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 April 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 000-31701
BOWLIN TRAVEL CENTERS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 85-0473277
(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)
Registrant's telephone number, including area code: 505-266-5985
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
As of June 11, 2003, 4,583,348 shares of the issuer's common stock were
outstanding.
BOWLIN TRAVEL CENTERS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO
-------
Item 1. Financial Statements
Condensed Balance Sheets as of April 30, 2003
and January 31, 2003............................................ 2
Condensed Statements of Income for the Three Months
April 2003 and 2002............................................. 3
Condensed Statements of Cash Flows for the Three
Months Ended April 30, 2003 and 2002............................ 4
Notes to the Condensed Financial Statements..................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 5
Item 3. Quantitative and Qualitative Disclosures About
Market Risk..................................................... 7
Item 4. Controls and Procedures......................................... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................... 8
Item 2. Changes in Securities and Use of Proceeds....................... 8
Item 3 Defaults Upon Senior Securities................................. 8
Item 4. Submission of Matters to a Vote of Security Holders............. 8
Item 5. Other Information............................................... 8
Item 6. Exhibits and Reports on Form 8-K................................ 8
Signatures...................................................... 9
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOWLIN TRAVEL CENTERS, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share data)
April 30, January 31,
2003 2003
(Unaudited)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 2,371 $ 2,416
Accounts receivable 136 106
Accounts receivable, related parties 5 4
Inventories 3,104 3,094
Prepaid expenses 240 309
Mortgages receivable, current maturities 8 9
Notes receivable 25 33
----------- -----------
Total current assets 5,889 5,971
Property & equipment, net 9,395 9,167
Intangible assets, net 231 240
Interest receivable 37 27
Investment in real estate 509 475
Mortgages receivable 202 301
Notes receivable 201 202
----------- -----------
Total assets $ 16,464 $ 16,383
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,076 $ 995
Current installments of long-term debt 654 647
Accrued liabilities 358 256
Deferred revenue 20 33
Income taxes payable 14 2
----------- -----------
Total current liabilities 2,122 1,933
Deferred income taxes 597 590
Long-term debt, less current installments 3,234 3,400
----------- -----------
Total liabilities 5,953 5,923
----------- -----------
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000 shares
authorized, none issued or outstanding at April 30,
2003 and January 31, 2003 -- --
Common stock, $.001 par value; 10,000,000 shares
authorized, 4,583,348 issued and outstanding at
April 30, 2003 and January 31, 2003 5 5
Additional paid in capital 9,775 9,775
Retained earnings 731 680
----------- -----------
Total stockholders' equity 10,511 10,460
----------- -----------
Total liabilities and stockholders' equity $ 16,464 $ 16,383
=========== ===========
See accompanying notes to condensed financial statements.
2
BOWLIN TRAVEL CENTERS, INC.
CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
Three Months Ended
----------------------------
April 30, April 30,
2003 2002
(Unaudited) (Unaudited)
----------- -----------
Gross sales $ 5,236 $ 5,285
Less discounts on sales 92 93
----------- -----------
Net sales 5,144 5,192
Cost of goods sold 3,395 3,454
----------- -----------
Gross profit 1,749 1,738
General and administrative expenses (1,504) (1,495)
Depreciation and amortization (174) (189)
----------- -----------
Operating income 71 54
----------- -----------
Non-operating income (expense):
Interest income 19 27
Gain on sale of property and equipment 21 1
Interest expense (48) (57)
Miscellaneous income 1 1
Rental income 22 20
----------- -----------
Total non-operating income (expense) 15 (8)
----------- -----------
Income before income taxes 86 46
Income tax expense 35 18
----------- -----------
Net income $ 51 $ 28
=========== ===========
Earnings per share:
Weighted average common shares
outstanding 4,583,348 4,583,348
=========== ===========
Basic and diluted $ 0 .011 $ 0 .006
=========== ===========
See accompanying notes to condensed financial statements.
