CONFORMED COPY
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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: 1-11867
NATIONAL PROPANE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 42-1453040
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
200 FIRST STREET S.E., SUITE 1700, 52401-1409
CEDAR RAPIDS, IA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(319) 365-1550
(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 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 last 90 days. Yes __X__ No _______
There were 6,701,550 Common Units and 4,533,638 Subordinated Units
outstanding as of May 14, 1999.
________________________________________________________________________________
NATIONAL PROPANE PARTNERS, L.P.
INDEX TO FORM 10-Q
PAGE
----
Part I -- Financial Information
Item 1 -- Financial Statements:
Condensed Consolidated Balance Sheets -- December 31, 1998 and
March 31, 1999................................................................................. 3
Condensed Consolidated Statements of Operations -- Three months ended March 31, 1998 and 1999.... 4
Condensed Consolidated Statements of Cash Flows -- Three months ended
March 31, 1998 and 1999........................................................................ 5
Notes to Condensed Consolidated Financial Statements............................................. 6
Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations....... 9
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk.................................. 15
Part II -- Other Information
Item 3 -- Defaults Upon Senior Securities............................................................. 16
Item 5 -- Other Information........................................................................... 17
Item 6 -- Exhibits and Reports on Form 8-K............................................................ 17
Signatures............................................................................................ 18
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31,
1998(A) 1999
------------ ---------
(IN THOUSANDS)
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 4,448 $ 9,559
Receivables....................................................................... 14,455 13,999
Finished goods inventories........................................................ 7,879 6,282
Other current assets.............................................................. 2,110 1,716
------------ ---------
Total current assets......................................................... 28,892 31,556
Note receivable from Triarc Companies, Inc.(Note 6).................................... 30,700 30,700
Properties............................................................................. 77,653 76,873
Unamortized costs in excess of net assets of acquired companies........................ 16,862 16,738
Other assets........................................................................... 6,930 6,416
------------ ---------
$161,037 $ 162,283
------------ ---------
------------ ---------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Current portion of long-term debt................................................. $141,687 $ 141,111
Accounts payable.................................................................. 7,492 7,476
Accrued expenses.................................................................. 6,347 6,482
Customer credit balances.......................................................... 6,008 3,391
------------ ---------
Total current liabilities.................................................... 161,534 158,460
Long-term debt......................................................................... 177 129
Customer deposits and other long-term liabilities...................................... 2,344 2,270
Partners' capital (deficit):
Common partners' capital.......................................................... -- --
General partners' capital (deficit), including subordinated units................. (3,018) 1,424
------------ ---------
Total partners' capital (deficit)............................................ (3,018) 1,424
------------ ---------
$161,037 $ 162,283
------------ ---------
------------ ---------
- ------------
(A) Derived from the audited consolidated financial statements as of December
31, 1998.
See accompanying notes to condensed consolidated financial statements
3
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
----------------------------
1998 1999
------------ ------------
(IN THOUSANDS
EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)
Revenues............................................................................ $ 46,130 $ 45,217
------------ ------------
Cost of sales:
Cost of product -- propane and appliances...................................... 21,243 18,786
Other operating expenses applicable to revenues................................ 11,479 11,552
------------ ------------
32,722 30,338
------------ ------------
Gross profit.............................................................. 13,408 14,879
Selling, general and administrative expenses........................................ 6,487 8,535
------------ ------------
Operating income.......................................................... 6,921 6,344
Interest expense.................................................................... (3,275) (3,169)
Interest income from Triarc Companies, Inc.......................................... 1,355 1,022
Other income, net................................................................... 583 235
------------ ------------
Income before income taxes................................................ 5,584 4,432
Provision for income taxes.......................................................... (50) (50)
------------ ------------
Net income................................................................ $ 5,534 $ 4,382
------------ ------------
------------ ------------
General partners' interest in net income............................................ $ 221 $ 175
------------ ------------
------------ ------------
Unitholders' interest (common and subordinated) in net income....................... $ 5,313 $ 4,207
------------ ------------
------------ ------------
Net income per unit................................................................. $ .47 $ .37
------------ ------------
------------ ------------
Weighted average number of units outstanding........................................ 11,235 11,235
------------ ------------
------------ ------------
See accompanying notes to condensed consolidated financial statements
4
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,
----------------------------
1998 1999
------------ ------------
(IN THOUSANDS)
(UNAUDITED)
Cash flows from operating activities:
Net income..................................................................... $ 5,534 $ 4,382
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of properties............................... 2,679 2,385
Amortization of costs in excess of net assets of acquired companies....... 249 227
Amortization of deferred financing costs.................................. 182 182
Other amortization........................................................ 276 248
Provision for doubtful accounts........................................... 279 275
Gain on sale of properties, net........................................... (385) (88)
Other, net................................................................ (69) 45
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable and customer credit
balances.......................................................... 151 (2,426)
Increase in interest receivable from Triarc Companies, Inc........... (1,355) --
Decrease in inventories.............................................. 2,233 1,597
Decrease (increase) in prepaid expenses and other current assets..... (113) 394
Increase (decrease) in accounts payable and accrued expenses......... 587 119
------------ ------------
Net cash provided by operating activities................................. 10,248 7,340
------------ ------------
Cash flows from investing activities:
Capital expenditures........................................................... (1,906) (1,666)
Business acquisitions.......................................................... (315) (38)
Proceeds from sale of properties............................................... 687 156
------------ ------------
Net cash used in investing activities..................................... (1,534) (1,548)
------------ ------------
Cash flows from financing activities:
Repayments of long-term debt................................................... (6,342) (681)
Distributions.................................................................. (6,143) --
------------ ------------
Net cash used in financing activities..................................... (12,485) (681)
------------ ------------
Net increase (decrease) in cash..................................................... (3,771) 5,111
Cash and cash equivalents at beginning of period.................................... 4,616 4,448
------------ ------------
Cash and cash equivalents at end of period.......................................... $ 845 $ 9,559
------------ ------------
------------ ------------
See accompanying notes to condensed consolidated financial statements
5
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- ORGANIZATION AND RECENT DEVELOPMENTS
The consolidated financial statements of National Propane Partners, L.P.
