-----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, KsXWBblwkgJkp2lwitNvKCJpAjg/I8et9XidYv+FeVqYGdJrPz0jPRe06+WOmN3p MSydwpj7fA7ckI3xmlpPkQ== 0000893220-06-000232.txt : 20060209 0000893220-06-000232.hdr.sgml : 20060209 20060209163703 ACCESSION NUMBER: 0000893220-06-000232 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060209 DATE AS OF CHANGE: 20060209 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: 1934 Act SEC FILE NUMBER: 001-13692 FILM NUMBER: 06593524 BUSINESS ADDRESS: STREET 1: 460 N GULPH RD STREET 2: BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19406 BUSINESS PHONE: 6103377000 MAIL ADDRESS: STREET 1: 460 NORTH GULPH ROAD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 w17237e10vq.txt FORM 10-Q AMERIGAS PARTNERS, L.P. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2005 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 AMERIGAS PARTNERS, L.P. (Exact name of registrant as specified in its charters) Delaware 23-2787918 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
460 North Gulph Road, King of Prussia, PA 19406 (Address of principal executive offices) (Zip Code) (610) 337-7000 (Registrant's 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 ----- ----- Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer X Accelerated filer Non-accelerated filer ----- ----- ----- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X ----- ----- At January 31, 2006, there were 56,797,105 Common Units of AmeriGas Partners, L.P. outstanding. AMERIGAS PARTNERS, L.P. TABLE OF CONTENTS
PAGES ------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of December 31, 2005, September 30, 2005 and December 31, 2004 1 Condensed Consolidated Statements of Operations for the three months ended December 31, 2005 and 2004 2 Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2005 and 2004 3 Condensed Consolidated Statement of Partners' Capital for the three months ended December 31, 2005 4 Notes to Condensed Consolidated Financial Statements 5 - 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 - 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 19 - 20 Item 4. Controls and Procedures 21 PART II OTHER INFORMATION Item 6. Exhibits 22 Signatures 23
-i- AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Thousands of dollars)
December 31, September 30, December 31, 2005 2005 2004 ------------ ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 33,070 $ 99,162 $ 7,218 Accounts receivable (less allowances for doubtful accounts of $14,658, $13,143 and $13,285, respectively) 278,920 161,209 234,016 Accounts receivable - related parties 2,943 2,600 2,935 Inventories 112,907 90,748 104,253 Derivative financial instruments 15,543 50,788 657 Prepaid expenses and other current assets 13,403 13,233 9,771 ---------- ---------- ---------- Total current assets 456,786 417,740 358,850 Property, plant and equipment (less accumulated depreciation and amortization of $584,516, $569,822 and $535,322, respectively) 584,810 584,519 594,805 Goodwill and excess reorganization value 619,052 619,052 618,048 Intangible assets (less accumulated amortization of $21,871, $20,756 and $17,324, respectively) 28,332 29,422 31,395 Other assets 13,819 12,342 17,997 ---------- ---------- ---------- Total assets $1,702,799 $1,663,075 $1,621,095 ========== ========== ========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Current maturities of long-term debt $ 152,838 $ 118,087 $ 60,420 Bank loans -- -- 30,000 Accounts payable - trade 221,321 136,429 180,902 Accounts payable - related parties 7,822 2,993 5,418 Customer deposits and advances 72,067 92,427 64,537 Employee compensation and benefits accrued 22,153 31,410 21,053 Interest accrued 15,922 28,985 16,634 Other current liabilities 55,847 46,684 55,127 ---------- ---------- ---------- Total current liabilities 547,970 457,015 434,091 Long-term debt 759,791 795,415 840,812 Other noncurrent liabilities 63,717 64,658 61,578 Commitments and contingencies (note 4) Minority interests 8,404 8,570 7,574 Partners' capital 322,917 337,417 277,040 ---------- ---------- ---------- Total liabilities and partners' capital $1,702,799 $1,663,075 $1,621,095 ========== ========== ==========
See accompanying notes to condensed consolidated financial statements. -1- AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Thousands of dollars, except per unit)
Three Months Ended December 31, ------------------- 2005 2004 -------- -------- Revenues: Propane $588,357 $517,451 Other 41,867 38,765 -------- -------- 630,224 556,216 -------- -------- Costs and expenses: Cost of sales - propane 391,974 335,309 Cost of sales - other 15,815 15,835 Operating and administrative expenses 133,438 130,619 Depreciation and amortization 18,253 19,318 Other income, net (3,921) (12,549) -------- -------- 555,559 488,532 -------- -------- Operating income 74,665 67,684 Interest expense (18,919) (20,503) -------- -------- Income before income taxes and minority interests 55,746 47,181 Income tax expense (51) (2,315) Minority interests (682) (575) -------- -------- Net income $ 55,013 $ 44,291 ======== ======== General partner's interest in net income $ 5,536 $ 2,493 ======== ======== Limited partners' interest in net income $ 49,477 $ 41,798 ======== ======== Net income per limited partner unit - basic and diluted: $ 0.87 $ 0.77 ======== ======== Average limited partner units outstanding (thousands): Basic 56,797 54,477 ======== ======== Diluted 56,840 54,552 ======== ========
See accompanying notes to condensed consolidated financial statements. -2- AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Thousands of dollars)
Three Months Ended December 31, -------------------- 2005 2004 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 55,013 $ 44,291 Adjustments to reconcile net income to net cash (used) provided by operating activities: Depreciation and amortization 18,253 19,318 Gain on sale of Atlantic Energy -- (9,135) Other, net 2,683 432 Net change in: Accounts receivable (121,381) (93,081) Inventories (22,159) (19,302) Accounts payable 89,723 72,925 Other current assets and liabilities (38,605) (27,570) --------- -------- Net cash used by operating activities (16,473) (12,122) --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant and equipment (18,084) (21,136) Proceeds from disposals of assets 2,217 6,096 Net proceeds from sale of Atlantic Energy -- 11,504 Acquisitions of businesses, net of cash acquired (551) (15,642) --------- -------- Net cash used by investing activities (16,418) (19,178) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions (32,128) (30,265) Minority interest activity (502) (485) Increase in bank loans -- 30,000 Repayment of long-term debt (571) (1,315) --------- -------- Net cash used by financing activities (33,201) (2,065) --------- -------- Cash and cash equivalents decrease $ (66,092) $(33,365) ========= ======== CASH AND CASH EQUIVALENTS: End of period $ 33,070 $ 7,218 Beginning of period 99,162 40,583 --------- -------- Decrease $ (66,092) $(33,365) ========= ========
