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, 1998
Commission File Number 0-14998
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, 1998
----- -------------------------------
Common Stock, Par Value
$.01 Per Share 5,806,213
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, January 31, 1998 (unaudited) and
April 30, 1997.............................................3
Statement of Income (unaudited), quarter and nine months ended
January 31, 1998 and 1997..................................4
Statement of Cash Flows (unaudited), nine months
ended January 31, 1998 and 1997............................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......................................................16
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
1/31/98 4/30/97
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS ......................... $ 3,779,036 $ 3,134,871
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $244,000 AT
JANUARY 1998 AND $156,000 AT APRIL 1997 .... 4,357,981 4,357,665
NOTES RECEIVABLE ............................. 29,499 20,725
INVENTORIES .................................. 6,516,817 5,763,023
PREPAID AND OTHER CURRENT ASSETS ............. 1,027,768 1,231,509
INCOME TAX RECEIVABLE ........................ 491,941
DEFERRED TAXES - CURRENT ..................... 791,100 791,100
------- -------
TOTAL CURRENT ASSETS ..................... 16,502,201 15,790,834
NOTES RECEIVABLE, DUE AFTER ONE YEAR ........... 583,073 738,997
PROPERTY, PLANT AND EQUIPMENT, NET ............. 44,144,609 41,686,254
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES .................. 1,856,163 1,904,306
OTHER ASSETS, NET .............................. 2,184,180 2,315,603
--------- ---------
$65,270,226 $62,435,994
=========== ===========
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
SHORT-TERM DEBT ............................ $ 185,000 $
CURRENT PORTION OF LONG-TERM DEBT .......... 3,313,863 3,207,254
ACCOUNTS PAYABLE ........................... 6,597,017 5,350,448
ACCOUNTS PAYABLE - AFFILIATE ............... 479,856 1,179,927
INCOME TAXES PAYABLE ....................... 592,250
ACCRUED COMPENSATION ....................... 1,460,690 1,714,677
ACCRUED SALES AND FUEL TAX ................. 1,865,607 1,925,570
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES ...................... 1,281,946 1,158,607
--------- ---------
TOTAL CURRENT LIABILITIES .............. 15,776,229 14,536,483
LONG TERM DEBT ............................... 23,032,715 25,526,937
CONVERTIBLE SUBORDINATED DEBENTURES .......... 6,100,000 4,650,000
DEFERRED INCOME TAXES ........................ 1,905,600 1,905,600
--------- ---------
TOTAL LIABILITIES ...................... 46,814,544 46,619,020
========== ==========
SHAREHOLDERS EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES,
ISSUED AND OUTSTANDING AT JANUARY
1998 - 5,806,213 AND
APRIL 1997 - 5,574,954 ................. 58,062 55,749
ADDITIONAL PAID-IN CAPITAL ............... 5,315,717 4,649,414
RETAINED EARNINGS ........................ 13,081,903 11,111,811
---------- ----------
TOTAL SHAREHOLDERS EQUITY ............. 18,455,682 15,816,974
---------- ----------
$65,270,226 $62,435,994
=========== ===========
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
1998 1997 1998 1997
NET SALES AND OPERATING
REVENUE $ 50,637,375 $ 52,152,573 $161,767,434 $151,340,507
COST OF GOODS SOLD 39,118,762 41,221,054 124,401,878 116,689,277
---------- ---------- ----------- -----------
GROSS PROFIT 11,518,613 10,931,519 37,365,556 34,651,230
---------- ---------- ---------- ----------
OPERATING EXPENSE 9,199,824 8,894,288 28,292,090 27,015,904
GENERAL AND
ADMINISTRATIVE EXPENSE 1,150,101 1,115,863 3,710,196 3,370,717
INTEREST EXPENSE 779,371 918,685 2,379,978 2,305,639
OTHER INCOME, NET (186,364) (55,715) (380,800) (233,177)
-------- ------- -------- --------
10,942,932 10,873,121 34,001,464 32,459,083
