<PAGE>
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, 1996
--------------
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: 0-27300
--------
STAR GAS PARTNERS, L.P.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1437793
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2187 Atlantic Street, Stamford, Connecticut 06902
- ----------------------------------------------------
(Address of principal executive office) (Zip Code)
(203) 328-7300
- ---------------------------------------------------
(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 Sections 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) 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 May 8th, 1996:
Star Gas Partners, L.P. 2,875,000 Common Units
2,396,078 Subordinated Units
This Report contains a total of 27 pages.
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
PART 1 FINANCIAL INFORMATION: ----
Item 1 - Financial Statements
Star Gas Partners, L.P. and the Star Gas Group (Predecessor)
------------------------------------------------------------
<S> <C>
Condensed Consolidated Balance Sheets as of
March 31, 1996 and September 30, 1995 (Predecessor) 3
Condensed Consolidated Statements of Operations
for the three months ended March 31, 1996 and
March 31, 1995 (Predecessor) 4
Condensed Consolidated Statements of Operations
from October 1 through December 20, 1995 (Predecessor)
and from December 20, 1995 through March 31, 1996 and
October 1, 1994 - March 31, 1995 (Predecessor) 5
Condensed Consolidated Statements of Cash Flows from
October 1 through December 20, 1995 (Predecessor)
and from December 20 through March 31, 1996 and
October 1, 1994 - March 31, 1995 (Predecessor) 6
Condensed Consolidated Statement of Partners' Capital
from December 20, 1995 through March 31, 1996 7
Notes to Condensed Consolidated Financial Statements 8 - 18
Item 2 - Management's Discussion and Analysis of Financial
Conditions and Results of Operations 19 -25
PART 2 OTHER INFORMATION:
Item 6 - Exhibits and Reports on Form 8-K 26
Signature 27
</TABLE>
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
(UNAUDITED) (PREDECESSOR)
----------- --------------
<S> <C> <C>
ASSETS:
Current assets:
Cash $ 8,316 $ 727
Receivables, net of allowance of $312
and $362, respectively 12,817 6,436
Inventories 2,961 6,154
Prepaid expenses and other current
assets 1,544 949
-------- --------
Total current assets 25,638 14,266
-------- --------
Property and equipment 107,994 103,879
Less accumulated depreciation (9,394) (5,192)
-------- --------
98,600 98,687
Intangibles, net of accumulated
amortization of $4,899 and $3,267,
respectively and other assets 42,320 42,440
-------- --------
Total assets $166,558 $155,393
======== ========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL/PREDECESSOR EQUITY
<S> <C> <C>
Current liabilities:
Current debt $ - $ 748
Accounts payable 2,588 2,824
Accrued interest 357 20
Other accrued expenses 2,502 2,980
Dividends payable - 4,875
Customer credit balances - 3,305
-------- --------
Total current liabilities 5,447 14,752
-------- --------
Long-term debt 85,000 1,389
Due to Petro - 86,002
Other long-term liabilities 284 320
Cumulative redeemable preferred stock - 8,625
Predecessor Equity - 44,305
Partners' Capital:
Common unitholders 60,496 -
Subordinated unitholder 14,875 -
General partner 456 -
-------- --------
Total Partners'
Capital/Predecessor Equity 75,827 44,305
-------- --------
Total Liabilities and Partners'
Capital/Predecessor Equity $166,558 $155,393
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
MARCH 31, MARCH 31, 1995
1996 (PREDECESSOR)
---------- ---------------
<S> <C> <C>
Sales $47,080 $38,347
Cost of sales 24,481 17,783
------- -------
Gross profit 22,599 20,564
Delivery and branch 9,682 9,229
Depreciation and amortization 2,473 2,314
General and administrative 1,455 1,300
Net gain (loss) on sales of assets (23) (5)
------- -------
Operating income 8,966 7,716
Interest expense (net) 1,722 2,053
------- -------
Income before income taxes 7,244 5,663
Income tax expense 14 30
------- -------
Net income $ 7,230 $ 5,633
======= =========
General Partner's interest
in net income $ 145
-------
Limited Partners' interest
in net income $ 7,085
=======
Net income per Limited Partner unit $1.34
=======
Weighted average number of units 5,271
outstanding =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------------
OCTOBER 1, 1995 OCTOBER 1, 1995 OCTOBER 1, 1994
THROUGH DECEMBER 20, 1995 THROUGH THROUGH
DECEMBER 20, 1995 THROUGH MARCH 31, 1996 MARCH 31, 1995
(PREDECESSOR) MARCH 31, 1996 (COMBINED) (PREDECESSOR)
------------------ ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Sales $28,159 $53,555 $81,714 $70,671
Cost of sales 12,808 27,578 40,386 33,933
------- ------- ------- -------
Gross profit 15,351 25,977 41,328 36,738
Delivery and branch 7,729 10,991 18,720 19,258
Depreciation and amortization 2,177 2,739 4,916 5,203
General and administrative 1,349 1,540 2,889 2,795
Net gain (loss) on sales
of assets (113) (23) (136) (584)
------- ------- ------- -------
Operating income 3,983 10,684 14,667 8,898
Interest expense (net) 1,922 1,955 3,877 4,260
------- ------- ------- -------
Income before income taxes 2,061 8,729 10,790 4,638
Income tax expense 60 14 74 105
------- ------- ------- -------
Net income $ 2,001 $ 8,715 $10,716 $ 4,533
======= ======= ======= =======
General Partner's interest
in net income $ 175
-------
Limited Partners' interest
in net income $ 8,540
=======
Net income per Limited Partner unit $1.62
=======
Weighted average number of units 5,271
outstanding =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
OCTOBER 1, 1995 OCTOBER 1, 1995 OCTOBER 1, 1994
