UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 25, 2000
PRIDE COMPANIES, L.P.
(Exact name of registrant as specified in its charter)
Delaware 001-10473 75-2313597
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
1209 North Fourth Street
Abilene, Texas 79601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (915) 677-5444
<PAGE>
Item 5. Other Events
The Defense Energy Support Center ("DESC") did not appeal the
judgment entered by the Court of Federal Claims in favor of Pride
Companies, L.P. ("Pride"). The Court held that the economic price
adjustment clause present in 12 jet fuel contracts between Pride and
the DESC was impermissible and that Pride was entitled to additional
payments of $45.7 million under the contracts, plus statutory interest
estimated to be $15.7 million at July 25, 2000. The damage portion of
the judgment was received today, and the interest portion will be
received in a second payment, possibly in a following month.
Also, due to various layers of debt and Pride's preferred equity,
and taking into consideration preferential calls on available cash
contained in Pride's debt instruments and preferred equity instruments
(including accumulated arrearages owed on debt and preferred
instruments) and payments under Pride's bonus plan, it is expected
that a common unitholder will be allocated income upon payment of the
judgment without a corresponding distribution of cash to offset the
tax liability that arises from such income. Pride estimates that the
net taxable income from the judgment that will be allocable to common
unitholders will be approximately $41.0 million (or $8.28 per Common
Unit). As previously mentioned, the judgment will not be paid in a
lump sum with the result that such net income may be reported to
common unitholders in two or more different months.
In accordance with Pride's partnership agreement, Pride's
managing general partner has determined that it is necessary to
establish a convention under which the income and certain expenses
attributable to the judgment will be allocated to the holders of Pride
common units. Under that convention, common unitholders as of the
close of business on the last business day of any month or months
during which any proceeds are received by Pride will be allocated the
income attributable to the portion of the proceeds from the judgment
actually received by Pride during that month. Pride intends to take
the position that suspended losses will be available to offset net
income attributable to the judgment; however, it is not certain the
Internal Revenue Service would agree with this position. The actual
tax impact on a common unitholder depends upon his overall personal
tax situation and whether he has suspended losses which can be used to
offset the allocation of income. Each common unitholder should
consult with his own tax advisor regarding his use of suspended
losses.
Pride Companies, L.P., headquartered in Abilene, Texas, is a
Delaware limited partnership and it owns and operates a common carrier
products pipeline system and three products terminals in Abilene,
Texas, San Angelo, Texas and Aledo, Texas, which are used to market
conventional gasoline, low sulfur diesel fuel, and military aviation
fuel.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release, dated July 25, 2000.
<PAGE>
SIGNATURE
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.
PRIDE COMPANIES, L.P.
By: Pride Refining, Inc.,
Managing General Partner
By: Brad Stephens
Chief Executive Officer
Date: July 25, 2000
<PAGE>
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
PRIDE COMPANIES, L.P. ESTABLISHES CONVENTION FOR
ALLOCATION OF INCOME FROM JUDGMENT PROCEEDS
ABILENE, TX - July 25, 2000 - As earlier indicated, the Defense Energy
Support Center ("DESC") did not appeal the judgment entered by the
Court of Federal Claims in favor of Pride Companies, L.P. ("Pride").
The Court held that the economic price adjustment clause present in 12
jet fuel contracts between Pride and the DESC was impermissible and
that Pride was entitled to additional payments of $45.7 million under
the contracts, plus statutory interest estimated to be $15.7 million
at July 25, 2000. The damage portion of the judgment was received
today, and the interest portion will be received in a second payment,
possibly in a following month.
As also earlier indicated, due to various layers of debt and Pride's
preferred equity, and taking into consideration preferential calls on
available cash contained in Pride's debt instruments and preferred
equity instruments (including accumulated arrearages owed on debt and
preferred instruments) and payments under Pride's bonus plan, it is
expected that a common unitholder will be allocated income upon
payment of the judgment without a corresponding distribution of cash
to offset the tax liability that arises from such income. Pride
estimates that the net taxable income from the judgment that will be
allocable to common unitholders will be approximately $41.0 million
(or $8.28 per Common Unit). As previously mentioned, the judgment
will not be paid in a lump sum with the result that such net income
may be reported to common unitholders in two or more different months.
In accordance with Pride's partnership agreement, Pride's managing
general partner has determined that it is necessary to establish a
convention under which the income and certain expenses attributable to
the judgment will be allocated to the holders of Pride common units.
Under that convention, common unitholders as of the close of business
on the last business day of any month or months during which any
proceeds are received by Pride will be allocated the income
attributable to the portion of the proceeds from the judgment actually
received by Pride during that month. Pride intends to take the
position that suspended losses will be available to offset net income
attributable to the judgment; however, it is not certain the Internal
Revenue Service would agree with this position. The actual tax impact
on a common unitholder depends upon his overall personal tax situation
and whether he has suspended losses which can be used to offset the
allocation of income. Each common unitholder should consult with his
own tax advisor regarding his use of suspended losses.
Pride Companies, L.P., headquartered in Abilene, Texas, is a Delaware
limited partnership and it owns and operates a common carrier products
pipeline system and three products terminals in Abilene, Texas, San
Angelo, Texas and Aledo, Texas, which are used to market conventional
gasoline, low sulfur diesel fuel, and military aviation fuel.
Safe Harbor Statement: Certain information included in this release
contains forward-looking statements made pursuant to the Private
Securities Litigation Reform Act of 1995 ("Reform Act"). Such
statements are based on current expectations and involve a number of
known and unknown risks and uncertainties that could cause the actual
results and performance of Pride to differ materially from any
expected future results or performance, expressed or implied, by the
forward-looking statements. In connection with the safe harbor
provisions of the Reform Act, Pride has identified important factors
that could cause actual results to differ materially from such
expectations, including operating uncertainty, acquisition
uncertainty, uncertainties relating to geothermal resources,
uncertainties relating to domestic and international economic and
political conditions and uncertainties regarding the impact of
regulations, changes in government policy and competition. Reference
is made to all of Pride's SEC filings, including Pride's 10-K for the
year ended December 31, 1999, which is incorporated herein by
reference, for a description of such factors. Pride assumes no
responsibility to update forward-looking information contained herein.
