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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported) August 6, 2003
STAR GAS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 33-98490 06-1437793
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2187 Atlantic Street, Stamford, CT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 328-7300
-------------
Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99.1 A copy of the Press Release dated August 6, 2003
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On August 6, 2003, Star Gas Partners, L.P., a Delaware partnership (the
"Partnership"), issued a press release describing its financial results for the
three and nine-month periods ended June 30, 2003. A copy of the Partnership's
press release has been furnished as Exhibit 99.1 to this Current Report on Form
8-K.
The information in this report shall not be treated as "filed" for purposes of
the Securities Exchange Act of 1934, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STAR GAS PARTNERS, L.P.
By: Star Gas LLC (General Partner)
By: /s/ James Bottiglieri
---------------------------------
Name: James Bottiglieri
Title: Vice President
Date: August 6, 2003
Exhibit 99.1
Star Gas Partners, L.P. Reports 2003 Fiscal Third
Quarter Results, Achieves Record Q3 Sales of
$235.2 Million and Announces Six Acquisitions
STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 6, 2003--Star Gas Partners,
L.P. (the "Partnership" or "Star") (NYSE: SGU, SGH), a diversified
home energy distributor and services provider specializing in heating
oil, propane, natural gas and electricity, today reported results for
the fiscal 2003 third quarter and the nine months ended June 30, 2003.
Star also reported that since April 1, 2003 it has completed six
acquisitions consisting of 81 million gallons - including the
acquisition of Valero's home heating oil business in New England.
For the fiscal 2003 third quarter ended June 30, 2003, Star's
sales rose 25% to a record $235.2 million, versus $188.7 million in
the third quarter of fiscal 2002. This significant rise resulted from
higher energy prices, as well as a 6% volume increase. This volume
increase was the result of both the impact of colder weather during
the early part of the quarter as well as the contribution from 14
acquisitions made since April 1, 2002.
Star's fiscal third quarter is a non-heating period and the
operating loss rose from $20.7 million in 2002 to $26.4 million in
2003 primarily due to a) the expensing of $4.4 million tied to the
value of previously granted equity-based compensation; and, b) $2.0
million of reorganization expenses associated with the previously
announced heating oil division's Business Process Redesign Improvement
Program.
The third quarter seasonal net loss increased to $37.9 million
resulting from the aforementioned operating loss and from increased
interest expense largely due to financing higher levels of working
capital associated with increased sales. Diluted net loss per limited
partner unit rose to $1.15 per unit in the third quarter of fiscal
2003, from $1.02 per unit in the third quarter of fiscal 2002. EBITDA
for the three months ended June 30, 2003 was a loss of $13.2 million,
versus a loss of $5.6 million in the fiscal 2002 third quarter. This
decrease in EBITDA was primarily due to the same two factors that
accounted for the increased operating loss.
For the nine months ended June 30, 2003, sales increased 45% to a
record $1.3 billion, compared to $886.2 million in the same period in
fiscal 2002, due both to volume expansion and higher energy prices.
Operating income for the nine months ended June 30, 2003 increased 42%
to $99.0 million, from $69.8 million in the comparable period in
fiscal 2002. This was due primarily to a) an approximate 24% rise in
volume largely driven by colder temperatures; b) 19 acquisitions
consummated since October 1, 2001; and, c) a 1.3 cent per gallon
heating oil and propane gross profit margin increase, notwithstanding
historically high energy prices.
Net income for the nine months ended June 30, 2003 increased 47%
to $61.4 million, from $41.8 million in the comparable period in
fiscal 2002. Income before the cumulative effect of the change in
accounting principle for the adoption of SFAS No. 142, relating to
accounting for goodwill and other intangibles, rose 56% to $65.3
million, from $41.8 million in the comparable period of fiscal 2002.
This increase was primarily attributable to the operating income
increase, offset by higher income taxes and interest expense. Diluted
net income per limited partner unit grew to $1.87 per unit. Income per
limited partner unit before the cumulative effect of the change in
accounting principles for the adoption of SFAS No. 142 increased 35%
to $1.99, versus $1.47 in the comparable period in fiscal 2002.
