-----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, FC0TE91tuu2VCgibLhZUFt61o2XBTX4JMTXgqQc06EzPbGR71a7jV5gUEcgnUYRo PpfbJTZIo/VAAxKhDIp1PQ== 0001005210-97-000003.txt : 19970211 0001005210-97-000003.hdr.sgml : 19970211 ACCESSION NUMBER: 0001005210-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970207 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUBURBAN PROPANE PARTNERS LP CENTRAL INDEX KEY: 0001005210 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 223410353 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14222 FILM NUMBER: 97520678 BUSINESS ADDRESS: STREET 1: ONE SUBURBAN PLAZA STREET 2: 240 ROUTE 10 WEST CITY: WIPPANY STATE: NJ ZIP: 07981 BUSINESS PHONE: 2018875300 MAIL ADDRESS: STREET 1: ONE SUBURBAN PLZ STREET 2: 240 RTE 10 WEST CITY: WHIPPANY STATE: NJ ZIP: 07981 10-Q 1 SUBURBAN PROPANE FIRST QUARTER 10-Q DEC1996 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 December 28, 1996 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 16 OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ______ to ______ Commission File Number: 1-14222 SUBURBAN PROPANE PARTNERS, L.P. ------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-3410353 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 240 Route 10 West, Whippany, NJ 07981 - -------------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) (201)887-5300 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for each shorter period that the Registrant was required to file such reports), and (2) had been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of December 28, 1996: Suburban Propane Partners, L.P. - 21,562,500 Common Units - 7,163,750 Subordinated Units This Report contains a total of 17 pages. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES Index to Form 10-Q Part 1 Financial Information Page Item 1 - Financial Statements Suburban Propane Partners, L.P. and Subsidiaries ------------------------------------------------ Condensed Consolidated Balance Sheets as of December 28, 1996 3 and as of September 28, 1996 Condensed Consolidated Statement of Operations for the three months ended December 28, 1996 4 Condensed Consolidated Statement of Cash Flows for the three months ended December 28, 1996 5 Condensed Consolidated Statement of Partners' Capital for the three months ended December 28, 1996 6 Notes to Condensed Consolidated Financial Statements 7-11 Suburban Propane division of Quantum Chemical Corporation --------------------------------------------------------- (Predecessor) ------------- Condensed Consolidated Statement of Operations for the three months ended December 30, 1995 4 Condensed Consolidated Statement of Cash Flows for the three months ended December 30, 1995 5 Notes to Condensed Consolidated Financial Statements 7-11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 14-15 Part 2 Other Information Item 5 - Other 16 Item 6 - Exhibits and Reports on Form 8-K 16 Signatures 17 SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 28, September 28, 1996 1996 ---- ---- Current assets: Cash and cash equivalents ............................. $ 19,290 $ 18,931 Accounts receivable, less allowance for doubtful accounts of $3,842 and $3,312, respectively 110,230 55,021 Inventories ........................................... 57,012 40,173 Prepaid expenses and other current assets ............. 5,747 6,567 --------- --------- Total current assets ............................. 192,279 120,692 Property, plant and equipment, net ......................... 374,015 374,013 Net prepaid pension cost ................................... 47,810 47,514 Goodwill and other intangible assets, net .................. 254,467 255,948 Other assets ............................................... 9,309 9,257 --------- --------- Total assets ..................................... $ 877,880 $ 807,424 ========= ========= LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Accounts payable ...................................... $ 58,815 $ 40,730 Accrued employment and benefit costs .................. 22,622 25,389 Accrued insurance ..................................... 5,280 5,280 Short-term borrowings ................................. 49,000 -- Customer deposits and advances ........................ 6,862 8,242 Accrued interest ...................................... 16,294 8,222 Other current liabilities ............................. 14,095 13,963 --------- --------- Total current liabilities ........................ 172,968 101,826 Long-term debt ............................................. 428,229 428,229 Postretirement benefits obligation ......................... 81,120 81,374 Accrued insurance .......................................... 16,811 19,456 Other liabilities .......................................... 11,232 11,860 --------- --------- Total liabilities ................................ 710,360 642,745 Partners' capital: Common unitholders .................................... 134,842 129,283 Subordinated unitholder ............................... 