<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported) January 28, 2000
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STAR GAS PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 33-98490 06-1437793
- -----------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2187 Atlantic Street, Stamford, CT 06902
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 328-7300
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Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
Star Gas Partners, L.P. a Delaware partnership (the "Reporting Person") is
filing pursuant to this form 8-K three historical press releases; Star Gas
Partners to acquire certain Midwest propane operations and also signs letter of
intent to enter deregulated electric and natural gas markets (Released January
28, 2000), Star Gas Partners, L.P. reports fiscal 2000 first quarter results and
announces $0.575/unit common unit distribution (Released January 24, 2000) and
Star Gas Partners, L.P. reports fiscal 1999 year-end and fourth quarter results
(Released December 2, 1999).
JANUARY 28, 2000 PRESS RELEASE
- ------------------------------
STAR GAS PARTNERS TO ACQUIRE CERTAIN MIDWEST PROPANE OPERATIONS
ALSO SIGNS LETTER OF INTENT TO ENTER DEREGULATED ELECTRIC AND NATURAL GAS
MARKETS
STAMFORD, CT (January 28, 2000) -- Star Gas Partners, L.P. ("Star" or the
"Partnership") (NYSE: SGU, SGH) today announced the signing of a purchase
agreement to acquire certain operations of a privately owned Midwest retail
propane distributor, consisting of more than 12.4 million gallons of propane
sold annually to over 14,000 customers. More than 75% of this distributor's
volume is sold to residential customers. The consummation of this transaction is
subject to finalization of financing and certain other conditions.
Separately, Star also announced that the Partnership has signed a letter of
intent to invest approximately $8 million to acquire a controlling interest in a
privately owned independent marketer of electricity and natural gas. The
consummation of this transaction is subject to the signing of a definitive
agreement, finalization of financing and other normal closing conditions.
Commenting on these developments, Star Gas Chairman and Chief Executive Officer,
Irik P. Sevin stated, "We are of course very pleased with these events. The
propane acquisition is very attractive given its relatively large size within
our existing marketing areas which should allow for significant operational cost
savings. It also is in keeping with our strategy of acquiring distributorships
that have a large proportion of residential accounts.
"We are also very excited about the prospect of entering the deregulated sale of
electricity and natural gas. Not only do we believe that this business can be
profitable, but it fits well with our strategy to sell rationally related
products, such as electricity, to our existing customers. In addition, this
acquisition gives us an opportunity to extend our installation and equipment
servicing expertise to electric and natural gas consumers."
Star Gas Partners, L.P. is a leading distributor of home heating oil and propane
and has been an active consolidator in these industries. Through its wholly
owned Petro subsidiary, Star is the nation's largest retail distributor of home
heating oil, serving approximately 335,000 customers in the Northeast and Mid-
Atlantic. Star is the nation's seventh largest retail propane distributor,
serving approximately 186,000 customers throughout the Midwest and Northeast.
This news announcement contains certain forward-looking information that is
subject to certain risks and uncertainties as indicated from time to time in the
Company's 10-K, 10-Q, 8-K and other filings with the Securities and Exchange
Commission. Included among these risks and uncertainties are the effects of the
weather on the Company's financial results, competitive and propane and heating
oil pricing pressures and other factors impacting the propane and home heating
oil distribution industries.
2
<PAGE>
JANUARY 24, 2000 PRESS RELEASE
- ------------------------------
STAR GAS PARTNERS, L.P. REPORTS FISCAL 2000 FIRST QUARTER RESULTS AND ANNOUNCES
$0.575/UNIT COMMON UNIT DISTRIBUTION
PRO FORMA NET INCOME INCREASES 77% TO $0.53 PER UNIT
STAMFORD, CT (January 24, 2000) -- Star Gas Partners, L.P. ("Star") (NYSE: SGU,
SGH), today announced results for the fiscal 2000 first quarter ended December
31, 1999, and declared its minimum quarterly distribution of $0.575/unit on its
outstanding common units, payable on February 11, 2000 to unit holders of record
February 2, 2000.
On a pro forma basis, including the acquisition of Petroleum Heat and Power Co.,
Inc. ("Petro") and 9 other propane and home heating oil acquisitions in the
first quarter of both fiscal 1999 and 2000, Star's net income rose 75% to $9.3
million, or $0.53 per unit in the fiscal 2000 first quarter, compared to net
income of $5.3 million, or $0.30 per unit, in the fiscal 1999 first quarter.
