SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 28, 1999, 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. 1-13727
FFP MARKETING COMPANY, INC.
(Exact name of registrant as specified in its charter)
Texas 75-2735779
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2801 Glenda Avenue; Fort Worth, Texas 76117-4391
(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
Common Shares 3,818,747
(Number of shares outstanding as of May 13, 1999)
FFP MARKETING COMPANY, INC.
Form 10-Q/A
March 28, 1999
On March 13, 2000, FFP Marketing Company, Inc. (the "Company") filed an
amended and restated Form 10-Q Quarter Report for its first quarter of 1998, in
order to show certain adjustments made to its results for that quarter instead
of the fourth quarter of 1998.
The Company now amends and restates its Form 10-Q Quarterly Report for the
first quarter of 1999 to reflect the amended results for the first quarter of
1998 in order to facilitate a comparison of 1999 results to the amended 1998
results.
No change is made to the results for the first quarter of 1999 as previously
reported.
INDEX
Page
Part I
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 13
Market Risks
Part II
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
FFP Marketing Company, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 28, December 27,
1999 1998
Assets
Current assets -
Cash and cash equivalents $10,353 $9,537
Trade receivables 15,923 11,901
Notes receivable, current portion 843 1,078
Receivables from affiliates, current portion 2,161 1,923
Inventories 19,058 15,439
Deferred tax asset, net 2,695 2,334
Prepaid expenses and other 1,787 1,386
Total current assets 52,820 43,598
Property and equipment, net 40,035 33,602
Notes receivable from affiliates, excluding
current portion 12,773 13,058
Other assets, net 5,992 6,782
Total assets $111,620 $97,040
Liabilities and Stockholders' Equity
Current liabilities -
Current installments of long-term debt $1,936 $1,959
Current installments of capital lease
obligations 316 401
Current installments of note payable
to affiliate 99 0
Accounts payable 18,578 16,254
Due to affiliates 340 0
Money orders payable 15,851 15,190
Accrued expenses 12,460 14,351
Total current liabilities 49,580 48,155
Long-term debt, excluding current installments 25,139 18,421
Capital lease obligations, excluding current
installments 4,873 955
Note payable to affiliate, excluding current
installments 2,573 0
Deferred income taxes 5,198 4,913
Other liabilities 2,675 2,824
Total liabilities 90,038 75,268
Stockholders' equity -
Common stock ($0.01 par value) 22,235 22,235
Accumulated deficit (653) (463)
Total stockholders' equity 21,582 21,772
Total liabilities and stockholders' equity $111,620 $97,040
See accompanying Notes to Condensed Consolidated Financial Statements.
FFP Marketing Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 28, March 29,
1999 1998
(Restated)
Revenues -
Motor fuel $72,687 $76,345
Merchandise 25,758 22,579
Miscellaneous 2,635 2,331
Total revenues 101,080 101,255
Costs and expenses -
Cost of motor fuel 66,386 69,867
Cost of merchandise 17,780 15,599
Direct store expenses 11,552 10,666
General and administrative expenses 3,774 3,120
Depreciation and amortization 1,499 1,339
Total costs and expenses 100,991 100,591
Operating income 89 664
Interest expense, net 356 201
Income/(loss) before income taxes (267) 463
Income tax expense/(benefit) -
Current 0 16
Deferred (77) 170
Total (77) 186
Net Income/(Loss) $(190) $277
Net income/(loss) per share -
Basic $(0.05) $0.07
Diluted (0.05) 0.07
Weighted average number of common shares
outstanding -
Basic 3,818 3,779
Diluted 3,818 3,827
See accompanying Notes to Condensed Consolidated Financial Statements.
FFP Marketing Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 28, March 29,
1999 1998
(Restated)
Cash Flows from Operating Activities -
Net income/(loss) $(190) $277
Adjustments to reconcile net income/(loss)
to cash provided/(used) by operating activities -
Depreciation and amortization 1,499 1,339
Deferred income tax expense/(benefit (77) 170
Net change in operating assets
and liabilities (3,012) (27)
Net cash provided/(used) by operating activities (1,780) 1,759
Cash Flows from Investing Activities -
Additions of property and equipment, net (4,000) (1,138)
Net cash (used) by investing activities (4,000) (1,138)
Cash Flows from Financing Activities -
Net borrowings/(repayments) under
credit facilities 6,596 (208)
Net cash provided/(used) by financing
activities 6,596 (208)
Net increase in cash and cash equivalents 816 413
Cash and cash equivalents at beginning of period 9,537 9,389
Cash and cash equivalents at end of period $10,353 $9,802
See accompanying Notes to Condensed Consolidated Financial Statements.
