-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T49uWg2PhnzYP5Fw/4wPyWcKD9nVKu7gk7XdhtnMHpkBViVxCPKmtO9Wpoq2DiDg d91M3x7uCQD91fpCfLXWUQ== 0000893220-98-000961.txt : 19980515 0000893220-98-000961.hdr.sgml : 19980515 ACCESSION NUMBER: 0000893220-98-000961 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGAS PARTNERS LP CENTRAL INDEX KEY: 0000932628 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 232787918 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13692 FILM NUMBER: 98619873 BUSINESS ADDRESS: STREET 1: 460 NORTH GULPH RD STREET 2: BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6103377000 MAIL ADDRESS: STREET 1: 460 NORTH GULPH ROAD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGAS FINANCE CORP CENTRAL INDEX KEY: 0000945792 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 232800532 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-92734-01 FILM NUMBER: 98619874 BUSINESS ADDRESS: STREET 1: 460 N GULPH RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6103371000 MAIL ADDRESS: STREET 1: 460 NORTH GULPH ROAD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 10-Q AMERIGAS PARTNERS,L.P./AMERIGAS FINANCE CORP. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 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 1-13692 Commission file number 33-92734-01 AMERIGAS PARTNERS, L.P. AMERIGAS FINANCE CORP. (Exact name of registrants as specified in their charters) Delaware 23-2787918 Delaware 23-2800532 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 460 North Gulph Road, King of Prussia, PA (Address of principal executive offices) 19406 (Zip Code) (610) 337-7000 (Registrants' telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- At April 30, 1998, the registrants had units and shares of common stock outstanding as follows: AmeriGas Partners, L.P. - 22,105,993 Common Units 19,782,146 Subordinated Units AmeriGas Finance Corp. - 100 shares 2 AMERIGAS PARTNERS, L.P. TABLE OF CONTENTS
PAGES ----- PART I FINANCIAL INFORMATION Item 1. Financial Statements AmeriGas Partners, L.P. ----------------------- Condensed Consolidated Balance Sheets as of March 31, 1998, September 30, 1997 and March 31, 1997 1 Condensed Consolidated Statements of Operations for the three, six and twelve months ended March 31, 1998 and 1997 2 Condensed Consolidated Statements of Cash Flows for the six and twelve months ended March 31, 1998 and 1997 3 Condensed Consolidated Statement of Partners' Capital for the six months ended March 31, 1998 4 Notes to Condensed Consolidated Financial Statements 5 - 7 AmeriGas Finance Corp. ---------------------- Balance Sheets as of March 31, 1998 and September 30, 1997 8 Note to Balance Sheets 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 17 PART II OTHER INFORMATION Item 5. Other Information 18 Item 6. Exhibits and Reports on Form 8-K 18 Signatures 19
3 AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Thousands of dollars)
March 31, September 30, March 31, 1998 1997 1997 -------------- -------------- -------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 16,019 $ 4,069 $ 38,967 Accounts receivable (less allowances for doubtful accounts of $9,619, $7,875, and $9,286, respectively) 100,466 78,341 130,111 Inventories 53,005 64,933 47,829 Prepaid expenses and other current assets 11,698 35,748 12,685 -------------- -------------- -------------- Total current assets 181,188 183,091 229,592 Property, plant and equipment (less accumulated depreciation and amortization of $184,349, $167,385, and $155,172, respectively) 445,853 444,677 448,934 Intangible assets (less accumulated amortization of $129,143, $116,557, and $104,458, respectively) 667,746 677,116 681,741 Other assets 13,356 13,777 13,646 -------------- -------------- -------------- Total assets $ 1,308,143 $ 1,318,661 $ 1,373,913 ============== ============== ============== LIABILITIES AND PARTNERS' CAPITAL - --------------------------------- Current liabilities: Current maturities of long-term debt $ 6,470 $ 6,420 $ 9,372 Bank loans - 28,000 - Accounts payable - trade 39,939 50,055 44,571 Accounts payable - related parties 6,875 4,533 2,650 Other current liabilities 82,992 91,861 83,870 -------------- -------------- -------------- Total current liabilities 136,276 180,869 140,463 Long-term debt 695,195 684,308 687,708 Other noncurrent liabilities 50,444 50,904 51,263 Commitments and contingencies Minority interest 5,283 5,043 5,970 Partners' capital 420,945 397,537 488,509 -------------- -------------- -------------- Total liabilities and partners' capital $ 1,308,143 $ 1,318,661 $ 1,373,913 ============== ============== ==============
The accompanying notes are an integral part of these financial statements. -1- 4 AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Thousands of dollars, except per unit)