Despite abnormally warm temperatures and a lower than normal agricultural demand
during the fall crop drying season in the fiscal 2000 first quarter, Star's pro
forma EBITDA grew 24% to $24.5 million due to the strong performance of both its
propane and heating oil divisions. The propane division's pro forma EBITDA
increased 20% due to higher residential and commercial volumes as well as
improved gross profit margins, which more than offset the extremely dry fall
crop season's impact on propane sales for agricultural purposes. Residential and
commercial volumes increased approximately 7%, due primarily to the division's
internal marketing programs as well as temperatures, which while 12% warmer than
normal, were slightly colder than last year's first quarter. Gross Profit
margins increased $0.025 per gallon, as the division was able to improve those
margins despite significantly higher wholesale costs associated with the general
increase in propane prices, in an effort to offset the abnormally warm weather.
For the three-month period ended December 31, 1999, the heating oil division's
pro forma EBITDA increased approximately 26%, also due to increased volume and
gross profit margin improvement, which served to mitigate the effect of
unusually warm weather. Home heating oil volume increased approximately 5% due
to slightly colder temperatures than in the year-ago quarter, as well as a
change in delivery patterns. In addition, Petro's significantly improved
operating performance enabled the division to adjust its gross profit margins to
higher wholesale home heating oil costs without any discernible impact on
Petro's customer base or marketing efforts. In fact, internal marketing
performance improved 50% in the first quarter of fiscal 2000, compared to the
fiscal 1999 first quarter.
On an historical basis, Star's net income increased from $1.3 million in the
fiscal 1999 first quarter, which did not include Petro's results, to $9.4
million in the fiscal 2000 first quarter.
Commenting on these results, Irik P. Sevin, Chairman and Chief Executive Officer
said: "We are, of course, very pleased with the performance of both Star
divisions. Despite temperatures that were almost 12% warmer than normal in our
marketing areas, Star was able to significantly increase all measures of
financial performance. The fundamental reasons for this improvement were
substantially the same at both divisions. Namely, the Partnership's
significantly enhanced operating practices and policies combined with a highly
motivated, more enfranchised employee team, enabling us to offset unusually warm
weather and high petroleum prices through increased gross profit margin
management, without negatively impacting our marketing efforts. This performance
also reflects the results of our disciplined acquisition program, which enabled
us to purchase nine heating oil and propane companies at what we consider to be
very attractive multiples.
"We are pleased that pro forma distributable cash flow covers our annualized
minimum quarterly common unit distribution 1.1 times for the 1999 calendar year.
While we are pleased with this ratio, given the volatility in weather that has
been experienced, the decision was made not to initiate a distribution on Senior
Subordinated Units at this time. The Board will reconsider paying a quarterly
distribution to the Senior Subordinated Unit holders at next quarter's board
meeting."
Star Gas Partners, L.P., is a leading distributor of home heating oil and
propane and has been an active consolidator in these industries. Through its
wholly owned Petro subsidiary, Star is the nation's largest retail distributor
of home heating oil, serving approximately 335,000 customers in the Northeast
and Mid-Atlantic. Star is the nation's seventh largest retail propane
distributor, serving approximately 186,000 customers throughout the Midwest and
Northeast.
3
<PAGE>
This news announcement contains certain forward-looking information that is
subject to certain risks and uncertainties as indicated from time to time in the
Company's 10-K, 10-Q, 8-K and other filings with the Securities and Exchange
Commission. Included among these risks and uncertainties are the effects of the
weather on the Company's financial results, competitive and propane and heating
oil pricing pressures and other factors impacting the propane and home heating
oil distribution industries.
