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 March 31, 1998, or
|_|Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission File No. 1-9510
FFP PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 75-2147570
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2801 Glenda Avenue; Fort Worth, Texas 76117-439
(Address of principal executive office, including zip code)
817/838-4700
(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
Class A Units 2,234,262
(Number of units outstanding as of May 15, 1998)
<PAGE>
FFP PARTNERS, L.P., AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998, AND DECEMBER 28, 1997
(In thousands)
(Unaudited)
March 31, December 28
1998 1997
ASSETS
Current Assets
Prepaid expenses $245 $196
Real Property
Land and improvements 6,016 6,026
Buildings 21,489 21,491
27,505 27,517
Accumulated depreciation (9,655) (9,374)
17,850 18,143
Other Assets 49 0
Total Assets $18,144 $18,339
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Current installments of long-term debt $1,158 $1,208
Due to affiliated company 2,918 0
Accrued liabilities 88 0
Total current liabilities 4,164 1,208
Long-term debt, excluding current 11,645 14,730
installments
Total Liabilities 15,809 15,938
Minority interest in subsidiary 941 960
Commitments and contingencies
Partners' Capital 1,394 1,441
Total Liabilities and Partners' Capital $18,144 $18,339
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FFP PARTNERS, L.P., AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(In thousands)
(Unaudited)
Revenues -
Rental income $613
Gain on sale of property 52
Interest income 2
Total revenues 667
Expenses -
General and administrative expenses 73
Depreciation and amortization 290
Interest expense 369
Total expenses 732
(Loss) before minority interest (65)
Minority interest in subsidiary 18
Net (Loss) $(47)
Net (loss) per unit -
Basic $(0.02)
Diluted (0.02)
Weighted average number of units outstanding -
Basic 2,272
Diluted 2,308
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FFP PARTNERS, L.P., AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998
(In thousands)
(Unaudited)
Cash Flows from Operating Activities -
Net (loss) $(47)
Adjustments to reconcile net (loss) to cash
provided by operating activities -
Depreciation and amortization 290
Minority interest in subsidiary (18)
Net change in operating assets and liabilities (11)
Net cash provided by operating activities 214
Cash Flows from Investing Activities -
Additions of property and equipment, net 3
Net cash provided by investing activities 3
Cash Flows from Financing Activities
Net (repayments) under credit facilities (217)
Net cash (used) by financing activities (217)
Net Increase/(Decrease) in Cash 0
Cash at beginning of period 0
Cash at end of period $0
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FFP PARTNERS, L.P., AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements include the assets,
liabilities, and results of operations of FFP Partners, L.P., and its 60%-owned
subsidiary, FFP Properties, L.P., collectively referred to as the "Company" or
"FFPLP."
The condensed consolidated balance sheet as of March 31, 1998, and
the condensed consolidated statement of operations and condensed consolidated
statement of cash flows for the three month period ended March 31, 1998, have
been prepared by the Company without audit. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the Company's financial position as of March 31, 1998, and the
results of operations and cash flows for the three month period then ended, have
been made. Interim operating results are not necessarily indicative of results
for the entire year.
The notes to the audited consolidated financial statements which are
included in the Company's Annual Report on Form 10-K for the year ended December
28, 1997, include accounting policies and additional information pertinent to an
understanding of these interim financial statements. That information has not
changed other than as a result of normal transactions in the three months ended
March 31, 1998, except as discussed below.
2. Change in Fiscal Year
Prior to the restructuring of the Company that occurred in December
1997, the Company prepared its financial statements on the basis of a fiscal
year which ended on the last Sunday in December. However, in connection with the
restructuring, the Company has changed its fiscal year to coincide with the
calendar year. Accordingly, the accompanying unaudited financial statements for
the three months ended March 31, 1998, include the three months then ended and
the three-day period (December 29 through December 31, 1997) immediately
following the restructuring. The effect of including these three additional days
in financial statements for the quarter ended March 31, 1998, is not material.
3. Income/(Loss) per Unit
A reconciliation of the denominator of the basic and diluted (loss)
per unit for the quarter ended March 31, 1998, follows:
In thousands
Weighted average number of units outstanding 2,272
Effect of dilutive options 36
Weighted average number of units outstanding
assuming dilution 2,308
The number of options that could potentially dilute basic
income/(loss) per unit in the future that were not included in the computation
of diluted (loss) per unit because to do so would have been antidilutive was
241,999.
4. Reporting of Comprehensive Income
At the beginning of its 1998 fiscal year, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires the presentation of "comprehensive
income" in financial statements. Comprehensive income includes net income and
all revenues, expenses, gains, and losses that had previously been recorded
directly to equity. The Company does not have any items of other comprehensive
income, therefore comprehensive income and net income are identical.
