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FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 30, 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 1-11727
HERITAGE PROPANE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 73-1493906
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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) has been subject to such
filing requirements for the past 90 days.
Yes X No
----------- ----------
At January 10, 1997, the registrant had units outstanding as follows:
Heritage Propane Partners, L.P. 4,285,000 Common Units
3,702,943 Subordinated Units
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FORM 10-Q/A
HERITAGE PROPANE PARTNERS, L.P.
TABLE OF CONTENTS
Pages
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Heritage Propane Partners, L.P. and Subsidiaries
------------------------------------------------
Consolidated Balance Sheets as of November 30, 1996,
August 31, 1996, and November 30, 1995 1
Consolidated Statements of Operations for the three
months ended November 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for the three
months ended November 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
Signatures
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FORM 10-Q/A
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HERITAGE PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
November 30, August 31, November 30,
1996 1996 1995
------------ ----------- -------------
(unaudited) (unaudited)
(Predecessor)
ASSETS
CURRENT ASSETS:
Cash $ 1,987 $1,170 $ 1,329
Accounts receivable, net 23,985 10,859 15,412
Inventories 12,600 11,115 10,399
Prepaid expenses 1,373 870 1,591
Deferred income taxes --- --- 1,483
----------- ---------- ----------
Total current assets 39,945 24,014 30,214
PROPERTY, PLANT AND EQUIPMENT, net 110,982 110,342 101,094
INVESTMENT IN AFFILIATES 4,927 4,882 4,823
INTANGIBLES AND OTHER ASSETS, net 48,153 48,612 40,497
----------- ---------- ----------
Total assets $ 204,007 $ 187,850 $ 176,628
=========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Working capital facilities $ 10,600 $ 5,600 $ 11,000
Accounts payable 23,326 13,155 13,817
Accrued and other current liabilities 9,730 5,730 8,918
Current maturities of long-term debt 254 243 19,058
----------- ---------- ----------
Total current liabilities 43,910 24,728 52,793
LONG-TERM DEBT 132,598 132,521 99,633
DEFERRED INCOME TAXES --- --- 19,326
----------- ---------- ----------
Total liabilities 176,508 157,249 171,752
----------- ---------- ----------
COMMITMENTS AND CONTINGENCIES
5% CUMULATIVE REDEEMABLE PREFERRED STOCK, $.01 par value,
19,262 shares authorized, 9,487 issued --- --- 12,488
----------- ---------- ----------
PARTNERS' CAPITAL:
Common unit holders (4,285,000 units outstanding) 14,759 16,392 ---
Subordinated unit holders (3,702,943 units
outstanding) 12,493 13,902 ---
General Partner 247 307 ---
----------- ---------- ----------
Total partners' capital 27,499 30,601 ---
----------- ---------- ----------
STOCKHOLDERS' DEFICIT:
Class A common stock, $.01 par value 2,648,517
authorized, 1,284,105 issued --- --- 13
Class B common stock, $.01 par value, 441,419
authorized, 357,500 issued --- --- 3
Additional paid-in capital --- --- 4,234
Accumulated deficit --- --- (11,862)
----------- ---------- ----------
Total stockholders' deficit --- --- (7,612)
----------- ---------- ----------
Total liabilities and partners' capital $204,007 $187,850 $176,628
============ ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED BALANCE SHEETS.
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HERITAGE PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT UNIT DATA)
(UNAUDITED)
Three Months Ended
November 30,
1996 1995
------------ ------------
(Predecessor)
REVENUES
Retail $ 30,086 $ 21,755
Wholesale 15,481 9,557
Other 5,076 4,629
--------- ---------
Total revenues 50,643 35,941
--------- ---------
COST AND EXPENSES
Cost of products sold 34,482 21,770
Depreciation and amortization 2,611 2,381
Selling, general and administrative 1,210 1,044
Operating expenses 9,661 8,293
--------- ---------
Total costs and expenses 47,964 33,488
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OPERATING INCOME 2,679 2,453
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GAIN ON DISPOSAL OF ASSETS 132 57
OTHER INCOME 150 116
EQUITY IN EARNINGS OF AFFILIATES 40 48
INTEREST EXPENSE (2,942) (3,276)
--------- ---------
INCOME (LOSS) BEFORE MINORITY INTEREST 59 (602)
MINORITY INTEREST (155) (97)
--------- ---------
NET LOSS (96) $ (699)
=========
GENERAL PARTNER'S INTEREST IN NET LOSS (1)
---------
LIMITED PARTNERS' INTEREST IN NET LOSS $ (95)
=========
NET LOSS PER LIMITED PARTNER UNIT $ (.01)
=========
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING
7,987,943
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.
