UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
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: 33-98490
STAR GAS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
| Delaware |
06-1437793 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 2187 Atlantic Street, Stamford, Connecticut 06902 |
||
| (Address of principal executive office) |
||
| (203) 328-7310 |
||
| (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 past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes x No ¨
Indicate the number of shares outstanding of each issuer’s classes of common stock, as of April 23, 2003:
| 28,970,446 |
Common Units | |
| 3,139,110 |
Senior Subordinated Units | |
| 345,364 |
Junior Subordinated Units | |
| 325,729 |
General Partner Units |
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FORM 10-Q
| Part I Financial Information: |
Page | |
| Item 1—Condensed Consolidated Financial Statements |
||
| Condensed Consolidated Balance Sheets as of September 30, 2002 and March 31, 2003 |
3 | |
| 4 | ||
| 5 | ||
|
Condensed Consolidated Statement of Partners’ Capital for the six months ended |
6 | |
| 7 | ||
| 8-17 | ||
| Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18-28 | |
| Item 3—Quantitative and Qualitative Disclosures About Market Risk |
29 | |
| 29 | ||
| Part II Other Information: |
||
| 30 | ||
| 31 | ||
| 32-33 |
2
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| September 30, 2002 |
March 31, 2003 |
|||||||
| (unaudited) |
||||||||
| ASSETS Current assets |
||||||||
| Cash and cash equivalents |
$ |
61,481 |
|
$ |
69,142 |
| ||
| Receivables, net of allowance of $8,282 and $11,428, respectively |
|
83,452 |
|
|
260,101 |
| ||
| Inventories |
|
39,453 |
|
|
56,826 |
| ||
| Prepaid expenses and other current assets |
|
37,815 |
|
|
39,020 |
| ||
| Total current assets |
|
222,201 |
|
|
425,089 |
| ||
| Property and equipment, net |
|
241,892 |
|
|
239,275 |
| ||
| Long-term portion of accounts receivables |
|
6,672 |
|
|
6,892 |
| ||
| Goodwill |
|
264,551 |
|
|
260,650 |
| ||
| Intangibles, net |
|
193,370 |
|
|
180,219 |
| ||
| Deferred charges and other assets, net |
|
15,080 |
|
|
14,192 |
| ||
| Total Assets |
$ |
943,766 |
|
$ |
1,126,317 |
| ||
| LIABILITIES AND PARTNERS’ CAPITAL Current liabilities |
||||||||
| Accounts payable |
$ |
20,360 |
|
$ |
53,520 |
| ||
| Working capital facility borrowings |
|
26,195 |
|
|
135,600 |
| ||
| Current maturities of long-term debt |
|
72,113 |
|
|
23,759 |
| ||
| Accrued expenses |
|
69,444 |
|
|
78,408 |
| ||
| Unearned service contract revenue |
|
30,549 |
|
|
27,655 |
| ||
| Customer credit balances |
|
70,583 |
|
|
18,125 |
| ||
| Total current liabilities |
|
289,244 |
|
|
337,067 |
| ||
| Long-term debt |
|
396,733 |
|
|
470,301 |
| ||
| Other long-term liabilities |
|
25,525 |
|
|
27,340 |
| ||
| Partners’ capital |
||||||||
| Common unitholders |
|
242,696 |
|
|
297,200 |
| ||
| Subordinated unitholders |
|
3,105 |
|
|
12,942 |
| ||
| General partner |
|
(2,710 |
) |
|
(1,718 |
) | ||
| Accumulated other comprehensive loss |
|
(10,827 |
) |
|
(16,815 |
) | ||
| Total Partners’ capital |
|
232,264 |
|
|
291,609 |
| ||
| Total Liabilities and Partners’ Capital |
$ |
943,766 |
|
$ |
1,126,317 |
| ||
See accompanying notes to condensed consolidated financial statements.
3
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| (in thousands, except per unit data) |
2002 |
2003 |
2002 |
2003 |
||||||||||||
| Sales: |
||||||||||||||||
| Product |
$ |
372,243 |
|
$ |
623,703 |
|
$ |
611,078 |
|
$ |
958,415 |
| ||||
| Installations, service and appliances |
|
39,042 |
|
|
45,117 |
|
|
86,430 |
|
|
95,385 |
| ||||
| Total sales |
|
411,285 |
|
|
668,820 |
|
|
697,508 |
|
|
1,053,800 |
| ||||
| Costs and expenses: |
||||||||||||||||
| Cost of sales |
|
206,572 |
|
|
407,080 |
|
|
338,456 |
|
|
608,407 |
| ||||
| Cost of installations, service and appliances |
|
45,410 |
|
|
52,181 |
|
|
97,773 |
|
|
106,201 |
| ||||
| Delivery and branch expenses |
|
67,589 |
|
|
86,644 |
|
|
123,910 |
|
|
161,158 |
| ||||
| Depreciation and amortization expenses |
|
14,509 |
|
|
12,885 |
|
|
29,012 |
|
|
25,733 |
| ||||
| General and administrative expenses |
|
8,877 |
|
|
14,034 |
|
|
17,923 |
|
|
26,883 |
| ||||
| Operating income |
|
68,328 |
|
|
95,996 |
|
|
90,434 |
|
|
125,418 |
| ||||
| Interest expense |
|
(10,600 |
) |
|
(11,494 |
) |
|
(21,503 |
) |
|
(20,525 |
) | ||||
| Interest income |
|
843 |
|
|
856 |
|
|
1,602 |
|
|
1,517 |
| ||||
| Amortization of debt issuance costs |
|
(307 |
) |
|
(554 |
) |
|
(619 |
) |
|
(991 |
) | ||||
| Loss on redemption of debt |
|
— |
|
|
(181 |
) |
|
— |
|
|
(181 |
) | ||||
| Income before income taxes and cumulative effect of change |
|
58,264 |
|
|
84,623 |
|
|
69,914 |
|
|
105,238 |
| ||||
| Income tax expense (benefit) |
|
(1,952 |
) |
|
1,460 |
|
|
(1,805 |
) |
|
2,135 |
| ||||
| Income before cumulative effect of change in accounting |
|
60,216 |
|
|
83,163 |
|
|
71,719 |
|
|
103,103 |
| ||||
| Cumulative effect of change in accounting principle for adoption |
|
— |
|
|
— |
|
|
— |
|
|
(3,901 |
) | ||||
| Net income |
$ |
60,216 |
|
$ |
83,163 |
|
$ |
71,719 |
|
$ |
99,202 |
| ||||
| General Partner’s interest in net income |
$ |
681 |
|
$ |
832 |
|
$ |
820 |
|
$ |
992 |
| ||||
| Limited Partners’ interest in net income |
$ |
59,535 |
|
$ |
82,331 |
|
$ |
70,899 |
|
$ |
98,210 |
| ||||