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31 DECEMBER 31
-------------------- -----------------------
1999 1998 1999 (C) 1998 (B)(C)
---------- -------- --------- ------------
<S> <C> <C> <C> <C>
Sales $186,886 $30,237 $187,223 $150,712
Costs and expenses:
Cost of sales 117,431 11,978 117,694 88,214
Operating expenses 44,983 11,724 45,031 42,670
Depreciation and amortization 8,404 3,008 8,450 8,392
Net gain (loss) on sales of assets 12 (4) 12 (19)
-------- ------- -------- --------
Operating income 16,080 3,523 16,060 11,417
Interest expense, net 6,473 2,178 6,495 5,887
Amortization of debt discount 129 45 129 129
-------- ------- -------- --------
Income before taxes 9,478 1,300 9,436 5,401
Income tax expense 113 6 113 81
-------- ------- -------- --------
Net income 9,365 1,294 9,323 5,320
General Partners' interest in net income 174 26 173 99
-------- ------- -------- --------
Limited Partners' interest in net income $ 9,191 $ 1,268 $ 9,150 $ 5,221
======== ======= ======== ========
Basic and diluted net income per
Limited Partner unit $0.53 $0.20 $0.53 $0.30
======== ======= ======== ========
Weighted average number of
Limited Partner units outstanding /(d)/ 17,200 6,255 17,200 17,200
SUPPLEMENTARY UNAUDITED DATA:
-----------------------------
Retail propane gallons sold 32,109 29,400 32,109 32,119
Home heating oil gallons sold 103,968 - 104,146 99,072
Distributable Cash Flow:
EBITDA /(a)/ $ 24,472 $ 6,535 $ 24,498 $ 19,828
Less Interest Expense, net (6,473) (2,178) (6,495) (5,887)
Income Taxes (113) (6) (113) (81)
Maintenance Capital Expenditures (760) (540) (760) (1,438)
-------- ------- -------- --------
Distributable Cash Flow $ 17,126 $ 3,811 $ 17,130 $ 12,422
======== ======= ======== ========
</TABLE>
(a) EBITDA is defined as operating income (loss) plus depreciation,
amortization, restructuring and corporate identity charges, 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.
(b) Pro forma for the effects of the acquisition of Petroleum Heat and Power
Co., Inc. on March 26, 1999. For a complete description of this
transaction, see page 31 of the partnership's prospectus as filed on March
23, 1999 with the Securities and Exchange Commission.
(c) Pro forma for the effects of three propane acquisitions completed in fiscal
1999, one propane acquisition completed in fiscal 2000, three heating oil
acquisitions completed in fiscal 1999 and two heating oil acquisitions
completed in fiscal 2000.
(d) Pro forma for the issuance of 10.5 million common units including 9.4
million units issued in connection with the Petro acquisition and 1.1
million common units issued in August 1999.
4
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DECEMBER 2, 1999 PRESS RELEASE
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STAR GAS PARTNERS, L.P. REPORTS FISCAL 1999 YEAR-END AND FOURTH QUARTER RESULTS
PRO FORMA NET INCOME OF 8C PER UNIT IN FISCAL 1999, VERSUS PRO FORMA 15C PER
UNIT LOSS IN FISCAL 1998 -
STAMFORD, CT (December 2, 1999) -- Star Gas Partners, L.P. ("Star") (NYSE: SGU,
SGH), today announced results for the 1999 fiscal year and fourth quarter ended
September 30, 1999.
For the year ended September 30, 1999, Star's propane division recorded net
income of $699,000, compared with a $955,000 net loss for fiscal 1998. On March
26, 1999, Star acquired Petroleum Heat and Power Co., Inc. ("Petro"), whose
financial results are included in Star's figures beginning on that date. Petro,
like Star, normally incurs a loss during the non-heating season, and from the
time of purchase through September 30, 1999, Petro had a net loss of $30.2
million.
On a pro forma basis, accounting for Petro and all other acquisitions for an
entire year in both fiscal 1998 and fiscal 1999, Star's 1999 net income was $1.4
million, compared to a $2.7 million net loss in 1998. This represents net income
of $.08 per unit, or a $.23 per unit increase over the 1998 loss of $.15 per
unit.
Despite the abnormally warm weather throughout fiscal 1999 and a very dry fall
crop season, which significantly impacted propane sales in the fiscal first
quarter, Star's pro forma EBITDA grew 1.6% from $57.5 million in 1998, to $58.4
million in 1999. This improvement was primarily due to a $2.4 million increase
in Petro's heating oil EBITDA resulting from an approximate $1.6 million
reduction in expenses associated with the division's operating improvement
program, as well as a 1.0c per gallon increase in home heating oil gross profit
margins.
In fiscal 1999, Star's propane division's volume increased approximately 1.0% as
the Partnership's acquisition program and internal growth more than offset a 35%
decline in propane volume to agricultural customers in the fiscal first quarter.
However, the propane division's EBITDA declined $1.5 million due to the
financial impact of the reduced agricultural sales and increased marketing
costs, consisting primarily of employee bonuses, which were earned due to the
achievement of 4.5% residential internal growth.
