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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) December 13, 2005
STAR GAS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 011-14129 06-1437793
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
2187 Atlantic Street, Stamford, CT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 328-7310
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|X| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|X| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On December 13, 2005, Star Gas Partners, L.P., a Delaware partnership (the
"Partnership"), issued a press release announcing its financial results for its
fiscal fourth quarter ending September 30, 2005. A copy of the press release is
furnished within this report as Exhibit 99.1.
The information in this report is being furnished, and is not deemed as "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
and shall not be deemed incorporated by reference in any filings under the
Securities Act of 1933, as amended, unless specifically stated so therein.
ITEM 7.01. REGULATION FD DISCLOSURE
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 A copy of the Star Gas Partners, L P. Press Release
dated December 13, 2005
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/ Richard F. Ambury
------------------------------------
Name: Richard F. Ambury
Title: Chief Financial Officer
Principal Financial & Accounting Officer
Date: December 13, 2005
Exhibit 99.1
Star Gas Partners, L.P. Reports Fiscal 2005 Fourth Quarter Results
STAMFORD, Conn.--(BUSINESS WIRE)--Dec. 13, 2005--Star Gas
Partners, L.P. (the "Partnership" or "Star") (NYSE: SGU, SGH), a home
energy distributor and services provider specializing in heating oil,
today announced financial results for its fiscal 2005 fourth quarter,
a non-heating season period, and the twelve-month period ended
September 30, 2005. On December 17, 2004, the Partnership sold its
propane segment and in March 2004 divested its TG&E segment.
Consequently, the historical results of both of these segments are
accounted for as discontinued operations in the Partnership's
financial statements.
Separately, on December 5, 2005, Star announced that the board of
directors of its general partner, Star Gas LLC, had approved a
strategic recapitalization that, if approved by unitholders and
completed, would result in a reduction in the amount of Star's 10.25%
Senior Notes of between approximately $87 and $100 million. Pursuant
to the recapitalization, Kestrel Energy Partners, LLC and its
affiliates have agreed to purchase $15 million in new equity capital
and also to provide a standby commitment in a $35 million rights
offering to Star's common unitholders.
The combined $50 million in new equity financing, plus an
additional $10 million to $23.1 million from Star's operations, would
be utilized to repurchase at least $60 million in face amount of
Star's Senior Notes and, at our option, up to $73.1 million of Senior
Notes. The Partnership's senior noteholders have also agreed to
convert an additional $26.9 million in face amount of Star's Senior
Notes into common units. All common unit conversions and purchases
would be valued at a price of $2.00 per unit. Further details on these
agreements are available in the Partnership's Current Report on Form
8-K and news announcement issued on December 5.
For the fiscal 2005 fourth quarter, Star reported a 17.8 percent
increase in total revenues to $150.7 million, compared to total
revenues of $127.9 million in the year ago period, as higher selling
prices more than offset a reduction in sales of home heating oil.
Average wholesale prices of product cost increased 55.1 percent to
$1.73 per gallon for the fourth fiscal quarter, compared to $1.11 for
the prior year period. Home heating oil volume for the fiscal fourth
quarter declined 16.6 percent year-over-year, from 41.1 million
gallons to 34.2 million gallons.
The home heating oil volume decline was due to net customer
attrition, continued conservation and to a certain extent, warmer
temperatures. For the fiscal 2005 fourth quarter, Star lost
approximately 15,800 accounts (net), or 3.2 percent of its home
heating oil customer base, as compared to the fiscal 2004 fourth
quarter in which Star lost 10,900 accounts (net), or 2.1 percent of
its customer base. This increased loss of approximately 4,900 accounts
is largely due to losses attributable to accounts that were renewed at
a lower than Star's targeted fixed price margin in the summer and fall
of 2004 and who chose not to renew at higher prices in fiscal 2005.