40,754 40,100 General Partners ...................................... 3,340 3,286 Unearned compensation ................................. (11,416) (7,990) --------- --------- Total partners' capital .......................... 167,520 164,679 --------- --------- Total liabilities and partners' capital .......... $ 877,880 $ 807,424 ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ( in thousands, except per unit amounts) (unaudited) Three Months Ended December 28, December 30, 1996 1995 (Predecessor) ------- -------- Revenues Propane ..................................... $224,557 $170,697 Other ....................................... 21,471 19,982 ------- -------- 246,028 190,679 Costs and expenses Cost of sales ............................... 148,094 97,295 Operating ................................... 54,725 50,632 Depreciation and amortization ............... 9,281 8,716 Selling, general and administrative expenses 8,028 6,865 Management fee .............................. 0 775 -------- -------- 220,128 164,283 Income before interest expense and income taxes .. 25,900 26,396 Interest expense, net ............................ 8,498 0 -------- -------- Income before provision for income taxes ......... 17,402 26,396 Provision for income taxes ....................... 64 12,023 -------- -------- Net income .................................. $ 17,338 $ 14,373 ======= ======== General Partner's interest in net income ......... $ 347 -------- Limited Partners' interest in net income ......... $ 16,991 ======== Net income per Unit .............................. $ 0.59 ======== Weighted average number of Units outstanding ..... 28,726 -------- The accompanying notes are an integral part of these condensed consolidated financial statements. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended Three Months Ended December 28, December 30, 1996 1995 (Predecessor) --------------- ------------------ Cash flows from operating activities: Net income ................................................ $ 17,338 $ 14,373 Adjustments to reconcile net loss to net cash provided by (used in) operations: Depreciation ......................................... 7,395 7,087 Amortization ......................................... 1,886 1,629 Gain on disposal of property, plant and equipment .......................................... (382) (33) Changes in operating assets and liabilities, net of acquisitions and dispositions: (Increase) in accounts receivable ..................... (55,209) (35,466) (Increase) in inventories ............................. (16,839) (5,004) Decrease/(Increase) in prepaid expenses and other current assets ................................ 820 (1,221) Increase in accounts payable .......................... 18,085 8,998 (Decrease) in accrued employment and benefit costs ................................... (2,609) (2,340) Increase in accrued interest ......................... 8,072 0 (Decrease) in other accrued liabilities .............. (1,248) (3,731) Other noncurrent assets ................................... (348) (4) Deferred credits and other noncurrent liabilities ......... (3,526) (1,799) ------- -------- Net cash used in operating activities ........... (26,565) (17,511) -------- -------- Cash flows from investing activities: Capital expenditures ..................................... (8,762) (6,408) Acquisitions ............................................. (694) (3,544) Proceeds from sale of property, plant and equipment, net.. 2,036 569 -------- -------- Net cash used in investing activities ........... (7,420) (9,383) -------- -------- Cash flows from financing activities: Cash activity with parent, net ........................... 0 26,877 Short-term borrowings, net ............................... 49,000 0 Partnership distribution ................................. (14,656) 0 -------- -------- Net cash provided by financing activities ....... 34,344 26,877 -------- -------- Net increase/(decrease) in cash and cash equivalents ........... 359 (17) Cash and cash equivalents at beginning of period ............... 18,931 136 -------- -------- Cash and cash equivalents at end of period ..................... $ 19,290 $ 119 ======== ======== Supplemental disclosure of cash flow information: Cash paid for interest ................................... $ 168 $ 0 -------- --------
