<PAGE> 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, 1997
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, 1997, the registrants had units and shares of common stock
outstanding as follows:
AmeriGas Partners, L.P. - 22,060,407 Common Units
19,782,146 Subordinated Units
AmeriGas Finance Corp. - 100 shares
<PAGE> 2
AMERIGAS PARTNERS, L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
AmeriGas Partners, L.P.
-----------------------
Condensed Consolidated Balance Sheets as of March 31, 1997,
September 30, 1996 and March 31, 1996 1
Condensed Consolidated Statements of Operations for the three and six
months ended March 31, 1997 and 1996 2
Condensed Consolidated Statements of Cash Flows for the six months
ended March 31, 1997 and 1996 3
Condensed Consolidated Statement of Partners' Capital for the
six months ended March 31, 1997 4
Notes to Condensed Consolidated Financial Statements 5 - 8
AmeriGas Finance Corp.
----------------------
Balance Sheets as of March 31, 1997, September 30, 1996 and 9
March 31, 1996
Note to Balance Sheets 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11 - 16
PART II OTHER INFORMATION
Item 5. Other 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
</TABLE>
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<PAGE> 3
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1997 1996 1996
---------- ------------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,967 $ 2,122 $ 30,436
Accounts receivable (less allowances for doubtful accounts
of $9,286, $6,579, and $7,554, respectively) 130,111 85,926 136,504
Inventories 47,829 82,957 62,590
Prepaid expenses and other current assets 13,649 29,375 6,508
---------- ---------- ----------
Total current assets 230,556 200,380 236,038
Property, plant and equipment (less accumulated depreciation and
amortization of $155,172, $138,850, and $122,800, respectively) 448,934 454,112 455,425
Intangible assets (less accumulated amortization of $104,458,
$94,785, and $86,723, respectively) 681,741 691,688 693,623
Other assets 25,182 26,043 40,189
---------- ---------- ----------
Total assets $1,386,413 $1,372,223 $1,425,275
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long-term debt $ 9,372 $ 5,150 $ 5,080
Bank loans -- 15,000 --
Accounts payable - trade 44,571 46,891 44,716
Accounts payable - related parties 2,650 2,552 1,101
Other current liabilities 84,833 108,667 76,540
---------- ---------- ----------
Total current liabilities 141,426 178,260 127,437
Long-term debt 687,708 687,303 665,644
Other noncurrent liabilities 62,800 58,927 78,538
Minority interest 5,970 5,497 6,565
Partners' capital 488,509 442,236 547,091
---------- ---------- ----------
Total liabilities and partners' capital $1,386,413 $1,372,223 $1,425,275
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Thousands of dollars, except per unit)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- ---------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Propane $ 352,602 $ 352,398 $ 684,496 $ 609,047
Other 18,547 22,370 46,769 51,517
--------- --------- --------- ---------
371,149 374,768 731,265 660,564
--------- --------- --------- ---------
Costs and expenses:
Cost of sales - propane 207,809 198,254 399,734 346,314
Cost of sales - other 8,004 11,067 20,787 25,727
Operating and administrative expenses 81,082 84,495 164,689 161,415
Depreciation and amortization 15,514 15,453 31,014 30,925
Miscellaneous income, net (7,054) (1,645) (8,452) (4,489)
--------- --------- --------- ---------
305,355 307,624 607,772 559,892
--------- --------- --------- ---------
Operating income 65,794 67,144 123,493 100,672
Interest expense (16,901) (15,635) (33,607) (31,198)
--------- --------- --------- ---------
Income before income taxes 48,893 51,509 89,886 69,474
Income tax (expense) benefit 137 339 (471) 5
Minority interest (522) (550) (956) (754)
--------- --------- --------- ---------
Net income $ 48,508 $ 51,298 $ 88,459 $ 68,725
========= ========= ========= =========
General partner's interest in net income $ 485 $ 513 $ 885 $ 687
========= ========= ========= =========
Limited partners' interest in net income $ 48,023 $ 50,785 $ 87,574 $ 68,038
========= ========= ========= =========
Income per limited partner unit $ 1.15 $ 1.22 $ 2.10 $ 1.63
========= ========= ========= =========
Average limited partner units
outstanding (thousands) 41,780 41,731 41,755 41,727
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE> 5
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 88,459 $ 68,725
