<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 27, 1996
Commission file number 1-13018
PETRO STOPPING CENTERS, L.P.
(Exact name of the registrant as specified in its charter)
DELAWARE 74-2628339
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6080 SURETY DR.
EL PASO, TEXAS 79905
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (915) 779-4711
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
----- -----
================================================================================
<PAGE> 2
PETRO STOPPING CENTERS, L.P.
Index
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets
as of December 29, 1995 and September 27, 1996 3
Unaudited Consolidated Statements of Income
for the Three and Nine Months Ended September 29, 1995
and September 27, 1996 4
Unaudited Consolidated Statements of Cash Flows
for the Nine Months Ended September 29, 1995
and September 27, 1996 5
Notes to Unaudited Consolidated Financial Statements 6-8
Report of Independent Accountants 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
</TABLE>
2
<PAGE> 3
PART 1. Financial Information
Item 1. Financial Statements
PETRO STOPPING CENTERS, L.P.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 29, September 27,
1995 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash $ 5,688 $ 3,893
Accounts receivable, net of allowance for uncollectible
accounts of $608 in 1995 and $332 in 1996 11,468 12,919
Inventories 16,319 17,861
Other current assets 1,728 1,990
Due from affiliates 1,520 1,994
------------ ------------
Total current assets 36,723 38,657
Property and equipment, net 162,348 160,883
Deferred debt issuance and organization costs, net of
accumulated amortization of $4,546 in 1995 and $6,117 in 1996 13,370 12,249
Other assets 9,258 7,193
------------ ------------
Total assets $ 221,699 $ 218,982
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of long-term debt $ 4,948 $ 6,433
Trade accounts payable 14,188 17,345
Accrued expenses and other liabilities 25,166 24,988
Due to affiliates 2,028 2,110
------------ ------------
Total current liabilities 46,330 50,876
Notes payable 20,578 15,639
Long-term debt, excluding current portion 142,866 139,622
------------ ------------
Total liabilities 209,774 206,137
------------ ------------
Commitments and contingencies
Partners' capital:
General partners (7,204) (7,072)
Limited partners 19,129 19,917
------------ ------------
Total partners' capital 11,925 12,845
------------ ------------
Total liabilities and partners' capital $ 221,699 $ 218,982
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements
3
<PAGE> 4
PETRO STOPPING CENTERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 29, September 27, September 29, September 27,
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues: (including motor fuel taxes)
Diesel fuel island $ 89,051 $ 107,904 $ 258,912 $ 315,142
Petro:Lube 9,984 12,276 27,024 33,030
Restaurant 12,530 12,113 35,703 35,367
Travel and convenience stores 16,581 17,452 45,852 49,305
Petro:2 6,988 8,184 20,918 24,086
Other 2,250 2,601 6,486 7,602
---------- --------- --------- ---------
Total net revenues 137,384 160,530 394,895 464,532
---------- --------- --------- ---------
Costs and expenses:
Cost of sales (including motor fuel taxes),
exclusive of depreciation and amortization 104,663 127,026 303,310 368,971
Operating expenses 19,745 20,941 54,271 60,282
---------- --------- --------- ---------
124,408 147,967 357,581 429,253
---------- --------- --------- ---------
Operating contribution 12,976 12,563 37,314 35,279
General and administrative 2,987 3,473 8,714 9,652
Depreciation and amortization 2,805 2,874 7,888 8,832
---------- --------- --------- ---------
Operating income 7,184 6,216 20,712 16,795
Interest expense 5,276 5,247 15,804 15,875
---------- --------- --------- ---------
Net income $ 1,908 $ 969 $ 4,908 $ 920
========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
4
<PAGE> 5
PETRO STOPPING CENTERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 29, September 27,
1995 1996
---- ----
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 4,908 $ 920
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 7,888 8,832
Deferred debt issuance amortization 907 1,048
Accretion of original issue discount 624 710
Provision for losses on accounts receivable 155 171
Increase (decrease) from changes in:
Accounts receivable (2,855) (1,609)
Inventories (2,139) (1,542)
Other current assets (130) (262)
Due from affiliates (388) (474)
Due to affiliates (69) 82
Trade accounts payable 2,941 3,157
Accrued expenses and other liabilities 3,038 6,136
----------- -----------
Net cash provided by operating activities 14,880 17,155
----------- -----------
Cash flows used in investing activities:
Purchases of property and equipment (17,595) (4,771)
Decrease in other assets, net (995) (257)
----------- -----------
Net cash used in investing activities (18,590) (5,028)
----------- -----------
Cash flows provided by (used in) financing activities:
Repayments of notes payable (27,364) (21,000)
Proceeds from notes payable 38,000 16,061
Repayments of long-term debt (2,500) (2,469)
Distribution to partners (326) -
Payment of debt issuance costs (19) (201)
Decrease in cash overdrafts (2,222) (6,314)
----------- -----------
Net cash provided by (used in) financing activities 5,569 (13,923)
----------- -----------
Net increase (decrease) in cash 1,859 (1,795)
Cash, beginning of period 3,823 5,688
----------- -----------
Cash, end of period $ 5,682 $ 3,893
=========== ===========
- ---------------------------------------------------------------------------------------------------------------
Supplemental cash flow information -
Interest paid during the period, net of capitalized interest of
$515 in 1995 $ 12,614 $ 9,894
Minority interest converted to equity 506 -
</TABLE>
See accompanying notes to unaudited consolidated financial statements
5
<PAGE> 6
PETRO STOPPING CENTERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
The interim consolidated financial statements of Petro Stopping
Centers, L.P. (the "Company") are unaudited, and certain information and
footnote disclosures normally included in the annual consolidated financial
statements have been omitted. While management of the Company believes that
the disclosures presented are adequate to make the information not misleading,
it is suggested that these statements be read in conjunction with the Company's
1995 annual report on Form 10-K. In the opinion of management, the
accompanying unaudited consolidated financial statements contain all necessary
adjustments (consisting of only normal recurring adjustments) for 1995 and
1996. The results of operations for the nine-month period ended September 27,
1996 are not necessarily indicative of the results to be expected for the full
year.