Home heating oil per gallon margins for the fiscal 2005 fourth
quarter rose by 7.0 cents per gallon, versus the corresponding 2004
period as the Partnership was able to take advantage of rare
opportunities in the commodity market because of its owned storage
facilities, the loss of certain low margin price protected customers
and a more disciplined approach to product pricing. In addition, home
heating oil margins were comparatively lower in the three months ended
September 30, 2004, as the heating oil segment chose for marketing
reasons not to fully pass on the increase in cost of product to its
customers. The loss from service improved by $4.1 million from a loss
of $3.0 million for the fiscal 2004 fourth quarter to a profit of $1.1
million for the fiscal 2005 fourth quarter.
Total operating expenses increased by $3.7 million to $55.0
million for the fiscal 2005 fourth quarter as compared to $51.3
million for the prior year's quarter. This increase was due to higher
bad debt expenses, credit card processing fees and other collection
expenses of $2.3 million driven by the increase in the underlying cost
of home heating oil, an increase in premiums for officers and
directors insurance of $0.5 million, higher legal and professional
fees of $2.0 million associated with exploring refinancing and
restructuring alternatives, and $0.5 million for compliance with
Sarbanes-Oxley. The fiscal 2005 fourth quarter comparisons were
unfavorably impacted by a $4.2 million credit recorded in the fiscal
2004 fourth quarter relating to unit appreciation rights. In the
fiscal 2004 fourth quarter, the decline in the unit price for Star's
senior subordinated units resulted in reversing a previously recorded
unit appreciation rights expense of $4.2 million. These increases were
partially offset by an estimated $2.9 million of variable costs due to
the lower home heating oil volume sold, lower administration overhead
expense of $1.0 million, reduced marketing expenses of $0.9 million,
and lower process improvement expenses of $0.7 million.
In the fiscal 2005 fourth quarter, the Partnership recorded an
operating loss of $40.0 million, unchanged from the prior year's
comparable period, as the benefit of higher per gallon margins and
lower net service expense were offset by lower home heating oil volume
and the increase in operating expenses, including depreciation.
Star's net loss during the fiscal 2005 fourth quarter declined
$16.3 million on a year-over-year basis, from $63.3 million in fiscal
2004, to $47.0 million in 2005. The year-over-year improvement was
favorably impacted by the absence of a $12.2 million loss from
discontinued operations in the fiscal 2005 quarter that the
Partnership experienced in the 2004 fiscal fourth quarter and lower
net interest expense of $3.5 million, as the Partnership utilized a
portion of the proceeds from the sale of the propane segment to reduce
long-term debt.
For the fiscal 2005 fourth quarter, the Partnership reported an
EBITDA (Income (loss) from Continuing Operations Before Interest,
Taxes, Depreciation and Amortization) loss of $31.4 million, compared
to an EBITDA loss of $30.9 million in the prior-year period, as the
benefit of higher per gallon margins and lower net service expense was
reduced by higher operating costs (which included $2.0 million in
legal and professional fees associated with exploring refinancing and
restructuring alternatives, $0.5 million for compliance with
Sarbanes-Oxley) and the absence of a $4.2 million benefit in
compensation expense relating to Unit Appreciation Rights. EBITDA is a
non-GAAP financial measure (see reconciliation below) that 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). Management
believes this information is of interest to investors as a
supplemental measure of the Partnership's operating performance and
provides additional information for evaluating the Partnership's
ability to make the Minimum Quarterly Distribution.
Commenting on the Partnership's results and recent material
developments, Star Gas Partners Chief Executive Officer Joseph P.
Cavanaugh, stated, "Given the continuing volatility in home heating
oil prices and the competitive environment in our industry we have
been experiencing over the last several years, we believe the proposed
strategic recapitalization, announced in early December, is a very
welcome development for Star and all its stakeholders.
"The proposed recapitalization will substantially strengthen the
Partnership's balance sheet, assisting us in better meeting liquidity
and capital requirements. We are also delighted about the involvement
of Kestrel Energy Partners and its principal investor Yorktown Energy
Partners VI, L.P. in these transactions, as well as their vote of
confidence in Star's senior management team, our valued employees and
the future of this organization.
"We believe that our fourth quarter results, combined with the
proposed recapitalization and agreements with our senior noteholders,
bode well for our future success. We were able to increase our
margins, achieve a profit on our service and installation operation,
and keep our ongoing operating costs under control. We are also
continuing our initiative of moving toward the decentralization of our
operations to maximize contact at the local level, while continuing to
assess the efficiency of certain centralized operations. Although net
customer attrition is a concern, our top priority is to continue
addressing that issue.