The accompanying notes are an integral part of these condensed consolidated financial statements. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (in thousands) (unaudited) Unearned Total Number of Units General Compensation Partners' Common Subordinated Common Subordinated Partner Restricted Units Capital ------ ------------ ------ ------------ ------- ---------------- ------- Balance at September 28, 1996 ........ 21,562 7,164 $ 129,283 $ 40,100 $ 3,286 $ (7,990) $164,679 Additional grants under restricted Unit plan (174,882 units) ............ 3,585 (3,585) Quarterly distribution ............... (10,787) (3,576) (293) (14,656) Unamortized restricted Unit compensation ......................... 159 159 Net income ...................... -- -- 12,761 4,230 347 -- 17,338 --------- --------- --------- --------- --------- --------- --------- Balance at December 28, 1996 ......... 21,562 7,164 $ 134,842 $ 40,754 $ 3,340 $ (11,416) $ 167,520 ========= ========= ========= ========= ========= ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements December 28, 1996 (Dollars in Thousands) (Unaudited) 1. Partnership Organization and Formation - ----------------------------------------- Suburban Propane Partners, L.P. (the "Partnership") was formed on December 19, 1995 as a Delaware limited partnership. The Partnership and its subsidiary, Suburban Propane, L.P. (the "Operating Partnership"), were formed to acquire and operate the propane business and assets of the Suburban Propane Division of Quantum Chemical Corporation (the "Predecessor Company"). In addition, Suburban Sales & Service, Inc. (the "Service Company"), a subsidiary of the Operating Partnership, was formed to acquire and operate the service work and appliance and parts sales businesses of the Predecessor Company. The Partnership, the Operating Partnership and the Service Company are collectively referred to hereinafter as the "Partnership Entities." The Partnership Entities commenced operations on March 5, 1996 (the "Closing Date") upon consummation of an initial public offering of 18,750,000 Common Units representing limited partner interests in the Partnership (the "Common Units"), the private placement of $425,000 aggregate principal amount of Senior Notes due 2011 issued by the Operating Partnership (the "Senior Notes") and the transfer of all the propane assets (excluding the net accounts receivable balance) of the Predecessor Company to the Operating Partnership and the Service Company. On March 25, 1996, the underwriters of the Partnership's initial public offering exercised an overallotment option to purchase an additional 2,812,500 Common Units. The Operating Partnership and Service Company are, and the Predecessor Company was, engaged in the retail and wholesale marketing of propane and related appliances and services. Suburban Propane GP, Inc. (the "General Partner") is a wholly-owned subsidiary of Quantum Chemical Corporation ("Quantum") and serves as the general partner of the Partnership and the Operating Partnership. Both the General Partner and Quantum are indirect wholly-owned subsidiaries of Millennium Chemicals, Inc. ("Millennium"), which was formed as a result of the demerger (spin-off) of Hanson PLC's ("Hanson") chemicals businesses in October 1996. The General Partner holds a 1% general partner interest in the Partnership and a 1.0101% general partner interest in the Operating Partnership. In addition, the General Partner owns a 24.4% limited partner interest in the Partnership. This limited partner interest is evidenced by 7,163,750 Subordinated Units representing limited partner interests in the Partnership. The General Partner has delegated to the Partnership's Board of Supervisors all management powers over the business and affairs of the Partnership Entities that the General Partner possesses under applicable law. 2. Basis of Presentation and Summary of Significant Accounting Policies - ----------------------------------------------------------------------- BASIS OF PRESENTATION. The condensed consolidated financial statements include the accounts of the Partnership Entities. All significant intercompany transactions and accounts have been eliminated . The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. They include all adjustments which the Partnership considers necessary for a fair statement of the results for the interim period presented. Such adjustments consisted only of normal recurring items unless otherwise disclosed. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended September 28, 1996, including management's discussion of financial results contained therein. Due to the seasonal nature of the Partnership's propane business, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. FISCAL PERIOD. The Partnership's fiscal periods end on the Saturday nearest the end of the quarter. USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH EQUIVALENTS. The Partnership considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short maturity of these instruments. REVENUE RECOGNITION. Sales of propane are recognized at the time product is shipped or delivered to the customer. Revenue from the sale of propane appliances and equipment is recognized at the time of sale or installation. Revenue from repairs and maintenance is recognized upon completion of the service. INVENTORIES. Inventories are stated at the lower of cost or market. Cost is determined using a weighted average method for propane and a specific identification basis for appliances. PROPERTY, PLANT AND EQUIPMENT.Property, plant and equipment are stated at cost. When plant and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in operations. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated service lives which range from three to forty years. Accumulated depreciation at December 28, 1996 and September 28, 1996 was $93,382 and $85,987, respectively. GOODWILL AND OTHER INTANGIBLE ASSETS. Goodwill and other intangible assets are comprised of the following at December 28, 1996: Goodwill $265,537 Debt origination costs 6,224 Other, principally noncompete agreements 4,164 ----- 275,925 Less: Accumulated amortization 21,458 ------ $254,467 ======== Goodwill represents the excess of the purchase price over the fair market value of net assets acquired and is being amortized on a straight-line basis over forty years from the date of acquisition. Debt origination costs represent the costs incurred in connection with the placement of the $425,000 of Senior Notes which is being amortized on a straight-line basis over 15 years. INCOME TAXES. As discussed in Note 1, the Partnership Entities consist of two limited partnerships, the Partnership and the Operating Partnership, and one corporate entity, the Service Company. For federal and state income tax purposes, the earnings attributed to the Partnership and Operating Partnership are included in the tax returns of the individual partners. As a result, no recognition of income tax expense has been reflected in the Partnership's consolidated financial statements relating to the earnings of the Partnership and Operating Partnership. The earnings attributed to the Service Company are subject to federal and state income taxes. Accordingly, the Partnership's consolidated financial statements reflect income tax expense related to the Service Company's earnings. NET INCOME PER UNIT. Net income per unit is computed by dividing net income, after deducting the General Partner's 2% interest by the weighted average number of outstanding Common Units and Subordinated Units. RECLASSIFICATIONS. Certain prior period balances have been reclassified to conform with the current period presentation. 3. Distributions of Available Cash - ---------------------------------- The Partnership will make distributions to its partners 45 days after the end of each fiscal quarter in an aggregate amount equal to its Available Cash for such quarter. Available Cash generally means all cash on hand at the end of the fiscal quarter plus all additional cash on hand as a result of borrowings and purchases of additional limited partner units (APUs) subsequent to the end of such quarter less cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. The Partnership paid the Minimum Quarterly Distributions on all outstanding Common Units and Subordinated Units for the quarter ended September 28, 1996 on November 12, 1996. The aggregate amount of these Common and Subordinated Distributions was $14,363. 4. Related Party Transactions - ----------------------------- Pursuant to a Computer Services Agreement (the "Services Agreement") dated as of the Closing Date between Quantum and the Partnership, Quantum permits the Partnership to utilize Quantum's mainframe computer for the generation of customer bills, reports and information regarding the Partnership's retail sales. For the three months ended December 28, 1996, the Partnership incurred expenses of $92 under the Services Agreement. 5. Commitments and Contingencies - -------------------------------- The Partnership leases certain property, plant and equipment for various periods under noncancelable leases. Rental expense under operating leases was $3,597 for the three months ended December 28, 1996. The Partnership is involved in various legal actions which have arisen in the normal course of business including those relating to commercial transactions and product liability. It is the opinion of management, based on the advice of legal counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Partnership's financial position or future results of operations. 6. Long-Term Debt and Bank Credit Facilities - -------------------------------------------- On the Closing Date, the Operating Partnership issued $425,000 of Senior Notes with an annual interest rate of 7.54%. The Operating Partnership's obligations under the Senior Note Agreement are unsecured and rank on an equal and ratable basis with the Operating Partnership's obligations under the Bank Credit Facilities discussed below. The Senior Notes will mature June 30, 2011, and require semiannual interest payments which commenced June 30, 1996. The Note Agreement requires that the principal be paid in equal annual installments of $42,500 starting June 30, 2002. The Bank Credit Facilities consist of a $100,000 acquisition facility (the "Acquisition Facility") and a $75,000 working capital facility ("The Working Capital Facility"). The Operating Partnership's obligations under the Bank Credit Facilities are unsecured and will rank on an equal and ratable basis with the Operating Partnership's obligations under the Senior Notes. The Bank Credit Facilities bear interest at a rate based upon