2) ENVIRONMENTAL LIABILITIES AND EXPENDITURES
Accruals for environmental matters are recorded in operating expenses
when it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. The measurement of environmental
liabilities is based on an evaluation of currently available facts with respect
to each individual site and considers factors such as existing technology,
presently enacted laws and regulations and prior experience in remediation of
contaminated sites. Accrued liabilities are exclusive of claims against third
parties and are not discounted.
3) INVENTORIES
The following is a summary of inventories at December 29, 1995 and
September 27, 1996:
<TABLE>
<CAPTION>
1995 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Motor fuels and lubricants $ 3,623 $ 5,095
Tires and tubes 3,568 3,780
Merchandise and accessories 7,783 7,694
Restaurant and other 1,345 1,292
------- -------
Total inventories $16,319 $17,861
======= =======
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment is summarized at December 29, 1995 and
September 27, 1996 as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES
(YEARS) 1995 1996
------- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Land -- $ 34,872 $ 35,199
Buildings and improvements 30 91,644 93,554
Furniture and equipment 3-10 37,887 40,145
Leasehold improvements 7-30 20,066 20,238
Facilities under development -- 157 147
-------- --------
184,626 189,283
Less accumulated depreciation and amortization 22,278 28,400
-------- --------
Net property and equipment $162,348 $160,883
======== ========
</TABLE>
Facilities under development include costs associated with new
facilities and major renovations of existing facilities. There were no
commitments for facilities under development at September 27, 1996.
6
<PAGE> 7
PETRO STOPPING CENTERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
5) NOTES PAYABLE
Notes payable at December 29, 1995 and September 27, 1996 consisted
of a five-year revolving credit facility under which up to $35,000,000 is
available. The credit facility matures in June 1999. Interest is paid monthly
at 1.5% over the bank's prime rate or 2.75% over the Eurodollar rate (the rate
of which is determined by the Company at time of borrowing). The revolver is
collateralized by substantially all of the Company's assets. The balance
outstanding on the credit facility was $20,578,000 and $15,639,000 as of
December 29, 1995 and September 27, 1996, respectively. The average interest
rate for the nine months ended September 27, 1996 was 8.8%.
In addition, also outstanding at December 29, 1995 and September 27,
1996 under the Credit Facility were standby letters of credit principally
related to unfunded insurance claims in the amount of $3,150,000 and other
various standby letters of credit of approximately $500,000.
6) COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and litigation incidental
to the business for which estimates of losses have been accrued, when
appropriate. In the opinion of management, such proceedings will not have a
material adverse effect on financial position or results of operations.
7) OTHER EVENTS
On October 23, 1996, the Company entered into an Interest Purchase
Agreement (the "Interest Purchase Agreement") with Mobil Long Haul Inc., a
wholly-owned subsidiary of Mobil Corporation ("Mobil Co"), Petro Holdings GP
Corp., and Petro Holdings LP Corp., each of which is an affiliate of Chartwell
Investments Inc. (collectively, "Chartwell Co"), Roadside, Inc., a general
partner of the Company ("Roadside"), and Sequoia Ventures Inc., a limited
partner of the Company (together with Roadside, the "Fremont Partners")
providing for the sale of all of the partnership interests in the Company held
by the Fremont Partners to Mobil Co and Chartwell Co. The aggregate purchase
price of the partnership interests held by the Fremont Partners is $28.5
million, subject to adjustment.
Concurrently with the execution of the Interest Purchase Agreement,
the Company entered into an Omnibus Agreement (the "Omnibus Agreement") with
James A. Cardwell, Sr., James A. Cardwell, Jr. and JAJCO II (collectively, the
"Cardwell Group"), each of whom is a limited partner of the Company, and Petro,
Inc., a general partner of the Company controlled by the Cardwell Group, Mobil
Co and Chartwell Co providing for, among other things, Chartwell Co and Mobil
Co to invest an aggregate of approximately $21 million and $15 million,
respectively. The investment proceeds will be used to acquire the interests of
the Company held by the Fremont Partners as described above, to invest
approximately $4.2 million in the Company and to invest $3 million in a new
special purpose entity which will acquire, own and develop new truck stops to
be operated by the Company. Upon consummation of the transactions, the common
partnership interests of the Company will be owned by Chartwell Co
(approximately 52%), the Cardwell Group (approximately 41%) and Mobil Co (7.5%)
and preferred partnership interests will be owned by Mobil Co ($12 million) and
the Cardwell Group ($7.6 million).
In addition, Mobil Oil Corporation ("Mobil Oil") and the Company will
enter into a 10 year supply agreement at the Closing under which Mobil Oil will
supply the Company's diesel fuel requirements. The diesel fuel sold at all of
the Company operated truck stops will be branded "Mobil." The Company will
also enter into 10 year supply agreements under which Mobil Oil will supply
lubricants and gasoline to the Company. The Company's Petro:Lube operations
will feature Mobil Delvac lubricants and the Company will initially brand 11 of
its gasoline fueling facilities at its truck stops "Mobil." The Company and
Mobil Oil will also enter into a Memorandum of Understanding with respect to
the joint development of new projects and Mobil Oil will provide marketing and
other services, including access to Mobil Oil personnel and resources. Mr.
