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 as of July 31, 2008 and
January 31, 2008 and results of operations of the Company as of and for the
periods ended July 31, 2008 and 2007. 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, 2008.
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 New Mexico
and Arizona.
The
Company’s gross retail sales include merchandise, retail gasoline sales,
restaurant sales and wholesale gasoline sales. Each of the Company’s
travel center locations retails a variety of unique Southwestern souvenirs and
gifts. The Company operates ten full-service travel centers along
interstate highways in Arizona and New Mexico. Two of the Company’s
travel centers are held for sale; one of which closed on October 31,
2007. Eight of the ten retail operations retail
gasoline. Four of the Company’s ten locations have full-service
restaurants that operate under the Dairy Queen/Brazier or Dairy Queen brand
names; one of the Company’s ten locations operates a DQ Treat restaurant that
sells only ice cream and drinks. The merchandise, gasoline and
restaurant retail sales are all a part of the Company’s ongoing retail business
and have been aggregated.
The
Company wholesales gasoline to three independent third party
locations. The wholesale gasoline does not meet the operating segment
definition criteria of paragraph 10(b) of FAS 131, Disclosures about Segments of
an Enterprise and Related Information, as the Company does not review wholesale
gasoline operating results for decision making about resource
allocation. Therefore, wholesale gasoline sales have been aggregated
with the Company’s business activities.
The
discussion of results of operations, which follows, compares such selected
operating data for the interim periods presented.
BOWLIN TRAVEL CENTERS,
INC.
Results
of Operations
Comparison
of the Three Months Ended July 31, 2008 and July 31, 2007
Gross
sales from continuing operations at the Company’s travel centers decreased by
7.8% to $7.699 million for the three months ended July 31, 2008, from $8.350
million for the three months ended July 31, 2007. Merchandise sales
from continuing operations decreased 17.3% to $2.468 million for the three
months ended July 31, 2008, from $2.985 million for the three months ended July
31, 2007. The decrease is primarily due to decreases in general merchandise,
fireworks, t-shirts and handmade and gold jewelry sales partially offset by an
increase in convenience store sales that include food such as chips, nuts,
cookies and prepackaged sandwiches along with a variety of bottled and canned
drinks and cigarette sales. There is a decrease in general
merchandise due to a slowing economy. In Arizona, a major interchange
construction project adversely affected merchandise sales at two
locations. There is a decrease in firework sales primarily due to
county ordinances that regulated the sale of fireworks at one of the Company’s
retail locations during the current period. In addition, increases in
gasoline prices continue to have a negative impact on travel and
sales. Retail gasoline sales from continuing operations increased
0.6% to $2.982 million for the three months ended July 31, 2008, from $2.964
million for the same period in 2007. The increase is due to an
increase in the average retail price per gallon of approximately $0.88 per
gallon, partially offset by a decrease in gallons sold of approximately 181,000
gallons. The average gallon of gasoline retailed for approximately
$4.23 for the three months ended July 31, 2008 compared to $3.35 for the three
months ended July 31, 2007. Restaurant sales from continuing
operations decreased 17.9% to $601,000 for the three months ended July 31, 2008,
from $731,000 for the three months ended July 31, 2007. The decrease
is due to a change at one of the Company’s Dairy Queen locations from a
full-service restaurant to a DQ Treat restaurant that sold only soft serve ice
cream and drinks during the quarter. A major interchange construction
project in Arizona adversely affected restaurant sales at one
location. In addition, convenience store food sales at Picacho Peak
Plaza negatively affected restaurant sales at the Picacho Peak DQ and increases
in gasoline prices continue to have a negative impact on travel and restaurant
sales. Wholesale gasoline sales to independent retailers decreased
1.3% to $1.649 million for the three months ended July 31, 2008, from $1.670
million for the three months ended July 31, 2007. The decrease is
primarily due to a decrease of approximately 163,000 in gasoline gallons
purchased in the current period, partially offset by market price
increases.