(the 'Partnership') include the accounts of the Partnership and its subsidiaries
National Propane, L.P. (the 'Operating Partnership') and National Sales &
Service, Inc. ('NSSI') which, collectively with the Partnership and Operating
Partnership, are referred to as the 'Partnership Entities'. The Partnership has
limited partner interests consisting of 6,701,550 common units (the 'Common
Units') and subordinated partner interests consisting of 4,533,638 subordinated
units (the 'Subordinated Units' and together with the Common Units, the 'Units')
outstanding. National Propane Corporation (the 'Managing General Partner'), a
wholly-owned subsidiary of Triarc Companies, Inc. ('Triarc'), and its
subsidiary, National Propane SGP Inc.('SGP'), own general partner interests
representing an aggregate 4% unsubordinated general partners' interest (the
'General Partners' Interest') in the Partnership Entities and the Managing
General Partner owns all of the Subordinated Units (the 'Subordinated Unit
Interests') representing a 38.7% subordinated general partner interest in the
Partnership Entities. Certain statements in these notes to the condensed
consolidated financial statements constitute 'forward-looking statements' under
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Partnership to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. See 'Part II -- Other Information.'
On April 5, 1999, the Partnership, the Managing General Partner, SGP and
Triarc and Columbia Propane Corporation ('Columbia Propane'), a subsidiary of
Columbia Energy Group, Columbia Propane, L.P. (the 'Purchaser') and CP Holdings
Inc., a subsidiary of Columbia Propane and the general partner of the Purchaser
(the 'Purchaser General Partner') signed a definitive purchase agreement (the
'Purchase Agreement') pursuant to which the Purchaser would acquire all of the
6,701,550 outstanding Common Units of the Partnership for $12.00 in cash per
Common Unit pursuant to a tender offer (the 'Partnership Sale'). On April 9,
1999, the Purchaser commenced the tender offer which expired on May 6, 1999. The
Purchaser has advised the Partnership that pursuant to the tender offer, the
Purchaser purchased 5,922,654 Common Units representing approximately 88.4% of
the outstanding Common Units.
The tender offer was the first step of a two-step cash transaction. In the
second step, subject to the terms and conditions of the Purchase Agreement,
Columbia Propane would indirectly acquire the General Partnership Interests and
Subordinated Unit Interests of the Partnership and the Operating Partnership
from its general partners and the Partnership would merge into the Purchaser. As
part of the second step, any remaining common unitholders of the Partnership
would receive, in cash, the same per unit price as that paid to common
unitholders who tendered their shares pursuant to the tender offer. Triarc would
receive approximately $17,916,000 for its acquired interests in the Partnership
and the Operating Partnership consisting of $2,100,000 in cash and approximately
$15,816,000 in the form of the forgiveness of a portion of a note receivable
from Triarc by the Operating Partnership. Simultaneously, and as a condition of
the closing, Triarc will prepay approximately $14,884,000 of such indebtedness.
Following the closing, Triarc, through the Managing General Partner, would
retain a 1.0% limited partner interest in the Purchaser. Approximately
$141,000,000 of the Operating Partnership's outstanding indebtedness is expected
to be refinanced in connection with the Partnership Sale. There can be no
assurance that the second step of the Partnership Sale will be consummated.
In connection with the Partnership Sale, the Operating Partnership, the
Managing General Partner, the SPG and the holders (the 'Noteholders') of the
Operating Partnership's $125,000,000 8.54% first mortgage notes due 2010 (the
'First Mortgage Notes') amended the Note Agreements governing the First Mortgage
Notes to provide for, among other things, modifications to the premium payable
to such Noteholders in connection with the prepayment of the First Mortgage
Notes pursuant to the Partnership Sale.
6
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
NOTE 2 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
the Partnership have been prepared in accordance with Rule 10-01 of Regulation
S-X promulgated by the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of the Partnership,
however, the accompanying condensed consolidated financial statements contain
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Partnership's financial position as of December 31, 1998 and
March 31, 1999, its results of operations and its cash flows for the three-month
periods ended March 31, 1998 and 1999. This information should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1998 (the 'Form 10-K').
The Partnership's continuation as a going concern is dependent on its
ability to generate sufficient cash flow to meet its obligations on a timely
basis, to comply with the terms and covenants of its debt agreements, to obtain
additional financing or refinancing as may be required, and ultimately to attain
successful operations. To successfully achieve these objectives, the Partnership
believes the Partnership Sale is the most viable alternative. See Note 6 for
management's plans and intentions if the Partnership Sale is not consummated.
Accordingly, the accompanying condensed consolidated financial statements have
been prepared on a going concern basis which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.
NOTE 3 -- PROPERTIES
The following is a summary of the components of properties, net:
DECEMBER 31, MARCH 31,
1998 1999
------------ ---------
(IN THOUSANDS)
Properties, at cost................................................ $174,170 $ 175,730
Less accumulated depreciation...................................... 96,517 98,857
------------ ---------
$ 77,653 $ 76,873
------------ ---------
------------ ---------
NOTE 4 -- INCOME TAXES
Income taxes have been provided primarily on the pre-tax income of NSSI,
which is subject to Federal and state income taxes. Since the earnings
attributed to the Partnership and the Operating Partnership are included in the
tax returns of the individual partners and not those of the Partnership, no
income taxes have been provided thereon.