"The success of the proposed recapitalization is crucial to our
ability to continue to put the Partnership on sound footing. Our
employees, our customers, our suppliers and our investors need and
want to see that the financial concerns of the past year are behind us
and that we will have the ability to operate successfully and
efficiently, while capitalizing upon the opportunity to grow our
business through a well planned and well executed acquisition
program."
For fiscal 2005, Star's revenues increased 14.0 percent to $1.3
billion, compared to $1.1 billion in fiscal 2004, as increases in
selling prices more than offset lower volume. Average wholesale supply
costs for the year increased 49.3 percent to $1.40 per gallon, while
home heating oil volume declined 11.7 percent to 487.3 million
gallons, compared to the prior-year total of 551.6 million gallons. A
rise in net customer attrition to 7.1 percent during fiscal 2005,
versus 6.4 percent in fiscal 2004, customer conservation due to higher
heating oil prices, delivery scheduling and other factors were a drag
on heating oil volume during the year, partially offset by slightly
colder temperatures and the impact of acquisitions.
For fiscal 2005, the Partnership lost 35,100 accounts (net) or
2,000 more than the 33,100 accounts (net) lost in fiscal 2004. The
Partnership has continued to experience net customer attrition in
fiscal 2006. For the period from October 1 to November 30, 2005, Star
lost 4,300 accounts (net), or 0.9 percent of its customer base as
compared to the previous October 1 to November 30, 2004 period in
which Star gained 500 accounts (net), or 0.1 percent of its customer
base.
Home heating oil per gallon margins for fiscal 2005 declined by
1.3 cents per gallon, versus fiscal 2004. Certain hedging and pricing
issues totaling $7.8 million adversely impacted per gallon margins by
1.6 cents per gallon in fiscal 2005, primarily during the first and
second fiscal quarters. Gross profit from service improved by $12.1
million to a loss of $9.2 million for fiscal 2005, as compared to a
loss of $21.3 million for fiscal 2004. On a per gallon basis, gross
profit from service improved by 2.0 cents per gallon.
For fiscal 2005, operating expenses increased $22.1 million to
$275.0 million, as compared to $252.9 million for fiscal 2004, due to
(i) bridge facility, legal and bank amendment expenses of $15.3
million, (ii) $4.1 million in expenses for compliance with
Sarbanes-Oxley, (iii) $3.8 million in expense relating to separation
agreements with former executives, (iv)$4.9 million in higher bad
debt, credit card processing fees and related expenses and, (v) wage
and benefit increases estimated to be $5.9 million. These increases
were partially offset by a reduction in operating costs due to the
variable nature of certain operating expenses, which declined with the
lower home heating oil volume sold, as well as lower business process
improvement expenses of $1.4 million and lower administration overhead
of $1.2 million.
For fiscal 2005, the Partnership reported an operating loss of
$101.8 million, compared to operating income of $15.8 million for
fiscal 2004. The decline was attributable to a $67.0 million non-cash
goodwill impairment charge in the second quarter of fiscal 2005, lower
margin from the sale of petroleum products of $42.4 million, a $22.1
million increase in operating expenses, offset in part by a $12.1
million increase in service profitability, as well as a decrease in
depreciation and amortization expense of $1.8 million.
Star's net loss for fiscal 2005 was $25.9 million, versus a $5.9
million net loss for fiscal 2004, as the decline in operating income
from continuing operations of $153.3 million, and the reduction in
income from discontinued operations of $24.8 million, were partially
offset by a $157.6 million gain on the sale of discontinued
operations. Contributing to the loss from continuing operations in
fiscal 2005 was a $42.1 million loss on the early redemption of
certain notes in the first quarter of fiscal 2005.
