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 quarterly period ended July 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXHANGE ACT
For the transition period from [ ] to [ ]
Commission File Number 0-21451
BOWLIN Outdoor Advertising & Travel Centers Incorporated
(Exact name of registrant as specified in its charter)
NEVADA 85-0113644
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
150 LOUISIANA NE, ALBUQUERQUE, NM 87108
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 505-266-5985
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
As of September 11, 1998, 4,384,848 shares of the issuer's common stock were
outstanding.
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
July 31, 1998 and January 31, 1998..............................2
Consolidated Statements of Income for the
Three Months Ended and Six Months Ended
July 31, 1998 and 1997..........................................4
Consolidated Statements of Stockholders'
Equity for the Six months ended July 31, 1998...................5
Consolidated Statements of Cash Flows for the
Six Months Ended July 31, 1998 and 1997.........................6
Notes to the Consolidated Financial Statements .................8
Item 2. Management's Discussion and Analysis or
Plan of Operation .............................................10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk....................................................14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................14
Item 2. Changes in Securities and Use of Proceeds ....................14
Item 3. Defaults Upon Senior Securities................................14
Item 4. Submission of Matters to a Vote of Security Holders............14
Item 5. Other Information..............................................15
Item 6. Exhibits and Reports on Form 8-K ..............................15
Signatures ....................................................15
1
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
(In thousands, except share data)
July 31, January 31,
1998 1998
(Unaudited) (Unaudited)
-------------------- --------------------
Current assets:
Cash and cash equivalents $ 1,524 $ 4,054
Accounts receivable, net 811 579
Notes receivable, related parties - current maturities 11 30
Inventories 3,871 3,623
Prepaid expenses 576 448
Income taxes 125 90
Other current assets 8 11
-------------------- --------------------
Total current assets 6,926 8,835
Notes receivable, related parties, less current
maturities 3 20
Property & equipment, net 20,368 15,728
Intangible assets, net 1,246 1,200
Other assets 73 76
-------------------- --------------------
Total assets 28,616 25,859
==================== ====================
(Continued)
2
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
(In thousands, except share data)
July 31, January 31,
1998 1998
(Unaudited) (Unaudited)
-------------------- ---------------------
Current liabilities:
Short-term borrowing, bank $ 359 $ 745
Accounts payable 1,208 1,351
Long-term debt, current maturities 1,095 779
Accrued liabilities 575 456
-------------------- ---------------------
Total current liabilities 3,237 3,331
Deferred income taxes 256 177
Long-term debt, less current maturities 10,312 8,124
-------------------- ---------------------
Total liabilities 13,805 11,632
Stockholders' equity
Common stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding 4,384,848 shares 4 4
Additional paid-in capital 11,604 11,604
Retained earnings 3,203 2,619
-------------------- ---------------------
Total stockholders' equity 14,811 14,227
-------------------- ---------------------
Total liabilities and stockholders' equity $ 28,616 $ 25,859
==================== =====================
See accompanying notes to consolidated financial statements.
3
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except share and per share data)
Three Months Ended Six Months Ended
-------------------------------- ------------------------------
July 31, July 31, July 31, July 31,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------- ------------- ------------- -------------
Gross sales 8,628 7,923 15,752 14,575
Less discounts on sales 73 78 135 155
------------- ------------- ------------- -------------
Net sales 8,555 7,845 15,617 14,420
Cost of goods sold 5,270 5,032 9,817 9,491
------------- ------------- ------------- -------------
Gross profit 3,285 2,813 5,800 4,929
General and administrative expenses (1,890) (1,773) (3,577) (3,312)
Other income 2 38 3 70
Depreciation and amortization (453) (310) (862) (528)
------------- ------------- ------------- -------------
Operating income 944 768 1,364 1,159
Other non-operating income (expense):
Interest income 33 63 61 145
Gain on sale of property and - 84 4 189
equipment
Interest expense (260) (194) (474) (348)
------------- ------------- ------------- -------------
Total other non-operating (227) (47) (409) (14)
income (expense), net
------------- ------------- ------------- -------------
Income before taxes 717 721 955 1,145
Income taxes 278 288 371 458
------------- ------------- ------------- -------------
Net income 439 433 584 687
============= ============= ============= =============
Weighted average common shares 4,384,848 4,384,848 4,384,848 4,384,848
Weighted average common and potential
dilutive common shares 4,394,801 4,384,848 4,389,824 4,384,848
Earnings per share
Basic $ 0.10 $ 0.10 $ 0.13 $ 0.16
============= ============= ============= =============
Diluted $ 0.10 $ 0.10 $ 0.13 $ 0.16
============= ============= ============= =============
See accompanying notes to consolidated financial statements.