FFP Marketing Company, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 28, 1999
(Restated)
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements include the assets,
liabilities, and results of operations of FFP Marketing Company, Inc., and its
wholly owned subsidiaries, FFP Operating Partners, L.P., Direct Fuels, L.P., FFP
Financial Services, L.P., Practical Tank Management, Inc., FFP Transportation,
L.L.C., FFP Money Order Company, Inc., FFP Operating LLC, and Direct Fuels
Management Company, Inc. These companies are collectively referred to as the
"Company."
The condensed consolidated balance sheet as of March 28, 1999, and the
condensed consolidated statements of operations and cash flows for the three
month periods ended March 28, 1999, and March 29, 1998, have not been audited.
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 28, 1999, and the results of operations and cash flows for
the periods presented 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 27,
1998, 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 28, 1999, and as discussed below.
2. Notes Payable and Long-Term Debt
The Company's bank revolving credit line provides for borrowings up to
$15,000,000, with the amount available at any time limited to a borrowing base
equal to 85% of the Company's eligible trade receivables plus 50% of the
Company's eligible inventories. On March 28, 1999, the Company's borrowing base
was $11,956,000. The revolving credit facility and a term loan in the original
principal amount of $8,000,000 executed in October 1997 both bear interest at
the lender's prime rate (7.75% at the end of 1998), payable monthly. The term
loan requires monthly principal payments of $95,000; and both loans mature in
November 2000. At March 28, 1999, the total amount outstanding under the
revolving line was $8,580,000, and the term loan had an outstanding balance of
$6,476,000. The loans are subject to a Loan and Security Agreement dated in
October 1997, first amended as of June 28, 1998, and amended again as of
December 27, 1998, between the lender, the Company and two subsidiaries of the
Company. The agreement contains numerous restrictive covenants including, but
not limited to, financial covenants relating to the maintenance of a specified
minimum tangible net worth, a maximum debt to tangible net worth ratio, and a
minimum cash flow coverage ratio, all as defined in the agreement. The loans
under the agreement are secured by the Company's trade accounts receivable, its
inventories and equipment not otherwise encumbered, a negative pledge of its
other assets, and a collateral assignment of the Company's note receivable from
FFP Partners and its deed of trust lien against the real properties of FFP
Partners.
On February 26, 1999, the Company acquired the operations of an additional 23
convenience stores and two truck stops. Eleven of the 25 stores are third party
leasehold locations where the Company purchased the existing leasehold interest,
equipment, and inventories. The Company's purchase of those properties was
financed with a third party lender consisting of four fully amortizing mortgage
loans in the aggregate original principal amount of $1,012,000, with maturity
dates ranging from 86 to 180 months, interest accruing at 9.275% per annum, and
aggregate payments of principal and interest of $13,000 per month. The land and
building at 14 of the stores was purchased by FFP Partners and immediately
leased to the Company under real estate leases classified as operating and
capital leases, respectively, with a 15-year term. The operating leases for land
provide for monthly payments aggregating $28,000, and the capital leases for
buildings provide for monthly payments aggregating $71,000. These lease payments
were negotiated between FFP Partners and the Company with a rate of return of
approximately 14%. The requirements under generally accepted accounting
principles in calculating the capital lease obligation for the buildings of
$3,932,000 result in an implicit rate of approximately 20%. These real estate
leases require the Company to pay all taxes, insurance, operating, and capital
costs and provide for an increased rent payments after each five-year period
during the term of the leases based upon any increase in the consumer price
index.
In addition, the Company purchased inventory and equipment from FFP Partners
at the 14 locations in exchange for a $2,692,000 note payable. The note bears
interest at the prime rate and is payable in monthly installments over 8 years.
