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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) April 29, 2004
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
--------------------------------------------
(Former name or former address, if changed since last report.)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 A copy of the Star Gas Partners, L.P. Press Release dated April
29, 2004
ITEM 9. REGULATION FD DISCLOSURE
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 29, 2004, Star Gas Partners, L.P., a Delaware partnership (the
"Partnership"), issued a press release describing its financial results for its
fiscal second quarter ended March 31, 2004. 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: April 29, 2004
EXHIBIT 99.1
Star Gas Partners, L.P. Reports Fiscal 2004 Second Quarter Results;
Declares Second Quarter Distribution
STAMFORD, Conn.--(BUSINESS WIRE)--April 29, 2004--Star Gas
Partners, L.P. (the "Partnership" or "Star") (NYSE: SGU, SGH), a
diversified home energy distributor and services provider specializing
in heating oil and propane, today reported results for the fiscal 2004
second quarter and six months ended March 31, 2004. Star also declared
its $0.575 per unit Minimum Quarterly Distribution on all units for
the quarter ended March 31, 2004, payable on May 14, 2004 to
unitholders of record as of May 10, 2004.
For the three months ended March 31, 2004, Star's volume increased
approximately 1% to 352 million gallons, versus 349 million gallons in
the second quarter of fiscal 2003. This increase is primarily
attributable to the effect of Star's acquisition of 11 companies since
January 1, 2003, which more than offset the negative impact of changes
in delivery scheduling, temperatures that were warmer in the second
quarter of 2004 than the colder weather experienced in the comparable
prior year period and net customer losses. Notwithstanding the effect
of Star's acquisition program and 1.5 cents per gallon higher heating
oil and propane gross profit margins, operating income declined by
$0.3 million to $93.4 million. This was due to $1.8 million in higher
depreciation and amortization expense, as well as the effect of warmer
weather, delivery patterns and account losses.
Net income for the three months ended March 31, 2004 declined to
$80.7 million, from $83.2 million in the comparable period last year.
This was primarily due to lower income from discontinued operations,
relating to the Partnership's Total Gas & Electric subsidiary, which
was sold on March 31, 2004, an increase in interest expense, as well
as from the slight decline in operating income. Diluted net income per
limited partner unit declined to $2.27 per unit in the fiscal 2004
second quarter from $2.53 in the comparable period in fiscal 2003 due
to the decline in net income as well as the increased number of units
outstanding used to finance Star's acquisition program and improve its
capital structure.
EBITDA from continuing operations for the three months ended March
31, 2004 increased approximately 2% to $108.0 million from $106.3
million in the comparable period last year. The EBITDA from continuing
operations increase was primarily attributable to Star's acquisition
program and a gross profit margin increase.
During the quarter, the Partnership raised $73.6 million by
issuing $35.0 million of its Senior Notes due 2013, at a premium to
par for total proceeds of $38.6 million, and by selling 1.495 million
common units for $35.0 million. The proceeds from these financings
were used to repay amounts outstanding under the Partnership's
acquisition facilities and to fund all scheduled debt amortizations
for fiscal 2004. As a result of these financings, the Partnership had
$96.6 million available under its revolving acquisition facilities as
of March 31, 2004.
Star also reported that on March 30, 2004, it purchased Tri-County
Fuel Oil of Perth Amboy, NJ. Tri-County had 1,650 customers and 1.5
million gallons of annual volume.
For the six months ended March 31, 2004, volume increased 2% to
583 million gallons, versus 571 million gallons in the same period in
fiscal 2003, despite 5% warmer temperatures than last year. This was
due to the effect of the 13 companies acquired since October 1, 2003.
Operating income for the six months ended March 31, 2004 increased
approximately $0.4 million to $124.6 million, from $124.2 million in
the comparable period in 2003. This increase was due primarily to
Star's acquisition program and an approximate 1.0 cent per gallon
increase in per gallon gross profit margins. Higher depreciation and
amortization of $3.5 million largely relating to acquisitions reduced
these increases.