4
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(In thousands)
For the Six Months Ended
Unaudited
Common Additional
Number stock, paid-in Retained
of shares at par capital earnings Total
---------------------------------------------------------------------------
Balance at January 31, 1998 4,384,848 $ 4 $ 11,604 $ 2,619 $ 14,227
Net income 584 584
---------------------------------------------------------------------------
Balance at July 31, 1998 4,384,848 $ 4 $ 11,604 $ 3,203 $ 14,811
===========================================================================
See accompanying notes to consolidated financial statements.
5
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
For the Six Months Ended
------------------------------------------
July 31, July 31,
1998 1997
(Unaudited) (Unaudited)
----------------- ---------------
Cash flows from operating activities:
Net income $ 584 $ 687
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 862 528
Gain on sales of property and equipment (4) (189)
Deferred income taxes 79 31
Imputed interest 16 -
Changes in operating assets and (602) (258)
liabilities
----------------- ---------------
Net cash provided by operating activities 935 799
Cash flows from investing activities:
Proceeds from sale of assets 8 423
Business acquisitions (note 2) (2,090) (4,865)
Purchases of property and equipment, net (1,741) (1,371)
Proceeds (disbursements) on notes receivable, net 36 (3)
----------------- ---------------
Net cash used in investing activities (3,787) (5,816)
Cash flows from financing activities:
Borrowings on short-term debt 359 3,457
Borrowings on long-term debt 1,128 -
Payments on short-term debt (745) (404)
Payments on long-term debt (420) -
----------------- ---------------
Net cash provided by financing activities 322 3,053
Net decrease in cash and cash equivalents (2,530) (1,964)
Cash and cash equivalents at beginning of period 4,054 7,519
----------------- ---------------
Cash and cash equivalents at end of period 1,524 5,555
================= ===============
(Continued)
6
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(In thousands)
July 31, July 31,
1998 1997
(Unaudited) (Unaudited)
----------------- -----------------
Supplemental disclosure of cash flow information:
Noncash investing and financing activities:
Acquisition of outdoor advertising assets in
exchange for long-term debt $ 1,650 $ 2,775
================= =================
Acquisition of covenants not-to-compete
in exchange for long-term debt $ 130 $ -
================= =================
Exchange of property and equipment and note
payable on sale of partnership investment $ - $ 1,284
================= =================
Acquisitions:
Fair value of assets acquired and liabilities
assumed at the date of the acquisitions were
as follows:
Accounts receivable $ 34 $ 74
Prepaid expenses 31 15
Billboards 1,970 3,200
Vehicles and equipment 55 63
Goodwill - 863
Accounts payable - (15)
================= =================
See accompanying notes to consolidated financial statements.
7
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. The consolidated financial statements for the six months ended July 31,
1998 and July 31, 1997 are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the financial position
and operating results for the interim periods. The condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes, together with management's discussion and
analysis of financial condition and results of operations, contained in the
Company's annual report on Form 10-K for the fiscal year ended January 31,
1998. Results of operations for interim periods are not necessarily
indicative of results that may be expected for the year as a whole. Certain
amounts in the January 31, 1998 financial statements have been reclassified
to conform with the July 31, 1998 presentation.
2. Earnings per Share. The following table is a reconciliation of the
numerators and denominators of the basic and diluted per share computations
for income from continuing operations.