either LIBOR, Chase Manhattan's (formerly Chemical Bank's) prime rate or the Federal Funds effective rate plus 1/2 of 1% and in each case, plus a margin. In addition, an annual fee (whether or not borrowings occur) is payable quarterly ranging from 0.125% to 0.375% based upon certain financial tests. As of December 28, 1996 such fee was 0.375%. The Working Capital Facility will expire on March 1, 1999. The Acquisition Facility will expire on March 1, 2003. Any loans outstanding under the Acquisition Facility after March 1, 1999 will require equal quarterly principal payments over a four year period. As of December 28, 1996, the Partnership had outstanding short-term borrowings of $35,000 under the Working Capital Facility and $14,000 under the Acquisition Facility. The Senior Note Agreement and Bank Credit Facilities contain various restrictive and affirmative covenants applicable to the Operating Partnership, including (i) maintenance of certain financial tests, (ii) restrictions on the incurrence of additional indebtedness, and (iii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions. 7. Unaudited Pro Forma Financial Information - -------------------------------------------- The accompanying unaudited pro forma condensed consolidated statements of operations for the three months ended December 30, 1995 were derived from the historical statements of operations of the Predecessor Company and the statements for the three months ended December 28, 1996 were derived from the condensed consolidated statement of operations of the Partnership. The pro forma condensed consolidated statements of operations were prepared to reflect the effects of the Partnership formation as if it had been completed in its entirety as of the beginning of the periods presented. However, these statements do not purport to present the results of operations of the Partnership had the Partnership formation actually been completed as of the beginning of the periods presented. In addition, the pro forma condensed consolidated statements of operations are not necessarily indicative of the results of future operations of the Partnership and should be read in conjunction with the historical condensed consolidated financial statements of the Predecessor Company and the Partnership appearing elsewhere in this Quarterly Report on Form 10-Q. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit amounts) Three Months Ended December 28, December 30, 1996 1995 ----------- ----------- Revenues Propane .................................... $224,557 $170,697 Other ...................................... 21,471 19,982 -------- -------- 246,028 190,679 Costs and Expenses Cost of sales .............................. 148,094 97,295 Operating .................................. 54,725 50,632 Depreciation and amortization .............. 9,281 8,716 Selling, general and administrative expenses 8,028 7,640 -------- -------- 220,128 164,283 Income before interest expenses and income taxes 25,900 26,396 Interest expense, net ........................... 8,498 8,230 -------- -------- Income before provision for income taxes ........ 17,402 18,166 Provision for income taxes ...................... 64 63 -------- -------- Net income ...................................... $ 17,338 $ 18,103 ======== ======== General Partner's interest in net income ........ $ 347 $ 362 -------- -------- Limited Partners' interest in net income ........ $ 16,991 $ 17,741 ======== ======== Net income per Unit ............................. $ 0.59 $ 0.62 ======== ======== Weighted average number of Units outstanding .... 28,726 28,726 ======== ======== 7. Unaudited Pro Forma Financial Information - Continued - -------------------------------------------------------- Significant pro forma adjustments reflected in the above data include the following: a. For the three month period ended December 30, 1995, the elimination of management fees paid by the Predecessor Company to a wholly-owned affiliate of Hanson. b. For the three month period ended December 30, 1995, the addition of the estimated incremental general and administrative costs associated with the Partnership operating as a publicly traded partnership. c. For the three month period ended December 30, 1995, an adjustment to interest expense to reflect the interest expense associated with the Senior Notes and Bank Credit Facilities. d. For the three month period ended December 30, 1995, the elimination of the provision for income taxes, as income taxes will be borne by the partners and not the Partnership, except for corporate income taxes related to the Service Company. 8. Restricted Unit Plan - ----------------------- The Partnership's 1996 Restricted Unit Award Plan authorizes the issuance of Common Units with an aggregate value of $15,000 to executives, managers and Elected Supervisors of the Partnership. Initial Restricted Unit grants with a total value of $7,990 were awarded effective March 5, 1996 and additional grants with a total value of $3,585 were awarded effective October 1, 1996. Upon issuance of Restricted Units, unearned compensation is amortized ratably over the applicable vesting periods under the Plan. Unamortized unearned compensation was $11,416 at December 28, 1996 and is shown as a reduction of partners' capital in the Partnership's Condensed Consolidated Balance Sheets. 