Net income for the period increased approximately $0.8 million to
$100.0 million, from $99.2 million in the comparable period in fiscal
2003. This was primarily due to the aforementioned operating income
increase, as well as the adoption in fiscal 2003 of SFAS No. 142
relating to accounting for goodwill and other intangibles, which
reduced fiscal 2003 first half net income by $3.9 million, offset by
increased interest expense in fiscal 2004. Diluted net income per
limited partner unit declined from $3.02 in the first six months of
fiscal 2003, to $2.86 in the comparable period in fiscal 2004, due to
an increase in the number of units outstanding relating to the
Partnerships acquisition program and its improved capital structure.
In commenting on this performance, Chairman Irik P. Sevin stated:
"We are pleased by a) Star's continued aggressive, yet disciplined
acquisition program; b) the initial benefits from the Petro Division's
Business Process Redesign Program; and, c) the excellent performance
of the propane division, which has successfully integrated nine
acquisitions since October 1, 2003, while at the same time improving
base business operations. In addition, Star's capital raising
activities has improved its financial flexibility."
Mr. Sevin went on to note: "While we achieved certain benefits
from the Petro Division's Business Process Redesign Program, they were
not as significant as we had expected in this, the first year of its
execution. However, we now have the foundation of a platform, which we
believe will enable us to capitalize on Petro's unique size to build a
brand in the highly fragmented home heating oil industry. This should
enable us to eventually grow internally as well as through
acquisitions. We are also pleased with having sold, for a slight gain,
our TG&E subsidiary, which we believe did not fit with the
Partnership's long-term strategy."
Star Gas Partners, L.P., is a leading distributor of home heating
oil and propane. The Partnership is the nation's largest retail
distributor of home heating oil and the nation's seventh largest
retail propane distributor. Additional information is available at
www.star-gas.com.
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 and other factors impacting the propane and home
heating oil distribution industries.
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Three Months Ended
March 31,
------------ ------------
2004 2003
------------ ------------
Sales $ 625,389 $ 628,704
Costs and expenses:
Cost of sales 410,165 423,816
Operating expenses 107,254 98,392
Depreciation and amortization expenses 14,597 12,788
------------ ------------
Operating income 93,373 93,708
Interest expense, net (11,928) (10,537)
Amortization of debt issuance costs (774) (554)
Loss on redemption of debt - (181)
------------ ------------
Income from continuing operations
before income taxes 80,671 82,436
Income tax expense 744 1,460
------------ ------------
Income from continuing operations 79,927 80,976
Income from discontinued operations before gain
on sale of TG&E segment, net of income taxes 496 2,187
Gain on sale of TG&E segment, net of income
taxes 230 -
------------ ------------
Net income $ 80,653 $ 83,163
============ ============
General Partner's interest in net income $ 739 $ 832
============ ============
Limited Partners' interest in net income $ 79,914 $ 82,331
============ ============
Net income per Limited Partner unit:
Basic $ 2.27 $ 2.54
============ ============
Diluted $ 2.27 $ 2.53
============ ============
Basic weighted average number of
Limited Partner units outstanding 35,158 32,453
============ ============
Diluted number of Limited Partner units 35,158 32,561
============ ============
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Six Months Ended
March 31,
-------------------------
2004 2003
------------ ------------
Sales $ 1,043,406 $ 1,000,035
Costs and expenses:
Cost of sales 690,442 667,302
Operating expenses 199,350 183,063
Depreciation and amortization expenses 29,022 25,512
------------ ------------
Operating income 124,592 124,158
Interest expense, net (22,747) (18,826)
Amortization of debt issuance costs (2,043) (991)
Loss on redemption of debt - (181)
------------ ------------
Income from continuing operations
before income taxes 99,802 104,160
Income tax expense 1,150 2,135
------------ ------------
Income from continuing operations 98,652 102,025
Income from discontinued operations before
gain on sale of TG&E segment and cumulative
effect of change in accounting principle,
net of income taxes 1,083 1,078
Gain on sale of TG&E segment, net of income
taxes 230 -
Cumulative effect of change in accounting
principle for adoption of SFAS No. 142 for
discontinued operations - (3,901)
------------ ------------
