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): NOVEMBER 24, 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 November 24, 2003. ITEM 9. REGULATION FD DISCLOSURE AND ITEM 12 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On November 24, 2003, Heritage Propane Partners, L.P. issued a press release announcing its financial results for the fourth quarter and year ended August 31, 2003. A copy of this press release is being furnished as an exhibit to this report on Form 8-K.
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. DATED: November 24, 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 November 24, 2003.
EXHIBIT 99.1 [HERITAGE PROPANE LOGO] PRESS RELEASE HERITAGE PROPANE PARTNERS, L.P. REPORTS RECORD FISCAL YEAR RESULTS TULSA, OKLAHOMA - NOVEMBER 24, 2003 - Heritage Propane Partners, L.P. (NYSE:HPG) today reported record net income for the fiscal year ended August 31, 2003 of $31.1 million, or $1.79 per limited partner unit, a sixfold improvement or $26.2 million increase over the net income of $4.9 million, or $0.25 per limited partner unit, for fiscal 2002. EBITDA, as adjusted, for fiscal 2003 also reached a record level of $111.0 million, representing a $29.5 million, or 36% increase over the EBITDA, as adjusted, of $81.5 million reported for fiscal 2002. The Partnership also established new volume records for fiscal 2003 with retail gallons sold of 375.9 million gallons, which represents an increase of 46.3 million gallons or 14% over the 329.6 million gallons sold during the fiscal year ended August 31, 2002. Total revenues of $571.4 million, gross profit of $274.3 million, and operating income of $70.2 million for fiscal 2003 also achieved fiscal year records for the Partnership. These increases from the prior year are due to more favorable weather conditions during fiscal 2003 in the Partnership's areas of operations that lead to higher volumes and gross margins and, to a lesser extent, the benefits of the volumes added through acquisitions. "The completion of fiscal 2003 marks the most successful financial and operating performance year in the Partnership's history. It is a tribute to our operating management that we established new quarterly and annual records during fiscal 2003 in volumes, revenues, gross profit, EBITDA, as adjusted, and net income while experiencing overall weather conditions in our operating areas that were about 3% warmer than normal. We also succeeded in significantly reducing the Partnership's long-term debt levels by approximately $40 million while continuing to acquire retail propane operations," said H. Michael Krimbill, President and CEO. "Although fiscal 2003 was a record year, we will continue to focus on strengthening our operating efficiencies and expanding our markets through accretive propane acquisitions. Additionally, our recent announcement regarding the combination with Energy Transfer Company will provide the Partnership with diversification into the natural gas midstream business that should reduce our quarterly volatility. With the addition of Energy Transfer Company, the Partnership should again reach new financial performance records in fiscal 2004." The Partnership's seasonal net loss for the fourth quarter ended August 31, 2003 was $17.9 million or $1.01 per limited partner unit as compared to a net loss of $16.1 million, or $1.02 per limited partner unit for the fourth quarter ended August 31, 2002. Retail gallons sold for the fiscal 2003 fourth quarter were 54.6 million, as compared to 45.4 million for the fourth quarter of fiscal 2002. Increased retail gallons sold during the fourth quarter of fiscal 2003 were offset by higher product costs and increased operating expenses from recent acquisitions. EBITDA, as adjusted, is a non-GAAP financial measure used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of the Partnership's fundamental business activities. EBITDA, as adjusted, should not be considered in isolation or as a substitute for net income, income from operations, or other measures of cash flow. A table reconciling EBITDA, as adjusted, with appropriate generally accepted accounting principles 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. 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 3:30pm Central Standard Time, Monday, November 24, 2003, to discuss the fiscal 2003 results. The dial-in number is 888-276-0005; 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) Three Months Ended Twelve Months Ended August 31, August 31, ------------------------------- ------------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ (unaudited) (unaudited) REVENUES: Retail fuel $ 63,298 $ 47,393 $ 463,392 $ 365,334 Wholesale fuel 6,101 5,212 47,366 41,204 Liquids marketing, net 18 691 1,333 542 Other 13,051 13,061 59,385 55,245 ------------ ------------ ------------ ------------ Total revenues 82,468 66,357 571,476 462,325 ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Cost of products sold 44,935 28,504 297,156 238,185 Operating expenses 34,041 32,579 152,131 133,203 Depreciation and amortization 9,668 8,424 37,959 36,998 Selling, general and administrative 3,095 3,331 14,037 12,978 ------------ ------------ ------------ ------------ Total costs and expenses 91,739 72,838 501,283 421,364 ------------ ------------ ------------ ------------ OPERATING INCOME (LOSS) (9,271) (6,481) 70,193 40,961 OTHER INCOME (EXPENSE): Interest expense (8,176) (9,417) (35,740) (37,341) Equity in earnings of affiliates (316) (261) 1,371 1,338 Gain (loss) on disposal of assets (243) (130) 430 812 Other (563) 48 (3,213) (294) ------------ ------------ ------------ ------------ INCOME (LOSS) BEFORE MINORITY INTERESTS AND INCOME TAXES (18,569) (16,241) 33,041 5,476 Minority interests 161 110 (876) (574) ------------ ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (18,408) (16,131) 32,165 4,902 Income taxes 460 -- (1,023) -- ------------ ------------ ------------ ------------ NET INCOME (LOSS) (17,948) (16,131) 31,142 4,902 GENERAL PARTNER'S INTEREST IN NET INCOME (LOSS) (138) (56) 1,319 918 ------------ ------------ ------------ ------------ LIMITED PARTNERS' INTEREST IN NET INCOME (LOSS) $ (18,086) $ (16,187) $ 29,823 $ 3,984 ============ ============ ============ ============ BASIC NET INCOME (LOSS) PER LIMITED PARTNER UNIT $ (1.01) $ (1.02) $ 1.79 $ 0.25 ============ ============ ============ ============ BASIC AVERAGE NUMBER OF UNITS OUTSTANDING 17,962,203 15,812,586 16,635,966 15,738,621 ============ ============ ============ ============
