-----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, SRjig1QpCaJtKY0BBeZT9I0fC8h8g+f9t0/d4K9ZEyNcqt/T2QdDbdwEsky5oXVO xzYo6H3JIGnZQzkJPy/PZw== 0000893220-00-000662.txt : 20000516 0000893220-00-000662.hdr.sgml : 20000516 ACCESSION NUMBER: 0000893220-00-000662 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 632650 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: 632651 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 FORM 10-Q FOR AMERIGAS FOR MARCH 31,2000 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, 2000 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, 2000, the registrants had units and shares of common stock outstanding as follows: AmeriGas Partners, L.P. - 32,078,293 Common Units 9,891,072 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, 2000, September 30, 1999 and March 31, 1999 1 Condensed Consolidated Statements of Operations for the three, six and twelve months ended March 31, 2000 and 1999 2 Condensed Consolidated Statements of Cash Flows for the six and twelve months ended March 31, 2000 and 1999 3 Condensed Consolidated Statement of Partners' Capital for the six months ended March 31, 2000 4 Notes to Condensed Consolidated Financial Statements 5 - 7 AmeriGas Finance Corp. Balance Sheets as of March 31, 2000 and September 30, 1999 8 Note to Balance Sheets 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 17 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 18 Signatures 19
-i- 3 AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Thousands of dollars)
March 31, September 30, March 31, 2000 1999 1999 ---------- ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 4,285 $ 390 $ 16,453 Accounts receivable (less allowances for doubtful accounts of $7,243, $5,998, and $8,115, respectively) 123,380 66,937 93,963 Inventories 50,855 53,455 37,042 Prepaid expenses and other current assets 15,279 19,787 17,139 ---------- ---------- ---------- Total current assets 193,799 140,569 164,597 Property, plant and equipment (less accumulated depreciation and amortization of $257,524, $236,628, and $223,846, respectively) 430,845 435,545 438,241 Intangible assets (less accumulated amortization of $177,308, $165,676, and $153,535, respectively) 607,936 608,878 619,752 Other assets 11,791 11,469 11,712 ---------- ---------- ---------- Total assets $1,244,371 $1,196,461 $1,234,302 ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Current maturities of long-term debt $ 16,821 $ 17,394 $ 5,190 Bank loans 5,000 22,000 5,000 Accounts payable - trade 61,698 48,730 39,680 Accounts payable - related parties 3,603 2,151 2,283 Other current liabilities 74,293 97,632 90,766 ---------- ---------- ---------- Total current liabilities 161,415 187,907 142,919 Long-term debt 784,021 727,331 714,742 Other noncurrent liabilities 39,719 43,802 45,941 Commitments and contingencies Minority interest 3,602 3,380 4,321 Partners' capital 255,614 234,041 326,379 ---------- ---------- ---------- Total liabilities and partners' capital $1,244,371 $1,196,461 $1,234,302 ========== ========== ==========
See accompanying notes to consolidated financial statements. -1- 4 AMERIGAS PARTNERS, L.P. 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, --------------------------- --------------------------- --------------------------- 2000 1999 2000 1999 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Revenues: Propane $ 366,225 $ 284,276 $ 636,043 $ 496,421 $ 924,762 $ 765,871 Other 22,651 20,649 53,881 46,288 94,988 82,111 ----------- ----------- ----------- ----------- ----------- ----------- 388,876 304,925 689,924 542,709 1,019,750 847,982 ----------- ----------- ----------- ----------- ----------- ----------- Costs and expenses: Cost of sales - propane 205,957 120,450 350,650 213,884 490,829 334,627 Cost of sales - other 9,403 8,345 23,404 19,439 40,670 32,498 Operating and administrative expenses 92,032 88,740 181,536 172,330 338,841 326,110 Depreciation and amortization 16,475 16,444 32,746 32,022 65,602 63,996 Other income, net (2,236) (1,300) (3,377) (2,004) (6,765) (783) ----------- ----------- ----------- ----------- ----------- ----------- 321,631 232,679 584,959 435,671 929,177 756,448 ----------- ----------- ----------- ----------- ----------- ----------- Operating income 67,245 72,246 104,965 107,038 90,573 91,534 Interest expense (18,035) (16,409) (36,015) (33,073) (69,527) (65,448) ----------- ----------- ----------- ----------- ----------- ----------- Income before income taxes 49,210 55,837 68,950 73,965 21,046 26,086 Income tax (expense) benefit 323 145 5 (121) 68 3 Minority interest (526) (591) (749) (798) (319) (368) ----------- ----------- ----------- ----------- ----------- ----------- Net income $ 49,007 $ 55,391 $ 68,206 $ 73,046 $ 20,795 $ 25,721 =========== =========== =========== =========== =========== =========== General partner's interest in net income $ 490 $ 554 $ 682 $ 730 $ 208 $ 257 =========== =========== =========== =========== =========== =========== Limited partners' interest in net income $ 48,517 $ 54,837 $ 67,524 $ 72,316 $ 20,587 $ 25,464 =========== =========== =========== =========== =========== =========== Income per limited partner unit - basic and diluted $ 1.16 $ 1.31 $ 1.61 $ 1.73 $ 0.49 $ 0.61 =========== =========== =========== =========== =========== =========== Average limited partner units outstanding (thousands) 41,969 41,888 41,969 41,888 41,958 41,888 =========== =========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements. -2- 5 AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Thousands of dollars)