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HERITAGE PROPANE PARTNERS, L.P., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
For the Three Months Ended
November 30,
1996 1995
------------ ------------
(Predecessor)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (95) $ (699)
Reconciliation of net loss to net cash used in
operating activities--
Depreciation and amortization 2,471 2,381
Provision for losses on accounts receivable 114 36
Gain on disposal of assets (132) (57)
Increase in deferred income taxes --- 24
Undistributed earnings of affiliates (45) (82)
Changes in assets and liabilities, net of effect of
acquisitions:
Accounts receivable (13,235) (7,363)
Inventories (1,485) (268)
Prepaid expenses (502) (756)
Intangibles and other assets (32) (333)
Accounts payable 6,761 2,268
Accrued and other current liabilities 3,998 3,448
--------- ---------
Net cash used in operating activities (2,182) (1,401)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash acquired (366) (4,150)
Capital expenditures (2,193) (2,091)
Proceeds from asset sales 248 76
--------- ---------
Net cash used in investing activities (2,311) (6,165)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 15,844 16,964
Principal payments on debt (7,528) (9,521)
Unit distribution to partners (2,878) ---
Capital adjustment for MLP costs (128) ---
Issuance of common stock --- 59
Deferred tax adjustment --- 170
Minority interest --- (14)
--------- ---------
Net cash provided by financing activities 5,310 7,658
--------- ---------
INCREASE IN CASH 817 92
CASH, beginning of period 1,170 1,237
--------- ---------
CASH, end of period $ 1,987 $ 1,329
========= =========
NONCASH FINANCING ACTIVITIES:
Notes payable incurred on noncompete agreements $ 182 $ 40
5% preferred stock dividend --- 150
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for--
Interest $ 491 $ 364
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS.
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HERITAGE PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL:
The accompanying unaudited consolidated financial statements have been prepared
by Heritage Propane Partners, L.P. (the Company) and should be read in
conjunction with the Company's consolidated financial statements as of August
31, 1996 and the notes thereto included in the Company's consolidated financial
statements included in Form 10-K as filed with the Securities and Exchange
Commission. The foregoing financial statements include only normal recurring
accruals and all adjustments which the Company considers necessary for a fair
presentation.
2. DETAILS TO CONSOLIDATED BALANCE SHEETS:
Inventories are valued at the lower of cost or market. The cost of fuel
inventories is determined using average cost while the cost of appliances,
parts and fittings is determined by the first-in, first-out method.
Inventories consist of the following:
NOV. 30, AUG. 31, NOV. 30,
1996 1996 1995
--------- ---------- ---------
(UNAUDITED) (UNAUDITED)
(PREDECESSOR)
Fuel $ 9,511 $ 7,735 $ 7,244
Appliances, parts and fittings 3,089 3,380 3,155
---------- --------- ----------
$ 12,600 $ 11,115 $ 10,399
========== ========= ==========
3. LOSS PER LIMITED PARTNER UNIT:
Loss per limited partner unit is computed by dividing net loss, after
considering the General Partner's one percent interest, by the weighted average
number of Common and Subordinated Units outstanding.
4. CASH DISTRIBUTIONS:
A cash distribution of $2,820, or $.353 per Common and Subordinated unit, was
paid on October 15, 1996 to Unitholders of record on October 1, 1996 and $58 was
distributed to the General Partner.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
ANALYSIS OF UNAUDITED HISTORICAL RESULTS OF OPERATIONS
On June 28, 1996, Heritage Propane Partners, L.P. (the Partnership)
acquired certain assets of Heritage Holdings, Inc. (the Company) and completed
an initial public offering. The following discussion reflects for the periods
indicated the results of operations and operating data for the Partnership and
its predecessor, the Company. During fiscal year 1996, the Company consummated
eight acquisitions which affect the comparability of prior period financial
results as they are included in all three months of the quarter ending November
30, 1996, yet for the most part were not included in the same period a year ago.