Three months ended July 31
--------------------------------------------------------------------------------
1998 1997
-------------------------------------- -----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Basic EPS $ 439,000 4,384,848 $ 0.10 $ 433,000 4,384,848 $ 0.10
--------- --------
Income available to
common stockholders
Effect if Dilutive Securities:
Stock options 9,953
---------- --------- --------- ---------
Diluted EPS
Income available to common
stockholders plus assumed
conversions $ 439,000 4,394,801 $ 0.10 $ 433,000 4,384,848 $ 0.10
---------- --------- --------- --------- --------- --------
Six months ended July 31,
---------------------------------------------------------------------------------
1998 1997
-------------------------------------- -----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Basic EPS $ 584,000 4,384,848 $ 0.13 $ 687,000 4,384,848 $ 0.16
--------- --------
Income available to
common stockholders
Effect if Dilutive Securities:
Stock options 4,976
---------- --------- --------- ---------
Diluted EPS
Income available to common
stockholders plus assumed
conversions $ 584,000 4,389,824 $ 0.13 $ 687,000 4,384,848 $ 0.16
---------- --------- --------- --------- --------- --------
8
3. Acquisitions. On February 1, 1998, the Company acquired the outdoor
advertising assets of Big-Tex Outdoor Advertising (Big-Tex) for $1,559,000.
The Company paid $559,000 from the proceeds of the initial public offering
and financed $1,000,000 with bank debt. Big-Tex owned and operated
approximately 285 poster and painted faces in the Brownwood, Texas metro
area. The Company also entered into a non-compete agreement with the former
principals of Big-Tex for a period of ten years from the date of the
acquisition, payable in ten annual installments of $10,000 beginning in
February 1999. The acquisition was accounted for as a purchase. The results
of Big-Tex's operations have been combined with the Company's since the
date of acquisition. The purchase price was allocated to the assets
acquired based on their estimated fair values and no goodwill was recorded
in connection with the purchase.
On March 3, 1998, the Company acquired the outdoor advertising assets of
Norwood Outdoor, Inc. (Norwood) for $1,006,000. The Company paid $350,000
from the proceeds of the initial public offering, $6,000 cash and financed
$650,000 with bank debt. Norwood owned and operated approximately 140
poster and painted bulletin faces in the Brady, Texas metro area. The
acquisition was accounted for as a purchase. The results of Norwood's
operations have been combined with the Company's since the date of
acquisition. The purchase price was allocated to the assets acquired based
on their estimated fair values and no goodwill was recorded in connection
with the purchase.
On May 1, 1998 the Company purchased the outdoor advertising assets of
Edgar Outdoor Advertising Co. for $900,000. The Company paid $900,000 at
closing from the proceeds of the initial public offering. Edgar owned and
operated approximately 62 painted bulletin faces in central Texas. The
acquisition was accounted for as a purchase. The results of Edgar's
operations have been combined with the Company's since the date of
acquisition. The purchase price was allocated to the assets acquired based
on their estimated fair values and no goodwill was recorded in connection
with the purchase.
On June 1, 1998 the Company purchased the outdoor advertising assets of J &
J Sign Company, located in Silver City, New Mexico. The Company paid
$275,000 from the proceeds of the initial public offering and recorded a
payable of $100,000 to the former owner of J & J. J & J owned and operated
approximately 40 painted bulletin faces in Southwestern New Mexico. The
acquisition was accounted for as a purchase. The purchase price was
allocated to the assets acquired based on their estimated fair values and
no goodwill was recorded in connection with the purchase.
The following unaudited proforma consolidated results of operations have
been prepared as if the acquisitions of Big-Tex, Norwood and Edgar occurred
on February 1, 1998 and 1997. The effect of the Company's acquisition of
the assets of J & J are not material to the combined results of operations
of the Company.
(in thousands except per share amounts)
Six Months Ended
July 31
(unaudited)
1998 1997
---- ----
Gross sales $ 15,882 $ 15,204
Net income 611 745
Earnings per basic and
diluted share $ .14 $ .17
========== ==========
9
The proforma information is presented for informational purposes only and
is not necessarily indicative of the results of operations that actually
would have been achieved had the acquisition been consummated as of that
time, nor is it intended to be a projection of future results.
