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): JULY 14, 2003
HERITAGE PROPANE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-11727 73-1493906
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
8801 South Yale Avenue, Suite 310, Tulsa, Oklahoma 74137
(Address of principal executive offices and zip code)
(918) 492-7272
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
----------- -----------
Exhibit 99.1 Press Release issued by the registrant dated
July 14, 2003.
ITEM 9. REGULATION FD DISCLOSURE.
On July 14, 2003, Heritage Propane Partners, L.P. issued a press release
announcing its financial results for the third quarter and nine months ended May
31, 2003. A copy of this press release is being furnished as an exhibit to this
report on Form 8-K. The information contained in this report on Form 8-K is
being furnished to the U.S. Securities and Exchange Commission (the
"Commission") to report information pursuant to Item 12. - Results of Operations
and Financial Conditions in accordance with the interim guidance provided by the
Commission in Release No. 33-8216.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: July 14, 2003.
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. Propane, L.P.
(General Partner)
By: U.S. Propane, L.L.C.
(General Partner)
By: s/ Michael L. Greenwood
------------------------------------
Michael L. Greenwood
Vice President and Chief
Financial Officer
INDEX TO EXHIBITS
The exhibits listed on the following Exhibit Index are furnished as part of this
Report. Exhibits required by Item 601 of Regulation S-K, but which are not
listed below, are not applicable.
Exhibit
Number Description
------- -----------
99.1 Press Release issued by the registrant dated July 14, 2003.
EXHIBIT 99.1
[HERITAGE PROPANE LOGO]
PRESS RELEASE
HERITAGE PROPANE PARTNERS, L.P.
REPORTS RECORD THIRD QUARTER RESULTS
TULSA, OKLAHOMA - JULY 14, 2003 - Heritage Propane Partners, L.P. (NYSE:HPG)
today reported record earnings before interest, taxes, depreciation and
amortization (EBITDA) of $16.7 million for the third quarter of fiscal 2003
ended May 31, 2003, a $1.4 million, or 9% increase from the $15.3 million EBITDA
for the third quarter of fiscal 2002. The seasonal net loss for the fiscal 2003
third quarter improved to $3.1 million, or $(0.20) per limited partner unit, a
28% improvement from the $4.3 million loss, or $(0.28) per limited partner unit,
recorded for the third quarter of fiscal 2002.
The Partnership established new volume records for the three months ended May
31, 2003 with retail gallons sold of 78.0 million gallons, representing an
increase of 3.0 million gallons over the 75.0 million gallons sold during the
three months ended May 31, 2002. Total revenues and gross profit for the third
quarter of fiscal 2003 also achieved new third quarter records for the
Partnership, keeping pace with the record results achieved in the first two
quarters of fiscal 2003.
In commenting on the quarterly results, H. Michael Krimbill, President and CEO
said, "We continue to benefit from our previous cost improvements and accretive
acquisitions that have allowed the Partnership to maintain its record pace for
fiscal 2003. The quarterly records for the Partnership were established without
favorable weather conditions. We have now reported three consecutive quarters of
record quarterly results in volumes, revenues, gross profit, and EBITDA. During
the quarter, the Partnership also improved its balance sheet by repaying
approximately $45 million in long-term debt as a result of improved operating
cash flows and the proceeds received from a secondary equity offering completed
in May 2003. The record financial results combined with the long-term debt
reduction has strengthened the Partnership's credit ratios and enhanced its
position to access the capital markets to fund future growth. The year-to-date
results indicate that fiscal 2003 could prove to be the most profitable year in
the Partnership's history."
EBITDA for the first nine months of fiscal 2003 was a record level of $110.5
million, representing a $31.3 million, or 40% increase over the EBITDA of $79.2
million reported for the nine months ended May 31, 2002. Record net income for
the nine months ended May 31, 2003 more than doubled to $47.4 million, or $2.86
per limited partner unit, a $26.4 million increase over the net income of $21.0
million, or $1.28 per limited partner unit, for the first nine months of fiscal
2002. For the first nine months of fiscal 2003, retail volumes were also at a
record level of 321.3 million gallons sold, a 37.1 million gallon increase from
the 284.2 million gallons sold during the nine months ended May 31, 2002. The
Partnership also established new records for total revenues and gross profit for
the nine months ended May 31, 2003.
