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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

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 number 1-13018



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PETRO STOPPING CENTERS, L.P.

(Exact name of the registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 74-2628339                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer 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



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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 ̈No  x

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated
filer ̈Non-accelerated filer  x

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. Not applicable.



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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PETRO STOPPING CENTERS, L.P.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)



|                                               |  |                  |         |   |              |   |         |  
|---------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | -
|                                               |  | December 31,2005 |         |   | June 30,2006 |  
|Assets                                         |  |                  |         |   |              |   |         |  
|Current assets:                                |  |                  |         |   |              |   |         |  
|Cash and cash equivalents                      |  | $                | 27,048  |   |              | $ | 46,679  |  
|Trade accounts receivable, net                 |  |                  | 7,318   |   |              |   | 8,459   |  
|Inventories, net                               |  |                  | 32,223  |   |              |   | 38,042  |  
|Other current assets                           |  |                  | 3,827   |   |              |   | 2,769   |  
|Due from affiliates                            |  |                  | 3,981   |   |              |   | 3,354   |  
|                                               |  |                  |         |   |              |   |         |  
|Total current assets                           |  |                  | 74,397  |   |              |   | 99,303  |  
|                                               |  |                 
|Property and equipment, net                    |  |                  | 235,220 |   |              |   | 234,909 |  
|Deferred debt issuance costs, net              |  |                  | 10,536  |   |              |   | 9,720   |  
|Other assets                                   |  |                  | 15,539  |   |              |   | 14,812  |  
|                                               |  |                  |         |   |              |   |         |  
|Total assets                                   |  | $                | 335,692 |   |              | $ | 358,744 |  
|                                               |  |                  |         |   |              |   |         |  
|Liabilities and Partners Deficit              |  |                  |         |   |              |   |         |  
|Current liabilities:                           |  |                  |         |   |              |   |         |  
|Other short-term borrowings                    |  | $                | 572     |   |              | $ | 194     |  
|Trade accounts payable                         |  |                  | 27,212  |   |              |   | 38,175  |  
|Accrued expenses and other current liabilities |  |                  | 37,251  |   |              |   | 35,892  |  
|Due to affiliates                              |  |                  | 7,051   |   |              |   | 12,682  |  
|                                               |  |                  |         |   |              |   |         |  
|Total current liabilities                      |  |                  | 72,086  |   |              |   | 86,943  |  
|                                               |  |                 
|Other liabilities                              |  |                  | 797     |   |              |   | 1,117   |  
|Long-term debt                                 |  |                  | 271,250 |   |              |   | 271,250 |  
|                                               |  |                  |         |   |              |   |         |  
|Total long-term liabilities                    |  |                  | 272,047 |   |              |   | 272,367 |  
|                                               |  |                  |         |   |              |   |         |  
|Total liabilities                              |  |                  | 344,133 |   |              |   | 359,310 |  
|                                               |  |                  |         |   |              |   |         |  
|Commitments and contingencies                  |  |                  |         |   |              |   |         |  
|                                               |  |                 
|Partners deficit:                             |  |                  |         |   |              |   |         |  
|General partners                              |  |                  | (167    | ) |              |   | (144    | )
|Limited partners                              |  |                  | (8,274  | ) |              |   | (422    | )
|                                               |  |                  |         |   |              |   |         |  
|Total partners deficit                        |  |                  | (8,441  | ) |              |   | (566    | )
|                                               |  |                  |         |   |              |   |         |  
|Total liabilities and partners deficit        |  | $                | 335,692 |   |              | $ | 358,744 |  
|                                               |  |                  |         |   |              |   |         |  

See accompanying notes to unaudited consolidated condensed financial statements.



1



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PETRO STOPPING CENTERS, L.P.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in thousands)



|                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|------------------------------------ |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | --------- | -
|                                     |  | Three Months EndedJune 30, |         |   | Six Months EndedJune 30, |  
|                                     |  | 2005                       |         |   | 2006                     |   |         | 2005 |  |   | 2006    |  
|Net revenues:                        |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Fuel (including motor fuel taxes)    |  | $                          | 365,208 |   |                          | $ | 487,671 |      |  | $ | 662,412 |   |  | $ | 929,266   |  
|Non-fuel                             |  |                            | 72,910  |   |                          |   | 80,776  |      |  |   | 136,941 |   |  |   | 156,217   |  
|                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Total net revenues                   |  |                            | 438,118 |   |                          |   | 568,447 |      |  |   | 799,353 |   |  |   | 1,085,483 |  
|                                     |  |                            |         |  
|Costs and expenses:                  |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Cost of sales                        |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Fuel (including motor fuel taxes)    |  |                            | 351,501 |   |                          |   | 467,951 |      |  |   | 638,602 |   |  |   | 898,203   |  
|Non-fuel                             |  |                            | 29,781  |   |                          |   | 32,913  |      |  |   | 54,615  |   |  |   | 63,331    |  
|Operating expenses                   |  |                            | 37,943  |   |                          |   | 41,877  |      |  |   | 72,267  |   |  |   | 83,639    |  
|General and administrative           |  |                            | 4,829   |   |                          |   | 5,085   |      |  |   | 9,265   |   |  |   | 9,569     |  
|Depreciation and amortization        |  |                            | 4,114   |   |                          |   | 4,582   |      |  |   | 8,002   |   |  |   | 9,006     |  
|Loss on disposition of fixed assets  |  |                            | 16      |   |                          |   | 9       |      |  |   | 29      |   |  |   | 19        |  
|                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Total costs and expenses             |  |                            | 428,184 |   |                          |   | 552,417 |      |  |   | 782,780 |   |  |   | 1,063,767 |  
|                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Operating income                     |  |                            | 9,934   |   |                          |   | 16,030  |      |  |   | 16,573  |   |  |   | 21,716    |  
|                                     |  |                            |         |  
|Write-down of land held for sale     |  |                            |        |   |                          |   | (16     | )    |  |   |        |   |  |   | (16       | )
|Equity in income (loss) of affiliate |  |                            | (15     | ) |                          |   | 132     |      |  |   | (178    | ) |  |   | 268       |  
|Interest income                      |  |                            | 31      |   |                          |   | 110     |      |  |   | 119     |   |  |   | 216       |  
|Interest expense                     |  |                            | (5,962  | ) |                          |   | (6,616  | )    |  |   | (11,745 | ) |  |   | (13,028   | )
|                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  
|Net income                           |  | $                          | 3,988   |   |                          | $ | 9,640   |      |  | $ | 4,769   |   |  | $ | 9,156     |  
|                                     |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |           |  

See accompanying notes to unaudited consolidated condensed financial statements.