NOTE 5 -- CONTINGENCIES
The Partnership continues to have an environmental contingency of the same
nature and general magnitude as described in Note 17 to the consolidated
financial statements in the Form 10-K. The costs of remediation and third party
claims, if any, associated with this environmental contingency may have a
material adverse effect on the Partnership's financial position, results of
operations or its ability to make distributions to the holders of the Common
Units and the Subordinated Units.
There are a number of lawsuits pending or threatened against the
Partnership. In general, these lawsuits have arisen in the ordinary course of
the Partnership's business and involve claims for actual damages, and in some
cases punitive damages, arising from the alleged negligence of the Partnership
or as a result of product defects, business disputes with competitors or similar
matters. Of the pending or threatened matters, a number involve property damage,
and several involve serious personal injuries or deaths. In certain cases, the
claims made are for relatively large amounts. Although any litigation is
inherently uncertain, based on past experience, the information currently
available to it and the availability of insurance coverage in certain matters,
the Partnership does not believe that the pending or threatened litigation of
which the Partnership is aware will have a material adverse effect on its
financial position or its results of operations. Notwithstanding the foregoing,
any one of the matters discussed above or all of them taken together may
adversely affect the Partnership's financial position, results of operations or
its ability to make distributions.
7
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
NOTE 6 -- LONG-TERM DEBT AND QUARTERLY DISTRIBUTIONS
At December 31, 1998 and March 31, 1999, the Partnership was not in
compliance with a covenant under its bank credit facility (the 'Bank Facility').
Pursuant to a waiver letter dated as of February 20, 1999, the Partnership
received an unconditional waiver from the lenders under its credit facility
('the Lenders') with respect to the non-compliance as of December 31, 1998 and a
conditional waiver with respect to any future non-compliance with such covenant
through August 31, 1999 (the 'February Waiver'). There are certain conditions to
the waiver of future non-compliance under the February Waiver including among
other things, consummation of the Partnership Sale and the repayment of all
amounts outstanding under the Bank Facility, both by September 30, 1999. In
addition, the February Waiver prohibits the Partnership from making any future
distributions to Unitholders until all outstanding indebtedness under the Bank
Facility is paid in full. Should the conditions not be met or the February
Waiver expire, and the Operating Partnership be in default of its Bank Facility,
the Operating Partnership would also be in default of its First Mortgage Notes
by virtue of cross-default provisions. In accordance with the February Waiver
the Lenders have unconditionally waived non-compliance with the covenant at
March 31, 1999. As a result of projected future covenant non-compliance, the
conditions of the February Waiver, and the cross-default provisions of the First
Mortgage Notes, the Partnership has classified all of the debt under the Bank
Facility and the First Mortgage Notes having a principal balance of $15,997,000
and $125,000,000, respectively, at March 31, 1999, as a current liability.
Further, in accordance with the terms of the February Waiver, no additional
borrowings are available to the Operating Partnership under the Bank Facility.
The Partnership's continuation as a going concern is dependent on its
ability to generate sufficient cash flow to meet its obligations on a timely
basis, to comply with the terms and covenants of its debt agreements, to obtain
additional financing or refinancing as may be required, and ultimately to attain
successful operations. To successfully achieve these objectives, the Partnership
believes the Partnership Sale is the most viable alternative. If the Partnership
Sale is not consummated and the Lenders are unwilling to extend or modify the
February Waiver, (i) the Partnership could seek to otherwise refinance its
indebtedness, (ii) the Managing General Partner might consider buying the bank's
loans to the Partnership ($15,997,000 principal amount outstanding at March 31,
1999), (iii) the Partnership could pursue other potential purchasers of the
Partnership, or (iv) the Partnership could be forced to seek protection under
Federal bankruptcy laws. In such latter event, the Managing General Partner may
be required to honor its guarantee of the Partnership's debt under the Bank
Facility and the First Mortgage Notes.
The Partnership did not declare any distribution with respect to the fourth
quarter of 1998 (which would have been paid in the first quarter of 1999) since
it was in violation of certain of its debt covenants under the Bank Facility as
previously discussed and as a result, was prohibited from making any such
distribution. The February Waiver prohibits any further distributions to all
Unitholders until all outstanding indebtedness under the Bank Facility is repaid
in full. Additionally, under the terms of the Purchase Agreement, the
Partnership is prohibited from paying any further distributions to Unitholders
without the prior written consent of the Purchaser General Partner. Accordingly,
no distribution was declared with respect to the first quarter of 1999. Under
the terms of the Partnership agreement, each Common Unit has an arrearage of
$0.2625, $0.525 and $0.525 per Common Unit related to the third and fourth
quarters of 1998 and the first quarter of 1999 distributions, respectively, for
an aggregate of $8,796,000. Cash distributions on the Partnership's Common and
Subordinated Units and the General Partners' Interest are not guaranteed, will
depend on future Partnership operating performance and will be affected by among
other things, the funding of reserves, operating and capital expenditures and
requirements under the Partnership's debt agreements and the Purchase Agreement.
Accordingly, there can be no assurance that the Partnership will be able to pay
any such future distributions. (See Note 1 regarding the Partnership Sale.)
8
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
NOTE 7 -- RELATED PARTY TRANSACTIONS
The Partnership continues to have related party transactions of the same
nature and general magnitude as those described in Note 19 to the consolidated
financial statements contained in the Form 10-K.