Three Months Ended Six Months Ended Twelve Months Ended March 31, March 31, March 31, ------------------------------ ---------------------------- ----------------------------- 1998 1997 1998 1997 1998 1997 ------------- -------------- ------------- ------------- ------------- ------------- Revenues: Propane $ 287,654 $ 352,602 $ 565,177 $ 684,496 $ 874,881 $ 1,000,259 Other 18,528 18,547 43,928 46,769 80,784 83,667 ------------- -------------- ------------- ------------- ------------- ------------- 306,182 371,149 609,105 731,265 955,665 1,083,926 ------------- -------------- ------------- ------------- ------------- ------------- Costs and expenses: Cost of sales - propane 138,337 207,809 289,970 399,734 454,195 579,675 Cost of sales - other 8,461 8,004 19,988 20,787 35,614 38,532 Operating and administrative expenses 85,573 81,082 166,440 164,689 318,143 320,670 Depreciation and amortization 15,669 15,514 31,251 31,014 62,241 61,720 Miscellaneous income, net (1,243) (7,054) (1,966) (8,452) (4,830) (12,358) ------------- -------------- ------------- ------------- ------------- ------------- 246,797 305,355 505,683 607,772 865,363 988,239 ------------- -------------- ------------- ------------- ------------- ------------- Operating income 59,385 65,794 103,422 123,493 90,302 95,687 Interest expense (16,864) (16,901) (33,814) (33,607) (65,865) (65,191) ------------- -------------- ------------- ------------- ------------- ------------- Income before income taxes 42,521 48,893 69,608 89,886 24,437 30,496 Income tax (expense) benefit 213 137 (127) (471) 164 (111) Minority interest (458) (522) (754) (956) (353) (413) ------------- -------------- ------------- ------------- ------------- ------------- Net income $ 42,276 $ 48,508 $ 68,727 $ 88,459 $ 24,248 $ 29,972 ============= ============== ============= ============= ============= ============= General partner's interest in net income $ 423 $ 485 $ 687 $ 885 $ 242 $ 300 ============= ============== ============= ============= ============= ============= Limited partners' interest in net income $ 41,853 $ 48,023 $ 68,040 $ 87,574 $ 24,006 $ 29,672 ============= ============== ============= ============= ============= ============= Income per limited partner unit $ 1.00 $ 1.15 $ 1.62 $ 2.10 $ 0.57 $ 0.71 ============= ============== ============= ============= ============= ============= Average limited partner units outstanding (thousands) 41,888 41,780 41,884 41,755 41,863 41,743 ============= ============== ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. -2- 5 AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Thousands of dollars)
Six Months Ended Twelve Months Ended March 31, March 31, ------------------------------ ----------------------------- 1998 1997 1998 1997 ------------- ------------- ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 68,727 $ 88,459 $ 24,248 $ 29,972 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 31,251 31,014 62,241 61,720 Other, net 2,079 58 5,960 (2,913) ------------- ------------- ------------- ------------ 102,057 119,531 92,449 88,779 Net change in: Accounts receivable (24,892) (47,488) 24,107 1,279 Inventories and prepaid propane purchases 33,908 35,409 (4,611) 15,314 Accounts payable (8,281) (2,229) (951) 1,397 Other current assets and liabilities (6,820) (6,012) (4,067) (1,642) ------------- ------------- ------------- ------------ Net cash provided by operating activities 95,972 99,211 106,927 105,127 ------------- ------------- ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant and equipment (15,401) (11,728) (28,143) (19,141) Proceeds from disposals of assets 1,502 8,370 3,745 11,125 Acquisition of businesses, net of cash acquired (5,622) (2,748) (14,501) (22,115) ------------- ------------- ------------- ------------ Net cash used by investing activities (19,521) (6,106) (38,899) (30,131) ------------- ------------- ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Distributions (46,517) (46,368) (93,010) (92,736) Minority interest activity (528) (498) (1,054) (1,075) Decrease in bank loans (28,000) (15,000) (7,000) - Issuance of long-term debt 13,000 7,000 14,131 30,001 Repayment of long-term debt (2,456) (1,420) (4,043) (2,681) Capital contribution from General Partner - 26 - 26 ------------- ------------- ------------- ------------ Net cash used by financing activities (64,501) (56,260) (90,976) (66,465) ------------- ------------- ------------- ------------ Cash and cash equivalents increase (decrease) $ 11,950 $ 36,845 $ (22,948) $ 8,531 ============= ============= ============= ============ CASH AND CASH EQUIVALENTS: End of period $ 16,019 $ 38,967 $ 16,019 $ 38,967 Beginning of period 4,069 2,122 38,967 30,436 ------------- ------------- ------------- ------------ Increase (decrease) $ 11,950 $ 36,845 $ (22,948) $ 8,531 ============= ============= ============= ============
The accompanying notes are an integral part of these financial statements. -3- 6 AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (unaudited) (Thousands, except unit data)
Number of units Total ------------------------------ General partners' Common Subordinated Common Subordinated partner capital ------------- ------------- ------------- ------------- ------------- ------------- BALANCE SEPTEMBER 30, 1997 22,060,407 19,782,146 $ 208,253 $ 185,310 $ 3,974 $ 397,537 Issuance of Common Units in connection with acquisition 45,586 1,198 1,198 Net income 35,908 32,132 687 68,727 Distributions (24,303) (21,749) (465) (46,517) ------------- ------------- ------------- ------------- ------------- ------------- BALANCE MARCH 31, 1998 22,105,993 19,782,146 $ 221,056 $ 195,693 $ 4,196 $ 420,945 ============= ============= ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. -4- 7 AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) 1. BASIS OF PRESENTATION AmeriGas Partners, L.P. (AmeriGas Partners), through its subsidiary AmeriGas Propane, L.P. (the "Operating Partnership"), is the largest retail propane distributor in the United States. The Operating Partnership serves residential, commercial, industrial, motor fuel and agricultural customers from locations in 45 states, including