Cardwell, Chief Executive Officer of the Company, will assume the additional
roles of Chairman and President and be responsible for the Company's operations
and a
7
<PAGE> 8
PETRO STOPPING CENTERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Mobil manager will assume the full time position of Senior Vice
President-Planning and Support Services at the Company.
The Omnibus Agreement also provides for the Company to enter into
agreements at the Closing with affiliates of the Cardwell Group and Chartwell
Co providing for: (i) the extension of certain agreements between the Company
and affiliates of the Cardwell Group and (ii) financial advisory and consulting
services to be performed by an affiliate of Chartwell Co for the Company.
The closing of the transactions contemplated by the Interest Purchase
Agreement and the Omnibus Agreement is subject to certain conditions, including
the refinancing of the Company's existing senior credit facility and obtaining
consents from holders of not less than 75% of the principal amount of the
Company's 12.5% Senior Notes due 2002 (the "Notes") to the effect that the
contemplated transactions do not constitute a "Change of Control" under the
Indenture governing the Notes. Chartwell Co and Mobil Co have obtained a
financing commitment, subject to satisfaction of certain conditions, sufficient
to refinance the Company's existing senior credit facility.
The transactions are expected to close before the end of this year.
8) RECENT PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 encourages entities
to adopt a fair value based method of accounting for all employee stock and
other equity based compensation, as well as transactions in which an entity
issues its equity instruments to acquire goods or services from nonemployees.
SFAS No. 123 allows an entity to continue measuring compensation costs for the
plans using the accounting principles prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"). In that case,
however, companies must also include pro forma disclosures of net income and
earnings per share, if applicable, as if the fair value based method of
accounting defined in SFAS No. 123 had been applied. SFAS No. 123 is effective
for fiscal years beginning after December 15, 1995. The Partnership has
elected to continue to apply the accounting recognition rules contained in APB
No. 25, and provide proforma disclosures as required beginning in 1996.
8
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Control and Partners
Petro Stopping Centers, L.P.
We have reviewed the accompanying consolidated balance sheet of Petro Stopping
Centers, L.P. as of September 27, 1996, and the related consolidated statements
of income and cash flows for the three and nine month periods ended September
29, 1995 and September 27, 1996. These consolidated financial statements are
the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
November 7, 1996
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
The following table sets forth the development of the Company's
Stopping Center network since 1992.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Company-operated Stopping Centers:
Full-sized...................... 20 21 21 2 23
Petro:2 :....................... 3 3 3 3 3
Franchised (1).................... 12 12 13 14 15
Independently operated (1)........ 1 1 1 1 -
-- -- -- -- --
Total Stopping Centers........... 36 37 38 41 41
== == == == ==
</TABLE>
1) During 1996, the independently operated Stopping Center became a franchised
unit.
The following table sets forth information on Stopping Centers opened
since January 1, 1993, all of which were full-sized facilities.
LOCATION DATE OPENED
Company-operated Stopping Centers:
Laramie, Wyoming October 1993
Medford, Oregon February 1995
Ocala, Florida June 1995
Franchised:
Fargo, North Dakota November 1994
Carnesville, Georgia January 1995
All of the Stopping Centers opened since January 1, 1993 were newly
constructed facilities, except Medford, Oregon, where the Company purchased an
existing truck stop and converted it into a Stopping Center. In addition to
the new full-sized facilities, the Company opened new Petro:Lubes at its San
Antonio, Beaumont and Medford locations in June 1994, January 1995 and April
1996, respectively. At September 27, 1996, the Company had no new Stopping
Centers under construction. However, two franchise locations are under
construction; one in York, Nebraska, which is scheduled to open in late 1996
and the other in Scranton, Pennsylvania, which is scheduled to open in the
first quarter of 1997. The approximate construction cost of a new stopping
center (exclusive of land) is $8,500,000.
The Company has never closed a Stopping Center and has no current
plans to do so. It is, however, contemplated that one or more Stopping Centers
will be transferred to a new entity in connection with the transaction
described below under "Chartwell and Mobil Investments and Related
Transactions." See "Liquidity and Capital Resources."
In May 1994, the Company purchased the rights to certain revenues
(the "Coinage Arrangement") from certain specified activities (pay telephone
services, video games and rentals of retail space) at 14 Stopping Centers.
On September 1, 1996, the federal minimum wage was increased to
$4.75. Because of the low number of Company employees that were effected by
this increase, the increase has not had an adverse impact on the Company.
In March 1996, the Company, and its principal partners jointly
retained Goldman, Sachs & Co. as their financial advisor to assist them in
enhancing shareholder value. On October 23, 1996, the
10
<PAGE> 11
Company announced that it had entered into a definitive agreement with
affiliates of Chartwell Investments, Inc. and Mobil Corporation and the Fremont
Group providing for the sale of all of the Company partnership interests held
by affiliates of the Fremont Group to affiliates of Chartwell Investments, Inc.
and Mobil Corporation. As part of the transactions, affiliates of Chartwell
Investments, Inc. and Mobil Corporation will also be making a separate equity
investment in the Company. See "Chartwell and Mobil Investments and Related
Transactions."
Revenues. The Company's revenues at each of its full-sized Stopping
Centers are recorded through the following divisions: diesel fuel island,
Petro:Lube, restaurant and travel and convenience stores. The Company's
Petro:2 division includes all activities at its Petro:2 units except for
revenues from Petro:Lubes located at the Petro:2 locations. Sales of non-fuel
merchandise in the fuel island building, as well as its revenues from the truck
weighing scales, are included in the results of the diesel fuel island
division. The restaurant division also includes the free-standing Iron Skillet
restaurant in Arlington, Texas. The travel and convenience store division
includes the Company's revenues from other activities at the Stopping Center,
including showers, laundry, vending machines, video games and other retail
activities, as well as gasoline and auto diesel sales. Other includes
franchisee fees and income from video poker machines, discounts on franchisee
receivables, fuel hauling, fast food restaurants and the motel and RV park at
the Medford, Oregon location.