EBITDA (Income (loss) from Continuing Operations Before Interest,
Taxes, Depreciation and Amortization) for the twelve months ended
September 30, 2005 declined by $161.5 million, to an EBITDA loss of
$108.4 million, compared to positive EBITDA of $53.1 million in the
year-ago period. The decrease was due to the $67.0 million non-cash
goodwill impairment charge, a debt redemption loss of $42.1 million,
bridge facility, bank amendment and legal fees totaling $15.3 million,
lower profit margins of $42.4 million from product sales, $3.8 million
in compensation expense related to severance agreements with former
executives and Sarbanes-Oxley compliance expenses of $4.1 million
offset in part by a $12.1 million increase in service profitability.
EBITDA is a non-GAAP financial measure (see reconciliation below) that
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).
Management believes this information is of interest to investors as a
supplemental measure of the Partnership's operating performance and
provides additional information for evaluating the Partnership's
ability to make the Minimum Quarterly Distribution.
In December 2004, we completed the sale of our propane segment.
Pursuant to the terms of the indenture relating to our senior notes,
we are permitted, within 360 days of the sale, to apply the Net
Proceeds to a Permitted Use. To the extent there are any Excess
Proceeds, the indenture requires us to make an offer to all holders of
Senior Notes to purchase for cash that number of Senior Notes that may
be purchased with Excess Proceeds at a purchase price equal to 100% of
the principal amount of the Senior Notes plus accrued and unpaid
interest to the date of purchase.
After payment of certain debt and transaction expenses, the Net
Proceeds from the propane segment sale were approximately $156.3
million. As of September 30, 2005, we had utilized $53.1 million of
such Net Proceeds to invest in working capital assets, purchase
capital assets and repay long-term debt, which reduced the amount of
Net Proceeds in excess of $10 million not applied toward a Permitted
Use to $93.2 million as of September 30, 2005. As of December 2, 2005
all Excess Proceeds have been applied toward a Permitted Use.
We understand, based on informal communications, that certain
holders of senior notes may take the position that the use of Net
Proceeds to invest in working capital is not a Permitted Use under the
indenture. We disagree with this position and have communicated our
disagreement with these noteholders. However, if our position is
challenged and we are unsuccessful in defending our position, this
would constitute an event of default under the indenture if declared
either by the holders of 25% in principal amount of the Senior Notes
or by the trustee. In such event, all amounts due under the Senior
Notes would become immediately due and payable, which would have a
material adverse effect on our ability to continue as a going concern.
The report of our independent registered public accounting firm on our
consolidated financial statements as of September 30, 2005 and 2004,
and for the three years ended September 30, 2005, includes an
explanatory paragraph raising substantial doubt on our ability to
continue as a going concern if this matter is resolved adversely to
us. We have reached an agreement with the holders of 94% in aggregate
principal amount of the senior notes to resolve this matter, which is
subject to our completing the proposed recapitalization, of which
there can be no assurance.
REMINDER: Star Gas management will host a conference call and
webcast today at 1:00 p.m. (ET). Conference call dial-in is
888/391-0235 or 402/977-9140 (international callers). A webcast is
also available at www.star-gas.com and at www.vcall.com
Star Gas Partners, L.P., is the nation's largest retail
distributor of home heating oil. Additional information is available
by obtaining the Partnership's SEC filings and by visiting Star's
website at www.star-gas.com.
Additional Information and Where to Find It
This communication is not a solicitation of a proxy from any
security holder of the Partnership and does not constitute an offer of
any securities for sale. Star expects to mail a Proxy Statement to its
unitholders concerning the proposed recapitalization and to file with
the Securities and Exchange Commission a Registration Statement
relating to the rights offering. WE URGE INVESTORS AND SECURITY
HOLDERS TO READ THE PROXY STATEMENT AND PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be able to
obtain the documents free of charge at the SEC's website, www.sec.gov.
In addition, documents filed with the SEC by Star will be available
free of charge upon request from: Star's website at
http://www.star-gas.com/docreq.cfm or by calling 877/422-5748.
