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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1995 Commission file number 0-14557
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POWER TEST INVESTORS LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
NEW YORK 11-2717079
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Jericho Turnpike, Jericho, New York 11753
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(Address of principal executive offices) (Zip Code)
(516) 338 - 6000
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(Registrant's telephone number, including area code)
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
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Registrant has 6,509,516 units of general and limited partnership interests
outstanding as of September 30, 1995.
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POWER TEST INVESTORS LIMITED PARTNERSHIP
INDEX
PART I. FINANCIAL INFORMATION Page Number
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Item 1. Consolidated Financial Statements:
Balance Sheets - September 30, 1995 and December 31, 1994 1
Statements of Income - three and nine months ended
September 30, 1995 and 1994 2
Statements of Cash Flows - nine months ended
September 30, 1995 and 1994 3
Notes to Consolidated Financial Statements 4 - 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and December 31, 1994
September 30, December 31,
1995 1994
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(unaudited)
ASSETS
Cash and cash equivalents $ 3,311,062 $ 2,523,681
Net investment in direct financing leases 5,207,795 5,747,246
Fixed assets, at cost, net of accumulated
depreciation of $18,943,960 and $18,523,870,
respectively 30,842,630 31,903,386
Deferred charges, net of accumulated
amortization of $2,433,844 and $2,332,576,
respectively 183,891 285,159
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$39,545,378 $40,459,472
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LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities, primarily interest $340,363 $358,438
Mortgages payable 35,797,123 37,908,888
Partners' capital,
6,509,516 and 6,510,975 units of general and
limited partnership interests outstanding,
respectively 3,407,892 2,192,146
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$39,545,378 $40,459,472
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See accompanying notes.
1
POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------- -----------------------
1995 1994 1995 1994
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Revenues:
Rental income $2,211,551 $2,280,750 $6,684,323 $6,862,342
Interest on direct
financing leases 256,912 295,112 796,707 900,752
Other income 737,611 29,858 1,324,825 520,071
---------- ---------- ---------- ----------
3,206,074 2,605,720 8,805,855 8,283,165
---------- ---------- ---------- ----------
Expenses:
Interest 866,447 898,961 2,637,659 2,655,159
General and administrative 196,797 173,660 614,870 538,707
Depreciation and
amortization 224,933 226,521 676,241 680,359
Income applicable to
minority interest 19,432 13,168 49,601 44,441
---------- ---------- ---------- ----------
1,307,609 1,312,310 3,978,371 3,918,666
---------- ---------- ---------- ----------
Net income $1,898,465 $1,293,410 $4,827,484 $4,364,499
========== ========== ========== ==========
Net income per unit $.29 $.20 $.74 $.67
========== ========== ========== ==========
Distributions per unit $.185 $.185 $.555 $.555
========== ========== ========== ==========
Weighted average units
outstanding 6,509,523 6,510,975 6,510,138 6,510,975
========== ========== ========== ==========
See accompanying notes.
2
POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1995 and 1994
(unaudited)
1995 1994
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Cash flows from operating activities:
Net income $4,827,484 $4,364,499
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 676,241 680,359
Amortization of investment in direct
financing leases 539,451 449,224
Gain on dispositions of fixed assets (1,185,529) (455,723)
Minority interest 49,601 44,441
Change in assets and liabilities -
Increase (decrease) in accrued liabilities (18,075) 555
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Net cash provided by operating activities 4,889,173 5,083,355
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Cash flows from investing activities:
Proceeds from dispositions
of fixed assets 1,671,312 839,157
---------- ----------
Net cash provided by investing activities 1,671,312 839,157
---------- ----------
Cash flows used in financing activities:
Mortgage principal payments (2,111,765) (1,947,160)
Cash distributions (3,650,576) (3,651,112)
Purchase of partnership units (10,763) -
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Net cash used in financing activities (5,773,104) (5,598,272)
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Net increase in cash and cash equivalents 787,381 324,240
Cash and cash equivalents at beginning of period 2,523,681 1,983,574
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Cash and cash equivalents at end of period $3,311,062 $2,307,814
========== ==========
Supplemental disclosure of cash flow
information -
Cash paid during the period for interest $2,662,270 $2,668,347
See accompanying notes.