Net income $ 99,965 $ 99,202
============ ============
General Partner's interest in net income $ 933 $ 992
============ ============
Limited Partners' interest in net income $ 99,032 $ 98,210
============ ============
Net income per Limited Partner unit:
Basic $ 2.86 $ 3.03
============ ============
Diluted $ 2.86 $ 3.02
============ ============
Basic weighted average number of
Limited Partner units outstanding 34,655 32,452
============ ============
Diluted number of Limited Partner units 34,655 32,560
============ ============
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
SUPPLEMENTARY DATA
(in thousands)
Earnings before interest, taxes, depreciation and amortization from
continuing operations (EBITDA)
The Partnership uses EBITDA as a measure of liquidity and it is being
included because the Partnership believes that it provides investors
and industry analysts with additional information to evaluate the
Partnership's ability to pay quarterly distributions. EBITDA is not a
recognized term under generally accepted accounting principles
("GAAP") and should not be considered as an alternative to net
income/(loss) or net cash provided by operating activities determined
in accordance with GAAP. Because EBITDA as determined by the
Partnership excludes some, but not all of the items that affect net
income/(loss), it may not be comparable to EBITDA or similarly titled
measures used by other companies. The following table sets forth (i)
the calculation of EBITDA and (ii) a reconciliation of EBITDA, as so
calculated, to cash provided by operating activities:
Three Months
Ended March 31,
-------------------------
2004 2003
------------ ------------
Income from continuing operations $ 79,927 $ 80,976
Plus:
Income tax expense 744 1,460
Amortization of debt issuance costs 774 554
Interest expense, net 11,928 10,537
Depreciation and amortization 14,597 12,788
------------ ------------
EBITDA $ 107,970 $ 106,315
============ ============
Six Months
Ended March 31,
-------------------------
2004 2003
------------ ------------
Income from continuing operations $ 98,652 $ 102,025
Plus:
Income tax expense 1,150 2,135
Amortization of debt issuance costs 2,043 991
Interest expense, net 22,747 18,826
Depreciation and amortization 29,022 25,512
------------ ------------
EBITDA 153,614 149,489
Add/(subtract)
Loss on redemption of debt - 181
Income tax expense (1,150) (2,135)
Interest expense, net (22,747) (18,826)
Unit compensation expense 84 1,023
Provision for losses on accounts
receivable 3,703 2,452
Loss (gain) on sales of fixed assets, net (149) 54
Change in operating assets and liabilities (175,934) (214,348)
------------ ------------
Net cash used in operating activities $ (42,579) $ (82,110)
============ ============
2004 2003
------------ ------------
Total gallons sold:
Three months ended March 31, 352,476 349,383
============ ============
Six months ended March 31, 582,552 571,283
============ ============
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Mar. 31, Sept. 30,
2004 2003
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 25,677 $ 10,044
Receivables, net of allowance of $9,344 and
$7,542, respectively 218,743 100,511
Inventories 55,911 38,561
Prepaid expenses and other current assets 46,200 51,470
Net current assets of discontinued
operations - 10,523
------------ ------------
Total current assets 346,531 211,109
------------ ------------
Property and equipment, net 254,082 261,867
Long-term portion of accounts receivables 7,114 7,145
Goodwill 273,350 272,740
Intangibles, net 187,255 201,468
Deferred charges and other assets, net 17,982 14,414
Net long-term assets of discontinued
operations - 6,867
------------ ------------
Total Assets $ 1,086,314 $ 975,610
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $ 32,440 $ 27,140
Working capital facility borrowings 85,100 12,000
Current maturities of long-term debt 22,586 22,847
Accrued expenses 81,764 82,356
Unearned service contract revenue 33,427 32,036
Customer credit balances 26,772 74,716
Net current liabilities of discontinued
operations - 7,569
------------ ------------
Total current liabilities 282,089 258,664
------------ ------------
Long-term debt 488,496 499,341
Other long-term liabilities 27,442 27,829
Partners' Capital (Deficit)
Common unitholders 298,486 210,636
Subordinated unitholders 6,006 (57)
General partner (2,523) (3,082)
Accumulated other comprehensive loss (13,682) (17,721)
------------ ------------
Total Partners' capital 288,287 189,776
------------ ------------
Total Liabilities and Partners' Capital $ 1,086,314 $ 975,610
============ ============
CONTACT: Star Gas Partners, L.P.
Richard F. Ambury , 203-328-7300
or
Jaffoni & Collins Incorporated
Robert L. Rinderman, Purdy Tran
212-835-8500 or SGU@jcir.com