The Company's fuel revenues and cost of sales include significant
amounts of federal and state motor fuel taxes. Such taxes were $38,837,000 and
$44,190,000 for the three-month periods ended September 29, 1995 and September
27, 1996, respectively, and $114,475,000 and $129,470,000 for the nine-month
periods ended September 29, 1995 and September 27, 1996, respectively.
Taxes. No provision for income taxes is reflected in the financial
statements as the Company is a partnership for which taxable income and tax
deductions are passed through to the individual partners.
RESULTS OF OPERATIONS
NINE MONTH PERIOD ENDED SEPTEMBER 27, 1996 COMPARED TO NINE MONTH PERIOD ENDED
SEPTEMBER 29, 1995
OVERVIEW.
The Company's net revenues increased $69,637,000 to $464,532,000 in
the nine-month period ended September 27, 1996 from $394,895,000 in the
nine-month period ended September 29, 1995. Revenues from comparable units
contributed $59,868,000 or 85.9% of the increase. A Stopping Center is
considered a "comparable unit" as to a particular month in the current period
if it was open during the same month of the prior year. This increase in 1996
net revenues was due principally to significant increases in fuel gallons sold
at the fuel islands, travel and convenience stores and Petro:2s, an 8.4%
increase in fuel sales price per diesel gallon sold and increases in Petro:Lube
sales. Revenues during the first six months of 1996 from the new location in
Ocala, Florida opened in June 1995 and revenues during January 1996 from the
Medford, Oregon location opened in February 1995, contributed an additional
$9,769,000 in revenues in 1996.
Operating contribution, which is defined as net revenues less cost of
sales and operating expenses, declined 5.5% to $35,279,000. This was due to an
increase in cost of sales of $65,661,000, combined with an 11.0% increase in
operating expenses.
Factors increasing cost of sales and depressing profitability for the
nine months ended September 27, 1996 related to higher fuel prices during the
first quarter, due to (1) anticipated increases in natural gas prices which
caused many commercial/utility entities to shift to use of diesel fuel, (2) an
extremely cold winter which increased demand for home heating oils, (3)
technical problems and manufacturing shifts at refineries, which reduced
output, and (4) heightened competitive pressure as a result of market share
positioning between a competing national truckstop chain and a significant
third-
11
<PAGE> 12
party billing company. The margin compression was due to lower prices charged
by the competitor in an attempt to maintain market share originally provided by
the third-party processor.
DIESEL FUEL ISLAND.
<TABLE>
<CAPTION>
Nine months ended
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenues $315,142,000 $258,912,000
Cost of sales 286,963,000 231,198,000
Operating expenses 16,163,000 14,270,000
Operating contribution 12,016,000 13,445,000
</TABLE>
Revenues increased $56,230,000 to $315,142,000 in 1996 from
$258,912,000 in 1995. The increase in revenues was attributable predominately
to revenues of $6,279,000 from the Ocala and Medford locations and a
$49,951,000 increase in revenues from comparable units, due primarily to higher
fuel volume combined with a higher selling price per gallon.
Cost of sales increased $55,765,000 due to higher fuel volumes
combined with higher average fuel costs during the period, in addition to the
new locations.
Operating expenses increased $1,893,000 relating to volume related
expenses such as employee expenses and third-party billing fees.
Operating contribution decreased by $1,429,000 in total and
$1,647,000 on a comparable units basis. The decline in operating contribution
was due to a 12.9% reduction in net fuel margin per gallon as a result of the
Company's inability to pass along price increases to match the sudden rise in
fuel costs. The Company anticipates that the recent declines in fuel margins,
as a result of higher costs in the industry, might continue. The Company
cannot quantify the impact of such trends due to the unknown impact on fuel
volume.
PETRO:LUBE.
<TABLE>
<CAPTION>
Nine months ended
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenues $33,030,000 $27,024,000
Cost of sales 15,248,000 12,293,000
Operating expenses 10,650,000 9,171,000
Operating contribution 7,131,000 5,559,000
</TABLE>
Revenues increased $6,006,000 to $33,030,000 in 1996 from $27,024,000
in 1995. This increase was due to growth in comparable units of $5,330,000
combined with a $676,000 increase due to new locations.
Cost of sales increased $2,955,000 due to increased volumes.
Operating expenses increased $1,479,000, due primarily to higher
employee expense associated with increased sales volume and $229,000 for new
locations.
Operating contribution increased $1,572,000 yielding an operating
margin of 21.6% up from a 20.6% rate in 1995.
12
<PAGE> 13
RESTAURANT.
<TABLE>
<CAPTION>
Nine months ended
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenues $35,367,000 $35,703,000
Cost of sales 10,470,000 10,562,000
Operating expenses 18,865,000 18,860,000
Operating contribution 6,032,000 6,281,000
</TABLE>
Restaurant revenues in total declined $336,000 in 1996 as compared to
1995. Revenues from new locations in Ocala and Medford for the period
contributed $901,000, while revenues from comparable units declined $1,237,000.
The Company believes that a major factor causing the decline was increased fuel
prices, which had an impact on discretionary spending in non-fuel profit
centers.
Cost of sales declined $92,000 in 1996 as compared to 1995, due
primarily to less volume at comparable units.