NOTE 8 -- STATEMENT OF PARTNERS' CAPITAL
The following is a summary of the changes in partners' capital (deficit):
TOTAL
GENERAL TOTAL
COMMON PARTNERS' PARTNERS'
PARTNERS' CAPITAL CAPITAL
CAPITAL (DEFICIT) (DEFICIT)
---------- ---------- ----------
Balance at December 31, 1998......................................... $ -- $ (3,018) $ (3,018)
Net income........................................................... 2,510 1,872 4,382
Reallocation of Partnership income................................... (2,545) 2,545 --
Amortization of unearned compensation on below market unit options... 35 25 60
---------- ---------- ----------
Balance at March 31, 1999............................................ $ -- $ 1,424 $ 1,424
---------- ---------- ----------
---------- ---------- ----------
The reallocation of Partnership income represents a partial recovery of
previous reallocations of Partnership losses that were required under the terms
of the partnership agreement in order that the Unitholders' capital account
balances are not reduced below zero. In accordance with the terms of the
partnership agreement, the General Partners' Interest will recover the remaining
unrecovered loss reallocations of $77,000 to the extent the Common Unitholders'
interest in future earnings exceed distributions to Common Unitholders.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
This 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' should be read in conjunction with 'Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations' in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1998. A
general description of the Partnership's industry and a discussion of recent
trends affecting that industry are contained therein. Certain statements under
this caption may constitute 'forward-looking statements' under the Private
Securities Litigation Reform Act of 1995 (the 'Reform Act'). Such
forward-looking statements involve risks, uncertainties and other factors which
may cause the actual results, performance, or achievements of the Partnership
Entities to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. For those
statements the Partnership claims the protection of the safe harbor for
forward-looking statements contained in the Reform Act. See 'Part II -- Other
Information.'
RECENT DEVELOPMENTS
As has been previously announced, National Propane Corporation (the
"Managing General Partner") had been considering various strategic alternatives
to maximize the value of the Partnership and had been in active discussions with
several third parties concerning a sale or merger of the Partnership. In January
1999, the Managing General Partner established a special committee of the Board
of Directors (the "Special Committee") (which retained financial and legal
advisors) to evaluate and make a recommendation on behalf of the Partnership's
Common Unitholders with respect to any transaction. On April 5, 1999, the
Partnership, the Managing General Partner, National Propane SGP Inc. ("SGP")
and Triarc Companies, Inc. ("Triarc") and Columbia Propane Corporation
('Columbia Propane'), a subsidiary of
9
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Columbia Energy Group, Columbia Propane, L.P. (the 'Purchaser') and CP Holdings
Inc., a subsidiary of Columbia Propane and the general partner of the Purchaser
(the 'Purchaser General Partner') signed a definitive purchase agreement (the
'Purchase Agreement') pursuant to which the Purchaser would acquire all of the
6.7 million outstanding common units of the Partnership for $12.00 in cash per
common unit pursuant to a tender offer (the 'Partnership Sale'). The Board of
Directors of the Managing General Partner, acting on the recommendation of its
Special Committee, unanimously approved the Partnership Sale and unanimously
recommended that the Partnership's Common Unitholders tender their common units
pursuant to the offer. The Special Committee received an opinion of Lehman
Brothers Inc. that, from a financial point of view, the consideration to be
received by the Partnership's Common Unitholders in the Partnership Sale is fair
to the holders of the Common Units. On April 9, 1999, the Purchaser commenced
the tender offer which expired on May 6, 1999. The Purchaser has advised the
Partnership that pursuant to the tender offer, the Purchaser purchased 5,922,654
Common Units representing approximately 88.4% of the outstanding Common Units.
The tender offer was the first step of a two-step cash transaction. In the
second step, subject to the terms and conditions of the Purchase Agreement,
Columbia Propane would indirectly acquire the General Partnership Interests and
Subordinated Unit Interests of the Partnership and the Operating Partnership
from its general partners and the Partnership would merge into the Purchaser. As
part of the second step, any remaining Common Unitholders of the Partnership
would receive, in cash, the same per unit price as that paid to Common
Unitholders who tender their shares pursuant to the tender offer. Triarc would
receive $17.9 million for its acquired interests in the Partnership and the
Operating Partnership consisting of $2.1 million in cash and $15.8 million in
the form of the forgiveness of a portion of a Note Receivable from Triarc by the
Operating Partnership. Simultaneously, and as a condition of the closing, Triarc
will prepay $14.9 million of such indebtedness. Following the closing, Triarc,
through the Managing General Partner, would retain a 1.0% limited partnership
interest in the Purchaser. Approximately $141.0 million of the Operating
Partnership's outstanding indebtedness is expected to be refinanced in
connection with the Partnership Sale. There can be no assurance that the second
step of the Partnership Sale will be consummated.
In connection with the Partnership Sale, the Operating Partnership, the
Managing General Partner, the SGP and the holders (the 'Noteholders') of the
Operating Partnership's $125.0 million 8.54% first mortgage notes due 2010 (the
'First Mortgage Notes') amended the Note Agreements governing the First Mortgage
Notes to provide for, among other things, modifications to the premium payable
to such Noteholders in connection with the prepayment of the First Mortgage
Notes pursuant to the Partnership Sale.
At December 31, 1998 and March 31, 1999, the Partnership was not in
compliance with a covenant under its bank credit facility (the 'Bank Facility').