2



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PETRO STOPPING CENTERS, L.P.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN PARTNERS DEFICIT

For the Six Months Ended June 30, 2005 and 2006

(in thousands)



|                                  |  |                         |      |   |                         |   |         |                       |  |   |         |  
|--------------------------------- |  | ----------------------- | ---- | - | ----------------------- | - | ------- | --------------------- |  | - | ------- | -
|                                  |  | GeneralPartnersDeficit |      |   | LimitedPartnersDeficit |   |         | TotalPartners'Deficit | 
|Balances, December 31, 2004       |  | $                       | (200 | ) |                         | $ | (18,077 | )                     |  | $ | (18,277 | )
|                                  |  |                         |     
|Net income                        |  |                         | 12   |   |                         |   | 4,757   |                       |  |   | 4,769   |  
|Partners operating distributions |  |                         |     |   |                         |   | (4,796  | )                     |  |   | (4,796  | )
|Partners tax distributions       |  |                         |     |   |                         |   | (9      | )                     |  |   | (9      | )
|                                  |  |                         |      |   |                         |   |         |                       |  |   |         |  
|Balances, June 30, 2005           |  | $                       | (188 | ) |                         | $ | (18,125 | )                     |  | $ | (18,313 | )
|                                  |  |                         |      |   |                         |   |         |                       |  |   |         |  
|                                  |  |                         |     
|Balances, December 31, 2005       |  | $                       | (167 | ) |                         | $ | (8,274  | )                     |  | $ | (8,441  | )
|                                  |  |                         |     
|Net income                        |  |                         | 23   |   |                         |   | 9,133   |                       |  |   | 9,156   |  
|Partners operating distributions |  |                         |     |   |                         |   | (1,254  | )                     |  |   | (1,254  | )
|Partners tax distributions       |  |                         |     |   |                         |   | (27     | )                     |  |   | (27     | )
|                                  |  |                         |      |   |                         |   |         |                       |  |   |         |  
|Balances, June 30, 2006           |  | $                       | (144 | ) |                         | $ | (422    | )                     |  | $ | (566    | )
|                                  |  |                         |      |   |                         |   |         |                       |  |   |         |  

See accompanying notes to unaudited consolidated condensed financial statements.



3



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PETRO STOPPING CENTERS, L.P.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                  |  |                           |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Six Months Ended June 30, |        
|                                                                                  |  | 2005                      |         |   | 2006 |  
|Cash flows from operating activities:                                             |  |                           |         |   |      |   |         |  
|Net income                                                                        |  | $                         | 4,769   |   |      | $ | 9,156   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |         |   |      |   |         |  
|Depreciation and amortization                                                     |  |                           | 8,002   |   |      |   | 9,006   |  
|Deferred debt issuance cost amortization                                          |  |                           | 782     |   |      |   | 900     |  
|Provision for bad debt                                                            |  |                           | 154     |   |      |   | 82      |  
|Equity in loss (income) of affiliate                                              |  |                           | 178     |   |      |   | (268    | )
|Loss on disposition of fixed assets                                               |  |                           | 29      |   |      |   | 19      |  
|Write-down of land held for sale                                                  |  |                           |        |   |      |   | 16      |  
|Other operating activities                                                        |  |                           | 22      |   |      |   | 37      |  
|Increase (decrease) from changes in:                                              |  |                           |         |   |      |   |         |  
|Trade accounts receivable                                                         |  |                           | (4,199  | ) |      |   | (1,223  | )
|Inventories                                                                       |  |                           | (4,420  | ) |      |   | (5,819  | )
|Other current assets                                                              |  |                           | (304    | ) |      |   | 1,058   |  
|Due from affiliates                                                               |  |                           | (535    | ) |      |   | 627     |  
|Due to affiliates                                                                 |  |                           | 308     |   |      |   | 5,631   |  
|Trade accounts payable                                                            |  |                           | 8,651   |   |      |   | 10,296  |  
|Accrued expenses and other current liabilities                                    |  |                           | 809     |   |      |   | (1,392  | )
|                                                                                  |  |                           |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                           | 14,246  |   |      |   | 28,126  |  
|                                                                                  |  |                           |         |   |      |   |         |  
|Cash flows from investing activities:                                             |  |                           |         |   |      |   |         |  
|Proceeds from disposition of fixed assets                                         |  |                           | 83      |   |      |   |        |  
|Purchases of property and equipment                                               |  |                           | (22,728 | ) |      |   | (8,368  | )
|(Increase) decrease in other assets, net                                          |  |                           | (357    | ) |      |   | 949     |  
|                                                                                  |  |                           |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                           | (23,002 | ) |      |   | (7,419  | )
|                                                                                  |  |                           |         |   |      |   |         |  
|Cash flows from financing activities:                                             |  |                           |         |   |      |   |         |  
|Repayments of bank revolver                                                       |  |                           | (36,500 | ) |      |   | (17,600 | )
|Proceeds from bank revolver                                                       |  |                           | 36,500  |   |      |   | 17,600  |  
|Repayments of other short-term borrowings                                         |  |                           |        |   |      |   | (378    | )
|Change in book cash overdraft                                                     |  |                           |        |   |      |   | 675     |  
|Partners operating distributions                                                 |  |                           | (4,796  | ) |      |   | (1,254  | )
|Partners minimum tax distributions                                               |  |                           | (9      | ) |      |   | (27     | )
|Payment of debt issuance costs                                                    |  |                           | (373    | ) |      |   | (92     | )
|                                                                                  |  |                           |         |   |      |   |         |  
|Net cash used in financing activities                                             |  |                           | (5,178  | ) |      |   | (1,076  | )
|                                                                                  |  |                           |         |   |      |   |         |  
|Net (decrease) increase in cash and cash equivalents                              |  |                           | (13,934 | ) |      |   | 19,631  |  
|Cash and cash equivalents, beginning of period                                    |  |                           | 33,843  |   |      |   | 27,048  |  
|                                                                                  |  |                           |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                         | 19,909  |   |      | $ | 46,679  |  
|                                                                                  |  |                           |         |   |      |   |         |  
|                                                                                  |  |                          
|Supplemental cash flow information - Interest paid during the period              |  | $                         | 11,033  |   |      | $ | 12,352  |  

See accompanying notes to unaudited consolidated condensed financial statements.



4



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PETRO STOPPING CENTERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(1) Basis of Presentation

The accompanying unaudited consolidated condensed financial statements, which include the accounts of Petro Stopping Centers, L.P. and
its wholly owned subsidiaries, Petro Financial Corporation and Petro Distributing, Inc. (collectively, the Company), have been prepared in accordance with the instructions to Form 10-Q and, therefore, certain financial information has
been condensed and certain footnote disclosures have been omitted. Such information and disclosures are normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles.

These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto in
the Annual Report of the Company on Form 10-K for the year ended December 31, 2005 (2005 Form 10-K). Capitalized terms used in this report and not defined herein have the meanings ascribed to such terms in the 2005 Form 10-K. In the
opinion of management of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the consolidated condensed financial position of the Company at December 31, 2005
and June 30, 2006, the consolidated condensed results of operations for the three and six months ended June 30, 2005 and 2006, and the changes in partners deficit and the consolidated condensed cash flows for the six months ended
June 30, 2005 and 2006. The results of operations for the three and six months ended June 30, 2006 are not necessarily indicative of the results to be expected for the full calendar year.