3
POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(unaudited)
1. Basis of Presentation:
The accompanying consolidated financial statements are unaudited but, in the
opinion of management, reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation.
2. Organization:
Power Test Investors Limited Partnership ("Partnership"), a New York limited
partnership, was formed in January 1985 to invest in and become the limited
partner in Power Test Realty Company Limited Partnership ("Operating
Partnership"), also a New York limited partnership. The Operating Partnership
was formed to acquire, own, lease and sell or dispose of certain of the assets
("Assets") formerly used in the petroleum marketing operations of Getty Oil
Company and Getty Refining and Marketing Company located in the Northeastern
and Mid-Atlantic states. The Operating Partnership has leased to Getty
Petroleum Corp. ("Getty") the Assets which were acquired on February 1, 1985.
The leases are principally for initial periods of fifteen years expiring
January 31, 2000 (subject to multiple renewal periods through 2050) and
provide for aggregate annual rental payments of approximately $10,585,000 as
of September 30, 1995 (See Note 6). The general partner of the Partnership
and the Operating Partnership is CLS General Partnership Corp. ("General
Partner").
The limited partners of the Partnership contributed approximately 79% of the
capital of the Partnership and share pro rata with the General Partner (which
contributed approximately 21% of the capital of the Partnership) in the
financial and tax attributes of the Partnership. The Partnership contributed
99% of the capital of the Operating Partnership and shares pro rata with the
General Partner (which contributed the remaining 1% of the capital of the
Operating Partnership) in the financial and tax attributes of the Operating
Partnership. In 1990 and 1991, the General Partner purchased 38,933 and
46,000 units of limited partnership interests, respectively, further
increasing its ownership of the Partnership to approximately 22.2%.
4
3. Consolidation:
The consolidated financial statements include the accounts of the Partnership
and the Operating Partnership. All significant intercompany accounts and
transactions have been eliminated.
The General Partner's share of the Operating Partnership's income for the
periods ended September 30, 1995 and 1994 has been reflected as "Income
applicable to minority interest" in the accompanying consolidated statements
of income.
4. Partners' Capital:
Total
General Limited Partners'
Partner Partners Capital
------------ ------------ -------------
Balance, December 31, 1994 $ 414,748 $1,777,398 $ 2,192,146
Net income for the nine months
ended September 30, 1995 1,073,322 3,754,162 4,827,484
Distributions to unitholders (840,848) (2,809,728) (3,650,576)
Purchase of partnership units - (10,763) (10,763)
Income applicable to minority
interest 49,601 - 49,601
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Balance, September 30, 1995 $ 696,823 $2,711,069 $ 3,407,892
========== ========== ===========
As of September 30, 1995 and December 31, 1994, the General Partner's minority
interest amounted to $26,385 and $14,305, respectively, which is included in
"Total Partners' Capital".
5. Disposition of Properties:
In accordance with the terms of the lease, the Operating Partnership sold two
service station properties to Getty during the third quarter of 1995 for
eleven times the annual rentals, resulting in a net gain of $670,078 to the
Partnership. For the nine months ended September 30, 1995, gains on the sale
of three properties amounted to $1,009,553. During the nine months ended
September 30, 1994, the Operating Partnership sold four service station
properties to Getty for eleven times the annual rentals resulting in a net
gain of $455,723 to the Partnership.
During 1995, the New Haven terminal and a service station property were
subject to partial condemnations resulting in the taking of land. The
condemnation awards were allocated to the Operating Partnership and Getty in
accordance with the formula set forth in the lease. The condemnations resulted
in a net gain to the Partnership of $17,482 and $175,976 for the three and
nine months ended September 30, 1995, respectively.
5
The net gains resulting from the aforementioned dispositions have been
reflected in "Other income" in the accompanying consolidated statements of
income.
6. Subsequent Events:
On October 2, 1995, the Operating Partnership sold ten service station
properties to Getty for eleven times the annual rentals, as provided by the
lease agreement. The sales resulted in a net gain of approximately $2,100,000
to the Partnership, which will be recognized during the fourth quarter ending
December 31, 1995. As a result of these sales, aggregate annual rentals to
the Operating Partnership will be reduced by approximately $267,000 to
$10,318,000.