Pursuant to a waiver letter dated as of February 20, 1999, the Partnership
received an unconditional waiver from the lenders under its credit facility
('the Lenders') with respect to the non-compliance as of December 31, 1998 and a
conditional waiver with respect to any future non-compliance with such covenant
through August 31, 1999 (the 'February Waiver'). There are certain conditions to
the waiver of future non-compliance under the February Waiver including, among
others, consummation of the Partnership Sale and the repayment of all amounts
outstanding under the Bank Facility, both by September 30, 1999. In addition,
the February Waiver prohibits the Partnership from making any future
distributions to Unitholders until all outstanding indebtedness under the Bank
Facility is repaid in full. Should the conditions not be met or the February
Waiver expire, and the Operating Partnership be in default of its Bank Facility,
the Operating Partnership would also be in default of its First Mortgage Notes
by virtue of cross-default provisions. In accordance with the February Waiver,
the Lenders have unconditionally waived non-compliance with the covenant at
March 31, 1999. As a result of projected covenant non-compliance, the conditions
of the February Waiver, and the cross-default provisions of the First Mortgage
Notes, the Partnership has classified all of the debt under the Bank Credit
Facility and the First Mortgage Notes
10
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
having a principal balance of $16.0 million and $125.0 million, respectively, at
March 31, 1999 as a current liability. Further, in accordance with the terms of
the February Waiver, no additional borrowings are available to the Operating
Partnership under the Bank Facility.
The Partnership's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a timely
basis, to comply with the terms and covenants of its debt agreements, to obtain
additional financing or refinancing as may be required, and ultimately to attain
successful operations. To successfully achieve these objectives, the Partnership
believes the Partnership Sale is the most viable alternative. If the Partnership
Sale is not consummated and the Lenders are unwilling to extend or modify the
February Waiver, (i) the Partnership could seek to otherwise refinance its
indebtedness, (ii) the Managing General Partner might consider buying the bank's
loans to the Partnership ($16.0 million principal amount outstanding at March
31, 1999), (iii) the Partnership could pursue other potential purchasers of the
Partnership, or (iv) the Partnership could be forced to seek protection under
Federal bankruptcy laws. In such latter event, the Managing General Partner may
be required to honor its guarantee of the Partnership's debt under the Bank
Facility and the First Mortgage Notes.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
Revenues decreased $0.9 million, or 2.0%, to $45.2 million in the three
months ended March 31, 1999 as compared to $46.1 million for the three months
ended March 31, 1998 with propane revenues decreasing $1.4 million, or 3.2% to
$42.6 million for the three months ended March 31, 1999 compared with $44.0
million in 1998 and revenues from appliance and other product lines increasing
$0.5 million. The $1.4 million decrease in propane revenues is a result of
decreased average selling prices ($5.3 million) due to lower product costs
partially offset by increased volumes ($3.9 million). Propane retail gallons
sold increased 4.2 million gallons, or 8.7%, to 52.6 million gallons in the
first quarter of 1999, compared to 48.4 million gallons in the first quarter of
1998. This increase in gallons sold is primarily attributable to an increase in
residential customers sales due to the fact that the three months ended March
31, 1999 were 6.0% colder than the same period in 1998 according to Degree Day
data published by the National Climatic Data Center as applied to the geographic
regions of the Partnership's operations.
Gross profit increased $1.5 million, or 11.2%, to $14.9 million in the
three months ended March 31, 1999 as compared to $13.4 million in the comparable
three months of 1998. The gross profit increase is attributable to the effect of
higher propane sales volumes in the 1999 period ($2.0 million) and an increase
in other gross profit from other product lines ($0.3 million) partially offset
by a 3.5% decrease in the average margin per gallon (the spread between the
sales price and the direct product cost) ($0.8 million). The increase in gross
profit as a percentage of sales, from 29.1%, to 32.9%, is primarily the result
of the average dollar margin per gallon decreasing 3.5% from period to period
while the average sales price per gallon decreased $.10 per gallon or 11.1%, due
to lower propane costs.
Selling, general and administrative expenses increased $2.0 million, or
30.8%, to $8.5 million in the three months ended March 31, 1999 from $6.5
million in 1998. The increase is attributable to legal and professional fees
associated with the Partnership Sale.
Interest expense decreased $0.1 million, or 3.0%, to $3.2 million in the
three months ended March 31, 1999 as compared to $3.3 million in the comparable
three months of 1998 due to lower average borrowings and lower average interest
rates in the 1999 period.
Interest income from Triarc decreased $0.4 million, or 28.6%, to $1.0
million in the three months ended March 31, 1999 as compared to $1.4 million in
the comparable three months of 1998 due to $10.0 million principal repayments on
the Triarc Note received in the third quarter of 1998.
11
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Other income, net decreased $0.4 million to $0.2 million in the three
months ended March 31, 1999 as compared to $0.6 million during the same period
in 1998 due primarily to lower gains on the sales of properties in the 1999
first quarter.
The provision for income taxes, which relates primarily to the pre-tax
income of NSSI, was relatively unchanged.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's cash and cash equivalents (collectively 'Cash') increased
$5.1 million during the three-month period ended March 31, 1999. This increase
reflected cash provided by operating activities of $7.3 million partially offset
by cash used in investing activities of $1.5 million and cash used in financing
activities of $0.7 million.
Cash flows provided by operating activities of $7.3 million in the 1999
period consisted of net income of $4.4 million and net non-cash charges of $3.3
million, principally depreciation and amortization, partially offset by $0.4
million of cash used for an increase in working capital. The change in working
capital is primarily made up of seasonal increases in receivables of $2.4
million and decreases in inventories of $1.6 million.
Cash used in investing activities of $1.5 million during the three month
period ended March 31, 1999 included capital expenditures of $1.7 million
partially offset by proceeds from the sales of properties of $0.2. Of the
capital expenditure amount for 1999, $0.3 million was for recurring maintenance
and $1.4 million was to support growth of operations. The Partnership has
forecasted maintenance capital expenditures and growth capital expenditures for
the remainder of 1999 of approximately $1.5 million and $1.6 million,
respectively, subject to the availability of cash and other financing sources.