The Companys fuel revenues and related cost of sales include a significant amount of federal and state motor fuel taxes. Such taxes were $74.1
million and $78.9 million for the three months ended June 30, 2005 and 2006, respectively, and $140.5 million and $159.5 million for the six months ended June 30, 2005 and 2006, respectively.

Reclassifications

Certain prior period amounts have
been reclassified to conform to the current year presentation.

(2) Partners Deficit

Under the Indenture for the 9.0% senior secured notes due 2012 and the agreement governing the Companys senior secured credit facilities, the
Company is permitted to make distributions to Petro Stopping Centers Holdings, L.P. (the Holding Partnership) in amounts sufficient to allow the Holding Partnership to pay interest on the Holding Partnerships senior third secured
discount notes due 2014 and to pay for taxes and administrative expenses. For the six months ended June 30, 2006, the Company paid approximately $1.3 million with respect to these distributions. The Company believes it will distribute an
additional $4.7 million to the Holding Partnership during the remainder of 2006 for interest payments, taxes, and administrative expenses.

(3) Segments

The Company has two reportable operating segments, company-operated truck stops and franchise operations.

As of June 30, 2005 and 2006, the Company operated 40 and 42 multi-service truck stops in the United States, respectively. The Company has
aggregated its company-operated truck stops into one reportable operating segment based on the distribution of products and services under one common site facility, classified as a multi-service truck stop. The revenues generated from the
Companys company-operated truck stops were $436.6 million and $567.1 million for the three months ended June 30, 2005 and 2006, respectively, and $796.5 million and $1.1 billion for the six months ended June 30, 2005 and 2006,
respectively.

(continued)



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PETRO STOPPING CENTERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

As of
June 30, 2005 and 2006, the Company was a franchisor to 22 Petro Stopping Center locations. The Company collects royalties and fees in exchange for the use of its tradenames and trademarks and for certain services provided to the franchisees.
Franchise fees are based generally upon a percentage of the franchisees sales. The revenues generated from the Companys franchise operations were $1.5 million and $1.3 million for the three months ended June 30, 2005 and 2006,
respectively, and $2.9 million and $3.1 million for the six months ended June 30, 2005 and 2006, respectively. Franchise operations revenues, which include initial franchise fees and other revenue types, are combined in non-fuel revenues
reported on the accompanying unaudited consolidated condensed statements of operations. The Company does not allocate any expenses in measuring this segments profit and loss, nor does it believe there are any significant financial commitments
or obligations resulting from these franchise agreements.

The following table contains financial information of the Companys
reportable operating segments:

REPORTABLE OPERATING SEGMENT INFORMATION



|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|---------------------------- |  | --------------------------- | ------- | ------------------------- | - | ------- |  | ---- | ------- |  | - | ---------
|                             |  | Three Months Ended June 30, |         | Six Months Ended June 30,
|                             |  | 2005                        |         | 2006                      |   | 2005    |  | 2006
|                             |  | (in thousands)             
|Income Statement Data:       |  |                             |         |                           |   |         |  |      |         |  |   |          
|Net revenues:                |  |                             |         |                           |   |         |  |      |         |  |   |          
|Company-operated truck stops |  | $                           | 436,606 |                           | $ | 567,107 |  | $    | 796,502 |  | $ | 1,082,412
|Franchise operations         |  |                             | 1,512   |                           |   | 1,340   |  |      | 2,851   |  |   | 3,071    
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total net revenues           |  | $                           | 438,118 |                           | $ | 568,447 |  | $    | 799,353 |  | $ | 1,085,483
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Operating income:            |  |                             |         |                           |   |         |  |      |         |  |   |          
|Company-operated truck stops |  | $                           | 8,422   |                           | $ | 14,690  |  | $    | 13,722  |  | $ | 18,645   
|Franchise operations         |  |                             | 1,512   |                           |   | 1,340   |  |      | 2,851   |  |   | 3,071    
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total operating income       |  | $                           | 9,934   |                           | $ | 16,030  |  | $    | 16,573  |  | $ | 21,716   
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Balance Sheet Data:          |  |                             |         |                           |   |         |  |      |         |  |   |          
|(at end of period)           |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total assets:                |  |                             |         |                           |   |         |  |      |         |  |   |          
|Company-operated truck stops |  |                             |         |                           |   |         |  | $    | 299,124 |  | $ | 358,744  
|Franchise operations         |  |                             |         |                           |   |         |  |      |        |  |   |         
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total assets                 |  |                             |         |                           |   |         |  | $    | 299,124 |  | $ | 358,744  
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          

(4) Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment, which replaces the original Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, issued in October 1995. This standard addresses the accounting for
transactions where an entity obtains employee services in share-based payment transactions. The effective dates vary depending on the type of reporting entity. Non-public companies, such as the Company, must apply the revised standard as of the
beginning of the first annual reporting period that begins after December 15, 2005. Management has adopted this revised standard and concluded that it had no impact on its consolidated financial position or results of operations.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets (as
amended), an amendment of FASB Statement No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This standard focuses on the recognition and valuation for all separately recognized
servicing assets and liabilities. It requires that entities

(continued)



6



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PETRO STOPPING CENTERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

separately recognize a
servicing asset or liability when they undertake, through a servicing contract, an obligation to service a financial asset. The effective date for this standard is for fiscal years that begin after September 15, 2006. Management is evaluating
the impact of this standard on its consolidated financial statements. Management does not believe that the adoption of this standard will have a significant impact on the Companys results of operations.

(5) Subsequent Events

On July 14, 2006, the
Company amended its senior secured credit agreement to, among other things: (i) permit an increase in the maximum amount of guarantees permitted under the senior secured credit agreement to an aggregate amount not to exceed $15.0 million at any
time outstanding, (ii) obtain the release of the Collateral Agents (as defined in the senior secured credit agreement) lien on approximately 15 acres of raw land located in Girard, Ohio, and (iii) exclude any future guarantees of
indebtedness related to a potential joint venture in Midland, Texas from the calculation of Consolidated Leverage Ratio (as defined in the senior secured credit agreement).



7



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain
sections of this report, including Managements Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk, contain various forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which represent managements expectations or beliefs concerning future events that involve risks and
uncertainties. These statements may be accompanied by words such as believe, intend, estimate, may, could, project, anticipate, expect, or
predict, that convey the uncertainty of future events or outcomes. These statements are based on assumptions that we believe are reasonable; however, many important factors could cause our actual results in the future to differ
materially from the results referred to in the forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties that may cause our actual results to be materially different from any future
results expressed or implied by us in those statements. Some of these risks are described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2005 (the 2005 Form 10-K). These risk factors should
be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

All statements, other than statements of historical facts included in this report, may be considered forward-looking statements. The forward-looking statements are included in, without limitation, Overview of Operating
Results, Consolidated Revenues, Results of Operations, Network Development, Liquidity and Capital Resources, and Critical Accounting Policies. In
addition, in the preparation of our unaudited consolidated condensed financial statements, we make various estimates and assumptions that are by their nature forward-looking statements.

Reporting Format

We have two reportable operating segments, company-operated truck stops and
franchise operations.