For the 1999 fiscal fourth quarter ended September 30, 1999, which is a non-
heating season period in which losses are traditionally sustained, Star's
propane division had a net loss of $4.5 million and the heating oil division
recorded a seasonal loss of $20.4 million.
On a pro forma basis, including Petro and Star's other acquisitions in fiscal
1998 and 1999, the fourth quarter net loss increased from $30.9 million, or
$1.76 per unit in 1998, to $34.6 million, or $1.97 per unit in 1999. This
increase was due primarily to a $2.0 million increase in Petro's EBITDA loss
resulting from a return to more normal margins during the fourth quarter 1999,
compared to the unusually high levels achieved in the comparable 1998 period.
The heating oil division's results were also impacted by increased marketing
costs which contributed to a significant 40% improvement in the division's
marketing performance.
During the 1999 fourth quarter, propane volume increased 3.1% over 1998 levels
due to the Partnership's acquisition and internal growth programs. The propane
division's larger size, combined with a return to more normal margins and an
increase in marketing expenses led to a $1.6 million increase in its seasonal
EBITDA loss, compared to the fourth quarter of fiscal 1998.
In commenting on these results, Irik P. Sevin, Chairman and Chief Executive
Officer said: "While the exceptionally warm and dry weather in 1999 made the
year challenging, our organization can take pride in the way it addressed those
issues. In particular, it has been gratifying that since the end of the first
quarter, results have approximated our own expectations despite the 10% warmer
than normal temperatures experienced during that period. This has been made
possible by the significant operating, customer service and marketing
improvements made at both the propane and heating oil divisions. These
improvements not only enabled us to reduce operating expenses below expected
levels, but enhanced customer service provided greater pricing flexibility,
enabling us to better manage our gross profit margins. This allowed us to both
mitigate the impact of weather as well as adjust to higher wholesale costs.
5
<PAGE>
"While we are encouraged by the progress in our base business, we are also very
pleased with our disciplined acquisition program which has resulted in the
purchase of eight retail propane and heating oil companies since the Petro
transaction. While base business improvements and our acquisition program will
hopefully enable the Partnership to continue to progress, we are also exploring
ways to capitalize on Star/Petro's account base and improved operating structure
to sell other rationally related products and services to our 520,000
customers."
Star Gas Partners, L.P., is a leading distributor of home heating oil and
propane and has been an active consolidator in these industries. Through its
wholly owned Petro subsidiary, Star is the nation's largest retail distributor
of home heating oil, serving approximately 337,000 customers in the Northeast
and Mid-Atlantic. Star is the nation's eighth largest retail propane
distributor, serving approximately 186,000 customers throughout the Midwest and
Northeast.
This news announcement contains certain forward-looking information that is
subject to certain risks and uncertainties as indicated from time to time in the
Company's 10-K, 10-Q, 8-K and other filings with the Securities and Exchange
Commission. Included among these risks and uncertainties are the effects of the
weather on the Company's financial results, competitive and propane and heating
oil pricing pressures and other factors impacting the propane and home heating
oil distribution industries.
(financial tables follow)
6
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
<TABLE>
<CAPTION>
Historical Historical
Three Months Ended Year Ended
September 30, September 30,
(unaudited) (audited)
---------------------------------------- ---------------------------------------
1999 1998 1999 1998
------------------- ------------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
Sales $ 62,590 $15,714 $224,020 $111,685
Costs and expenses:
Cost of sales 46,527 5,772 131,649 49,498
Operating expenses 36,450 10,581 98,123 43,281
Depreciation and amortization 8,224 2,953 22,713 11,462
Net gain (loss) on sales of assets 13 (58) (83) (271)
-------- ------- -------- --------
Operating income (loss) (28,598) (3,650) (28,548) 7,173
Interest expense, net 5,675 2,093 15,435 7,927
Amortization of debt discount 129 41 347 176
-------- ------- -------- --------
Income (loss) before taxes (34,402) (5,784) (44,330) (930)
Income tax expense (benefit) (9,456) 6 (14,780) 25
-------- ------- -------- --------
Net income (loss) (24,946) (5,790) (29,550) (955)
General Partners' interest in net income (loss) (495) (116) (587) (19)
-------- ------- -------- --------
Limited Partners' interest in net income (loss) $(24,451) $(5,674) $(28,963) $ (936)
======== ======= ======== ========
Basic and diluted net income (loss) per
Limited Partner unit $(1.47) $(0.91) $(2.53) $(0.16)
======== ======= ======== ========
Weighted average number of
Limited Partner units outstanding 16,581 6,243 11,447 6,035
======== ======= ======== ========
SUPPLEMENTARY UNAUDITED DATA:
---------------------------------------------------------------------------------
Retail propane gallons sold 14,533 14,090 99,457 98,870
Home heating oil gallons sold 22,179 - 74,039 -
Distributable Cash Flow:
EBITDA /(a)/ $(20,387) $ (639) $ (5,752) $ 18,906
Less Interest Expense, net (5,675) (2,093) (15,435) (7,927)
Income Taxes /(b)/ (122) (6) (166) (25)
Maintenance Capital Expenditures (1,440) (411) (3,922) (2,626)
-------- ------- -------- --------
Distributable Cash Flow $(27,624) $(3,149) $(25,275) $ 8,328
======== ======= ======== ========
</TABLE>
(a) EBITDA is defined as operating income (loss) plus depreciation,
amortization, 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.