EBITDA represents a meaningful non-GAAP financial measure used by investors and
lenders to evaluate the Partnership's performance. EBITDA should not be
considered as an alternative to income from operations, net income, or other
measures of cash flow. A table reconciling EBITDA with appropriate GAAP
financial measures is included in the notes to the consolidated financial
statements included in this release.
Heritage is the fourth largest retail marketer of propane in the United States,
serving more than 650,000 customers from nearly 300 customer service locations
in 29 states. Operations extend from coast to coast, with concentrations in the
western, upper midwestern, northeastern, and southeastern regions of the United
States.
This press release may include certain statements concerning expectations for
the future that are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements are subject to a variety of known and
unknown risks, uncertainties, and other factors that are difficult to predict
and many of which are beyond management's control. An extensive list of factors
that can affect future results are discussed in the Partnership's Annual Report
on Form 10-K and other documents filed from time to time with the Securities and
Exchange Commission. The Partnership undertakes no obligation to update or
revise any forward-looking statement to reflect new information or events.
The Partnership has scheduled a conference call for 10:00 am Central Daylight
Time, Tuesday, July 15, 2003, to discuss the fiscal 2003 third quarter results.
The dial-in number is 800-230-1092; participant code Heritage Propane.
The information contained in this press release is available on the
Partnership's website at www.heritagepropane.com. For information, please
contact Michael L. Greenwood, Vice President and Chief Financial Officer, at
918-492-7272.
HERITAGE PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit and unit data)
(unaudited)
Three Months Nine Months
Ended May 31, Ended May 31,
------------------------------ ------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
REVENUES:
Retail fuel $ 103,340 $ 82,312 $ 400,093 $ 317,941
Wholesale fuel 9,699 8,865 41,265 35,992
Liquids marketing 22,961 40,113 163,278 138,259
Other 12,444 11,348 46,334 42,184
------------ ------------ ------------ ------------
Total revenues 148,444 142,638 650,970 534,376
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of products sold 66,781 52,303 252,221 209,681
Liquids marketing 22,705 38,629 161,963 138,407
Operating expenses 39,535 33,823 118,230 100,624
Depreciation and amortization 9,579 9,910 28,291 28,574
Selling, general and administrative 4,603 3,539 12,451 9,648
------------ ------------ ------------ ------------
Total costs and expenses 143,203 138,204 573,156 486,934
------------ ------------ ------------ ------------
OPERATING INCOME 5,241 4,434 77,814 47,442
OTHER INCOME (EXPENSE):
Interest expense (8,950) (9,205) (27,563) (27,924)
Equity in earnings of affiliates 504 430 1,687 1,599
Gain on disposal of assets 517 227 672 942
Other (103) (150) (2,649) (342)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY
INTERESTS AND INCOME TAXES (2,791) (4,264) 49,961 21,717
Minority interests (80) (55) (1,021) (685)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE TAXES (2,871) (4,319) 48,940 21,032
Income taxes 199 -- 1,483 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) (3,070) (4,319) 47,457 21,032
GENERAL PARTNER'S INTEREST IN NET INCOME (LOSS) 216 174 1,164 861
------------ ------------ ------------ ------------
LIMITED PARTNERS' INTEREST IN NET INCOME (LOSS) $ (3,286) $ (4,493) $ 46,293 $ 20,171
============ ============ ============ ============
BASIC NET INCOME (LOSS) PER LIMITED PARTNER UNIT $ (0.20) $ (0.28) $ 2.86 $ 1.28
============ ============ ============ ============
BASIC AVERAGE NUMBER OF UNITS OUTSTANDING 16,574,582 15,805,847 16,189,029 15,713,694
============ ============ ============ ============
Three Months Nine Months
Ended May 31, Ended May 31,
