-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RX8dwMxRAROyUOtfbY3fRgQznaq056cp07nR7l08OeBMhPxU+BULoEsr0PqjSfqc 4y3H448z1Yti2LT4lPfEuA== 0001157523-07-001341.txt : 20070209 0001157523-07-001341.hdr.sgml : 20070209 20070209082818 ACCESSION NUMBER: 0001157523-07-001341 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070209 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070209 DATE AS OF CHANGE: 20070209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STAR GAS PARTNERS LP CENTRAL INDEX KEY: 0001002590 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 061437793 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14129 FILM NUMBER: 07595500 BUSINESS ADDRESS: STREET 1: 2187 ATLANTIC ST CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033287300 MAIL ADDRESS: STREET 1: 2187 ATLANTIC STREET CITY: STAMFORD STATE: CT ZIP: 06902 8-K 1 a5330565.txt STAR GAS PARTNERS, L.P. 8-K 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) February 9, 2007 STAR GAS PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware 001-14129 06-1437793 (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 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): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| 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 February 9, 2007, Star Gas Partners, L.P., a Delaware partnership (the "Partnership"), issued a press release announcing its financial results for its fiscal first quarter ending December 31, 2006. 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 February 9, 2007 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: Kestrel Heat, LLC (General Partner) By: /s/ Richard F. Ambury -------------------------------------------------- Name: Richard F. Ambury Title: Chief Financial Officer Principal Financial & Accounting Officer Date: February 9, 2007 EX-99.1 2 a5330565ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Star Gas Partners, L.P. Reports Fiscal 2007 First Quarter Results - Star Gas CEO Joe Cavanaugh Announces Retirement; President and Industry Veteran Dan Donovan Appointed as Star's New CEO STAMFORD, Conn.--(BUSINESS WIRE)--Feb. 9, 2007--Star Gas Partners, L.P. (the "Partnership" or "Star") (NYSE: SGU), a home energy distributor and services provider specializing in heating oil, today announced financial results for its fiscal 2007 first quarter, the three-month period ended December 31, 2006. The Partnership also announced that its President Dan Donovan, 60, will assume the additional role of Chief Executive Officer on June 1, 2007, as Chief Executive Officer Joseph Cavanaugh has informed the Board of Directors that he will retire at the age of 70, effective May 31. Mr. Cavanaugh will retain his seat on Star's Board following his retirement. For the fiscal 2007 first quarter, Star reported a 20.3 percent decrease in total revenues to $330.2 million, compared to total revenues of $414.4 million in the year ago period, as slightly higher selling prices were more than offset by a reduction in sales of home heating oil. Home heating oil volume for the fiscal 2007 first quarter declined 24.4 percent, year-over-year, from 131.3 million gallons to 99.3 million gallons. The home heating oil volume decline was due to warmer weather and net customer attrition. Temperatures in Star's geographic areas of operations for the fiscal 2007 first quarter were 17.8 percent warmer than the fiscal 2006 first quarter and 19.6 percent warmer than normal, as reported by the National Oceanic Atmospheric Administration. For the twelve months ended December 31, 2006, Star's net customer attrition rate was 6.0 percent. For the fiscal 2007 first quarter, Star lost approximately 4,100 accounts (net), or 1.0 percent of its home heating oil customer base, as compared to the fiscal 2006 first quarter in which the Partnership lost 7,200 accounts (net), or 1.6 percent of its customer base. Home heating oil per gallon margins for the fiscal 2007 first quarter rose by 0.9 cents per gallon, versus the corresponding fiscal 2006 period, when measured before the impact of change in the fair value of derivative instruments. Currently, none of Star's derivative instruments for its price-protected customers or its home heating oil inventory have been designated for hedge accounting treatment. As a result, unrealized gains and losses on these derivative instruments are recorded in earnings. In the fiscal 2006 first quarter, Star recorded a non-cash charge of $40.6 million, primarily due to a 42 cent per gallon decline in the market value of certain hedges. Similarly, in the fiscal 2007 first quarter, Star recorded a $6.3 million charge, primarily driven by a 4 cent per gallon decline in the market value of certain derivative instruments. Total operating expenses decreased by $14.6 million, or 22.2 percent, to $51.2 