As of October 31, 1995, the Operating Partnership refinanced a mortgage loan
which was payable through January 1, 1997. The loan had an outstanding balance
of $31,845,000 at an interest rate of prime (8.75% at October 31, 1995). The
amended and restated loan agreement provides for interest at LIBOR plus 1.125%
to 1.75% per annum, depending on the Funded Debt Ratio of Getty (LIBOR plus
1.375% or 7.21% at October 31, 1995). Principal payments are $85,000 per month
through 1999 and $175,000 per month thereafter through October 1, 2000 with the
balance of the loan due on November 1, 2000. In November 1995, the Operating
Partnership paid $279,000 to terminate the interest rate swap agreement
relating to the refinanced loan.
6
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Partnership was formed to invest in and become the limited partner in the
Operating Partnership. The operations of the Operating Partnership consist of
leasing to Getty properties which were acquired by the Operating Partnership
on February 1, 1985. The leases are principally for initial periods of
fifteen years expiring January 31, 2000 (subject to multiple renewal periods
through 2050) and provide for aggregate annual rental payments of
approximately $10,585,000 as of September 30, 1995.
On October 2, 1995, the Operating Partnership sold ten service station
properties to Getty for eleven times the annual rentals, as provided by the
lease agreement. The sales resulted in a net gain of approximately $2,100,000
to the Partnership which will be recognized during the fourth quarter ending
December 31, 1995. As a result of these sales, aggregate annual rentals to
the Operating Partnership will be reduced by approximately $267,000 to
$10,318,000. A portion of the $2,937,000 proceeds from the sale of the
properties may be used, among other things, to acquire properties, reduce
outstanding debt or to purchase partnership units pursuant to the unit
purchase program.
The decrease in rental income for the three and nine months ended September
30, 1995 as compared to the prior year periods is due to the sale of certain
properties.
The increase in other income for the three months ended September 30, 1995 as
compared to the prior year period is principally due to a net gain of $670,078
from the sale of two properties during the 1995 period. The increase in other
income for the nine month period ended September 30, 1995 is principally due
to net gains of $1,009,553 from the sale of three properties and $175,976
resulting from partial condemnations at the New Haven terminal and a
service station property, as compared to a net gain of $455,723 from the sale
of four properties during the nine month period ended September 30, 1994.
Other income also includes interest income earned on investments for each of
the respective periods.
As of October 31, 1995, the Operating Partnership refinanced a mortgage loan
which was payable through January 1, 1997. The amended and restated loan
agreement provides for interest at LIBOR plus 1.125% to 1.75% per annum,
depending on the Funded Debt Ratio of Getty (LIBOR plus 1.375% or
7.21% at October 31, 1995). In November 1995, the Operating Partnership paid
$279,000 to terminate the interest rate swap agreement relating to the
refinanced loan. The Partnership expects that the refinancing will result in
interest savings of approximately $650,000 over the next twelve months.
On November 9, 1995, the Partnership announced that it may purchase in the
market from time to time up to 150,000 of its units at prices not to exceed
$8.00 per unit. In June 1995, the Partnership had offered to purchase units
for $7.50 per unit. The unit purchase program will continue until the end of
the year. Through September 30, 1995, the Partnership has purchased 1,459 units.
The Partnership has made quarterly cash distributions to its unitholders since
1987. On December 1, 1995, a cash distribution of 18.5 cents per unit will be
paid to unitholders of record on November 1, 1995.
7
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Designation of Exhibit
in this Quarterly Report
on Form 10-Q Description of Exhibit
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27 Financial Data Schedule
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POWER TEST INVESTORS LIMITED PARTNERSHIP
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(Registrant)
By:____________________________________________
Leo Liebowitz, President, Treasurer and a
Director of CLS General Partnership Corp.,
the General Partner (Principal Financial
and Accounting Officer)
Dated: November 9, 1995
8
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF POWER TEST INVESTORS LIMITED PARTNERSHIP
AS OF SEPTEMBER 30, 1995 AND FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
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