Amounts discussed below reflect 100% of the results of operations of M-P Oils
Partnership, a general partnership in which the Company owns a 60% interest.
Because M-P Oils Partnership is primarily engaged in lower-margin wholesale
propane distribution, its contribution to the Partnership's net income and
EBITDA is not significant.
Three Months Ended November 30, 1996 Compared to Three Months Ended
November 30, 1995.
Volume. During the three months ended November 30, 1996, the Company
sold 31.5 million retail gallons, an increase of 5.4 million retail gallons or
20.7% from the 26.1 million retail gallons sold in the three months ended
November 30, 1995. This increase was primarily attributable both to the effect
of acquisitions and internal growth and, to a lesser extent, colder weather.
The Company also sold approximately 30.0 million wholesale gallons in
the three months ended November 30, 1996, a 2.2 million gallon or 7.9% increase
from the 27.8 million wholesale gallons sold in the prior year three-month
period. The increase in wholesale volumes was largely attributable to
increased wholesale volumes in the United States.
Revenues. Total revenues increased $14.7 million or 40.9% to $50.6
million for the three months ended November 30, 1996, as compared to $35.9
million for the prior year three-month period. Domestic revenues increased
$10.4 million or 37.7% to $38.0 million for the three months ended November 30,
1996, as compared to $27.6 million for the three-month period ended November
30, 1995. Foreign revenues increased $4.3 million or 51.8% to $12.6 million
for the three months ended November 30, 1996, as compared to $8.3 million for
the three-month period ended November 30, 1995. The increase in foreign
revenues was attributable entirely to increased selling prices where as the
increased domestic revenues were due in equal parts from higher selling prices
and greater volumes.
Cost of Sales. Total cost of sales increased $12.7 million or 58.3%
to $34.5 million for the three months ended November 30, 1996, as compared to
$21.8 million for the three months ended November 30, 1995. Domestic costs of
sales increased $8.5 million or 61.6% to $22.3 million for the three months
ended November 30, 1996, as compared to $13.8 million for the three-month
period ended November 30, 1995. Foreign cost of sales increased $4.2 million
or 52.5% to $12.2 million for the three months ended November 30, 1996, as
compared to $8.0 million for the three-month period ended November 30, 1995.
The increase was primarily attributable to higher propane costs and increased
volumes sold.
Gross Profit. Gross profit increased $2.0 million or 14.2% to $16.1
million for the three months ended November 30, 1996, as compared to $14.1
million for the prior year three-month period. This increase was attributable
to an increase in volumes sold, partially offset by a margin decline caused
primarily by an increase in propane costs from suppliers.
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Operating Expenses. Operating expenses increased $1.4 million or
16.9% to $9.7 million in the three months ended November 30, 1996, as compared
to $8.3 million in the three months ended November 30, 1995. The entire amount
of this increase was attributable to increased volumes.
Selling, General and Administrative. Selling, general and
administrative expenses were $1.2 million for the three months ended
November 30, 1996, an increase from $1.0 million for the prior year three-month
period. This increase resulted from costs associated with being a public entity
and a master limited partnership.
Depreciation and Amortization. Depreciation and amortization
increased approximately $.2 million or 8.3% to $2.6 million in the three months
ended November 30, 1996, as compared to $2.4 million for the three months ended
November 30, 1995. This increase was the result of additional depreciation
associated with acquisitions.
Operating Income. Operating income increased $.2 million or 8.0% to
$2.7 million for the three months ended November 30, 1996, as compared to $2.5
million for the prior year three-month period. This increase was due primarily
to increased volumes, partially offset by a decline in margins.
Net Loss. The Partnership's net loss was approximately $.1 million
for the three months ended November 30, 1996 and $.7 million for the three
months ended November 30, 1995, as a result of higher operating income and
lower interest expense for the three months ended November 30, 1996.