Alaska and Hawaii. AmeriGas Partners and the Operating Partnership are Delaware limited partnerships. AmeriGas Propane, Inc. (the "General Partner") serves as the general partner of AmeriGas Partners and the Operating Partnership. The General Partner holds a 1% general partner interest in AmeriGas Partners and a 1.01% general partner interest in the Operating Partnership. In addition, the General Partner and its wholly owned subsidiary Petrolane Incorporated (Petrolane) own an effective 56.6% limited partner interest in the Operating Partnership. The condensed consolidated financial statements include the accounts of AmeriGas Partners, the Operating Partnership and their subsidiaries, collectively referred to herein as the Partnership. The General Partner's 1.01% interest in the Operating Partnership is accounted for in the condensed consolidated financial statements as a minority interest. Certain prior-period balances have been reclassified to conform with the current period presentation. The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. They include all adjustments which the Partnership considers necessary for a fair statement of the results for the interim periods presented. Such adjustments consisted only of normal recurring items unless otherwise disclosed. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's Report on Form 10-K for the year ended September 30, 1997. Weather significantly impacts demand for propane and profitability because many customers use propane for heating purposes. Due to the seasonal nature of the Partnership's propane business, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from these estimates. -5- 8 AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) (Thousands of dollars, except per unit) 2. DISTRIBUTIONS OF AVAILABLE CASH Distributions of 55 cents per limited partner unit (the "Minimum Quarterly Distribution" or "MQD") for the quarters ended September 30, 1997 and December 31, 1997 were paid on November 18, 1997 and February 18, 1998, respectively, on all Common and Subordinated units. On April 27, 1998, the Partnership declared the MQD on all Common and Subordinated units for the quarter ended March 31, 1998, payable May 18, 1998 to holders of record on May 8, 1998. 3. RELATED PARTY TRANSACTIONS In accordance with the Amended and Restated Agreement of Limited Partnership of AmeriGas Partners, the General Partner is entitled to reimbursement of all direct and indirect expenses incurred or payments it makes on behalf of the Partnership, and all other necessary or appropriate expenses allocable to the Partnership or otherwise reasonably incurred by the General Partner in connection with the Partnership's business. These costs totaled $48,037, $97,897 and $181,220 during the three, six and twelve months ended March 31, 1998, respectively, and $46,586, $93,887 and $172,018 during the three, six and twelve months ended March 31, 1997, respectively. In addition, UGI Corporation (UGI) provides certain financial and administrative services to the General Partner. UGI bills the General Partner for these direct and indirect corporate expenses, and the General Partner is reimbursed by the Partnership for these expenses. Such corporate expenses totaled $1,595, $3,047 and $6,329 during the three, six and twelve months ended March 31, 1998, respectively, and $1,794, $3,275 and $6,630 during the three, six and twelve months ended March 31, 1997, respectively. 4. UNUSUAL ITEMS In March 1997, the Partnership sold its 50% equity interest in Atlantic Energy, Inc. (Atlantic Energy), a refrigerated liquefied petroleum gas storage terminal in Chesapeake, Virginia. The resulting gain of $4,700 increased net income for the three, six and twelve months ended March 31, 1997 by $4,652 or $.11 per limited partner unit. 5. COMMITMENTS AND CONTINGENCIES The Partnership has succeeded to the lease guarantee obligations of Petrolane, a predecessor company of the Partnership, relating to Petrolane's divestiture of nonpropane operations prior to its 1989 acquisition by QFB Partners. These leases are currently estimated to aggregate approximately $60,000. The leases expire through 2010, and some of them are currently in default. The Partnership has succeeded to the indemnity agreement of Petrolane by which Texas Eastern Corporation (Texas Eastern), a prior -6- 9 AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) (Thousands of dollars, except per unit) owner of Petrolane, agreed to indemnify Petrolane against any liabilities arising out of the conduct of businesses that do not relate to, and are not a part of, the propane business, including lease guarantees. To date, Texas Eastern has directly satisfied defaulted lease obligations without the Partnership having to honor its guarantee. The Partnership believes the probability that it will be required to directly satisfy such lease obligations is remote. In addition, the Partnership has succeeded to Petrolane's agreement to indemnify Shell Petroleum N.V. (Shell) for various scheduled claims that were pending against Tropigas de Puerto Rico (Tropigas). This indemnification agreement had been entered into by Petrolane in conjunction with Petrolane's sale of the international operations of Tropigas to Shell in 1989. The Partnership also succeeded to Petrolane's right to seek indemnity on these claims first from International Controls Corp., which sold Tropigas to Petrolane, and then from Texas Eastern. To date, neither the Partnership