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 31,014 30,925
Other, net 58 (467)
--------- --------
119,531 99,183
Net change in:
Accounts receivable (47,488) (76,569)
Inventories 35,409 16,903
Accounts payable (2,229) 9,082
Other current assets and liabilities (6,012) (6,137)
--------- --------
Net cash provided by operating activities 99,211 42,462
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (11,728) (14,495)
Proceeds from disposals of assets 8,370 2,668
Decrease in short-term investments -- 9,000
Acquisition of businesses, net of cash acquired (2,748) (1,542)
--------- --------
Net cash used by investing activities (6,106) (4,369)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (46,368) (46,359)
Minority interest activity (498) (473)
Decrease in bank loans (15,000) --
Issuance of long-term debt 7,000 14,008
Repayment of long-term debt (1,420) (9,650)
Capital contribution from General Partner 26 8
--------- --------
Net cash used by financing activities (56,260) (42,466)
--------- --------
PARTNERSHIP FORMATION TRANSACTIONS:
Fees and expenses -- (4,758)
--------- --------
Cash and cash equivalents increase (decrease) $ 36,845 $ (9,131)
========= ========
CASH AND CASH EQUIVALENTS:
End of period $ 38,967 $ 30,436
Beginning of period 2,122 39,567
--------- --------
Increase (decrease) $ 36,845 $ (9,131)
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE> 6
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(unaudited)
(Thousands, except unit data)
<TABLE>
<CAPTION>
Number of units Total
--------------------------- General partners'
Common Subordinated Common Subordinated partner capital
----------- ------------ --------- ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SEPTEMBER 30, 1996 21,949,272 19,782,146 $ 230,376 $ 207,439 $4,421 $442,236
Net income 46,073 41,501 885 88,459
Distributions (24,144) (21,760) (464) (46,368)
Issuance of Common Units in
connection with acquisition 111,135 2,645 27 2,672
Capital contribution from
General Partner 786 709 15 1,510
----------- ----------- --------- --------- ------ --------
BALANCE MARCH 31, 1997 22,060,407 19,782,146 $ 255,736 $ 227,889 $4,884 $488,509
=========== =========== ========= ========= ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
<PAGE> 7
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Thousands of dollars, except per unit)
1. BASIS OF PRESENTATION
AmeriGas Partners, L.P. (AmeriGas Partners), through its subsidiary
AmeriGas Propane L.P. (the "Operating Partnership"), is the largest
retail propane distributor in the United States serving residential,
commercial, industrial, motor fuel and agricultural customers from
locations in 44 states, including Alaska and Hawaii. AmeriGas Partners
and the Operating Partnership are Delaware limited partnerships.
AmeriGas Propane, Inc. (the "General Partner") serves as the general
partner of AmeriGas Partners and the Operating Partnership. The General
Partner holds a 1% general partner interest in AmeriGas Partners and a
1.01% general partner interest in the Operating Partnership. In
addition, the General Partner and certain of its wholly owned
subsidiaries own an effective 56.5% limited partner interest in the
Operating Partnership.
The condensed consolidated financial statements include the accounts of
AmeriGas Partners, the Operating Partnership and their subsidiaries,
collectively referred to herein as the Partnership. The General
Partner's 1.01% interest in the Operating Partnership is accounted for
in the condensed consolidated financial statements as a minority
interest.
The accompanying condensed consolidated financial statements are
unaudited and have been prepared in accordance with the rules and
regulations of the U.S. Securities and Exchange Commission. They
include all adjustments which the Partnership considers necessary for a
fair statement of the results for the interim periods presented. Such
adjustments consisted only of normal recurring items unless otherwise
disclosed. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Partnership's Report on Form 10-K for the year ended September 30,
1996. Due to the seasonal nature of the Partnership's propane business,
the results of operations for interim periods are not necessarily
indicative of the results to be expected for a full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and revenues and expenses during the
reporting period. Actual results could differ from these estimates.