THROUGH DECEMBER 20, 1995 THROUGH THROUGH
DECEMBER 20, 1995 THROUGH MARCH 31, 1996 MARCH 31, 1995
(PREDECESSOR) MARCH 31, 1996 (COMBINED) (PREDECESSOR)
------------------ ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,001 $ 8,715 $ 10,716 $ 4,533
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,177 2,739 4,916 5,203
Provision for losses on
accounts receivable 101 132 233 280
Loss on sales of assets 113 23 136 584
Changes in operating assets
and liabilities:
Increase in receivables (2,779) (3,636) (6,415) (1,143)
Decrease in inventories 1,430 1,763 3,193 2,217
Decrease (increase) in other assets (455) (134) (589) 62
Increase (decrease) in accounts
payable 10 (246) (236) (1,052)
Decrease in other current
liabilities (1,713) (488) (2,201) (6,453)
Decrease in other long-term
liabilities (12) (24) (36) (24)
-------- -------- -------- --------
Net cash provided by operating
activities 873 8,844 9,717 4,207
-------- -------- -------- --------
INVESTING ACTIVITIES:
Capital expenditures (1,617) (1,237) (2,854) (4,467)
Purchase of company - (1,500) (1,500) (3,607)
Proceeds from sales of fixed assets 566 65 631 99
Proceeds from sale of business - - - 13,250
-------- -------- -------- --------
Net cash provided by (used in)
investing activities (1,051) (2,672) (3,723) 5,275
-------- -------- -------- --------
FINANCING ACTIVITIES:
Net repayments under revolving
credit facility - - - (2,300)
Borrowings(repayments) of debt to Petro (31,425) (54,577) (86,002) 1,835
Repayments of preferred stock - - - (5,091)
Dividends to Petro (25,538) - (25,538) -
Dividends - - - (252)
Loan to Petro (12,000) - (12,000) -
Proceeds from debt placement 85,000 - 85,000 -
Proceeds from offering - 63,306 63,306 -
Repayment of preferred stock to Petro (8,625) - (8,625) -
Debt placement and credit agreement
expenses (1,412) (526) (1,938) -
Expenses of offering - (6,578) (6,578) -
Repayment of other debt (30) - (30) (4,287)
Cash retained by general partner (6,000) - (6,000) -
-------- -------- -------- --------
Net cash provided by (used in)
financing activities (30) 1,625 1,595 (10,095)
-------- -------- -------- --------
Net increase (decrease) in cash (208) 7,797 7,589 (613)
Cash at beginning of period 727 519 727 1,825
-------- -------- -------- --------
Cash at end of period $ 519 $ 8,316 $ 8,316 $ 1,212
========= ======== ======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
NUMBER OF UNITS TOTAL
-------------------- GENERAL PARTNERS'
COMMON SUBORDINATED COMMON SUBORDINATED PARTNER CAPITAL
------ ------------ ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance December 20, 1995 - - - - - -
Contribution of net assets
from Predecessor - 2,396 $ - $10,956 $225 $11,181
Issuance of Common Units, net 2,875 - 55,875 - 56 55,931
Net income - - 4,621 3,919 175 8,715
------ ------------ ------- ------------ ---- -------
Balance March 31, 1996 2,875 2,396 $60,496 $14,875 $456 $75,827
====== =========== ======= =========== ==== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1) PARTNERSHIP ORGANIZATION AND FORMATION
Star Gas Partners, L.P. ("Star Gas Partners") was formed on October 16,
1995, as a Delaware limited partnership. Star Gas Partners and its
subsidiary, Star Gas Propane, L.P., a Delaware limited partnership, (the
"Operating Partnership") were formed to acquire, own and operate
substantially all of the propane operations and assets and liabilities of
Star Gas Corporation ("Star Gas"), a Delaware corporation (and the general
partner of Star Gas Partners and the Operating Partnership) and the propane
operations and assets and liabilities of Star Gas' parent corporation,
Petroleum Heat and Power Co., Inc., a Minnesota corporation ("Petro"),
(collectively hereinafter referred to as the "Star Gas Group" or the
"Predecessor Company"). The Operating Partnership is, and the Star Gas
Group was, engaged in the marketing and distribution of propane gas and
related appliances to retail and wholesale customers in the United States
located principally in the Midwest and Northeast. On December 20, 1995,
(i) Petro conveyed all of its propane assets and related liabilities to
Star Gas and (ii) Star Gas and its subsidiaries conveyed substantially all
of their assets (other than $83.6 million in cash from the proceeds of the
First Mortgage Notes and certain non-operating assets) to the Operating
Partnership (the "Star Gas Conveyance") in exchange for general and limited
partner interests in the Operating Partnership and the assumption by the
Operating Partnership of substantially all of the liabilities of Star Gas
and its subsidiaries (excluding certain income tax liabilities and certain
other long-term obligations of Star Gas that were assumed by Petro),
including the First Mortgage Notes and approximately $54.6 million in
outstanding Star Gas debt due to Petro. The net book value of the assets
contributed by Star Gas and its subsidiaries to the Operating Partnership
exceeded the liabilities assumed by $10.4 million. Immediately after the
Star Gas Conveyance, Star Gas and its subsidiaries conveyed their limited
partner interests in the Operating Partnership to Star Gas Partners in
exchange for an aggregate of 2.4 million Subordinated Units of limited
partner interest in Star Gas Partners.
Of the $83.6 million in cash retained by the General Partner, $31.5 was
paid to Petro in satisfaction of additional indebtedness, $8.6 million was
used to redeem preferred stock of the General Partner held by Petro, $12.0
million was loaned to Petro, and $6.0 million was retained to be available
to fund the General Partner's additional capital contribution obligation.
The remaining $25.5 million was paid to Petro as dividends.