Operating expenses were flat in total because increases related to
new locations were offset by declining expenses in comparable units.
Operating contribution declined $249,000 to $6,032,000 in 1996 from
$6,281,000 in 1995. The decline in operating contribution was due primarily to
the decline in revenues on a comparable units basis as discussed above.
TRAVEL AND CONVENIENCE STORES.
<TABLE>
<CAPTION>
Nine months ended
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenues $49,305,000 $45,852,000
Cost of sales 34,930,000 31,579,000
Operating expenses 9,866,000 9,443,000
Operating contribution 4,509,000 4,830,000
</TABLE>
Revenues increased $3,453,000 to $49,305,000 in 1996 from $45,852,000
in 1995. The increase was due to revenues of $1,549,000 from the Ocala and
Medford locations combined with a $1,904,000 increase in revenues at comparable
units. The increased revenues at comparable units were due to increased fuel
sales offset somewhat by a decline in merchandise sales.
Cost of sales increased $3,351,000 due to higher fuel volume and
related higher cost of fuel and higher merchandise volume. The increase in
cost of sales resulted in a 15.6% decline in fuel margin per gallon from 1995
to 1996.
Operating expenses increased $423,000 of which $312,000 related to
the Medford and Ocala locations. The remaining $111,000 increase was due to
higher employee costs.
Operating contribution declined $321,000 in total and $405,000 on a
comparable units basis. The decline in operating contribution was due to the
higher cost of sales and operating expenses offset somewhat by a the increase
in fuel volume
13
<PAGE> 14
PETRO:2.
<TABLE>
<CAPTION>
Nine months ended
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenues $24,086,000 $20,918,000
Cost of sales 20,916,000 17,541,000
Operating expenses 2,540,000 2,441,000
Operating contribution 630,000 937,000
</TABLE>
Revenues increased $3,168,000 to $24,086,000 in 1996 from the 1995
period. The increase was attributable to a 12.7% increase in fuel gallons
sold.
Cost of sales increased $3,375,000 due to (1) higher fuel volumes and
(2) higher costs per gallon sold.
Operating expenses increased $99,000 primarily due to volume related
expenses including employee costs and third-party billing fees.
Operating contribution declined $307,000 despite the increase in
revenues, due to a 14.9% decline in fuel margins (as described above in the
diesel fuel island section) combined with an increase in operating expenses.
The Company anticipates that the current trends affecting the diesel fuel
islands and travel and convenience stores will be applicable to its Petro:2s.
OTHER.
Revenues increased $1,116,000 to $7,602,000 in the 1996 period from
$6,486,000 in the 1995 period. The increase was attributable primarily to
increased revenues of $1,020,000 from the fast food locations and the motel and
RV park. The increase was offset slightly by declines in coinage income and
video poker revenue at the Company's two Louisiana locations. During 1996,
Louisiana enacted a statute requiring the cessation of video poker operations
by July 1999 unless the parish in which the operations were conducted voted to
allow the continued operations of video poker machines. On November 5, 1996,
the Shreveport location voted to continue to allow video poker operations,
while the Hammond location parish voted to disallow video poker operations.
The phase out period is through June 1999. The Hammond location has generated
monthly earnings from video poker of approximately $60,000.
GENERAL AND ADMINISTRATIVE.
General and administrative expenses increased $938,000 in 1996 from
1995. The increase was due primarily to the reversal in 1995 of a 1994
long-term bonus accrual combined with an increase in 1996 employee costs. The
bonus accrual related to an anticipated long-term compensation plan that was
later modified.
DEPRECIATION AND AMORTIZATION.
Depreciation and amortization increased $944,000 due primarily to a
full nine months depreciation on the Medford and Ocala locations.
INTEREST EXPENSE.
Interest expense of $15,875,000 during the nine months of 1996 was
flat compared to 1995.
14
<PAGE> 15
NET INCOME.
The Company's net income declined $3,988,000 to $920,000 in 1996 from
$4,908,000 reported for the 1995 period.
QUARTER ENDED SEPTEMBER 27, 1996 COMPARED TO QUARTER ENDED SEPTEMBER 29, 1995
OVERVIEW.
The Company's net revenues increased $23,146,000 to $160,530,000 in
the third quarter of 1996 from $137,384,000 for the third quarter of 1995, due
principally to significant increases in fuel gallons sold at the fuel island,
travel and convenience stores and Petro:2s, an 8.4% increase in fuel sales
price per diesel gallon sold and increases in Petro:Lube sales, attributable in
part to the opening of two new Petro:Lubes in Medford, Oregon and Franklin,
Kentucky.
Operating contribution declined $413,000 to $12,563,000. This was
due to an increase in cost of sales from 76.2% of net revenues in 1995 to 79.1%
of net revenues in 1996 combined with a 6.1% increase in operating expenses.
The decline in gross margin and increase in operating expenses is further
explained in the following presentation of the profit centers.
DIESEL FUEL ISLAND.
<TABLE>
<CAPTION>
Three months ended
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $107,904,000 $89,051,000
Cost of sales 98,536,000 79,166,000
Operating expenses 5,431,000 5,061,000
Operating contribution 3,937,000 4,823,000
</TABLE>
Revenues increased $18,853,000 to $107,904,000 in 1996 from
$89,051,000 in 1995. The increase in revenues was due primarily to higher fuel
volume combined with a higher selling price per gallon.
Cost of sales increased $19,370,000 due to higher fuel volumes
combined with higher cost per gallon sold. The increase in cost of sales
resulted in a 21.6% reduction in fuel margin per gallon as a result of an
inability to pass along price increases to match the rise in fuel costs.