The Company guaranteed the acquisition indebtedness of FFP Partners of
$9,550,000, because such was a condition to obtaining the operations of those 14
stores for the Company. The Company's projected lease payments to FFP Partners
over the 15-year term of the leases will exceed the debt service costs of FFP
Partners during such period.
3. Income/(Loss) per Share
Basic net income/(loss) per share is computed by dividing net income/(loss)
by the weighted average number of common shares outstanding for the year.
Diluted net income per share is computed by dividing net income/(loss) by the
weighted average number of common shares outstanding for the year plus
potentially dilutive common shares. At March 28, 1999, outstanding options to
acquire 231,667 common shares have been excluded from the diluted computation
because the effect would have been anti-dilutive. A reconciliation of the
denominators of the basic and diluted income/(loss) per share calculations for
the 1999 and 1998 periods follows:
1999 1998
In thousands
Weighted average number of common shares outstanding 3,818 3,779
Effect of dilutive options 0 48
Weighted average number of common shares outstanding,
assuming dilution 3,818 3,827
4. Operating Segments
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was adopted by the Company in 1998 for reporting information about
its operating segments. The Company and its subsidiaries are principally engaged
in two operating segments: (i) the retail and wholesale sale of motor fuel,
merchandise and other products and services at convenience stores, truck stops,
and other gasoline outlets ("Retail and Wholesale"), and (ii) the operation of a
motor fuel terminal and processing facility ("Terminal Operations"). The Company
has identified such segments based on management responsibilities. No major
distinctions exist regarding geographical areas served by the Company or
customer types. The following table sets forth certain information about each
segment's financial information for the first quarters of 1999 and 1998:
Retail
and Terminal
Wholesale Operations Eliminations Consolidated
(In thousands)
First Quarter 1999
Revenues from external sources $100,918 $162 $0 $101,080
Revenues from other segment 0 2,767 (2,767) 0
Depreciation and amortization 1,368 131 0 1,499
Income/(loss) before income taxes 12 (279) 0 (267)
First Quarter 1998
Revenues from external sources $101,255 $0 $0 $101,255
Revenues from other segment 0 863 (863) 0
Depreciation and amortization 1,212 127 0 1,339
income/(loss) before income taxes 861 (398) 0 463
FFP Marketing Company, Inc. and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
FFP Marketing Company, Inc. was formed as a Texas corporation immediately
prior to the December 1997 restructuring of FFP Partners, L.P. ("FFP Partners").
In that restructuring, all of the assets and businesses of FFP Partners was
transferred to the Company, except that FFP Partners retained the improved real
property previously used in its retail operations. Unless the context requires
otherwise, references herein to the "Company" for periods or activities prior to
the December 1997 restructuring include the activities of FFP Partners and its
then subsidiaries, which are now subsidiaries of FFP Marketing Company, Inc.
In the December 1997 restructuring of FFP Partners, the holders of its
limited partnership interests received one share of common stock of the Company
for each limited partnership unit that they owned on December 28, 1997,
resulting in each such person owning the same economic interest in the Company
as they had held in FFP Partners.
The Company conducts its operations through the following subsidiaries:
Entity Date Formed Principal Activity
FFP Operating Partners, December 1986 Operation of convenience
L.P., a Delaware limited stores and other retail outlets
partnership
Direct Fuels, L.P., a Texas December 1988 Operation of fuel terminal and
limited partnership wholesale fuel sales
FFP Financial Services, September Sale of money order services
L.P., a Delaware limited 1990 and supplies
partnership
Practical Tank Management, September Underground storage tank
Inc., a Texas corporation 1993 monitoring
FFP Transportation, L.L.C., September Ownership of tank trailers and
a Texas limited liability 1994 other transportation equipment
company
FFP Money Order Company, December 1996 Sale of money orders through
Inc., a Nevada corporation agents
The Company and its subsidiaries are principally engaged in two operating
segments: (i) the retail and wholesale sale of motor fuel, merchandise and other
products and services at over 400 convenience stores, truck stops, and other
gasoline outlets ("Retail and Wholesale"), and (ii) the operation of a motor
fuel terminal and processing facility ("Terminal Operations").