On December 20, 1995, Star Gas Partners completed its initial public
offering of 2.6 million Common Units, representing Limited Partner
interests, at a price of $22.00 a unit. The net proceeds received of $51.0
million, after deducting underwriting discounts, commissions and expenses
<PAGE>
1) PARTNERSHIP ORGANIZATION AND FORMATION - CONTINUED
were contributed to the Operating Partnership and used to repay debt due to
Petro which was assumed by the Operating Partnership in the Star Gas
Conveyance.
On January 18, 1996, pursuant to the underwriters' over-allotment option,
Star Gas Partners, L.P. issued an additional 275,000 Common Units at $22.00
per share for $5.6 million, net of underwriting discounts and expenses.
The Partnership will use these proceeds for general corporate purposes.
The General Partner holds a 1.0% general partner interest in Star Gas
Partners and a 1.0101% general partner interest in the Operating
Partnership. Star Gas Partners and the Operating Partnership have no
employees. The General Partner conducts, directs and manages all
activities of Star Gas Partners and the Operating Partnership and is
reimbursed on a monthly basis for all direct and indirect expenses it
incurs on their behalf including the cost of employee wages.
The Condensed Consolidated Financial Statements for the period December
20, 1995 through March 31, 1996 include the accounts of Star Gas Partners,
L.P., the Operating Partnership and its corporate subsidiary, Stellar
Propane Service Corp., collectively referred to herein as (the
"Partnership"). The accompanying Condensed Consolidated Financial
Statements are unaudited and have been prepared in accordance with
generally accepted accounting principles and 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 of
the interim periods presented. Such adjustments consisted only of normal
recurring items unless otherwise disclosed. These financial statements
should be read in conjunction with the financial statements and the notes
thereto for the fiscal years ended September 30, 1993, 1994 and 1995
included in the registration statement on Form S-1 (No. 33-98490) of Star
Gas Partners, L.P. filed with the Securities and Exchange Commission in
connection with Star Gas Partners' initial public offering. Due to the
seasonal nature of the Partnership's propane business, the results of
operations for the periods presented are not necessarily indicative of the
results to be expected for a full year.
2) QUARTERLY DISTRIBUTION OF AVAILABLE CASH
The Partnership will distribute to its partners, on a quarterly basis,
all of its Available Cash. "Available Cash" generally means, with respect
to any fiscal quarter of the Partnership, all cash on hand at the end of
such quarter, less the amount of cash reserves that are necessary or
appropriate in the reasonable discretion of the General Partner to (i)
provide for the proper conduct of the Partnership's business, (ii) comply
with applicable law or any Partnership debt instrument or other agreement,
or (iii) provide funds for distributions to the Unitholders and the General
Partner during the next four quarters.
Cash distributions will be characterized as distributions from either
Operating Surplus or Capital Surplus. This distinction affects the amounts
distributed to Unitholders in relation to the General Partner, and under
<PAGE>
2) QUARTERLY DISTRIBUTION OF AVAILABLE CASH - CONTINUED
certain circumstances it determines whether holders of the Subordinated
Units receive any distributions.
Operating Surplus generally refers to (i) the cash balance of the
Partnership on the date the Partnership commences operations, plus $6.0
million, plus all cash receipts of the Partnership, less (ii) all
Partnership operating expenses (including expenses the General Partner
incurred on behalf of the Partnership), debt service payments, maintenance
capital expenditures and reserves established for future debt service and
Partnership operations.
Capital Surplus will generally be generated only by borrowings (other
than for working capital purposes), sales of debt and equity securities and
sales or other dispositions of assets for cash (other than inventory,
accounts receivable and other assets, all as disposed of in the ordinary
course of business).
To avoid the difficulty of trying to determine whether Available Cash
distributed by the Partnership is from Operating Surplus or Capital
Surplus, all Available Cash distributed by the Partnership from any source
will be treated as distributed from Operating Surplus until the sum of all
Available Cash distributed since the commencement of the Partnership equals
the Operating Surplus as of the end of the quarter prior to such
distribution. Any excess Available Cash (irrespective of its source) will
be deemed to be Capital Surplus and distributed accordingly.
If Capital Surplus is distributed in respect of each Common Unit in an
aggregate amount equal to the initial public offering price of the Common
Unit (the "Initial Unit Price"), the distinction between Operating Surplus
and Capital Surplus will cease, and all distributions will be treated as
from Operating Surplus. The General Partner does not expect that there
will be significant distributions from Capital Surplus.
The Subordinated Units are a separate class of interests in the
Partnership, and the rights of holders of such interests to participate in
distributions differ from the rights of the holders of Common Units. For
any given quarter, Available Cash will be distributed to the General
Partner and to the holders of Common Units, and it may also be distributed
to the holders of Subordinated Units, depending upon the amount of
Available Cash for the quarter, amounts distributed in prior quarters,
whether the Subordination Period has ended and other factors discussed
below.
Distribution by the Partnership in an amount equal to 100% of its
Available Cash will generally be made 98% to the Common and Subordinated
Unitholders and 2% to the General Partner, subject to the payment of
incentive distributions in the event Available Cash exceeds the Minimum
Quarterly Distribution ($0.55) on all Units. To the extent there is
sufficient Available Cash, the holders of Common Units have the right to
<PAGE>
2) QUARTERLY DISTRIBUTION OF AVAILABLE CASH - CONTINUED
receive the Minimum Quarterly Distribution, plus any arrearages, prior to
the distribution of Available Cash to holders of Subordinated Units. Common
Units will not accrue arrearages for any quarter after the end of the
Subordination Period (as defined below) and Subordinated Units will not
accrue any arrearage with respect to distributions for any quarter.
