WHIPPANY, N.J., Feb. 6, 2014 /PRNewswire/ -- Suburban Propane
Partners, L.P. (NYSE:SPH), a nationwide distributor of propane,
fuel oil and related products and services, as well as a marketer
of natural gas and electricity, today announced earnings for its
first quarter ended December 28,
2013.
Net income for the first quarter of fiscal 2014 was $58.7 million, or $0.97 per Common Unit, compared to net income of
$57.6 million, or $1.01 per Common Unit, in the prior year first
quarter. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the first quarter of fiscal 2014
amounted to $114.9 million, compared
to $112.8 million in the prior year
first quarter.
Net income and EBITDA for the first quarter of fiscal 2014 and
2013 included expenses of $2.5
million and $1.0 million,
respectively, related to the ongoing integration of Inergy Propane.
Excluding the effects of these charges, as well as the unrealized
(non-cash) mark-to-market adjustments on derivative instruments in
both quarters, Adjusted EBITDA (as defined and reconciled below)
amounted to $117.7 million for the
first quarter of fiscal 2014, compared to Adjusted EBITDA of
$117.5 million in the prior year
first quarter.
In announcing these results, President and Chief Executive
Officer Michael J. Dunn, Jr., said,
"The fiscal 2014 heating season got off to a slow start with warmer
than normal temperatures through November
2013, followed by colder than normal temperatures during the
month of December 2013. In light of the inconsistent weather,
a rising propane price environment and the onset of supply and
logistics issues facing the propane industry, we are very pleased
with our results for the first quarter. Our volumes responded
when colder weather arrived and our people continued to focus on
the areas within our control -- driving efficiencies, managing
costs and providing superior service to our customer base."
Retail propane gallons sold in the first quarter of fiscal 2014
increased 4.0 million gallons, or 2.6%, to 157.9 million gallons
from 153.9 million gallons in the prior year first quarter. Sales
of fuel oil and other refined fuels decreased 1.9 million gallons,
to 14.0 million gallons compared to 15.9 million gallons in the
prior year first quarter. According to the National Oceanic
and Atmospheric Administration, average temperatures (as measured
by heating degree days) across all of the Partnership's service
territories for the first quarter of fiscal 2014 were reported as
normal and 9% colder than the prior year quarter, as a result of
colder than normal average temperatures during the month of
December 2013. Average temperatures through the first two
months of the fiscal 2014 first quarter were 8% warmer than normal
and 5% warmer than the comparable prior year period.
Revenues of $526.1 million
increased $35.4 million, or 7.2%,
compared to the prior year first quarter, primarily due to higher
retail selling prices associated with higher wholesale product
costs, and to a lesser extent, an increase in retail propane
volumes sold. Average posted propane prices increased rapidly
throughout the first quarter of fiscal 2014, resulting in an
increase of 35.0% in average posted prices compared to the prior
year first quarter (basis Mont Belvieu,
Texas). Average posted propane prices at other key
supply points increased at an even greater rate. Average
posted prices for fuel oil were 1.9% lower than the prior year
first quarter. Cost of products sold for the first quarter of
fiscal 2014 of $280.5 million
increased $35.4 million, or 14.5%,
compared to $245.1 million in the
prior year first quarter, primarily due to higher propane product
costs stemming from the rise in commodity prices, and to a lesser
extent, higher propane volumes sold. Included in cost of products
sold for the first quarters of fiscal 2014 and 2013 were unrealized
(non-cash) losses attributable to the mark-to-market adjustment for
derivative instruments used in risk management activities of
$0.3 million and $3.6 million, respectively; these unrealized
losses are excluded from Adjusted EBITDA for both periods in the
table below.
Combined operating and general and administrative expenses of
$130.6 million for the first quarter
of fiscal 2014 were $2.1 million, or
1.6%, lower than the prior year first quarter, primarily due to
lower professional services and general insurance costs, as well as
synergies realized during the period associated with the
integration of Inergy Propane. Depreciation and amortization
expense of $34.8 million increased
$4.3 million, or 14.1%, primarily due
to the acceleration of depreciation expense on assets taken out of
service as a result of integration activities. Net interest expense
of $21.2 million decreased
$3.3 million, or 13.6%, due to the
reduction of $157.3 million in
long-term borrowings during the fourth quarter of fiscal 2013.