4. Subsequent Events: On August 14, 1998 the Company purchased the outdoor
advertising assets of T & C Outdoor for $160,000 cash. T & C owned and
operated approximately 20 faces in central Texas.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
The following is a discussion of the consolidated financial condition and
results of operations of the Company as of and for the two fiscal periods ended
July 31, 1998 and 1997. This discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes included
in the Company's Form 10-KSB for the fiscal year ended January 31, 1998.
The Company operates in two industry segments, travel centers and outdoor
advertising. In order to perform a meaningful evaluation of the Company's
performance in each of its operating segments, the Company has presented
selected operating data which separately sets forth the revenue, expenses and
operating income attributable to each segment, and also separately sets forth
the corporate expenses of the Company which are not properly allocable to either
of the Company's segments for purposes of determining their respective operating
income. The discussion of results of operations which follows compares such
selected operating data and corporate expense data for the interim periods
presented.
The forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, which reflect management's
best judgment based on factors currently known, involve risks and uncertainties.
Actual results could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including but not
limited to those discussed.
10
Results of Operations
The following table presents certain income and expense items derived from the
Consolidated Statements of Income for the six months ended July 31 (unaudited
and amounts in thousands):
% Incr/
1998 1997 (Decr)
---- ---- ------
Travel centers:
Gross sales 12,452 12,315 1.1%
Discounts on sales 135 155 (12.9)%
---------------- ----------------
Net sales 12,317 12,160 1.3%
Cost of sales 8,358 8,247 1.3%
---------------- ----------------
3,959 3,913 1.2%
General and administrative expenses 2,867 2,716 5.6%
Depreciation and amortization 286 207 38.2%
---------------- ----------------
Operating income 806 990 (18.6)%
Outdoor advertising:
Gross sales 3,300 2,260 46.0%
Direct operating expenses 1,459 1,244 17.3%
---------------- ----------------
1,841 1,016 81.2%
General and administrative expenses 482 354 36.2%
Depreciation and amortization 522 252 107.1%
---------------- ----------------
Operating income 837 410 104.1%
Corporate and other:
General and administrative expenses (228) (242) (5.8)%
Depreciation and amortization (54) (69) (21.7%)
Interest expense (474) (348) 36.2%
Other income, net 68 404 (83.2%)
---------------- ----------------
Income before taxes 955 1,145 (16.6)%
Income taxes 371 458 (19.0)%
---------------- ----------------
Net income $ 584 $ 687 (15.0)%
================ ================
11
Comparison of the Six Months Ended July 31, 1998 and July 31, 1997
Travel Centers. Gross sales at the Company's Travel Centers increased by 1.1% to
$12.452 million for the six months ended July 31, 1998 from $12.315 million for
the six months ended July 31, 1997. This increase is primarily attributable to a
7.0% increase in merchandise sales which were $4.122 million for the six months
ended July 31,1998 compared with $3.851 million for the six months ended July
31,1997. Gasoline sales decreased 1.6% to $6.206 million for the six months
ended July 31, 1998 from $6.306 million for the same period in 1997. Wholesale
gasoline sales increased 48.7% to $614,000 for the six months ended July 31,
1998, as compared to $413,000 for the six months ended July 31, 1997. Restaurant
sales decreased by 13.4% to $1.510 million for the six months ended July 31,
1998 compared with $1.744 for the six months ended July 31, 1997. Cost of goods
sold for the travel centers increased 1.3% to $8.358 million for the six months
ended July 31, 1998 from $8.247 million for the six months ended July 31, 1997,
primarily as a result of an increase in merchandise sales.
General and administrative expenses for travel centers consist of salaries,
bonuses and commissions for travel center personnel, property costs and repairs
and maintenance. General and administrative expenses for the travel centers
increased to $2.867 million for the six months ended July 31 1998 from $2.716
million for the six months ended July 31, 1997.
Depreciation and amortization expense increased by 38.2% to $286,000 for the six
months ended July 31, 1998 as compared to $207,000 for the six months ended July
31, 1997. The increase is attributable to additions of depreciable assets during
the current period.
The above factors contributed to an overall decrease in travel center operating
income of 18.6% to $806,000 for the six months ended July 31,1998 from $990,000
for the six months ended July 31, 1997. This decrease is primarily attributable
to increases in depreciation and general and administrative expenses.