nor Petrolane has paid any sums under this indemnity, but several claims by Shell, including claims related to certain antitrust actions aggregating at least $68,000, remain pending. The Partnership has identified environmental contamination at several of its properties. The Partnership's policy is to accrue environmental investigation and cleanup costs when it is probable that a liability exists and the amount or range of amounts can be reasonably estimated. However, in many circumstances future expenditures cannot be reasonably quantified because of a number of factors, including various costs associated with potential remedial alternatives, the unknown number of other potentially responsible parties involved and their ability to contribute to the costs of investigation and remediation, and changing environmental laws and regulations. The Partnership intends to pursue recovery of any incurred costs through all appropriate means, although such recovery cannot be assured. In addition to these environmental matters, there are various other pending claims and legal actions arising out of the normal conduct of the Partnership's business. The final results of environmental and other matters cannot be predicted with certainty. However, it is reasonably possible that some of them could be resolved unfavorably to the Partnership. Management believes, after consultation with counsel, that damages or settlements, if any, recovered by the plaintiffs in such claims or actions will not have a material adverse effect on the Partnership's financial position but could be material to operating results and cash flows in future periods depending on the nature and timing of future developments with respect to these matters and the amounts of future operating results and cash flows. -7- 10 AMERIGAS FINANCE CORP. (a wholly owned subsidiary of AmeriGas Partners, L.P.) BALANCE SHEETS (unaudited)
March 31, September 30, 1998 1997 ----------- ------------- ASSETS - ------ Cash $ 1,000 $ 1,000 ----------- ---------- Total assets $ 1,000 $ 1,000 =========== ========== STOCKHOLDER'S EQUITY - -------------------- Common stock, $.01 par value; 100 shares authorized, issued and outstanding $ 1 $ 1 Additional paid-in capital 999 999 ----------- ---------- Total stockholder's equity $ 1,000 $ 1,000 =========== ==========
The accompanying note is an integral part of these financial statements. -8- 11 AMERIGAS FINANCE CORP. (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.) NOTE TO BALANCE SHEETS AmeriGas Finance Corp. (AmeriGas Finance), a Delaware corporation, was formed on March 13, 1995 and is a wholly owned subsidiary of AmeriGas Partners, L.P. (AmeriGas Partners). AmeriGas Partners was formed on November 2, 1994 as a Delaware limited partnership. AmeriGas Partners was formed to acquire and operate the propane businesses and assets of AmeriGas Propane, Inc., a Delaware corporation (AmeriGas Propane), AmeriGas Propane-2, Inc. (AGP-2) and Petrolane Incorporated (Petrolane) through AmeriGas Propane, L.P. (the "Operating Partnership"). AmeriGas Partners holds a 98.99% limited partner interest in the Operating Partnership and AmeriGas Propane, Inc., a Pennsylvania corporation and the general partner of AmeriGas Partners (the "General Partner"), holds a 1.01% general partner interest. On April 19, 1995, (i) pursuant to a Merger and Contribution Agreement dated as of April 19, 1995, AmeriGas Propane and certain of its operating subsidiaries and AGP-2 merged into the Operating Partnership (the "Formation Merger"), and (ii) pursuant to a Conveyance and Contribution Agreement dated as of April 19, 1995, Petrolane conveyed substantially all of its assets and liabilities to the Operating Partnership (the "Petrolane Conveyance"). As a result of the Formation Merger and the Petrolane Conveyance, the General Partner and Petrolane received limited partner interests in the Operating Partnership and the Operating Partnership owns substantially all of the assets and assumed substantially all of the liabilities of AmeriGas Propane, AGP-2 and Petrolane. AmeriGas Propane conveyed its limited partner interest in the Operating Partnership to AmeriGas Partners in exchange for 2,922,235 Common Units and 13,350,146 Subordinated Units of AmeriGas Partners and Petrolane conveyed its limited partner interest in the Operating Partnership to AmeriGas Partners in exchange for 1,407,911 Common Units and 6,432,000 Subordinated Units of AmeriGas Partners. Both Common and Subordinated units represent limited partner interests in AmeriGas Partners. On April 19, 1995, AmeriGas Partners issued $100,000,000 face value of 10.125% Senior Notes due April 2007. AmeriGas Finance serves as a co-obligor of these notes. AmeriGas Partners owns all 100 shares of AmeriGas Finance Common Stock outstanding. -9- 12 AMERIGAS PARTNERS, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ANALYSIS OF RESULTS OF OPERATIONS The following analyses compare the Partnership's results of operations for the three months ended March 31, 1998 (1998 three-month period) with the three months ended March 31, 1997 (1997 three-month period); the six months ended March 31, 1998 (1998 six-month period) with the six months ended March 31, 1997 (1997 six-month period); and the twelve months ended March 31, 1998 (1998 twelve-month period) with the twelve months ended March 31, 1997 (1997 twelve-month period). AmeriGas Finance Corp. has nominal assets and does not conduct any operations. Accordingly, a discussion of the results of operations and financial condition and liquidity of AmeriGas Finance Corp. is not presented. 1998 THREE-MONTH PERIOD COMPARED WITH 1997 THREE-MONTH PERIOD