Cost of
goods sold for continuing operations decreased 3.0% to $5.390 million for the
three months ended July 31, 2008, from $5.557 million for the three months ended
July 31, 2007. Merchandise cost of goods from continuing operations
decreased 15.3% to $875,000 for the three months ended July 31, 2008, from
$1.033 million for the three months ended July 31, 2007. The decrease
relates to the decrease in sales. Retail gasoline cost of goods from
continuing operations increased 1.8% to $2.700 million for the three months
ended July 31, 2008, from $2.652 million for the three months ended July 31,
2007. The increase corresponds to increases in overall market prices
during the period and is partially offset by a decrease in gallons
sold. Restaurant cost of goods from continuing operations decreased
17.8% to $171,000 for the three months ended July 31, 2008, from $208,000 for
the three months ended July 31, 2007. The decrease is due to one of
the Company’s Dairy Queen locations changing from a full-service restaurant to a
soft serve ice cream and drinks only restaurant, partially offset by increases
in food prices as well as gasoline delivery surcharges. Wholesale
gasoline cost of goods decreased 1.2% to $1.644 million for the three months
ended July 31, 2008, from $1.664 million for the three months ended July 31,
2007. The decrease is primarily due to a decrease in gasoline gallons
purchased in the current period, partially offset by market price
increases. Cost of goods sold as a percentage of net revenues
increased to 70.5% for the three months ended July 31, 2008, as compared to
67.2% for the three months ended July 31, 2007. The increase is
primarily due to the increase in gasoline cost of goods as a result of overall
market prices increases during the period.
BOWLIN TRAVEL CENTERS,
INC.
Gross
profit from continuing operations decreased 16.8% to $2.255 million for the
three months ended July 31, 2008, from $2.711 million for the three months ended
July 31, 2007. The decrease is primarily due to the increase in
market prices related to retail and wholesale gasoline as well as a decrease in
sales.
General
and administrative expenses for continuing operations consist primarily of
salaries, bonuses and commissions for travel center personnel, property costs
and repairs and maintenance. General and administrative expenses for
continuing operations also include executive and administrative compensation and
benefits, accounting, legal and investor relations fees. General and
administrative expenses for continuing operations decreased 11.3% to $1.856
million for the three months ended July 31, 2008, from $2.093 million for the
three months ended July 31, 2007. The decrease is due to decreases in
personnel related costs, costs associated with the Company’s inventory
bar-coding project, general repair and maintenance that includes weed and trash
clean up at the retail locations, supplies, freight as a result of volume
purchasing, bank card fees as a result of the decrease in sales and accounting
costs in the prior period related to Section 404 of Sarbanes-Oxley internal
controls over financial reporting compliance partially offset by increases in
sign repair and maintenance due to the cost of removing eight sign structures in
Arizona.
Depreciation
and amortization expense for continuing operations increased 8.8% to $211,000
for the three months ended July 31, 2008, from $194,000 for the three months
ended July 31, 2007. The increase is associated with certain asset
additions for the three months ended July 31, 2008 offset by some assets
becoming fully depreciated or disposed of.
The above
factors contributed to an overall decrease in operating income from continuing
operations of 55.7% to $188,000 for the three months ended July 31, 2008,
compared to operating income from continuing operations of $424,000 for the
three months ended July 31, 2007.
Non-operating
income (expense) for continuing operations includes interest income, gains and
losses from the sale of assets, rental income and interest
expense. Interest income for continuing operations decreased 31.4% to
$33,000 for the three months ended July 31, 2008, compared to interest income of
$47,000 for the three months ended July 31, 2007. The decrease is due
to lower interest rates on the Company’s marketable securities as well as lower
receivable balances in the current period. There was a gain from the
sale of assets of $5,000 for the three months ended July 31, 2008 compared to a
loss of $1,000 for the three months ended July 31, 2007. The gain of
$5,000 for the three months ended July 31, 2008 is due primarily to installment
payments received related to notes receivable that include deferred
gains. The loss of $1,000 for the three months ended July 31, 2007 is
due to installment payments received related to notes receivable that include
deferred gains of approximately $27,000, partially offset by a loss of
approximately $1,000 on the sale of a vehicle and a write off of approximately
$28,000 of impaired assets. Rental income was $38,000 for the three
months ended July 31, 2008 compared to $39,000 for the three months ended July
31, 2007. Interest expense decreased 49.3% to $70,000 for the three
months ended July 31, 2008, from $138,000 for the three months ended July 31,
2007. The decrease is primarily due to the retirement of loan fees of
approximately $62,000 associated with the Company’s exchange of debt commitment
with its primary lender in the prior period.
