-----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, HeMV3BuCZ6TSvMB+04iGhSsoA+71PQIccDfkxr4k5cw3/3edwRVOih9xy0zGDHdp z760YcQvBLcGkeghRNynQw== 0001157523-07-011985.txt : 20071207 0001157523-07-011985.hdr.sgml : 20071207 20071207100751 ACCESSION NUMBER: 0001157523-07-011985 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071207 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071207 DATE AS OF CHANGE: 20071207 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: 071291174 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 a5562849.txt STAR 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) December 7, 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 (IRS Employer jurisdiction of Number) Identification No.) incorporation) 2187 Atlantic Street, Stamford, CT 06902 (Address of principal executive (Zip Code) offices) 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 December 7, 2007, 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, 2007. 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 7, 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 Officer Date: December 7, 2007 EX-99.1 2 a5562849ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Star Gas Partners, L.P. Reports Seasonal Fourth Quarter Loss and Fiscal 2007 Results STAMFORD, Conn.--(BUSINESS WIRE)--Dec. 7, 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 the fiscal year ended September 30, 2007 and its fiscal 2007 fourth quarter, a non-heating season period. In addition, Star announced that it completed two acquisitions during the fiscal 2007 fourth quarter. During the full fiscal 2007 period, Star acquired seven retail heating oil dealers with approximately 19,400 home heating oil customers and several thousand plumbing customers. Because these acquisitions were completed after the heating season, they did not affect fiscal year 2007 results in a material way. For the fiscal year ended September 30, 2007, compared to the fiscal year ended September 30, 2006 Star reported a 2.3 percent decrease in revenues to $1,267.2 million, compared to $1,296.5 million, as increases in selling prices were more than offset by a decline in product sales due to lower volume. Home heating oil volume declined 13.3 million gallons, or 3.4 percent, to 376.6 million gallons, as 3.1 percent colder temperatures were more than offset by the impact of net customer attrition and other factors. For fiscal 2007, Star lost (excluding gains from acquisitions) 5.0 percent of its home heating oil customer base, an improvement from fiscal 2006 in which Star lost 6.6 percent of its home heating oil customer base. Total gross profit increased by $3.7 million, as the impact of an expansion in home heating oil margins of 2.8 cents and an improvement in service and installation profitability of $3.7 million more than offset the impact of lower sales volume. Total operating expenses (delivery, branch, general and administrative) decreased by $9.9 million, or 4.3 percent, largely due to lower insurance expense of $4.7 million and other expense reductions of $5.0 million. Operating income increased $78.3 million to $55.1 million. The majority of this increase relates to the favorable non-cash change in the fair value of derivative instruments of $61.3 million. The balance of the change, or $17.0 million, was largely due to lower operating costs of $9.9 million, an improvement in service and installation profitability of $3.7 million and lower depreciation and amortization expense of $3.4 million. For fiscal 2006, Star recorded a $6.6 million non-cash loss on the early redemption and conversion of our 10.25% senior notes. Net interest expense decreased $9.7 million, or 45.6 percent, to $11.5 million due to lower average debt outstanding of approximately $63.3 million and higher invested cash balances. Net income increased $92.5 million to $38.2 million, due to a $78.3 million increase in operating income, lower net interest expense of $9.7 million and the non-recurrence of a $6.6 million loss on the redemption of debt recorded in fiscal 2006, reduced by higher income tax expense of $1.5 million and a $1.1 million charge relating to the sale of the propane segment in fiscal 2005. Adjusted EBITDA increased by $13.5 million to $68.4 million, as an increase in Adjusted EBITDA in the base business was slightly reduced by the expected summertime losses from acquisitions. In fiscal 2007, we were able to increase our per gallon margins and reduce our operating expenses, which more than offset the impact of lower sales volume and resulted in an increase in Adjusted EBITDA. Adjusted 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 the presentation of Adjusted EBITDA is relevant and useful because it allows investors to view the Partnership's performance in a manner similar to the method management uses, adjusted for non- cash items (such as changes