EBITDA for the nine months ended June 30, 2003 rose $20.1 million
to $133.9 million. Included in EBITDA for that period was a charge of
$3.9 million for the cumulative effect of change in accounting
principle for the adoption of SFAS No. 142.
Star also announced that during the period from April 1, 2003 to
date, the Partnership has acquired six heating oil and propane
companies consisting of approximately 95,000 customers. These
acquisitions are expected to add 81 million gallons of annual volume,
representing an approximate 13% increase in Star's total volume. The
cumulative acquisition purchase price was $68.5 million, representing
a 5.3x anticipated EBITDA multiple. The largest acquisition was the
Ultramar New England Home Energy business, a unit of Valero Energy
Corporation (NYSE: VLO). The other five companies were SICO Heating
Oil Company of Mount Joy, Pennsylvania; Summit Gas Co., Coventry,
Rhode Island; DiFeo Oil & Gas, Brentwood, New Hampshire; Palmyra
Service Co., Palmyra, Maine; and, Carlos Leffler, Inc., Richland,
Pennsylvania.
Commenting on this performance, Chairman Irik P. Sevin stated, "We
are pleased that in the fiscal third quarter, the Partnership
performed operationally in-line with expectations. This enabled Star
to continue to realize the benefits from a) this past winter's cold
temperatures; b) the contribution from our acquisition program; and,
c) continued per gallon gross margin expansion. Of possibly even
greater long-term significance, however, was the heating oil
division's progress this past quarter in commencing the implementation
of its Business Process Improvement Program, the results of which we
hope to begin realizing in fiscal 2004."
Mr. Sevin went on to note, "We were also gratified with the
continuation of Star's active but disciplined acquisition program,
highlighted by the Partnership's selection as the purchaser of
Valero's home heating properties."
Star Gas Partners, L.P., is a leading distributor of home heating
oil, propane and deregulated natural gas and electricity. The
Partnership is the nation's largest retail distributor of home heating
oil and the nation's seventh largest retail propane distributor. Star,
through its wholly owned subsidiary Total Gas & Electric, also sells
natural gas and electricity in the Northeast, Mid-Atlantic and
Florida.
This news announcement contains certain forward-looking
information that is subject to certain risks and uncertainties as
indicated from time to time in the Partnership's 10-K, 10-Q, 8-K and
other filings with the Securities and Exchange Commission. Included
risks and uncertainties are the effects of the weather on the
Partnership's financial results, competitive and propane and heating
oil pricing pressures, realized savings from the Business Process
Improvement Program and other factors impacting the propane, home
heating oil, natural gas and electricity distribution industries.
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER DATA
(in thousands, except per unit data)
(unaudited)
Three Months Ended
June 30,
--------------------
2002 2003
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Sales $188,725 $235,220
Costs and expenses:
Cost of sales 127,012 166,411
Operating expenses 67,342 81,993
Depreciation and amortization expenses 15,027 13,248
-------- ---------
Operating loss (20,656) (26,432)
Interest expense, net 8,767 10,714
Amortization of debt issuance costs 417 606
-------- ---------
Loss before income taxes (29,840) (37,752)
Income tax expense 98 100
-------- ---------
Net loss $(29,938) $(37,852)
======== =========
General Partner's interest in net loss $ (331) $ (378)
======== =========
Limited Partners' interest in net loss $(29,607) $(37,474)
======== =========
Net loss per Limited Partner Unit:
Basic $ (1.02) $ (1.15)
======== =========
Diluted $ (1.02) $ (1.15)
======== =========
Basic weighted average number of
Limited Partner units outstanding 28,957 32,457
======== =========
Diluted number of Limited Partner units 28,957 32,457
======== ========
Supplementary Data:
Retail propane gallons sold 22,554 20,608
Home heating oil gallons sold 72,525 79,972
-------- ---------
Total gallons sold 95,079 100,580
======== =========
EBITDA (a) $ (5,629) $(13,184)
======== =========
(a) EBITDA should not be considered as an alternative to net income
(as an indicator of operating performance) or as an alternative to
cash flow (as a measure of liquidity or ability to service debt
obligations), but provides additional information for evaluating the
Partnership's ability to make the Minimum Quarterly Distribution.