See accompanying notes to condensed consolidated financial statements. -3- AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (unaudited) (Thousands, except unit data)
Accumulated Number of other Total Common General comprehensive partners' Units Common partner income (loss) capital ---------- -------- ------- ------------- --------- BALANCE SEPTEMBER 30, 2005 56,792,605 $289,396 $2,920 $ 45,101 $337,417 Net income 49,477 5,536 55,013 Net losses on derivative instruments (27,238) (27,238) Reclassification of net gains on derivative instruments (10,294) (10,294) -------- ------ -------- -------- Comprehensive income 49,477 5,536 (37,532) 17,481 Distributions (31,807) (321) (32,128) Common Units issued in connection with incentive compensation plan 4,500 146 1 147 ---------- -------- ------ -------- -------- BALANCE DECEMBER 31, 2005 56,797,105 $307,212 $8,136 $ 7,569 $322,917 ========== ======== ====== ======== ========
See accompanying notes to condensed consolidated financial statements. -4- 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") and its principal operating subsidiaries AmeriGas Propane, L.P. ("AmeriGas OLP") and AmeriGas OLP's subsidiary, AmeriGas Eagle Propane, L.P. ("Eagle OLP"). AmeriGas Partners, AmeriGas OLP and Eagle OLP are Delaware limited partnerships. AmeriGas OLP and Eagle OLP are collectively referred to herein as "the Operating Partnerships," and AmeriGas Partners, the Operating Partnerships and all of their subsidiaries are collectively referred to herein 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 AmeriGas OLP and an unrelated third party's approximate 0.1% limited partner interest in Eagle OLP as minority interests in the condensed consolidated financial statements. The Partnership's 50% ownership interest in Atlantic Energy, Inc. ("Atlantic Energy") was accounted for by the equity method. In November 2004, the Partnership sold its interest in Atlantic Energy (also see Note 3). AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp. are wholly-owned finance subsidiaries of AmeriGas Partners. Their sole purpose is to serve as co-obligors for debt securities issued by AmeriGas Partners, L.P. 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 ("SEC"). 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. The September 30, 2005 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. 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, 2005 ("2005 Annual Report"). 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. NET INCOME PER UNIT. Net income per unit is computed by dividing net income, after deducting the General Partner's interest in AmeriGas Partners, by the weighted average number of limited partner units outstanding. Effective April 2004, the Partnership adopted Emerging Issues Task Force Issue No. 03-6, "Participating Securities and the Two-Class Method under FASB Statement No. 128" ("EITF 03-6"), which results in the calculation of net income per limited partner unit for each period according to distributions declared and participation rights in undistributed -5- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) earnings, as if all of the earnings for the period had been distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the General Partner and a dilution of the earnings to the limited partners. Due to the seasonality of the propane business, the dilutive effect of EITF 03-6 on net income per limited partner unit will typically, but not necessarily, impact our first three fiscal quarters. EITF 03-6 is not expected to impact net income per limited partner unit for the fiscal year. The dilutive effect of EITF 03-6 on net income per diluted limited partner unit was $(0.09) and $(0.03) for the three months ended December 31, 2005 and 2004, respectively. Potentially dilutive Common Units included in the diluted limited partner units outstanding computation reflect the effects of restricted Common Unit awards granted under the General Partner's incentive compensation plans. COMPREHENSIVE INCOME. The following table presents the components of comprehensive income (loss) for the three months ended December 31, 2005 and 2004:
Three Months Ended December 31, ------------------- 2005 2004 -------- -------- Net income $ 55,013 $ 44,291 Other comprehensive loss (37,532) (26,142) -------- -------- Comprehensive income $ 17,481 $ 18,149 ======== ========
Other comprehensive income (loss) is principally the result of changes in the fair value of propane commodity derivative instruments and interest rate protection agreements, net of reclassifications of net gains and losses to net income. UNIT-BASED COMPENSATION. Certain members of the General Partner's management may be granted stock options for UGI Common Stock under UGI's equity compensation plans. Such awards typically vest ratably over a period of years (generally three years). There are certain change of control and retirement eligibility conditions that, if met, generally result in an acceleration of vesting. Stock options for UGI Common Stock generally can be exercised no later than ten years from the grant date. Under the AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan ("2000 Propane Plan"), the General Partner may grant to key employees the rights to receive a total of 500,000 AmeriGas Partners Common Units ("Units"), or cash equivalent to the fair market value of such Units, or a combination of both, upon the achievement of certain market performance goals. In addition, the 2000 Propane Plan authorizes the crediting of Partnership Common Unit distribution equivalents to participants' accounts. Any distribution equivalents will be paid in cash. The actual number of Common Units (or their cash equivalent) ultimately issued, and the actual amount of distribution equivalents paid, is dependent upon the achievement of market performance goals and employee service conditions. Generally, each grant, unless paid, will terminate when the participant ceases to be employed by the General Partner. There are certain change of control and retirement eligibility conditions that, if met, generally result in the acceleration of vesting. No awards were granted pursuant to the 2000 Propane Plan during the three months ended December 31, 2005 or 2004. We also have a nonexecutive AmeriGas Propane, Inc. plan under which the General Partner may grant key employees who do not participate in -6- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) the 2000 Propane Plan the rights to receive a total of 200,000 AmeriGas Partners Common Units. Generally, awards under the nonexecutive plan vest at the end of a three-year period and are paid in Units and cash. There are certain change of control