The Partnership has outstanding commitments amounting to $0.7 million for such
capital expenditures as of March 31, 1999 which consists of $0.2 million for
maintenance capital expenditures and $0.5 for growth capital expenditures. The
Partnership made one insignificant propane distributor acquisition during the
first quarter of 1999 and since it no longer has an acquisition credit facility
does not anticipate making any significant business acquisitions during the
remainder of 1999.
Cash used in financing activities during the three-month period ending
March 31, 1999 reflects debt repayments of $0.7 million.
The Bank Facility provided for an acquisition facility (the 'Acquisition
Facility') and a working capital facility (the 'Working Capital Facility'). As
of March 31, 1999 the Partnership had $13.0 million and $3.0 million of
outstanding borrowings under the Acquisition Facility and Working Capital
Facility. As disclosed above, all amounts outstanding under the Bank Facility
are classified as current liabilities in accordance with terms of the February
Waiver and no additional borrowings under the Bank Facility are available to the
Partnership without the consent of each Lender. The Working Capital Facility, as
amended, is due in full in July 1999. The original repayment terms of the
Acquisition Facility, as amended, were approximately $1.1 million per quarter
beginning in the third quarter of 1999. The original repayment terms of the
First Mortgage Notes required equal annual installments of approximately $15.6
million commencing 2003 through 2010.
The Partnership did not declare a distribution with respect to the fourth
quarter of 1998 (which would have been paid in the first quarter of 1999) since
it was in violation of certain of its debt covenants under the Bank Facility as
previously discussed and as a result, was prohibited from making any such
distribution. The February Waiver prohibits any further distributions to all
Unitholders until all outstanding indebtedness under the Bank Facility is repaid
in full. Additionally, under the terms of the Purchase Agreement, the
Partnership is prohibited from paying any further distributions to Unitholders
without the prior written consent of the Purchaser General Partner. Accordingly,
no distribution was declared with respect to the first quarter of 1999. Under
the terms of the Partnership agreement, each
12
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Common Unit has an arrearage of $0.2625, $0.525 and $0.525 per Common Unit
related to the third and fourth quarters of 1998 and the first quarter of 1999,
respectively, for an aggregate of $8,796,000. Cash distributions on the
Partnership's Common and Subordinated Units and the General Partners' Interest
are not guaranteed, will depend on future Partnership operating performance and
will be affected by among other things, the funding of reserves, operating and
capital expenditures and requirements under the Partnership's debt agreements
and the Purchase Agreement. Accordingly, there can be no assurance that the
Partnership will be able to pay any such future distributions.
CONTINGENCIES
The Partnership continues to have an environmental contingency of the same
nature and general magnitude as described in Note 17 to the consolidated
financial statements in the Form 10-K. The costs of remediation and third party
claims, if any, associated with this environmental contingency may have a
material adverse effect on the Partnership's financial position, results of
operations or its ability to make distributions to the holders of the Common
Units and the Subordinated Units.
There are a number of lawsuits pending or threatened against the
Partnership. In general, these lawsuits have arisen in the ordinary course of
the Partnership's business and involve claims for actual damages, and in some
cases punitive damages, arising from the alleged negligence of the Partnership
or as a result of product defects, business disputes with competitors or similar
matters. Of the pending or threatened matters, a number involve property damage,
and several involve serious personal injuries or deaths. In certain cases, the
claims made are for relatively large amounts. Although any litigation is
inherently uncertain, based on past experience, the information currently
available to it and the availability of insurance coverage in certain matters,
the Partnership does not believe that the pending or threatened litigation of
which the Partnership is aware will have a material adverse effect on its
financial position or its results of operations. Notwithstanding the foregoing,
any one of the matters discussed above or all of them taken together may
adversely affect the Partnership's financial position, results of operations or
its ability to make distributions.
YEAR 2000
The Partnership has undertaken a study of its internal functional
application systems to determine their compliance with Year 2000 issues and, to
the extent of noncompliance, the required remediation. The Partnership's study
consisted of an eight-step methodology to: (1) obtain an awareness of the
issues; (2) perform an inventory of its software and hardware systems; (3)
identify its systems and computer programs with year 2000 exposure; (4) assess
the impact on its operations by each mission critical application; (5) consider
solution alternatives; (6) initiate remediation; (7) perform validation and
confirmation testing; and (8) implement. The Partnership has completed steps one
through six and expects to complete steps seven and eight by August, 1999. Such
study addressed both information technology ('IT') and non-IT systems, including
embedded technology such as micro controllers in telephone systems and the
Partnership's application programs and communication devices associated with its
financial reporting systems in place at each of its retail locations and its
corporate headquarters. As a result of such study and subsequent remediation,
the Partnership has no reason to believe that any of its mission critical
systems are not presently year 2000 compliant. Accordingly, the Partnership does
not currently anticipate that internal systems failures will result in any
material adverse effect to its operations. However, should the final testing and
implementation steps reveal any year 2000 compliance problems which cannot be
corrected prior to January 1, 2000 the most reasonably likely worst case
scenario is that the Partnership may experience delays in its posting of sales
and cash receipts in its general ledger although the Partnership does not
believe these delays would be material. In such case, the Partnership's
contingency plan would be to revert to a manual system in order to perform the
required functions without any significant disruption of business. As of March
31, 1999, the expenses
13
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
incurred by the Partnership in order to become year 2000 compliant, including
software and hardware costs, have been approximately $0.1 million and the
current estimated cost to complete such remediation in 1999 is expected to be
approximately $0.1 million. Such costs incurred through December 31, 1998 are
being expensed as incurred except for the direct purchase costs of software and
hardware, which are being capitalized. The software-related costs incurred on or
after January 1, 1999 are being capitalized in accordance with the provisions of
Statement of Position ('SOP') 98-1.