- ----------------------------------------------------------------------------------------------------------- Increase Three Months Ended March 31, 1998 1997 (Decrease) - ----------------------------------------------------------------------------------------------------------- (Millions of dollars) Gallons sold (millions): Retail 265.7 267.6 (1.9) (.7)% Wholesale 60.8 73.5 (12.7) (17.3)% -------- ------- ------ 326.5 341.1 (14.6) (4.3)% ======== ======= ====== Revenues: Retail propane $ 260.3 $ 308.5 $(48.2) (15.6)% Wholesale propane 27.3 44.1 (16.8) (38.1)% Other 18.6 18.5 .1 .5% -------- ------- ------ $ 306.2 $ 371.1 $(64.9) (17.5)% ======== ======= ====== Total margin $ 159.4 $ 155.3 $ 4.1 2.6% EBITDA (a) $ 75.1 $ 81.3 $ (6.2) (7.6)% Operating income $ 59.4 $ 65.8 $ (6.4) (9.7)% - -----------------------------------------------------------------------------------------------------------
(a) EBITDA (earnings before interest expense, income taxes, depreciation and amortization) should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not a measure of performance or financial condition under generally accepted accounting principles. Retail volumes of propane sold during the 1998 three-month period decreased slightly from volumes sold during the prior-year period. Based upon degree day information provided by the National Oceanic and Atmospheric Administration (NOAA) for 335 airports in the continental U.S., weather during the 1998 three-month period was 14% warmer than normal and 8% warmer -10- 13 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) than last year. Wholesale volumes of propane sold were lower in the 1998 three-month period due in part to the warmer weather. Total revenues from retail propane sales decreased $48.2 million during the 1998 three-month period reflecting a $46.0 million decrease as a result of lower average retail propane selling prices and a $2.2 million decrease as a result of lower volumes sold. The lower average retail propane selling prices reflect lower 1998 three-month period propane product costs. Wholesale propane revenues decreased $16.8 million due to lower average wholesale propane selling prices and the previously mentioned lower wholesale volumes sold. Total margin increased $4.1 million in the 1998 three-month period as declining propane product costs resulted in slightly higher retail unit margins. Although wholesale volumes were lower in the 1998 three-month period, such decrease did not have a material impact on the change in total margin because wholesale unit margins are typically very small. The decrease in EBITDA and operating income during the 1998 three-month period reflects a $5.8 million decrease in miscellaneous income and slightly higher operating expenses partially offset by higher total margin. Miscellaneous income in the 1997 three-month period includes $4.7 million of income from the sale of the Partnership's 50% interest in Atlantic Energy which owns and operates a liquefied petroleum gas storage terminal in Virginia, higher finance charge income and higher income from sales of fixed assets. Operating expenses increased $4.5 million reflecting, among other things, higher employee compensation and benefit expenses and increased equipment refurbishment and maintenance expenses due in large part to acquisitions and new business development activities. Interest expense was $16.9 million in both the 1998 three-month period and the 1997 three-month period. An increase in interest expense on higher amounts outstanding under the Partnership's Acquisition Facility was offset by a decrease in Revolving Credit Facility interest as a result of lower required borrowings to finance working capital. Working capital borrowings were higher in the prior-year period due to an increase in inventory and receivable balances attributable to higher propane product costs. -11- 14 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 1998 SIX-MONTH PERIOD COMPARED WITH 1997 SIX-MONTH PERIOD
- -------------------------------------------------------------------------------------------------------- Increase Six Months Ended March 31, 1998 1997 (Decrease) - -------------------------------------------------------------------------------------------------------- (Millions of dollars) Gallons sold (millions): Retail 514.3 519.3 (5.0) (1.0)% Wholesale 143.5 142.1 1.4 1.0% -------- -------- -------- 657.8 661.4 (3.6) (.5)% ======== ======== ======== Revenues: Retail propane $ 500.6 $ 594.4 $ (93.8) (15.8)% Wholesale propane 64.6 90.1 (25.5) (28.3)% Other 43.9 46.8 (2.9) (6.2)% -------- -------- -------- $ 609.1 $ 731.3 $ (122.2) (16.7)% ======== ======== ======== Total margin $ 299.1 $ 310.7 $ (11.6) (3.7)% EBITDA (a) $ 134.7 $ 154.5 $ (19.8) (12.8)% Operating income $ 103.4 $ 123.5 $ (20.1) (16.3)% - --------------------------------------------------------------------------------------------------------
