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, 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 July 31, 1995
Common Stock, Par Value
$.01 Per Share 5,209,924
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, July 31, 1995 (unaudited) and
April 30, 1995.......................................... 3
Statement of Income (unaudited), quarter ended
July 31, 1995 and 1994.................................. 4
Statement of Cash Flows (unaudited), three months
ended July 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...................... 9
Signatures................................................... 13
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
7/31/95 4/30/95
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 5,170,190 $ 7,593,798
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $210,555 AT
JULY 1995 AND $214,052 AT APRIL 1995 3,768,301 3,683,235
NOTES RECEIVABLE 326,590 332,655
INVENTORIES 5,186,531 5,790,823
PREPAID AND OTHER CURRENT ASSETS 848,859 532,904
DEFERRED TAXES - CURRENT 381,900 381,900
TOTAL CURRENT ASSETS 15,682,371 18,315,315
NOTES RECEIVABLE, DUE AFTER ONE YEAR 1,974,427 1,390,600
PROPERTY, PLANT AND EQUIPMENT, NET 27,834,441 27,052,462
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 2,016,639 2,032,686
OTHER ASSETS, NET 2,534,179 2,579,747
$50,042,057 $51,370,810
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
SHORT-TERM DEBT DUE BANKS $ 207,000 $
CURRENT PORTION OF LONG-TERM DEBT 2,334,506 2,360,015
ACCOUNTS PAYABLE 5,405,932 6,897,323
ACCOUNTS PAYABLE - AFFILIATE 417,677 597,100
INCOME TAXES PAYABLE 352,181
ACCRUED COMPENSATION 1,021,072 1,335,305
ACCRUED SALES AND FUEL TAX 1,178,058 1,047,649
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 1,054,366 1,057,679
TOTAL CURRENT LIABILITIES 11,970,792 13,295,071
LONG TERM DEBT 19,704,216 20,328,957
CONVERTIBLE SUBORDINATED DEBENTURES 4,650,000 4,650,000
DEFERRED INCOME TAXES 747,200 747,200
TOTAL LIABILITIES 37,072,208 39,021,228
SHAREHOLDERS EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES,
ISSUED AND OUTSTANDING AT JULY
1995 AND APRIL 1995 - 5,209,924 52,099 52,099
ADDITIONAL PAID-IN CAPITAL 3,767,741 3,767,741
RETAINED EARNINGS 9,150,009 8,529,742
TOTAL SHAREHOLDERS EQUITY 12,969,849 12,349,582
$50,042,057 $51,370,810
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED
JULY 31
1995 1994
NET SALES AND OPERATING REVENUE $ 38,126,668 $ 38,175,726
COST OF GOODS SOLD 28,396,630 28,397,399
GROSS PROFIT 9,730,038 9,778,327
OPERATING EXPENSE 7,297,158 7,527,416
GENERAL AND ADMINISTRATIVE EXPENSE 973,835 860,572
INTEREST EXPENSE 677,199 476,696
OTHER INCOME, NET (299,121) (39,807)
8,649,071 8,824,877
INCOME BEFORE TAXES 1,080,967 953,450
PROVISION FOR TAXES ON INCOME 460,700 392,200
NET INCOME $ 620,267 $ 561,250
PER SHARE DATA:
NET INCOME PER SHARE - PRIMARY $0.12 $0.11
NET INCOME PER SHARE - FULLY DILUTED $0.10 $0.11
WEIGHTED AVERAGE SHARES
OUTSTANDING - PRIMARY 5,333,771 5,280,361
WEIGHTED AVERAGE SHARES
OUTSTANDING - FULLY DILUTED 6,907,006 5,280,361
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JULY 31
1995 1994
OPERATING ACTIVITIES:
NET INCOME $ 620,267 $ 561,250
DEPRECIATION AND AMORTIZATION 653,894 608,177
PROVISION FOR LOSSES ON ACCOUNT RECEIVABLE 17,309 31,935
GAIN ON SALE OF ASSETS (190,880)
CHANGES IN OPERATING ASSETS AND LIABILITIES -
ACCOUNTS RECEIVABLE (102,375) (323,890)
INVENTORIES 604,292 (12,765)
PREPAID AND OTHER CURRENT ASSETS (314,581) 42,049
ACCOUNTS PAYABLE (1,670,814) 1,153,938
ACCRUED COMPENSATION (314,233) 30,703
ACCRUED SALES AND FUEL TAX 130,409 (311,138)
ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES (3,313) (102,769)
CHANGES IN INCOME TAXES PAYABLE 352,181 293,899
CHANGES IN OTHER NON-CURRENT ASSETS 4,601 (57,100)
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (213,243) 1,914,289
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT &
EQUIPMENT (2,055,814) (606,619)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 266,461 46,369
NET PROCEEDS RECEIVED ON NOTES RECEIVABLE 22,238 16,818
NET CASH USED IN INVESTING ACTIVITIES (1,767,115) (543,432)
FINANCING ACTIVITIES:
NET SHORT-TERM BORROWINGS (PAYMENTS) 207,000 (492,000)
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (650,250) (522,360)
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 0 39,998
NET CASH USED IN FINANCING ACTIVITIES (443,250) (974,362)
NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS (2,423,608) 396,495
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 7,593,798 1,177,400
CASH AND EQUIVALENTS - END OF PERIOD $5,170,190 $1,573,895
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $ 663,691 $ 451,495
INCOME TAXES PAID $ 105,000 $ 85,300
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
JULY 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 July 31, 1995 and April
30, 1995, and for the three months ended July 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:
July 31, 1995 April 30, 1995
At first-in, first-out (FIFO) cost:
Petroleum Products $1,036,728 $1,467,754
Store Merchandise 1,691,850 1,708,595
Parts for repairs and tires 2,006,865 2,138,790
Other 451,088 475,684
$5,186,531 $5,790,823
The FIFO value of inventory approximates the current
replacement costs.