An assessment of the readiness of Year 2000 compliance of third-party
entities with which the Partnership has relationships, such as its suppliers,
banking institutions, customers, payroll processors and others ('Third Party
Entities') is ongoing. The Partnership has inquired, or is in the process of
inquiring, of the significant aforementioned Third Party Entities as to their
readiness with respect to year 2000 compliance and to date has received
indications that many of them are in the process of remediation and/or will be
year 2000 compliant. The Partnership is, however, subject to certain risks with
respect to these Third Party Entities' potential year 2000 non-compliance. The
Partnership believes that these risks are primarily associated with its banks
and propane suppliers. At present, the Partnership cannot determine the impact
on its results of operations in the event of year 2000 non-compliance by these
Third Party Entities. In the most reasonably likely worst-case scenario, such
year 2000 non-compliance might result in a disruption of business and loss of
revenues, including the effects of any lost customers. The Partnership will
continue to monitor these Third Party Entities to determine the impact on the
business of the Partnership and the actions the Partnership must take, if any,
in the event of non-compliance by any of these Third Party Entities. The
Partnership is in the process of collecting additional information from Third
Party Entities which disclosed that remediation is required and has begun
detailed evaluations of these Third Party Entities, as well as those that could
not satisfactorily respond, in order to develop its contingency plans in
conjunction therewith. The Partnership believes there are multiple vendors of
the goods and services it receives from its suppliers and thus the risk of
non-compliance with year 2000 by any of its suppliers is mitigated by this
factor. In 1998, no single supplier provided over 11% of the Partnership's
propane needs with the Partnership purchasing approximately 64% of its propane
from 10 suppliers with the balance purchased from over 40 other suppliers. With
respect to its customer base, the Partnership believes the majority of its
residential customers do not rely upon any systems that are at risk of year 2000
non-compliance and, in addition, no single customer accounts for more than 10%
of the Partnership's revenues, thus mitigating the adverse risk to the
Partnership's business if some customers are not year 2000 compliant.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the 'FASB') issued
Statement of Financial Accounting Standards No. 133 ('SFAS 133') 'Accounting for
Derivative Instruments and Hedging Activities'. SFAS 133 provides a
comprehensive standard for the recognition and measurement of derivatives and
hedging activities. The standard requires all derivatives to be recorded on the
balance sheet at fair value and establishes special accounting for three types
of hedges. The accounting treatment for each of these three types of hedges is
unique but results in including the offsetting changes in fair values or cash
flows of both the hedge and the hedged item in results of operations in the same
period. Changes in fair value of derivatives that do not meet the criteria of
one of the aforementioned categories of hedges are included in results of
operations. SFAS 133 is effective for the Partnership's fiscal year beginning
January 1, 2000. The provisions of SFAS 133 are complex and the Partnership is
only beginning its evaluation of the implementation requirements of SFAS 133
and, accordingly, is unable to determine at this time the impact it will have on
the Partnership's financial position and results of operations.
14
NATIONAL PROPANE PARTNERS, L.P. , AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
COMMODITY PRICE RISK
During the first quarter of 1999, the Partnership was party to simultaneous
put and call contracts for propane ('Propane Contracts') with three third
parties which expired prior to March 31, 1999. Such contracts required monthly
settlements with counterparties through cash exchange of a net amount equal to
the difference between monthly index average price and the fixed contract price.
The contracts were entered into for purposes other than trading and were in
anticipation of market movements in order to protect the Partnership's gross
profit on its fixed price sales commitments.
INTEREST RATE RISK
The Partnership has interest rate risk exposure due to the variable
interest rate terms of its Bank Facility. The Bank Facility terms are such that
the interest rate fluctuates with changes in the prime rate of interest and/or
LIBOR. Assuming an instantaneous increase in interest rates of one percentage
point from their levels at March 31, 1999, the Partnership would incur
additional annual interest expense of approximately $0.2 million due to the
variable interest rate feature of the Bank Facility.
CREDIT RISK
The Partnership is subject to credit risk with the Propane Contracts to the
extent the counterparties do not perform. The Partnership evaluates the
financial condition of each counterparty with which it conducts business to
reduce exposure to credit risk of non-performance and only executes Propane
Contracts with third parties it believes to be well-capitalized. There were no
outstanding Propane Contracts at March 31, 1999.
15
PART II. OTHER INFORMATION
Certain statements in this Quarterly Report on Form 10-Q that are not
historical facts, including most importantly, statements relating to the
proposed transaction between National Propane Partners, L.P. (the 'Partnership')
and Columbia Propane Corporation (and affiliates thereof), information
concerning possible or assumed future results of operations of the Partnership
and statements preceded by, followed by, or that include the words 'may',
'believes', 'expects', 'anticipates' or the negation thereof, or similar
expressions constitute 'forward-looking statements' within the meaning of the
Private Securities Litigation Reform Act of 1995 (the 'Reform Act'). Such
forward-looking statements involve risks, uncertainties and other factors which
may cause actual results, performance or achievements of the Partnership to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. For those statements,
the Partnership claims the protection of the safe harbor for forward-looking
statements contained in the Reform Act. Many important factors could affect the
future results of the Partnership and could cause those results to differ
materially from those expressed in the forward-looking statements contained
herein. Such factors include, but are not limited to, the following: changes in
wholesale propane prices; regional weather conditions; the ability to attract
and retain customers; general economic conditions where the Partnership
operates; competition from other energy sources and within the propane industry;
success of operating initiatives; development and operating costs; advertising
and promotional efforts; the existence or absence of adverse publicity; change
in business strategy or development plans; quality of management; availability,
terms and deployment of capital; business ability and judgement of personnel;
availability of qualified personnel; labor and employee benefit costs; the
success of the Partnership in identifying systems and programs that are not yet
Year 2000 compliant; unexpected costs associated with Year 2000 compliance or
the business risk associated with Year 2000 non-compliance by customers and/or
suppliers; changes in, or failure to comply with, government regulations
(including accounting standards, environmental laws and taxation requirements);
the costs, uncertainties and other effects of legal and administrative
proceedings and other risks and uncertainties referred to in this Quarterly
Report on Form 10-Q and other current and periodic filings by the Partnership.