(a) EBITDA (earnings before interest expense, income taxes, depreciation and amortization) should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not a measure of performance or financial condition under generally accepted accounting principles. Retail volumes of propane sold were slightly lower during the 1998 six-month period. Based upon degree day information provided by NOAA for 335 airports in the continental U.S., weather during the peak heating-season months November 1997 through March 1998 was 9% warmer than normal and 5% warmer than the prior year. In particular, the period comprising January and February 1998 was the warmest in the last 104 years. Total revenues from retail propane sales decreased $93.8 million during the 1998 six-month period reflecting an $88.1 million decrease as a result of lower average retail propane selling prices and a $5.7 million decrease as a result of the lower retail volumes sold. The decrease in wholesale propane revenues is due to lower 1998 six-month period selling prices. The lower average retail and wholesale selling prices resulted from significantly lower propane product costs. The decline in other revenues reflects in large part lower terminal and storage revenues and lower appliance sales revenues. -12- 15 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Total margin declined $11.6 million in the 1998 six-month period reflecting the impact of significantly lower average retail unit margins early in the 1998 six-month period partially offset by slightly higher unit margins during the later half of the period. Unit margins in the first half of the prior-year period benefitted from fuel supply and pricing strategies that were especially effective during the unique market conditions (characterized by a rapid increase in propane spot-market prices) that existed at the time. During the second half of the 1998 six-month period, declining propane product costs resulted in slightly higher retail unit margins. The decrease in operating income and EBITDA during the 1998 six-month period principally reflects the decrease in total propane margin, lower miscellaneous income and slightly higher operating expenses. Miscellaneous income in the prior-year six-month period includes $4.7 million from the sale of Atlantic Energy as well as higher customer finance charges and income from sales of fixed assets. Operating expenses increased $1.8 million reflecting higher employee compensation and benefit expenses and an increase in equipment refurbishment and maintenance expense due in large part to acquisitions and new business development activities partially offset by reduced workers' compensation expense reflecting the benefits of safety improvement programs initiated in 1996. Interest expense was $33.8 million during the 1998 six-month period compared with $33.6 million in the prior-year period reflecting increased interest expense on the Partnership's Acquisition Facility from higher amounts outstanding. -13- 16 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 1998 TWELVE-MONTH PERIOD COMPARED WITH 1997 TWELVE-MONTH PERIOD
- -------------------------------------------------------------------------------------------------------- Increase Twelve Months Ended March 31, 1998 1997 (Decrease) - -------------------------------------------------------------------------------------------------------- (Millions of dollars) Gallons sold (millions): Retail 802.4 815.1 (12.7) (1.6)% Wholesale 220.0 236.6 (16.6) (7.0)% --------- ---------- -------- 1,022.4 1,051.7 (29.3) (2.8)% ========= ========== ======== Revenues: Retail propane $ 774.4 $ 866.2 $ (91.8) (10.6)% Wholesale propane 100.5 134.0 (33.5) (25.0)% Other 80.8 83.7 (2.9) (3.5)% --------- ---------- -------- $ 955.7 $ 1,083.9 $ (128.2) (11.8)% ========= ========== ======== Total margin $ 465.9 $ 465.7 $ .2 -% EBITDA (a) $ 152.5 $ 157.4 $ (4.9) (3.1)% Operating income $ 90.3 $ 95.7 $ (5.4) (5.6)% - --------------------------------------------------------------------------------------------------------
(a) EBITDA (earnings before interest expense, income taxes, depreciation and amortization) should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not a measure of performance or financial condition under generally accepted accounting principles. Retail and wholesale volumes of propane sold decreased in the 1998 twelve-month period principally reflecting the effects of warmer temperatures. Based upon degree day information provided by NOAA for 335 airports in the continental U.S., weather during the peak heating season months of November 1997 through March 1998 averaged 9% warmer than normal and 5% warmer than the prior year. Total revenues from retail propane sales declined $91.8 million reflecting a $78.3 million decrease as a result of lower average retail propane selling prices and a $13.5 million decrease as a result of the lower retail volumes sold. The decrease in wholesale propane revenues reflects a $24.1 million decrease as a result of lower average selling prices and a $9.4 million decrease as a result of the lower volumes. The higher selling prices in the prior-year period were a result of significantly higher propane spot-market prices particularly during the three months ended December 31, 1996. Total margin in the 1998 twelve-month period was comparable with the prior-year period, -14- 17 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) notwithstanding the lower retail and wholesale volumes sold, reflecting slightly higher average retail unit margins. Total margin from other sales and services during the 1998 twelve-month period were virtually unchanged from the prior-year period. Although total margin during the 1998 twelve-month period was comparable with the prior-year period, EBITDA and operating income declined principally as a result of lower miscellaneous income. Miscellaneous