------------------------ ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
SUPPLEMENTAL INFORMATION:
Net income (loss) $ (3,070) $ (4,319) $ 47,457 $ 21,032
Depreciation and amortization 9,579 9,910 28,291 28,574
Interest 8,950 9,205 27,563 27,924
Taxes 199 -- 1,483 --
Other expense 103 150 2,649 342
Non-cash compensation expense 1,232 435 2,579 1,409
Depreciation, amortization, interest, and taxes of investee 241 194 698 497
Minority interest net of MP Energy Partnership (43) (48) 441 364
Less: Gain on disposal of assets (517) (227) (672) (942)
--------- --------- --------- ---------
(a) EBITDA $ 16,674 $ 15,300 $ 110,489 $ 79,200
========= ========= ========= =========
Capital expenditures:
Maintenance $ 2,379 $ 2,034 $ 13,773 $ 10,881
Growth $ 4,454 $ 4,029 $ 30,740 $ 26,025
Retail gallons sold 77,997 74,947 321,340 284,196
(a) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization (including the EBITDA of investees, but does not include the
EBITDA of the minority interest of MP Energy Partnership or any non-cash
compensation expense). EBITDA should not be considered as an alternative to
net income, cash flow, or any other financial performance measure presented
in accordance with generally accepted accounting principles but provides
additional information for evaluating the Partnership's operating results
or its ability to make quarterly distributions. Management believes that
EBITDA is a meaningful non-GAAP financial measure used by investors and
lenders to evaluate the Partnership's operating performance, cash
generation, and ability to service debt, as certain of the Partnership's
debt covenants include EBITDA as a performance measure. The presentation of
EBITDA for the periods described herein is calculated in the same manner as
presented by the Partnership in the past, and is intended to allow
investors to compare performance with prior periods. The Partnership also
believes that EBITDA is sometimes useful to compare the operating results
of other companies within the propane industry due to the fact that such
information is commonly utilized and eliminates the effects of certain
financing and accounting decisions. The Partnership's calculation of
EBITDA, however, may differ from similarly titled items reported by other
companies.
HERITAGE PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
May 31, August 31,
2003 2002
--------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,089 $ 4,596
Marketable securities 2,294 2,559
Accounts receivable, net of allowance for doubtful accounts 42,688 30,898
Inventories 25,726 48,187
Assets from liquids marketing 570 2,301
Prepaid expenses and other 3,044 6,846
--------- ---------
Total current assets 81,411 95,387
PROPERTY, PLANT AND EQUIPMENT, net 428,747 400,044
INVESTMENT IN AFFILIATES 9,243 7,858
GOODWILL, net of amortization prior to adoption of SFAS No. 142 157,254 155,735
INTANGIBLES AND OTHER ASSETS, net 53,751 58,240
--------- ---------
Total assets $ 730,406 $ 717,264
========= =========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Working capital facility $ -- $ 30,200
Accounts payable 32,423 40,929
Accounts payable to related companies 7,653 5,002
Accrued and other current liabilities 22,020 23,962
Liabilities from liquids marketing 552 1,818
Current maturities of long-term debt 25,453 20,158
--------- ---------
Total current liabilities 88,101 122,069
LONG-TERM DEBT, less current maturities 385,950 420,021
MINORITY INTERESTS 4,746 3,564
--------- ---------
Total liabilities 478,797 545,654
--------- ---------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Common Unitholders (17,947,111 and 15,815,847 units issued and
outstanding at May 31, 2003 and August 31, 2002, respectively) 250,747 173,677
Class C Unitholders (1,000,000 units issued and outstanding at
May 31, 2003 and August 31, 2002) -- --
General Partner 2,400 1,585
Accumulated other comprehensive loss (1,538) (3,652)
--------- ---------
Total partners' capital 251,609 171,610
--------- ---------
Total liabilities and partners' capital $ 730,406 $ 717,264
========= =========