As of June 30, 2005 and 2006, we operated 40 and 42 multi-service truck stops in the United States,
respectively. We have aggregated our company-operated truck stops into one reportable operating segment based on the distribution of products and services under one common site facility, classified as a multi-service truck stop. The revenues
generated from our company-operated truck stops were $436.6 million and $567.1 million for the three months ended June 30, 2005 and 2006, respectively, and $796.5 million and $1.1 billion for the six months ended June 30, 2005 and 2006,
respectively.

As of June 30, 2005 and 2006, we were a franchisor to 22 Petro Stopping Center locations. We collect royalties and fees
in exchange for the use of our tradenames and trademarks and for certain services provided to the franchisees. Franchise fees are based generally upon a percentage of the franchisees sales. The revenues generated from our franchise operations
were $1.5 million and $1.3 million for the three months ended June 30, 2005 and 2006, respectively, and $2.9 million and $3.1 million for the six months ended June 30, 2005 and 2006, respectively. Franchise operations revenues, which
include initial franchise fees and other revenue types, are combined in non-fuel revenues reported on our accompanying unaudited consolidated condensed statements of operations. We do not allocate any expenses in measuring this segments profit
and loss, nor do we believe there are any significant financial commitments or obligations resulting from these franchise agreements.

No
provision for federal income taxes is reflected in the accompanying unaudited consolidated condensed financial statements because we are a partnership for which federal taxable income and federal tax deductions are passed through to the individual
partners.



8



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The following table contains financial information of our reportable operating segments:

REPORTABLE OPERATING SEGMENT INFORMATION



|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|---------------------------- |  | --------------------------- | ------- | ------------------------- | - | ------- |  | ---- | ------- |  | - | ---------
|                             |  | Three Months Ended June 30, |         | Six Months Ended June 30,
|                             |  | 2005                        |         | 2006                      |   | 2005    |  | 2006
|                             |  | (in thousands)             
|Income Statement Data:       |  |                             |         |                           |   |         |  |      |         |  |   |          
|Net revenues:                |  |                             |         |                           |   |         |  |      |         |  |   |          
|Company-operated truck stops |  | $                           | 436,606 |                           | $ | 567,107 |  | $    | 796,502 |  | $ | 1,082,412
|Franchise operations         |  |                             | 1,512   |                           |   | 1,340   |  |      | 2,851   |  |   | 3,071    
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total net revenues           |  | $                           | 438,118 |                           | $ | 568,447 |  | $    | 799,353 |  | $ | 1,085,483
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Operating income:            |  |                             |         |                           |   |         |  |      |         |  |   |          
|Company-operated truck stops |  | $                           | 8,422   |                           | $ | 14,690  |  | $    | 13,722  |  | $ | 18,645   
|Franchise operations         |  |                             | 1,512   |                           |   | 1,340   |  |      | 2,851   |  |   | 3,071    
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total operating income       |  | $                           | 9,934   |                           | $ | 16,030  |  | $    | 16,573  |  | $ | 21,716   
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Balance Sheet Data:          |  |                             |         |                           |   |         |  |      |         |  |   |          
|(at end of period)           |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total assets:                |  |                             |         |                           |   |         |  |      |         |  |   |          
|Company-operated truck stops |  |                             |         |                           |   |         |  | $    | 299,124 |  | $ | 358,744  
|Franchise operations         |  |                             |         |                           |   |         |  |      |        |  |   |         
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          
|Total assets                 |  |                             |         |                           |   |         |  | $    | 299,124 |  | $ | 358,744  
|                             |  |                             |         |                           |   |         |  |      |         |  |   |          

Overview of Operating Results

During the six months ended June 30, 2006, our net revenues were $1.1 billion, a 35.8% increase over the prior year period. The increase was mainly due to higher fuel revenues, as a result of an increase in our
average retail-selling price of fuel and increased fuel gallons sold, improved non-fuel sales, and the addition of our five new sites, which were opened during 2005. Our net income of $9.2 million was $4.4 million higher than our net income for the
six months ended June 30, 2005, due primarily to higher operating income, offset by higher interest expense caused by an increase in our total outstanding debt.

During the second quarter of 2006, our net revenues were $568.4 million, a 29.7% increase over prior years quarter. The increase was mainly due to higher fuel revenues, as a result of an increase in our average
retail-selling price of fuel and increased fuel gallons sold, improved non-fuel sales, and the addition of our five new sites. Our net income of $9.6 million was $5.7 million higher compared to the prior years quarter.

We derive our revenues from:



| |  |  | The sale of diesel and gasoline fuels;
| | - |  | --------------------------------------



| |  |  | Non-fuel items, including the sale of merchandise and offering of services such as truck tire sales and installation, truck maintenance and repair services, on-site vendor lease
income, showers, laundry, video games, franchise revenues, fast-food operations, and other operations; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Iron Skillet restaurant operations.
| | - |  | -----------------------------------



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Consolidated Revenues

The following table sets forth our total consolidated revenues by major source:



|                                |  |                             |         |  |                           |   |  |      |         |  |       |   |  |   |         |  |       |   |  |   |           |  |       |  
|------------------------------- |  | --------------------------- | ------- |  | ------------------------- | - |  | ---- | ------- |  | ----- | - |  | - | ------- |  | ----- | - |  | - | --------- |  | ----- | -
|                                |  | Three Months Ended June 30, |         |  | Six Months Ended June 30, |  
|                                |  | 2005                        |         |  | 2006                      |   |  | 2005 |         |  | 2006  |  
|                                |  | (dollars in thousands)      |        
|Fuel                            |  | $                           | 365,208 |  | 83.4                      | % |  | $    | 487,671 |  | 85.8  | % |  | $ | 662,412 |  | 82.9  | % |  | $ | 929,266   |  | 85.6  | %
|Non-Fuel (excluding restaurant) |  |                             | 53,940  |  | 12.3                      | % |  |      | 60,270  |  | 10.6  | % |  |   | 100,538 |  | 12.6  | % |  |   | 115,707   |  | 10.7  | %
|Restaurant                      |  |                             | 18,970  |  | 4.3                       | % |  |      | 20,506  |  | 3.6   | % |  |   | 36,403  |  | 4.5   | % |  |   | 40,510    |  | 3.7   | %
|                                |  |                             |         |  |                           |   |  |      |         |  |       |   |  |   |         |  |       |   |  |   |           |  |       |  
|Total Net Revenues              |  | $                           | 438,118 |  | 100.0                     | % |  | $    | 568,447 |  | 100.0 | % |  | $ | 799,353 |  | 100.0 | % |  | $ | 1,085,483 |  | 100.0 | %
|                                |  |                             |         |  |                           |   |  |      |         |  |       |   |  |   |         |  |       |   |  |   |           |  |       |  

Our fuel revenues and related cost of sales include a significant amount of federal and state
motor fuel taxes. Such taxes were $74.1 million and $78.9 million for the three months ended June 30, 2005 and 2006, respectively, and $140.5 million and $159.5 million for the six months ended June 30, 2005 and 2006, respectively.