Forward Looking Information
This news release includes "forward-looking statements" which
represent the Partnership's expectations or beliefs concerning future
events that involve risks and uncertainties, including those
associated with the recapitalization, the approval of the unit
purchase agreement, the effect of weather conditions on our financial
performance, the price and supply of home heating oil, the consumption
patterns of our customers, our ability to obtain satisfactory gross
profit margins, our ability to obtain new accounts and retain existing
accounts, our ability to effect strategic acquisitions or redeploy
assets, the ultimate disposition of Excess Proceeds from the sale of
the propane segment, the impact of litigation, the impact of the
business process redesign project at the heating oil segment and our
ability to address issues related to that project, our ability to
contract for our future supply needs, natural gas conversions, future
union relations and outcome of current union negotiations, the impact
of future environmental, health, and safety regulations, customer
credit worthiness, and marketing plans. All statements other than
statements of historical facts included in this news release are
forward-looking statements. Although the Partnership believes that the
expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove
to have been correct. Important factors that could cause actual
results to differ materially from the Partnership's expectations
("Cautionary Statements") are disclosed in this news release and in
the Partnership's Annual Report on Form 10-K for the year ended
September 30, 2005 including without limitation and in conjunction
with the forward-looking statements included in this news release. All
subsequent written and oral forward-looking statements attributable to
the Partnership or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements. Unless
otherwise required by law, the Partnership undertakes no obligation to
update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise after the date of this
news release.
(financials follow)
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, Sept. 30,
(in thousands) 2004 2005
--------- ---------
ASSETS
Current assets
Cash and cash equivalents $4,692 $99,148
Receivables, net of allowance of $5,622 and
$8,433, respectively 84,005 89,703
Inventories 34,213 52,461
Prepaid expenses and other current assets 60,973 70,120
Current assets of discontinued operations 50,288 -
--------- ---------
Total current assets 234,171 311,432
--------- ---------
Property and equipment, net 63,701 50,022
Long-term portion of accounts receivables 5,458 3,788
Goodwill 233,522 166,522
Intangibles, net 103,925 82,345
Deferred charges and other assets, net 13,885 15,152
Long-term assets of discontinued operations 306,314 -
--------- ---------
Total Assets $960,976 $629,261
--------- ---------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $25,010 $19,780
Working capital facility borrowings 8,000 6,562
Current maturities of long-term debt 24,418 796
Accrued expenses 65,491 56,580
Unearned service contract revenue 35,361 36,602
Customer credit balances 53,927 65,287
Current liabilities of discontinued operations 50,676 -
--------- ---------
Total current liabilities 262,883 185,607
--------- ---------
Long-term debt 503,668 267,417
Other long-term liabilities 24,654 31,129
Partners' capital (deficit)
Common unitholders 167,367 144,312
Subordinated unitholders (6,768) (8,930)
General partner (3,702) (3,936)
Accumulated other comprehensive income 12,874 13,662
--------- ---------
Total Partners' capital 169,771 145,108
--------- ---------
Total Liabilities and Partners' Capital $960,976 $629,261
--------- ---------
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
Sept. 30, Sept. 30,
------------------------------------------
(in thousands,
except per unit data) 2004 2005 2004 2005
--------- --------- ---------- -----------
Sales:
Product $84,832 $105,412 $921,443 $1,071,270
Installations and service 43,079 45,287 183,648 188,208
--------- --------- ---------- -----------
Total sales 127,911 150,699 1,105,091 1,259,478
Cost and expenses:
Cost of product 61,494 82,901 594,153 786,349
Cost of installations and
service 46,060 44,199 204,902 197,430
Operating expenses 51,297 54,998 252,922 274,999
Depreciation and
amortization expenses 9,100 8,564 37,313 35,480
Goodwill impairment charge - - - 67,000