2. DISTRIBUTIONS OF AVAILABLE CASH
Distributions of 55 cents per limited partner unit (the "Minimum
Quarterly Distribution" or "MQD") for the quarters ended September 30,
1996 and December 31, 1996 were paid on November 18, 1996 and February
18, 1997, respectively on all Common and Subordinated units. On April
28, 1997, the Partnership declared the MQD on all
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<PAGE> 8
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
Common and Subordinated units for the quarter ended March 31, 1997,
payable May 18, 1997 to holders of record on May 9, 1997.
3. RELATED PARTY TRANSACTIONS
In accordance with the Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, the General Partner is entitled to
reimbursement of all direct and indirect expenses incurred or payments
it makes on behalf of the Partnership, and all other necessary or
appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with the
Partnership's business. These costs totaled $46,586 and $93,887 during
the three and six months ended March 31, 1997, respectively, and
$50,733 and $98,294 during the three and six months ended March 31,
1996, respectively. In addition, UGI provides certain financial and
administrative services to the General Partner. UGI bills the General
Partner for these direct and indirect corporate expenses and the
General Partner is reimbursed by the Partnership for these expenses.
Such corporate expenses totaled $1,794 and $3,275, during the three and
six months ended March 31, 1997, respectively, and $2,357 and $4,431,
during the three and six months ended March 31, 1996, respectively.
4. UNUSUAL ITEMS
In March 1997, the Partnership sold its 50% equity interest in Atlantic
Energy, Inc. (Atlantic Energy), a refrigerated liquefied petroleum gas
storage terminal in Chesapeake, Virginia. The resulting gain of $4,700
increased net income for the three and six months ended March 31, 1997
by $4,652 or $.11 per limited partner unit.
During the three months ended March 31, 1996, the Partnership completed
the arrangements for a refund of general liability insurance premium
deposits which were previously paid by a predecessor company of the
Partnership. The refund, which has been reflected as a reduction to
operating expenses in the accompanying condensed consolidated
statements of operations, increased net income for the three and six
months ended March 31, 1996 by $4,356 or $.10 per limited partner unit.
During the three months ended March 31, 1996, the Partnership completed
a reassessment of its potential liability for environmental matters
principally relating to the clean up of underground storage tanks
(USTs). The reassessment indicated a reduction in estimated future
costs and the resulting adjustment has been reflected as a reduction to
operating expenses in the accompanying condensed consolidated
statements of operations. The adjustment increased net income for the
three and six months ended March 31, 1996 by $3,312 or $.08 per limited
partner unit.
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<PAGE> 9
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
5. COMMITMENTS AND CONTINGENCIES
The Partnership has succeeded to the lease guarantee obligations of
Petrolane Incorporated (Petrolane), a predecessor company of the
Partnership, relating to Petrolane's divestiture of nonpropane
operations prior to its 1989 acquisition by QFB Partners. These leases
are currently estimated to aggregate approximately $85,000 (subject to
reduction in certain circumstances). The leases expire through 2010 and
some of them are currently in default. Under certain circumstances such
lease obligations may be reduced by the earnings of such divested
operations. 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 its
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
that were pending against Tropigas de Puerto Rico (Tropigas). This
indemnification agreement had been entered into by Petrolane in
conjunction with Petrolane's sale of the international operations of
Tropigas to Shell in 1989. The Partnership also succeeded to
Petrolane's right to seek indemnity on these claims first from
International Controls Corp., which sold Tropigas to Petrolane, and
then from Texas Eastern. To date, neither the Partnership nor Petrolane
has paid any sums under this indemnity, but several claims by Shell,
including claims related to certain antitrust actions aggregating at
least $68,000, remain pending.
The Partnership has identified environmental contamination at several
of its properties. The Partnership's policy is to accrue environmental
investigation and cleanup costs when it is probable that a liability
exists and the amount or range of amounts is reasonably estimable.
However, in many circumstances future expenditures cannot be reasonably
quantified because of a number of factors, including various costs
associated with potential remedial alternatives, the unknown number of
other potentially responsible parties involved and their ability to
contribute to the costs of investigation and remediation, and changing
environmental laws and regulations. The Partnership intends to pursue
recovery of any incurred costs through all appropriate means, although
such recovery cannot be assured.