EBITDA is calculated as follows:
Net loss $(29,938) $(37,852)
Plus:
Income tax expense 98 100
Amortization of debt issuance costs 417 606
Interest expense, net 8,767 10,714
Depreciation and amortization 15,027 13,248
-------- ---------
EBITDA $ (5,629) $(13,184)
======== =========
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER DATA
(in thousands, except per unit data)
(unaudited)
Nine Months Ended
June 30,
--------------------
2002 2003
-------- ----------
Sales $886,233 $1,289,020
Costs and expenses:
Cost of sales 563,241 881,019
Operating expenses 209,175 270,034
Depreciation and amortization expenses 44,039 38,981
-------- ----------
Operating income 69,778 98,986
Interest expense, net 28,668 29,722
Amortization of debt issuance costs 1,036 1,597
Loss on redemption of debt - 181
-------- ----------
Income before income taxes and cumulative
effect of change in accounting principle 40,074 67,486
Income tax expense (benefit) (1,707) 2,235
-------- ----------
Income before cumulative effect of change in
accounting principle 41,781 65,251
Cumulative effect of change in accounting
principle for adoption of SFAS No. 142 - 3,901
-------- ----------
Net income $ 41,781 $ 61,350
======== ==========
General Partner's interest in net income $ 488 $ 614
======== ==========
Limited Partners' interest in net income $ 41,293 $ 60,736
======== ==========
Net income per Limited Partner Unit:
Basic $ 1.47 $ 1.87
======== ==========
Diluted $ 1.47 $ 1.87
======== ==========
Basic weighted average number of
Limited Partner units outstanding 28,068 32,453
======== ==========
Diluted number of Limited Partner units 28,110 32,561
======== ==========
Supplementary Data:
Retail propane gallons sold 118,394 142,747
Home heating oil gallons sold 419,175 524,448
-------- ----------
Total gallons sold 537,569 667,195
======== ==========
EBITDA (a) $113,817 $ 133,885
======== ==========
(a) EBITDA should not be considered as an alternative to net income
(as an indicator of operating performance) or as an alternative to
cash flow (as a measure of liquidity or ability to service debt
obligations), but provides additional information for evaluating the
Partnership's ability to make the Minimum Quarterly Distribution.
EBITDA is calculated as follows:
Net income $ 41,781 $ 61,350
Plus:
Income tax expense (benefit) (1,707) 2,235
Amortization of debt issuance costs 1,036 1,597
Interest expense, net 28,668 29,722
Depreciation and amortization 44,039 38,981
-------- --------
EBITDA $113,817 $133,885
======== ========
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, June 30,
2002 2003
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(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 61,481 $ 15,010
Receivables, net of allowance of $8,282
and $10,082, respectively 83,452 146,163
Inventories 39,453 35,859
Prepaid expenses and other current assets 37,815 38,913
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Total current assets 222,201 235,945
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Property and equipment, net 241,892 251,771
Long-term portion of accounts receivables 6,672 6,409
Goodwill 264,551 273,923
Intangibles, net 193,370 188,223
Deferred charges and other assets, net 15,080 13,859
------------- -------------
Total Assets $ 943,766 $ 970,130
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $ 20,360 $ 25,857
Working capital facility borrowings 26,195 23,000
Current maturities of long-term debt 72,113 23,376
Accrued expenses 69,444 88,547
Unearned service contract revenue 30,549 28,801
Customer credit balances 70,583 24,883
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Total current liabilities 289,244 214,464
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Long-term debt 396,733 490,648
Other long-term liabilities 25,525 26,671
Partners' capital
Common unitholders 242,696 247,119
Subordinated unitholders 3,105 7,740
General partner (2,710) (2,284)
Accumulated other comprehensive loss (10,827) (14,228)
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Total Partners' capital 232,264 238,347
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Total Liabilities and Partners'
Capital $ 943,766 $ 970,130
============= =============
CONTACT: Star Gas Partners, L.P.
Richard F. Ambury, 203/328-7310
or
Jaffoni & Collins Incorporated
Robert L. Rinderman / Purdy Tran, 212/835-8500
SGU@jcir.com