Three Months Twelve Months SUPPLEMENTAL INFORMATION: Ended August 31, Ended August 31, ----------------------- ------------------------- 2003 2002 2003 2002 -------- -------- --------- --------- NET INCOME RECONCILIATION Net income (loss) $(17,948) $(16,131) $ 31,142 $ 4,902 Depreciation and amortization 9,668 8,424 37,959 36,998 Interest 8,176 9,417 35,740 37,341 Taxes (460) -- 1,023 -- Non-cash compensation expense 229 469 1,159 1,878 Other expenses 563 (48) 3,213 294 Depreciation, amortization, and interest and taxes of investee 203 247 901 743 Minority interest in the Operating Partnership (201) (172) 256 192 (Gain) loss on disposal of assets 243 130 (430) (812) -------- -------- --------- --------- EBITDA, as adjusted (a) $ 473 $ 2,336 $ 110,963 $ 81,536 ======== ======== ========= ========= Capital Expenditures: Maintenance $ 1,363 $ 1,950 $ 15,137 $ 12,831 Growth $ 6,374 $ 7,958 $ 37,113 $ 33,983 Retail Gallons Sold 54,599 45,378 375,939 329,574 (a) EBITDA, as adjusted, is defined as the Partnership's earnings before interest, taxes, depreciation, amortization and other non-cash items, such as compensation charges for unit issuances to employees, gain or loss on disposal of assets, and other expenses. We present EBITDA, as adjusted, on a Partnership basis which includes both the general and limited partner interests. Non-cash compensation expense represents charges for the value of the Common Units awarded under the Partnership's compensation plans that have not yet vested under the terms of those plans and are charges which do not, or will not, require cash settlement. Non-cash income such as the gain arising from our disposal of assets is not included when determining EBITDA, as adjusted. EBITDA, as adjusted (i) is not a measure of performance calculated in accordance with generally accepted accounting principles and (ii) should not be considered in isolation or as a substitute for net income, income from operations or cash flow as reflected in our consolidated financial statements. EBITDA, as adjusted, is presented because such information is relevant and is used by management, industry analysts, investors, lenders, and rating agencies to assess the financial performance and operating results of the Partnership's fundamental business activities. Management believes that the presentation of EBITDA, as adjusted, is useful to lenders and investors because of its use in the propane industry and for master limited partnerships as an indicator of the strength and performance of the Partnership's ongoing business operations, including the ability to fund capital expenditures, service debt and pay distributions. Additionally, management believes that EBITDA, as adjusted, provides additional and useful information to the Partnership's investors for trending, analyzing, and benchmarking the operating results of the Partnership from period to period as compared to other companies that may have different financing and capital structures. The presentation of EBITDA, as adjusted, allows investors to view the Partnership's performance in a manner similar to the methods used by management and provides additional insight to the Partnership's operating results. EBITDA, as adjusted is used by management to determine our operating performance, and along with other data as internal measures for setting annual operating budgets, assessing financial performance of the Partnership's numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation. EBITDA, as adjusted, can be a meaningful measure of financial performance because it excludes factors which are outside the control of the employees responsible for operating and managing the business locations, and provides information management can use to evaluate the performance of the business locations, or the region where they are located, and the employees responsible for operating them. There are material limitations to using a measure such as EBITDA, as adjusted, including the difficulty associated with using it as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company's net income or loss. In addition, Heritage's calculation of EBITDA, as adjusted, may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with generally accepted accounting principles. EBITDA, as adjusted, for the periods described herein is calculated in the same manner as presented by Heritage in the past.
HERITAGE PROPANE PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) August 31, August 31, 2003 2002 --------- --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,117 $ 4,596 Marketable securities 3,044 2,559 Accounts receivable, net of allowance for doubtful accounts 35,879 30,898 Inventories 45,274 48,187 Assets from liquids marketing 83 2,301 Prepaid expenses and other 2,741 6,846 --------- --------- Total current assets 94,138 95,387 PROPERTY, PLANT AND EQUIPMENT, net 426,588 400,044 INVESTMENT IN AFFILIATES 8,694 7,858 GOODWILL, net of amortization prior to adoption of SFAS No. 142 156,595 155,735 INTANGIBLES AND OTHER ASSETS, net 52,824 58,240 --------- --------- Total assets $ 738,839 $ 717,264 ========= ========= LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Working capital facility $ 26,700 $ 30,200 Accounts payable 43,690 40,929 Accounts payable to related companies 6,255 5,002 Accrued and other current liabilities 35,993 23,962 Liabilities from liquids marketing 80 1,818 Current maturities of long-term debt 38,309 20,158 --------- --------- Total current liabilities 151,027 122,069 LONG-TERM DEBT, less current maturities 360,762 420,021 MINORITY INTERESTS 4,002 3,564 --------- --------- 515,791 545,654 --------- --------- COMMITMENTS AND CONTINGENCIES PARTNERS' CAPITAL: Common Unitholders (18,013,229 and 15,815,847 units issued and outstanding at August 31, 2003 and 2002, respectively) 221,207 173,677 Class C Unitholders (1,000,000 units issued and outstanding at August 31, 2003 and 2002) -- -- General Partner 2,190 1,585 Accumulated other comprehensive loss (349) (3,652) --------- --------- Total partners' capital 223,048 171,610 --------- --------- Total liabilities and partners' capital $ 738,839 $ 717,264 ========= =========