Income
from continuing operations before income taxes decreased 47.7% to income of
$194,000 for the three months ended July 31, 2008, compared to income before
income taxes from continuing operations of $371,000 for the three months ended
July 31, 2007, primarily due to decreases in net revenues, general and
administrative expenses and cost of goods sold as a result of a slowing
economy. As a percentage of net revenues, the income from continuing
operations before income taxes was 2.5% for the three months ended July 31,
2008, compared to income from continuing operations before income taxes of 4.5%
for the three months ended July 31,
2007.
Income
tax expense for continuing operations decreased 40.0% with income tax expense of
$78,000 for the three months ended July 31, 2008, compared to income tax expense
for continuing operations of $130,000 for the three months ended July 31,
2007. The decrease is a result of the decrease in income from
continuing operations before income taxes.
BOWLIN TRAVEL CENTERS,
INC.
The
foregoing factors contributed to net income from continuing operations of
$116,000 for the three months ended July 31, 2008, compared to net income from
continuing operations of $241,000 for the three months ended July 31,
2007.
Discontinued
operations include the property, fixtures and equipment for the two retail
locations that the Company has listed for sale (see Note 2 to the Condensed
Financial Statements). There is income of $3,000 for discontinued
operations for the three months ended July 31, 2008 compared to a loss of
$109,000 for the three months ended July 31, 2007. There is income
tax expense of $1,000 for the three months ended July 31, 2008, compared to an
income tax benefit of $30,000 for the three months ended July 31,
2007. The net income from discontinued operations for the three
months ended July 31, 2008 is $2,000 compared to a net loss from discontinued
operations for the three months ended July 31, 2007 of $79,000.
Income
from the disposal of discontinued operations, net of income tax expense of
$549,000 for the three months ended July 31, 2007, is due to the sale of
property, fixtures and equipment located 17 miles west of Albuquerque, New
Mexico at the Rio Puerco exit. The gain on the sale of the property,
fixtures and equipment of approximately $967,000 was reduced by the retirement
of loan fees of approximately $69,000 that were related to this retail location
and the exchange of debt associated with the Company’s commitment with its
primary lender, and is net of income tax expense of approximately
$349,000.
The
foregoing factors contributed to net income for the three months ended July 31,
2008 of $118,000 compared to net income of $711,000 for the three months ended
July 31, 2007.
Comparison
of the Six Months Ended July 31, 2008 and July 31, 2007
Gross
sales from continuing operations at the Company’s travel centers decreased by
5.0% to $14.326 million for the six months ended July 31, 2008, from $15.077
million for the six months ended July 31, 2007. Merchandise sales
from continuing operations decreased 16.0% to $4.345 million for the six months
ended July 31, 2008, from $5.172 million for the six months ended July 31, 2007.
The decrease is primarily due to decreases in general merchandise, fireworks,
handmade and gold jewelry and t-shirt sales partially offset by an increase in
convenience store sales that include food such as chips, nuts, cookies and
prepackaged sandwiches along with a variety of bottled and canned drinks, as
well as moccasins and cigarette sales. There is a decrease in general
merchandise due to a slowing economy. In Arizona, a major interchange
construction project adversely affected merchandise sales at two
locations. The decrease in firework sales is primarily due to county
ordinances that regulated the sales of fireworks at one of the Company’s retail
locations during the current period. In addition, increases in
gasoline prices continue to have a negative impact on travel and
sales. Retail gasoline sales from continuing operations increased
5.8% to $5.724 million for the six months ended July 31, 2008, from $4.817
million for the same period in 2007. The increase is due to an
increase in the average retail price per gallon of approximately $0.79 per
gallon, partially offset by a decrease in gallons sold of approximately 276,000
gallons. The average gallon of gasoline retailed for approximately
$3.86 for the six months ended July 31, 2008 compared to $3.07 for the six
months ended July 31, 2007. Restaurant sales from continuing
operations decreased 14.3% to $1.147 million for the six months ended July 31,
2008, from $1.338 million for the six months ended July 31, 2007. The
decrease is due to a change at one of the Company’s Dairy Queen locations from a
full-service restaurant to a DQ Treat restaurant that sold only soft serve ice
cream and drinks. A major interchange construction project in Arizona
adversely affected restaurant sales at one location. In addition,
convenience store food sales at Picacho Peak Plaza negatively affect restaurant
sales at the Picacho Peak DQ and increases in gasoline prices that continue to
have a negative impact on travel and restaurant sales. Wholesale
gasoline sales to independent retailers decreased 1.6% to $3.110 million for the
six months ended July 31, 2008, from $3.159 million for the six months ended
July 31, 2007. The decrease is primarily due to a decrease of
approximately 321,000 in gasoline gallons purchased in the current period,
partially offset by market price increases.