9. Subsequent Event - Common Unit Distribution - ---------------------------------------------- On January 21, 1997, the Partnership announced a quarterly distribution of $0.50 per Limited Partner Common Unit for the first quarter of fiscal 1997 payable on February 11, 1997. The Partnership will not make a quarterly distribution on its Subordinated Units (which are held by the General Partner) for said fiscal quarter. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended December 28, 1996 Compared to Three Months Ended December 30, 1995 REVENUES Revenues increased 29.0% or $55.3 million to $246.0 million for the three months ended December 28, 1996 as compared to $190.7 million for the three months ended December 30, 1995. The overall increase is primarily attributable to higher retail and wholesale selling prices resulting from the increased cost of propane. Propane sold to retail customers increased .9% or 1.4 million gallons to 159.0 million gallons while wholesale gallons sold increased 32.7% or 16.5 million gallons to 67.0 million gallons. Nationwide temperatures nationally were approximately 3% warmer than the prior period. The increase in wholesale gallons resulted from favorable trading opportunities arising from the volatility of industry-wide propane prices during the period. GROSS PROFIT Gross profit increased 4.9% or $4.6 million to $97.9 million. The increase is a result of higher retail and wholesale volumes and margins. Average product cost for the Partnership increased substantially when comparing the three months ended December 28, 1996 to the same period in the prior year. The product cost increase is principally attributable to significant price increases charged by the Partnership's suppliers during the 1996 period resulting from perceived low nationwide propane inventory levels. During the three months ended December 28, 1996, the Partnership was able to pass on these increases and maintain overall margins above the prior period. OPERATING EXPENSES Operating expenses increased 8.1% or $4.1 million to $54.7 million for the three months ended December 28, 1996 as compared to $50.6 million for the three months ended December 30, 1995. The increase in operating expenses is principally due to higher vehicle fuel costs resulting from the increase in propane prices and higher payroll expenses attributable to an increase in the operational workforce to support enhanced customer service programs. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses, including the management fee, increased 5.1% or $.4 million to $8.0 million for the three months ended December 28, 1996 compared to $7.6 million for the three months ended December 30, 1995. Expenses were higher than the prior period principally due to higher information system development costs. OPERATING INCOME AND EBITDA Operating income decreased $.5 million to $25.9 million in the three months ended December 28, 1996 compared to $26.4 million in the prior period. EBITDA increased $.1 million to $35.2 million. The increase is attributable to increased gross profits offset by higher period expenses. EBITDA 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) but provides additional information for evaluating the Partnership's ability to distribute the Minimum Quarterly Distribution. LIQUIDITY AND CAPITAL RESOURCES Due to the seasonal nature of the propane business, cash flows from operating activities are greater during the winter and spring seasons as customers pay for propane purchased during the heating season. For the three months ended December 28, 1996, net cash used in operating activities increased $9.1 million to $26.6 million compared to $17.5 million used in operating activities in the three months ended December 30, 1995. Such increase was principally due to higher working capital requirements for receivables and inventory of $31.6 million partially offset by an increase in accounts payable of $9.1 million and an increase in accrued interest and other accrued liabilities of $10.6 million. The increases in receivables, inventory and accounts payable primarily result from the increase in propane costs and corresponding selling prices. Net cash used in investing activities was $7.4 million for the three months ended December 28, 1996 consisting of capital expenditures of $8.8 million and acquisition payments of $.7 million, offset by proceeds from the sale of property, plant and equipment of $2.1 million. Net cash used in investing activities was $9.4 million for the three months ended December 30, 1995 consisting of capital expenditures of $6.4 million and acquisition payments of $3.5 million, offset by proceeds from the sale of property, plant