Addressing the Inergy Propane integration, Mr. Dunn said, "Our
integration efforts are right on schedule. As planned, we are
taking a break from our integration activities during the heating
season to focus all of our efforts on our customer base. We will
resume our integration activities late in the second quarter and
expect to meet our synergy goals for the year by the end of this
fiscal year."
Mr. Dunn concluded, "Despite the increased size of our business
and significantly higher working capital requirements as a result
of higher wholesale product costs, we once again funded all working
capital needs from cash on hand without the need to borrow under
our revolving credit facility, and ended the quarter with
$55.3 million of cash."
As previously announced on January 23,
2014, the Partnership's Board of Supervisors has declared a
quarterly distribution of $0.8750 per
Common Unit for the three months ended December 28, 2013. On an annualized basis, this
distribution rate equates to $3.50
per Common Unit. The $0.8750 per
Common Unit distribution is payable on February 11, 2014 to Common Unitholders of record
as of February 4, 2014.
Suburban Propane Partners, L.P. is a publicly traded master
limited partnership listed on the New York Stock Exchange.
Headquartered in Whippany, New
Jersey, Suburban has been in the customer service business
since 1928. The Partnership serves the energy needs of more than
1.2 million residential, commercial, industrial and agricultural
customers through more than 750 locations in 41 states.
This press release contains certain forward-looking
statements relating to future business expectations and financial
condition and results of operations of the Partnership, based on
management's current good faith expectations and beliefs concerning
future developments. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those discussed or implied in
such forward-looking statements, including the following:
- The impact of weather conditions on the demand for propane,
fuel oil and other refined fuels, natural gas and
electricity;
- Volatility in the unit cost of propane, fuel oil and other
refined fuels and natural gas, the impact of the
Partnership's hedging and risk management activities, and the
adverse impact of price increases on volumes as a result of
customer conservation;
- The cost savings expected from the Partnership's acquisition
of the retail operations formerly owned by Inergy, L.P. (the
"Inergy Propane Acquisition") may not be fully realized or realized
within the expected timeframe;
- The revenue gained by the Partnership from the Inergy
Propane Acquisition may be lower than expected;
- The costs of integrating the business acquired in the Inergy
Propane Acquisition into the Partnership's existing operations may
be greater than expected;
- The ability of the Partnership to compete with other
suppliers of propane, fuel oil and other energy sources;
- The impact on the price and supply of propane, fuel oil and
other refined fuels from the political, military or economic
instability of the oil producing nations, global terrorism and
other general economic conditions;
- The ability of the Partnership to acquire sufficient volumes
of, and the costs to the Partnership of acquiring, transporting and
storing, propane, fuel oil and other refined fuels;
- The ability of the Partnership to acquire and maintain
reliable transportation for its propane, fuel oil and other refined
fuels;
- The ability of the Partnership to retain customers or
acquire new customers;
- The impact of customer conservation, energy efficiency and
technology advances on the demand for propane, fuel oil and other
refined fuels, natural gas and electricity;
- The ability of management to continue to control
expenses;
- The impact of changes in applicable statutes and government
regulations, or their interpretations, including those relating to
the environment and global warming, derivative instruments and
other regulatory developments on the Partnership's
business;
- The impact of changes in tax laws that could adversely
affect the tax treatment of the Partnership for income tax
purposes;
- The impact of legal proceedings on the Partnership's
business;
- The impact of operating hazards that could adversely affect
the Partnership's operating results to the extent not covered by
insurance;
- The Partnership's ability to make strategic acquisitions and
successfully integrate them, including, but not limited to, Inergy
Propane;
- The impact of current conditions in the global capital and
credit markets, and general economic pressures;
- The operating, legal and regulatory risks the Partnership
may face; and
- Other risks referenced from time to time in filings with the
Securities and Exchange Commission ("SEC") and those factors listed
or incorporated by reference into the Partnership's Annual Report
under "Risk Factors."
Some of these risks and uncertainties are discussed in more
detail in the Partnership's Annual Report on Form 10-K for its
fiscal year ended September 28, 2013
and other periodic reports filed with the SEC. Readers are
cautioned not to place undue reliance on forward-looking
statements, which reflect management's view only as of the date
made. The Partnership undertakes no obligation to update any
forward-looking statement, except as otherwise required by
law.