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:
First Quarter ended July 31, 1995 and 1994
Sales from operations were $38,126,668 for the first quarter
of fiscal 1996, down $49,058, or less than 1%, from the
first quarter of last year. The facility in Fairplay, South
Carolina was sold on June 15, 1995. The impact from selling
this facility during the quarter was a $465,000 reduction in
sales as compared to the first quarter of 1995. However the
increase is sales for same units nearly offset the decline
from the sale of Fairplay. In addition, during the first
quarter this year, four of our facilities had major
renovation projects under way which were believed to have a
moderating impact on sales growth.
Gross profit for the first quarter was $9,730,038 which was
a decrease of $48,289, or less than 1%, from the prior
year. As noted for the decline in sales, increases in same-
store gross profit nearly offset the decline in gross profit
from the sale of Fairplay.
Operating expenses of $7,297,158 for the first quarter were
$230,258 or 3.1% less than last year. Declines in repairs
and maintenance, liability insurance, workers compensation
and the sale of Fairplay accounted for the decline.
General and administrative expenses for the quarter of
$973,835 increased $113,263 or 13.2% from last year. The
addition of salaried personnel, travel and entertainment and
advertising expense accounted for this increase.
Other income increased from last year as a result of the
sale of two properties and greater interest income from
notes receivable and invested cash.
Interest expense increased from last year by $200,503 as a
result of the higher prime rate and increased level of debt.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Companys cash position decreased by $2,423,608 to
$5,170,190 during the three months ended July 31, 1995.
Inventories decreased $604,292. Accounts payable decreased
$1,670,814 from the reduction in inventory and payments on
capital expenditures. Accrued compensation decreased
$314,233 due to the payment of bonuses. Income taxes payable
increased $352,181 due to amount and timing of tax payments.
Overall operating activities for the three months ended July
31, 1995, used $213,243 in cash compared to last year's
operating activities providing $1,914,289 in cash.
Investing activities resulted in a net use of $1,767,115.
Capital expenditures during the first three months of 1996
were $2,055,814. The renovation projects noted above
accounted for the majority of the expenditures. Proceeds
from notes receivable provided cash of $22,238 and $266,461
was received from the sale of two properties.
Financing activities for the first three months of 1996
resulted in a net use of $443,250. Short-term borrowings
increased $207,000 to meet cash requirements. Principal
payments on long-term debt were $650,250.
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 July 31, 1994, the Company has utilized
$200,000 of its available line of credit as collateral for
various letters of credit in addition to the $207,000
outstanding on the line.
The Company is in the process of filing a Form S-3
Registration Statement for the underlying shares related to
the issue of convertible debentures.
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
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 14 of this report.
(b) REPORT ON FORM 8-K
None
EXHIBIT (11)
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE QUARTER ENDED JULY 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 first quarter as
option prices were below the average market price of $2.65
during the period.
Weighted average number of shares
outstanding at July 31, 1995 5,209,924
Common stock equivalents 123,847
5,333,771
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE QUARTER ENDED JULY 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.
The common stock equivalents represent shares which had a
dilutive effect on earnings during the first quarter as
option prices were below the closing market price of $2.88
for the period.
Total Options Average Period End
Qtr. Ended Below Market Option Price Market Price Shares
7/31/95 420,738 $1.87 $2.88 147,082
Additional shares due to assumed exercise of convertible
debentures 1,550,000
Average number of shares outstanding 5,209,924
6,907,006
Net income for quarter ended 7/31/95 $620,267
Interest on convertible debentures 59,243
$679,510
Net income per common and common equivalent share - fully
diluted $.10
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 15, 1995 s/ John M. Holahan
John M. Holahan, President
Date: September 15, 1995 s/ William Burslem III
William Burslem III
Vice President
Exhibit (27)
Cash and cash items $ 5,170,190
Notes and accounts receivable - trade $ 3,978,866
Allowance for doubtful accounts $ 210,565
Inventory $ 5,186,531
Total current assets $ 15,682,371
Property, plant and equipment $ 46,249,284
Accumulated depreciation $ 18,414,843
Total assets $ 50,042,057
Total current liabilities $ 11,970,792
Bonds, mortgages and similar debt $ 26,688,722
Common stock $ 52,099
Other stockholders equity $ 12,917,750
Total liabilities and stockholders equity $ 50,042,057
Total net sales and operating revenue $ 38,126,668
Total costs and expenses applicable to sales
and revenues $ 28,396,630
Other costs and expenses $ 8,649,071
Provision for doubtful accounts and notes $ 17,309
Interest and amortization of debt discount $ 677,199
Other income, net $ (299,121)
Income before taxes and other items $ 1,080,967
Income tax expense $ 460,700
Net income or loss $ 620,627
Earnings per share - primary $ .12
Earnings per share - fully diluted $ .10