and equipment of $.6 million. Prior to March 5, 1996, the Predecessor Company's cash accounts had been managed on a centralized basis by an affiliate of Hanson. Accordingly, cash receipts and disbursements relating to the operations of the Predecessor Company were received or funded by the Hanson affiliate. Net cash provided by financing activities, which are reflected as a increase in division invested capital, was $26.9 million during the three months ended December 30, 1995. Net cash provided by financing activities for the three months ended December 28, 1996 was $34.3 million, arising from net short-term borrowings of $49.0 million principally for working capital requirements and to fund the Partnership's fiscal 1996 fourth quarter distribution. SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES Part II Item 5. OTHER INFORMATION - NONE. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule (99) Press Release dated January 21, 1997 announcing fiscal 1997 first quarter results and Common Unit quarterly distribution. (B) Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized: SUBURBAN PROPANE PARTNERS, L.P. Date: February 7, 1997 By /s/ Charles T. Hoepper ---------------------- Charles T. Hoepper Senior Vice President, Chief Financial Officer and Chief Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 This Schedule contains summary financial information extracted from the financial statements contained in the body of the accompanying Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS SEP-28-1996 DEC-28-1996 19,290 0 114,072 3,842 57,012 192,279 467,397 93,382 877,880 172,968 428,229 0 0 0 167,520 877,880 246,028 246,028 148,094 202,819 0 3,842 8,498 17,402 64 17,338 0 0 0 17,338 0 0
EX-99 3 PRESS RELEASE NEWS RELEASE For Immediate Release Suburban Propane Partners, L.P. Reports First Quarter Results and Declares Common Unit Quarterly Distribution Whippany, New Jersey, January 21, 1997 -- Suburban Propane Partners, L.P. (NYSE: SPH) today announced its results for the three months ended December 28, 1996, and declares its Common Unit quarterly distribution. Suburban's sales for the first quarter of 1997 rose 29 percent to $246.0 million from $190.7 million a year ago. The company reported net income for the first quarter of $17.3 million or $0.59 per unit compared to a pro forma net income of $18.1 million or $0.62 per unit in the first quarter ended December 30, 1995. EBITDA for the first quarter 1997 and pro forma EBITDA for the first quarter 1996 were $35.2 million and $35.1 million respectively. Retail sales gallons in the first quarter of 1997 increased to 159 million, slightly above the 157.6 million gallons sold in the first quarter of 1996. Operating expenses for the first quarter increased by approximately 8 percent principally due to higher vehicle fuel costs resulting from the increase in propane prices, and higher payroll expenses attributable to an increase in our operational workforce to support enhanced customer service programs. Nationwide temperatures averaged 2 percent colder than normal as compared to 5 percent colder than normal last year. However, on the East Coast and West Coast, temperatures were 1 percent and 2 percent respectively warmer than normal. Temperatures in December, which accounted for 45 percent of the company's first quarter's volume, were approximately 90 percent of normal and approximately 14 percent warmer than last year. "We are pleased with first quarter results which showed a volume improvement over the prior year, even though the weather was 3 percent warmer than last year. Our volume gains would have been more pronounced except for the fact that our customers are being forced to take extraordinary measures to reduce their energy consumption as a result of record high prices for propane," said Mark A. Alexander, President and Chief Executive Officer. Suburban also today announced a quarterly distribution of $0.50 per Limited Partner Common Unit for the first quarter ended December 28, 1996. The distribution for the Partnership's first fiscal quarter is payable on February 11, 1997 to Common Unit holders of record as of January 31, 1997. The Partnership will not make the quarterly distribution on its Subordinated Units. "The Board of Supervisors is making this difficult decision to benefit the long term needs of the company," said Mark A. Alexander, President and Chief Executive Officer. Suburban Propane Partners, L.P. is a publicly traded company listed on the New York Stock Exchange. Headquartered in Whippany, New Jersey, Suburban has been in the customer service business since 1928 and is the nation's third largest propane gas marketer. The company serves more than 730,000 active residential, commercial, industrial and agricultural customers through more than 350 customer service centers in more than 40 states. Company contact: Beverly M. Saco Director, Investor Relations & Public Relations (201) 503-9973 E-mail: bevsaco@suburbanpropane.com -----END PRIVACY-ENHANCED MESSAGE-----