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 575,681 58,398 3,364,092 2,192,147
PROVISION FOR TAXES
ON INCOME 239,600 9,300 1,394,000 915,900
------- ----- --------- -------
NET INCOME $ 336,081 $ 49,098 $ 1,970,092 $ 1,276,247
=========== =========== =========== ============
PER SHARE DATA:
NET INCOME PER
SHARE - BASIC $ 0.06 $ 0.01 $ 0.35 $ 0.23
=========== =========== ========== ===========
NET INCOME PER
SHARE - DILUTED $ 0.05 $ 0.01 $ 0.28 $ 0.20
=========== =========== ========== ===========
SHARES OUTSTANDING
- - BASIC 5,681,147 5,571,621 5,611,372 5,567,110
========= ========= ========= =========
SHARES OUTSTANDING
- - DILUTED 7,909,110 5,571,621 7,614,817 7,368,360
========= ========= ========= =========
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED JANUARY 31
1998 1997
OPERATING ACTIVITIES:
NET INCOME $ 1,970,092 $ 1,276,247
DEPRECIATION AND AMORTIZATION 2,596,407 2,419,312
(GAIN) LOSS ON SALE OF ASSETS
CHANGES IN OPERATING ASSETS AND LIABILITIES -
ACCOUNTS RECEIVABLE (316) (930,108)
INVENTORIES (756,794) (1,303,583)
PREPAID AND OTHER CURRENT ASSETS 188,191 (310,243)
ACCOUNTS PAYABLE 546,498 1,738,245
ACCRUED COMPENSATION (253,987) 163,919
ACCRUED SALES AND FUEL TAX (59,963) 1,091,422
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 123,339 (5,407)
CHANGES IN INCOME TAXES PAYABLE 1,084,191
CHANGES IN OTHER NON-CURRENT ASSETS 18,365 (277,976)
------ --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,456,023 3,861,828
--------- ---------
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT & EQUIPMENT (4,970,597) (7,011,129)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 77,037 3,333
NET PROCEEDS RECEIVED ON NOTES RECEIVABLE 165,700 30,334
------- ------
NET CASH USED IN INVESTING ACTIVITIES (4,727,860) (6,977,462)
---------- ----------
FINANCING ACTIVITIES:
NET SHORT-TERM DEBT BORROWING 185,000 758,000
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (2,387,613) (1,926,214)
PROCEEDS FROM LONG-TERM BORROWING 1,900,000 4,775,707
PROCEEDS FROM VALUE ASSIGNED TO WARRANTS 100,000
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 118,615 30,770
------- ------
NET CASH (USED) PROVIDED BY FINANCING
ACTIVITIES (83,998) 3,638,263
------- ---------
NET INCREASE IN CASH AND EQUIVALENTS 644,165 522,629
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 3,134,871 1,667,062
--------- ---------
CASH AND EQUIVALENTS - END OF PERIOD $ 3,779,036 $ 2,189,691
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $ 2,323,751 $ 2,239,279
INCOME TAXES PAID $ 788,803 $ 1,000,816
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
JANUARY 31, 1998
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 January 31, 1998 and its results of operations for the
three months and nine months ended January 31, 1998 and 1997. 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:
January 31, 1998 April 30, 1997
At first-in, first-out (FIFO) cost:
Petroleum Products $1,631,696 $1,047,017
Store Merchandise 2,307,968 2,328,955
Parts for repairs and tires 2,072,562 1,803,705
Other 504,591 583,346
------- -------
$6,516,817 $5,763,023
========== ==========
NOTE 3 EARNINGS PER SHARE
- -------------------------
Effective for the quarter ending January 31, 1998, the Company adopted the
provisions of FAS 128, Earnings Per Share. This statement simplifies the
standards for computing earnings per share previously found in Accounting
Principles Board (APB) Opinion No. 15, Earnings Per Share, and makes them
comparable to international earnings per share (EPS) standards. Basic EPS
excludes the effect of common stock equivalents and is computed by dividing
income available to common shareholders by the weighted average of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could result if securities or other contracts to issue common stock were
exercised or converted into common stock. Historical earnings per share have
been restated to conform with the provisions of FAS 128.
