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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from---------------to---------------
COMMISSION FILE NUMBER 0-25990
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INTRAV, INC.
(Exact name of registrant as specified in its charter)
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MISSOURI 43-1323155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7711 BONHOMME AVENUE, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)
(314) 727-0500
(Registrant's telephone number, including area code)
NO CHANGES
(Former name, former address and former fiscal year, if change
since last report)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
YES /X/ NO / /
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The Company had 5,151,400 shares of common stock outstanding at July 31, 1996.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
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INTRAV, INC.
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Program revenues $ 10,095 $ 11,189 $ 33,804 $ 30,701
Cost of operations 8,909 9,648 29,095 26,141
-------- -------- -------- --------
Gross profit 1,186 1,541 4,709 4,560
Selling, general and administrative 2,991 2,522 5,881 5,090
-------- -------- -------- --------
Operating income (loss) (1,805) (981) (1,172) (530)
Investment income 278 450 511 611
-------- -------- -------- --------
Income (loss) before provision for income taxes (1,527) (531) (661) 81
Provision (credit) for income taxes (545) (192) (238) 29
-------- -------- -------- --------
Net income (loss) (982) (339) (423) 52
-------- -------- -------- --------
Net income (loss) per common share $ (0.19) $ (0.07) $ (0.08) $ 0.01
-------- -------- -------- --------
Weighted average number of common shares
outstanding 5,192 5,162 5,238 5,081
-------- -------- -------- --------
See notes to financial statements.
</TABLE>
2
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<TABLE>
INTRAV, INC.
BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
-------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,928 $ 9,066
Marketable securities 8,826 12,234
Accounts receivable 848 795
Prepaid program costs 14,553 7,706
Prepaid expenses 295 148
-------- --------
Total current assets 43,450 29,949
Property and equipment - net 2,199 2,311
Prepaid promotion costs 9,269 7,674
-------- --------
Total $ 54,918 $ 39,934
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 645 $ 1,548
Accrued expenses 2,528 2,259
Deferred revenue 45,953 25,511
Income taxes payable (deposit) (130) 536
Deferred income taxes 1,874 2,839
-------- --------
Total current liabilities 50,870 32,693
Deferred income taxes 547 547
Stockholders' equity:
Preferred stock, $.01 par value - authorized, 5,000,000
shares; issued and outstanding, none
Common stock, $.01 par value - authorized, 20,000,000
shares; 5,325,000 shares issued and outstanding 53 53
Additional paid-in capital 3,017 3,017
Retained earnings 1,840 3,571
Unrealized gain (loss) on marketable securities (5) 53
Treasury stock (at cost: 173,600 shares in 1996) (1,404) -
-------- --------
Total stockholders' equity 3,501 6,694
-------- --------
Total $ 54,918 $ 39,934
-------- --------
See notes to financial statements.
</TABLE>
3
<PAGE> 4
<TABLE>
INTRAV, INC.
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (423) $ 52
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 300 300
Amortization of bond premium 25 21
Deferred income taxes (1,023) 507
Changes in assets and liabilities which provided (used) cash:
Accounts receivable (53) 314
Prepaid expenses (8,587) (8,921)
Accounts payable and accrued expenses (634) (937)
Deferred revenue 20,442 18,853
Income taxes payable (666) (551)
-------- --------
Net cash provided by (used in) operating activities 9,381 9,638
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment - net (189) (238)
Sales of marketable securities 7,879 6,514
Purchases of marketable securities (4,497) (10,332)
-------- --------
Net cash provided by (used in) investing activities 3,193 (4,056)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock - 2,684
Purchase of treasury stock (1,404) -
Dividends paid (1,308) (1,500)
Cash received from (paid to) affiliate - 598
-------- --------
Net cash provided by (used in) financing activities (2,712) 1,782
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,862 7,364
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,066 8,951
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,928 $ 16,315
-------- --------
See notes to financial statements.
</TABLE>
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INTRAV, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
DESCRIPTION OF BUSINESS
Intrav, Inc. (the "Company") is a leading designer, organizer, marketer and
operator of deluxe, escorted, international travel programs. The Company's
programs are designed to appeal to higher income individuals desiring
first-class travel experiences. The Company markets substantially all of
its programs via direct mail through sponsoring "affinity groups", or directly
to the ultimate traveler.
