15
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 January 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 January 31, 1995
Common Stock, Par Value
$.01 Per Share 5,209,924
This report consists of 15 pages.
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, January 31, 1995 and
April 30, 1994................................... 3
Statement of Income, quarter and nine months ended
January 31, 1995 and 1994........................ 4
Statement of Cash Flows, nine months ended
January 31, 1995 and 1994........................ 5
Notes to Financial Information........................ 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 8
PART II Other Information
Index to Exhibits and Legal Proceedings............... 11
Signatures............................................ 15
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
1/31/95 4/30/94
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 5,872,741 $ 1,177,400
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $280,018 AT
JANUARY 1995 AND $207,001 AT APRIL 1994 3,442,568 3,018,092
NOTES RECEIVABLE 347,028 86,699
INVENTORIES 5,308,765 4,572,142
PREPAID AND OTHER CURRENT ASSETS 575,009 514,806
DEFERRED TAXES - CURRENT 436,083 436,083
TOTAL CURRENT ASSETS 15,982,194 9,805,222
NOTES RECEIVABLE, DUE AFTER ONE YEAR 1,397,841 1,689,277
PROPERTY, PLANT AND EQUIPMENT, NET 25,905,905 25,725,081
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 2,048,734 2,096,876
OTHER ASSETS, NET 2,594,806 2,531,441
$47,929,480 $41,847,897
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
SHORT-TERM DEBT DUE BANKS $ 0 $ 1,752,000
CURRENT PORTION OF LONG-TERM DEBT 2,179,934 2,256,795
ACCOUNTS PAYABLE 5,630,505 4,981,427
ACCOUNTS PAYABLE - AFFILIATE 353,245 285,693
INCOME TAXES PAYABLE 337,044 247,057
ACCRUED COMPENSATION 1,413,581 1,074,504
ACCRUED SALES AND FUEL TAX 1,012,264 1,456,013
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 1,189,443 1,106,739
TOTAL CURRENT LIABILITIES 11,394,478 13,160,228
LONG TERM DEBT 20,925,719 17,551,222
CONVERTIBLE SUBORDINATED DEBENTURES 2,150,000 0
DEFERRED INCOME TAXES 716,917 716,917
TOTAL LIABILITIES 35,907,652 31,428,367
SHAREHOLDERS EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES,
ISSUED AND OUTSTANDING AT JANUARY
1995 - 5,209,924 AND
APRIL 1994 - 5,184,038 52,099 51,841
ADDITIONAL PAID-IN CAPITAL 3,767,741 3,727,979
RETAINED EARNINGS 8,201,988 6,639,710
TOTAL SHAREHOLDERS EQUITY 12,021,828 10,419,530
$47,929,480 $41,847,897
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
1995 1994 1995 1994
NET SALES AND
OPERATING REVENUE $ 37,529,063 $ 32,661,421 $114,780,410 $101,615,793
COST OF GOODS SOLD 28,282,146 24,848,478 85,662,334 76,099,640
GROSS PROFIT 9,246 917 7,812,943 29,118,076 25,516,153
OPERATING EXPENSE 7,231,905 6,475,074 22,222,029 20,015,413
GENERAL AND
ADMINISTRATIVE EXPENSE 991,434 837,450 2,764,722 2,576,238
INTEREST EXPENSE 835,950 390,180 1,834,920 1,216,243
OTHER INCOME, NET (81,044) (76,822) (142,628) (295,140)
8,766,500 7,625,882 26,467,298 23,512,754
INCOME BEFORE TAXES
AND CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE 480,417 187,061 2,650,778 2,003,399
PROVISION FOR TAXES
ON INCOME 193,500 85,300 1,088,500 823,000
INCOME BEFORE
CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE 286,917 101,761 1,562,278 1,180,399
CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE 0 0 0 (99,735)
NET INCOME $ 286,917 $ 101,761 $ 1,562,278 $ 1,080,664
PER SHARE DATA:
EARNINGS PER COMMON
AND COMMON EQUIVALENT
SHARE BEFORE CUMULATIVE
EFFECT OF AN
ACCOUNTING CHANGE $0.05 $0.02 $0.30 $0.23
CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE 0.00 0.00 0.00 (0.02)
NET INCOME PER SHARE $0.05 $0.02 $0.30 $0.21
AVERAGE NUMBER OF
COMMON AND
COMMON EQUIVALENT SHARES 5,309,167 5,320,090 5,286,883 5,243,146
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED JANUARY 31
1995 1994
OPERATING ACTIVITIES:
NET INCOME $1,562,278 $1,080,664
DEPRECIATION AND AMORTIZATION 1,834,920 1,781,111
PROVISION FOR LOSSES
ON ACCOUNT RECEIVABLE 94,145 17,257
PROVISION FOR
DEFERRED INCOME TAXES 0 59,741
GAIN ON SALE OF ASSETS 27,974 (179,173)
CHANGES IN OPERATING ASSETS
AND LIABILITIES -
ACCOUNTS RECEIVABLE (518,621) (700,493)
INVENTORIES (736,623) 15,118
PREPAID AND OTHER
CURRENT ASSETS ( 60,203) (123,769)
ACCOUNTS PAYABLE 716,630 468,850
ACCRUED COMPENSATION 338,077 (220,922)
ACCRUED SALES AND FUEL TAX (443,749) (184,361)
ACCRUED EXPENSES AND
OTHER CURRENT LIABILITIES 82,704 (294,869)
CHANGES IN INCOME TAXES PAYABLE 89,987 39,875
CHANGES IN OTHER
NON-CURRENT ASSETS (117,550) 43,278
NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,869,969 1,802,307
INVESTING ACTIVITIES:
EXPENDITURES FOR
PROPERTY, PLANT & EQUIPMENT (2,072,388) (1,131,934)
PROCEEDS FROM
DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 100,997 527,895
NET PROCEEDS RECEIVED ON
NOTES RECEIVABLE 61,107 167,698
NET CASH USED IN
INVESTING ACTIVITIES (1,910,284) (436,341)
FINANCING ACTIVITIES:
NET SHORT-TERM PAYMENTS (1,752,000) 967,000
PRINCIPAL PAYMENTS
ON LONG-TERM DEBT (7,202,364) (2,533,013)
PROCEEDS FROM
LONG-TERM BORROWING 10,500,000 0
PROCEEDS FROM
CONVERTIBLE SUBORDINATED
DEBENTURES 2,150,000 0
PROCEEDS FROM EXERCISE
OF STOCK OPTIONS 40,020 0
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES 3,735,656 (1,566,013)
NET INCREASE (DECREASE)
IN CASH AND EQUIVALENTS 4,695,341 (200,047)
CASH AND EQUIVALENTS -
BEGINNING OF PERIOD 1,177,400 1,080,793
CASH AND EQUIVALENTS -
END OF PERIOD $5,872,741 $ 880,746
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $1,494,615 $1,197,549
INCOME TAXES PAID $1,046,991 $ 825,480
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
JANUARY 31, 1995
NOTE 1 BASIS OF PRESENTATION
This 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, 1994, and, in the opinion of management, contains
all adjustments necessary to present fairly the Company's
financial information as of January 31, 1995, and for the
quarter and the nine months ended January 31, 1995, and
1994.
NOTE 2 INCOME TAXES
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109.
" Accounting for Income Taxes" (SFAS 109), and the Company
has adopted the provisions of this standard as of May 1,
1993.
NOTE 3 EARNINGS PER SHARE
Earnings per share are computed by dividing net income by
the weighted average number of common, and when applicable,
dilutive common equivalent shares outstanding during the
period. Fully diluted earnings per share have not been
presented as they do not differ materially from the primary
data.
NOTE 4 FINANCING AGREEMENTS
On June 30, 1994, the Company entered into a $2,500,000 term
loan agreement with its primary lender covering the
acquisition and certain improvements planned for completion
during 1995 to the Greenland, New Hampshire facility.
Principal payments are $20,833.33 per month plus interest at
the fixed rate of 9.65%. The loan is amortized over ten
years with a balloon due on June 30, 1999.