Suburban Propane
Partners, L.P. and Subsidiaries
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Consolidated
Statements of Operations
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For the Three
Months Ended December 28, 2013 and December 29, 2012
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(in thousands,
except per unit amounts)
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(unaudited)
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Three Months
Ended
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December 28,
2013
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December 29,
2012
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Revenues
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Propane
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$
438,594
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$
392,785
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Fuel oil and
refined fuels
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54,268
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62,146
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Natural gas
and electricity
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18,316
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18,389
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All
other
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14,878
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17,383
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526,056
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490,703
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Costs and
expenses
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Cost of
products sold
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280,526
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245,100
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Operating
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113,313
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114,936
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General and
administrative
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17,335
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17,832
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Depreciation
and amortization
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34,827
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30,527
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446,001
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408,395
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Operating
income
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80,055
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82,308
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Interest expense,
net
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21,207
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24,556
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Income before
provision for income taxes
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58,848
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57,752
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Provision for income
taxes
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177
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132
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Net income
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$
58,671
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$
57,620
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Net income per Common
Unit - basic
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$
0.97
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$
1.01
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Weighted average
number of Common Units outstanding - basic
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60,389
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57,170
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Net income per Common
Unit - diluted
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$
0.97
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$
1.00
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Weighted average
number of Common Units outstanding - diluted
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60,620
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57,347
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Supplemental
Information:
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EBITDA (a)
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$
114,882
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$
112,835
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Adjusted EBITDA
(a)
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$
117,708
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$
117,473
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Retail gallons
sold:
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Propane
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157,858
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153,933
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Refined
fuels
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13,997
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15,885
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Capital
expenditures:
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Maintenance
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$
3,424
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$
1,434
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Growth
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$
5,900
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$
5,327
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(more)
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(a)
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EBITDA represents net
income before deducting interest expense, income taxes,
depreciation and amortization. Adjusted EBITDA
represents EBITDA excluding the unrealized net gain or loss on
mark-to-market activity for derivative instruments and certain
other items, as applicable, as provided in the table below.
Our management uses EBITDA and Adjusted EBITDA as measures of
liquidity and we are including them because we believe that they
provide our investors and industry analysts with additional
information to evaluate our ability to meet our debt service
obligations and to pay our quarterly distributions to holders of
our Common Units.
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EBITDA and Adjusted
EBITDA are not recognized terms under accounting principles
generally accepted in the United States of America ("US GAAP") and
should not be considered as an alternative to net income or net
cash provided by operating activities determined in accordance with
US GAAP. Because EBITDA and Adjusted EBITDA as determined by
us excludes some, but not all, items that affect net income, they
may not be comparable to EBITDA and Adjusted EBITDA or similarly
titled measures used by other companies.
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The following
table sets forth (i) our calculations of EBITDA and Adjusted EBITDA
and (ii) a reconciliation of Adjusted EBITDA, as so calculated, to
our net cash provided by operating
activities:
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Three Months
Ended
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December 28,
2013
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December 29,
2012
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Net income
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$
58,671
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$
57,620
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Add:
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Provision for
income taxes
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177
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132
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Interest
expense, net
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21,207
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24,556
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Depreciation
and amortization
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34,827
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30,527
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EBITDA
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114,882
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112,835
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Unrealized
(non-cash) losses on changes in fair value of
derivatives
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290
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3,614
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Integration-related costs
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2,536
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1,024
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Adjusted
EBITDA
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117,708
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117,473
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Add /
(subtract):
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Provision for
income taxes
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(177)
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(132)
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Interest
expense, net
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(21,207)
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(24,556)
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Unrealized
(non-cash) (losses) on changes in fair value of
derivatives
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(290)
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(3,614)
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Integration-related costs
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(2,536)
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(1,024)
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Gain on
disposal of property, plant and equipment, net
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(237)
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(2,267)
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Compensation
cost recognized under Restricted Unit Plans
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1,638
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1,240
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Changes in
working capital and other assets and liabilities
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(90,738)
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(25,583)
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Net cash provided by
operating activities
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$
4,161
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$
61,537
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The unaudited
financial information included in this document is intended only as
a summary provided for your convenience, and should be read in
conjunction with the complete consolidated financial statements of
the Partnership (including the Notes thereto, which set forth
important information) contained in its Quarterly Report on Form
10-Q to be filed by the Partnership with the United States
Securities and Exchange Commission ("SEC"). Such report, once
filed, will be available on the public EDGAR electronic filing
system maintained by the SEC.
|
SOURCE Suburban Propane Partners, L.P.