income in the 1997 twelve-month period includes $4.7 million of income from the sale of the Partnership's 50% interest in Atlantic Energy. Miscellaneous income in the prior-year period also includes higher interest income and income from sales of fixed assets. Operating expenses were slightly lower during the 1998 twelve-month period principally as a result of lower required self-insurance reserves associated with general and automobile liability and workers' compensation costs. Interest expense was $65.9 million in the twelve months ended March 31, 1998 compared with $65.2 million in the prior-year period. The increase reflects higher interest expense on the Partnership's Revolving Credit and Acquisition facilities principally due to higher amounts outstanding. FINANCIAL CONDITION AND LIQUIDITY FINANCIAL CONDITION The Partnership's debt outstanding at March 31, 1998 totaled $701.7 million compared with $718.7 million at September 30, 1997. The decrease is principally a result of $28 million in net repayments under the Revolving Credit Facility partially offset by $13 million of borrowings under the Acquisition Facility. The Partnership's debt outstanding at March 31, 1997 totaled $697.1 million. At March 31, 1998 and 1997 there were no amounts outstanding under the Revolving Credit Facility. During the six months ended March 31, 1998, the Partnership declared and paid the MQD of 55 cents on all units for the quarters ended September 30, 1997 and December 31, 1997. The MQD for the quarter ended March 31, 1998 will be paid on May 18, 1998 to holders of record on May 8, 1998 of all Common and Subordinated units. The ability of the Partnership to continue to pay the full MQD on all of its units will depend upon a number of factors including the level of Partnership earnings, the cash needs of the Partnership's operations (including cash needed for maintenance and growth capital), and the Partnership's ability to finance externally such cash needs. The Partnership's EBITDA during the 1998 six-month period was $19.8 million lower than during the 1997 six-month period. Given the level of EBITDA to date, it is unlikely the Partnership will be able to fund solely from cash generated from operations during fiscal 1998 payment of the full distribution on its Subordinated Units for the remainder of calendar year 1998. While the Partnership expects to have sufficient borrowing capacity to fund all of its cash needs (including amounts for growth capital and the full -15- 18 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) distribution on the Subordinated Units) during this period, no assurance can be given that the General Partner will elect to utilize such borrowing capacity to fund the full distribution on the Subordinated Units. The Partnership expects to generate sufficient cash from operations during fiscal 1998 to continue to fund the full distribution on the Common Units. CASH FLOWS Cash and cash equivalents totaled $16.0 million at March 31, 1998 compared with $4.1 million at September 30, 1997 and $39.0 million at March 31, 1997. Due to the seasonal nature of the propane business, cash flows from operating activities are generally strongest during the second and third fiscal quarters of the Partnership when customers pay for propane purchased during the heating season and are typically at their lowest levels during the first and fourth fiscal quarters. Accordingly, cash flows from operations during the six months ended March 31, 1998 are not necessarily indicative of cash flows to be expected for a full year. OPERATING ACTIVITIES. Cash provided by operating activities was $96.0 million during the six months ended March 31, 1998 compared with $99.2 million in the comparable prior-year period. Cash flow from operations before changes in working capital was $102.1 million in the six months ended March 31, 1998 compared with $119.5 million during the six months ended March 31, 1997 reflecting a decrease in the Partnership's operating results. Changes in operating working capital during the six months ended March 31, 1998 required $6.1 million of operating cash flow principally from a $24.9 million seasonal increase in accounts receivable and a $16.8 million decrease in accounts payable and customer deposits partially offset by a $33.9 million decrease in inventories and prepaid propane purchases. During the six months ended March 31, 1997, changes in operating working capital required $20.3 million of operating cash flow. INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment totaled $15.4 million (including maintenance capital expenditures of $4.4 million) during the six months ended March 31, 1998 compared with $11.7 million (including maintenance capital expenditures of $3.9 million) in the prior-year period. Proceeds from disposals of assets totaled $1.5 million during the six months ended March 31, 1998 compared with $8.4 million during the six months ended March 31, 1997 which included proceeds from the sale of Atlantic Energy. During the six months ended March 31, 1998, the Partnership acquired several propane businesses for $5.6 million in cash. In conjunction with one acquisition, the Partnership issued 45,586 Common Units to the General Partner having a fair value of $1.2 million. During the six months ended March 31, 1997, the Partnership made acquisition-related cash payments of $2.7 million. FINANCING ACTIVITIES. During each of the six-month periods ended March 31, 1998 and 1997, AmeriGas