On September 29, 1994, the Company entered into an eight
year term loan with its primary lender in the amount of
$10,500,000. Proceeds from this loan were used for the
payment of term loan due in 1996 at prime plus 1.25%,
payment of $1.5 million due on line of credit and cash for
expanded capital expenditures
The loan has a fixed rate of 10.12% with interest only
payments for six months. After six months a monthly payment
of principal and interest of $166,957.84 is made with all
remaining principal and interest due September 29, 2002.
The Companys primary lending institution has renewed its
commitment for the Companys existing line of credit until
August 31, 1995. The line of credit is now 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.
The Company, through a private placement, sold $4,650,000 of
Convertible Senior Subordinated Debentures due January 15,
2005, together with warrants to purchase additional shares
of the Companys Common Stock. The securities were sold
under Regulation D of the Securities Act of 1933 (the Act)
and in offshore transactions under Regulation S of the Act.
The debentures carry an annual interest rate of 8.5%,
payable quarterly, and are convertible into the Companys
Common Stock at a price equal to $3.00 per share at the
option of the holder at any time. The debentures are
callable at the discretion of the Company after January 15,
1998, at a redemption price equal to 109% as of January 15,
1998, and gradually decreasing to 100% at maturity on
January 15, 2005.
The warrants, which are exercisable at any time, entitle
warrant holders to purchase up to a total of 15,500 shares
of the Companys Common Stock at a price of $3.60 per share.
As of January 31, 1995, $2,150,000 of the debentures were
sold. By the closing date of February 15, 1995, an
additional $2,500,000 of debentures were sold.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Third Quarter ended January 31, 1995 and 1994
Sales from operations were $37,529,063 for the third quarter
of fiscal 1995, an increase of $4,867,642 (14.9%) from the
third quarter of last year. Approximately $2.8 million of
this increase came from our new facility in Greenland, New
Hampshire that was acquired April 30, 1994. Sales on a same
unit basis were up over last year with volume gains coming
in all categories.
Gross profit for the third quarter was $9,246,917 which was
$1,433,974 (18.4%) more than last year. Approximately 50% of
this increase came from our Greenland facility. Increases in
diesel, shop, store and restaurant gross profit from volume
increases accounted for the remainder of the improvement.
Operating expenses of $7,231,905 for the third quarter were
$756,831 (11.7%) greater than last year. Most of this
increase came from the Greenland facility. All other
expenses were in line with last year.
General and administrative expenses of $991,434 for the
quarter increased $153,984 from last year. The bonus
accrual based upon improved year-to-date performance, wages,
travel and entertainment, and advertising expense accounted
for this increase.
Interest expense increased from last year by $445,770 as the
result of the increased prime rate and an increased level of
debt, primarily from the Greenland acquisition.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Companys cash position increased by $4,695,341 to
$5,872,741 during the nine months ended January 31, 1995.
Accounts receivable, prior to the provision for doubtful
accounts, increased $518,621 and inventories increased
$736,623 to support sales activity. Accounts payable
increased $716,630 from the increased inventory and
operating expenses. Operating activities for the nine months
provided $2,869,969 in cash compared to last year's
operating activities providing $1,802,307 in cash.
Investing activities resulted in a net use of cash of
$1,910,284. Capital expenditures during the first nine
months were $2,072,388.
Short-term borrowings decreased $1,752,000 as compared to an
increase in borrowings of $967,000 last year. $1,500,000 of
the line of credit was refinanced in the eight year term
note discussed below. Principal payments on long-term debt
were $7,202,364, as a term note due in 1996 was refinanced
in the eight year term note discussed below. The financing
from the eight year term note discussed below provided about
$3,000,000 in new debt. The convertible subordinated
debentures provided $2,150,000 in new debt.
On June 30, 1994, the Company entered into a $2,500,000 term
loan agreement with its primary lender covering the
acquisition and certain improvements planned for completion
during 1995 to the Greenland, New Hampshire facility.
Principal payments are $20,833.33 per month plus interest at
the fixed rate of 9.65%. The loan is amortized over ten
years with a balloon due on June 30, 1999.