Six Months Ended Twelve Months Ended March 31, March 31, ----------------------- ----------------------- 2000 1999 2000 1999 --------- --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 68,206 $ 73,046 $ 20,795 $ 25,721 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,746 32,022 65,602 63,996 Other, net 1,037 3,673 (3,577) (1,231) --------- --------- --------- --------- 101,989 108,741 82,820 88,486 Net change in: Accounts receivable (58,710) (37,433) (32,739) 3,363 Inventories and prepaid propane purchases 5,987 13,164 (12,020) 16,030 Accounts payable 14,420 1,171 23,435 (4,735) Other current assets and liabilities (25,726) (20,017) (18,909) (572) --------- --------- --------- --------- Net cash provided by operating activities 37,960 65,626 42,587 102,572 --------- --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant and equipment (12,858) (15,838) (28,073) (32,014) Proceeds from disposals of assets 1,801 2,291 5,215 5,942 Acquisitions of businesses, net of cash acquired (14,833) (2,968) (15,763) (5,422) --------- --------- --------- --------- Net cash used by investing activities (25,890) (16,515) (38,621) (31,494) --------- --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions (46,633) (46,542) (93,221) (93,085) Minority interest activity (528) (528) (1,036) (1,039) Increase (decrease) in bank loans (17,000) (5,000) -- 5,000 Issuance of long-term debt 126,000 73,007 149,000 83,007 Repayment of long-term debt (70,014) (62,468) (70,893) (64,539) Capital contribution from General Partner -- -- 16 12 --------- --------- --------- --------- Net cash used by financing activities (8,175) (41,531) (16,134) (70,644) --------- --------- --------- --------- Cash and cash equivalents increase (decrease) $ 3,895 $ 7,580 $ (12,168) $ 434 ========= ========= ========= ========= CASH AND CASH EQUIVALENTS: End of period $ 4,285 $ 16,453 $ 4,285 $ 16,453 Beginning of period 390 8,873 16,453 16,019 --------- --------- --------- --------- Increase (decrease) $ 3,895 $ 7,580 $ (12,168) $ 434 ========= ========= ========= =========
See accompanying notes to consolidated financial statements. -3- 6 AMERIGAS PARTNERS, L.P. 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, 1999 32,078,293 9,891,072 $ 177,947 $ 53,756 $ 2,338 $234,041 Net income 51,610 15,914 682 68,206 Distributions (35,287) (10,880) (466) (46,633) ---------- --------- --------- -------- ------- -------- BALANCE MARCH 31, 2000 32,078,293 9,891,072 $ 194,270 $ 58,790 $ 2,554 $255,614 ========== ========= ========= ======== ======= ========
See accompanying notes to consolidated 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 The condensed consolidated financial statements include the accounts of AmeriGas Partners, L.P. ("AmeriGas Partners"), its subsidiary AmeriGas Propane, L.P. (the "Operating Partnership"), and their corporate subsidiaries, together referred to in this report as "the Partnership" or "we." We eliminate all significant intercompany accounts and transactions when we consolidate. We account for AmeriGas Propane, Inc.'s (the "General Partner's") 1.01% interest in the Operating Partnership as a minority interest in the condensed consolidated financial statements. 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 we consider 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 related notes included in our Annual Report on Form 10-K for the year ended September 30, 1999. 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 Partnership's comprehensive income as determined under Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," was the same as its net income for all periods presented. 2. 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 $52,677, $104,246 and $192,405 during the three, six and twelve months ended March 31, 2000, respectively, and $52,337, $100,953 and $191,020 during the three, six and twelve months ended March 31, 1999, respectively. In addition, UGI Corporation ("UGI") provides certain financial and administrative services to the General Partner. UGI -5- 8 AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) (Thousands of dollars, except per unit) 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 $1,474, $1,907 and $4,636 during the three, six and twelve months ended March 31, 2000, respectively, and $1,419, $2,767 and $5,655 during the three, six and twelve months ended March 31, 1999, respectively. 3. COMMITMENTS AND CONTINGENCIES The Partnership has succeeded to certain lease guarantee obligations of Petrolane Incorporated ("Petrolane"), a predecessor company of the Partnership, relating to Petrolane's divestiture of nonpropane operations before its 1989 acquisition by QFB Partners. Future lease payments under these leases total approximately $37,000 at March 31, 2000. 