--------- --------- ---------- -----------
Operating income (loss) (40,040) (39,963) 15,801 (101,780)
Interest expense (10,274) (7,429) (40,072) (36,152)
Interest income 715 1,348 3,390 4,314
Amortization of debt
issuance costs (767) (612) (3,480) (2,540)
Loss on redemption of debt - - - (42,082)
--------- --------- ---------- -----------
Loss from continuing
operations before income
taxes (50,366) (46,656) (24,361) (178,240)
Income tax expense 240 2,096 1,240 696
--------- --------- ---------- -----------
Loss from continuing
operations (50,606) (48,752) (25,601) (178,936)
Income (loss) from
discontinued operations,
net of income taxes (12,170) - 20,276 (4,552)
Gain (loss) on sales of
discontinued operations,
net of income taxes (521) 1,800 (538) 157,560
--------- --------- ---------- -----------
Net loss $(63,297) $(46,952) $(5,863) $(25,928)
--------- --------- ---------- -----------
General Partner's interest
in net loss $(585) $(423) $(57) $(234)
--------- --------- ---------- -----------
Limited Partners' interest
in net loss $(62,712) $(46,529) $(5,806) $(25,694)
--------- --------- ---------- -----------
Basic and diluted income
(loss) per Limited Partner
Unit:
Continuing operations $(1.40) $(1.35) $(0.72) $(4.95)
Discontinued operations (0.34) - 0.57 (0.13)
Gain (loss) on sales of
discontinued operations (0.01) 0.05 (0.01) 4.36
--------- --------- ---------- -----------
Net loss $(1.75) $(1.30) $(0.16) $(0.72)
--------- --------- ---------- -----------
Weighted average number of
Limited Partner units
outstanding:
Basic 35,756 35,884 35,205 35,821
--------- --------- ---------- -----------
Diluted 35,756 35,884 35,205 35,821
--------- --------- ---------- -----------
SUPPLEMENTAL INFORMATION
------------------------
Earnings (loss) 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 tables set forth (i)
the calculation of EBITDA and (ii) a reconciliation of EBITDA, as so
calculated, to cash provided by (used in) operating activities.
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
RECONCILIATION OF EBITDA
Twelve Months Ended
September 30,
--------------------
(in thousands) 2004 2005
--------------------
Loss from continuing operations $(25,601) $(178,936)
Plus:
Income tax expense 1,240 696
Amortization of debt issuance costs 3,480 2,540
Interest expense, net 36,682 31,838
Depreciation and amortization expense 37,313 35,480
--------- ----------
EBITDA 53,114 (108,382)
Add/(subtract)
Income tax expense (1,240) (696)
Interest expense, net (36,682) (31,838)
Unit compensation expense (income) (4,382) (2,185)
Provision for losses on accounts receivable 7,646 9,817
Loss on derivative instruments, net 1,673 2,144
Loss on redemption of debt -- 42,082
Gain on sales of fixed assets, net (281) (43)
Goodwill impairment charge -- 67,000
Change in operating assets and liabilities (6,179) (32,814)
--------- ----------
Net cash provided by (used in) operating
activities $13,669 $(54,915)(a)
========= ==========
(a) Includes $42.1 million related to early debt redemption and
non-cash goodwill impairment charge of $67.0 million.
Twelve Months Ended
September 30,
--------------------
2004 2005
--------- ----------
Home heating oil gallons sold (millions) 551.6 487.3
(additional supplemental information follows)
SUPPLEMENTAL INFORMATION
------------------------
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
RECONCILIATION OF EBITDA
Three Months Ended
September 30,
-------------------
2004 2005
-------------------
(in thousands)
Loss from continuing operations $(50,606) $(48,752)
Plus:
Income tax expense 240 2,096
Amortization of debt issuance costs 767 612
Interest expense, net 9,559 6,081
Depreciation and amortization expense 9,100 8,564
--------- ---------
EBITDA (30,940) (31,399)
Add/(subtract)
Income tax expense (240) (2,096)
Interest expense, net (9,559) (6,081)
Unit compensation expense (income) (4,167) -
Provision for losses on accounts receivable 1,779 3,586
Loss on derivative instruments, net 1,542 2,598
Gain on sales of fixed assets, net (85) (23)
Change in operating assets and liabilities 56,757 59,027
--------- ---------
Net cash provided by operating activities $15,087 $25,612
========= =========
Three Months Ended
September 30,
--------------------
2004 2005
--------- ----------
Home heating oil gallons sold (millions) 41.1 34.2
CONTACT: Star Gas Partners
Investor Relations, 203-328-7310
or
Jaffoni & Collins Incorporated
Robert Rinderman or Steven Hecht, 212-835-8500
SGU@jcir.com