BOWLIN TRAVEL CENTERS,
INC.
Cost of
goods sold for continuing operations increased 0.4% to $10.180 million for the
six months ended July 31, 2008, from $10.143 million for the six months ended
July 31, 2007. Merchandise cost of goods from continuing operations
decreased 12.6% to $1.575 million for the six months ended July 31, 2008, from
$1.803 million for the six months ended July 31, 2007. The decrease
relates to the decrease in sales. Retail gasoline cost of goods from
continuing operations increased 7.3% to $5.170 million for the six months ended
July 31, 2008, from $4.817 million for the six months ended July 31,
2007. The increase corresponds to increases in overall market prices
during the period and is partially offset by a decrease in gallons
sold. Restaurant cost of goods from continuing operations decreased
11.7% to $333,000 for the six months ended July 31, 2008, from $377,000 for the
six months ended July 31, 2007. The decrease is due to one of the
Company’s Dairy Queen locations changing from a full-service restaurant to a
soft serve ice cream and drinks only restaurant, partially offset by increases
in food prices as well as gasoline delivery surcharges. Wholesale
gasoline cost of goods decreased 1.4% to $3.101 million for the six months ended
July 31, 2008, from $3.146 million for the six months ended July 31,
2007. The decrease is primarily due to a decrease in gasoline gallons
purchased in the current period, partially offset by market price
increases. Cost of goods sold as a percentage of net revenues
increased to 71.6% for the six months ended July 31, 2008, as compared to 67.9%
for the six months ended July 31, 2007. The increase is primarily due
to the increase in gasoline cost of goods as a result of overall market prices
increases during the period.
Gross
profit from continuing operations decreased 15.8% to $4.044 million for the six
months ended July 31, 2008, from $4.802 million for the six months ended July
31, 2007. The decrease is primarily due to the increase in market
prices related to retail and wholesale gasoline as well as a decrease in
sales.
General
and administrative expenses for continuing operations consist primarily of
salaries, bonuses and commissions for travel center personnel, property costs
and repairs and maintenance. General and administrative expenses for
continuing operations also include executive and administrative compensation and
benefits, accounting, legal and investor relations fees. General and
administrative expenses for continuing operations decreased 8.4% to $3.578
million for the six months ended July 31, 2008, from $3.907 million for the six
months ended July 31, 2007. The decrease is due to decreases in
personnel related costs, costs associated with the Company’s inventory
bar-coding project, general repair and maintenance that includes weed and trash
clean up and repair and maintenance related to overall weather condition such as
snow removal and wind damage in the prior period, supplies, freight as a result
of volume purchasing, bank card fees as a result of the decrease in sales and
accounting costs in the prior period related to Section 404 of Sarbanes-Oxley
internal controls over financial reporting compliance partially offset by
increases in sign repair and maintenance due to prior period weather conditions
that limited the Company’s ability to travel to billboard locations as well as
the cost of removing eight sign structures in Arizona.
Depreciation
and amortization expense for continuing operations increased 8.2% to $421,000
for the six months ended July 31, 2008, from $389,000 for the six months ended
July 31, 2007. The increase is associated with certain asset
additions for the six months ended July 31, 2008 offset by some assets becoming
fully depreciated or disposed of.
The above
factors contributed to an overall decrease in operating income from continuing
operations of 91.1% to $45,000 for the six months ended July 31, 2008, compared
to operating income from continuing operations of $506,000 for the six months
ended July 31, 2007.
BOWLIN TRAVEL CENTERS,
INC.