Quarter ended January 31 Nine Months ended January 31
1998 1997 1998 1997
Basic Earnings Per Share
Income Applicable
to Common Stock $ 336,081 $ 49,098 $1,970,092 $1,276,247
Average Common
Stock Outstanding 5,681,147 5,571,621 5,611,372 5,567,110
Basic Earnings Per
Common Share $ .06 $ .01 $ .35 $ .23
========= ========== ========== ==========
Diluted Earnings Per Share
Income Applicable
to Common Stock $ 336,081 $ 49,098 $1,970,092 $1,276,247
Interest Expense on
Convertible
Debentures (1) 74,220 0 192,796 177,863
------ ----- ------- -------
$ 410,301 $ 49,098 $2,162,888 $1,454,110
========= ========== ========== ==========
Average Common
Stock Outstanding 5,681,147 5,571,621 5,611,372 5,567,110
Options and Warrants 288,414 0 261,730 158,140
Convertible
Debentures (1) 1,939,549 0 1,741,715 1,643,110
--------- ------ --------- ---------
7,909,110 5,571,621 7,614,817 7,368,360
========= ========= ========= =========
Diluted Earnings
Per Common Share $ .05 $ .01 $ .28 $ .20
========== ========== ========== ===========
(1) Convertible debentures were anti-dilutive in the quarter ended January
31, 1997.
NOTE 4 FINANCING AGREEMENTS
- ---------------------------
The Companys primary lending institution has renewed its commitment for the
Companys 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 Companys
accounts receivable under 90 days old, plus 45% of the Company's inventory. As
of October 31, 1997, the Company has utilized $385,000 of its available line of
credit, including $200,000 as collateral for various letters 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 prime plus 1/2%. No advances have been made
against the capital line of credit.
On October 27, 1997, the Company restated and amended its credit agreement
with its primary lender. The revised agreement provides for a LIBOR Rate option
in addition to a Prime Rate option on all of the variable rate debt except the
Revolving Line. The ratio of Funded Debt to EBITDA allows for changes in the
basis points charged by the primary lender. These changes were effective
November 1, 1997.
On December 4, 1997, the Company completed the sale of (1) $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due December 4,
2007, convertible at $4.30 per share and (2) Warrants to purchase 40,000 shares
of Common Stock, par value $.01 per share, of the Company at a price of $5.16
per share to Cephas Capital Partners, L.P. A value of $100,000 has been assigned
to the warrants in accordance with Accounting Principles Board Opinion No.
14(APB 14). The values of the subordinated debentures and additional paid in
capital were adjusted accordingly.
During the quarter one bond holder converted $450,000 of the Company's 8.5%
Convertible Senior Subordinated Debentures into 159,009 shares of common stock.
Note 5 SUBSIDIARY CORPORATIONS
- -------------------------------
On November 17, 1997, the Company formed two Delaware corporations, Travel Port
Systems, Inc. and Travel Port Franchising, Inc., to facilitate the beginning of
franchising the Travel Port and Buckhorn Family Restaurant operations. The
Company has recently commenced its franchise effort.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
- ----------------------
Third Quarter ended January 31, 1998 and 1997
- ---------------------------------------------
Sales from operations were $50,637,375 for the third quarter of fiscal
1998, down $1,515,198, or 2.9%, from the third quarter of last year. The average
price per gallon of diesel fuel was $.15 lower than last year. If diesel pricing
had remained constant with last year, our sales for the quarter would have been
$4,500,000 greater. Diesel gallons sold increased 8% for the quarter. A similar
effect was true for gasoline but with a smaller impact. The lower retail price
of gasoline amounted to $325,000 in reduced sales while gallons sold increased
1%. Convenience store and fast food sales increased 12%, travel store sales
increased 8%, and motel revenues increased 33%. Gross profit for the third
quarter was $11,518,613, an increase of $587,094, or 5.4%, from the prior year.
Diesel margins were consistent with last year, but gross profit dollars
increased as a result of the greater number of gallons sold. Gross profit also
improved from the sales increases noted above and improved margins in the
restaurants and the shops. Operating expenses of $9,199,824 for the third
quarter were $305,536, or 3.4% more than last year. Salary and wages were up
$95,000 or 2.4%. Utilities, supplies, repairs and maintenance and equipment
rental account for the majority of the remaining increase. General and
administrative expenses for the quarter were $1,150,101, an increase of $34,238
or 3.1% from last year. Third quarter interest expense of $779,371, decreased
$139,314, or 15.2% from last year as a result of lower interest rates on
variable rate debt and lower borrowings on the line of credit. Other income of
$186,364 was $130,649 greater than last year resulting from the sale of a parcel
of land in the third quarter this year.
