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, 1997
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, 1997
Common Stock, Par Value
$.01 Per Share 5,582,765
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, July 31, 1997 (unaudited) and
April 30, 1997...................................... 3
Statements of Income (unaudited), quarter ended
July 31, 1997 and 1996.............................. 4
Statements of Cash Flows (unaudited), quarter ended
ended July 31, 1997 and 1996........................ 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..................... 8
Signatures.................................................. 12
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
7/31/97 4/30/97
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 3,961,286 $ 3,134,871
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $233,000 AT
JULY 1997 AND $156,000 AT APRIL 1997 4,703,756 4,357,665
NOTES RECEIVABLE 21,322 20,725
INVENTORIES 5,754,508 5,763,023
PREPAID AND OTHER CURRENT ASSETS 1,179,705 1,231,509
INCOME TAXES RECEIVABLE 491,941
DEFERRED TAXES - CURRENT 791,100 791,100
TOTAL CURRENT ASSETS 16,411,677 15,790,834
NOTES RECEIVABLE, DUE AFTER ONE YEAR 798,437 738,997
PROPERTY, PLANT AND EQUIPMENT, NET 42,574,532 41,686,254
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 1,888,258 1,904,306
OTHER ASSETS, NET 2,226,452 2,315,603
$63,899,356 $62,435,994
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
CURRENT PORTION OF LONG-TERM DEBT $ 3,248,870 $ 3,207,254
ACCOUNTS PAYABLE 7,353,681 5,350,448
ACCOUNTS PAYABLE - AFFILIATE 960,058 1,179,927
INCOME TAXES PAYABLE 433,342
ACCRUED COMPENSATION 1,070,704 1,714,677
ACCRUED SALES AND FUEL TAX 2,051,091 1,925,570
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 1,002,657 1,158,607
TOTAL CURRENT LIABILITIES 16,120,403 14,536,483
LONG TERM DEBT 24,493,786 25,526,937
CONVERTIBLE SUBORDINATED DEBENTURES 4,650,000 4,650,000
DEFERRED INCOME TAXES 1,905,600 1,905,600
TOTAL LIABILITIES 47,169,789 46,619,020
SHAREHOLDERS' EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES,
ISSUED AND OUTSTANDING AT JULY 31,
1997 - 5,582,765 AND
APRIL 30, 1997 - 5,574,965 55,828 55,749
ADDITIONAL PAID-IN CAPITAL 4,660,687 4,649,414
RETAINED EARNINGS 12,013,052 11,111,811
TOTAL SHAREHOLDERS' EQUITY 16,729,567 15,816,974
$63,899,356 $62,435,994
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED
JULY 31
1997 1996
NET SALES AND OPERATING REVENUE $56,397,785 $46,488,936
COST OF GOODS SOLD 43,036,822 34,840,378
GROSS PROFIT 13,360,963 11,648,558
OPERATING EXPENSE 9,762,266 8,740,139
GENERAL AND ADMINISTRATIVE EXPENSE 1,309,305 1,150,698
INTEREST EXPENSE 809,722 614,004
OTHER INCOME, NET (58,271) (54,384)
11,823,022 10,450,457
INCOME BEFORE TAXES 1,537,941 1,198,101
PROVISION FOR TAXES ON INCOME 636,700 507,700
NET INCOME $ 901,241 $ 690,401
PER SHARE DATA:
NET INCOME PER SHARE - PRIMARY $0.16 $0.12
NET INCOME PER SHARE - FULLY DILUTED $0.13 $0.10
WEIGHTED AVERAGE SHARES
OUTSTANDING - PRIMARY 5,718,913 5,743,084
WEIGHTED AVERAGE SHARES
OUTSTANDING - FULLY DILUTED 7,460,024 7,423,202
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JULY 31
1997 1996
OPERATING ACTIVITIES:
NET INCOME $ 901,241 $ 690,401
DEPRECIATION AND AMORTIZATION 861,055 746,719
CHANGES IN OPERATING ASSETS AND LIABILITIES -
ACCOUNTS RECEIVABLE (411,091) 87,170
INVENTORIES 8,515 (447,354)
PREPAID AND OTHER CURRENT ASSETS 51,804 (302,303)
ACCOUNTS PAYABLE 1,783,364 2,024,140
ACCRUED COMPENSATION (643,973) (22,328)
ACCRUED SALES AND FUEL TAX 125,521 755,439
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES (155,950) (255,755)
INCOME TAXES PAYABLE/PAYABLE 925,283 315,092
OTHER NON-CURRENT ASSETS 47,578 34,598
NET CASH PROVIDED BY OPERATING
ACTIVITIES 3,493,347 3,619,819
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT &
EQUIPMENT (1,704,649) (3,735,359)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 12,937
NET PROCEEDS RECEIVED ON NOTES RECEIVABLE 4,963 9,854
NET CASH USED IN INVESTING ACTIVITIES (1,686,749) (3,725,505)
FINANCING ACTIVITIES:
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (991,535) (599,372)
PROCEEDS FROM LONG-TERM BORROWING 960,000
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 11,352 23,270
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (980,183) 383,898
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 826,415 278,212
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 3,134,871 1,667,062
CASH AND EQUIVALENTS - END OF PERIOD $3,961,286 $1,945,274
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $ 941,230 $ 676,218
INCOME TAXES PAID $ -0- $ 62,011
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
JULY 31, 1997
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, 1997, 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, 1997 and the results
of operations for the three months ended July 31, 1997 and 1996. 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, 1997 April 30, 1997