million for the fiscal 2007 first quarter, as compared to $65.8 million for the prior year's quarter, largely due to a reduction in delivery and branch expenses of $5.0 million associated with the 24.4 percent decline in volume, a reduction in legal and professional expenses of $1.5 million, and a $7.2 million benefit resulting from amounts recorded under the Partnership's weather insurance contract as temperatures were warmer than normal during the three-month period. Our weather insurance contract covers the period from November 1, 2006 to February 28, 2007, taken as a whole. If January and February 2007 are colder and thus result in more degree days than the 10 year average, the projected proceeds under this contract would be reduced and could be reduced to zero. Net interest expense declined by $3.4 million to $3.3 million for the fiscal 2007 first quarter, due to a reduction in average debt outstanding of $100.7 million, primarily due to the recapitalization completed in April 2006 and higher invested cash balances. For the fiscal 2007 first quarter, net income was $4.7 million, a $33.1 million improvement versus the net loss for the fiscal 2006 first quarter, as a lower charge for the change in fair value of derivative instruments of $34.2 million, a reduction in net interest expense of $3.4 million, and lower depreciation and amortization expense of $1.1 million, were partially offset by a reduction in earnings of $5.6 million, driven largely by the 24.4 percent decline in volume. For the fiscal 2007 first quarter, EBITDA increased $28.0 million, to $16.0 million, as compared to an EBITDA loss of $11.9 million for the corresponding fiscal 2006 period. For the three months ended December 31, 2006, EBITDA was reduced by the non-cash change in the fair value of derivative instruments of $6.3 million. For the three months ended December 31, 2005, EBITDA was negatively impacted by the aforementioned $40.6 million change in the fair value of derivative instruments. EBITDA is a non-GAAP financial measure (see below reconciliation) 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. The Partnership is not required to accrue the Minimum Quarterly Distribution until October 1, 2008. Star Gas Partners Chief Executive Officer Joseph Cavanaugh, stated, "Despite abnormally warm temperatures in our operating areas during the start of the winter heating season, we are pleased with fiscal 2007 first quarter results, which benefited from $7.2 million recorded under our weather insurance contract and Star's continued success in implementing across-the-board expense reductions. We continue to make progress with customer account attrition, which was again lower during the current quarter than in the previous year" Star Gas Chairman Paul Vermylen, stated, "On behalf of my fellow members of the Star Gas Board and all of the Partnership's employees, we would like to both congratulate and thank Joe for his numerous contributions throughout his tenure at Star. We anticipate a seamless transition for Dan in his new, expanded role as Star's CEO based on his excellent track record and in-depth understanding of our industry and the markets and regions in which we operate." Commenting on his decision to retire, Mr. Cavanaugh, added, "Having been with the Partnership for the majority of the past 38 years, it is time for me to step down as Chief Executive as I will be celebrating my 70th birthday this coming May. Dan is a fine choice to succeed me as he has a tremendous wealth of heating oil industry experience and he has and will continue to play an instrumental role in the ongoing operational and financial turnaround at Star." From 1980 to 2004, Donovan held various management positions with Meenan Oil Co. LP, including Vice President and General Manager at the time of its purchase by Star Gas in 2001. Prior to his tenure with Meenan, he worked for Mobil Oil Corp. from 1971 to 1980. REMINDER: Star Gas management will host a conference call and webcast today at 1:00 p.m. (ET). Conference call dial-in is 888/243-1745 or 303/957-1357 (international callers). A webcast is also available at http://www.star-gas.com/MediaList.cfm 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. 