Operating expenses increased $370,000 due primarily to volume related
expenses such as employee expense and third-party billing fees.
Operating contribution decreased by $886,000 due to higher cost of
sales and increased operating expenses. The Company anticipates that the
recent declines in fuel margins in the industry will continue, but cannot
quantify the impact of such trends due to the unknown impact on fuel volume.
PETRO:LUBE.
<TABLE>
<CAPTION>
Three months ended
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $12,276,000 $9,984,000
Cost of sales 5,774,000 4,647,000
Operating expenses 3,685,000 3,428,000
Operating contribution 2,817,000 1,909,000
</TABLE>
Revenues increased $2,292,000 to $12,276,000 in the 1996 period from
$9,984,000 in 1995, a portion of which was generated by the new Medford and
Franklin locations.
15
<PAGE> 16
Cost of sales increased $1,127,000 due to costs associated with the
Medford and Franklin locations and an increase in costs at existing units.
Operating expenses increased $257,000 from $3,428,000 in 1995,
substantially all of which was due to expenses at the Medford and Franklin
locations.
Operating contribution increased $908,000 due to higher revenues
offset slightly by a small decline in gross margin percentage and higher
operating expenses.
RESTAURANT.
<TABLE>
<CAPTION>
Three months ended
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $12,113,000 $12,530,000
Cost of sales 3,516,000 3,687,000
Operating expenses 6,617,000 6,776,000
Operating contribution 1,980,000 2,066,000
</TABLE>
Revenues declined $417,000 to $12,113,000 in 1996 from $12,530,000 in
1995. The Company believes that a major factor causing the decline was the
increased fuel prices which had an impact on discretionary spending in other
profit centers.
Cost of sales declined $171,000 due to the reduction in revenues
combined with improved management of food costs.
Operating expenses declined $159,000 due to reduction in labor costs
directly correlated with the reduction in revenues for the period.
Operating contribution declined $86,000 to $1,980,000 in 1996 from
$2,066,000 in 1995. The overall decline in operating contribution was due to
lower revenues partially offset by improvement in gross margin and a decrease
in operating expenses.
TRAVEL AND CONVENIENCE STORES.
<TABLE>
<CAPTION>
Three months ended
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $17,452,000 $16,581,000
Cost of sales 11,990,000 11,338,000
Operating expenses 3,393,000 3,529,000
Operating contribution 2,068,000 1,715,000
</TABLE>
Revenues increased $871,000 to $17,452,000 in 1996 from $16,581,000
in 1995. The increase in revenues was due to a 15.2% increase in fuel sales
due to a 6.9% increase in selling price per gallon combined with a slight
increase in gallons sold. Merchandise sales declined 2.2% in the 1996 period.
Cost of sales increased $652,000 due primarily to increased fuel
costs related to higher fuel volumes and increased fuel costs.
Operating expenses declined $136,000 from 1995 due primarily to
improved control over employee costs and other operating expenses.
Operating contribution increased $353,000 due to higher revenues
combined with the decline in operating expenses.
16
<PAGE> 17
PETRO:2.
<TABLE>
<CAPTION>
Three months ended
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $8,184,000 $6,988,000
Cost of sales 7,077,000 5,842,000
Operating expenses 857,000 829,000
Operating contribution 250,000 317,000
</TABLE>
Revenues increased $1,186,000 to $8,184,000 in 1996 from the 1995
period. The increase was largely attributable to a 16.3% increase in fuel
gallons sold.
Cost of sales increased $1,235,000 due to costs associated with the
16.3% increase in fuel gallons sold. In addition, costs of sales increased due
to an increase in average cost per gallon from 1995 to 1996.
Operating expenses increased slightly due primarily to volume related
expenses such as employee costs and third-party billing fees.
Operating contribution declined $67,000 despite an increase in
revenues due to a 18.8% decline in fuel margins combined with an increase in
operating expenses. The Company anticipates that the current trends affecting
the diesel fuel islands and travel and convenience stores will be applicable to
its Petro:2s.
OTHER.
Revenues increased $351,000 to $2,601,000 in the 1996 period from
$2,250,000 in the 1995 period. The increase was attributable primarily to the
increased revenues from the fast food locations and the motel and RV park. The
increase was offset slightly by declines in coinage income and video poker
revenue at the Louisiana locations.
GENERAL AND ADMINISTRATIVE.
General and administrative expenses increased $486,000 from 1995. The
increase was due primarily to increases in employee related costs associated
with positions that were vacant in the 1995 period.
DEPRECIATION AND AMORTIZATION.
Depreciation and amortization for the 1996 period was flat as
compared to the 1995 period.
INTEREST EXPENSE.
Interest expense declined $29,000 to $5,247,000 during the third
quarter of 1996 due to a lower average debt level outstanding during 1996.
NET INCOME.
The Company reported net income of $969,000 in 1996 compared to
$1,908,000 in the third quarter of 1995.
17
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled $17,155,000 for the
first nine months of 1996 compared with $14,880,000 for the comparable 1995
period. The $17,155,000 of cash provided by operating activities was used to
reduce notes payable $4,939,000, long-term debt $2,469,000, $4,771,000 of
capital expenditures and for working capital.
Capital expenditures totaled $4,771,000 for 1996 and $17,595,000 for
1995. Included in the capital expenditures for 1996 was $837,000 to construct
the Petro:Lube in Medford and $1,034,000 related to the Company's first
free-standing Petro:Lube in Franklin, Kentucky. Capital expenditures for 1995
included $7,027,000 spent on the Ocala, Florida location and $6,301,000 used to
acquire the Medford location, as described below.