Results of Operations

Six Months Ended
June 30, 2006 Compared to Six Months Ended June 30, 2005

Overview.Net income increased 92.0% to $9.2 million for the
six months ended June 30, 2006 compared to net income of $4.8 million for the six months ended June 30, 2005, due primarily to higher operating income, offset by higher interest expense caused by an increase in our total outstanding debt.
Our net revenues increased 35.8% to $1.1 billion for the six months ended June 30, 2006 from $799.4 million in the prior year period. The increase was mainly due to (i) higher fuel revenues, as a result of an increase in our average
retail-selling price of fuel related to market conditions and increased fuel gallons sold, (ii) improved non-fuel sales, and (iii) the addition of five new sites. On a comparable unit basis, net revenues increased by 28.2% to $988.4
million for the six months ended June 30, 2006 from $770.9 million in the prior year period. The increase was mainly due to (i) higher fuel revenues, as a result of an increase in our average retail-selling price of fuel and increased fuel
gallons sold and (ii) improved non-fuel sales. A Petro Stopping Center is considered a comparable unit in 2006 if we operated it for twelve months in 2005. During the six months ended June 30, 2006, we had 36 company-operated comparable
units out of a total of 41 company-operated units, in each case excluding our jointly-owned Wheeler Ridge facility, which is reflected in equity in income (loss) of affiliates. Operating expenses increased 15.7% to $83.6 million from $72.3 million
in the prior year period, due primarily to the addition of our five new sites, higher employee-related costs, increased utility costs, and higher credit card fees associated with the increased fuel revenues.

Fuel.Revenues increased 40.3% to $929.3 million for the six months ended June 30, 2006 compared to $662.4 million for the six months ended
June 30, 2005. Fuel revenues increased due to a 24.9% increase in our average retail-selling price per gallon compared to the prior year period related to market conditions, as well as a 12.4% increase in our total fuel gallons sold from the
prior year period, which was partially due to the addition of our five new sites. Gross profit increased by 30.5% to $31.1 million for the six months ended June 30, 2006 compared to $23.8 million in the prior year period, despite a 40.7%
increase in our cost of fuel. On a comparable unit basis, fuel revenues increased 32.9% due to a 25.0% increase in our average retail-selling price per gallon, as well as a 6.3% increase in our total fuel gallons sold compared to the prior year
period. On a comparable unit basis, gross profit increased by 18.9%, or $4.4 million, for the six months ended June 30, 2006 compared to the prior year period.

Non-Fuel (excluding Restaurant). Revenues increased 15.1% to $115.7 million for the six months ended June 30, 2006 compared to $100.5 million in the prior year period. Gross profit increased 13.9% to $65.0
million for the six months ended June 30, 2006 from $57.1 million in the prior year period. The increases in revenues and gross profit were due primarily to a 15.8%, or $14.7 million, increase in general merchandise sales at our retail stores
and increased sales at our Petro:Lubes, in addition to our five new sites. On a comparable unit basis, revenues increased 6.9%, or $6.7 million, and gross profit increased 5.8%, or $3.2 million, compared to the prior year period.



10



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Restaurant. Revenues increased 11.3% to $40.5 million for the six months ended June 30, 2006
compared to $36.4 million in the prior year period, due primarily to the addition of five new sites, four of which had restaurant operations. Gross profits in the restaurant increased by 10.4%, or $2.6 million, compared to the prior year period, due
primarily to the increase in revenues due to the addition of our new sites, partially offset by an increase in food costs. On a comparable unit basis, revenues increased 2.2%, or $785,000, for the six months ended June 30, 2006 compared to
$35.0 million in the prior year period, mostly due to slight increases in both our customer counts and our average ticket selling price. On a comparable unit basis, gross profit increased 1.5%, or $376,000, from the prior year period.

Costs and Expenses. Total costs and expenses increased 35.9% to $1.1 billion for the six months ended June 30, 2006 compared to $782.8
million in the prior year period. Cost of sales increased 38.7%, or $268.3 million, from the prior year period mainly due to a 40.7% increase in our cost of fuel, in addition to costs incurred related to the addition of our five new sites. Operating
expenses increased 15.7%, or $11.4 million, to $83.6 million compared to the prior year period, due primarily to the addition of our new sites, higher employee-related costs, increased utility costs, and higher credit card fees associated with the
increased fuel revenues. General and administrative expenses increased by 3.3%, or $304,000, from the prior year period, due primarily to higher employee-related costs, offset by lower professional services. On a comparable unit basis, total costs
and expenses increased 28.3%, or $213.9 million, from the prior year period. On a comparable unit basis, cost of sales increased 31.3%, or $209.6 million, from the prior year period, due primarily to a 33.4% increase in our cost of fuel. On a
comparable unit basis, operating expenses increased 5.3%, or $3.6 million, to $72.7 million compared to the prior year period, due primarily to higher employee-related costs, increased utility costs, and higher credit card fees associated with the
increased fuel revenues.

Equity in Income (Loss) of Affiliate.For the six months ended June 30, 2006, we recognized income of
$268,000 related to our investment in the Wheeler Ridge facility in Southern California compared to a loss of $178,000 for the prior year period.

Interest Expense. Interest expense increased 10.9% to $13.0 million compared to $11.7 million in the prior year period, due primarily to an increase in our total debt outstanding in the current period.

Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005

Overview.Net income increased 142% to $9.6 million for the quarter ended June 30, 2006 compared to net income of $4.0 million for the quarter
ended June 30, 2005. Our net revenues increased 29.7% to $568.4 million for the quarter ended June 30, 2006 from $438.1 million in the prior year quarter. The increase was mainly due to (i) higher fuel revenues, as a result of an
increase in our average retail-selling price of fuel related to market conditions and increased fuel gallons sold, (ii) improved non-fuel sales, and (iii) the addition of five new sites. On a comparable unit basis, net revenues increased
by 24.5% to $516.2 million for the quarter ended June 30, 2006 from $414.5 million in the prior year quarter. The increase was mainly due to (i) higher fuel revenues, as a result of an increase in our average retail-selling price of fuel
and increased fuel gallons sold and (ii) improved non-fuel sales. A Petro Stopping Center is considered a comparable unit in 2006 if we operated it for twelve months in 2005. During the quarter ended June 30, 2006, we had 36
company-operated comparable units out of a total of 41 company-operated units, in each case excluding our jointly-owned Wheeler Ridge facility, which is reflected in equity in income (loss) of affiliates. Operating expenses increased 10.4% to $41.9
million from $37.9 million in the prior year quarter, due primarily to the addition of our five new sites, higher employee-related costs, increased utility costs, and higher credit card fees associated with the increased fuel revenues.