Outdoor Advertising. Gross sales from the Company's Outdoor Advertising
increased 46.0% to $3.300 million for the six months ended July 31, 1998 from
$2.260 million for the six months ended July 31, 1997. The increase was
primarily attributable to the continual assimilation of the Company's
acquisitions, increased usage of available sign inventory, and increases in
rates.
Direct operating expenses related to outdoor advertising consist of rental
payments to property owners for the use of land on which advertising displays
are located, production expenses and selling expenses. Production expenses
include salaries for operations personnel and real estate representatives,
property taxes, materials and repairs and maintenance of advertising displays.
Selling expenses consist primarily of salaries and commissions for salespersons
and travel and entertainment related to sales. Direct operating costs increased
17.3% to $1.459 million for the six months ended July 31, 1998 from $1.244
million for the six months ended July 31, 1997, principally due additional
direct operating costs associated with the acquisitions.
General and administrative expenses for outdoor advertising consist of salaries
and wages for administrative personnel, insurance, legal fees, association dues
and subscriptions and other indirect operating expenses. General and
administrative expenses increased 36.2% to $482,000 for the six months ended
July 31, 1998 from $354,000 for the six months ended July 31, 1997.
Depreciation and amortization expense increased 107.1% to $522,000 for the six
months ended July 31, 1998 from $252,000 for the six months ended July 31, 1997.
The increase is attributable to scheduled depreciation of advertising display
structures and machinery and equipment primarily associated with acquisitions as
well as the amortization of goodwill and non-compete covenants.
12
The above factors contributed to the increase in outdoor advertising operating
income of 104.1% to $837,000 for the six months ended July 31, 1998 from
$410,000 for the six months ended July 31, 1997. In addition, earnings before
interest, taxes, depreciation and amortization (EBITDA) for outdoor advertising
increased 105.3% to $1.359 million for the six months ended July 31, 1998 from
$662,000 for the six months ended July 31, 1997. The EBITDA margin for outdoor
advertising increased to 41.2% for the six months ended July 31, 1998 as
compared to 29.3% for the six months ended July 31, 1997.
Corporate and Other. General and administrative expenses for corporate and other
operations of the Company consist primarily of executive and administrative
compensation and benefits, accounting, legal and investor relations fees.
General and administrative expenses decreased slightly to $228,000 for the six
months ended July 31, 1998 as compared to $242,000 for the six months ended July
31, 1997.
Depreciation and amortization expenses for the Company's corporate and other
operations consist of depreciation associated with the corporate headquarters,
furniture and fixtures and vehicles. Depreciation and amortization expenses
decreased to $54,000 for the six months ended July 31, 1998 as compared to
$69,000 for the six months ended July 31, 1997.
Interest expense increased by 36.2% to $474,000 for the six months ended July
31, 1998 as compared to $348,000 for the six months ended July 31, 1997. The
increase is primarily attributable to the increase in debt associated with the
Company's acquisitions.
Other income, net, primarily includes operating rental revenues from the
Company's former subsidiary, gains and/or losses from the sales of assets, and
interest income. Other income, net, decreased 83.2% to $68,000 for the six
months ended July 31, 1998 as compared to $404,000 for the six months ended July
31, 1997. The decrease is due to certain non-operating gains in 1997 not present
in 1998 and a decrease in interest income due to use of IPO proceeds for
acquisitions.
Income before taxes decreased 16.6% to $955,000 for the six months ended July
31, 1998 as compared to $1.145 million for the six months ended July 31, 1997.
As a percentage of gross revenues, income before taxes decreased slightly to
6.1% for the six months ended July 31, 1998 as compared to 7.9% for the six
months ended July 31, 1997.
Income taxes were $371,000 for the six months ended July 31, 1998 as compared to
$458,000 for the six months ended July 31, 1997, as the result of lower pretax
income.
The foregoing factors contributed to a decrease in the Company's net income for
the six months ended July 31, 1998 to $584,000 as compared to $687,000 for the
six months ended July 31, 1997.