conditions that, if met, generally result in an acceleration of vesting. Awards granted pursuant to the nonexecutive plan during the three months ended December 31, 2005 and any associated expense was not material to the Partnership's financial position, results of operations or cash flows. Effective October 1, 2005, the Partnership adopted Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). Prior to October 1, 2005, as permitted, we applied the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), in recording compensation expense for grants of equity instruments to employees. Under APB 25, the Partnership did not record any compensation expense for stock options, but provided the required pro forma disclosures as if we had determined compensation expense under the fair value method as prescribed by the provisions of SFAS No. 123. Under SFAS 123R, all equity-based compensation cost is measured on the grant date or at the end of each period based on the fair value of that award and is recognized in the income statement over the requisite service period. As permitted by the standard, under the modified prospective approach, effective October 1, 2005, we began recording compensation expense for awards that were not vested as of that date. The Partnership used the Black-Scholes option-pricing model to estimate the fair value of each option prior to adoption of SFAS 123R and continues to use this model. The adoption of SFAS 123R resulted in compensation expense associated with stock options of $88 during the three months ended December 31, 2005 which did not impact our reported basic and diluted earnings per limited partner unit. As of December 31, 2005, there was $546 of unrecognized compensation cost related to non-vested stock options that is expected to be recognized over a weighted average period of 1.9 years. Assuming no significant change in the level of future stock option grants to AmeriGas Propane, Inc. employees, we do not believe that compensation cost associated with stock options will have a material impact on the Partnership's financial position, results of operations or cash flows. Both prior to and after the adoption of SFAS 123R, we measured and recorded compensation cost of Unit awards that can be settled in cash or at the General Partner's option in cash or AmeriGas Partners Common Units, or a combination of both, based upon their fair value as of the end of each period. The fair value of Units are generally dependent upon AmeriGas Partners Common Unit price and its performance in comparison to a group of peer companies. The fair value of these awards is expensed over requisite service periods. -7- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) The following table illustrates the effects on net income and basic and diluted income per unit as if we had applied the provisions of SFAS 123R to all of our equity-based compensation awards for the period prior to the adoption of SFAS 123R. For the three months ended December 31, 2004 Net income as reported $44,291 Add: Unit-based employee compensation benefit included in reported net income (495) Deduct: Total stock and unit-based employee compensation benefit determined under the fair value method for all awards 350 ------- Pro forma net income $44,146 ======= Basic income per limited partner unit: As reported $ 0.77 Pro forma $ 0.77 Diluted income per limited partner unit: As reported $ 0.77 Pro forma $ 0.76
The total equity-based compensation benefit recorded during the three months ended December 31, 2005 was $750 which reflects both stock option and Unit awards. Both of the three-month periods ended December 31, 2005 and 2004 reflect a net compensation benefit largely reflecting the effects of certain market performance conditions not being met. As of December 31, 2005, there was $1,414 of unrecognized compensation cost associated with 86,967 Unit awards that is expected to be recognized over a weighted average period of 1.7 years. Also, at December 31, 2005, a liability of $1,426 is reflected in other noncurrent liabilities in the Condensed Consolidated Balance Sheet. It is the Partnership's practice to issue new AmeriGas Partners Common Units for the portion of any Unit award paid out in AmeriGas Partners Common Units.
Number of Average Fair Units Value (per Unit) --------- ---------------- Non-vested Units - September 30, 2005(a) 112,967 $37.31 Non-vested Units - December 31, 2005(a) 86,967 $32.65
(a) The decrease in non-vested Unit awards from September 30, 2005 compared to December 31, 2005 is a result of market performance conditions not being met with respect to the 2000 Propane Plan. With respect to the nonexecutive plan, awards representing 6,750 were paid out to employees, 4,500 of which were settled through the issuance of new AmeriGas Partners Common Units. Also, during the three months ended December 31, 2005, 6,750 new Unit awards were granted to employees. RECLASSIFICATIONS. We have reclassified certain prior-year balances to conform to the current period presentation. USE OF ESTIMATES. We make estimates and assumptions when preparing financial statements in conformity with accounting principles generally accepted in the United States of America. These estimates and assumptions affect the reported amounts of -8- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) assets and liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. 2. INTANGIBLE ASSETS The Partnership's intangible assets comprise the following:
December 30, September 30, 2005 2005 ------------ ------------- Subject to amortization: Customer relationships and noncompete agreements $ 50,203 $ 50,178 Accumulated amortization (21,871) (20,756) -------- -------- $ 28,332 $ 29,422 -------- -------- Not subject to amortization: Goodwill $525,732 $525,732 Excess reorganization value 93,320 93,320 -------- -------- $619,052 $619,052 -------- --------