in the fair value of derivative instruments and losses on redemption of debt) and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, certain of Star's financial covenants in its material debt documents are calculated using Adjusted EBITDA. Star Gas Partners Chief Executive Officer Dan Donovan, stated, "We are pleased with the recent success of our acquisition program, which added 19,400 home heating oil customers in fiscal 2007, and almost totally offset customers lost through net attrition." Mr. Donovan, continued, "We have seen all-time record home heating oil prices since the end of fiscal 2007. To counteract this challenging industry environment, our entire organization continues to focus on offering our valued customers excellence in all facets of our service and also keeping the Partnership's operating expenses under control. The difficult market conditions may also present increased opportunities for Star to make additional acquisitions." For the three months ended September 30, 2007, compared to the three months ended September 30, 2006 Star reported a 9.2 percent decrease in total revenues to $137.6 million, compared to total revenues of $151.5 million in the year-ago period, as the impact of higher selling prices was more than offset by a 15.9 percent reduction in home heating oil volume. Selling prices were higher during the quarter due to the increase in the wholesale cost of home heating oil. The home heating oil volume decline was due to warmer temperatures in September and other factors. Total gross profit declined by $7.8 million due to a reduction in home heating oil margins of 9.9 cents per gallon, lower sales volume and lower service and installation gross profit. During the fourth quarter of fiscal 2006, Star took advantage of favorable conditions in the home heating oil spot market, which resulted in an expansion of its per gallon margin. Star's management believes the home heating oil margins realized in the fourth quarter of fiscal 2007 are more representative of typical summertime margins. Total operating expenses (delivery, branch, general and administrative) decreased by $2.8 million, or 6.1 percent, to $42.8 million. The Partnership's operating loss decreased by $12.7 million to a $30.0 million loss, as compared to an operating loss of $42.7 million, as a favorable change in the fair value of derivatives of $17.3 million and lower operating costs (including depreciation and amortization) of $3.3 million, were partially offset by lower gross profit of $7.8 million. The net loss decreased by $12.8 million to a $33.1 million loss, as compared to a net loss of $45.9 million, primarily due to a $12.7 million increase in operating income, lower net interest expense of $0.8 million and an increase in the income tax benefit of $0.4 million, reduced by a $1.1 million adjustment to sale of discontinued operations. The Adjusted EBITDA loss increased by $5.0 million to $21.6 million, due to lower per gallon gross profit margins ($2.5 million), an expected loss from acquisitions ($0.8 million) and the impact of lower volume and other factors ($1.7 million). Adjusted 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 the presentation of Adjusted EBITDA is relevant and useful because it allows investors to view the Partnership's performance in a manner similar to the method management uses, adjusted for non cash items (such as changes in the fair value of derivative instruments and losses on redemption of debt) and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, certain of Star's financial covenants in its material debt documents are calculated using Adjusted EBITDA. REMINDER: Star Gas management will host a conference call and webcast today at 11:00 a.m. (ET). Conference call dial-in is 800/603-3143 or 706/634-8769 (international callers). Please note the conference ID# is 26522078. A webcast is also available at 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 residual impact of the business process redesign project and our ability to address issues related to that project, our ability to contract for our current and future supply needs, 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, the ability to attract and retain employees, customer credit worthiness, counter party 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, 2007, 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 CONSOLIDATED BALANCE SHEETS Years Ended September 30, ------------------- (in thousands) 2007 2006 - -------------------------------------------------- --------- --------- ASSETS Current assets Cash and cash equivalents $112,886 $ 91,121 Receivables, net of allowance of $7,645 and $6,532, respectively 78,923 87,393 Inventories 85,968 75,859 Fair asset value of derivative instruments 14,510 3,766 Prepaid expenses and other current assets 28,216 37,741 --------- --------- Total current