The Partnership will not undertake and specifically declines any obligation to
publicly release the result of any revisions to any forward-looking statements
to reflect events or circumstances after anticipated or unanticipated events. In
addition, it is the Partnership's policy generally not to make any specific
projections as to future earnings, and the Partnership does not endorse any
projections regarding future performance that may be made by third parties.
Cash distributions on the Partnership's common units are not guaranteed,
will depend on future Partnership operating performance and will be affected by
among other things, the funding of reserves, operating and capital expenditures
and requirements under the Partnership's debt agreements. Cash distributions on
the Common Units were suspended in January 1999 with respect to the fourth
quarter of 1998 and are currently prohibited under the terms of the
Partnership's debt agreements until all bank indebtedness is repaid in full.
Under the terms of the Purchase Agreement (as defined in Item 2 of this
Quarterly Report on Form 10-Q), the Partnership is prohibited from paying any
further distributions to holders of Common Units without prior written consent
of the Purchaser General Partner (as defined in Item 2 of this Quarterly Report
on Form 10-Q).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Under terms of the Partnership Agreement, the Partnership must distribute
100% of its available cash ('Available Cash') within 45 days of the end of each
fiscal quarter. Available Cash under the Partnership Agreement generally means,
with respect to any 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 discretion of the Managing 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 Unitholders and the General Partners in respect of any one or
more of the next four quarters (see Note 11 to the consolidated financial
statements contained in the Form 10-K for a more detailed discussion of
Available Cash).
16
On October 21, 1998 the Partnership declared a quarterly distribution for the
quarter ended September 30, 1998 of $0.2625 per Common Unit to Unitholders of
record on November 6, 1998 paid on November 13, 1998, with a proportionate
amount of the General Partnership Interest, or an aggregate of approximately
$1.8 million including approximately $0.1 million to the General Partners
related to the General Partners' Interest. This distribution represented a 50%
reduction from previous quarters. After a careful evaluation of the
Partnership's recent financial results, the Board of Directors of the Managing
General Partner concluded that a reduced distribution was necessary to maintain
financial flexibility in future quarters. With respect to the fourth quarter of
1998, the Partnership was in violation of certain of its debt covenants under
the Bank Facility as previously discussed and as such, was prohibited under its
debt agreement from making any distribution in respect of the fourth quarter of
1998. Furthermore, the February Waiver prohibits any further distributions to
Unitholders until all outstanding indebtedness under the Bank Facility has been
repaid in full. In addition, under the terms of the Purchase Agreement, prior to
the closing of the Partnership Sale, the Partnership must obtain the prior
written consent of the Purchaser General Partner before taking certain specified
actions including the payment of any distributions to any unitholders.
Accordingly, no distribution was declared with respect to the first quarter of
1999. Under terms of the partnership agreement, the Common Units have arrearages
of $0.2625, $0.525 and $0.525 per Common Unit related to the third and fourth
quarters of 1998 and the first quarter of 1999, respectively, for an aggregate
of approximately $8.8 million.
ITEM 5. OTHER INFORMATION
On April 9, 1999, the Purchaser, Purchaser Holdings, Purchaser General
Partner and Columbia Energy Group, the parent company of Purchaser Holdings,
commenced the tender offer (the 'Offer') for all outstanding National Common
Units, at a purchase price of $12.00 per National Common Unit, net to the seller
in cash without interest thereon. The Purchaser has advised the Partnership that
pursuant to the Offer, which expired on May 6, 1999, the Purchaser purchased
5,922,654 National Common Units (representing approximately 88.4% of the
National Common Units then outstanding).
The Company intends to file with the Securities and Exchange Commission an
Information Statement on Schedule 14C to furnish to the holders of National
Common Units in connection with the special meeting of the Unitholders to be
held in connection with the proposed merger (the 'Merger') of the Partnership
with and into the Purchaser and Purchaser Holdings, pursuant to the Purchase
Agreement. The Merger is the second step, the first being the Offer, in a
two-part transaction, the purpose of which is the acquisition by the Purchaser
of (i) all of the National Common Units and all of the subordinated units
representing subordinated general partner interests in the Partnership, (ii) all
of the unsubordinated general partner interests in the Partnership and all of
the incentive distribution rights representing general partner interests in the
Partnership and (iii) all of the unsubordinated general partner interests in the
Operating Partnership and substantially all of the limited partner interests in
the Operating Partnership. Pursuant to the Purchase Agreement, upon the
consummation of the Merger, (i) the Partnership will be merged with and into the
Purchaser, with the Purchaser continuing as the surviving limited partnership,
and (ii) each outstanding National Common Unit (other than National Common Units
owned by the Purchaser or any of its affiliates) will be converted into the
right to receive $12.00 in cash, without interest thereon.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 -- Financial Data Schedule for the three month period ended March 31, 1999 submitted to the Securities and
Exchange Commission in electronic format.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the three months ended March 31,
1999.
17
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
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.
NATIONAL PROPANE PARTNERS, L.P.
BY: NATIONAL PROPANE CORPORATION
as Managing General Partner
By: /s/ R. BROOKS SHERMAN, JR.
...................................
R. BROOKS SHERMAN, JR.
VICE-PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
By: /s/ STEVEN T. SCHURING
...................................
STEVEN T. SCHURING
CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
Date: May 15, 1999
18