In addition to these environmental matters, there are various other
pending claims and legal actions arising out of the normal conduct of
the Partnership's business. The final results of environmental and
other matters cannot be predicted with certainty. However, it is
reasonably possible that some of them could be resolved unfavorably to
the Partnership. Management believes, after consultation with counsel,
that damages or
-7-
<PAGE> 10
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
settlements, if any, recovered by the plaintiffs in such claims or
actions will not have a material adverse effect on the Partnership's
financial position but could be material to operating results and cash
flows in future periods depending on the nature and timing of future
developments with respect to these matters and the amounts of future
operating results and cash flows.
-8-
<PAGE> 11
AMERIGAS FINANCE CORP.
(a wholly owned subsidiary of AmeriGas Partners, L.P.)
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1997 1996 1996
-------- ------------- ---------
<S> <C> <C> <C>
ASSETS
Cash $1,000 $1,000
Subscription receivable -- -- $1,000
------ ------ ------
Total assets $1,000 $1,000 $1,000
====== ====== ======
STOCKHOLDER'S EQUITY
Common stock, $.01 par value; 100 shares authorized,
issued and outstanding $ 1 $ 1 $ 1
Additional paid-in capital 999 999 999
------ ------ ------
Total stockholder's equity $1,000 $1,000 $1,000
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-9-
<PAGE> 12
AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
NOTE TO BALANCE SHEETS
AmeriGas Finance Corp. (AmeriGas Finance), a Delaware corporation, was formed on
March 13, 1995 and is a wholly owned subsidiary of AmeriGas Partners, L.P.
(AmeriGas Partners). AmeriGas Partners was formed on November 2, 1994 as a
Delaware limited partnership. AmeriGas Partners was formed to acquire and
operate the propane businesses and assets of AmeriGas Propane, Inc., a Delaware
corporation (AmeriGas Propane), AmeriGas Propane-2, Inc. (AGP-2) and Petrolane
Incorporated (Petrolane) through AmeriGas Propane, L.P. (the "Operating
Partnership"). AmeriGas Partners holds a 98.99% limited partner interest in the
Operating Partnership and AmeriGas Propane, Inc., a Pennsylvania corporation and
the general partner of AmeriGas Partners (the "General Partner"), holds a 1.01%
general partner interest. On April 19, 1995, (i) pursuant to a Merger and
Contribution Agreement dated as of April 19, 1995, AmeriGas Propane and certain
of its operating subsidiaries and AGP-2 merged into the Operating Partnership
(the "Formation Merger"), and (ii) pursuant to a Conveyance and Contribution
Agreement dated as of April 19, 1995, Petrolane conveyed substantially all of
its assets and liabilities to the Operating Partnership (the "Petrolane
Conveyance"). As a result of the Formation Merger and the Petrolane Conveyance,
the General Partner and Petrolane received limited partner interests in the
Operating Partnership and the Operating Partnership owns substantially all of
the assets and assumed substantially all of the liabilities of AmeriGas Propane,
AGP-2 and Petrolane. AmeriGas Propane conveyed its limited partner interest in
the Operating Partnership to AmeriGas Partners in exchange for 2,922,235 Common
Units and 13,350,146 Subordinated Units of AmeriGas Partners and Petrolane
conveyed its limited partner interest in the Operating Partnership to AmeriGas
Partners in exchange for 1,407,911 Common Units and 6,432,000 Subordinated Units
of AmeriGas Partners. Both Common and Subordinated units represent limited
partner interests in AmeriGas Partners.
On April 19, 1995, AmeriGas Partners issued $100,000,000 face value of 10.125%
Senior Notes due April 2007. AmeriGas Finance serves as a co-obligor of these
notes.
AmeriGas Partners owns all 100 shares of AmeriGas Finance Common Stock
outstanding.