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 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's having to honor its guarantee. In addition, the Partnership has succeeded to Petrolane's agreement to indemnify Shell Petroleum N.V. ("Shell") for various scheduled claims, including claims related to antitrust actions, that were pending against Tropigas de Puerto Rico ("Tropigas"). Petrolane had entered into this indemnification agreement in conjunction with its 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. In 1999, a case brought by an unsuccessful entrant into the Puerto Rican propane market was dismissed by the Supreme Court of Puerto Rico for lack of subject matter jurisdiction, with the Court concluding that the Public Service Commission of Puerto Rico has exclusive jurisdiction over the matter. In the only pending litigation, the Supreme Court of Puerto Rico denied the motion of the defendants to dismiss, remanding the matter to the trial court for proceedings consistent with its ruling. In this case the plaintiff seeks treble damages in excess of $11,700. We believe the probability that we will be required to directly satisfy the above-described lease obligations and the remaining claim subject to the indemnification agreements is remote. -6- 9 AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) (Thousands of dollars, except per unit) In addition to these matters, there are other pending claims and legal actions arising in the normal course of our business. We cannot predict with certainty the final results of these matters. However, it is reasonably possible that some of them could be resolved unfavorably to us. 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 our financial position. However, such damages or settlements could be material to our operating results or 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, 2000 1999 ------ ------ 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 ====== ======
See accompanying notes to consolidated 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"). 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 (1) the three months ended March 31, 2000 ("2000 three-month period") with the three months ended March 31, 1999 ("1999 three-month period"); (2) the six months ended March 31, 2000 ("2000 six-month period") with the six months ended March 31, 1999 ("1999 six-month period"); and (3) the twelve months ended March 31, 2000 ("2000 twelve-month period") with the twelve months ended March 31, 1999 ("1999 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. 2000 THREE-MONTH PERIOD COMPARED WITH 1999 THREE-MONTH PERIOD
- ----------------------------------------------------------------------------------------------- Increase Three Months Ended March 31 2000 1999 (Decrease) - ----------------------------------------------------------------------------------------------- (Millions of dollars) Gallons sold (millions): Retail 266.8 284.8 (18.0) (6.3)% Wholesale 86.6 66.8 19.8 29.6% ------ ------ ------ 353.4 351.6 1.8 0.5% ====== ====== ====== Revenues: Retail propane $313.5 $259.5 $ 54.0 20.8% Wholesale propane 52.7 24.8 27.9 112.5% Other 22.7 20.6 2.1 10.2% ------ ------ ------ $388.9 $304.9 $ 84.0 27.6% ====== ====== ====== Total margin $173.5 $176.1 $ (2.6) (1.5)% EBITDA (a) $ 83.7 $ 88.7 $ (5.0) (5.6)% Operating income $ 67.2 $ 72.2 $ (5.0) (6.9)% Heating degree days - % warmer than normal (b) 15.4 11.0 -- -- - -----------------------------------------------------------------------------------------------
(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. -10- 13 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) (b) Based upon national weather statistics provided by the National Oceanic and Atmospheric Administration ("NOAA") for 335 airports in the continental U.S. For the third consecutive year, results for the three-month period ended March 31 were significantly impacted by warmer than normal weather. Based upon national heating degree day data, temperatures in the 2000 three-month period were 15.4% warmer than normal and 4.6% warmer than in the prior-year period. Retail volumes of propane sold decreased 18.0 million gallons (6.3%) principally reflecting the impact of the warmer winter weather on sales to our residential heating customers and the Year 2000 ("Y2K") issue which resulted in some of our customers accelerating propane deliveries in November and December 1999. Wholesale volumes of propane sold increased 19.8 million gallons in the 2000 three-month period reflecting higher sales associated with product cost management activities. Total revenues from retail propane sales increased $54.0 million during the 2000 three-month period reflecting a $70.4 million increase as a result of higher average selling prices partially offset by a $16.4 million decrease as a result of the lower retail volumes sold. Wholesale propane revenues increased $27.9 million due primarily to