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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 June 30, 1996 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 6,501,063 units of general and limited partnership interests
outstanding as of June 30, 1996.
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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 - June 30, 1996 and December 31, 1995 1
Statements of Income - three and six months ended
June 30, 1996 and 1995 2
Statements of Cash Flows - six months ended
June 30, 1996 and 1995 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
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POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
June 30, December 31,
1996 1995
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(unaudited)
ASSETS
Cash and cash equivalents $3,828,387 $5,754,500
Net investment in direct financing leases 4,309,954 4,767,144
Fixed assets, at cost, net of accumulated
depreciation of $19,285,311 and $18,979,807,
respectively 29,627,706 29,913,036
Deferred charges, net of accumulated
amortization of $2,537,863 and $2,492,569,
respectively 392,990 432,564
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$38,159,037 $40,867,244
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LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities, primarily interest $218,118 $277,453
Mortgage and note payable 32,366,475 35,456,493
Partners' capital, 6,501,063 and 6,501,577
units of general and limited partnership
interests outstanding, respectively 5,574,444 5,133,298
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$38,159,037 $40,867,244
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See accompanying notes.
1
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POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three months ended June 30, Six months ended June 30,
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1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Rental income $2,130,295 $2,223,851 $4,265,251 $4,472,772
Interest on direct
financing leases 212,673 265,706 437,383 539,795
Other income 492,402 47,741 798,702 587,214
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2,835,370 2,537,298 5,501,336 5,599,781
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Expenses:
Interest 559,098 884,752 1,131,352 1,771,212
General and administrative 226,689 225,164 409,360 418,073
Depreciation and
amortization 214,284 225,465 428,250 451,308
Income applicable to
minority interest 18,624 12,557 35,681 30,169
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1,018,695 1,347,938 2,004,643 2,670,762
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Net income $1,816,675 $1,189,360 $3,496,693 $2,929,019
========== ========== ========== ==========
Net income per unit $.28 $.18 $.54 $.45
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Distributions per unit $.285 $.185 $.47 $.37
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Weighted average units
outstanding 6,501,063 6,509,931 6,501,148 6,510,450
========== ========== ========== ==========
See accompanying notes.
2
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POWER TEST INVESTORS LIMITED PARTNERSHIP
(A New York limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1996 and 1995
(unaudited)
1996 1995
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Cash flows from operating activities:
Net income $3,496,693 $2,929,019
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 428,250 451,308
Amortization of investment
in direct financing leases 404,141 350,977
Gain on dispositions of properties (693,426) (497,969)
Minority interest 35,681 30,169
Changes in assets and liabilities:
Increase in deferred charages (5,720) -
Decrease in accrued liabilities (59,335) (16,815)
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Net cash provided by operating activities 3,606,284 3,246,689
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Cash flows from investing activities:
Property acquisitions (325,352) -
Proceeds from dispositions of properties 974,201 668,571
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Net cash provided by investing activities 648,849 668,571
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Cash flows used in financing activities:
Proceeds from borrowings 1,500,000 -
Repayment of debt (4,590,018) (1,386,518)
Cash distributions (3,087,116) (2,433,808)
Purchase of partnership units (4,112) (10,613)
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Net cash used in financing activities (6,181,246) (3,830,939)
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Net increase (decrease) in cash and cash equivalents (1,926,113) 84,321
Cash and cash equivalents at beginning of period 5,754,500 2,523,681
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Cash and cash equivalents at end of period $3,828,387 $2,608,002
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Supplemental disclosure of cash flow information -
Cash paid during the period for interest $1,199,505 $1,787,611
See accompanying notes.
3
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POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(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") is a New York limited
partnership which 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 five ten year renewal periods through 2050) and
provide for aggregate annual rental payments of approximately $10,132,000 as
of June 30, 1996. 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 as of June 30, 1996 to
approximately 22.3%.
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 June 30, 1996 and 1995 has been reflected as "Income applicable
to minority interest" in the accompanying consolidated statements of income.
4
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4. Cash and Cash Equivalents:
As of June 30, 1996, $2,189,000 of cash is restricted for the acquisition of
additional properties or the repayment of debt. In addition, the Operating
Partnership is required under the terms of its mortgage loan agreement to
maintain cash balances or other investments of at least $1,000,000 through
December 31, 1998 and $500,000 thereafter.