assets 320,503 295,880 --------- --------- Property and equipment, net 41,721 42,377 Long-term portion of accounts receivables 1,362 3,513 Goodwill 181,496 166,522 Intangibles, net 48,468 61,007 Deferred charges and other assets, net 8,554 10,899 Long-term assets held for sale - 1,010 --------- --------- Total assets $602,104 $581,208 ========= ========= LIABILITIES AND PARTNERS' CAPITAL Current liabilities Accounts payable $ 18,797 $ 21,544 Fair liability value of derivative instruments 5,312 13,790 Current maturities of long-term debt - 96 Accrued expenses and other current liabilities 65,444 62,651 Unearned service contract revenue 37,219 36,634 Customer credit balances 71,109 73,863 --------- --------- Total current liabilities 197,881 208,578 --------- --------- Long-term debt 173,941 174,056 Other long-term liabilities 13,951 25,249 Partners' capital Common unitholders 232,895 194,818 General partner (129) (293) Accumulated other comprehensive income (loss) (16,435) (21,200) --------- --------- Total partners' capital 216,331 173,325 --------- --------- Total liabilities and partners' capital $602,104 $581,208 ========= ========= STAR GAS PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Twelve Months Ended September 30, September 30, ------------------- ----------------------- (in thousands, except per unit data) 2007 2006 2007 2006 - -------------------------- --------- --------- ----------- ----------- Sales: Product $ 94,381 $105,924 $1,088,610 $1,109,332 Installations and service 43,174 45,572 178,565 187,180 --------- --------- ----------- ----------- Total sales 137,555 151,496 1,267,175 1,296,512 Cost and expenses: Cost of product 74,848 79,672 804,928 825,694 Cost of installations and service 41,465 42,746 176,947 189,214 (Increase) decrease in the fair value of derivative instruments 1,340 18,601 (15,664) 45,677 Delivery and branch expenses 39,197 41,579 199,090 205,037 Depreciation and amortization expenses 7,073 7,570 28,995 32,415 General and administrative expenses 3,607 4,025 17,768 21,673 --------- --------- ----------- ----------- Operating income (loss) (29,975) (42,697) 55,111 (23,198) Interest expense (5,167) (5,003) (20,448) (26,288) Interest income 2,597 1,674 8,923 5,085 Amortization of debt issuance costs (570) (570) (2,282) (2,438) Loss on redemption of debt - - - (6,603) --------- --------- ----------- ----------- Income (loss) from continuing operations before income taxes (33,115) (46,596) 41,304 (53,442) Income tax expense (benefit) (1,090) (681) 2,002 477 --------- --------- ----------- ----------- Income (loss) from continuing operations (32,025) (45,915) 39,302 (53,919) Loss on sale of discontinued operations, net of income taxes (1,061) - (1,061) - --------- --------- ----------- ----------- Income (loss) before cumulative effect of change in accounting principles (33,086) (45,915) 38,241 (53,919) Cumulative effect of change in accounting principles -- change in inventory pricing method - - - (344) --------- --------- ----------- ----------- Net income (loss) $(33,086) $(45,915) $ 38,241 $ (54,263) ========= ========= =========== =========== General Partner's interest in net income (loss) (141) (200) 164 (160) --------- --------- ----------- ----------- Limited Partners' interest in net income (loss) $(32,945) $(45,715) $ 38,077 $ (54,103) ========= ========= =========== =========== Basic and diluted income (loss) per Limited Partner Unit: Continuing operations $ (0.42) $ (0.60) $ 0.51 $ (1.01) Loss on sale of discontinued operations (0.01) - (0.01) - Cumulative effect of change in accounting principle - - - (0.01) --------- --------- ----------- ----------- Net income (loss) $ (0.43) $ (0.60) $ 0.50 $ (1.02) ========= ========= =========== =========== Weighted average number of Limited Partner units outstanding: Basic 75,774 75,774 75,774 52,944 ========= ========= =========== =========== Diluted 75,774 75,774 75,774 52,944 ========= ========= =========== =========== SUPPLEMENTAL INFORMATION The Partnership uses EBITDA and adjusted EBITDA as measures of liquidity and they are being included because the Partnership believes that they provide investors and industry analysts with additional information to evaluate the Partnership's ability to pay quarterly distributions. EBITDA and adjusted EBITDA are not recognized terms 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 and adjusted 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 and adjusted EBITDA or similarly titled measures used by other companies. The following tables set forth (i) the calculation of EBITDA and adjusted EBITDA and (ii) a reconciliation of EBITDA and adjusted EBITDA, as so calculated, to cash provided by operating activities. STAR GAS PARTNERS, L.P. AND SUBSIDIARIES RECONCILIATION OF EBITDA AND ADJUSTED EBITDA Three Months Ended September 30, (in thousands) 2007 2006 - -------------------------------------------------- --------- --------- Income (loss) from continuing operations $(32,025) $(45,915) Plus: Income tax expense (benefit) (1,090) (681) Amortization of debt issuance cost 570 570 Interest expense, net 2,570 3,329 Depreciation and amortization 7,073 7,570 --------- --------- EBITDA from continuing operations (22,902) (35,127) (Increase) / decrease in the fair value of derivative instruments 1,340 18,601 --------- --------- Adjusted EBITDA(a) (21,562) (16,526) Add / (subtract) - -------------------------------------------------- Income tax expense 1,090 681 Interest expense, net (2,570) (3,329) Provision for losses on accounts receivable 263 (205) Gain on sales of fixed assets, net (108) (149) Change in operating assets and liabilities 18,521 45,736 --------- --------- Net cash provided by (used in) operating activities $ (4,366) $ 26,208 ========= ========= Three Months Ended September 30, (in thousands) 2007 2006 - -------------------------------------------------- --------- --------- Home heating oil gallons sold (millions) 25,383 30,181 ========= ========= (a)Adjusted EBITDA is calculated as earnings from continuing operations before net interest expense, income taxes, depreciation and amortization,(increase) decrease in the fair value of derivatives, loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges. Management believes the presentation of this measure is relevant and useful because it allows investors to view the partnership's performance in a manner similar to the method management uses, and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, this measure is consistent with the manner in which the partnership's debt covenants in its material debt agreements are calculated and investors measure its overall performance and liquidity, including its ability to pay quarterly equity distributions, service its long-term debt and other fixed obligations and fund its capital expenditures and working capital requirements. Certain of Star's financial covenants in its material debt documents are calculated using Adjusted EBITDA. This method of calculating Adjusted EBITDA may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP. SUPPLEMENTAL INFORMATION - ---------------------------------------------------------------------- STAR GAS PARTNERS, L.P. AND SUBSIDIARIES RECONCILIATION OF EBITDA AND ADJUSTED EBITDA Twelve Months Ended September 30, (in thousands) 2007 2006 - ------------------------------------------------- --------- --------- Income (loss) from continuing operations $ 39,302 $(53,919) Plus: Income tax expense (benefit) 2,002 477 Amortization of debt issuance cost 2,282 2,438 Interest expense, net 11,525 21,203 Depreciation and amortization 28,995 32,415 --------- --------- EBITDA from continuing operations 84,106 2,614 (Increase) / decrease in the fair value of derivative instruments (15,664) 45,677 Loss on redemption of debt - 6,603 --------- --------- Adjusted EBITDA(a) 68,442 54,894 Add / (subtract) - ------------------------------------------------- Income tax expense (2,002) (477) Interest expense, net (11,525) (21,203) Provision for losses on accounts receivable 5,726 6,105 Gain on sales of fixed assets, net (864) (956) Change in operating assets and liabilities (8,662) (19,999) --------- --------- Net cash provided by operating activities $ 51,115 $ 18,364 ========= ========= Twelve Months Ended September 30, (in thousands) 2007 2006 - ------------------------------------------------- --------- --------- Home heating oil gallons sold (millions) 376,645 389,921 ========= ========= (a)Adjusted EBITDA is calculated as earnings from continuing operations before net interest expense, income taxes, depreciation and amortization,(increase) decrease in the fair value of derivatives, loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges. Management believes the presentation of this measure is relevant and useful because it allows investors to view the partnership's performance in a manner similar to the method management uses, and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, this measure is consistent with the manner in which the partnership's debt covenants in its material debt agreements are calculated and investors measure its overall performance and liquidity, including its ability to pay quarterly equity distributions, service its long-term debt and other fixed obligations and fund its capital expenditures and working capital requirements. Certain of Star's financial covenants in its material debt documents are calculated using Adjusted EBITDA. This method of calculating Adjusted EBITDA may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP. CONTACT: Star Gas Partners Investor Relations, 203-328-7310 or Jaffoni & Collins Incorporated Robert Rinderman or Steven Hecht, 212-835-8500 SGU@jcir.com -----END PRIVACY-ENHANCED MESSAGE-----