Accordingly, the effect of the adoption of SFAS No. 130 had no effect on the
Company's consolidated financial statements.
<PAGE>
FFP PARTNERS, L.P., AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
In December 1997, FFP Partners, L.P. ("FFPLP" or the "Company")
completed a restructuring which resulted in the transfer of the convenience
store, retail motor fuel, and other businesses previously operated by it to FFP
Marketing Company, Inc. ("FFP Marketing"). In the restructuring, FFPLP retained
the real estate used in the retail businesses and leases the properties to FFP
Marketing. Accordingly, there is no comparative income data for the Company for
the prior year.
Results of Operations for First Quarter 1998, Liquidity, and Capital Resources
Substantially all of the Company's rental income is from the various
convenience store and other retail outlets that it leases to FFP Marketing. The
leases were entered into in connection with the December 1997 restructuring of
FFPLP and are for five years; accordingly, the rental income from these
locations is expected to remain constant for that period. However, upon securing
additional financing, the Company expects to acquire additional locations, which
may be leased to FFP Marketing or to others. The Company expects that all leases
will be on a "triple-net" basis.
The Company has entered into a management agreement with FFP
Marketing under which FFP Marketing provides various administrative and other
services to FFPLP. Under this agreement, FFP Marketing makes payments on behalf
of FFPLP and charges such items to its account while the rental income due to
FFPLP by FFP Marketing is applied to this account. Accordingly, FFPLP does not,
at this time, maintain separate cash accounts. However, as FFPLP grows and
expands its real estate holdings, it is expected to function more independently
although management anticipates that FFP Marketing will continue to provide
various administrative services to FFPLP for the foreseeable future.
The Company is continuing to evaluate alternatives for refinancing
the debt which it retained in connection with the December 1997 restructuring.
As a part of this refinancing, the Company is seeking to obtain additional
capital to permit it to expand its real estate holdings. The Company has had
discussions with various lenders who have expressed an interest in providing
funds to refinance the existing debt and for acquisition of additional real
estate. However, it has not yet received any formal financing proposals.
Although the Company expects that its property acquisitions will be centered on
convenience store and similar properties, it will also look for opportunities in
other types of property that yield an above average return with an acceptable
level of risk.
Forward-Looking Statements
Certain of the statements made in this report are forward-looking
statements that involve a number of risks and uncertainties. Statements that
should generally be considered forward-looking include, but are not limited to,
those that contain the words "estimate," "anticipate," "in the opinion of
management," "believes," and similar phrases. Although the Company believes that
the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, the Company's actual results could differ materially
from those set forth in the forward-looking statements. Among the factors that
could cause actual results to differ materially from the forward-looking
statements made include the following: changes in real estate conditions,
including rental rates and the construction or availability of competing
properties; changes in the industry in which FFPLP's sole tenant competes;
changes in general economic conditions; the ability of management to identify
acquisitions and investment opportunities meeting the investment objectives of
FFPLP; the timely leasing of unoccupied properties; timely releasing of
currently occupied properties upon expiration of the current leases or the
default of the current tenant; the Company's ability to generate funds
sufficient to meet its debt service payments and other operating expenses; the
inability of FFPLP to control the management and operation of its tenant and the
businesses conducted on the Company's properties; financing risks, including the
availability of funds to service or refinance existing debt and to finance
acquisitions of additional property, changes in interest rates associated with
its variable rate debt; the possibility that the Company's existing debt (which
requires a so-called "balloon" payment of principal) may be refinanced at a
higher interest rate or on other terms less favorable to FFPLP than at present;
the existence of complex tax regulations relating to the Company's status as a
publicly-traded real estate partnership and, if achieved, to its status as a
real estate investment trust and the adverse consequences of the failure to
qualify as such; and other risks detailed from time to time in FFPLP's filings
with the Securities and Exchange Commission. Given these uncertainties, readers
are cautioned not to place undue reliance on the forward-looking statements. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
<PAGE>
EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
27 Financial Data Schedule.
Reports on Form 8-K
A report on Form 8-K dated December 22, 1997, was filed with the
Securities and Exchange Commission on January 6, 1998, reporting the purchase of
operating convenience stores.
A report on Form 8-K dated December 28, 1997, was filed with the
Securities and Exchange Commission on January 12, 1998, reporting the
restructuring of FFP Partners, L.P., by which the convenience store, retail
motor fuel marketing, and other businesses conducted by FFP Partners were
transferred to FFP Marketing Company, Inc., while the real estate used in the
retail operations was retained by FFP Partners.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
FFP PARTNERS, L.P.
Registrant
Date: May 20, 1998 By: /s/Steven B. Hawkins
---------------------------------
Steven B. Hawkins
Vice President - Finance and
Chief Financial Officer
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