Results of Operations for First Quarter 1999 compared with First Quarter 1998
Fuel Sales and Margins
First Quarter
Change Change
1999 1998 Amount Percent
(In thousands, except per gallon data)
Fuel sales $72,687 $76,345 $-3,658 -4.8%
Fuel margin 6,301 6,478 -177 -2.7%
Gallons sold
Retail 62,738 57,495 5,243 9.1%
Wholesale 22,717 19,843 2,874 14.5%
Total 85,455 77,338 8,117 10.5%
Margin per gallon (cents)
Retail 9.1 10.4 -1.3 12.5%
Wholesale 1.8 2.3 -0.5 -21.7%
The Company sold 85,455,000 gallons of motor fuel in the first quarter 1999,
a 8,117,000 gallon increase (10.5%) over the volume of motor fuel sold in the
comparable 1998 period. One factor causing the increase in gallons sold was
sales of 1,488,000 gallons from 25 additional stores purchased on February 26,
1999. However, the industry-wide fluctuations in fuel prices that has continued
into 1999 resulted in a decline of $3,658,000 (4.8%) in the Company's motor fuel
revenues. Although motor fuel revenues and fuel margins per gallon declined
during the first quarter of 1999, the Company's gross profit on motor fuel sales
remained relatively flat when compared to the 1998 quarter. The retail fuel
margin in the first quarter of 1999 was 9.1 cents per gallon as compared to 10.4
cents per gallon in the 1998 first quarter. Wholesale fuel sales, in gallons,
increased by 14.5% in the first quarter 1999 over 1998, but the per gallon
margin on the sales declined by 21.7% between the two periods.
Merchandise Sales and Margins
First Quarter
Change Change
1999 1998 Amount Percent
(In thousands, except average weekly sales data)
Mdse sales $25,758 $22,579 $3,179 14.1%
Mdse margin 7,978 6,980 998 14.3%
Margin percentage, convenience
stores and truck stops 31.0% 31.3% -0.3% -1.0%
Average weekly mdse sales per store:
Convenience stores $10,137 $8,257 $1,880 22.8%
Truck stops 16,629 16,217 412 2.5%
Merchandise sales increased by $3,179,000 (14.1%) in the first quarter 1999.
A principal factor for that increase was an increase in the sales price of
tobacco products and additional sales from the additional stores purchased on
February 26, 1999. Merchandise gross profit increased by $998,000 (14.3%) as a
result of the additional merchandise sales while maintaining approximately the
same percentage margin.
Other Income and Expenses
Miscellaneous income rose from $2,331,000 in the first quarter of 1998 to
$2,635,000 in the first quarter of 1999, a 13.0% increase. As with fuel and
merchandise volumes, the increase in miscellaneous revenues was impacted
favorably by the purchase of 25 additional stores on February 26, 1999.
Miscellaneous revenues include lottery ticket sales income, money order sales
income, commissions received on alcohol beverage sales, check cashing fees,
state excise tax handling fees and various other types of income.
The $886,000 (8.3%) increase in direct store expenses also relates, in part,
to the additional direct store costs associated with operating the 25 additional
stores acquired in February 1999. General and administrative expenses increased
$654,000 (21.0%) in the 1999 period. This increase resulted from additional
costs from adding office personnel, especially in the data processing area, as a
result of operating a greater number of convenience stores than in prior years,
adding field supervisory personnel as a result of acquiring 25 additional
convenience stores and truck stops in February 1999, bad debt expense, and
upgrading the Company's money order controls.
Depreciation and amortization increased by $160,000 (11.9%) in the current
quarter. This increase resulted from depreciation of property additions during
1998 (primarily associated with the upgrade of underground storage tanks to meet
1998 environmental requirements), depreciation of the fixtures and equipment
acquired in the February 1999 acquisition of 25 additional convenience stores
and truck stops, and depreciation of equipment at the Company's fuel terminal.
The $155,000 (77.1%) increase in net interest expense resulted from a higher
level of debt in the first quarter of 1999 as compared to the first quarter of
1998, offset by interest income earned on the note receivable from FFP Partners
received in June 1998.