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 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 impact of litigation, the continuing impact of the business process redesign project and our ability to address issues related to that project, natural gas conversions, future union relations and the outcome of current and future union negotiations, the impact of current and future environmental, health and safety regulations, customer creditworthiness, 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, 2006 and the Partnership's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2006, 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. STAR GAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) Dec. 31, Sept. 30, 2006 2006 ------------ ------------ ASSETS (unaudited) Current assets Cash and cash equivalents $ 69,736 $ 91,121 Receivables, net of allowances of $7,854 and $6,532, respectively 136,064 87,393 Inventories 76,139 75,859 Fair asset value of derivative instrument 1,639 3,766 Weather insurance contract 7,200 - Prepaid expenses and other current assets 35,472 37,741 ------------ ------------ Total current assets 326,250 295,880 ------------ ------------ Property and equipment, net 41,351 42,377 Long-term portion of accounts receivables 3,381 3,513 Goodwill 166,522 166,522 Intangibles, net 55,875 61,007 Deferred charges and other assets, net 10,259 10,899 Long-term assets held for sale 648 1,010 ------------ ------------ Total Assets $ 604,286 $ 581,208 ============ ============ LIABILITIES AND PARTNERS' CAPITAL Current liabilities Accounts payable $ 23,655 $ 21,544 Fair liability value of derivative instrument 17,354 13,790 Current maturities of long-term debt 96 96 Accrued expenses 69,657 62,651 Unearned service contract revenue 43,567 36,634 Customer credit balances 72,778 73,863 ------------ ------------ Total current liabilities 227,107 208,578 ------------ ------------ Long-term debt 174,005 174,056 Other long-term liabilities 25,133 25,249 Partners' capital (deficit) Common unitholders 199,514 194,818 General partner (273) (293) Accumulated other comprehensive loss (21,200) (21,200) ------------------------- Total Partners' capital 178,041 173,325 ------------ ------------ Total Liabilities and Partners' Capital $ 604,286 $ 581,208 ============ ============ STAR GAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per unit data) Three Months Ended December 31, --------------------- 2006 2005 ---------- ---------- Sales: (restated) Product $280,402 $358,869 Installations and service 49,842 55,512 ---------- ---------- Total sales 330,244 414,381 Cost and expenses: Cost of product 206,236 262,280 Cost of installations and service 50,474 57,695 Change in the fair value of derivative instruments 6,315 40,563 Delivery and branch expenses 46,832 58,998 Depreciation and amortization expenses 7,372 8,485 General and administrative expenses 4,350 6,794 ---------- ---------- Operating income (loss) 8,665 (20,434) Interest expense (5,108) (7,540) Interest income 1,794 858 Amortization of debt issuance costs (570) (631) ---------- ---------- Income (loss) before income taxes and cumulative effect of changes in accounting principles 4,781 (27,747) Income tax expense 65 250 ---------- ---------- Income (loss) before cumulative effect of changes in accounting principles 4,716 (27,997) Cumulative effect of changes in accounting principles - change in inventory pricing method - (344) ---------- ---------- Net income (loss) $4,716 $(28,341) ========== ========== General Partner's interest in net income (loss) 20 (259) ---------- ---------- Limited Partners' interest in net income (loss) $4,696 $(28,082) ========== ========== Basic and Diluted income (loss) per Limited Partner Unit: Net income (loss) before cumulative effect of changes in accounting principles $0.06 $(0.77) ---------- ---------- Net income (loss) $0.06 $(0.78) ========== ========== Weighted average number of Limited Partner units: Basic 75,774 35,903 ========== ========== Diluted 75,774 35,903 ========== ========== 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 operating activities. STAR GAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF EBITDA (unaudited) Three Months Ended December 31, --------------------- 2006 2005 ---------- ---------- (in thousands) (restated) Net income (loss) before the cumulative effect of changes in accounting principle $4,716 $(27,997) Plus: Income tax expense 65 250 Amortization of debt issuance costs 570 631 Interest expense, net 3,314 6,682 Depreciation and amortization expense 7,372 8,485 ---------- ---------- EBITDA 16,037 (11,949) Add/(subtract) Income tax expense (65) (250) Interest expense, net (3,314) (6,682) Provision for losses on accounts receivable 1,952 1,977 (Gain)/Loss on sales of fixed assets, net (247) 427 Change in fair value of derivative instruments 6,315 40,563 Increase in weather insurance contract (7,200) - Change in operating assets and liabilities (34,363) (137,524) ---------- ---------- Net cash used in operating activities $(20,885) ($113,438) ========== ========== Three Months Ended December 31, --------------------- 2006 2005 ---------- ---------- Home heating oil gallons sold (millions) 99.3 131.3 CONTACT: Star Gas Partners Investor Relations 203/328-7310 or Jaffoni & Collins Incorporated Robert Rinderman / Steven Hecht, 212-835-8500 SGU@jcir.com -----END PRIVACY-ENHANCED MESSAGE-----