At first-in, first-out (FIFO) cost:
Petroleum Products $1,226,420 $1,047,017
Store Merchandise 2,485,008 2,328,955
Parts for repairs and tires 1,794,626 1,803,705
Other 248,454 583,346
$5,754,508 $5,763,023
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 September 29, 1998. The regular line
of credit is limited to the lesser of $3,750,000 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, 1997, the Company has utilized $200,000 of it
available line of credit as collateral for various line of credit. In addition
the Company has $3,500,000 for a capital line of credit available from its
primary lender. The capital line of credit calls for interest only at
prime plus 1/4% until July 31, 1998. At that time the line can be repaid or
amortized over 42 months with interest at 1/2%. No advances have been made
against the capital line of credit.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
First Quarter ended July 31, 1997 and 1996
Sales from operations were $56,398,000 for the first quarter of fiscal 1998,
an increase of $9,909,000, or 21%, from the first quarter of last year. Sales
in all categories on a same unit basis increased $4,955,000 or 11%. The
Harborcreek facility opened in June 1996, which accounts for the balance of
the differences from last year.
Gross profit for the first quarter was $13,361,000, which was an increase of
$1,712,000, or 15%, from the prior year. Same unit gross profit was up
$663,000 or 6%. This increase was reflected in all sales categories except
gasoline, where lower margins per gallon had an unfavorable impact.
Operating expenses of $9,762,000 for the first quarter were $1,022,000, 12%
more than last year. Of this increase, $474,000 related to the change in
number of locations. The same unit operating expenses increased $548,000,
or 6%.
General and administrative expenses for the quarter of $1,309,000 increased
$159,000 or 14% from last year. The increase relates to compensation as a
result of increased staff and accrued bonuses on greater net income.
Professional services increased over last year as a result of several
projects, including preparing the Company's computer systems for the year
2000.
Interest expense increased from last year by $196,000 as a result of
increased levels of debt and a higher prime rate.
Net income for the quarter was $901,000, an increase of $211,000 or 31% over
last year for the reasons discussed above.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position increased by $826,000 to $3,961,000 during the
three months ended July 31, 1997. Cash from operations was $3,493,000 for
the quarter compared to $3,620,000 in the prior year.
Investing activities resulted in a net use of $1,687,000. Capital
expenditures during the first three months of fiscal 1998 were $1,705,000,
$2,031,000 lower than last year when the Harborcreek travel plaza was under
construction.
Financing activities for the first three months of fiscal 1998 used $980,000
due to principal payments on long-term debt.
The Company's primary lending institution has renewed its commitment for the
Company's existing line of credit until September 29, 1998. The regular line
of credit is limited to the lesser of $3,750,000 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, 1997, the Company has utilized $200,000 of it
available line of credit as collateral for various line of credit. In addition
the Company has $3,500,000 for a capital line of credit available from its
primary lender. The capital line of credit calls for interest only at
prime plus 1/4% until July 31, 1998. At that time the line can be repaid or
amortized over 42 months with interest at 1/2%. No advances have been made
against the capital line 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
The Company is not presently a party to any 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 such 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 11 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 13 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, 1997
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
7/31/97 727,916 $2.30 $2.83 136,148
Average number of shares outstanding 5,582,765
5,718,913
Net income per common and common equivalent share $.16
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE QUARTER ENDED JULY 31, 1997
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
7/31/97 833,916 $2.34 $3.25 234,149
Additional shares due to assumed exercise of convertible debentures 1,643,110
Average number of shares outstanding 5,582,765
7,460,024
Net income for quarter ended 7/31/97 $901,241
Interest on convertible debentures 59,288
$960,529
Net income per common and common equivalent share - fully diluted $.13
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, 1997 s/ John M. Holahan
John M. Holahan, President
Date: September 12, 1997 s/ William Burslem III
William Burslem III
Vice President
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