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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 March 31, 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 March 31, 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 - March 31, 1996 and December 31, 1995 1
Statements of Income - three months ended
March 31, 1996 and 1995 2
Statements of Cash Flows - three months ended
March 31, 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
March 31, 1996 and December 31, 1995
March 31, December 31,
1996 1995
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(unaudited)
ASSETS
Cash and cash equivalents $ 3,783,370 $ 5,754,500
Net investment in direct financing leases 4,569,196 4,767,144
Fixed assets, at cost, net of accumulated
depreciation of $19,129,357 and $18,979,807,
respectively 29,939,406 29,913,036
Deferred charges, net of accumulated amortization
of $2,514,943 and $2,492,569, respectively 410,190 432,564
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$38,702,162 $40,867,244
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LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities, primarily interest $ 211,137 $ 277,453
Mortgage and note payable 32,879,998 35,456,493
Partners' capital, 6,501,063 and 6,501,577 units
of general and limited partnership interests
outstanding, respectively 5,611,027 5,133,298
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$38,702,162 $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
Three months ended March 31, 1996 and 1995
(unaudited)
1996 1995
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Revenues:
Rental income $2,134,956 $2,248,921
Interest on direct financing leases 224,710 274,089
Other income 306,300 539,473
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2,665,966 3,062,483
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Expenses:
Interest 572,254 886,460
General and administrative 182,671 192,909
Depreciation and amortization 213,966 225,843
Income applicable to minority interest 17,057 17,612
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985,948 1,322,824
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Net income $1,680,018 $1,739,659
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Net income per unit $ .26 $ .27
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Distributions per unit $ .185 $ .185
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Weighted average units outstanding 6,501,233 6,510,975
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See accompanying notes.
2
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POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1996 and 1995
(unaudited)
1996 1995
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Cash flows from operating activities:
Net income $1,680,018 $1,739,659
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 213,966 225,843
Amortization of investment in direct
financing leases 197,948 171,297
Gain on dispositions of properties (257,244) (497,969)
Minority interest 17,057 17,612
Changes in assets and liabilities:
Increase in receivable-condemnation, net -- (164,958)
Decrease in accrued liabilities (66,316) (47,212)
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Net cash provided by operating activities 1,785,429 1,444,272
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Cash flows from investing activities:
Property acquisitions (325,352) --
Proceeds from dispositions of properties 364,634 668,571
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Net cash provided by investing activities 39,282 668,571
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Cash flows used in financing activities:
Proceeds from borrowings 1,500,000 --
Repayment of debt (4,076,495) (607,475)
Cash distributions (1,215,234) (1,217,037)
Purchase of partnership units (4,112) --
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Net cash used in financing activities (3,795,841) (1,824,512)
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Net increase (decrease) in cash and
cash equivalents (1,971,130) 288,331
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 $3,783,370 $2,812,012
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Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 621,383 $ 887,542
See accompanying notes.
3
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POWER TEST INVESTORS LIMITED PARTNERSHIP
(a New York limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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
multiple renewal periods through 2050) and provide for aggregate annual
rental payments of approximately $10,330,000 as of March 31, 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
March 31, 1996 to approximately 22.3%.
4
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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
three months ended March 31, 1996 and 1995 has been reflected as "Income
applicable to minority interest" in the accompanying consolidated
statements of income.
4. Cash and Cash Equivalents:
As of March 31, 1996, $1,847,000 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
------- -------- -------
Balance, December 31, 1995 $1,108,974 $4,024,324 $ 5,133,298
Net income for the three months
ended March 31, 1996 374,040 1,305,978 1,680,018
Distributions to unitholders (280,283) (934,951) (1,215,234)
Purchase of 514 partnership units -- (4,112) (4,112)
Income applicable to
minority interest 17,057 -- 17,057
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Balance, March 31, 1996 $1,219,788 $4,391,239 $ 5,611,027
========== ========== ===========
As of March 31, 1996 and December 31, 1995, the General Partner's minority
interest amounted to $49,779 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 a
service station property to Getty during the first quarter of 1996 for
eleven times the annual rental, resulting in a net gain of $242,539 to the
Partnership. 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.
5
<PAGE>
During the quarters ended March 31, 1996 and 1995, respectively, a service
station property and the New Haven terminal were subject to partial
condemnations which resulted in the taking of certain of the land.
The condemnations resulted in a net gain to the Partnership of $14,705 and
$158,494, for the quarters ended March 31, 1996 and 1995, respectively.
The net gains resulting from the aforementioned dispositions have been
reflected in "Other income" in the accompanying consolidated statements of
income.
6
<PAGE>
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 $10,330,000 as of March 31, 1996.
The decrease in rental income for the three months ended March 31, 1996 as
compared to the prior year period is due to the sale of certain properties.
The decrease in other income for the three months ended March 31, 1996 as
compared to the prior year period is principally due to $241,000 of reduced
gains on dispositions of properties. Other income also includes interest
income earned on investments for each of the respective periods.
The decrease in interest expense for the three months ended March 31, 1996
as compared to the 1995 period was principally due to lower interest rates and
debt outstanding as a result of refinancing the Operating Partnership's debt.
At March 31, 1996, cash and cash equivalents amounted to $3,783,000, of
which $2,847,000 was restricted under the terms of the mortgage loan.
Restricted funds of $1,673,000 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 quarter ended March 31, 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 entered into lease agreements with Getty for
these locations 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 June 4, 1996, a cash distribution of 18.5 cents per unit
will be paid to unitholders of record on May 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
<PAGE>
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: /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: May 7, 1996
8
<PAGE>
<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 MARCH 31, 1996 AND FOR THE THREE MONTHS THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,783
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 49,069
<DEPRECIATION> 19,129
<TOTAL-ASSETS> 38,702
<CURRENT-LIABILITIES> 0
<BONDS> 32,880
<COMMON> 0
0
0
<OTHER-SE> 5,611
<TOTAL-LIABILITY-AND-EQUITY> 38,702
<SALES> 0
<TOTAL-REVENUES> 2,666
<CGS> 0
<TOTAL-COSTS> 214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 572
<INCOME-PRETAX> 1,680
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,680
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,680
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
