FOR TAXES ON INCOME 507,700 460,700
NET INCOME $ 690,401 $ 620,267
PER SHARE DATA:
NET INCOME PER SHARE - PRIMARY $0.13 $0.12
NET INCOME PER SHARE - FULLY DILUTED $0.11 $0.10
WEIGHTED AVERAGE SHARES
OUTSTANDING - PRIMARY 5,397,548 5,333,771
WEIGHTED AVERAGE SHARES
OUTSTANDING - FULLY DILUTED 6,981,297 6,907,006
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JULY 31
1996 1995
OPERATING ACTIVITIES:
NET INCOME $ 690,401 $ 620,267
DEPRECIATION AND AMORTIZATION 746,719 653,894
PROVISION FOR LOSSES ON ACCOUNT RECEIVABLE 37,739 17,309
GAIN ON SALE OF ASSETS (190,880)
CHANGES IN OPERATING ASSETS AND LIABILITIES -
ACCOUNTS RECEIVABLE 43,431 (102,375)
INVENTORIES (447,354) 604,292
PREPAID AND OTHER CURRENT ASSETS (302,303) (314,581)
ACCOUNTS PAYABLE 2,024,140 (1,670,814)
ACCRUED COMPENSATION (22,328) (314,233)
ACCRUED SALES AND FUEL TAX 755,439 130,409
ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES (255,755) (3,313)
CHANGES IN INCOME TAXES PAYABLE 315,092 352,181
CHANGES IN OTHER NON-CURRENT ASSETS 34,598 4,601
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 3,619,819 (213,243)
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT &
EQUIPMENT (3,735,359) (2,055,814)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 266,461
NET PROCEEDS RECEIVED ON NOTES RECEIVABLE 9,854 22,238
NET CASH USED IN INVESTING ACTIVITIES (3,725,505) (1,767,115)
FINANCING ACTIVITIES:
NET SHORT-TERM BORROWINGS 207,000
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (599,372) (650,250)
PROCEEDS FROM LONG-TERM BORROWING 960,000
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 23,270
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 383,898 (443,250)
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 278,212 (2,423,608)
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 1,667,062 7,593,798
CASH AND EQUIVALENTS - END OF PERIOD $1,945,274 $5,170,190
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $ 676,218 $ 663,691
INCOME TAXES PAID $ 62,011 $ 105,000
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
JULY 31, 1996
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, 1996, 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 July 31, 1996 and the results of
operations for the three months ended July 31, 1996 and 1995. 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:
July 31, 1996 April 30, 1996
At first-in, first-out (FIFO) cost:
Petroleum Products $1,343,792 $ 925,239
Store Merchandise 1,959,718 1,960,961
Parts for repairs and tires 1,966,318 1,884,512
Other 511,355 563,117
$5,781,183 $5,333,829
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 Company's primary lending institution has renewed its commitment for the
Company's existing line of credit until August 31, 1997. The line of credit
is limited to the lesser of $2,750,000 or the sum of 80% of the Company's
accounts receivable under 90 days old, plus 45% of the Company's inventory.
On December 21, 1995, the Company entered into an agreement with its primary
lender that provided a construction line of credit in the amount of $3,500,000
for the construction of the Harborcreek facility. During September 1996, the
Company will close permanent financing in the amount of $6,000,000, based
upon a 15 year amortization and a 10 year balloon.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
First Quarter ended July 31, 1996 and 1995
Sales from operations were $46,488,936 for the first quarter of fiscal 1997,
an increase of $8,362,268, or 22%, from the first quarter of last year. We
opened our new travel plaza in Harborcreek, Pennsylvania on June 15, 1996.
In addition we operated the travel plaza in Baltimore, Maryland for the full
quarter. The facility in Fairplay, South Carolina was sold on June 15, 1995.
These changes in locations resulted in a net increase in sales of $4,940,000.
Sales from a same unit basis increased $3,422,000 or 9%. On a same unit
basis diesel gallons increased 4% while diesel dollar sales increased 12%.
Gross profit for the first quarter was $11,648,558 which was an increase of
$1,918,520, or 20%, from the prior year. The change in number of locations
noted above also increased gross profit in the amount of $1,323,000. More
importantly same unit gross profit was up $596,000 or 6%. This increase was
reflected in all sales categories.
Operating expenses of $8,740,139 for the first quarter were $1,442,981 or
20% more than last year. Of this increase, $1,220,000 related to the change
in number of locations. The same unit operating expenses increased $223,000
or 3%.
General and administrative expenses for the quarter of $1,150,698 increased
$176,863 or 18% from last year. The increase relates primarily to increased
compensation.
Other income, net decreased $244,737 as a result of (a) the gains from last
year's sale of two properties, not present this year and (b) a decrease in
interest income as a result of lower cash levels this year.
Interest expense decreased from last year by $63,195 as a result of the
lower prime rate.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position increased by $278,212 to $1,945,274 during the
three months ended July 31, 1996. Cash from operations was $3,619,819 for
the quarter compared to a $213,243 use of cash in the prior year. Increased
cash from operations is primarily due to improved operating results combined
with the timing of payments associated with the construction of Harborcreek
and the gain on sale in the prior year.
Investing activities resulted in a net use of $3,725,505. Capital
expenditures during the first three months of fiscal 1997 were $3,735,359
primarily from the completion of the Harborcreek travel plaza.
Financing activities for the first three months of fiscal 1997 provided
$383,898 as funds were advanced through borrowings for the Harborcreek
facility. Principal payments on long-term debt were $599,372.
The Company's primary lending institution has renewed its commitment for the
Company's existing line of credit until August 31, 1997. The line of credit
is limited to the lesser of $2,750,000 or the sum of 80% of the Company's
accounts receivable under 90 days old, plus 45% of the Company's inventory.
As of July 31, 1996, the Company has utilized $200,000 of its available line
of credit as collateral for various letters of credit in addition to the
$2,221,000 outstanding on the line. The amount outstanding on the line is
classified as long-term debt as it relates to the financing of Harborcreek.
On December 21, 1995, the Company entered into an agreement with its primary
lender that provided a construction line of credit in the amount of $3,500,000
for the construction of the Harborcreek facility. During September 1996, the
Company will close permanent financing in the amount of $6,000,000 based upon
a 15 year amortization and a 10 year balloon.
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
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
None
Item 5. OTHER INFORMATION
None
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 Company's 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 Company's 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 Company's
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
(22) Published report regarding matters submitted to vote of security
holders
None
(23) Consents of experts and counsel
Not applicable
(24) Power of attorney
None
(27) Financial Data Schedule
Exhibit (27) on page 14 of this report.
(99) Additional exhibits
None
(b) REPORT ON FORM 8-K
None
EXHIBIT (11)
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE QUARTER ENDED JULY 31, 1996
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
7/31/96 499,176 $2.12 $2.97 143,124
Average number of shares outstanding 5,254,424
5,397,548
Net income per common and common equivalent share $.13
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE QUARTER ENDED JULY 31, 1996
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 Average Period End
Qtr. Ended Below Market Option Price Market Price Shares
7/31/96 499,176 $2.12 $3.28 176,873
Additional shares due to assumed exercise of convertible debentures 1,550,000
Average number of shares outstanding 5,254,424
6,981,297
Net income for quarter ended 7/31/95 $690,401
Interest on convertible debentures 59,288
$749,689
Net income per common and common equivalent share - fully diluted $.11
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: September 12, 1996 s/ John M. Holahan
John M. Holahan, President
Date: September 12, 1996 s/ William Burslem III
William Burslem III
Vice President
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