Amortization expense of intangible assets was $1,115 and $1,166 for the three months ended December 31, 2005 and 2004, respectively. Our expected aggregate amortization expense of intangible assets for the next five fiscal years is as follows: Fiscal 2006 - $4,377; Fiscal 2007 - $3,736; Fiscal 2008 - $3,455; Fiscal 2009 - $3,127; Fiscal 2010 - $2,811. 3. RELATED PARTY TRANSACTIONS Pursuant to the Partnership Agreement and a Management Services Agreement among AmeriGas Eagle Holdings, Inc., the general partner of Eagle OLP, and the General Partner, the General Partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of the Partnership. These costs, which totaled $78,652 and $78,694 during the three months ended December 31, 2005 and 2004, respectively, include employee compensation and benefit expenses of employees of the General Partner and general and administrative expenses. UGI provides certain financial and administrative services to the General Partner. UGI bills the General Partner for all direct and indirect corporate expenses incurred in connection with providing these services and the General Partner is reimbursed by the Partnership for these expenses. Such corporate expenses totaled $787 and $3,234 during the three months ended December 31, 2005 and 2004, respectively. In addition, UGI and certain of its subsidiaries (excluding Atlantic Energy which is discussed separately) provide office space and automobile liability insurance and sell propane to the -9- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) Partnership. These costs totaled $864 and $997 during the three months ended December 31, 2005 and 2004, respectively. AmeriGas OLP purchases propane from Atlantic Energy, now owned by an affiliate of UGI. Purchases of propane by AmeriGas OLP from Atlantic Energy during the three months ended December 31, 2005 and 2004 totaled $12,256 and $8,506, respectively. Amounts due to Atlantic Energy totaled $7,822, $2,505 and $3,986 at December 31, 2005, September 30, 2005 and December 31, 2004, respectively, and are reflected in accounts payable - related parties in the Condensed Consolidated Balance Sheets. Prior to the November 2004 sale of our 50% ownership interest in Atlantic Energy, we purchased propane on behalf of Atlantic Energy. Atlantic Energy reimbursed AmeriGas OLP for its purchases plus interest as Atlantic Energy sold such propane to third parties or to AmeriGas OLP itself. The total dollar value of propane purchased on behalf of Atlantic Energy was $2,420 during the three months ended December 31, 2004 all of which occurred prior to the sale of our ownership interests. In November 2004, in conjunction with the sale of our 50% ownership interest in Atlantic Energy, UGI Asset Management, Inc. and AmeriGas OLP entered into a Product Sales Agreement whereby UGI Asset Management, Inc. has agreed to sell and AmeriGas OLP has agreed to purchase a specified amount of propane annually at the Atlantic Energy terminal in Chesapeake, Virginia. The Product Sales Agreement took effect on April 1, 2005 and will continue for a primary term of five years with an option to extend the agreement for up to an additional five years. The price to be paid for product purchased under the agreement will be determined annually using a contractual formula that takes into account published index prices and the locational value of deliveries at the Atlantic Energy terminal. Prior to the sale of Atlantic Energy, the General Partner also provided it with other services including accounting, insurance and other administrative services and was reimbursed for the related costs. Such costs were not material during the three months ended December 31, 2004. In addition, AmeriGas OLP entered into product cost hedging contracts on behalf of Atlantic Energy. When these contracts were settled, AmeriGas OLP was reimbursed the cost of any losses by, or distributed the proceeds of any gains to, Atlantic Energy. No amounts were due from Atlantic Energy at December 31, 2005. Amounts due from Atlantic Energy at December 31, 2004 totaled $376 which is included in accounts receivable - related parties in the Condensed Consolidated Balance Sheet. -10- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) 4. COMMITMENTS AND CONTINGENCIES The Partnership has succeeded to certain lease guarantee obligations of Petrolane relating to Petrolane's divestiture of nonpropane operations before its 1989 acquisition by QFB Partners. Future lease payments under these leases total approximately $9,000 at December 31, 2005. 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. In December 1999, Texas Eastern filed for dissolution under the Delaware General Corporation Law. PanEnergy Corporation ("PanEnergy"), Texas Eastern's sole stockholder, subsequently assumed all of Texas Eastern's liabilities as of December 20, 2002, to the extent of the value of Texas Eastern's assets transferred to PanEnergy as of that date (which was estimated to exceed $94,000), and to the extent that such liabilities arise within ten years from Texas Eastern's date of dissolution. Notwithstanding the dissolution proceeding, and based on Texas Eastern previously having satisfied directly defaulted lease obligations without the Partnership's having to honor its guarantee, we believe that the probability that the Partnership will be required to directly satisfy the lease obligations subject to the indemnification agreement is remote. On August 21, 2001, AmeriGas Partners, through AmeriGas OLP, acquired the propane distribution businesses of Columbia Energy Group (the "2001 Acquisition") pursuant to the terms of a purchase agreement (the "2001 Acquisition Agreement") by and among Columbia Energy Group ("CEG"), Columbia Propane Corporation ("Columbia Propane"), Columbia Propane, L.P. ("CPLP"), CP Holdings, Inc. ("CPH," and together with Columbia Propane and CPLP, the "Company Parties"), AmeriGas Partners, AmeriGas OLP and the General Partner (together with AmeriGas Partners and AmeriGas OLP, the "Buyer Parties"). As a result of the 2001 Acquisition, AmeriGas OLP acquired all of the stock of Columbia Propane and CPH and substantially all of the partnership interests of CPLP. Under the terms of an earlier acquisition agreement (the "1999 Acquisition Agreement"), the Company Parties agreed to indemnify the former general partners of National Propane Partners, L.P. (a predecessor company of the Columbia Propane businesses) and an affiliate (collectively, "National General Partners") against certain income tax and other losses that they may sustain as a result of the 1999 acquisition by CPLP of National Propane Partners, L.P. (the "1999 Acquisition") or the operation of the business after the 1999 Acquisition ("National Claims"). At December 31, 2005, the potential amount payable under this indemnity by the Company Parties was approximately $58,000. These indemnity obligations will expire on the date that CPH acquires the remaining outstanding partnership interest of CPLP, which is expected to occur on or after July 19, 2009. Under the terms of the 2001 Acquisition Agreement, CEG agreed to indemnify the Buyer Parties and the Company Parties against any losses that they sustain under the 1999 -11- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) Acquisition Agreement and related agreements ("Losses"), including National Claims, to the extent such claims are based on acts or omissions of CEG or the Company Parties prior to the 2001 Acquisition. The Buyer Parties agreed to indemnify CEG against Losses, including National Claims, to the extent such claims are based on acts or omissions of the Buyer Parties or the Company Parties after the 2001 Acquisition. CEG and the Buyer Parties have agreed to apportion certain losses resulting from National Claims to the extent such losses result from the 2001 Acquisition