(b) Excludes deferred income tax benefit.
(pro forma table follows)
7
<PAGE>
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts) (unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ----------------------------
1999(C) 1998(B)(C) 1999(B)(C) 1998(B)(C)(D)
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ 63,391 $ 59,343 $526,680 $576,467
Costs and expenses:
Cost of sales 46,937 40,763 305,593 354,945
Operating expenses 36,784 35,410 162,673 164,005
Depreciation and amortization 8,352 8,267 33,593 33,139
Restructuring and corporate identity charges - - - 3,185
Net gain (loss) on sales of assets 13 (47) (63) (48)
-------- -------- -------- --------
Operating income (loss) (28,669) (25,144) 24,758 21,145
Interest expense, net 5,676 5,622 22,496 22,904
Amortization of debt discount 129 113 468 453
-------- -------- -------- --------
Income (loss) before taxes (34,474) (30,879) 1,794 (2,212)
Income tax expense 122 6 356 500
-------- -------- -------- --------
Net income (loss) (34,596) (30,885) 1,438 (2,712)
General Partners' interest in net income (loss) (643) (574) 26 (50)
-------- -------- -------- --------
Limited Partners' interest in net income (loss) $(33,953) $(30,311) $ 1,412 $ (2,662)
======== ======== ======== ========
Basic and diluted net income (loss) per
Limited Partner unit $(1.97) $(1.76) $0.08 $(0.15)
======== ======== ======== ========
Weighted average number of
Limited Partner units outstanding /(b)(e)/ 17,200 17,200 17,200 17,200
SUPPLEMENTARY UNAUDITED DATA:
----------------------------------------------------
Retail propane gallons sold 15,318 15,357 104,588 109,184
Home heating oil gallons sold 22,199 23,447 340,351 353,404
Distributable Cash Flow:
EBITDA /(a)/ $(20,330) $(16,830) $ 58,414 $ 57,517
Less Interest Expense, net (5,676) (5,622) (22,496) (22,904)
Income Taxes (122) (6) (356) (500)
Maintenance Capital Expenditures (1,466) (1,065) (5,220) (6,961)
-------- -------- -------- --------
Distributable Cash Flow $(27,594) $(23,523) $ 30,342 $ 27,152
======== ======== ======== ========
</TABLE>
(a) EBITDA is defined as operating income (loss) plus depreciation,
amortization, restructuring and corporate identity charges, 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.
(b) Pro forma for the effects of the acquisition of Petroleum Heat and Power
Co., Inc. on March 26, 1999. For a complete description of this
transaction, see page 31 of the partnership's prospectus as filed on March
23, 1999 with the Securities and Exchange Commission.
(c) Pro forma for the effects of seven propane acquisitions completed in fiscal
1998, three propane acquisitions completed in fiscal 1999 and three heating
oil acquisitions completed in fiscal 1999.
(d) Pro forma for the divestiture of Petro's Hartford, CT operations in November
1997.
(e) Pro forma for the issuance of 10.5 million common units including 9.4
million units issued in connection with the Petro acquisition and 1.1
million common units issued in August 1999.
8
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Star Gas Partners, L.P.
By: Star Gas LLC (General Partner)
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Irik P. Sevin Chairman of the Board and January 28, 2000
- -------------------
Irik P. Sevin Chief Executive Officer
Star Gas LLC
(Principal Executive
Officer)
9