higher selling prices and, to a lesser extent, higher volumes sold. The higher retail and wholesale selling prices resulted from higher propane product costs. Other revenues increased $2.1 million reflecting, in part, higher customer fees and higher hauling revenues. Cost of sales in the 2000 three-month period increased $86.6 million as a result of the higher propane product costs and the increase in wholesale volumes sold. Total margin decreased $2.6 million in the 2000 three-month period principally as a result of lower volumes sold to residential customers partially offset by greater total margin from PPX Prefilled Propane Xchange(R) ("PPX(R)") and higher customer fees. EBITDA and operating income were lower in the 2000 three-month period principally as a result of the lower total margin and an increase in operating expenses. The increase in operating and administrative expenses includes (1) increased vehicle fuel costs and vehicle repair and maintenance expenses and (2) higher expenses associated with new business initiatives. -11- 14 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 2000 SIX-MONTH PERIOD COMPARED WITH 1999 SIX-MONTH PERIOD
- ------------------------------------------------------------------------------------------------ Increase Six Months Ended March 31, 2000 1999 (Decrease) - ------------------------------------------------------------------------------------------------ (Millions of dollars) Gallons sold (millions): Retail 500.5 505.5 (5.0) (1.0)% Wholesale 143.2 114.9 28.3 24.6% ------ ------ ------ 643.7 620.4 23.3 3.8% ====== ====== ====== Revenues: Retail propane $553.9 $453.2 $100.7 22.2% Wholesale propane 82.1 43.2 38.9 90.0% Other 53.9 46.3 7.6 16.4% ------ ------ ------ $689.9 $542.7 $147.2 21.6% ====== ====== ====== Total margin $315.9 $309.4 $ 6.5 2.1% EBITDA $137.7 $139.1 $ (1.4) (1.0)% Operating income $105.0 $107.0 $ (2.0) (1.9)% Heating degree days - % warmer than normal 14.8 11.0 -- -- - ------------------------------------------------------------------------------------------------
Temperatures based upon heating degree days were 14.8% warmer than normal in the 2000 six-month period and 4.1% warmer than the prior-year period. Retail propane volumes sold decreased 5.0 million gallons as a result of the warmer weather's effect on heating-related sales partially offset by increased non-heating related PPX(R) and motor fuel sales. Wholesale volumes increased 28.3 million gallons (24.6%) as a result of higher wholesale sales associated with product cost management activities. Total retail propane revenues increased $100.7 million due almost entirely to higher average selling prices resulting from significantly higher propane product costs. Wholesale propane revenues increased $38.9 million reflecting a $28.3 million increase from higher average selling prices and a $10.6 million increase as a result of the higher wholesale volumes sold. Other revenues increased $7.6 million reflecting, in part, higher customer fees and hauling, service and PPX(R) cylinder sales revenue. Cost of sales in the 2000 six-month period increased $140.7 million as a result of the higher propane product costs and higher wholesale volumes sold. -12- 15 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Notwithstanding the overall lower retail volumes in the 2000 six-month period, total margin increased $6.5 million principally as a result of (1) greater volumes sold to higher margin PPX(R) customers and (2) an increase in other margin from customer fees and hauling and service related revenues. EBITDA declined $1.4 million, notwithstanding the slightly higher total margin, reflecting higher operating and administrative expenses in the 2000 six-month period. The increase in operating expenses includes (1) higher vehicle fuel and repairs and maintenance expenses and (2) higher expenses associated with the expansion of PPX(R) and other new business initiatives. Operating income decreased $2.0 million in the 2000 six-month period reflecting the lower EBITDA and slightly higher depreciation and amortization expense. -13- 16 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) 2000 TWELVE-MONTH PERIOD COMPARED WITH 1999 TWELVE-MONTH PERIOD
- ---------------------------------------------------------------------------------------------------- Increase Twelve Months Ended March 31, 2000 1999 (Decrease) - ---------------------------------------------------------------------------------------------------- (Millions of dollars) Gallons sold (millions): Retail 778.2 776.5 1.7 0.2% Wholesale 218.9 176.5 42.4 24.0% -------- -------- -------- 997.1 953.0 44.1 4.6% ======== ======== ======== Revenues: Retail propane $ 810.5 $ 698.7 $ 111.8 16.0% Wholesale propane 114.2 67.2 47.0 69.9% Other 95.1 82.1 13.0 15.8% -------- -------- -------- $1,019.8 $ 848.0 $ 171.8 20.3% ======== ======== ======== Total margin $ 488.3 $ 480.9 $ 7.4 1.5% EBITDA $ 156.2 $ 155.5 $ 0.7 0.5% Operating income $ 90.6 $ 91.5 $ (0.9) (1.0)% Heating degree days - % warmer than normal 13.2 11.7 -- -- - ----------------------------------------------------------------------------------------------------
