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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) January 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
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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 Star Gas Partners, L.P. Press Release dated January
29, 2004
ITEM 9. REGULATION FD DISCLOSURE
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 29, 2004, Star Gas Partners, L.P., a Delaware partnership (the
"Partnership"), issued a press release describing its financial results for its
fiscal first quarter ended December 31, 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: January 29, 2004
Exhibit 99.1
Star Gas Partners, L.P. Reports 2004 Fiscal First Quarter Results;
Declares First Quarter Distribution
STAMFORD, Conn.--(BUSINESS WIRE)--Jan. 29, 2004--Star Gas
Partners, L.P. (the "Partnership" or "Star") (NYSE:SGU) (NYSE:SGH), a
diversified home energy distributor and services provider specializing
in heating oil, propane, natural gas and electricity, today reported
results for the fiscal 2004 first quarter ended December 31, 2003.
Star also declared its $0.575 per unit Minimum Quarterly Distribution
on all units for the quarter ended December 31, 2003, payable on
February 13, 2004 to unitholders of record as of February 9, 2004.
For the three months ended December 31, 2003, Star's sales
increased 12.7% to a record $434 million, from $385 million in the
first quarter of fiscal 2003. This was due to both higher energy
prices and increased volume as the Partnership's acquisition program
more than offset weather that was 10% warmer than the relatively cold
first quarter in fiscal 2003.
Operating income for the three months ended December 31, 2003
increased 8.4% to $31.9 million, from $29.4 million for the comparable
period in fiscal 2003, despite the first quarter's warmer weather.
This was primarily due to: a) the contribution from 12 acquisitions
with annual volume of 113 million gallons completed since October 1,
2002; b) heating oil and propane gross profit margins increasing 1.5
cents per gallon; and, c) improved operating expenses and revenues
from related products and services resulting from the heating oil
division's Business Process Improvement Program. These increases were
partially offset by the impact of warm weather.
Net income for the three months ended December 31, 2003 increased
20.4% to $19.3 million, from $16.0 million in the comparable period
last year. This was primarily due to the operating income increase
referred to above, as well as the adoption in Fiscal 2003 of SFAS No.
142 relating to accounting for goodwill and other intangibles which
reduced last year's first quarter net income by $3.9 million, offset
during this year's fiscal quarter by an increase in interest expense
of $2.5 million. Diluted net income per limited partner unit increased
to $0.56, from $0.49 per unit in the comparable period in fiscal 2003.
Diluted income per limited partner unit before the impact of SFAS No.
142 was $0.61 for the quarter ended December 31, 2002.
EBITDA for the fiscal 2004 first quarter increased by 21% to $46.4
million, from $38.4 million in the comparable period last year. This
EBITDA increase was primarily attributable to the improvement in
Star's operating performance and acquisitions, which more than offset
the warmer temperatures. The quarter-to-quarter comparison was also
impacted by the adoption of SFAS No. 142, which reduced EBITDA by $3.9
million in the fiscal 2003 first quarter.
Star also announced the acquisition of two propane companies with
2,400 customer accounts between them and an aggregate annual volume of
1.0 million gallons.
In commenting on Star's fiscal 2004 first quarter performance,
Chairman Irik P. Sevin stated: "We are extremely pleased with this
quarter's results as operating income increased approximately 8%
despite weather that was 10% warmer than last year and 4% warmer than
normal, as reported by the National Oceanic and Atmospheric
Administration. This performance resulted primarily from the following
three factors: First, the Partnership successfully continues its
active but disciplined acquisition program. In fiscal 2003, the
Partnership acquired ten companies representing an aggregate of 112
million gallons. Since most of this volume was acquired subsequent to
last year's winter heating season, these acquisitions are having a
positive effect on fiscal 2004 results, as compared to fiscal 2003.
Second, Star was able to continue the expansion, in both the propane
and home heating oil segments' per gallon gross profit margins,
despite historically high energy prices. Third, for over five years,
we have been developing and implementing the heating oil division's
Business Process Improvement Program, which was designed to capitalize
on that operation's size advantage within the highly fragmented home
heating oil industry. While the full benefits of that program have yet
to be realized, we are pleased that the Partnership began to achieve
some tangible benefits in the first quarter of 2004."
