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, 2004
[ ] 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
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. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of June 9, 2004, 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, 2004
and January 31, 2004............................................ 2
Condensed Statements of Income for the Three
Months Ended April 30, 2004 and 2003............................ 3
Condensed Statements of Cash Flows for the Three
Months Ended April 30, 2004 and 2003............................ 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..................................................... 8
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................................ 9
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,
2004 2004
(Unaudited)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 1,970 $ 2,240
Accounts receivable 41 70
Accounts receivable, related parties 45 37
Inventories 3,587 3,252
Prepaid expenses 471 513
Notes receivable, current maturities 13 19
----------- -----------
Total current assets 6,127 6,131
Property and equipment, net 10,715 10,431
Intangible assets, net 203 204
Interest receivable 33 22
Investment in real estate 475 475
Notes receivable 169 193
----------- -----------
Total assets $ 17,722 $ 17,456
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,364 $ 1,109
Current installments of long-term debt 805 786
Accrued liabilities 600 411
Deferred revenue 20 34
----------- -----------
Total current liabilities 2,789 2,340
Deferred income taxes 807 793
Long-term debt, less current installments 3,157 3,369
----------- -----------
Total liabilities 6,753 6,502
----------- -----------
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000
shares authorized, none issued or outstanding
at April 30, 2004 and January 31, 2004 -- --
Common stock, $.001 par value; 10,000,000 shares
authorized, 4,583,348 issued and outstanding
at April 30, 2004 and January 31, 2004 5 5
Additional paid in capital 9,775 9,775
Retained earnings 1,189 1,174
----------- -----------
Total stockholders' equity 10,969 10,954
----------- -----------
Total liabilities and stockholders' equity $ 17,722 $ 17,456
=========== ===========
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,
2004 2003
(Unaudited) (Unaudited)
----------- -----------
Gross sales $ 5,567 $ 5,236
Less discounts on sales 118 92
----------- -----------
Net sales 5,449 5,144
Cost of goods sold 3,547 3,395
----------- -----------
Gross profit 1,902 1,749
General and administrative expenses (1,693) (1,504)
Depreciation and amortization (171) (174)
----------- -----------
Operating income 38 71
----------- -----------
Non-operating income (expense):
Interest income 14 19
Gain on sale of property and equipment -- 21
Interest expense (46) (48)
Miscellaneous income -- 1
Rental income 22 22
----------- -----------
Total non-operating income (expense) (10) 15
----------- -----------
Income before income taxes 28 86
Income tax expense 13 35
----------- -----------
Net income $ 15 $ 51
=========== ===========
Earnings per share:
Weighted average common shares outstanding 4,583,348 4,583,348
=========== ===========
Basic and diluted $ 0.003 $ 0.011
=========== ===========
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,
2004 2003
(Unaudited) (Unaudited)
----------- -----------
Cash flows from operating activities:
Net income $ 15 $ 51
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 171 174
Amortization of loan fee -- 6
Gain on sale of property and equipment -- (21)
Deferred income taxes 14 7
Changes in operating assets and liabilities, net 158 210
----------- -----------
Net cash provided by operating activities 358 427
----------- -----------
Cash flows from investing activities:
Proceeds from sale of assets -- 45
Purchases of property and equipment, net (454) (423)
Accrued interest receivable (11) (10)
Investment in real estate -- (34)
Mortgages receivable, net -- 100
Notes receivable, net 30 9
----------- -----------
Net cash used in investing activities (435) (313)
----------- -----------
Cash flows from financing activities:
Payments on long-term debt (193) (159)
----------- -----------
Net cash used in financing activities (193) (159)
----------- -----------
Net decrease in cash and cash equivalents (270) (45)
Cash and cash equivalents at beginning of period 2,240 2,416
----------- -----------
Cash and cash equivalents at end of period $ 1,970 $ 2,371
=========== ===========
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, 2004 and 2003 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, 2004. Results of operations for interim
periods are not necessarily indicative of results that may be expected for
the year as a whole.
2. On March 24, 2004, the Company disposed of land and building located in Las
Cruces, New Mexico to a third party. The assets had a carrying book value
of approximately $268,000. The Company exchanged the assets for land and
building adjacent to the Company's warehouse facility located in Las
Cruces, New Mexico. The fair value of assets received and the carrying
value of the assets exchanged by the Company was approximately equal.
Therefore, no gain or loss was recorded on the transaction.
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, 2004 and
2003. 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, 2004.
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.
5
BOWLIN TRAVEL CENTERS, INC.
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
--------------------
2004 2003
-------- --------
SELECTED STATEMENT OF OPERATIONS DATA:
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Gross sales $ 5,567 $ 5,236
======== ========
Net income $ 15 $ 51
======== ========
Earnings per share $ 0.003 $ 0.011
======== ========
COMPARISON OF THE THREE MONTHS ENDED APRIL 30, 2004 AND APRIL 30, 2003
Gross sales at the Company's travel centers increased by 6.3% to $5.567 million
for the three months ended April 30, 2004, from $5.236 million for the three
months ended April 30, 2003. Merchandise sales increased 8.8% to $2.221 million
for the three months ended April 30, 2004, from $2.042 million for the three
months ended April 30, 2003. The increase is due to sales incentives as well as
additional supervisory support dedicated to the stores but is partially offset
by a $20,000 decrease at one location as a result of a major highway project.
Gasoline sales increased 6.1% to $2.405 million for the three months ended April
30, 2004, from $2.267 million for the same period in 2003. The increase is
primarily due to market price increases that are partially offset by a $179,000
decrease at one location as a result of a major highway project. Restaurant
sales increased 7.9% to $576,000 for the three months ended April 30, 2004, from
$534,000 for the three months ended April 30, 2003. 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 7.1% to $365,000 for the three months ended April 30, 2004, from
$393,000 for the three months ended April 30, 2003. The decrease is primarily
due to decreases in volume at one wholesale location.