itself. Samuel and Brenda Swiger and their son (the "Swigers") sustained personal injuries and property damage as a result of a fire that occurred when propane that leaked from an underground line ignited. In July 1998, the Swigers filed a class action lawsuit against AmeriGas Propane, L.P. (named incorrectly as "UGI/AmeriGas, Inc."), in the Circuit Court of Monongalia County, West Virginia, in which they sought to recover an unspecified amount of compensatory and punitive damages and attorney's fees, for themselves and on behalf of persons in West Virginia for whom the defendants had installed propane gas lines, allegedly resulting from the defendants' failure to install underground propane lines at depths required by applicable safety standards. In 2003, we settled the individual personal injury and property damage claims of the Swigers. In 2004, the court granted the plaintiffs' motion to include customers acquired from Columbia Propane in August 2001 as additional potential class members and the plaintiffs amended their complaint to name additional parties pursuant to such ruling. Subsequently, in March 2005, we filed a cross-claim against CEG, former owner of Columbia Propane, seeking indemnification for conduct undertaken by Columbia Propane prior to our acquisition. Class counsel has indicated that the class is seeking compensatory damages in excess of $12,000 plus punitive damages, civil penalties and attorneys' fees. We believe we have good defenses to the claims of the class members and intend to defend against the remaining claims in this lawsuit. We also have other contingent liabilities, pending claims and legal actions arising in the normal course of our business. We cannot predict with certainty the final results of these and the aforementioned matters. However, it is reasonably possible that some of them could be resolved unfavorably to us and result in losses in excess of recorded amounts. We are unable to estimate any possible losses in excess of recorded amounts. Although management currently 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, 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. -12- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) 5. SUBSEQUENT EVENT - LONG-TERM DEBT REFINANCING In January 2006, the Partnership and AP Eagle Finance Corp. issued $350,000 of 7.125% Senior Notes due 2016. The proceeds of this registered public debt offering were used to refinance $59,500 of the Partnership's $60,000 10% Senior Notes due 2006 pursuant to a tender offer, plus a premium, and AmeriGas OLP's $35,000 term loan due October 1, 2006. On January 27, 2006, AmeriGas OLP notified the holders of its $160,000 Series A and $68,800 Series C First Mortgage Notes of its intention to redeem the notes, including a make-whole premium, on February 16, 2006. The Partnership expects to incur a loss on extinguishment of debt associated with these refinancings of approximately $16,000 that will be recorded during the three months ending March 31, 2006. -13- AMERIGAS PARTNERS, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS Information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report may contain forward-looking statements. Such statements use forward-looking words such as "believe," "plan," "anticipate," "continue," "estimate," "expect," "may," "will," or other similar words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, we caution you that actual results almost always vary from assumed facts or bases, and the differences between actual results and assumed facts or bases can be material, depending on the circumstances. When considering forward-looking statements, you should keep in mind the following important factors which could affect our future results and could cause those results to differ materially from those expressed in our forward-looking statements: (1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability of propane, and the capacity to transport propane to our market areas; (3) changes in laws and regulations, including safety, tax and accounting matters; (4) competitive pressures from the same and alternative energy sources; (5) failure to acquire new customers thereby reducing or limiting any increase in revenues; (6) liability for environmental claims; (7) increased customer conservation measures due to high energy prices and improvements in energy efficiency and technology resulting in reduced demand; (8) adverse labor relations; (9) large customer, counterparty or supplier defaults; (10) liability in excess of insurance coverage for personal injury and property damage arising from explosions and other catastrophic events, including acts of terrorism, resulting from operating hazards and risks incidental to transporting, storing and distributing propane, butane and ammonia; (11) political, regulatory and economic conditions in the United States and foreign countries; and (12) reduced access to capital markets and interest rate fluctuations. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. We undertake no obligation to update publicly any forward-looking statement whether as a result of new information or future events except as required by the federal securities laws. -14- AMERIGAS PARTNERS, L.P. ANALYSIS OF RESULTS OF OPERATIONS The following analysis compares the Partnership's results of operations for the three months ended December 31, 2005 ("2005 three-month period") with the three months ended December 31, 2004 ("2004 three-month period"). EXECUTIVE OVERVIEW The Partnership's results are largely seasonal and dependent upon weather conditions, particularly during the peak-heating season, which occurs in the first half of our fiscal year. As a result, our net income is generally higher in our first and second fiscal quarters whereas lower net income or net losses occur in our third and fourth fiscal quarters. Weather during the 2005 three-month period was 4.1% warmer than normal compared to 8.0% warmer than normal in the prior-year period. In addition to the weather conditions, our volumes reflect the effects of customer conservation due to a continuing trend of high propane prices. The Partnership reported net income of $55.0 million during the 2005 three-month period, an increase of $10.7 million compared to the prior-year period. The 2004 three-month period included an after-tax gain of $7.1 million in connection with the November 2004 sale of Atlantic Energy, Inc. ("Atlantic Energy"). The Partnership's retail gallons sold during the 2005 three-month period reflect the negative effects of customer conservation resulting from higher propane costs and selling prices and reduced volumes sold to agricultural customers reflecting a weak crop-drying season. Although the Partnership experienced reduced volumes, we were able to effectively manage product costs and customer pricing, while remaining competitive in the marketplace. -15- AMERIGAS PARTNERS, L.P. 2005 THREE-MONTH PERIOD COMPARED WITH 2004 THREE-MONTH PERIOD