Non-operating
income (expense) for continuing operations includes interest income, gains and
losses from the sale of assets, rental income and interest
expense. Interest income for continuing operations decreased 4.4% to
$71,000 for the six months ended July 31, 2008, compared to interest income of
$75,000 for the six months ended July 31, 2007. The decrease is due
to lower interest rates on the Company’s marketable securities as well as lower
receivable balances in the current period. There was a gain from the
sale of assets of $10,000 for the six months ended July 31, 2008 compared to a
gain of $27,000 for the six months ended July 31, 2007. The gain of
$10,000 for the six months ended July 31, 2008 is due primarily to installment
payments received related to notes receivable that include deferred
gains. The gain of $27,000 for the six months ended July 31, 2007 is
due to installment payments received related to notes receivable that include
deferred gains of approximately $32,000 and an earnest deposit of $25,000 that
was forfeited due to a purchase agreement closing date expiring, partially
offset by a write off of approximately $28,000 of impaired assets, and a loss of
approximately $1,000 on the sale of equipment and two
vehicles. Rental income was $77,000 for the six months ended July 31,
2008 compared to $86,000 for the six months ended July 31,
2007. Interest expense decreased 35.8% to $138,000 for the six months
ended July 31, 2008, from $215,000 for the six months ended July 31,
2007. The decrease is primarily due to the retirement of loan fees of
approximately $62,000 associated with the Company’s exchange of debt commitment
with its primary lender in the prior period.
Income
from continuing operations before income taxes decreased 86.5% to income of
$65,000 for the six months ended July 31, 2008, compared to income before income
taxes from continuing operations of $481,000 for the six months ended July 31,
2007, primarily due to decreases in net revenues, general and administrative
expenses and cost of goods sold as a result of a slowing economy. As
a percentage of net revenues, the income from continuing operations before
income taxes was 0.5% for the six months ended July 31, 2008, compared to income
from continuing operations before income taxes of 3.2% for the six months ended
July 31, 2007.
Income
tax expense for continuing operations decreased 83.4% with income tax expense of
$31,000 for the six months ended July 31, 2008, compared to income tax expense
for continuing operations of $187,000 for the six months ended July 31,
2007. The decrease is a result of the decrease in income from
continuing operations before income taxes.
The
foregoing factors contributed to a net income from continuing operations of
$34,000 for the six months ended July 31, 2008, compared to net income from
continuing operations of $294,000 for the six months ended July 31,
2007.
Discontinued
operations include the property, fixtures and equipment for the two retail
locations that the Company has listed for sale (see Note 2 to the Condensed
Financial Statements). There is a loss of $20,000 for discontinued
operations for the six months ended July 31, 2008 compared to a loss of $201,000
for the six months ended July 31, 2007. There is an income tax
benefit of $7,000 for the six months ended July 31, 2008, compared to an income
tax benefit of $78,000 for the six months ended July 31, 2007. The
net loss from discontinued operations for the six months ended July 31, 2008 is
$13,000 compared to a net loss from discontinued operations for the six months
ended July 31, 2007 of $123,000.
Income
from the disposal of discontinued operations, net of income tax expense of
$549,000 for the six months ended July 31, 2007, is due to the sale of property,
fixtures and equipment located 17 miles west of Albuquerque, New Mexico at the
Rio Puerco exit. The gain on the sale of the property, fixtures and
equipment of approximately $967,000 was reduced by the retirement of loan fees
of approximately $69,000 that were related to this retail location and the
exchange of debt associated with the Company’s commitment with its primary
lender, and is net of income tax expense of approximately $349,000.
The
foregoing factors contributed to net income for the six months ended July 31,
2008 of $21,000 compared to net income of $720,000 for the six months ended July
31, 2007.
BOWLIN TRAVEL CENTERS,
INC.