Cost of goods sold increased 4.5% to $3.547 million for the three months ended
April 30, 2004, from $3.395 million for the three months ended April 30, 2003.
Merchandise cost of goods increased 4.9% to $905,000 for the three months ended
April 30, 2004 from $863,000 for the month ended April 30, 2003. The increase
corresponds to the increase is sales but is partially offset by $17,000 at one
location as a result of a major interstate construction project. Gasoline cost
of goods increased 5.9% to $2.132 million for the three months ended April 30,
2004, from $2.014 million for the three months ended April 30, 2003. The
increase corresponds to the increase in sales and is partially offset by
$151,000 at one location as a result of a major highway project. Restaurant cost
of goods increased 15.7% to $155,000 for the three months ended April 30, 2004,
from $134,000 for the three months ended April 30, 2003. The increase
corresponds to the increase in sales as well as an increase in prices. Wholesale
gasoline cost of goods decreased 7.6% to $355,000 for the three months ended
April 30, 2004, from $384,000 for the three months ended April 30, 2003. The
decrease 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, 2004 to 63.7%, as compared to 64.8% for the three months ended April 30,
2003.
Gross profit increased 8.7% to $1.902 million for the three months ended April
30, 2004, from $1.749 million for the three months ended April 30, 2003. The
increase is primarily attributable to continued improvement of management of
costs 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.
6
BOWLIN TRAVEL CENTERS, INC.
General and administrative expenses increased 12.6% to $1.693 million for the
three months ended April 30, 2004, from $1.504 million for the three months
ended April 30, 2003. The increase is due to continuing bonuses and commissions
for travel center personnel related to sales incentive programs, an accrual of
management bonuses and sign repair and maintenance completed in the first
quarter of fiscal year 2005 to prepare for summer advertising to the traveling
public.
Depreciation and amortization expense decreased 1.7% to $171,000 for the three
months ended April 30, 2004, from $174,000 for the three months ended April 30,
2003. The decrease is associated with certain assets becoming fully depreciated.
The above factors contributed to an overall decrease in operating income of
46.5% to $38,000 for the three months ended April 30, 2004, compared to
operating income of $71,000 for the three months ended April 30, 2003.
Non-operating income (expense) includes interest income, gains and/or losses
from the sale of assets, rental income and interest expense. Interest income
decreased 26.3% to $14,000 for the three months ended April 30, 2004, from
$19,000 for the three months ended April 30, 2003. The decrease is due to lower
cash balances in the current period. There was no gain on the sale of property
and equipment for the three months ended April 30, 2004 compared to a gain of
$21,000 for the three months ended April 20, 2003. Rental income was $22,000 for
both the three months ended April 30, 2004 and the three months ended April 30,
2003. Interest expense decreased 4.2% to $46,000 for the three months ended
April 30, 2004, from $48,000 for the three months ended April 30, 2003. The
decrease is primarily due lower debt balances.
Income before income taxes decreased 67.4% to $28,000 for the three months ended
April 30, 2004, compared to income before income taxes of $86,000 for the three
months ended April 30, 2003. As a percentage of gross revenues, income before
income taxes was 0.5% for the three months ended April 30, 2004, compared to
1.6% for the three months ended April 30, 2003.
Income tax expense decreased 62.9% to $13,000 for the three months ended April
30, 2004, compared to an income tax expense of $35,000 for the three months
ended April 30, 2003. The decrease is a result of lower income before income
taxes.
The foregoing factors contributed to net income for the three months ended April
30, 2004 of $15,000 compared to a net income of $51,000 for the three months
ended April 30, 2003.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2004, the Company had working capital of $3.338 million and a
current ratio of 2.2:1, compared to working capital of $3.791 million and a
current ratio of 2.6:1 as of January 31, 2004. Net cash provided by operating
activities was $358,000 for the three months ended April 30, 2004, compared to
$427,000 for the three months ended April 30, 2003. Net cash provided by
operating activities for the three months ended April 30, 2004 is primarily
attributable to net income adjusted for depreciation and amortization expense
and changes in operating assets and liabilities. 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
other operating assets and liabilities partially offset by gains on the sale of
property and equipment.
Net cash used in investing activities for the three months ended April 30, 2004
was $435,000 primarily consisting of $454,000, which was used for purchases of
property and equipment partially offset by notes receivable of $30,000. For the
three months ended April 30, 2003, net cash used in investing activities 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.
7
BOWLIN TRAVEL CENTERS, INC.
Net cash used in financing activities for the three months ended April 30, 2004
was $193,000, which were payments on long-term debt. For the three months ended
April 30, 2003, net cash used in financing activities was $159,000, 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.
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.
The Company's management evaluated, with the participation of the Chief
Executive Officer and Chief Financial Officer, the effectiveness of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that the Company's disclosure controls and
procedures were effective as of the end of the period covered by this report.
There has been no change in the Company's internal control over financial
reporting that occurred during the quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions, regardless of how remote.
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.
8
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 31.1 - Certification pursuant to Rule 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934, as amended.
Exhibit 31.2 - Certification pursuant to Rule 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934, as amended.
Exhibit 32.1 - Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2 - Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
On April 15, 2004, the Company filed a Current Report on Form 8-K
under Item 9 to disclose under Regulation FD a press release dated
April 15, 2004, announcing revenue results for the year ended January
31, 2004.
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.
Dated: June 9, 2004
/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