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<PAGE> 13
AMERIGAS PARTNERS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Increase
Three Months Ended March 31, 1997 1996 (Decrease)
- ---------------------------------------------------------------------------------------------
(Millions, except per gallon and percentages)
<S> <C> <C> <C> <C>
Gallons sold:
Retail 267.6 315.3 (47.7) (15.1)%
Wholesale 73.5 96.0 (22.5) (23.4)%
-------- -------- -------
341.1 411.3 (70.2) (17.1)%
======== ======== =======
Degree days - % colder (warmer)
than normal (a) (13.1)% 0.8% -- --
Revenues:
Retail propane $ 308.5 $ 305.2 $ 3.3 1.1%
Wholesale propane 44.1 47.2 (3.1) (6.6)%
Other 18.5 22.4 (3.9) (17.4)%
-------- -------- -------
$ 371.1 $ 374.8 $ (3.7) (1.0)%
======== ======== =======
Total margin (b) $ 155.3 $ 165.4 $ (10.1) (6.1)%
EBITDA (c) $ 81.3 $ 82.6 $ (1.3) (1.6)%
Operating income $ 65.8 $ 67.1 $ (1.3) (1.9)%
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Based on the weighted average deviation from average degree days during
the 30-year period 1961-1990, as contained in the National Weather
Service Climate Analysis Center database, for geographic areas in which
AmeriGas Partners operates.
(b) Total revenues less total cost of sales.
(c) 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.
- ----------
-11-
<PAGE> 14
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Retail volumes of propane sold decreased in the three months ended March 31,
1997 due in large part to the effects of weather that was 14.4% warmer than in
the prior-year period. In addition, higher propane market prices resulted in
customer conservation efforts which further reduced retail volumes. Wholesale
volumes of propane sold were lower in the three months ended March 31, 1997
principally reflecting reduced low-margin sales of storage inventories.
Total revenues from retail propane sales increased $3.3 million reflecting a
$49.5 million increase as a result of higher average retail propane selling
prices substantially offset by a $46.2 million decrease in retail propane
revenues resulting from the lower volumes sold. The higher average selling
prices reflect higher propane product costs which resulted principally from
higher supply costs experienced early in the quarter as well as the seasonal
liquidation of higher cost propane inventories purchased earlier in the fiscal
year. The spot price of propane at Mont Belvieu, Texas, a major U.S. storage and
distribution hub, increased dramatically during much of the first fiscal quarter
of 1997 rising to a high of 70.5 cents per gallon on December 16, 1996. Propane
spot market prices began to decline in late December 1996. The general trend of
declining spot market prices continued into the second quarter of fiscal 1997 to
a price of 36.75 cents per gallon on March 31, 1997. Wholesale propane and other
revenues decreased $7.0 million reflecting the lower wholesale volumes and lower
hauling and appliance revenues.
Total propane margin decreased in the three months ended March 31, 1997
principally reflecting the impact of lower volumes of propane sold partially
offset by the effects of higher average unit margins.
The decrease in operating income and EBITDA during the three months ended March
31, 1997 reflects the impact of the lower total margin partially offset by lower
operating expenses and an increase in miscellaneous income. Total operating
expenses were $81.1 million in the three months ended March 31, 1997 compared
with $84.5 million in the three months ended March 31, 1996. Operating expenses
in the prior-year period are net of $4.4 million from a refund of insurance
premium deposits made in prior years and $3.3 million from a reduction in
accrued environmental costs. Miscellaneous income in the three months ended
March 31, 1997 was $5.4 million greater than in the prior-year period
principally due to $4.7 million of income from the sale of the Partnership's 50%
interest in Atlantic Energy, Inc., a refrigerated liquefied petroleum gas
storage terminal in Chesapeake, Virginia. The Partnership sold its interest in
Atlantic Energy after determining that it was not a strategic asset.
Interest expense was $16.9 million in the three months ended March 31, 1997
compared with $15.6 million in the prior-year period reflecting increased
interest expense on the Partnership's Revolving Credit and Acquisition
facilities principally as a result of higher amounts outstanding.
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<PAGE> 15
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Increase
Six Months Ended March 31, 1997 1996 (Decrease)
- -------------------------------------------------------------------------------------------
(Millions, except per gallon and percentages)
<S> <C> <C> <C> <C>
Gallons sold:
Retail 519.3 559.6 (40.3) (7.2)%
Wholesale 142.1 215.2 (73.1) (34.0)%
-------- -------- --------
661.4 774.8 (113.4) (14.6)%
======== ======== ========
Degree days - % colder
(warmer) than normal (a) (7.6)% 1.1% -- --
Revenues:
Retail propane $ 594.4 $ 515.1 $ 79.3 15.4%
Wholesale propane 90.1 94.0 (3.9) (4.1)%
Other 46.8 51.5 (4.7) (9.1)%
-------- -------- --------
$ 731.3 $ 660.6 $ 70.7 10.7%
======== ======== ========
Total margin (b) $ 310.7 $ 288.5 $ 22.2 7.7%
EBITDA (c) $ 154.5 $ 131.6 $ 22.9 17.4%
Operating income $ 123.5 $ 100.7 $ 22.8 22.6%
- -------------------------------------------------------------------------------------------
</TABLE>
(a) Based on the weighted average deviation from average degree days during
the 30-year period 1961-1990, as contained in the National Weather
Service Climate Analysis Center database, for geographic areas in which
AmeriGas Partners operates.