Nine months ended January 31, 1998 and 1997
- -------------------------------------------
Sales from operations were $161,767,434 for the first nine months of fiscal
1998, up $10,426,927, or 6.9% from the first nine months of last year. As noted
for the quarter, retail selling prices for diesel fuel declined from last year.
If pricing had remained the same, sales would have been $7,300,000 higher. Sales
of diesel gallons increased 14.5% for the first nine months. All other sales
categories increased even after adjusting for the fact that Harborcreek,
Pennsylvania had a full nine months of operations this year (opened in June
1996). Gross profit for the first nine months was $37,365,556, an increase of
$2,714,326 or 7.8% from last year. Diesel margins were consistent with last year
with gross profit dollars increasing with the gallon change. Gasoline gross
profit declined as a result of lower margins that were not offset by increased
gallons. All other categories increased as a result of the sales increases.
Operating expenses were $28,292,090 for the first nine months, an increase of
$1,276,186 or 4.7%. The difference is due to a full nine months of operations at
Harborcreek combined with normal inflationary increases. General and
administrative expenses of $3,710,196 increased $339,479 or 10.1%. Increases in
salary and wages, professional services, and advertising account for the change.
A portion of the professional services was for consulting on the Year 2000
computer issues. The Company is Year 2000 compliant in all areas except one,
which will be resolved by December 31, 1998. Interest expense increased $74,339.
Other income increased $147,623 from the land sale in the third quarter as noted
above.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
- -----------------------------------------------------
The Company's cash position increased by $644,165 to $3,779,036 during the
nine months ended January 31, 1998. Inventories increased $756,794 due to
greater petroleum inventory. Accounts payable increased $546,498 as a result of
the increased inventory. Income taxes payable increased $1,084,191. Overall
operating activities for the nine months ended January 31, 1998, provided
$5,456,023 in cash compared to last year's $3,861,828. Investing activities
resulted in a net use of $4,727,860. Capital expenditures during the first nine
months of 1998 were $4,970,597, relating to renovation projects at a number of
the Company's locations.
Financing activities during the first nine months of 1998 used $83,998.
Principal payments on long term debt amounted to $2,387,613. The issuance of
subordinated convertible bonds and warrants provided $2,000,000.
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 January 31, 1998, the Company has utilized $385,000 of its
available line of credit, including $200,000 as collateral for various letters
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 prime plus 1/2%. No advances have
been made against the capital line of credit.
On October 27, 1997, the Company restated and amended its credit agreement
with its primary lender. The revised agreement provides for a LIBOR Rate option
in addition to a Prime Rate option on all of the variable rate debt except the
Revolving Line. The ratio of Funded Debt to EBITDA allows for changes in the
basis points charged by the primary lender. These changes were effective
November 1, 1997.
On December 4, 1997, the Company completed the sale of (1) $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due December 4,
2007, convertible at $4.30 per share and (2) Warrants to purchase 40,000 shares
of Common Stock, par value $.01 per share, of the Company at a price of $5.16
per share to Cephas Capital Partners, L.P. A value of $100,000 has been assigned
to the warrants in accordance with Accounting Principles Board Opinion No.
14(APB 14). The values of the subordinated debentures and additional paid in
capital were adjusted accordingly.
During the quarter one bond holder converted $450,000 of the Company's 8.5%
Convertible Senior Subordinated Debentures into 159,009 shares of
common stock.
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 other litigation has been
threatened.
Item 2. CHANGES IN SECURITIES
On December 4, 1997, the Company completed the sale of (1) $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due December 4,
2007, convertible at $4.30 per share and (2) Warrants to purchase 40,000 shares
of Common Stock, par value $.01 per share, of the Company at a price of $5.16
per share to Cephas Capital Partners, L.P. A value of $100,000 has been assigned
to the warrants in accordance with Accounting Principles Board Opinion No.
14(APB 14). The values of the subordinated debentures and additional paid in
capital were adjusted accordingly. Copies of the Securities were filed as
exhibits with the Company's Form 10-Q for the quarter ended October 31, 1997.