Liquidity and Capital Resources
The Company's working capital at the end of the first quarter 1999 was
$3,240,000 as compared to a negative $4,557,000 at year end 1998. The
improvement resulted principally from a $4,022,000 increase in trade receivables
and a $3,619,000 increase in inventories, offset by a $2,324,000 increase in
accounts payable and a $340,000 increase in amounts due to affiliates. These
increases resulted primarily from the Company's acquisition of operations of 25
convenience stores and truck stops on February 26, 1999.
The Company is entering its typically strongest period of the year when
revenues and cash flows generally increase. Consequently, although the Company
has limited current working capital, management believes that its internally
generated funds and use of trade credit, along with its existing bank line of
credit and/or possible refinancing of such line of credit, will allow its
operations to be conducted in a customary manner.
The Company's money order sales have increased significantly over the last
few years. For example, money order payables at the end of fiscal year 1996 were
$7,809,000, compared to money order payables at the end of first quarter 1999 of
$15,851,000. Money order payables represent those sales of money orders for
which the payee of the money order has not yet requested payment. Although the
Company collects money order receipts on a daily basis on sales of money orders
made at its own stores, the Company relies on receiving timely payment from its
third party money order sales agents. The Company's failure to receive money
order payments from an agent on a timely basis or to continue relationships with
its money order agents could negatively impact the Company's liquidity.
Year "2000 " Issues
The Year 2000 issue ("Y2K") is the result of computer software programs being
coded to use two digits rather than four to define the applicable year. Some of
computer programs that have date-sensitive coding may recognize a date using
"00" as the year 1900 rather than the year 2000. This coding could result in
system failures or miscalculations, causing disruptions of operations.
The Company has approached the Y2K issue in phases. A Y2K project office
manager, together with strong support from management, has designed a Y2K work
plan that is currently being implemented. The Y2K work plan includes: (1)
identifying and inventorying all Year 2000 tasks and items; (2) assigning
priorities to all tasks and items; (3) remediation of information systems ("IS")
application code, testing and reintegration to production, as well as testing
all replaced systems software and non-remediated applications; (4) contacting
third-party vendors to verify their compliance and perform selected interface
tests with major vendors; (5) determining the Company's Y2K responsibilities to
its subsidiaries and affiliates; and (6) establishing contingency alternatives
assuming worst-case scenarios.
The Company continues to progress favorably in its completion of the various
tasks and target dates identified in the Y2K work plan. The Company believes it
has identified and prioritized all major Y2K-related items. In addition, many
non-IS, merchandise, equipment, financial institution, insurance and public
utility vendors are being contacted, inquiring as to their readiness and the
readiness of their respective vendors. The Company will perform follow-up
efforts with the above vendors as required. Testing compliance with major
vendors is now being planned. The following reflects management's assessment of
the Company's Y2K state of readiness on March 28, 1999:
Estimated Estimated
Percentage Completion
Completed Date
Phase
Internal IS and Non-IS systems and
equipment:
Awareness 90% Dec 1999
Assessment 80% Jun 1999
Remediation 60% Sep 1999
Testing 20% Oct 1999
Contingency planning 20% Sep 1999
Suppliers, customers and third party
providers:
Awareness-identify companies 70% May 1999
Assessment questionnaire completed
by major suppliers 30% Aug 1999
Assessment review with third party
providers 30% Aug 1999
Review contractual commitments 10% Jul 1999
Risk assessment 10% Jun 1999
Contingency planning 10% Sep 1999
Testing as applicable 10% Sep 1999
The Company's estimates are judgmental and subject to error. It believes that
work should be significantly finished at the estimated completion date, but the
Company will continue to reevaluate awareness, send follow-up questionnaires and
update contingency plans as considered necessary.
The Company estimates that the cost of the Y2K project will be approximately
$500,000 to $750,000, of which about one-half will be capital costs. The costs
incurred to date approximate $200,000, with the remaining cost for outside
consultants software and hardware applications to be funded through operating
cash flow. This estimate includes costs related to the upgrade and/or
replacement of computer software and hardware; costs of remediated code testing
and test result verification; and the reintegration to production of all
remediated applications. In addition, the costs include the testing of
applications and software currently certified as Y2K compliant. The Company does
not separately track the internal costs incurred for the Y2K project, which are
primarily the related payroll costs for the IS and various user personnel
participating in the project.