(b) Total revenues less total cost of sales.
(c) EBITDA (earnings before interest expense, income taxes, depreciation
and amortization) should not be considered as an alternative to net
income (as an indicator of operating performance) or as an alternative
to cash flow (as a measure of liquidity or ability to service debt
obligations) and is not a measure of performance or financial condition
under generally accepted accounting principles.
- ----------
Retail volumes of propane sold decreased in the six months ended March 31, 1997
reflecting the effects of warmer heating-season weather and price-induced
customer conservation efforts.
-13-
<PAGE> 16
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Wholesale volumes of propane sold were lower in the six months ended March 31,
1997 principally due to reduced low-margin sales of storage inventories.
Total revenues from retail propane sales increased $79.3 million reflecting a
$116.4 million increase as a result of higher average retail propane selling
prices partially offset by a $37.1 million decrease in retail propane revenues
resulting from the lower volumes sold. The higher prices resulted principally
from higher propane product costs experienced by the Partnership particularly
during the first quarter of fiscal 1997. Wholesale propane and other revenues
decreased $8.6 million reflecting the lower wholesale volumes and lower hauling
and appliance revenues.
Total propane margin was significantly greater in the six months ended March 31,
1997 reflecting the impact of higher average retail unit margins partially
offset by reduced volumes of propane sold. Although the Partnership's propane
product costs increased significantly, they were partially mitigated by
favorable fixed-price supply commitments and financial contracts entered into by
the Partnership as part of its overall propane supply strategy. In addition, the
higher 1997 six-month period average retail unit margin reflects the fact that
retail unit margins in the prior-year period were adversely impacted by the
effects of certain sales and marketing programs.
The increase in operating income and EBITDA during the six months ended March
31, 1997 reflects the impact of the higher total margin and an increase in
miscellaneous income. Total operating expenses were $164.7 million in the six
months ended March 31, 1997 compared with $161.4 million in the six months ended
March 31, 1996. The 1996 operating expenses are net of $4.4 million from a
refund of insurance premium deposits made in prior years and $3.3 million from a
reduction in accrued environmental costs. Miscellaneous income increased $4.0
million in the six months ended March 31, 1997 primarily from $4.7 million of
income from the sale of the Partnership's 50% interest in Atlantic Energy.
Interest expense was $33.6 million in the six months ended March 31, 1997
compared with $31.2 million in the prior-year period reflecting increased
interest expense on the Partnership's Revolving Credit and Acquisition
facilities principally as a result of higher amounts outstanding.
-14-
<PAGE> 17
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY
FINANCIAL CONDITION
The Partnership's debt outstanding at March 31, 1997 totaled $697.1 million
compared with $707.5 million at September 30, 1996. The decrease is principally
a result of a $15 million decrease in borrowings under the Operating
Partnership's Revolving Credit Facility partially offset by $7 million of
borrowings under its Acquisition Facility.
Effective October 28, 1996, the Operating Partnership has a revolving credit
agreement with the General Partner under which it may borrow up to $20 million
to fund working capital, capital expenditures, and interest and distribution
payments. This agreement is coterminous with, and generally comparable to, the
Operating Partnership's Revolving Credit Facility. Borrowings under the General
Partner Facility are unsecured and subordinated to all senior debt of the
Partnership. Interest rates on borrowings are based upon one-month offshore
interbank borrowing rates. Facility fees are determined in the same manner as
fees under the Revolving Credit Facility. UGI has agreed to contribute on an as
needed basis through its subsidiaries up to $20 million to the General Partner
to fund such borrowings. Also effective October 28, 1996, the Operating
Partnership's Bank Credit Agreement was amended to include a revolving $15
million sublimit under its Special Purpose Facility which can be used to fund
working capital, capital expenditures, and interest and distribution payments.