Acquisition. In January 1995, the Company acquired an existing truck
stop in Medford, Oregon. The Medford facility is designed similarly to the
Company's Stopping Centers with a diesel fuel island, restaurant, travel store
and free-standing convenience store. In addition, this location has a motel
and RV park. The Company constructed a Petro:Lube at this location which
opened early in the second quarter of 1996. The Company utilized a portion of
its revolving line of credit to fund the purchase of the Medford facility and
construction of the Petro:Lube.
Expansion: In June 1995, the Company opened its Ocala, Florida
location. The Ocala location is a typical stopping center with the addition of
a free-standing Wendy's (branded food restaurant) that opened in October 1995.
In June 1996, the Company opened its first free standing lube operation in
Franklin, Kentucky. The construction costs of Ocala, Florida of $7,730,000 and
Franklin, Kentucky of $1,319,000 were funded by a combination of draws on the
revolving line of credit and internally generated funds.
Insurance: The Company is partially self-insured with respect to
workers' compensation and general liability. During 1996, the Company paid
claims aggregating $909,000 and $260,000 relating to workers' compensation and
general liability claims, respectively. The Company believes it provides an
accrual adequate to cover both known and incurred but not reported claims.
The term loans made to the Company under the Credit Agreement require
the Company to make quarterly payments of principal. The calendar year
principal payments will total $4,948,000 in 1996, $6,928,000 in 1997,
$7,000,000 in 1998, $7,917,000 in 1999, $8,908,000 in 2000 and $10,809,000 in
2001. In June 1996, the Company's Credit Agreement was amended to provide for
more flexibility under the covenants.
In connection with the Mobil and Chartwell Investment, as described
below, the Company has obtained a financing commitment sufficient to refinance
the Company's existing senior credit facility. The commitment consists of a
credit facility that will be similar to the existing credit facility containing
term loans, a revolving line of credit and financial covenants, all of which
are consistent with the existing agreement. In addition, a new special purpose
entity ("Realco") will be organized and owned by the Company's partners. Mobil
Co and Chartwell Co will invest a total of $3 million in Realco and Realco is
seeking a new $30 million secured bank facility. As part of the capitalization
of Realco, it is contemplated that the Company will sale to Realco one or more
existing Stopping Centers with a total fair market value of approximately $15
million in exchange for $2.5 million in cash and Realco subordinated notes in
the amount of $12.5 million. These Stopping Centers will be managed by the
Company. In the future, Realco will seek to acquire, own and develop new truck
stops to be leased to, and operated by, the Company.
The Company had negative working capital of $12,219,000 at September
27, 1996 and $9,607,000 at December 29, 1995. Negative working capital is
normal in the truckstop industry. The truckstop business is an industry that
generates a large amount of cash business with relatively low levels of
inventories and receivables, as a percentage of revenues. A majority of the
Company's sales are cash (or
18
<PAGE> 19
the equivalent in the case of credit card sales or sales paid for by check on a
daily basis by third-party billing companies). Diesel fuel inventory turns
every two to three days, and store merchandise inventories normally turn every
90 days. Based upon the above, the overall inventory turns approximately every
13 days. As a result of the high level of cash receipts and rapid inventory
turns, the Company's daily operations do not require significant amounts of
working capital.
At September 27, 1996, the Company had availability on its revolving
line of credit of approximately $15,711,000. Management of the Company
believes that internally generated funds, together with amounts available under
the Credit Agreement, will be sufficient to fund its current and future
operational needs, planned capital expenditures and debt service requirements.
ENVIRONMENTAL
Accruals for environmental matters are recorded in operating expenses
when it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. The measurement of environmental
liabilities is based on an evaluation of currently available facts with respect
to each individual site and considers factors such as existing technology,
presently enacted laws and regulations and prior experience in remediation of
contaminated sites. Accrued liabilities are exclusive of claims against third
parties and are not discounted.
The Company is subject to contingencies pursuant to environmental
laws and regulations that in the future may require the Company to take action
to correct the effects on the environment of prior disposal practices or
releases of chemical or petroleum substances by the Company or other parties.
The Company has accrued for certain environmental remediation activities
consistent with the policy set forth in Note 2. At September 27, 1996, such
accrual amounted to approximately $200,000 and, in management's opinion, was
appropriate based on existing facts and circumstances. Under the most adverse
circumstances, however, this potential liability could be significantly higher.
In the event that future remediation expenditures are in excess of amounts
accrued, management does not anticipate that they will have a material adverse
effect on the consolidated financial position or results of operations of the
Company. At September 27, 1996, the Company has recognized approximately
$236,000 in the consolidated balance sheet related to recoveries of certain
remediation costs from third-parties. The Company is planning to spend
approximately $300,000 in 1997 to complete the upgrade of seven of its
locations to 1998 EPA standards. All other locations are in compliance with
1998 EPA standards.
CHARTWELL AND MOBIL INVESTMENTS AND RELATED TRANSACTIONS
On October 23, 1996, the Company entered into an Interest Purchase
Agreement (the "Interest Purchase Agreement") with Mobil Long Haul Inc., a
wholly-owned subsidiary of Mobil Corporation ("Mobil Co"), Petro Holdings GP
Corp., and Petro Holdings LP Corp., each of which is an affiliate of Chartwell
Investments Inc. (collectively, "Chartwell Co"), Roadside, Inc., a general
partner of the Company ("Roadside"), and Sequoia Ventures Inc., a limited
partner of the Company (together with Roadside, the "Fremont Partners")
providing for the sale of all of the partnership interests in the Company held
by the Fremont Partners to Mobil Co and Chartwell Co. The aggregate purchase
price of the partnership interests held by the Fremont Partners is $28.5
million, subject to adjustment.