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.
Exhibit 4-e, Form of Indenture as of December 4, 1997, between Travel Ports
of America, Inc. and Cephas Capital Partners, L.P., with respect to $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due December 4,
2007, is incorporated by reference to Exhibit 4-e to the Company's Form 10-Q
dated December 12, 1997.
Exhibit 4-f, Form of Warrant to purchase Common Stock is incorporated by
reference to Exhibit 4-e to the Company's Form 10-Q dated December 12, 1997.
(10) Material Contracts
Exhibit 10.21, Consulting Agreement with E. Philip Saunders is set
forth on page 18 of this report.
(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
(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) Supplemental Financial Information
Exhibit (27) on page 17 of this report.
(99) Additional exhibits
None
(b) REPORT ON FORM 8-K
None
EXHIBIT (11)
COMPUTATION OF BASIC EARNINGS PER SHARE
---------------------------------------
FOR THE QUARTER ENDED JANUARY 31, 1998
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding.
Shares outstanding at end of November 5,612,584
Shares outstanding at end of December 5,624,644
Shares outstanding at end of January 5,806,213
---------
Average number of shares outstanding 5,681,147
=========
Net income per basic share $.06
====
COMPUTATION OF DILUTED EARNINGS PER SHARE
-----------------------------------------
FOR THE QUARTER ENDED JANUARY 31, 1998
Net income per share was computed by dividing net income, adjusted for
debenture interest, by the weighted average number of common shares outstanding
and common stock equivalents.
Total Options
and Warrants Average Average
Qtr. Ended Below Market Exercise Price Market Price Shares
- ---------- ------------ -------------- ------------ ------
1/31/98 981,636 $2.633 $3.729 288,414
Average number of shares outstanding 5,681,147
8.5% convertible debenture 1,643,110
7.81% convertible debenture 296,439
- ---- -------
7,909,110
=========
Net income for quarter ended 1/31/97 $ 336,081
Interest on convertible debentures 74,220
------
$ 410,301
==========
Net income per diluted share $.05
====
COMPUTATION OF BASIC EARNINGS PER SHARE
---------------------------------------
FOR THE NINE MONTHS ENDED JANUARY 31, 1998
Net income per share was computed by dividing net income number of common shares
outstanding.
Shares outstanding at end of May through July 5,554,654
Shares outstanding at end of August 5,588,294
Shares outstanding at end of September 5,594,064
Shares outstanding at end of October and November 5,612,584
Shares outstanding at end of December 5,624,644
Shares outstanding at end of January 5,806,213
Average number of shares outstanding 5,611,372
Net income per basic share $.35
COMPUTATION OF DILUTED EARNINGS PER SHARE
-----------------------------------------
FOR THE NINE MONTHS ENDED JANUARY 31, 1998
Net income per share was computed by dividing net income, adjusted for
debenture interest, by the weighted average number of common shares outstanding
and common stock equivalents.
Total Options
and Warrants Average Average
Qtr. Ended Below Market Exercise Price Market Price Shares
- ---------- ------------ -------------- ------------ ------
7/31/97 727,916 $2.215 $2.833 158,847
10/31/97 1,016,256 $2.601 $3.897 337,928
1/31/98 981,636 $2.633 $3.729 288,414
- -- -- ------- ------ ------ -------
Total for Three Quarters 785,189
=======
Average common stock equivalents outstanding during
nine months ended January 31, 1998 261,730
8.5% convertible debenture 1,643,110
7.81% convertible debenture 98,605
Average number of shares outstanding 5,611,372
---------
,614,817
=========
Net income for nine months ended 1/31/98 $1,970,092
Interest on convertible debentures, net of tax 192,796
-------
$2,162,888
==========
Net income per diluted share $.28
====
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 13, 1998 s/ John M. Holahan
--------------------------
John M. Holahan, President
Date: March 13, 1998 s/ William Burslem III
--------------------------
William Burslem III
Vice President
CONSULTING AGREEMENT
This agreement is made as of the 1st day of May, 1992, by and between
Travel Ports of America, Inc., a New York corporation with its principal office
at 3495 Winton Place, Building C, Rochester, New York 14623 (Company) and E.