To enhance the Partnership's ability to pay the Minimum Quarterly
Distribution on the Common Units, the General Partner has agreed, subject
to certain limitations, to contribute up to $6.0 million in additional
capital to the Partnership if, and to the extent that, the amount of
Available Cash constituting Operating Surplus (without giving effect to any
such additional contribution) with respect to any quarter is less than the
amount necessary to distribute the Minimum Quarterly Distribution on all
outstanding Common Units for such quarter.
The Partnership will make distributions to its partners with respect to
each fiscal quarter in an amount equal to all of its Available Cash for
such quarter approximately 45 days after each quarter ending March 31,
June 30, September 30 and December 31. The first distribution will
commence with the quarter ending March 31, 1996 and will be paid on May 15,
1996 to holders of record as of May 1, 1996. The initial distribution will
be $0.6225 per unit and represents a pro rata distribution of $0.0725 per
unit for the period December 20, 1995 to December 31, 1995 and a quarterly
distribution of $0.55 per unit for the three months ended March 31, 1996.
3) DISTRIBUTIONS FROM OPERATING SURPLUS DURING SUBORDINATION PERIOD
The Subordination Period will generally extend until the first day of any
quarter beginning on or after January 1, 2001 in respect of which (i)
distributions of Available Cash from Operating Surplus on the Common Units
and the Subordinated Units equals or exceeds the sum of the Minimum
Quarterly Distribution on all of the outstanding Common Units and
Subordinated Units with respect to each of the three non-overlapping four-
quarter periods immediately preceding such date, (ii) the Adjusted
Operating Surplus generated during each of the three immediately preceding
non-overlapping four-quarter periods equals or exceeds the sum of the
Minimum Quarterly Distribution on all of the outstanding Common Units and
Subordinated Units during such periods and (iii) there are no arrearages in
payment of the Minimum Quarterly Distribution on the Common Units.
Prior to the end of the Subordination Period, a portion of the
Subordinated Units will convert into Common Units on the first day after
the record date established for any quarter ending on or after March 31,
1999 (with respect to 599,020 of the Subordinated Units) and March 31, 2000
(with respect to an additional 599,020 of the Subordinated Units), on a
cumulative basis, in respect of which (i) distributions of Available Cash
from Operating Surplus on the Common Units and the Subordinated Units
equals or exceeds the sum of the Minimum Quarterly Distribution on all of
the outstanding Common Units and Subordinated Units with respect to each of
<PAGE>
3) DISTRIBUTIONS FROM OPERATING SURPLUS DURING SUBORDINATION PERIOD-CONTINUED
the three non-overlapping four-quarter periods immediately preceding such
date, (ii) the Adjusted Operating Surplus generated during each of the
three immediately preceding non-overlapping four-quarter periods equals or
exceeds the sum of the Minimum Quarterly Distribution on all of the
outstanding Common Units and Subordinated Units during such periods and
(iii) there are no arrearages in payment of the Minimum Quarterly
Distribution on the Common Units.
4) LONG-TERM DEBT
In December 1995, the General Partner issued $85.0 million of first
mortgage notes (the "First Mortgage Notes") with an annual interest rate of
8.04%. These notes were assumed as part of the Star Gas Conveyance by the
Operating Partnership. The Operating Partnership's obligations under the
First Mortgage Note Agreement are secured, on an equal and ratable basis
with the Operating Partnership's obligations under the Bank Credit
Facilities, by a mortgage on substantially all of the real property and
liens on substantially all of the operating facilities, equipment and other
assets of the Operating Partnership. The First Mortgage Notes will mature
September 15, 2009, and will require semiannual prepayments, without
premium on the principal thereof, beginning on March 15, 2001. Interest is
payable semiannually on March 15 and September 15. For the six months
ended March 31, 1996 the Partnership paid interest in the amount of $1.7
million.
The First Mortgage Note Agreement contains various restrictive and
affirmative covenants applicable to the Operating Partnership, including
(i) restrictions on the incurrence of additional indebtedness and (ii)
restrictions on certain liens, investments, guarantees, loans, advances,
payments, mergers, consolidations, distributions, sales of assets and other
transactions.
5) BANK CREDIT FACILITIES
The Bank Credit Facilities (the "Bank Credit Facilities") consist of a
$25.0 million acquisition facility (the "Acquisition Facility") and a $12.0
million working capital facility (the "Working Capital Facility"). The
Operating Partnership's obligations, under the Bank Credit Facilities, are
secured, on an equal and ratable basis with the Operating Partnership's
obligations under the First Mortgage Notes. The Bank Credit Facilities
will bear interest at a rate based upon either the London Interbank Offered
Rate plus a margin or a Base Rate. This agreement contains covenants
generally similar to those contained in the First Mortgage Notes.
The Working Capital Facility will expire on December 31, 1998. The
Acquisition Facility will revolve until September 30, 1998, after which any
outstanding loans will amortize quarterly in equal principal payments over
a period of 3 1/4 years.
<PAGE>
6) OVER-ALLOTMENT EXERCISE
On January 18, 1996, pursuant to the underwriters' over-allotment option,
Star Gas Partners issued an additional 275,000 Common Units at $22.00 per
share for $5.6 million, net of underwriting discounts and expenses. The
Partnership will use these proceeds for general corporate purposes.
7) REPAYMENT OF ADDITIONAL DEBT DUE TO PETRO
In order that the Partnership would commence operations with $6.2 million
of working capital on December 20, 1995, the Conveyance Agreement provided
that the amount of debt due to Petro at closing would be adjusted upwards
or downwards to the extent that the Star Gas Group's net working capital
exceeded or was less than $6.2 million. At closing, net working capital
was $9.7 million and $3.5 million was repaid to Petro on January 18, 1996.
8) NET INCOME PER UNIT
Net income per Unit is computed by dividing net income, after deducting
the General Partner's 2.0% interest, by the weighted average number of
Common Units and Subordinated Units outstanding.
9) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Partnership is threatened with,
or is named in, various lawsuits. The Partnership is not a party to any
litigation which individually or in the aggregate could reasonably be
expected to have a material adverse effect on the company.
10) RELATED PARTY TRANSACTIONS
The Partnership has no employees and is managed and controlled by the
General Partner. Pursuant to the Partnership Agreement, the General
Partner is entitled to reimbursement for all direct and indirect expenses
incurred or payments it makes on behalf of the Partnership, and all other
necessary or appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with operating the
Partnership's business. For the period December 20, 1995 through March 31,
1996, the Partnership reimbursed the General Partner for approximately $6.5
million representing salary, payroll tax and other compensation paid to the
employees of the General Partner.
In addition, Petro has incurred and was reimbursed for approximately $0.7
million of facility operating costs and management service expenses it
incurred on behalf of the Partnership for the period December 20, 1995
through March 31, 1996. These expenses represent the Partnership's share of
the costs incurred by Petro in conducting the operations of certain shared
branch locations and to provide corporate managerial services.
<PAGE>
11) UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited Pro Forma Condensed Consolidated Statements of
Operations for the three and six months ended March 31, 1995 and 1996 were
derived from the historical statements of operations of the Star Gas Group,
for the periods October 1, 1994 through March 31, 1995 and October 1, 1995
through December 20, 1995 and the Condensed Consolidated Statement of
Operations of the Partnership from December 20, 1995 through March 31,
1996. The Pro Forma Condensed Consolidated Statements of Operations were
prepared to reflect the effects of 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 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.
<PAGE>
11) UNAUDITED PRO FORMA FINANCIAL INFORMATION - CONTINUED
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- -------------------
1996 1995 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Sales $47,080 $38,347 $81,714 $68,617
Cost of sales 24,481 17,783 40,386 32,922
------- ------- ------- -------
Gross profit 22,599 20,564 41,328 35,695
Operating expenses 11,137 10,565 21,657 20,804
Depreciation and amortization 2,473 2,314 4,916 5,027
Net gain (loss) on sales of assets (23) (5) (136) 51
------- ------- ------- -------
Operating income 8,966 7,680 14,619 9,915
Interest expense (net) 1,722 1,722 3,466 3,466
------- ------- ------- -------
Income before income taxes 7,244 5,958 11,153 6,449
Income tax expense 14 14 25 25
------- ------- ------- -------
Net income $ 7,230 $ 5,944 $11,128 $ 6,424
======= ======= ======= =======
General Partner's interest
in net income $ 145 $ 119 $ 224 $ 129
------- ------- ------- -------
Limited Partners' interest
in net income $ 7,085 $ 5,825 $10,904 $ 6,295
======= ======= ======= =======
Net income per Limited Partner unit $1.34 $1.11 $2.07 $1.19
======= ======= ======= =======
Weighted average number of units 5,271 5,271 5,271 5,271
outstanding ======= ======= ======= =======
Other Data:
EBITDA (A) $11,462 $ 9,999 $19,671 $14,891
Retail propane gallons sold 38,161 33,235 69,005 61,682
</TABLE>
(A) EBITDA is defined as operating income plus depreciation and amortization
expense and less net gain (loss) on sales of assets. 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 make the Minimum
Quarterly Distribution.
<PAGE>
11) UNAUDITED PRO FORMA FINANCIAL INFORMATION - CONTINUED
Significant pro forma adjustments reflected in the above data include the
following:
1. For the six months ended March 31, 1995, the elimination of the results of
the Star Gas Group's propane operations in Southern Georgia from October 1,
1994 - November 16, 1994.
2. For the three and six months ended March 31, 1995, the elimination of
management fees paid by the Star Gas Group to Petro.
3. For the three and six months ended March 31, 1995 and the six months ended
March 31, 1996, the addition of the estimated incremental general and
administrative costs associated with operating as a publicly traded
partnership.
4. For the three and six months ended March 31, 1995 and the six months ended
March 31, 1996, an adjustment to interest expense to reflect the repayment
of debt due to Petro and to reflect the interest expense associated with
the First Mortgage Notes and Bank Credit Facility.
5. For the three and six months ended March 31, 1995 and the six months ended
March 31, 1996, the elimination of the provision for income taxes, as taxes
on income will be borne by the Partners and not the Partnership, except for
corporate income taxes relative to the Partnership's wholly owned
subsidiary, which will conduct non-qualifying Master Limited Partnership
business.
<PAGE>
12) ACQUISITION
During the six month period ending March 31, 1996, the Company acquired
the assets of one unaffiliated propane dealer. The aggregate consideration
for this acquisition, accounted for by the purchase method, was
approximately $1.5 million. Sales and net income of the acquired company
are included in the consolidated statement of income from the date of
acquisition.
Had this acquisition occurred at the beginning of the period, the pro
forma unaudited results of operations for the six months ended March 31,
1996 would have been as follows:
<TABLE>
<CAPTION>
OCTOBER 1, 1995 DECEMBER 20, 1995 OCTOBER 1, 1995
THROUGH THROUGH THROUGH
DECEMBER 20, 1995 MARCH 31, 1996 MARCH 31, 1996
------------------------ ----------------- ---------------
<S> <C> <C> <C>
Sales $28,348 $54,033 $82,381
======= =========== ==========
Net Income $ 2,014 $ 8,872 $10,886
======= =========== ==========
General Partner's interest in net income $ 178
-----------
Limited Partners' interest in net income $ 8,694
===========
Net income per limited partner unit $1.65
===========
Weighted average number of units outstanding 5,271
===========
</TABLE>
13) GENERAL PARTNER FINANCIAL STATEMENTS
The following presents the Condensed Consolidated Balance Sheet as of March
31, 1996 together with the Condensed Consolidated Statement of Operations
of the General Partner, Star Gas Corporation and Subsidiaries, for the
period December 20, 1995 through December 31, 1995 and January 1, 1996
through March 31, 1996.