Increase Three Months Ended December 31, 2005 2004 (Decrease) - ------------------------------- ------ ------ -------------- (millions of dollars) Gallons sold (millions): Retail 291.9 296.8 (4.9) (1.7)% Wholesale 38.2 44.4 (6.2) (14.0)% ------ ------ ------ 330.1 341.2 (11.1) (3.3)% ====== ====== ====== Revenues: Retail propane $543.2 $475.5 $ 67.7 14.2% Wholesale propane 45.2 42.0 3.2 7.6% Other 41.8 38.7 3.1 8.0% ------ ------ ------ $630.2 $556.2 $ 74.0 13.3% ====== ====== ====== Total margin(a) $222.4 $205.1 $ 17.3 8.4% EBITDA(b) $ 92.2 $ 86.4 $ 5.8 6.7% Operating income $ 74.7 $ 67.7 $ 7.0 10.3% Net income $ 55.0 $ 44.3 $ 10.7 24.2% Heating degree days - % warmer than normal(c) (4.1) (8.0) -- --
(a) Total margin represents total revenues less cost of sales - propane and cost of sales - other. (b) 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 accounting principles generally accepted in the United States of America ("GAAP"). Management believes EBITDA is a meaningful non-GAAP financial measure used by investors to compare the Partnership's operating performance with that of other companies within the propane industry and to evaluate the Partnership's ability to meet loan covenants. The Partnership's definition of EBITDA may be different from that used by other companies. 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, EBITDA for interim periods is not necessarily indicative of amounts to be expected for a full year. The following table includes reconciliations of net income to EBITDA for the periods presented:
Three Months Ended December 31, ------------------ 2005 2004 ----- ----- Net income $55.0 $44.3 Income tax expense 0.1 2.3 Interest expense 18.9 20.5 Depreciation 16.9 17.9 Amortization 1.3 1.4 ----- ----- EBITDA $92.2 $86.4 ===== =====
(c) Deviation from average heating degree days based upon national weather statistics provided by the National Oceanic and Atmospheric Administration ("NOAA") for 335 airports in the United States, excluding Alaska. -16- AMERIGAS PARTNERS, L.P. Based upon heating degree-day data, temperatures were 4.1% warmer than normal during the 2005 three-month period compared to temperatures that were 8.0% warmer than normal during the 2004 three-month period. Notwithstanding the colder weather, retail propane volumes sold decreased 1.7% compared to the prior-year three-month period reflecting, in part, the previously mentioned decrease in volumes sold to agricultural customers. High propane selling prices continued to cause price-induced customer conservation. In the 2005 three-month period, our average retail propane product cost per retail gallon sold was approximately 20% higher than in the 2004 three-month period, which resulted in higher year-over-year prices to our customers. Low-margin wholesale propane volumes sold decreased during the 2005 three-month period reflecting lower volumes sold in connection with product cost management activities. Retail propane revenues increased $67.7 million reflecting a $75.6 million increase due to higher average selling prices partially offset by a $7.9 million decrease due to the lower retail volumes sold. Wholesale propane revenues increased $3.2 million reflecting a $9.1 million increase resulting from higher average selling prices partially offset by a $5.9 million decrease due to lower volumes sold. The higher average retail and wholesale selling prices per gallon reflect the continuance of significantly higher propane product costs compared to the prior year. The average wholesale cost per gallon of propane at Mont Belvieu, one of the major propane supply points in the United States, was approximately 25% greater than the average cost per gallon during the 2004 three-month period. Total cost of sales increased to $407.8 million in the 2005 three-month period from $351.1 million in the 2004 three-month period largely reflecting the increase in propane product costs partially offset by the decreased volumes sold. Total margin increased $17.3 million compared to the 2004 three-month period principally reflecting higher average margin per retail gallon which is largely attributable to our product cost and customer pricing management efforts. EBITDA during the 2005 three-month period was $92.2 million compared to $86.4 million during the 2004 three-month period. The $5.8 million increase in EBITDA reflects the increase in total margin partially offset by (1) an $8.6 million decrease in other income primarily reflecting the absence of the gain on the sale of Atlantic Energy in November 2004 and (2) a $2.8 million increase in operating and administrative expenses. Operating and administrative expenses increased principally reflecting higher vehicle fuel costs and vehicle lease expense. Operating income increased $7.0 million reflecting the previously mentioned increase in EBITDA and lower depreciation and amortization expense. Net income in the 2005 three-month period increased $10.7 million reflecting the increase in operating income, lower income tax expense and $1.6 million in lower interest expense. The reduction in income taxes is attributable to the income tax expense on the gain on the Partnership's sale of Atlantic Energy included in the 2004 three-month period. FINANCIAL CONDITION AND LIQUIDITY FINANCIAL CONDITION The Partnership's long-term debt outstanding at December 31, 2005 totaled $912.6 million (including current maturities of $152.8 million) compared to $913.5 million (including current maturities of $118.1 million) at September 30, 2005. AmeriGas OLP's Credit Agreement expires on October 15, 2008 and consists of (1) a $100 million Revolving Credit Facility and (2) a $75 million Acquisition Facility. The Revolving -17- AMERIGAS PARTNERS, L.P. Credit Facility may be used for working capital and general purposes of AmeriGas OLP. The Acquisition Facility provides AmeriGas OLP with the ability to borrow up to $75 million to finance the purchase of propane businesses or propane business assets or, to the extent it is not so used, for working capital and general purposes, subject to restrictions in the AmeriGas Partners Senior Notes indentures. At December 31, 2005, there were no borrowings outstanding under the Credit Agreement. AmeriGas OLP's short-term borrowing needs are seasonal and are typically greatest during the fall and winter heating-season months due to the need to fund higher levels of working capital. Issued and outstanding letters of credit under the Revolving Credit Facility, which reduce the amount of available borrowing capacity, totaled $58.9 million at December 31, 2005. Largely due to the issuance of 2.3 million Common Units in September 2005, during the 2005 three-month period the Partnership did not need to use its revolving credit