Concurrently with the execution of the Interest Purchase Agreement,
the Company entered into an Omnibus Agreement (the "Omnibus Agreement") with
James A. Cardwell, Sr., James A. Cardwell, Jr. and JAJCO II (collectively, the
"Cardwell Group"), each of whom is a limited partner of the Company, and Petro,
Inc., a general partner of the Company controlled by the Cardwell Group, Mobil
Co and Chartwell Co providing for, among other things, Chartwell Co and Mobil
Co to invest an aggregate of approximately $21 million and $15 million,
respectively. The investment proceeds will be used to acquire the interests of
the Company held by the Fremont Partners as described above, to invest
approximately $4.2 million in the Company and to invest $3 million in a new
special purpose entity to be owned by the Company's partners,
19
<PAGE> 20
which will acquire, own and develop new truck stops to be operated by the
Company. Upon consummation of the transactions, the common partnership
interests of the Company will be owned by Chartwell Co (approximately 52%),
the Cardwell Group (approximately 41%) and Mobil Co (7.5%) and preferred
partnership interests will be owned by Mobil Co ($12 million) and the Cardwell
Group ($7.6 million).
In addition, Mobil Oil Corporation ("Mobil Oil") and the Company will
enter into a 10 year supply agreement at the Closing under which Mobil Oil will
supply the Company's diesel fuel requirements. The diesel fuel sold at all of
the Company operated truck stops will be branded "Mobil." The Company will
also enter into 10 year supply agreements under which Mobil Oil will supply
lubricants and gasoline to the Company. The Company's Petro:Lube operations
will feature Mobil Delvac lubricants and the Company will initially brand 11 of
its gasoline fueling facilities at its truck stops "Mobil." The Company and
Mobil Oil will also enter into a Memorandum of Understanding with respect to
the joint development of new projects and Mobil Oil will provide marketing and
other services, including access to Mobil Oil personnel and resources. Mr.
Cardwell, Chief Executive Officer of the Company, will assume the additional
roles of Chairman and President and be responsible for the Company's operations
and a Mobil manager will assume the full time position of Senior Vice
President-Planning and Support Services at the Company.
The Omnibus Agreement also provides for the Company to enter into
agreements at the Closing with affiliates of the Cardwell Group and Chartwell
Co providing for: (i) the extension of certain agreements between the Company
and affiliates of the Cardwell Group and (ii) financial advisory and consulting
services to be performed by an affiliate of Chartwell Co for the Company.
The closing of the transactions contemplated by the Interest Purchase
Agreement and the Omnibus Agreement is subject to certain conditions, including
the refinancing of the Company's existing senior credit facility and obtaining
consents from holders of not less than 75% of the principal amount of the
Company's 12.5% Senior Notes due 2002 (the "Notes") to the effect that the
contemplated transactions do not constitute a "Change of Control" under the
Indenture governing the Notes. Chartwell Co and Mobil Co have obtained a
financing commitment, subject to satisfaction of certain conditions, sufficient
to refinance the Company's existing senior credit facility.
The transactions are expected to close before the end of this year.
For additional information see the Company's Form 8-K dated October 23, 1996
filed with the Securities and Exchange Commission.
RECENT PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 encourages entities
to adopt a fair value based method of accounting for all employee stock and
other equity based compensation, as well as transactions in which an entity
issues its equity instruments to acquire goods or services from nonemployees.
SFAS No. 123 allows an entity to continue measuring compensation costs for the
plans using the accounting principles prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"). In that case,
however, companies must also include pro forma disclosures of net income and
earnings per share, if applicable, as if the fair value based method of
accounting defined in SFAS No. 123 had been applied. SFAS No. 123 is effective
for fiscal years beginning after December 15, 1995. The Partnership has
elected to continue to apply the accounting recognition rules contained in APB
No. 25, and provide proforma disclosures as required beginning in 1996.
20
<PAGE> 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various litigation incidental to the
business for which estimates of losses have been accrued, when appropriate. In
the opinion of management, such proceedings will not have a material adverse
effect on financial position or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the quarter ended
September 27, 1996.
21
<PAGE> 22
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.
PETRO STOPPING CENTERS, L.P.
(Registrant)
Date: November 9, 1996 /s/ James A. Cardwell, Sr.
---------------------------
James A. Cardwell, Sr.
Member of Board of Control and
Chief Executive Officer
/s/ David A. Haug
----------------------------
David A. Haug
Chief Accounting Officer
22
<PAGE> 23
EXHIBIT INDEX
Exhibit No. Exhibit Description
- ----------- -------------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1997
<PERIOD-START> DEC-30-1995
<PERIOD-END> SEP-27-1996
<CASH> 3,893
<SECURITIES> 0
<RECEIVABLES> 12,919
<ALLOWANCES> 332
<INVENTORY> 17,861
<CURRENT-ASSETS> 38,657
<PP&E> 189,283
<DEPRECIATION> 28,400
<TOTAL-ASSETS> 218,982
<CURRENT-LIABILITIES> 50,876
<BONDS> 0<F1>
0
0
<COMMON> 0
<OTHER-SE> 12,845
<TOTAL-LIABILITY-AND-EQUITY> 218,982
<SALES> 0
<TOTAL-REVENUES> 464,532
<CGS> 368,971
<TOTAL-COSTS> 429,253
<OTHER-EXPENSES> 9,625
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 15,875
<INCOME-PRETAX> 920
<INCOME-TAX> 0
<INCOME-CONTINUING> 920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 920
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>NOT SEPARATELY INDENTIFIED IN THE CURRENT FINANCIAL STATEMENTS OR ACCOMPANYING
NOTES THERETO.
</FN>
</TABLE>