3
BOWLIN TRAVEL CENTERS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months Ended
----------------------------
April 30, April 30,
2003 2002
(Unaudited) (Unaudited)
----------- -----------
Cash flows from operating activities:
Net income $ 51 $ 28
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 174 189
Amortization of loan fee 6 7
Gain on sale of property and equipment (21) (1)
Deferred income taxes 7 --
Changes in operating assets and liabilities, net 210 266
----------- -----------
Net cash provided by operating activities 427 489
----------- -----------
Cash flows from investing activities:
Proceeds from sale of assets 45 --
Purchases of property and equipment, net (423) (79)
Accrued interest receivable (10) (8)
Investment in real estate (34) --
Mortgages receivable, net 100 1
Notes receivable, net 9 5
----------- -----------
Net cash used in investing activities (313) (81)
----------- -----------
Cash flows from financing activities:
Payments on long-term debt (159) (246)
----------- -----------
Net cash used in financing activities (159) (246)
----------- -----------
Net (decrease) increase in cash and cash equivalents (45) 162
Cash and cash equivalents at beginning of period 2,416 2,671
----------- -----------
Cash and cash equivalents at end of period $ 2,371 $ 2,833
=========== ===========
See accompanying notes to condensed financial statements.
4
BOWLIN TRAVEL CENTERS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. The condensed financial statements of Bowlin Travel Centers, Inc. (the
Company) as of and for the three months ended April 30, 2003 and 2002 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 interim financial statements should be read in
conjunction with the 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, 2003. Results of operations for interim
periods are not necessarily indicative of results that may be expected for
the year as a whole.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CERTAIN STATEMENTS CONTAINED HEREIN WITH RESPECT TO FACTORS WHICH MAY AFFECT
FUTURE EARNINGS, INCLUDING MANAGEMENT'S BELIEFS AND ASSUMPTIONS BASED ON
INFORMATION CURRENTLY AVAILABLE, ARE FORWARD-LOOKING STATEMENTS MADE PURSUANT TO
THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. SUCH FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS INVOLVE
RISKS AND UNCERTAINTIES, AND RESULTS COULD VARY MATERIALLY FROM THE DESCRIPTIONS
CONTAINED HEREIN.
OVERVIEW
The following is a discussion of the financial condition and results of
operations of the Company as of and for the periods ended April 30, 2003 and
2002. This discussion should be read in conjunction with the Financial
Statements of the Company and the related notes included in the Company's annual
report on Form 10-K for fiscal year ended January 31, 2003.
The Company's principal business activities include the operation of
full-service travel centers and restaurants that offer brand name food and
gasoline, and a unique variety of Southwestern merchandise to the traveling
public in the Southwestern United States, primarily New Mexico.
The discussion of results of operations which follows compares such selected
operating data for the interim periods presented.
RESULTS OF OPERATIONS
The following table presents certain income and expense items derived from the
Statements of Operations for the three months ended April 30 (unaudited and
amounts in thousands):
Three Months Ended
--------------------
2003 2002
-------- --------
SELECTED STATEMENT OF OPERATIONS DATA:
(in thousands, except per share data)
Gross sales $ 5,236 $ 5,285
======== ========
Net income $ 51 $ 28
======== ========
Earnings per share $ 0.011 $ 0.006
======== ========
5
BOWLIN TRAVEL CENTERS, INC.
COMPARISON OF THE THREE MONTHS ENDED APRIL 30, 2003 AND APRIL 30, 2002
Gross sales at the Company's travel centers decreased by 0.9% to $5.236 million
for the three months ended April 30, 2003, from $5.285 million for the three
months ended April 30, 2002. Merchandise sales decreased 7.4% to $2.042 million
for the three months ended April 30, 2003, from $2.204 million for the three
months ended April 30, 2002. The decrease is primarily due to uncertainties
related to the national economy and the war in Iraq. Gasoline sales increased
6.4% to $2.267 million for the three months ended April 30, 2003, from $2.130
million for the same period in 2002. The increase is primarily due to increases
in retail market prices for the three months ended April 30, 2003 as compared to
the three months ended April 30, 2002. Restaurant sales increased 7.2% to
$534,000 for the three months ended April 30, 2003, from $498,000 for the three
months ended April 30, 2002. The increase is due to continuing sales incentive
programs as well as additional supervisory support dedicated to the restaurants.
Wholesale gasoline sales to independent retailers decreased 13.2% to $393,000
for the three months ended April 30, 2003, from $453,000 for the three months
ended April 30, 2002. The decrease is primarily due to one wholesale location in
the three months ended April 30, 2002, not present in the three months ended
April 30, 2003.