This sublimit is scheduled to expire April 12, 1998. At March 31, 1997, there
were no borrowings under the General Partner Facility or the sublimit under the
Special Purpose Facility.
During the six months ended March 31, 1997, the Partnership declared and paid
the MQD of 55 cents on all units for the quarters ended September 30, 1996 and
December 31, 1996. The MQD for the quarter ended March 31, 1997 will be made on
May 18, 1997 to holders of record on May 9, 1997 of all Common and Subordinated
units.
CASH FLOWS
Cash and cash equivalents totaled $39.0 million at March 31, 1997 compared with
$2.1 million at September 30, 1996. The higher balance at March 31, 1997 is a
result of cash generated by operating activities during the six months ended
March 31, 1997. Due to the seasonal nature of the propane business, cash flows
from operating activities are generally strongest during the second and third
fiscal quarters of the Partnership when customers pay for propane purchased
during the heating season and are typically at their lowest levels during the
first and fourth fiscal quarters. Accordingly, cash flows from operations during
the six months ended March 31, 1997 are not necessarily indicative of cash flows
to be expected for a full year.
OPERATING ACTIVITIES. Cash provided by operating activities was $99.2 million
during the six months ended March 31, 1997 compared with $42.5 million in the
comparable prior-year period. Cash flows
-15-
<PAGE> 18
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
from operations before changes in working capital were $119.5 million in the six
months ended March 31, 1997 compared with $99.2 million during the six months
ended March 31, 1996 reflecting a significant improvement in the Partnership's
operating performance. Changes in operating working capital during the six
months ended March 31, 1997 required $20.3 million of operating cash flow
principally from a seasonal increase in customer accounts receivable and a
decrease in accrued employee compensation partially offset by a seasonal
decrease in inventories. During the six months ended March 31, 1996, changes in
operating working capital required $56.7 million of operating cash flow.
INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $11.7 million (including maintenance capital expenditures of $5.0
million) during the six months ended March 31, 1997 compared with $14.5 million
(including maintenance capital expenditures of $3.6 million) in the prior-year
period. Proceeds from disposals of assets totaled $8.4 million during the six
months ended March 31, 1997 compared with $2.7 million in the same period last
year. The proceeds during the six months ended March 31, 1997 include proceeds
from the sale of the Partnership's 50% interest in Atlantic Energy. Maturing
short-term investments increased cash flows from investing activities by $9.0
million during the 1996 six-month period. During the six months ended March 31,
1997, the Partnership acquired several propane businesses for $2.7 million in
cash. In conjunction with one such acquisition, the Partnership issued 111,135
Common Units having a fair value of $2.6 million. During the six months ended
March 31, 1996, the Partnership made acquisition-related cash payments of $1.5
million.
FINANCING ACTIVITIES. During each of the six-month periods ended March 31, 1997
and 1996, AmeriGas Partners declared and paid the MQD on all units and the
general partner interest for the quarters ended September and December totaling
$46.4 million. In addition, during each of the six-month periods ended March 31,
1997 and 1996, the Operating Partnership distributed $.5 million to the General
Partner in respect of the General Partner's 1.0101% interest in the Operating
Partnership. During the six months ended March 31, 1997, the Operating
Partnership made $15 million of net repayments under its Revolving Credit
Facility. The maximum amount of seasonal borrowings under the Partnership's
working capital facilities during the six months ended March 31, 1997 was $73
million compared with $25 million of such borrowings during the six months ended
March 31, 1996. Seasonal borrowing requirements in the prior-year period were
lower due to the existence of significant cash balances at the beginning of such
period. The Partnership also borrowed $7 million under its Acquisition Facility
during the six months ended March 31, 1997 relating to acquisitions made prior
to fiscal 1997. There were borrowings of $5 million under the Acquisition
Facility and $9 million under the Special Purpose Facility during the same
period last year.
PARTNERSHIP FORMATION TRANSACTIONS. Cash paid for Partnership formation
transactions during the six months ended March 31, 1996 represents the
reimbursement by the Partnership of fees and expenses previously paid by
AmeriGas, Inc. relating to the formation of the Partnership.