The unaudited financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. However, in the opinion of management of the Company, the
financial statements include all adjustments, which consist of normal
recurring accruals, necessary to present fairly the financial information
for such periods. These financial statements should be read in conjunction
with the audited financial statements for the year ended December 31, 1995
contained in the Company's Annual Report on Form 10-K, dated March 29, 1996,
as filed with the Securities and Exchange Commission.
DIVIDEND DECLARATION
On August 1, 1996, the Company declared a dividend of $0.125 per share, for
stockholders of record on August 30, 1996, to be paid on September 16, 1996.
STOCK REPURCHASE PROGRAM
In January 1996, the Board of Directors approved a Stock Repurchase Program
whereby the Company intends to purchase up to 300,000 shares of common stock
over an unspecified period of time as market conditions allow. Such
repurchased shares may be used to fund the Company's stock option plan. As
of June 30, 1996, the Company had purchased 173,600 shares.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
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GENERAL
The Company recognizes the revenues and related costs of operations upon the
completion of each tour departure. The actual results reflect the timing of
the completion of such tour departures. Because of the timing of
recognition of revenues and related costs, quarterly comparisons from
year-to-year may not be indicative of the Company's level of business
activity for the compared quarters or be indicative for the results of
operations for the year.
The Company's business tends to be seasonal, with higher activity generally
occurring in the summer, early fall, and winter months.
Program revenues include revenues from the sale of base travel programs, as
well as optional products and services, including sightseeing, program
extensions, domestic airfare, and medical and educational seminars.
Cost of operations include the costs of airfare, ship, hotel and other
accommodations and services included in the base programs and optional
products and services. Also included are the costs of creating and
distributing promotional materials and promotional expenses for each program.
PROGRAM REVENUES
Program revenues for the three months ended June 30, 1996 compared to 1995,
decreased $1.1 million or 9.8%, from $11.2 million in 1995 to $10.1 million
in 1996. This decrease was due to 503 fewer travelers, representing a 21.3%
decrease, from 2,361 travelers in 1995 to 1,858 travelers in 1996. The
reduction in travelers was primarily attributable to the scheduled operation
of fewer second quarter tour departures of the Mediterranean cruise programs
in 1996 compared to 1995. This decrease was partially offset by a $695
increase in the average revenue per traveler, or 14.7%, from $4,739 in 1995
to $5,434 in 1996. This increase was primarily due to the inclusion of more
higher priced African programs in 1996.
Program revenues for the six months ended June 30, 1996 compared to 1995,
increased $3.1 million or 10.1%, from $30.7 million in 1995 to $33.8 million
in 1996. This increase was due to 708 more travelers, representing a 10.1%
increase, from 7,027 travelers in 1995 to 7,735 travelers in 1996. The
additional travelers were primarily attributable to the South America and
USAA Welcome Aboard programs which were new in 1996. The average revenue
per traveler remained constant at $4,369 in 1995 and $4,370 in 1996.
COST OF OPERATIONS
Cost of operations for the three months ended June 30, 1996 compared to
1995, decreased $0.7 million or 7.7%, from $9.6 million in 1995 to $8.9
million in 1996. This decrease reflects the reduced level of program costs
resulting from fewer travelers. The average cost per traveler increased $710
per traveler, from $4,086 in 1995 to $4,796 in 1996, consistent with the
increase in the average selling price of programs operated. Costs of
operations increased as a percentage of program revenues from 86.2% in 1995
to 88.3% in 1996 due to higher promotional expenses associated with the
programs operating in the second quarter of 1996.
Cost of operations for the six months ended June 30, 1996 compared to 1995,
increased $3.0 million or 11.3%, from $26.1 million in 1995 to $29.1 million
in 1996. This increase reflects the additional costs necessary to support
the increase in travelers. The average cost per traveler increased $41 per
traveler, from $3,720 in 1995
6
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to $3,761 in 1996. Costs of operations increased as a percentage of program
revenues from 85.1% in 1995 to 86.1% in 1996 due to higher promotional expenses
associated with the programs operating in the first six months of 1996.