<PAGE>
13) GENERAL PARTNER FINANCIAL STATEMENTS - CONTINUED
STAR GAS CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
ASSETS:
Current assets:
<S> <C>
Cash $ 6,063
Due from Petro 27
Interest receivable 372
-------
Total current assets 6,462
Note receivable from Petro 12,000
Investment in Partnership 15,331
-------
Total assets $33,793
=======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accrued expenses $ 15
Shareholders' equity 33,778
-------
Total liabilities and shareholders' equity $33,793
=======
</TABLE>
STAR GAS CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
DECEMBER 20, 1995 JANUARY 1, 1996 DECEMBER 20, 1995
THROUGH THROUGH THROUGH
DECEMBER 31, 1995 MARCH 31, 1996 MARCH 31, 1996
----------------- ---------------- ------------------
<S> <C> <C> <C>
Revenues:
Reimbursement of expenses
from Operating Partnership $883 $5,649 $6,532
Expenses:
Operating Expenses - 2 2
Services provided to Operating
Partnership 883 5,649 6,532
---- ------ ------
Operating loss - (2) (2)
Interest income 6 445 451
---- ------ ------
Income before equity interest in Star
Gas Partners, L.P. 6 443 449
---- ------ ------
Share of income of Star Gas Partners,
L.P. 728 3,366 4,094
---- ------ ------
Net income $734 $3,809 $4,543
==== ====== ======
</TABLE>
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996
- -------------------------------
COMPARED TO SIX MONTHS ENDED MARCH 31, 1995
- -------------------------------------------
VOLUME
For the six months ended March 31, 1996, retail propane volume increased
8.5% to 69.0 million gallons, as compared to 63.6 million gallons for the six
months ended March 31, 1995. Excluding the divested Southern Georgia
operations, which contributed 1.9 million gallons for the six months ended March
31, 1995, retail propane increased 11.9% or 7.3 million gallons. Propane sold
to residential and commercial customers increased 20.6% or 9.3 million gallons,
due to 21.2% colder weather, acquisitions and internal account growth. While
the residential and commercial market segments were favorably impacted by the
colder temperatures, sales to agricultural customers, who use propane
predominately in the grain drying process, declined 2.1 million gallons,
primarily as a result of the unusually dry crop harvest in the fall of 1995.
SALES
Sales increased 15.6% or $11.0 million, to $81.7 million for the six months
ended March 31, 1996, as compared to $70.7 million for the six months ended
March 31, 1995. Excluding the divested Southern Georgia operations, which
generated $2.1 million of sales in the prior year's period, sales from
continuing operations rose 19.1% or $13.1 million due to the increase in volume
resulting from colder weather, acquisitions, and internal account growth, and to
higher retail and wholesale selling prices.
COST OF SALES
Cost of sales increased 19.0% or $6.5 million, to $40.4 million for the six
months ended March 31, 1996, as compared to $33.9 million for the six months
March 31, 1995. While the divestiture of the Southern Georgia operations led to
a reduction in cost of sales of $1.0 million, this decline was offset by an
increase of $7.5 million due to the growth in volume and to higher per gallon
wholesale costs. While the Partnership did derive a benefit from the
utilization of its underground storage facility during the first quarter of its
fiscal year, this benefit was offset by the rapid but temporary spike in
wholesale product costs experienced during the second quarter ended March 31,
1996.
<PAGE>
GROSS PROFIT
Gross profit increased 12.5% or $4.6 million, to $41.3 million for the six
months ended March 31, 1996, as compared to $36.7 million generated for the six
months ended March 31, 1995. Adjusting for $1.0 million of gross profit
associated with the divested Southern Georgia operations, gross profit increased
15.8% or $5.6 million, as the increase in volume sold to higher margin
residential and commercial customers more than offset a decline in gross profit
of $1.0 million due to the spike in wholesale propane costs in the second
quarter of fiscal 1996. In addition, gross profit was reduced further by the
2.1 million gallon decline in volume sold to lower margin agricultural
customers.
DELIVERY AND BRANCH EXPENSES
Delivery and branch expenses declined 2.8% or $0.5 million from $19.3
million for the six months ended March 31, 1995 to $18.7 million for the six
months ended March 31, 1996. The divestiture of the Southern Georgia
operations, which accounted for a reduction in operating expenses of $1.2
million, was partially offset by an increase of $0.7 million or 3.8% from
continuing operations. This increase was attributable to the 11.9% rise in
retail propane volume and $0.2 million of storm-related costs associated with
the severe winter weather experienced in the Partnership's Northeast markets.
The increase in operating costs was less than the increase in retail propane
volume primarily due to lower insurance expense and economies of scale achieved
from growth in the Partnership's customer base.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense declined $0.3 million or 5.5% to $4.9
million, as compared to $5.2 million for the six months ended March 31, 1995
primarily due to the divestiture of the Southern Georgia operations.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased approximately $0.1 million to
$2.9 million for the six months ended March 31, 1996. This increase was
primarily due to additional expenses associated with operating under the master
limited partnership structure.
GAIN (LOSS) ON SALES OF ASSETS
Loss on sales of assets declined to $0.1 million for the six months ended
March 31, 1996 from $0.6 million for the six months ended March 31, 1995.
During the six months ending March 31, 1995, a loss of $0.7 million was recorded
in connection with the sale of the Southern Georgia operations.
INTEREST EXPENSE
Interest expense declined 9.0% or $0.4 million to $3.9 million for the six
months ended March 31, 1996, as compared to $4.3 million for the six months
ended March 31, 1995. This reduction was primarily due to a decline in the
weighted average long-term borrowing rate. For further discussions concerning
the Partnership's current debt structure, refer to footnote 4 of the condensed
consolidated financial statements.