Fuel.Revenues increased 33.5% to $487.7 million for the quarter ended June 30, 2006 compared to $365.2 million for the quarter ended
June 30, 2005. Fuel revenues increased due to a 28.3% increase in our average retail-selling price per gallon compared to the prior year quarter related to market conditions, as well as a 4.0% increase in our total fuel gallons sold from the
prior year quarter, which was partially due to the addition of our five new sites. Gross profit increased by 43.9% to $19.7 million for the quarter ended June 30, 2006



11



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compared to $13.7 million in the prior year quarter, despite a 33.1% increase in our cost of fuel. On a comparable unit
basis, fuel revenues increased 28.6% due to a 28.4% increase in our average retail-selling price per gallon compared to the prior year quarter. On a comparable unit basis, gross profit increased by 35.0%, or $4.6 million, for the quarter ended
June 30, 2006 compared to the prior year quarter.

Non-Fuel (excluding Restaurant). Revenues increased 11.7% to $60.3 million
for the quarter ended June 30, 2006 compared to $53.9 million in the prior year quarter. Gross profit increased 12.5% to $33.8 million for the quarter ended June 30, 2006 from $30.0 million in the prior year quarter. The increases in
revenues and gross profit were due primarily to a 12.8%, or $6.4 million, increase in general merchandise sales at our retail stores and increased sales at our Petro:Lubes, in addition to our five new sites. On a comparable unit basis, revenues
increased 5.5%, or $2.8 million, and gross profit increased 6.1%, or $1.7 million, compared to the prior year quarter.

Restaurant.
Revenues increased 8.1% to $20.5 million for the quarter ended June 30, 2006 compared to $19.0 million in the prior year quarter, due primarily to the addition of five new sites, four of which had restaurant operations. Gross profits in the
restaurant improved by 7.5%, or $978,000, compared to the prior year quarter, due primarily to the increase in revenues due to the addition of our new sites, partially offset by an increase in food costs. On a comparable unit basis, revenues
increased $133,000 for the quarter ended June 30, 2006 compared to $17.8 million in the prior year quarter, mostly due to a slight increase in our average ticket selling price. On a comparable unit basis, gross profits of $12.4 million remained
relatively flat compared to the prior year quarter.

Costs and Expenses. Total costs and expenses increased 29.0% to $552.4 million
for the quarter ended June 30, 2006 compared to $428.2 million in the prior year quarter. Cost of sales increased 31.4%, or $119.6 million, from the prior year quarter mainly due to a 33.1% increase in our cost of fuel, in addition to costs
incurred related to the addition of our five new sites. Operating expenses increased 10.4%, or $3.9 million, to $41.9 million compared to the prior year quarter, due primarily to the addition of our new sites, higher employee-related costs,
increased utility costs, and higher credit card fees associated with the increased fuel revenues. General and administrative expenses increased by 5.3%, or $256,000, compared to the prior year quarter, due primarily to higher employee-related costs.
On a comparable unit basis, total costs and expenses increased 23.9%, or $96.9 million, from the prior year quarter. On a comparable unit basis, cost of sales increased 26.4%, or $95.4 million, from the prior year quarter, due primarily to a 28.3%
increase in our cost of fuel. On a comparable unit basis, operating expenses increased 2.9%, or $1.0 million, to $36.4 million compared to the prior year quarter, due primarily to higher employee-related costs, increased utility costs, and higher
credit card fees associated with increased fuel revenues.

Equity in Income (Loss) of Affiliate.For the quarter ended June 30,
2006, we recognized income of $132,000 related to our investment in the Wheeler Ridge facility in Southern California compared to a loss of $15,000 for the prior year quarter.

Interest Expense. Interest expense increased 11.0% to $6.6 million compared to $6.0 million in the prior year quarter, due primarily to the
increase in our total debt outstanding in the current quarter.

Network Development

The following table sets forth the development of our Petro Stopping Centers network since 2002:



|                             |  |                |  |      |  |      |  |      |  |     
|---------------------------- |  | -------------- |  | ---- |  | ---- |  | ---- |  | ----
|                             |  | As of June 30,
|                             |  | 2002           |  | 2003 |  | 2004 |  | 2005 |  | 2006
|Company-operated             |  | 35             |  | 37   |  | 37   |  | 40   |  | 42  
|Franchise operation          |  | 21             |  | 23   |  | 23   |  | 22   |  | 22  
|                             |  |                |  |      |  |      |  |      |  |     
|Total Petro Stopping Centers |  | 56             |  | 60   |  | 60   |  | 62   |  | 64  
|                             |  |                |  |      |  |      |  |      |  |     



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The following table sets forth information on currently existing Petro Stopping Centers opened or
acquired from June 30, 2002 through June 30, 2006, all but four of which are full-sized facilities.



|                       |  |              
|---------------------- |  | -------------
|Location               |  | Date Opened  
|Company-operated:      |  |              
|Angola, Indiana        |  | August 2002  
|Sparks, Nevada         |  | December 2002
|New Paris, Ohio        |  | February 2005
|York, Nebraska         |  | March 2005   
|Kingsland, Georgia     |  | March 2005   
|Bordentown, New Jersey |  | July 2005    
|Waterloo, New York     |  | November 2005
|                       | 
|Franchise operation:   |  |              
|Gaston, Indiana        |  | October 2002 
|Remington, Indiana     |  | July 2005    
|Colby, Kansas          |  | November 2005
|Gadsden, Alabama       |  | November 2005

On November 1, 2005, we entered into a lease agreement to be effective October 19, 2005
for a company-operated site located in Spokane, Washington. The initial term of the lease shall commence upon our occupancy of the site, which was extended to no later than September 30, 2006 from June 1, 2006 by the terms of an amendment
to the lease agreement that we entered into on April 17, 2006.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows from our operations and the available borrowings under the revolving credit portion of our senior
secured credit facility.

Cash Flows From Operations

We had cash flows from operations of $14.2 million and $28.1 million for the six months ended June 30, 2005 and 2006, respectively. The increase in cash flows was due primarily to variations in the timing of
payments for trade accounts payable and due to affiliates for fuel purchases and the increase in operating income for the six months ended June 30, 2006, partially offset by increased inventory costs due to higher fuel prices and our five new
sites.

We had working capital of $2.3 million and $12.4 million at December 31, 2005 and June 30, 2006, respectively. Negative
working capital is normal in the truck stop industry since diesel fuel inventory turns approximately every two to three days, but payment for fuel purchases can generally be made over a longer period of time; however, due to our senior secured
credit facility and the associated reduction in our current portion of long-term debt, we had positive working capital at December 31, 2005 and June 30, 2006. Approximately 92.2% of our total sales are cash sales (or the equivalent in the
case of sales paid for on credit, which are funded on a daily basis by third-party billing companies).

Available Borrowings Under the Revolving Credit
Facility

Available borrowing capacity under the revolving credit portion of our senior secured credit facility was $30.0 million and
$28.8 million at December 31, 2005 and June 30, 2006, respectively, subject to certain conditions.

On February 3, 2006, we
amended our senior secured credit agreement to permit (i) a joint venture arrangement with Alon USA, Interests, LLC or any of its affiliates or subsidiaries (Alon) for the purpose of developing a travel center in the area of
Midland, Texas (the Asset Joint Venture); (ii) a joint venture arrangement with Alon for the purpose of operating certain aspects of the Asset Joint Venture; and (iii) the transfer of $5,000,000 in cash to Petro Distributing,
Inc. in the form of an equity contribution, for the purpose of facilitating Petro Distributing, Inc.s purchase of gasoline, fuel and similar products from its vendors.