On September 29, 1994, the Company entered into an eight
year term loan with its primary lender in the amount of
$10,500,000. Proceeds from this loan were used for the
payment of term loan due in 1996 at prime plus 1.25%,
payment of $1.5 million due on line of credit and cash for
expanded capital expenditures
The loan has a fixed rate of 10.12% with interest only
payments for six months. After six months a monthly payment
of principal and interest of $166,957.84 is made with all
remaining principal and interest due September 29, 2002.
The Companys primary lending institution has renewed its
commitment for the Companys existing line of credit until
August 31, 1995. The line of credit is now 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.
The Company, through a private placement, sold $4,650,000 of
Convertible Senior Subordinated Debentures due January 15,
2005, together with warrants to purchase additional shares
of the Companys Common Stock. The securities were sold
under Regulation D of the Securities Act of 1933 (the Act)
and in offshore transactions under Regulation S of the Act.
The debentures carry an annual interest rate of 8.5%,
payable quarterly, and are convertible into the Companys
Common Stock at a price equal to $3.00 per share at the
option of the holder at any time. The debentures are
callable at the discretion of the Company after January 15,
1998, at a redemption price equal to 109% as of January 15,
1998, and gradually decreasing to 100% at maturity on
January 15, 2005.
The warrants, which are exercisable at any time, entitle
warrant holders to purchase up to a total of 15,500 shares
of the Companys Common Stock at a price of $3.60 per share.
As of January 31, 1995, $2,150,000 of the debentures were
sold. By the closing date of February 15, 1995, an
additional $2,500,000 of debentures were sold.
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
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
The Articles of Incorporation and By-laws filed
under exhibits 3-a and 3-b to the Company's
Registration Statement on Form S-18, File No. 33-7870-
NY and amended to change the Company's name under
exhibit 3-c to the Companys annual report on Form 10-K
dated July 27, 1993 are incorporated herein by
reference with respect to the Restated Certificate of
Incorporation and By-laws of the Company.
(4) Instruments defining the rights of security
holders, including indentures
Exhibits 4-a, Form of Common Stock Certificate,
filed with the Company's Registration Statement on Form-
18, File No. 33-7870-NY; 4-b, Amended Stock
Certificate, filed with the Companys Annual Report on
Form 10-K dated July 27, 1993; 4-c, Form of Indenture
dated as of January 24, 1995 between the Company and
American Stock Transfer & 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 and 4-d, Form of Warrant to Purchase
Common Stock, both filed with Companys current report
on Form 8-K dated February 17, 1995, are incorporated
herein by reference with respect to instruments
defining the rights of security holders.
(10) Material Contracts
Not applicable
(11) Statement re: computation of earnings per share
Computation of earnings per share is set forth in
Exhibit (11) on page 14 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
(b) REPORT ON FORM 8-K
On February 17, 1995, the Company filed with the
Commission a current report on Form 8-K with respect to the
completion of the sale of (1) $4,650,000 principal amount of
8.5% Convertible Senior Subordinated Debentures due January
15, 2005, and (2) Warrants to purchase 15,500 shares of
Common Stock, par value $.01 per share, of the Company at a
price of $3.60 per share.
EXHIBIT (11)
COMPUTATION OF EARNINGS PER SHARE
FOR THE QUARTER ENDED JANUARY 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.
The common stock equivalents represent shares which had a
dilutive effect on earnings during the third quarter as
option prices were below the average market price of $2.44
during the period.
Weighted average number of shares
outstanding at January 31, 1995 5,209,924
Common stock equivalents 99,243
5,309,167
FOR THE NINE MONTHS ENDED JANUARY 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.
The common stock equivalents represent shares which had a
dilutive effect on earnings during the third quarter as
option prices were below the average market price of $2.28
during the period.
Weighted average number of shares
outstanding at January 31, 1995 5,209,924
Common stock equivalents 76,959
5,286,883
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: March 8, 1994 s/ John M. Holahan
John M. Holahan, President
Date: March 8, 1994 s/ William Burslem III
William Burslem III
Vice President