UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
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: 0-32453
Inergy, L.P.
(Exact name of registrant as specified in its charter)
| Delaware |
43-1918951 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| Two Brush Creek Blvd., Suite 200 |
64112 | |
| Kansas City, Missouri |
(Zip code) | |
| (Address of principal executive offices) |
(816) 842-8181
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 last 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
The following units were outstanding at February 3, 2003:
| Common Units |
3,827,176 | |
| Senior Subordinated Units |
3,313,367 | |
| Junior Subordinated Units |
572,542 | |
| Non-Managing General Partner Units |
157,410 |
INERGY, L.P.
INDEX TO FORM 10-Q
| Page | ||
| Part I – Financial Information |
||
| Item 1 – Financial Statements of Inergy, L.P.: |
||
|
Consolidated Balance Sheets as of December 31, 2002 (unaudited) |
3 | |
|
Unaudited Consolidated Statements of Income for the Three Months Ended |
5 | |
|
Unaudited Consolidated Statement of Partners’ Capital for the Three |
6 | |
|
Unaudited Consolidated Statements of Cash Flows for the Three Months |
7 | |
| 9 | ||
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operation |
17 | |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk |
23 | |
| 25 | ||
| Part II – Other Information |
||
| 26 | ||
| 26 | ||
| 26 | ||
| Item 4 – Submission of Matters to a Vote of Security Holders |
26 | |
| 26 | ||
| 26 | ||
| 27 |
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
| December 31, 2002 (Unaudited) |
September 30, 2002 |
|||||||
| (In Thousands) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash |
$ |
4,524 |
|
$ |
2,088 |
| ||
| Accounts receivable, less allowance for doubtful accounts of $1,090,000 and $927,000 at December 31, 2002 and September 30, 2002, respectively |
|
39,413 |
|
|
13,112 |
| ||
| Inventories |
|
25,208 |
|
|
41,162 |
| ||
| Prepaid expenses and other current assets |
|
2,979 |
|
|
3,929 |
| ||
| Assets from price risk management activities |
|
6,972 |
|
|
9,725 |
| ||
| Total current assets |
|
79,096 |
|
|
70,016 |
| ||
| Property, plant and equipment, at cost: |
|
148,716 |
|
|
137,902 |
| ||
| Less accumulated depreciation |
|
(15,500 |
) |
|
(13,352 |
) | ||
| Property, plant and equipment, net |
|
133,216 |
|
|
124,550 |
| ||
| Intangible assets: |
|
106,688 |
|
|
101,591 |
| ||
| Less accumulated amortization |
|
(10,309 |
) |
|
(8,941 |
) | ||
| Intangible assets, net |
|
96,379 |
|
|
92,650 |
| ||
| Other |
|
1,434 |
|
|
1,016 |
| ||
| Total assets |
$ |
310,125 |
|
$ |
288,232 |
| ||
3
INERGY, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| December 31, 2002 (Unaudited) |
September 30, 2002 | |||||
| (In Thousands) | ||||||
| Liabilities and partners’ capital |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ |
27,302 |
$ |
13,364 | ||
| Accrued expenses |
|
7,459 |
|
6,394 | ||
| Customer deposits |
|
6,881 |
|
8,718 | ||
| Liabilities from price risk management activities |
|
9,523 |
|
14,378 | ||
| Current portion of long-term debt |
|
14,232 |
|
19,367 | ||
| Total current liabilities |
|
65,397 |
|
62,221 | ||
| Long-term debt, less current portion |
|
121,698 |
|
105,095 | ||
| Partners’ capital: |
||||||
| Common unitholders (3,827,176 and 3,828,877 units issued and outstanding as of December 31 and September 30, 2002, respectively) |
|
77,789 |
|
76,762 | ||
| Senior subordinated unitholders (3,313,367 units issued and outstanding) |
|
42,221 |
|
41,292 | ||
| Junior subordinated unitholders (572,542 units issued and outstanding) |
|
768 |
|
607 | ||
| Non-managing general partner (2% interest with 157,410 and 157,445 equivalent units outstanding as of December 31 and September 30, 2002, respectively) |
|
2,252 |
|
2,255 | ||
| Total partners’ capital |
|
123,030 |
|
120,916 | ||
| Total liabilities and partners’ capital |
$ |
310,125 |
$ |
288,232 | ||
See accompanying notes.
4
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Unit Data)
| Three Months Ended December 31, |
||||||||
| 2002 |
2001 |
|||||||
| (unaudited) |
||||||||
| Revenue: |
||||||||
| Propane |
$ |
104,042 |
|
$ |
46,584 |
| ||
| Other |
|
5,648 |
|
|
3,046 |
| ||
|
|
109,690 |
|
|
49,630 |
| |||
| Cost of product sold |
|
81,323 |
|
|
33,795 |
| ||
| Gross profit |
|
28,367 |
|
|
15,835 |
| ||
| Expenses: |
||||||||
| Operating and administrative |
|
14,539 |
|
|
8,292 |
| ||
| Depreciation and amortization |
|
3,361 |
|
|
1,774 |
| ||
| Operating income |
|
10,467 |
|
|
5,769 |
| ||
| Other income (expense): |
||||||||
| Interest expense |
|
(2,640 |
) |
|
(1,238 |
) | ||
| Loss on sale of property, plant and equipment |
|
(106 |
) |
|
(90 |
) | ||
| Finance charges |
|
16 |
|
|
36 |
| ||
| Other |
|
29 |
|
|
20 |
| ||
| Income before income taxes |
|
7,766 |
|
|
4,497 |
| ||
| Provision for income taxes |
|
50 |
|
|
32 |
| ||
| Net income |
$ |
7,716 |
|
$ |
4,465 |
| ||
| Partners’ interest information for the three months ended December 31, 2002 and 2001: |
||||||||
| Non-managing general partners’ interest in net income |
$ |
155 |
|
$ |
89 |
| ||
| Limited partners’ interest in net income: |
||||||||
| Common unit interest |
$ |
3,752 |
|
$ |
1,458 |
| ||
| Senior subordinated unit interest |
|
3,248 |
|
|
2,488 |
| ||
| Junior subordinated unit interest |
|
561 |
|
|
430 |
| ||
| Total limited partners’ interest in net income |
|
7,561 |
|
|
4,376 |
| ||
| Net income per limited partner unit: |
||||||||
| Basic |
$ |
0.98 |
|
$ |
0.75 |
| ||
| Diluted |
$ |
0.97 |
|
$ |
0.74 |
| ||
| Weighted average limited partners’ units outstanding: |
||||||||
| Basic |
|
7,713 |
|
|
5,827 |
| ||
| Diluted |
|
7,805 |
|
|
5,898 |
| ||
See accompanying notes.
5
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In Thousands)
| Common Unit Capital |
Senior Subordinated Unit Capital |
Junior Subordinated Unit Capital |
Non-Managing General Partner |
Total Partners’ Capital |
||||||||||||||||
| Balance at September 30, 2002 |
$ |
76,762 |
|
$ |
41,292 |
|
$ |
607 |
|
$ |
2,255 |
|
$ |
120,916 |
| |||||
| Return and cancellation of common units originally issued in the IPC acquisition |
|
(45 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(45 |
) | |||||
| Distributions |
|
(2,680 |
) |
|
(2,319 |
) |
|
(400 |
) |
|
(158 |
) |
||||||||