13



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On July 14, 2006, we amended our senior secured credit agreement to, among other things:
(i) permit an increase in the maximum amount of guarantees permitted under our senior secured credit agreement to an aggregate amount not to exceed $15.0 million at any time outstanding, (ii) obtain the release of the Collateral
Agents (as defined in our senior secured credit agreement) lien on approximately 15 acres of raw land located in Girard, Ohio, and (iii) exclude any future guarantees of indebtedness related to the potential Alon Asset Joint Venture from
the calculation of Consolidated Leverage Ratio (as defined in our senior secured credit agreement).

At June 30, 2006, we have senior
secured credit facilities in an aggregate principal amount of $61.3 million, consisting of a four-year revolving credit facility of $40.0 million ($5.0 million of which is restricted to the issuance of letters of credit), and a four-year term loan
facility of $21.3 million. Any funds drawn on our senior secured credit facilities are secured by substantially all of our assets and the guarantees of each of our subsidiaries. As of June 30, 2006, we were in compliance with all financial
covenants under our senior secured credit facilities.

Under the revolving credit portion of our senior secured credit facilities, $40.0
million is available on a revolving basis until maturity at February 9, 2008. Interest on drawn funds is paid at maturity or quarterly if the term is greater than three months at a current spread of 1.50% above the banks base rate or
2.25% over the Eurodollar rate (the rate is determined at the time of borrowing, at our option). Commitment fees of 0.50% per quarter on undrawn funds are paid quarterly. At June 30, 2006, we had no borrowings outstanding under the
revolving credit portion of our senior secured credit facilities and had $11.2 million in standby letters of credit outstanding, which reduce our borrowing capacity under the revolving credit portion of our senior secured credit facilities on a
dollar for dollar basis. Approximately $6.8 million of these letters of credit are required to be posted with our insurance carriers in connection with our obtaining liability and other insurance coverage.

As of June 30, 2006, we had $21.3 million outstanding under our term loan facility, which matures on February 9, 2008.

Short-Term Requirements

Our primary short-term cash
requirements include working capital, employment agreements, distributions to Petro Stopping Centers Holdings, L.P. (the Holding Partnership), interest on our debt, and capital expenditures. We believe that cash flows from operations and
our revolving credit facility should be sufficient to satisfy our short-term operating and capital needs.

On January 31, 2006, we
entered into a purchase agreement to acquire real property located in Fairfield, Virginia for the construction of a future Petro Stopping Center for $1.4 million. On March 1, 2006, this acquisition was completed.

Capital expenditures for our existing Petro Stopping Centers totaled $6.5 million for the six months ended June 30, 2006. We currently expect to
invest approximately $5.5 million during the remainder of 2006 on capital expenditures related to regular capital maintenance and improvement projects, as well as volume building projects. Capital expenditures related to new sites on our truck stop
network totaled $1.9 million for the six months ended June 30, 2006, which includes $1.4 million for the acquisition of land in Fairfield, Virginia. We currently expect to invest approximately $1.2 million on capital expenditures related to new
sites during the remainder of 2006. These capital outlays will be funded through borrowings under our senior secured credit facilities and internally generated cash.

Under our Indenture for the 9.0% senior secured notes due 2012 and the agreement governing our senior secured credit facilities, we are permitted to make distributions to the Holding Partnership in amounts sufficient
to allow the Holding Partnership to pay interest on its senior third secured discount notes due 2014 and to pay for taxes and administrative expenses. For the six months ended June 30, 2006, we paid approximately $1.3 million with respect to
these distributions. We believe we will distribute an additional $4.7 million to the Holding Partnership during the remainder of 2006 for interest payments, taxes, and administrative expenses.



14



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Long-Term Requirements

Our anticipated long-term cash requirements include indebtedness and operating leases. Other possible long-term uses of cash include:



| |  |  | expansion of our network through building or acquiring new sites;
| | - |  | -----------------------------------------------------------------



| |  |  | distributions to the Holding Partnership; and
| | - |  | ---------------------------------------------



| |  |  | capital improvements to existing locations.
| | - |  | -------------------------------------------

Based on the
foregoing, we believe that internally generated funds, together with amounts available under our senior secured credit facilities, will be sufficient to satisfy our cash requirements for operations and debt service through 2006 and the foreseeable
future thereafter; provided however, that our ability to satisfy such obligations and maintain covenant compliance under our senior secured credit facilities is dependent upon a number of factors, some of which are beyond our control, including
economic, capital market, and competitive conditions. Some of these risks are described in Part I, Item 1A of our 2005 Form 10-K.

Critical
Accounting Policies

The preparation of our unaudited consolidated condensed financial statements in conformity with generally accepted
accounting principles requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in our unaudited consolidated
condensed financial statements and accompanying notes. The U.S. Securities and Exchange Commission has defined a companys critical accounting policies as the ones that are most important to the portrayal of the companys financial
condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. Based on this definition, we have
identified our critical accounting policies as including those addressed below. We also have other key accounting policies that involve the use of estimates, judgments, and assumptions. See Note 2 in Notes to Consolidated Financial Statements
included in our 2005 Form 10-K for additional discussion of these accounting policies. We believe that our estimates and assumptions are reasonable, based upon information presently available, however, actual results may differ from these estimates
under different assumptions or conditions.

Partial Self-Insurance

We are partially self-insured, paying our own employment practices, general liability, workers compensation, and group health benefit claims, up to stop-loss amounts ranging from $100,000 to $250,000 on a per
occurrence basis. Provisions established under these partial self-insurance programs are made for both estimated losses on known claims and claims incurred but not reported, in both cases based on claims history. The most significant risk of this
methodology is its dependence on claims history, which is not always indicative of future claims. Revisions of estimates based on historical claims data have the effect of increasing or decreasing the related required provisions and thus may impact
our net income (loss) for the period. If our estimates are inaccurate, our expenses and net income (loss) will be understated or overstated. Although some variation to actual results occurs, historically such variability has not been material. At
June 30, 2006, the aggregated liability was approximately $9.7 million, which we believe is adequate to cover both reported and incurred but not reported claims.

Loyalty Program

We utilize estimates in accounting for our Petro Passport loyalty program. We record
a liability for the estimated redemption of Petro points based upon our estimates about the future redemption rate of Petro points outstanding. The most significant risk of this methodology is its dependence on using historical redemption rates,
which are not always indicative of future redemption rates. If our estimates are inaccurate, our related



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expenses and net income (loss) could be understated or overstated. Although some variation to actual results occurs,
historically such variability has not been material. At June 30, 2006, we believe our liability related to our Petro Passport loyalty program is adequate to cover future point redemptions.

Recently Issued Accounting Pronouncements

In
December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, which replaces the original Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation, issued in October 1995. This standard addresses the accounting for transactions where an entity obtains employee services in share-based payment transactions. The effective dates
vary depending on the type of reporting entity. Non-public companies, such as ourselves, must apply the revised standard as of the beginning of the first annual reporting period that begins after December 15, 2005. We have adopted this revised
standard and concluded that it had no impact on our consolidated financial position or results of operations.