Partners declared and paid the MQD on all units and the general partner interest for the quarters ended September 30, 1997 and December 31, 1997. In addition, during each of the six-month periods ended March 31, 1998 and 1997, the Operating Partnership distributed $.5 million to the General Partner in respect of the General Partner's 1.0101% interest in the Operating Partnership. -16- 19 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) During the six months ended March 31, 1998 and 1997, the Partnership had net repayments under its working capital facilities of $28 million and $15 million, respectively. The Partnership borrowed $13 million under its Acquisition Facility during the six months ended March 31, 1998 relating to acquisitions made prior to fiscal 1998. The Partnership borrowed $7 million under the Acquisition Facility during the 1997 six-month period. During the six months ended March 31, 1998, the Partnership made long-term debt repayments of $2.5 million (including the repayment of $1.2 million of debt assumed in conjunction with an acquisition) compared with $1.4 million in the prior-year period. YEAR 2000 MATTERS The Partnership, in conjunction with outside consultants, has conducted a detailed assessment of its critical computer-based systems in order to evaluate its Year 2000 "Y2K" exposure. The Y2K issue is a result of computer programs being written using two digits (rather than four) to identify and process a year in a date field. Computer programs having date sensitive software may recognize date fields using "00" as the year 1900 rather than the year 2000, resulting in miscalculations and possible computer system failures. The Partnership has also identified and is contacting major vendors on which it depends for products or services in order to assess their Y2K compliance readiness and, if necessary, to develop appropriate contingency plans. The Partnership has a number of information initiatives under way which include the installation of integrated financial system software that is Y2K compliant. In addition, the Partnership, in conjunction with consultants, has begun modifying its computer-based systems that are not currently Y2K compliant. The Partnership anticipates that its critical computer-based systems will be Y2K compliant by March 31, 1999. The Partnership does not expect the costs to modify its computer-based systems, which will be expensed as incurred, will have a material effect on the Partnership's results of operations or cash flows. However, in the event that the Partnership or its major suppliers experience disruptions due to Y2K issues, the Partnership's operations could be adversely affected. -17- 20 AMERIGAS PARTNERS, L.P. PART II OTHER INFORMATION ITEM 5. OTHER INFORMATION Martha B. Lindsay was elected Vice President-Finance and Chief Financial Officer of AmeriGas Propane, Inc., the General Partner of AmeriGas Partners, L.P., effective January 5, 1998. She was also elected Vice President-Finance and Chief Financial Officer of AmeriGas Finance Corp. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) List of Exhibits 27.1 Financial Data Schedule of AmeriGas Partners, L.P. 27.2 Financial Data Schedule of AmeriGas Finance Corp. (b) No Current Report on Form 8-K was filed by either AmeriGas Partners, L.P. or AmeriGas Finance Corp. during the fiscal quarter ended March 31, 1998. -18- 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. AmeriGas Partners, L.P. --------------------------------------- (Registrant) By: AmeriGas Propane, Inc., as General Partner Date: May 13, 1998 By: Martha B. Lindsay - ------------------- --------------------------------------- Martha B. Lindsay Vice President - Finance and Chief Financial Officer By: Richard R. Eynon --------------------------------------- Richard R. Eynon Controller and Chief Accounting Officer AmeriGas Finance Corp. --------------------------------------- (Registrant) Date: May 13, 1998 By: Martha B. Lindsay - ------------------- --------------------------------------- Martha B. Lindsay Vice President - Finance and Chief Financial Officer By: Richard R. Eynon --------------------------------------- Richard R. Eynon Controller -19- 22 AMERIGAS PARTNERS, L.P. EXHIBIT INDEX 27.1 Financial Data Schedule of AmeriGas Partners, L.P. 27.2 Financial Data Schedule of AmeriGas Finance Corp. EX-27.1 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet and Statement of Operations of AmeriGas Partners, L.P., and subsidiaries as of and for the six months ended March 31, 1998 and is qualified in its entirety by reference to such financial statements included in AmeriGas Partners' quarterly report on Form 10-Q for the quarter ended March 31, 1998. 0000932628 AMERIGAS PARTNERS, L.P. 1,000 6-MOS SEP-30-1997 OCT-01-1997 MAR-31-1998 16,019 0 110,085 9,619 53,005 181,188 630,202 184,349 1,308,143 136,276 695,195 0 0 0 420,945 1,308,143 609,105 609,105 309,958 309,958 0 0 33,814 69,608 127 68,727 0 0 0 68,727 1.62 1.62
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Balance Sheet of AmeriGas Finance Corp. as of March 31, 1998 and is qualified in its entirety by reference to such Balance Sheet included in AmeriGas Partners' quarterly report on Form 10-Q for the quarter ended March 31, 1998. 0000945792 AMERIGAS FINANCE CORP. 6-MOS SEP-30-1997 OCT-01-1997 MAR-31-1998 1,000 0 0 0 0 1,000 0 0 1,000 0 0 0 0 1 999 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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