EBITDA. EBITDA increased $.6 million or 12.2% to $5.5 million in the
three months ended November 30, 1996, as compared to $4.9 million for the prior
year three-month period. This increase was due to an increase in volumes
attributable to acquisitions, favorable weather conditions and internal growth,
partially offset by a decrease in gross margins.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash used by operating activities during the three months ended
November 30, 1996 was $2.2 million compared with $1.4 million during the three
months ended November 30, 1995. The cash flows from operations before changes
in working capital actually increased during the three months ended November
30, 1996 but were offset by increases in accounts receivable and inventory
resulting from higher supplier propane prices.
Cash used in investing activities during the three months ended
November 30, 1996 included capital expenditures for acquisitions amounting to
$.4 million. An additional $2.2 million was spent for remaining maintenance
needed to sustain operations at current levels, new customer tanks to support
growth of operations and other miscellaneous capitalized items.
Cash provided by financing activities during the three months ended
November 30, 1996 of $5.3 million primarily reflects net borrowings under the
credit facilities available to the Company.
Financing and Sources of Liquidity
In June 1996, the Partnership entered into a Bank Credit Facility,
which includes a Working Capital Facility, a revolving credit facility
providing for up to $15.0 million of borrowings to be used for working capital
and other general partnership purposes, and an Acquisition Facility, a
revolving credit facility providing for up to $25.0 million of borrowings to be
used for acquisitions and improvements.
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The Partnership uses almost all of its cash provided by operating and
financing activities to fund acquisition, maintenance and growth capital
expenditures. Acquisition capital expenditures, which include expenditures
related to the acquisition of retail propane operations and a portion of the
purchase price allocated to intangibles associated with such acquired
businesses, were $.4 million for the three months ended November 30, 1996, as
compared to $4.2 million during the three months ended November 30, 1995.
The assets utilized in the propane business do not typically require
lengthy manufacturing process time nor complicated, high technology components.
Accordingly, the Partnership does not have any significant financial commitments
for capital expenditures. In addition, the Partnership has not experienced any
significant increases attributable to inflation in the cost of these assets.
The ability of the Partnership to satisfy its obligations will depend
on its future performance, which will be subject to prevailing economic,
financial, business and weather conditions and other factors, many of which are
beyond its control. Future capital needs of the Partnership are expected to be
provided by future operations, existing cash balances and the Working Capital
Facility. The Partnership may incur additional indebtedness or issue
additional Units in order to fund possible future acquisitions.
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FORM 10-Q/A
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) The following exhibits are filed 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
------- -----------
10.1* Bank Credit Facility ("BCF")
10.1.1* Amendment of BCF dated as of July 9, 1996.
10.2* Note Purchase Agreement ("NPA")
10.2.1* Amendment of NPA dated as of July 25, 1996.
27.1 Financial Data Schedule - Filed with EDGAR
version only
- ------------
* Filed previously
(b) No reports on Form 8-K have been filed by the registrant for the
quarter for which this report is filed.
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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 thereunto duly authorized.
HERITAGE PROPANE PARTNERS, L.P.
By: Heritage Holdings, Inc., General Partner
Date: January 21, 1997 By: /s/ H. Michael Krimbill
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H. Michael Krimbill
(Chief Accounting Officer and
officer duly authorized to
sign on behalf of the registrant)
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EXHIBIT INDEX
Exhibit
Number Description
------- -----------
10.1* Bank Credit Facility ("BCF")
10.1.1* Amendment of BCF dated as of July 9, 1996.
10.2* Note Purchase Agreement ("NPA")
10.2.1* Amendment of NPA dated as of July 25, 1996.
27.1 Financial Data Schedule - Filed with EDGAR
version only
- ------------
* Filed previously
5
1,000
3-MOS
AUG-31-1997
SEP-01-1996
NOV-30-1996
1,987
0
24,300
315
12,600
39,945
133,374
22,392
204,007
43,910
132,598
27,499
0
0
0
204,007
50,643
50,643
34,482
47,964
322
0
2,942
59
0
(96)
0
0
0
(96)
(.01)
0