Due to the general uncertainty inherent in the Y2K process, primarily due to
issues surrounding the Y2K readiness of third-party suppliers and vendors, a
reasonable worst-case scenario is difficult to determine at this time. The
Company does not anticipate more than temporary isolated disruptions attributed
to Y2K issues to affect either the Company or its primary vendors. The Company
is concentrating on four critical business areas in order to identify, evaluate
and determine the scenarios requiring the development of contingency plans: (1)
merchandise ordering and receipt, (2) petroleum products ordering and receipt,
(3) disruption of power at retail sites, and (4) cash collection and
disbursement systems. To the extent vendors are unable to deliver products due
to their own Year 2000 issues, the Company believes it will generally have
alternative sources for comparable products and does not expect to experience
any material business disruptions. Although considered unlikely, the failure of
public utility companies to provide telephone and electrical service could have
material consequences. Contingency planning efforts will escalate as the Company
continues to receive and evaluate responses from all of its primary merchandise
vendors and service providers. These contingency plans are scheduled to be
complete by September 1999.
The costs of the Y2K project and the date on which the Company plans to
complete the Y2K modifications are based on management's best estimates, which
were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third-party modification plans and
other factors. As a result, there can be no assurance that these forward-looking
estimates will be achieved and the actual costs. Vendor compliance could differ
materially from the Company's current expectations and result in a material
financial risk. In addition, while the Company is making significant efforts in
addressing all anticipated Y2K risks within its control, this event is
unprecedented. Consequently, there can be no assurance that the Y2K issue will
not have a material adverse impact on the Company's operating results and
financial condition.
Forward-Looking Statements
Certain of the statements made in this report are "forward-looking"
statements that involve inherent risks and uncertainties. As defined by the U.S.
Private Securities Litigation Reform Act of 1995, "forward-looking" statements
include information about the Company that is based on the beliefs of management
and the assumptions made by, and information currently available to, management.
In making such forward-looking statements, the Company is relying upon the
"statutory safe harbors" contained in the applicable statutes and the rules,
regulations and releases of the Securities and Exchange Commission. 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," "expects," "believes," and similar phrases. Among the factors that
could cause actual results to differ materially from the statements made are the
following: general business conditions in the local markets served by the
Company's convenience stores, truck stops, and other retail outlets, and its
wholesale fuel markets; the weather in the local markets served by the Company;
competitive factors such as changes in the locations, merchandise offered,
pricing, and other aspects of competitors' operations; increases in cost of fuel
and merchandise sold or reductions in the gross profit realized from such sales;
available product for processing and processing efficiencies at the Company's
fuel terminal; expense pressures relating to operating costs, including labor,
repair and maintenance, and supplies; unexpected outcome of litigation; adverse
liquidity situations; unanticipated general and administrative expenses,
including employee, taxes, insurance, expansion and financing costs; and
unexpected liabilities.
Should one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results or outcomes may vary
materially from those described herein as anticipated, believed, estimated,
expected, or intended.
Quantitative and Qualitative Disclosures About Market Risks
The Company is subject to insignificant market risks related to variable
interest rates and commodity prices. Although interest expense on the Company's
bank loan containing the revolving credit facility and term loan is calculated
at the prime rate of interest, which is subject to change, the Company is also
the holder of a note receivable from FFP Partners containing payment terms which
mirror that of the Company's debt. Thus, any increase in interest expense of the
Company attributable to an increase in the prime rate will be substantially
offset by an increase in its interest income.
The Company is also subject to the market risk of increasing commodity prices
and sometimes is a party to commodity futures and forward contracts to hedge
that risk. However, open positions under these futures and forward contracts
were not significant at the end of the first quarter of 1999.
EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
27 Financial Data Schedule.
Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FFP Marketing Company, Inc.
Registrant
Date: March 13, 2000 By: /s/John H. Harvison
---------------------------------
John H. Harvison
Chairman and
Chief Executive Officer
Date: March 13, 2000 By: /s/Craig T. Scott
---------------------------------
Craig T. Scott
Vice President - Finance and
Chief Financial Officer