Mr. Sevin added: "We are also pleased that Star was able to
improve its liquidity, most recently through the sale of $35 million
of long-term notes in January 2004. This offering was executed at
approximately 2.25% below the yield on Star's last public note
issuance, indicating the public debt markets' favorable view of the
Partnership's performance. The proceeds of the offering will be used
to repay $18.3 million in note amortizations for fiscal 2004 and
amounts borrowed under Star's $100 million bank term loan facilities.
As a result of the offering, Star will have approximately $35.0
million outstanding under those facilities leaving $65.0 million
available for future uses."
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 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
December 31,
---------------------------
2003 2002
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Sales $ 433,862 $ 384,980
Costs and expenses:
Cost of sales 294,032 255,347
Operating expenses 93,404 87,363
Depreciation and amortization expenses 14,545 12,848
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Operating income 31,881 29,422
Interest expense, net (10,894) (8,370)
Amortization of debt issuance costs (1,269) (437)
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Income before income taxes and
cumulative effect of change in
accounting principle 19,718 20,615
Income tax expense 406 675
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Income before cumulative effect of
change in accounting principle 19,312 19,940
Cumulative effect of change in accounting
principle for adoption of SFAS No. 142 - (3,901)
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Net income $ 19,312 $ 16,039
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General Partner's interest in net income $ 194 $ 159
============ ============
Limited Partners' interest in net income $ 19,118 $ 15,880
============ ============
Limited Partners' interest in net income
per Limited Partner unit:
Basic $ .56 $ .49
============ ============
Diluted $ .56 $ .49
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Basic weighted average number of Limited
Partner units outstanding 34,158 32,449
============ ============
Diluted number of Limited Partner units 34,158 32,564
============ ============
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
SUPPLEMENTARY DATA
(in thousands)
(unaudited)
Earnings before interest, taxes, depreciation and amortization
(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
December 31,
---------------------------
2003 2002
------------ ------------
Net income $ 19,312 $ 16,039
Plus:
Income tax expense 406 675
Amortization of debt issuance costs 1,269 437
Interest expense, net 10,894 8,370
Depreciation and amortization 14,545 12,848
------------ ------------
EBITDA 46,426 38,369
Add/(subtract)
Income tax expense (406) (675)
Interest expense, net (10,894) (8,370)
Unit compensation expense 52 472
Provision for losses on accounts
receivable 1,555 1,383
Gain on sale of fixed assets (84) (16)
Cumulative effect of change in accounting
principle for the adoption of SFAS No.
142 - 3,901
Change in operating assets and
liabilities (72,303) (81,812)
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Net cash used in operating activities $ (35,654) $ (46,748)
============ ============
Total gallons sold 230,074 221,591
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STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Dec. 31, Sept. 30,
2003 2003
------------ ------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 14,241 $ 10,111
Receivables, net of allowance of $10,043
and $9,560, respectively 189,430 105,639
Inventories 62,890 42,391
Prepaid expenses and other current assets 44,989 52,968
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Total current assets 311,550 211,109
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Property and equipment, net 259,207 262,301
Long-term portion of accounts receivables 7,806 7,145
Goodwill 278,857 278,857
Intangibles, net 194,368 201,784
Deferred charges and other assets, net 17,799 14,414
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Total Assets $ 1,069,587 $ 975,610
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LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $ 53,782 $ 31,026
Working capital facility borrowings 78,500 12,000
Current maturities of long-term debt 21,571 22,847
Accrued expenses 88,221 83,197
Unearned service contract revenue 36,941 32,036
Customer credit balances 62,354 77,558
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Total current liabilities 341,369 258,664
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Long-term debt 501,845 499,341
Other long-term liabilities 27,575 27,829
Partners' Capital (Deficit)
Common unitholders 210,071 210,636
Subordinated unitholders 39 (57)
General partner (3,075) (3,082)
Accumulated other comprehensive loss (8,237) (17,721)
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Total Partners' Capital 198,798 189,776
------------ ------------
Total Liabilities and Partners'
Capital $ 1,069,587 $ 975,610
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CONTACT: Star Gas Partners, L.P., Stamford
Richard F. Ambury, 203-328-7300
or
Jaffoni & Collins Incorporated, New York
Robert L. Rinderman or Purdy Tran, 212-835-8500
SGU@jcir.com