Liquidity
and Capital Resources
At July
31, 2008, the Company had working capital of $6.766 million compared to working
capital of $6.705 million at January 31, 2008 (“working capital” is the excess
of total current assets over total current liabilities). At July 31,
2008, the Company had a current ratio of 5.4:1; compared to a current ratio of
5.4:1 as of January 31, 2008 (“current ratio” is the ratio of current assets to
current liabilities). The increase in working capital is primarily
due to an increase in marketable securities of $200,000, an increase in
inventory of $68,000, an increase in prepaid expenses of $47,000, a decrease in
accrued liabilities of $133,000 and a decrease in deferred revenue of $19,000
offset by a decrease in cash of $144,000, a decrease in accountants receivable
of $59,000, a decrease in income taxes of $56,000 and an increase in accounts
payable of $138,000. The increase in marketable securities, which
consist of twelve-month certificates of deposit, is due to more certificates
with maturity dates greater than three months in the current
period. The increase in inventory is primarily due to merchandise
increases at the Company’s central warehouse as the Company prepared for
summertime sales that typically occur in the second quarter and an increase in
gasoline inventory as a result of higher market prices partially offset by a
decrease in gasoline gallon inventory. The increase in prepaid
expenses is primarily due to an increase in prepaid insurance for which June 1,
2008 was the renewal date partially offset by prepaid rent. The
decrease in accrued liabilities is primarily due to decreases in accrued
salaries and wages plus the related payroll taxes, as discretionary bonuses were
accrued through January 31, 2008 to be paid the following fiscal year partially
offset by an increase in accrued sales tax liability related to summertime sales
as well as an increase in property taxes that were paid in December 2007 and
have been accruing since that time. The decrease in deferred revenue
is a result of outdoor advertising billboard revenue as the Company had several
annual contracts that did not begin until August 1, 2007. The
decrease in cash is due to lower cash balances at July 31, 2008 as a result of
purchasing merchandise in preparation for the Company’s summer peak season that
typically begins in the second quarter as well as a decrease in net income due
to a decrease in sales and an increase in cost of goods sold as a result of an
increase in the market price of gasoline. The decrease in accounts
receivable is primarily due to payments received resulting in lower receivable
balances. The decrease in income taxes asset is primarily due to a
result of deferred tax assets and liabilities recognized for future tax
consequences attributable to differences between financial statement carrying
amounts of existing current assets and liabilities and their respective tax
bases. The increase in accounts payable is primarily due to
purchasing merchandise as the Company prepared for summertime sales as well as
timing of electronic fund transfers related to the Company’s wholesale gasoline
sales.
The
Company’s travel center operations are subject to seasonal
fluctuations. The first quarter of the fiscal year is typically the
weakest. The second quarter is normally the Company’s strongest due
to the summer being the Company’s peak season. Throughout the
Company’s fiscal year, revenues and earnings may experience substantial
fluctuations from quarter to quarter. These fluctuations could result
in periods of increased or decreased cash flow as well as increased or decreased
net income.
Net cash
provided by operating activities from continuing operations was $396,000 for the
six months ended July 31, 2008, compared to net cash provided by operating
activities from continuing operations of $383,000 for the six months ended July
31, 2007. Net provided by in operating activities for the six months
ended July 31, 2008 is primarily attributable to net income of $21,000, adjusted
for depreciation and amortization expense of $429,000, offset by cash used by
net operating assets and liabilities of $14,000, a decrease in net deferred
income taxes of $32,000 and the gain on sale of assets of
$10,000. Net cash provided by operating activities for the six months
ended July 31, 2007 is primarily attributable to net income of $720,000 adjusted
for depreciation and amortization expense of $439,000, the retirement of debt
issuance costs of $132,000 associated with the Company’s exchange of debt
commitment with its primary lender and changes in net operating assets and
liabilities of $160,000, partially offset by a decrease in net deferred income
taxes of $88,000 and the gain on sales of assets of $994,000.
BOWLIN TRAVEL CENTERS,
INC.
Net cash
used in investing activities for the six months ended July 31, 2008 was
$479,000, primarily consisting of an increase in marketable securities of
$200,000 and $318,000 used for purchases of property and equipment partially
offset by payments from notes receivable, net, of $38,000. Net cash
used in investing activities for the six months ended July 31, 2007 was $37,000,
primarily consisting of an increase in marketable securities of $1.878 million
which includes the purchase of $1.500 million of marketable securities from the
proceeds of the disposal of one discontinued operation and $623,000 used for
purchases of property and equipment partially offset by the proceeds from the
sale of property and equipment and the sale of property, fixtures and equipment
located 17 miles west of Albuquerque, New Mexico at the Rio Puerco exit of
$2.362 million and payments from notes receivable, net, of $61,000.
Net cash
used by financing activities for the six months ended July 31, 2008 was $61,000,
which consisted of payments on long-term debt. For the six months
ended July 31, 2007, net cash used in financing activities was $155,000, which
consisted of payments on long-term debt.
The
Company’s business and cash flow from operations rely on revenues generated from
the sale of gasoline. During the six months ended July 31, 2008,
retail gasoline sales from continuing operations accounted for approximately
40.2% of the Company’s net sales.