facility to fund its operations. The average daily borrowings outstanding under the Credit Agreement during the three months ended December 31, 2004 were $20.2 million. The peak borrowings outstanding under the Credit Agreement during the 2004 three-month period were $51.0 million. In January 2006, the Partnership and AP Eagle Finance Corp. issued $350 million of 7.125% Senior Notes due 2016. The proceeds of this registered public debt offering were used to refinance $59.5 million of the Partnership's $60 million 10% Senior Notes due 2006 pursuant to a tender offer, plus a premium, and AmeriGas OLP's $35 million term loan due October 1, 2006. On January 27, 2006, AmeriGas OLP notified the holders of its $160 million Series A and $68.8 million Series C First Mortgage Notes of its intention to redeem the notes, including a make-whole premium, on February 16, 2006. The Partnership expects to incur a loss on extinguishment of debt associated with these refinancings of approximately $16 million that will be recorded during the three months ending March 31, 2006. AmeriGas Partners periodically issues debt and equity securities and expects to continue issuing securities in the future. It has issued debt securities in underwritten public offerings or private offerings and Common Units in underwritten public offerings in each of the last three fiscal years. Most recently, it issued debt securities in January 2006 and Common Units in September 2005 in underwritten public offerings. Proceeds from these offerings are generally used to reduce or refinance indebtedness and for general Partnership purposes, including funding acquisitions. The Partnership has an effective debt and equity shelf registration statement with the Securities and Exchange Commission under which it may issue Common Units or Senior Notes due 2016 in underwritten public offerings. The quarterly distribution of $0.56 for the quarter ended December 31, 2005 will be paid on February 18, 2006 to holders of record on February 10, 2006. During the three months ended December 31, 2005, the Partnership declared and paid the quarterly distributions on all limited partner units for the quarter ended September 30, 2005. The ability of the Partnership to declare and pay the quarterly distribution on its Common Units in the future 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 increasing operating capacity); (3) changes in operating working capital; and (4) the Partnership's ability to borrow under its Credit Agreement, refinance maturing debt, and increase its long-term debt. Some of these factors are affected by conditions beyond the Partnership's control including weather, competition in markets we serve, the cost of propane and changes in capital market conditions. -18- AMERIGAS PARTNERS, L.P. CASH FLOWS OPERATING ACTIVITIES. The Partnership had cash and cash equivalents totaling $33.1 million at December 31, 2005 compared to $99.2 million at September 30, 2005. 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 months. Conversely, operating cash flows are generally at their lowest levels during the first and fourth fiscal quarters when the Partnership's investment in working capital, principally accounts receivable and inventories, is generally greatest. Accordingly, cash flows from operating activities during the three months ended December 31, 2005 are not necessarily indicative of cash flows to be expected for a full year. The Partnership generally uses its Credit Agreement to satisfy its seasonal cash flow needs. Cash flow used by operating activities was $16.5 million during the 2005 three-month period compared to $12.1 million during the 2004 three-month period. Cash flow from operating activities before changes in working capital was $75.9 million in the 2005 three-month period compared to $54.9 million in the prior-year three-month period. Cash required to fund changes in operating working capital during the 2005 three-month period totaled $92.4 million compared to the $67.0 million required in the prior-year three-month period largely reflecting the changes in accounts receivables. Our increased need for cash to fund working capital reflects, in large part, the effects of higher propane commodity prices. INVESTING ACTIVITIES. We spent $18.1 million for property, plant and equipment (including maintenance capital expenditures of $5.4 million and growth capital expenditures of $12.7 million) during the three months ended December 31, 2005 compared to $21.1 million (including maintenance capital expenditures of $6.5 million and growth capital expenditures of $14.6 million) during the prior-year three-month period. Expenditures for property, plant and equipment declined in the 2005 three-month period compared to the prior-year period reflecting more prudent use of existing cylinder capital. The decrease in proceeds received from disposals of assets reflects the higher number of district locations sold during the 2004 three-month period compared to the current-year period. FINANCING ACTIVITIES. Cash flow used by financing activities was $33.2 million in the 2005 three-month period compared to $2.1 million in the prior-year period. The Partnership's financing activities are typically the result of repayments and issuances of long-term debt, borrowings under our Credit Agreement, issuances of Common Units and distributions on partnership interests. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary financial market risks include commodity prices for propane and interest rates on borrowings. The risk associated with fluctuations in the prices the Partnership pays for propane is principally a result of market forces reflecting changes in supply and demand for propane and other energy commodities. The Partnership's profitability is sensitive to changes in propane supply costs, and the Partnership generally attempts to pass on increases in such costs to customers. The Partnership may not, however, always be able to pass through product cost increases fully, particularly when product costs rise rapidly. In order to reduce volatility of the Partnership's propane market price risk, we use contracts for the forward purchase or sale of propane, propane -19- AMERIGAS PARTNERS, L.P. fixed-price supply agreements, and over-the-counter derivative commodity instruments including price swap and option contracts. Over-the-counter derivative commodity instruments utilized by the Partnership are generally settled at expiration of the contract. In order to minimize credit risk associated with derivative commodity contracts, we monitor established credit limits with the contract counterparties. Although we use derivative financial and commodity instruments to reduce market price risk associated with forecasted transactions, we do not use derivative financial and commodity instruments for speculative or trading purposes. The Partnership has both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but generally do not impact its fair value. Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not impact its cash flows. Our variable rate debt includes borrowings under AmeriGas OLP's Credit Agreement and the AmeriGas OLP Term Loan. These agreements have interest rates that are generally indexed to short-term market interest rates. Our long-term debt is typically issued at fixed rates of interest based upon market rates for debt having similar terms and credit ratings. As these long-term debt issues mature, we may refinance such debt with new debt having interest rates reflecting then-current market conditions. This debt may have an interest rate that is more or less than the refinanced debt. In order to reduce interest rate risk associated with near-term forecasted issuances of fixed-rate debt, from time to time we enter into interest rate protection agreements. The following table summarizes the fair values of unsettled market risk sensitive derivative instruments held at December 31, 2005. Fair values reflect the estimated amounts that we would receive or (pay) to terminate the contracts at the reporting date based upon quoted market prices of comparable contracts at December 31, 2005. The table also includes the changes in fair value that would result if there were an adverse change of ten percent in (1) the market price of propane and (2) interest rates on ten-year U.S. treasury notes:
Fair Change in Value Fair Value ----- ---------- (Millions of dollars) December 31, 2005: Propane commodity price risk $15.5 $(12.6) Interest rate risk (7.3) (16.6)
Because the Partnership's derivative instruments generally qualify as hedges under Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," we expect that changes in the fair value of derivative instruments used to manage propane price or interest rate risk would be substantially offset by gains or losses on the associated underlying transactions. -20- AMERIGAS PARTNERS, L.P. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures The Partnership's management, with the participation of the Partnership's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Partnership's disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership's disclosure controls and procedures as of the end of the period covered by this report were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed by the Partnership in reports filed under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. (b) Change in Internal Control over Financial Reporting No change in the Partnership's internal control over financial reporting occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting. -21- AMERIGAS PARTNERS, L.P. PART II OTHER INFORMATION ITEM 6. EXHIBITS The exhibits filed as part of this report are as follows (exhibits incorporated by reference are set forth with the name of the registrant, the type of report and registration number or last date of the period for which it was filed, and the exhibit number in such filing):
EXHIBIT NO. EXHIBIT REGISTRANT FILING EXHIBIT - ----------- ------------------------------------------- ---------- --------- ------- 4.1 Indenture, dated January 26, 2006, by and AmeriGas Form 8-K 4.1 among AmeriGas Partners, L.P., a Delaware Partners, (1/26/06) limited partnership, AP Eagle Finance L.P. Corp., a Delaware corporation, and U.S. Bank National Association, as trustee. 31.1 Certification by the Chief Executive Officer relating to the Registrant's Report on Form 10-Q for the quarter ended December 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by the Chief Financial Officer relating to the Registrant's Report on Form 10-Q for the quarter ended December 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant's Report on Form 10-Q for the quarter ended December 31, 2005, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-22- AMERIGAS PARTNERS, L.P. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AmeriGas Partners, L.P. (Registrant) By: AmeriGas Propane, Inc., as General Partner Date: February 9, 2006 By: /s/ Jerry E. Sheridan ------------------------------------ Jerry E. Sheridan Vice President - Finance and Chief Financial Officer Date: February 9, 2006 By: /s/ William J. Stanczak ----------------------------------- William J. Stanczak Controller and Chief Accounting Officer -23- AMERIGAS PARTNERS, L.P. EXHIBIT INDEX 31.1 Certification by the Chief Executive Officer relating to the Registrant's Report on Form 10-Q for the quarter ended December 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by the Chief Financial Officer relating to the Registrant's Report on Form 10-Q for the quarter ended December 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant's Report on Form 10-Q for the quarter ended December 31, 2005, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-31.1 2 w17237exv31w1.txt CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Eugene V. N. Bissell, certify that: 1. I have reviewed this interim report on Form 10-Q of AmeriGas Partners, L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and EXHIBIT 31.1 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 9, 2006 /s/ Eugene V. N. Bissell ---------------------------------------- Eugene V. N. Bissell President and Chief Executive Officer of AmeriGas Propane, Inc. EX-31.2 3 w17237exv31w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 31.2 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jerry E. Sheridan, certify that: 1. I have reviewed this interim report on Form 10-Q of AmeriGas Partners, L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and EXHIBIT 31.2 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 9, 2006 /s/ Jerry E. Sheridan ---------------------------------------- Jerry E. Sheridan Vice President - Finance and Chief Financial Officer of AmeriGas Propane, Inc. EX-32 4 w17237exv32.txt CERTIFICATION OF CEO AND CFO, PURSUANT TO SECTION 906 EXHIBIT 32 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER RELATING TO A PERIODIC REPORT CONTAINING FINANCIAL STATEMENTS I, Eugene V. N. Bissell, Chief Executive Officer, and I, Jerry E. Sheridan, Chief Financial Officer, of AmeriGas Propane, Inc., a Pennsylvania corporation and the General Partner of AmeriGas Partners, L.P., a Delaware limited partnership (the "Registrant"), hereby certify that to our knowledge: (1) The Registrant's periodic report on Form 10-Q for the period ended December 31, 2005 (the "Form 10-Q") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant. * * * CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER /s/ Eugene V. N. Bissell /s/ Jerry E. Sheridan - ------------------------------------- ---------------------------------------- Eugene V. N. Bissell Jerry E. Sheridan Date: February 9, 2006 Date: February 9, 2006 -----END PRIVACY-ENHANCED MESSAGE-----