GROSS PROFIT
Gross profit for the three months ended June 30, 1996 compared to 1995,
decreased $0.3 million or 23.0%, from $1.5 million in 1995 to $1.2 million
in 1996, as a result of lower revenues and higher relative costs of
operations in 1996. Gross profit decreased as a percentage of revenues from
13.8% in 1995 to 11.7% in 1996, primarily due to the increased promotional
expenses incurred for the programs operating in the second quarter of 1996.
Gross profit for the six months ended June 30, 1996 compared to 1995,
increased $0.1 million or 3.3%, from $4.6 million in 1995 to $4.7 million in
1996, as a result of higher revenues and higher relative costs of operations
in 1996. Gross profit decreased as a percentage of revenues from 14.9% in
1995 to 13.9% in 1996, primarily due to the increased promotional expenses
incurred for the programs operating in the first six months of 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended June
30, 1996 compared to 1995, increased $0.5 million, or 18.6%, from $2.5
million in 1995 to $3.0 million in 1996. This increase was primarily due to
higher incentive compensation, credit card transaction fees, and expenses
associated with operating as a publicly traded company (directors fees,
shareholder communications, and filing fees). Selling, general and
administrative expenses increased as a percentage of revenues from 22.5% in
1995 to 29.6% in 1996 due to the increased expenses and the decrease in
program revenues.
Selling, general and administrative expenses for the six months ended June
30, 1996 compared to 1995, increased $0.8 million, or 15.5%, from $5.1
million in 1995 to $5.9 million in 1996. This increase was primarily due to
higher compensation costs, list management expenses, credit card transaction
fees, and public company expenses. Selling, general and administrative
expenses increased as a percentage of revenues from 16.6% in 1995 to 17.4%
in 1996 due to the increased expenses and partially offset by the increase
in program revenues.
INVESTMENT INCOME
Investment income for the three months ended June 30, 1996 compared to 1995,
decreased $172,000 from $450,000 in 1995 to $278,000 in 1996. This decrease
was due to a lower rate of return earned on investable cash and a $100,000
reduction in gains recognized on the sale of marketable securities. The
average monthly balance of cash and marketable securities during the second
quarter increased from $20.9 million in 1995 to $21.6 million in 1996.
Investment income for the six months ended June 30, 1996 compared to 1995,
decreased $100,000 from $611,000 in 1995 to $511,000 in 1996 due to the
reduction of gains recognized on the sale of marketable securities referred
to above.
7
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LIQUIDITY AND CAPITAL RESOURCES
The Company continues to fund its operations, capital expenditures, dividend
payments and treasury stock purchases through cash flows generated from
operations and from retained earnings.
Net cash provided by operating activities for the six months ended June 30,
1996 and 1995, was $9.4 million and $9.6 million, respectively. The Company
recognizes program revenues as income upon the completion of each tour
departure. Deferred revenue balances consist of amounts received from
travelers for tour departures which have not been completed. Of the $46.0
million of deferred revenue at June 30, 1996, approximately $29.6 million,
or 64.3%, relates to tour departures which will be completed by September
30, 1996. The balance of the deferred revenue, $16.4 million, relates to
deposits and payments for tour departures which will be completed after
September 30, 1996.
The Company paid cash dividends of $1,308,000 and purchased 173,600 shares
of its common stock from the open market for $1,404,000 during the six
months ended June 30, 1996.
8
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Not applicable.
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K
during the quarter for which this report was filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTRAV, INC.
(Registrant)
Date: August 1, 1996 /s/ Michael A. DiRaimondo
-------------------------------------------------
(Michael A. DiRaimondo)
Senior Vice President and Chief Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,928
<SECURITIES> 8,826
<RECEIVABLES> 848
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43,450
<PP&E> 5,679
<DEPRECIATION> 3,480
<TOTAL-ASSETS> 54,918
<CURRENT-LIABILITIES> 50,870
<BONDS> 0
<COMMON> 53
0
0
<OTHER-SE> 3,448
<TOTAL-LIABILITY-AND-EQUITY> 54,918
<SALES> 33,804
<TOTAL-REVENUES> 34,315
<CGS> 29,095
<TOTAL-COSTS> 29,095
<OTHER-EXPENSES> 5,881
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (661)
<INCOME-TAX> (238)
<INCOME-CONTINUING> (423)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (423)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