Cost of goods sold decreased 1.7% to $3.395 million for the three months ended
April 30, 2003, from $3.454 million for the three months ended April 30, 2002.
Merchandise cost of goods decreased 8.2% to $863,000 for the three months ended
April 30, 2003, from $940,000 for the three months ended April 30, 2002. The
decrease directly corresponds to the decrease in merchandise sales. Gasoline
cost of goods increased 4.3% to $2.014 million for the three months ended April
30, 2003, from $1.931 million for the three months ended April 30, 2002. The
increase is primarily attributable to cost increases for the three months ended
April 30, 2003, compared to April 30, 2002. Restaurant cost of goods decreased
5.6% to $134,000 for the three months ended April 30, 2003, from $142,000 for
the three months ended April 30, 2002. The decrease is a result of more
efficient management of costs. Wholesale gasoline cost of goods decreased 12.9%
to $384,000 for the three months ended April 30, 2003, from $441,000 for the
three months ended April 30, 2002. The decrease directly corresponds to the
decrease in wholesale gasoline sales. Cost of goods sold as a percentage of
gross revenues improved for the three months ended April 30, 2003 to 64.8%, as
compared to 65.4% for the three months ended April 30, 2002.
Gross profit increased 0.6% to $1.749 million for the three months ended April
30, 2003, from $1.738 million for the three months ended April 30, 2002. The
increase is primarily attributable to improved management of cost of goods due
to increases in volume purchasing.
General and administrative expenses consist of salaries, bonuses and commissions
for travel center personnel, property costs and repairs and maintenance. General
and administrative expenses also include executive and administrative
compensation and benefits, accounting, legal and investor relations fees.
General and administrative expenses increased 0.6% to $1.504 million for the
three months ended April 30, 2003, from $1.495 million for the three months
ended April 30, 2002. The increase is primarily due to increases in personnel,
as well as continuing bonuses and commissions for travel center personnel
related to sales incentive programs.
Depreciation and amortization expense decreased 7.9% to $174,000 for the three
months ended April 30, 2003 from $189,000 for the three months ended April 30,
2002. The decrease is associated with certain assets becoming fully depreciated.
The above factors contributed to an overall increase in operating income of
31.5% to $71,000 for the three months ended April 30, 2003, compared to
operating income of $54,000 for the three months ended April 30, 2002.
Non-operating income (expense) includes interest income, gains and/or losses
from the sale of assets, rental income and interest expense. Interest income
6
BOWLIN TRAVEL CENTERS, INC.
decreased 29.6% to $19,000 for the three months ended April 30, 2003, from
$27,000 for the three months ended April 30, 2002. The decrease is due to lower
cash balances in the current period as well as lower interest rates. Gain on the
sale of property and equipment for the three months ended April 30, 2003 was
$21,000, compared to a gain on the sale of property and equipment of $1,000 for
the three months ended April 30, 2002. Rental income was $22,000 for the three
months ended April 30, 2003, compared to $20,000 for the three months ended
April 30, 2002. Interest expense decreased 15.8% to $48,000 for the three months
ended April 30, 2003, from $57,000 for the three months ended April 30, 2002.
The decrease is primarily due to lower interest rates as well as lower debt
balances.
Income before income taxes increased 83.0% to $86,000 for the three months ended
April 30, 2003, compared to income before income taxes of $47,000 for the three
months ended April 30, 2002. As a percentage of gross revenues, income before
income taxes was 1.6% for the three months ended April 30, 2003, compared to
0.9% for the three months ended April 30, 2002.
Income tax expense increased 94.4% to $35,000 for the three months ended April
30, 2003, compared to an income tax expense of $18,000 for the three months
ended April 30, 2002. The increase is a result of higher pre-tax income.
The foregoing factors contributed to net income for the three months ended April
30, 2003 of $51,000 compared to a net income of $28,000 for the three months
ended April 30, 2002.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2003, the Company had working capital of $3.767 million and a
current ratio of 2.8:1, compared to working capital of $4.038 million and a
current ratio of 3.1:1 as of January 31, 2003. Net cash provided by operating
activities was $427,000 for the three months ended April 30, 2003, compared to
$489,000 for the three months ended April 30, 2002. Net cash provided by
operating activities for the three months ended April 30, 2003 is primarily
attributable to net income adjusted for depreciation and amortization expense
and changes in operating assets and liabilities partially offset by gains on
sales of assets. Net cash provided by operating activities for the three months
ended April 30, 2002 is primarily attributable to net income adjusted for
depreciation and amortization expense and changes in other operating assets and
liabilities.