-16-
<PAGE> 19
AMERIGAS PARTNERS, L.P.
PART II. OTHER INFORMATION
ITEM 5. OTHER
Management Changes
Effective April 28, 1997, Charles L. Ladner was elected Vice President
- - Finance and Accounting of AmeriGas Propane, Inc., the General Partner of
AmeriGas Partners, L.P., replacing David C. Riggan. Mr. Ladner is also Chief
Financial Officer of UGI Corporation, the parent of the General Partner.
Effective March 10, 1997, Richard R. Eynon was elected Controller of AmeriGas
Propane, Inc. Effective April 30, 1997, Messrs. Ladner and Eynon were elected
Vice President-Finance and Accounting, and Controller, respectively, of
AmeriGas Finance Corp.
- -------------------------------------------------------------------------------
05/13/1997
Directors and Officers
AmeriGas Finance Corp.
DIRECTORS:
- ----------
Brendan P. Bovaird Director
Last Elected: 04/30/1997
Lon R. Greenberg Director
Last Elected: 04/30/1997
Charles L. Ladner Director
Last Elected: 04/30/1997
OFFICERS:
- ---------
Lon R. Greenberg President
Last Elected: 04/30/1997
Brendan P. Bovaird Vice President and General Counsel
Last Elected: 04/30/1997
Robert H. Knauss Vice President - Law, Associate General
Last Elected: 04/30/1997 Counsel, Secretary
Charles L. Ladner Vice President - Finance and Accounting
Last Elected: 04/30/1997
Michael J. Cuzzolina Treasurer, Assistant Secretary
Last Elected: 04/30/1997
Richard R. Eynon Controller
Last Elected: 04/30/1997
Samuel R. Mauriello Assistant Treasurer
Last Elected: 04/30/1997
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
10 UGI Corporation 1997 Stock Option and Dividend Equivalent
Plan is incorporated by reference to Exhibit 10.2 to the
UGI Corporation Quarterly Report on Form 10-Q for the
period ended March 31, 1997
27.1 Financial Data Schedule of AmeriGas Partners, L.P.
27.2 Financial Data Schedule of AmeriGas Finance Corp.
(b) No current Reports on Form 8-K were filed during the fiscal
quarter ended March 31, 1997 by AmeriGas Partners or AmeriGas
Finance Corp.
-17-
<PAGE> 20
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 14, 1997 By: C. L. Ladner
- ------------------- ----------------------------------------------
C. L. Ladner
Vice President - Finance & Accounting
AmeriGas Finance Corp.
-----------------------------------------
(Registrant)
Date: May 14, 1997 By: C. L. Ladner
- ------------------- ----------------------------------------------
C. L. Ladner
Vice President - Finance & Accounting
-18-
<PAGE> 21
AMERIGAS PARTNERS, L.P.
EXHIBIT INDEX
10 UGI Corporation 1997 Stock Option and Dividend Equivalent Plan is
incorporated by reference to Exhibit 10.2 to the UGI Corporation
Quarterly Report on Form 10-Q for the period ended March 31, 1997
27.1 Financial Data Schedule of AmeriGas Partners, L.P.
27.2 Financial Data Schedule of AmeriGas Finance Corp.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS OF AMERIGAS
PARTNERS, L.P. AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED
IN AMERIGAS PARTNERS' QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1997.
</LEGEND>
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<NAME> AMERIGAS PARTNERS, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 38,967
<SECURITIES> 0
<RECEIVABLES> 139,397
<ALLOWANCES> 9,286
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<CURRENT-ASSETS> 230,556
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<CURRENT-LIABILITIES> 141,426
<BONDS> 687,708
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<COMMON> 0
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<TOTAL-LIABILITY-AND-EQUITY> 1,386,413
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<EPS-PRIMARY> 2.10
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF AMERIGAS FINANCE CORP. AS OF MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET INCLUDED IN AMERIGAS PARTNERS'
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</LEGEND>
<CIK> 0000945792
<NAME> AMERIGAS FINANCE CORP.
<S> <C>
<PERIOD-TYPE> 6-MOS
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