Liquidity and Capital Resources
At July 31,1998, the Company had working capital of $3.689 million and a current
ratio of 2.1:1, compared to working capital of $5.504 million and a current
ratio of 2.7:1 at January 31, 1998. Working capital and the current ratio
decreased for the six months ended July 31, 1998 as a result of IPO proceeds
used in the current period but present at January 31, 1998.
Net cash provided by operating activities was $935,000 for the six months ended
July 31, 1998 as compared to net cash provided by operating activities of
$799,000 for the six months ended July 31, 1997. Net cash provided in the
current period is primarily attributable to increased depreciation and
amortization from acquisitions and decreases in gains on sales of property and
equipment as well as an increase in cash used to fund operating assets and
liabilities.
13
Net cash used for investing activities for the six months ended July 31, 1998
was $3.787 million, of which $2.090 million was used in the purchase of the
outdoor advertising assets of Big-Tex, Norwood, Edgar and J & J, and $1.741
million was used for purchases of property and equipment. For the six months
ended July 31, 1997, net cash used for investing activities was $5.816 million,
of which $4.865 million was used for acquisitions. In addition, $300,000 was
used for the purchase of land for the construction of a new travel center
complex.
Net cash provided by financing activities for the six months ended July 31, 1998
was $322,000 as compared to $3.053 million for the six months ended July 31,
1997. At July 31, 1998 and 1997 financing activities were a result of borrowings
and payments on debt.
On May 1, 1998 the Company purchased the outdoor advertising assets of Edgar
Outdoor Advertising Co. for $900,000 with the proceeds of the initial public
offering. Edgar owned and operated approximately 62 painted bulletin faces in
central Texas.
On June 1, 1998 the Company purchased the outdoor advertising assets of J & J
Sign Company, located in Silver City, New Mexico. The Company paid $275,000 from
the proceeds of the initial public offering and recorded a payable of $100,000
to the former owner of J & J. J & J owned and operated approximately 40 painted
bulletin faces in Southwestern New Mexico.
On August 14, 1998 the Company purchased the outdoor advertising assets of T & C
Outdoor for $160,000 cash. T & C owned and operated approximately 20 faces in
central Texas.
The construction of a new travel center located approximately 20 miles west of
Albuquerque, New Mexico, on Interstate 40 is proceeding and is scheduled to open
in the third fiscal quarter of this year. In addition, the Company completed the
upgrade of one travel center.
Although the Company does not have any agreements in place, it will continue
discussions with acquisition candidates throughout the Southwestern United
States. The Company has not executed a letter of intent or other agreement,
binding or non-binding, to make such acquisitions. Any such acquisition would be
subject to the negotiation and execution of definitive agreements, appropriate
financing arrangements, performance of due diligence, approval of the Company's
Board of Directors, and the satisfaction of other customary closing conditions.
The Company would likely finance any such acquisitions with cash, additional
indebtedness or a combination of the two. Any commercial financing obtained for
purposes of acquiring additional assets is likely to impose certain financial
and other restrictive covenants upon the Company and increase the Company's
interest expense.
Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not
required.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities and Use of Proceeds.
The use of IPO proceeds for the quarter ended July 31, 1998 totaled $1.279
million. Of the total used, $1.175 million was used for the acquisitions of
Edgar Outdoor Advertising and J & J Sign Company. The remaining $104,000 was
used for the purchase of real estate for the expansion of the outdoor
advertising division.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submissions of Matters to a Vote of Security Holders. None.
14
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a). Exhibit No. Exhibit Name
----------- ------------
2.6 Purchase Agreement dated June 1, 1998
between the Registrant and J & J Signs.
27 Financial Data Schedule
(b). No reports were filed on Form 8-K during the six months ended
July 31, 1998.
Signatures
In accordance with 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.
Date: September 11, 1998
BOWLIN
Outdoor Advertising & Travel Centers Incorporated
/s/ Michael L. Bowlin
-----------------------------------------
Michael L. Bowlin, Chairman of the Board,
President and Chief Executive Officer
/s/ Nina J. Pratz
-----------------------------------------
Nina J. Pratz, Chief Financial Officer
(Principal Financial and Accounting Officer)
15