Net cash used in investing activities for the three months ended April 30, 2003
was $313,000, consisting of $423,000 which was used for purchases of property
and equipment, partially offset by mortgages receivable and proceeds from the
sale of assets. For the three months ended April 30, 2002, net cash used in
investing activities was $81,000, consisting of $78,000 which was used for
purchases of property and equipment, partially offset by notes receivable of
$4,000.
Net cash used in financing activities for the three months ended April 30, 2003
was $159,000, which were payments on long-term debt. For the three months ended
April 30, 2002, net cash used in financing activities was $246,000, which were
payments on long-term debt.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The principal market risk to which the Company is exposed are interest rates on
the Company's debt. The Company's interest sensitive liabilities are its debt
instruments. Variable interest on the majority of the Company's debt equals
LIBOR plus an applicable margin. Because rates may increase or decrease at any
time, the Company is exposed to market risk as a result of the impact that
changes in these base rates may have on the interest rate applicable to Company
borrowings. Management does not, however, believe that any risk inherent in the
variable rate nature of its debt is likely to have a material effect on the
Company's financial position, results of operations or liquidity.
7
BOWLIN TRAVEL CENTERS, INC.
The Company has not entered into any market risk sensitive instruments for
trading purposes. Further, the Company does not currently have any derivative
instruments outstanding and has no plans to use any form of derivative
instruments to manage the Company's business in the foreseeable future.
Profit margins on gasoline sales can be adversely affected by factors beyond the
control of the Company, including supply and demand in the retail gasoline
market, price volatility and price competition from other gasoline marketers.
The availability and price of gas could have an adverse impact on general
highway traffic. The Company has not entered into any long-term fixed-price
supply agreements for gasoline. Any substantial decrease in profit margins on
gasoline sales or number of gallons sold could have a material adverse effect on
the Company's gross margins and operating income.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this quarterly report, an
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Chief Executive Officer ("CEO") and
Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls
and procedures. Based on that evaluation, the CEO and CFO have concluded that
the Company's disclosure controls and procedures are effective to ensure that
the information required to be disclosed by the Company in this quarterly report
has been made known to them in a timely fashion. Subsequent to the date of their
evaluation, there were no significant changes in the Company's internal controls
or in other factors that could significantly affect the disclosure controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities and Use of Proceeds. 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.
99.1 Certification pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
99.2 Certification pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(b) Reports on Form 8-K.
On April 22, 2003, the Company filed a Current Report on Form 8-K
under Item 9 to disclose under Regulation FD a press release
dated April 22, 2003, announcing revenue results for the fiscal
year ended January 31, 2003.
8
BOWLIN TRAVEL CENTERS, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: June 11, 2003
/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
9
BOWLIN TRAVEL CENTERS, INC.
CERTIFICATION PURSUANT TO
15 U.S.C. 78m(a) OR 78o(d)
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)
I, Michael L. Bowlin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bowlin Travel
Centers, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Company's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Company's auditors and the audit
committee of Company's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data
and have identified for the Company's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
6. The Company's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
10
BOWLIN TRAVEL CENTERS, INC.
Date: June 11, 2003
/s/ MICHAEL L. BOWLIN
-----------------------------------------
Michael L. Bowlin, Chairman of the Board,
President and Chief Executive Officer
Bowlin Travel Centers, Inc.
11
BOWLIN TRAVEL CENTERS, INC.
CERTIFICATION PURSUANT TO
15 U.S.C. 78m(a) OR 78o(d)
(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)
I, Nina J. Pratz, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bowlin Travel
Centers, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
4. The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and
we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Company's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Company's auditors and the audit
committee of Company's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize and report financial data
and have identified for the Company's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls; and
6. The Company's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
12
BOWLIN TRAVEL CENTERS, INC.
Date: June 11, 2003
/s/ NINA J. PRATZ
--------------------------------------
Nina J. Pratz, Chief Financial Officer
Bowlin Travel Centers, Inc.
13