In March 2006, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets (as amended), an amendment of FASB Statement No. 140 Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This standard focuses on the recognition and valuation for all separately recognized servicing assets and liabilities. It requires that entities separately
recognize a servicing asset or liability when they undertake, through a servicing contract, an obligation to service a financial asset. The effective date for this standard is for fiscal years that begin after September 15, 2006. We are
evaluating the impact of this standard on our consolidated financial statements. We do not believe that the adoption of this standard will have a significant impact on our results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk due to changes in commodity prices and interest rates. For a complete discussion of our market risks and our market risk sensitive assets and liabilities, please refer to Item 7A,
Quantitative and Qualitative Disclosures about Market Risk, included in our 2005 Form 10-K. During the quarter ended June 30, 2006, there have been no material changes regarding our market risks from the discussion in our 2005 Form
10-K.

The following table reflects the carrying amount and estimated fair value of our financial instruments, as of December 31, 2005
and June 30, 2006:



|                                               |  |                        |         |               |            |   |                 |  |   |            |   |  |   |        
|---------------------------------------------- |  | ---------------------- | ------- | ------------- | ---------- | - | --------------- |  | - | ---------- | - |  | - | -------
|                                               |  | December 31, 2005      |         | June 30, 2006
|                                               |  | Carrying Amount        |         |               | Fair Value |   | Carrying Amount |  |   | Fair Value
|                                               |  | (dollars in thousands)
|Long-term debt and other short-term borrowings |  |                        |         |               |            |   |                 |  |   |            |   |  |   |        
|Fixed rate                                     |  | $                      | 250,000 |               |            | $ | 251,250         |  | $ | 250,000    |   |  | $ | 248,750
|Average interest rate                          |  |                        | 9.9     | %             |            |   |                |  |   | 9.9        | % |  |   |       
|Variable rate                                  |  | $                      | 21,250  |               |            | $ | 21,250          |  | $ | 21,250     |   |  | $ | 21,250 
|Average interest rate                          |  |                        | 5.7     | %             |            |   |                |  |   | 7.0        | % |  |   |       
|Fixed rate                                     |  | $                      | 572     |               |            | $ | 572             |  | $ | 194        |   |  | $ | 194    
|Interest rate                                  |  |                        | 7.5     | %             |            |   |                |  |   | 7.5        | % |  |   |       

Item 4. Controls and Procedures

As of June 30, 2006, we completed an evaluation, under the supervision and with the participation of our management, including our Chairman and Chief
Executive Officer and our Chief Financial Officer and Secretary, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chairman and Chief Executive Officer and Chief Financial
Officer and Secretary concluded that our disclosure controls and procedures are effective at a reasonable assurance level in timely alerting them to material information relating to us that is required to be included in our periodic Securities and
Exchange Commission filings.



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There have been no changes in our internal controls over financial reporting identified in connection
with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act during the second fiscal quarter of 2006, that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we are involved in ordinary routine litigation
incidental to our operations. Based on the existence of insurance coverage, we believe that any litigation currently pending or threatened against us will not have a material adverse effect on our unaudited consolidated condensed financial position
or results of operations.

Item 1A. Risk Factors

There have been no material changes in our risk factors as described in Part I, Item 1A of our 2005 Form 10-K.

Item 6. Exhibits

Incorporated herein by reference is a list of exhibits contained in the Exhibit Index on page 19 of
this report.



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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.



|                      |  |                              |  |                                                                                                   
|--------------------- |  | ---------------------------- |  | --------------------------------------------------------------------------------------------------
|                      |  | PETRO STOPPING CENTERS, L.P.
|                      |  |                              |  | (Registrant)                                                                                      
|                      |  |                             
|Date: August 14, 2006 |  | By:                          |  | /s/ Edward Escudero                                                                               
|                      |  |                              |  | Edward Escudero                                                                                   
|                      |  |                              |  | Chief Financial Officer and Secretary                                                             
|                      |  |                              |  | (On behalf of the Registrant and as Registrants Principal Financial and Chief Accounting Officer)

Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by
Registrants which have not Registered Securities Pursuant to Section 12 of the Act.

The Company has not sent and will not send a
quarterly report or proxy materials to its limited or general partners.



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.1         |  | Amended and Restated Certificate of Limited Partnership of Petro Stopping Centers, L.P., incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 001-13018).                                                                                                                                                                                                                                                                         
|            | 
|3.2         |  | Fourth Amended and Restated Limited Partnership Agreement of Petro Stopping Centers, L.P., dated July 23, 1999, by and among Petro Inc., as a General Partner and Petro Stopping Centers
Holdings, L.P., Petro Holdings GP, L.L.C., and James A. Cardwell, Jr., as Limited Partners, incorporated by reference to Exhibit 10.62 to our Current Report on Form 8-K, filed on August 6, 1999 (File No. 001-13018).                                                                                       
|            | 
|3.3         |  | First Amendment to the Fourth Amended and Restated Limited Partnership Agreement of Petro Stopping Centers, L.P., dated February 9, 2004, incorporated by reference to Exhibit 3.3 to our
Registration Statement on Form S-4, filed on May 10, 2004 (File No. 333-115358).                                                                                                                                                                                                                             
|            | 
|4.1         |  | Indenture, dated as of February 9, 2004, by and among Petro Stopping Centers, L.P. and Petro Financial Corporation, as Issuers, Petro Stopping Centers Holdings, L.P., Petro Holdings Financial
Corporation, and Petro Distributing, Inc., as Guarantors, and The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.9 to our Current Report on Form 8-K, filed on February 23, 2004 (File No. 001-13018).                                                                           
|            | 
|4.2         |  | First Supplemental Indenture, dated as of February 9, 2004, by and among Petro Stopping Centers, L.P. and Petro Financial Corporation, as Issuers, Petro Stopping Centers Holdings, L.P., Petro
Holdings Financial Corporation, and Petro Distributing, Inc., as Guarantors, and The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.10 to our Current Report on Form 8-K, filed on February 23, 2004 (File No.
001-13018).                                                       
|            | 
|10.43       |  | Fourth Amendment and Consent Relating to Credit Agreement, entered into as of July 14, 2006, among Petro Stopping Centers, L.P., Petro Stopping Centers Holdings, L.P., Petro Holdings
Financial Corporation, Petro Distributing, Inc., and Petro Financial Corporation, the Lenders, and Wells Fargo Bank, N.A., as Administrative Agent, Collateral Agent, and L/C Issuer, incorporated by reference to Exhibit 10.43 to our Current Report on
Form 8-K, filed on July 20, 2006 (File No. 001-13018).
|            | 
|31.1*       |  | Chairman and Chief Executive Officers Certification pursuant to Rule 13a-14(a) or 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|31.2*       |  | Chief Financial Officer and Secretarys Certification pursuant to Rule 13a-14(a) or 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|32*         |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                                                                                                                                                         

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|* | Filed herewith
|- | --------------



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