Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statement of operations
for the year ended September 30, 2001 gives effect to the acquisition of Meenan
Oil Co. L.P. ("Meenan") completed on August 12, 2001 by Star Gas Partners, L.P.
("Star Gas"). The information presented is derived from, should be read in
conjunction with, and is qualified in its entirety by reference to the
historical financial statements and related notes of Star Gas and Meenan.
The unaudited pro forma condensed consolidated statement of operations for the
twelve months ended September 30, 2001 was prepared as if the transaction had
occurred on October 1, 2000.
The pro forma adjustments are based upon currently available information and
certain estimates and assumptions described below, and therefore, the actual
adjustments may differ from the unaudited pro forma adjustments. However,
management believes that the assumptions provide a reasonable basis for
representing the significant effects of the transaction and that the unaudited
pro forma adjustments give appropriate effect to those assumptions and are
properly applied in the unaudited pro forma condensed consolidated financial
information. The unaudited pro forma condensed consolidated statement of
operations for the year ended September 30, 2001 is not necessarily indicative
of the results of operations of Star Gas if the transaction had actually
occurred on the dates indicated above. Likewise, the unaudited pro forma
condensed consolidated statement of operations is not necessarily indicative of
future financial results of combined operations of Star Gas.
(Continued)
STAR GAS PARTNERS, L.P. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Year Ended September 30, 2001
(in thousands, except per unit amounts)
Star Gas
Partners, L.P.
Star Gas Pro Forma Pro Forma
Partners, L.P. Meenan (a) Adjustments Combined
-------------- ------------- ----------- --------------
Sales $ 1,085,973 $ 237,003 - $ 1,322,976
Cost and expenses
Cost of sales 771,317 175,875 - 947,192
Operating expenses 235,830 41,960 ($1,530)(b) 276,260
Depreciation and amortization 44,396 3,084 2,895 (c) 50,375
TG &E customer acquisition expense 1,868 - - 1,868
Unit compensation expense 3,315 - - 3,315
------------- ------------ ----------- ------------
Operating income 29,247 16,084 (1,365) 43,966
Interest expense, net 33,727 7,376 (1,709)(d) 39,394
Amortization of debt issuance costs 737 - 100 (e) 837
------------- ------------ ----------- ------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (5,217) 8,708 244 3,735
Income tax expense 1,498 635 - 2,133
------------- ------------ ----------- ------------
Income (loss) before cumulative effect of change
in accounting principle (6,715) 8,073 244 1,602
Cumulative effect of change in accounting principle
for adoption of SFAS No. 133, net of income taxes 1,466 - - 1,466
------------- ------------ ----------- ------------
Net income (loss) ($5,249) $ 8,073 $ 244 $ 3,068
============= ============ =========== ============
General Partner's interest in net income (loss) (75) 110 3 38
------------- ------------ ----------- ------------
Limited Partners' interest in net income (loss) ($5,174) $ 7,963 $ 241 $ 3,030
============= ============ =========== ============
Net income (loss) per Limited Partner unit:
Basic ($0.23) $ 0.12
============= ============
Diluted ($0.23) $ 0.12
============= ============
Weighted average number of Limited Partner units outstanding
Basic 22,439 3,250 (f) 25,689
============= =========== ============
Diluted 22,439 3,250 (f) 25,992 (g)
============= =========== ============
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Star Gas Partners, L.P. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Information
Tables in (000s)
(a) Represents the results of operations of Meenan from October 1,
2000 to August 12, 2001, the date of acquisition by Star Gas. Subsequent to
August 12, 2001, the results of operations of Meenan were included in the
results of operations of Star Gas.
(b) Reflects the elimination of the salaries and related expenses for
two of the executives and principal owners of Meenan that will not be employed
by the Partnership as well as for other deal related expenses as follows:
October 1, 2000 to
August 12, 2001
------------------
Salaries and Related Costs $ 850
Other 680
Total -------
$1,530
=======
(c) Reflects the net adjustment for the period from October 1, 2000 to
August 12, 2001 to depreciation and amortization expense of $2.9 million
attributable to the acquisition of Meenan.
(d) Reflects the net reduction to interest expense of $1.7 million for
the period from October 1, 2000 to August 12, 2001. This amount reflects $4.40
million of additional interest expense on $61.0 million in principal amount of
the senior secured notes issued at an interest rate of 8.25%. These notes were
issued to fund the acquisition of Meenan. This amount also reflects a reduction
in interest expense of $2.0 million due to the repayment by the sellers of $25.0
million of debt with a weighted average interest rate of 9.34% and the
elimination from the pro forma financial statements of $4.0 million associated
with a prepayment penalty incurred at Meenan for the early termination for these
notes.
The following table summarizes the effect on interest expense of the
acquisition of Meenan and offerings from October 1, 2000 to August 12, 2001:
(Continued)
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Interest Interest
Amount Rate Expense
------ -------- --------
Debt Repaid
Meenan Notes ................................................. $25,000 9.34% $(2,021)
Elimination of Prepayment Penalty ............................ (4,045)
------
Total Reductions to Interest Expense ......................... $(6,066)
-------
New Debt Issued
8.25% Senior Secured Notes .......................... $61,000 8.25% $ 4,357
-------
Net Reduction to Interest Expense ................... $(1,709)
=======
(e) Reflects the net adjustment for the period from October 1, 2000 to
August 12, 2001 to amortization of debt issuance costs of $0.10 million
attributable to the debt offering and the acquisition of Meenan.
(f) Reflects the additional common units sold by Star Gas used to
complete the Meenan acquisition.
(g) Reflects the effect of units which were deemed anti-dilutive to
actual net income (loss) per unit of Star Gas as reported September 30, 2001 and
became dilutive to net income per unit as adjusted for the Meenan transaction.
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