<PAGE>
INCOME TAX EXPENSE
Income tax expense for the six months ended March 31, 1996 was
approximately $0.1 million. This expense primarily represents certain state
income taxes that the Star Gas Group was required to pay. Subsequent to
December 20, 1995, taxes on income will be borne by the partners and not the
Partnership, except for income taxes relating to the Partnership's wholly owned
corporate subsidiary which conducts non-qualifying master limited partnership
business.
NET INCOME
Net income increased 136.4% or $6.2 million to $10.7 million for the six
months ended March 31, 1996. The improvement of $6.2 million was attributable
to the 11.9% increase in retail propane volume, the positive impact of divesting
the Southern Georgia operations, and lower non-cash expenses, including the loss
on sales of assets.
EBITDA
EBITDA (defined as operating income plus depreciation and amortization less
net gain (loss) of sale of assets) increased $5.0 million or 34.3% to $19.7
million for the six months ended March 31, 1996. This significant improvement
in EBITDA was the result of the increase in volume associated with colder
temperatures and growth in the Partnership's customer base due to acquisitions
and internal marketing, partially offset by lower per gallon gross profit
margins experienced during the second quarter of fiscal 1996 resulting from the
rapid but temporary spike in wholesale propane costs. Total operating expenses
increased only 4.3% for continuing operations, despite an 11.9% increase in
retail propane volume, as the economies of scale associated with growth as well
as management's successful efforts at controlling the Partnership's operating
expenses, more than offset the effects of inflationary pressures on operating
costs. Also contributing to the increase in EBITDA was the divestiture of the
Southern Georgia operations, which negatively impacted EBITDA in the prior year
period by $0.2 million.
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
- ----------------------------------
COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
- ---------------------------------------------
VOLUME
For the three months ended March 31, 1996, retail propane volume increased
14.8% or 4.9 million gallons to 38.2 million gallons, as compared to 33.2
million gallons for the three months ended March 31, 1995. This increase in
volume was attributable to 12.3% colder temperatures, as well as growth in
volume associated with three acquisitions consummated since April 1, 1995 and
new customers added through internal marketing.
SALES
Sales increased 22.8% or $8.7 million, to $47.1 million for the three
months ended March 31, 1996, as compared to $38.3 million for the three months
ended March 31, 1995. This increase was primarily due to the increase in volume
described above and to higher retail selling prices, partly reflecting the
Partnership's response to a spike in per gallon wholesale product costs
experienced during the quarter ended March 31, 1996.
COST OF SALES
Cost of sales increased 37.7% or $6.7 million, to $24.5 million for the
three months ended March 31, 1996, as compared to $17.8 million for the three
months ended March 31, 1995. This increase of 37.7% exceeded the increase in
retail propane volume of 14.8% due to a rapid but temporary increase in
wholesale propane costs experienced during the quarter ended March 31, 1996.
GROSS PROFIT
Gross profit increased 9.9% or $2.0 million, to $22.6 million for the
quarter ended March 31, 1996, as compared to $20.6 million for three months
ended March 31, 1995. While gross profit rose by approximately $2.7 million due
to the 14.8% increase in retail propane sold, it was partially offset by a $1.0
million decline due to the effects of lower per gallon propane margins. In
several of the Partnership's marketing areas, per gallon gross profit margins
declined versus the prior year's comparable quarter as increases in selling
prices could not keep pace with the rapid but temporary spike in wholesale
product costs, due to competitive pressures.
<PAGE>
DELIVERY AND BRANCH EXPENSES
Delivery and branch expenses increased 4.9% or $0.5 million to $9.7 million
for the three months ended March 31, 1996. This increase was due to the 14.8%
increase in retail volume and $0.2 million of storm-related costs associated
with the severe winter weather experienced in the Partnerships' Northeast
markets. When measured on a per gallon basis, these expenses declined by 8.6%
primarily due to management's success in negotiating a lower level of insurance
expense.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased 6.9% or $0.2 million to
$2.5 million for the three months ended March 31, 1996, as compared to $2.3
million for the three months ended March 31, 1995 due to the impact of three
acquisitions consummated since April 1, 1995.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased approximately $0.2 million to
$1.5 million for the three months ended March 31, 1996. This increase was
primarily due to the additional expenses associated with operating under the
master limited partnership structure.
INTEREST EXPENSE
Interest expense declined 16.1% or $0.3 million to $1.7 million for the
three months ended March 31, 1996, as compared to $2.1 million for three months
ended March 31, 1995. This reduction was primarily due to a decline in the
weighted average long-term borrowing rate. For further discussions concerning
the Partnership's current debt structure, refer to footnote 4 of the condensed
consolidated financial statements.
INCOME TAX EXPENSE
Income tax expense for the three months ended March 31, 1996 represents
certain state income taxes that will be borne by the Partnership related to the
Partnership's wholly owned subsidiary which conducts non-qualifying master
limited partnership business.
NET INCOME
Net income increased 28.4% or $1.6 million to $7.2 million for the three
months ended March 31, 1996, as compared to $5.6 million for the three months
ended March 31, 1995. This change was attributable to the $2.0 million increase
in gross profit and lower interest expense, which was partially offset by
slightly higher operating and non-cash expenses.