5. Partners' Capital:
Total
General Limited Partners'
Partner Partners Capital
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Balance, December 31, 1995 $1,108,974 $4,024,324 $5,133,298
Net income for the six months
ended June 30, 1996 778,515 2,718,178 3,496,693
Distributions to unitholders (711,879) (2,375,237) (3,087,116)
Purchase of 514 partnership units - (4,112) (4,112)
Income applicable to minority interest 35,681 - 35,681
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Balance, June 30, 1996 $1,211,291 $4,363,153 $5,574,444
========== ========== ==========
As of June 30, 1996 and December 31, 1995, the General Partner's minority
interest amounted to $49,326 and $45,229, respectively, which is included in
"Total Partners' Capital".
6. Dispositions of Properties:
In accordance with the terms of the lease, the Operating Partnership sold
three service station properties to Getty during 1996 for eleven times the
annual rentals, resulting in net gains to the Partnership of $415,031 and
$657,570 for the three and six months ended June 30, 1996, respectively.
During the first quarter of 1995, the Operating Partnership sold a service
station property to Getty for eleven times the annual rental resulting in a
net gain of $339,475 to the Partnership.
During 1996, three service station properties were subject to partial
condemnations which resulted in the taking of certain of the land. The
condemnations resulted in net gains to the Partnership of $21,151 and $35,856
for the three and six months ended June 30, 1996, respectively. During the
5
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first quarter of 1995, the New Haven terminal was subject to a partial
condemnation which resulted in the taking of certain of the land. The
condemnation resulted in a net gain of $158,494 to the Partnership.
The net gains resulting from the aforementioned dispositions have been
reflected in "Other income" in the accompanying consolidated statements of
income.
6
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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 five ten year renewal
periods through 2050) and provide for aggregate annual rental payments of
approximately $10,132,000 as of June 30, 1996.
The decrease in rental income for the three and six months ended June 30, 1996
as compared to the prior year periods is due to the sale of certain
properties.
The increase in other income for the three and six months ended June 30, 1996
as compared to the prior year periods is principally due to increased gains on
dispositions of properties of $436,000 and $195,000, respectively. Other
income also includes interest income earned on investments for each of the
respective periods.
The decrease in interest expense for the three and six months ended June 30,
1996 as compared to the prior year periods is principally due to lower
interest rates and debt outstanding as a result of refinancing the Operating
Partnership's debt.
As of June 30, 1996, cash and cash equivalents amounted to $3,828,000, of
which $3,189,000 was restricted under the terms of the mortgage loan.
Restricted funds of $2,189,000 may be used to acquire additional properties or
to reduce the outstanding loan balance and the Operating Partnership is
required to maintain cash balances or other investments of at least $1,000,000
through December 31, 1998 and $500,000 thereafter.
During the six months ended June 30, 1996, the Operating Partnership acquired
a service station property in New Jersey, and certain land adjacent to an
existing service station property in Massachusetts, for a total of $325,000.
The Operating Partnership has leased these locations to Getty at fair market
rentals.
On November 9, 1995, the Partnership announced that it may purchase in the
market from time to time through March 15, 1996 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. Through March 15, 1996, the
Partnership purchased 9,912 Units for $76,897, of which 514 Units were
purchased for $4,112 during the quarter ended March 31, 1996.
The Partnership has made quarterly cash distributions to its unitholders since
1987. On September 3, 1996, a cash distribution of 18.5 cents per unit will
be paid to unitholders of record on August 1, 1996. On April 23, 1996, a
special extra cash distribution of 10 cents per unit was paid to unitholders
of record on April 11, 1996.
7
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PART II. OTHER INFORMATION
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: /s/ Leo Liebowitz
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Leo Liebowitz, President, Treasurer and a
Director of CLS General Partnership Corp.,
the General Partner (Principal Financial
and Accounting Officer)
Dated: August 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF POWER TEST INVESTORS LIMITED
PARTNERSHIP AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,828
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 48,913
<DEPRECIATION> 19,285
<TOTAL-ASSETS> 38,159
<CURRENT-LIABILITIES> 0
<BONDS> 32,366
<COMMON> 0
0
0
<OTHER-SE> 5,574
<TOTAL-LIABILITY-AND-EQUITY> 38,159
<SALES> 0
<TOTAL-REVENUES> 5,501
<CGS> 0
<TOTAL-COSTS> 428
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,131
<INCOME-PRETAX> 3,497
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,497
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,497
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