Temperatures based upon heating degree days were 13.2% warmer than normal in the 2000 twelve-month period and slightly warmer than in the 1999 twelve-month period. Notwithstanding the warmer weather, retail propane gallons sold were virtually unchanged as weather-related reductions were offset by higher motor fuel and PPX(R) sales. Wholesale volumes of propane sold increased 42.4 million gallons to 218.9 million gallons reflecting an increase in sales associated with propane product cost management activities. Total retail propane revenues increased $111.8 million due almost entirely to higher average retail propane selling prices. Wholesale propane revenues increased $47.0 million reflecting (1) a $30.9 million increase from higher average prices and (2) a $16.1 million increase as a result of the higher wholesale volumes. The higher average propane selling prices during the 2000 twelve-month period were a result of significantly higher propane product costs. Other revenues increased $13.0 million reflecting higher hauling revenues, higher ancillary sales and service revenue, and greater customer fee revenues. Cost of sales increased $164.4 million as a result of the higher propane product costs. -14- 17 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Total margin increased $7.4 million in the 2000 twelve-month period due to (1) an increase in margin from customer fees and ancillary sales and services and (2) higher total margin from our expanding PPX(R) cylinder exchange business. EBITDA and operating income were virtually unchanged from the prior year as the increase in total margin and higher other income was offset by higher operating and administrative expenses. Other income in the 1999 twelve-month period is net of a $4.0 million loss from interest rate protection agreements. Operating expenses of the Partnership were $338.8 million in the 2000 twelve-month period compared with $326.1 million in the prior-year period. The increase in operating and administrative expenses includes higher expenses associated with new business activities and higher vehicle expenses. FINANCIAL CONDITION AND LIQUIDITY FINANCIAL CONDITION The Partnership's debt outstanding at March 31, 2000 totaled $805.8 million comprising $800.8 million of long-term debt (including current maturities of $16.8 million) and $5.0 million of bank loans. During the six months ended March 31, 2000, the Operating Partnership borrowed $46 million under its Acquisition Facility and made Acquisition Facility repayments of $69.0 million. These repayments were funded through the Operating Partnership's issuance of $80 million of ten-year, Series E First Mortgage Notes at an effective interest rate of 8.47%. At March 31, 2000, there were no amounts outstanding under the Acquisition Facility. During the six months ended March 31, 2000, the Partnership declared and paid the minimum quarterly distribution of $0.55 (the "MQD") on all units for the quarters ended September 30, 1999 and December 31, 1999. The MQD for the quarter ended March 31, 2000 will be paid on May 18, 2000 to holders of record on May 10, 2000 of all Common and Subordinated units. The ability of the Partnership to pay the MQD on all units depends upon a number of factors. These factors include (1) the level of Partnership earnings, (2) the cash needs of the Partnership's operations (including cash needed for maintaining and growing operating capacity), (3) changes in operating working capital, and (4) the Partnership's ability to borrow and refinance debt. Some of these factors are affected by conditions beyond our control including weather, competition in markets we serve, and the cost of propane. The 9,891,072 Subordinated Units of the Partnership which are held by the General Partner are eligible to convert to Common Units on the first day after the record date for any quarter ending on or after March 31, 2000 in respect of which certain historical cash-based performance and distribution requirements are met. The ability of the Partnership to attain the cash-based performance and distribution requirements depends upon a number of factors including highly seasonal operating -15- 18 AMERIGAS PARTNERS, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) results, changes in working capital, asset sales and debt refinancings. Due to significantly warmer than normal weather and the impact of higher propane product costs on working capital, the Partnership did not achieve the cash-based performance requirements in respect of the quarter ended March 31, 2000. Due to the historical "look-back" provisions of the conversion test, the possibility is remote that the Partnership will satisfy the cash-based performance requirements for conversion any earlier than in respect of the quarter ending March 31, 2002. CASH FLOWS Cash and cash equivalents totaled $4.3 million at March 31, 2000 compared with $0.4 million at September 30, 1999. Due to the seasonal nature of the propane business, cash flows from operating activities are generally strongest during