<PAGE>
EBITDA
EBITDA (defined as operating income plus depreciation and amortization less
net gain (loss) on sale of assets) increased 14.2% or $1.4 million to $11.5
million for the three months ended March 31, 1996, as compared to $10.0 million
for the quarter ended March 31, 1995. This increase in EBITDA was primarily the
result of increased volume attributable to colder temperatures and new customers
added through internal marketing and acquisitions. While total operating
expenses increased by 5.8%, this was less than the 14.8% increase in retail
volume due to management's success in controlling such expenses. To a certain
extent, the favorable results arising from the volume growth and expense
curtailments were offset by lower per gallon gross profit margins due to the
rapid but temporary spike in wholesale propane costs and expenses related to the
unusually severe storms experienced in the Northeast. EBITDA should not be
considered as an alternative to net income as a measure 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 make the Minimum Quarterly Distribution and
expenses related to the unusually severe storm activity in the Northeast.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
For the six months ended March 31, 1996, net cash provided by operating
activities was $9.7 million. Net income of $10.7 million, non-cash charges of
$5.3 million, and other changes in working capital of $0.1 million provided
$16.1 million in cash, which was partially used to finance an increase in
accounts receivable of $6.4 million.
Net cash used in investing activities was $3.7 million for the six months
ended March 31, 1996. The proceeds from sales of certain fixed assets were used
to partially fund $2.9 million of capital expenditures and the acquisition of a
propane distributor for $1.5 million.
In December 1995, Star Gas issued $85.0 million of First Mortgage Notes
with an interest rate of 8.04% that provided $83.6 million in cash, net of
expenses. (The liability for these notes was assumed by the Operating
Partnership pursuant to the Conveyance Agreement). Star Gas used the net
proceeds from these notes to repay $40.1 million of debt and preferred stock,
pay dividends of $25.5 million, and loan $12.0 million, all to Petro and $6.0
million was retained by Star Gas to fund the General Partner's additional
contribution obligation. (See Footnote 2.) Also in December 1995, the
Partnership sold 2.6 million Common Units, which provided $51.0 million in cash,
net of expenses. The proceeds from this public offering were used to repay
$51.0 million of debt due to Petro. In January 1996, the Partnership paid to
Petro $3.5 million representing additional indebtedness resulting from the
excess of working capital over $6.2 million as provided in the Conveyance
Agreement.
Also in January 1996, the Partnership sold an additional 275,000 Common
Units at $22.00 per share. The net proceeds, after deducting the underwriting
discount of $0.4 million, was $5.6 million. As a result of the exercise of the
over-allotment option, the General Partner was required to make an additional
capital contribution of $56,000. The Partnership intends to use these funds for
general partnership purposes.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
- -------------------------------------------
The Partnership will make distributions in an amount equal to all of its
Available Cash approximately 45 days after the end of each fiscal quarter ending
March 31, June 30, September 30 and December 31, to holders of record on the
applicable record date. The initial distribution will occur on May 15, 1996 to
holders of record as of May 1, 1996. The initial distribution will be $0.6225
per unit and represents a pro rata distribution of $0.0725 per unit for the
period December 20, 1995 to December 31, 1995 and a quarterly distribution of
$0.55 per unit for the three months ended March 31, 1996. For the remainder of
fiscal 1996, the Partnership anticipates paying Limited and General Partner
distributions of approximately $3.0 million and paying interest on the First
Mortgage Notes of $3.4 million.
Based on the Partnership's current cash position, bank credit availability
and expected net cash from operating activities, the Partnership expects to be
able to meet all of their above obligations for fiscal 1996, as well as meet all
of its other current obligations as they become due.
<PAGE>
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits Included Within:
------------------------
(27) Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized:
Star Gas Partners, L.P.
By: Star Gas Corporation
(General Partner)
Signature Title Date
- --------- ----- ----
By: William G. Powers, Jr. President May 9, 1996
---------------------- Star Gas Corporation
William G. Powers, Jr.
By: Richard F. Ambury Vice President - Finance May 9, 1996
----------------- Star Gas Corporation
Richard F. Ambury
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STAR GAS
PARTNERS, L.P. AND SUBSIDIARY BALANCE SHEET AS OF MARCH 31, 1996 AND STATEMENT
OF OPERATIONS FOR THE INTERIM PERIOD DECEMBER 20, 1995 THROUGH MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> DEC-20-1995
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,316
<SECURITIES> 0
<RECEIVABLES> 13,129
<ALLOWANCES> 312
<INVENTORY> 2,961
<CURRENT-ASSETS> 25,638
<PP&E> 107,994
<DEPRECIATION> 9,394
<TOTAL-ASSETS> 166,558
<CURRENT-LIABILITIES> 5,447
<BONDS> 85,000
0
0
<COMMON> 74,590
<OTHER-SE> 1,237
<TOTAL-LIABILITY-AND-EQUITY> 166,558
<SALES> 52,256
<TOTAL-REVENUES> 53,555
<CGS> 27,578
<TOTAL-COSTS> 12,399
<OTHER-EXPENSES> 2,719
<LOSS-PROVISION> 132
<INTEREST-EXPENSE> 1,998
<INCOME-PRETAX> 8,729
<INCOME-TAX> 14
<INCOME-CONTINUING> 8,715
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,715
<EPS-PRIMARY> (1.62)
<EPS-DILUTED> (1.62)
<FN>
1. COMMON STOCK - IN DECEMBER 1995 STAR GAS PARTNERS, L.P. ISSUED COMMON
AND SUBORDINATED UNITS WHICH REPRESENT LIMITED PARTNER INTERESTS. THESE
UNITS ARE CONSIDERED TO POSSESS THE CHARACTERISTICS OF COMMON STOCK AND ARE
BOTH INCLUDED IN THE DETERMINATION OF EPS
2. OTHER SE - REPRESENTS THE GENERAL PARTNER'S INTEREST IN THE PARTNERSHIP AND
IS CLASSIFIED HERE SINCE IT DOES NOT POSSESS THE RELEVANT CHARACTERISTICS OF
EITHER COMMON OR PREFERRED STOCK.
</FN>
</TABLE>