Philip Saunders, an individual with a principal place of business located at 760
Brooks Avenue, Rochester, New York 14619 (Saunders).
NOW, THEREFORE, in consideration of the promise, covenants and agreements
hereinafter set forth, the parties agree as follows:
1. SERVICES. The Company hereby employs Saunders, and Saunders hereby
agrees to serve, as a consultant to the Company for a period hereinafter
defined. Saunders agrees to perform such services which shall from time to time
be assigned to him by the Company in connection with the operation of the
business. Saunders further agrees to use his best efforts to promote the
interests of the Company on an as needed basis by either telephone or in person
as determined by the Board of Directors of the Company. Such consulting work may
include discussing and assisting in planning the overall operation and direction
of the Company's business and generally to assist the Company at its request, to
maintain and expand the Company's business, and to give general business advice
concerning the Company's business.
2. LENGTH OF AGREEMENT. The term of this consulting agreement shall be for
the period of one (1) year which shall commence on the date hereof. This
agreement will be extended on a year-to-year basis unless terminated by either
party. This agreement may be terminated at any time by either party with ninety
(90) days written notice. Any such notice shall be in writing and shall be
deemed to have been given if delivered personally or sent by mail, postage
prepaid, to the above address. This agreement may not be assigned by either
party except that the Company may assign it to an affiliate, parent, subsidiary
or successor company.
3. COMPENSATION. As consideration for services as a consultant for the
Company, Saunders shall be paid $10,316.67 per month. Payments shall commence on
May 1, 1992 and be made at the first day of each month throughout the term of
this agreement unless sooner terminated. In addition Saunders will be paid a
management incentive based upon the audited financial results of the Company.
This incentive will be six percent (6%) of the pretax profits of the Company,
not including this management incentive on the first one (1) million dollars of
such pretax profit and one percent (1%) of such pretax profit over one (1)
million dollars. This management incentive will be estimated and paid prior to
the Company's fiscal year end of April 30th. The management incentive will be
recalculated after the audit is completed. Any additional amount due will be
paid to Saunders within ten (10) days or any over-payment will be returned by
Saunders within ten (10) days.
4. ENTIRE AGREEMENT. This agreement constitutes the entire understanding and
agreement between the parties. This agreement shall not be modified in whole or
part except by a written document signed by both parties. This agreement
supersedes and cancels any and all previous agreements, whether written or oral,
between the Company and Saunders.
5. INDEPENDENT CONTRACTOR. The parties understand and agree that Saunders
shall at all times during the term of this Agreement be deemed to be an
independent contractor and not an employee of the Company.
6. GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
7. SUBMISSION TO JURISDICTION. The parties hereby agree that any suit,
action, or proceeding brought by a party with respect to this Agreement shall be
brought in the Supreme Court of New York, Monroe County, New York. The parties
hereby submit to the exclusive jurisdiction and venue of such courts for the
purpose of any such suit, action, proceeding or judgment. Each party agrees that
service of all writs, process and summonses in any such suit, action or
proceeding in said courts may be made by the mailing thereof by registered or
certified mail, postage prepaid, to said party at the address above. Each party
hereby irrevocably waives any objection which it may now or thereafter have to
the laying of venue in any suit, action or proceeding arising out of or relating
to this Agreement brought in the Supreme Court of the State of New York, Monroe
County, New York and hereby further irrevocably waives any claim that any such
suite, action or proceeding brought in any such court has been brought in an
inconvenient forum.
8. SEVERABILITY. Should any provision of this Agreement be held by a court
of competent jurisdiction to be unenforceable, or enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties hereto with
any such modification (if any) to become a part hereof and treated as though
contained in this original Agreement. The parties further agree that any such
court is expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing the unenforceable provision from this Agreement in
its entirety, whether by rewriting the offending provision, deleting any or all
if the offending provision, adding additional language to this Agreement, or by
making such other modification that the court deems warranted to carry out the
agreement of the parties. The parties expressly agree that this Agreement as so
modified by the court shall be binding upon and enforceable against each of
them.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have set their hands hereunto this 1st day of May, 1992.
TRAVEL PORTS OF AMERICA, INC.
BY:___________________________
PRESIDENT
CONSULTANT
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E. PHILIP SAUNDERS