the second and third fiscal quarters 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, 2000 are not necessarily indicative of cash flows to be expected for a full year. OPERATING ACTIVITIES. Cash provided by operating activities was $38.0 million during the six months ended March 31, 2000 compared with $65.6 million during the prior-year six-month period. Changes in operating working capital used $64.0 million of cash in the 2000 six-month period compared to $43.1 million in the 1999 period reflecting the impact of higher propane product costs on accounts receivable and inventories. Operating cash flow before changes in working capital was $102.0 million in the 2000 six-month period compared to $108.7 million in the prior year principally reflecting the lower 2000 six-month period operating results. INVESTING ACTIVITIES. We spent $12.9 million for property, plant and equipment (including maintenance capital expenditures of $3.8 million) during the 2000 six-month period compared with $15.8 million (including maintenance capital expenditures of $6.3 million) in the prior-year period. Acquisitions of propane businesses used $14.8 million of cash in the six months ended March 31, 2000 compared to $3.0 million in the prior-year period. FINANCING ACTIVITIES. During each of the six-month periods ended March 31, 2000 and 1999, we declared and paid the MQD on all Common and Subordinated units and the general partner interests. During the 2000 six-month period, the Operating Partnership borrowed $46 million under the Acquisition Facility and subsequently repaid all Acquisition Facility borrowings, totaling $69 million, with the proceeds from the issuance of ten-year, Series E First Mortgage Notes. These notes bear interest at an effective interest rate of 8.47%. During the 2000 six-month period, the Operating Partnership had net repayments of $17 million under its Revolving Credit Facility compared with repayments of $5 million during the prior-year six-month period. -16- 19 AMERIGAS PARTNERS, L.P. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary market risk exposures are market prices for propane and changes in interest rates. In order to manage a portion of our propane market price risk, we use contracts for the forward purchase of propane, propane fixed-price supply agreements, and derivative commodity instruments such as price swap and option contracts. On occasion, we also enter into wholesale product cost management activities to reduce price risk associated with changes in the fair value of a portion of our propane storage inventory. The Partnership has interest rate exposure associated with borrowings under its Bank Credit Agreement. The Bank Credit Agreement provides for interest rates on borrowings which are indexed to the agent bank's reference rate or offshore interbank borrowing rates. Based upon Bank Credit Agreement average borrowings during the most recent fiscal year ended September 30, 1999, an increase in interest rates of 100 basis points (1.0%) would increase annual interest expense by approximately $0.6 million. On occasion we enter into interest rate protection agreements to reduce interest rate risk associated with forecasted issuances of debt. At March 31, 2000, the impact on the fair value of market risk sensitive instruments resulting from an adverse change in (1) the market price of propane of 10 cents a gallon and (2) interest rates on ten-year U.S. treasury notes of 100 basis points would not be materially different than that reported in the Partnership's 1999 Annual Report on Form 10-K. We expect that any losses from market risk sensitive instruments used to manage propane price or interest rate market risk would be substantially offset by gains on the associated underlying transactions. -17- 20 AMERIGAS PARTNERS, L.P. PART II OTHER INFORMATION 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, 2000. -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 12, 2000 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 12, 2000 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 -19- EX-27.1 2 FDS FOR AMERIGAS PARTNERS, L.P.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT OF AMERIGAS PARTNERS, L.P. AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS IN AMERIGAS PARTNERS' QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED MARCH 31, 2000. 0000932628 AMERIGAS PARTNERS, L.P. 1,000 6-MOS SEP-30-1999 OCT-01-1999 MAR-31-2000 4,285 0 130,623 7,243 50,855 193,799 688,345 257,524 1,244,371 161,415 784,021 0 0 0 255,614 1,244,371 689,924 689,924 374,054 374,054 0 3,059 36,015 68,950 (5) 68,206 0 0 0 68,206 1.61 1.61
EX-27.2 3 FDS FOR AMERIGAS FINANCE CORP.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET OF AMERIGAS FINANCE CORP. AS OF MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET INCLUDED IN AMERIGAS PARTNERS' QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED MARCH 31, 2000. 0000945792 AMERIGAS FINANCE CORP. 1 6-MOS SEP-30-1999 OCT-01-1999 MAR-31-2000 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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