<PAGE> 1
Exhibit 13
AmeriGas Partners, L.P. 2000 Annual Report
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
September 30,
-------------
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,795 $ 390
Accounts receivable (less allowances for doubtful accounts
of $6,529 and $5,998, respectively) 97,376 66,937
Inventories 65,489 53,455
Prepaid expenses and other current assets 15,185 19,787
---------- ----------
Total current assets 188,845 140,569
Property, plant and equipment (less accumulated depreciation and
amortization of $277,790 and $236,628, respectively) 436,119 435,545
Intangible assets (less accumulated amortization of $188,655 and
$165,676, respectively) 621,920 608,878
Other assets 11,336 11,469
---------- ----------
Total assets $1,258,220 $1,196,461
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long-term debt $ 64,512 $ 17,394
Bank loans 30,000 22,000
Accounts payable - trade 73,786 48,730
Accounts payable - related parties 3,001 2,151
Employee compensation and benefits accrued 16,295 23,530
Interest accrued 30,385 29,140
Customer deposits 28,070 23,244
Other current liabilities 20,964 21,718
---------- ----------
Total current liabilities 267,013 187,907
Long-term debt 792,722 727,331
Other noncurrent liabilities 39,927 43,802
Commitments and contingencies (note 9)
Minority interest 2,587 3,380
Partners' capital:
Common unitholders (units issued - 32,078,293) 118,872 177,947
Subordinated unitholders (units issued - 9,891,072) 35,542 53,756
General partner 1,557 2,338
---------- ----------
Total partners' capital 155,971 234,041
---------- ----------
Total liabilities and partners' capital $1,258,220 $1,196,461
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 2
AmeriGas Partners, L.P. 2000 Annual Report
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per unit)
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Revenues:
Propane $ 1,022,967 $ 785,140 $ 834,627
Other 97,089 87,395 79,751
----------- ----------- -----------
1,120,056 872,535 914,378
----------- ----------- -----------
Costs and expenses:
Cost of sales - propane 586,905 354,063 410,713
Cost of sales - other 41,376 36,705 33,047
Operating and administrative expenses 342,720 329,635 320,220
Depreciation and amortization 67,381 64,878 63,225
Other income, net (8,533) (5,392) (745)
----------- ----------- -----------
1,029,849 779,889 826,460
----------- ----------- -----------
Operating income 90,207 92,646 87,918
Interest expense (74,764) (66,585) (66,189)
----------- ----------- -----------
Income before income taxes 15,443 26,061 21,729
Income tax (expense) benefit 15 (58) (3)
Minority interest (262) (368) (324)
----------- ----------- -----------
Net income $ 15,196 $ 25,635 $ 21,402
=========== =========== ===========
General partner's interest in net income $ 152 $ 256 $ 214
=========== =========== ===========
Limited partners' interest in net income $ 15,044 $ 25,379 $ 21,188
=========== =========== ===========
Income per limited partner unit - basic and diluted $ 0.36 $ 0.61 $ 0.51
=========== =========== ===========
Average limited partner units outstanding - basic
and diluted (thousands) 41,969 41,918 41,886
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 3
AmeriGas Partners, L.P. 2000 Annual Report
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 15,196 $ 25,635 $ 21,402
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 67,381 64,878 63,225
Other, net (1,857) (941) (2,825)
--------- --------- ---------
80,720 89,572 81,802
Net change in:
Accounts receivable (33,839) (11,462) 15,904
Inventories and prepaid propane purchases (7,775) (4,843) 36,774
Accounts payable 25,906 10,186 (14,187)
Other current assets and liabilities (3,502) (13,200) 12,625
--------- --------- ---------
Net cash provided by operating activities 61,510 70,253 132,918
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment (30,427) (31,053) (31,577)
Proceeds from disposals of assets 7,404 5,705 5,153
Acquisitions of businesses, net of cash acquired (55,640) (3,898) (8,076)
--------- --------- ---------
Net cash used by investing activities (78,663) (29,246) (34,500)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (93,266) (93,130) (93,060)
Minority interest activity (1,055) (1,036) (1,039)
Increase (decrease) in bank loans 8,000 12,000 (18,000)
Issuance of long-term debt 196,000 96,007 23,000
Repayment of long-term debt (82,121) (63,347) (4,527)
Capital contribution from general partner -- 16 12
--------- --------- ---------
Net cash provided (used) by financing activities 27,558 (49,490) (93,614)
--------- --------- ---------
Cash and cash equivalents increase (decrease) $ 10,405 $ (8,483) $ 4,804
========= ========= =========
CASH AND CASH EQUIVALENTS
End of period $ 10,795 $ 390 $ 8,873
Beginning of period 390 8,873 4,069
--------- --------- ---------
Increase (decrease) $ 10,405 $ (8,483) $ 4,804
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 4
AmeriGas Partners, L.P. 2000 Annual Report
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Thousands of dollars, 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, 1997 22,060,407 19,782,146 $ 208,253 $ 185,310 $ 3,974 $ 397,537
Net income 11,182 10,006 214 21,402
Distributions (48,608) (43,521) (931) (93,060)
Adjustments to net assets
contributed (14,172) (12,783) (272) (27,227)
Common Units issued in connection
with acquisition 45,586 -- 1,211 -- 12 1,223
----------- ----------- ----------- ----------- ----------- -----------
Balance September 30, 1998 22,105,993 19,782,146 157,866 139,012 2,997 299,875
----------- ----------- ----------- ----------- ----------- -----------
Net income 4,372 21,007 256 25,635
Distributions (54,118) (38,081) (931) (93,130)
Conversion of Subordinated Units 9,891,074 (9,891,074) 68,182 (68,182) -- --
Common Units issued in connection
with employee incentive plan 81,226 -- 1,645 -- 16 1,661
----------- ----------- ----------- ----------- ----------- -----------
Balance September 30, 1999 32,078,293 9,891,072 177,947 53,756 2,338 234,041
----------- ----------- ----------- ----------- ----------- -----------
Net income 11,498 3,546 152 15,196
Distributions (70,573) (21,760) (933) (93,266)
----------- ----------- ----------- ----------- ----------- -----------
Balance September 30, 2000 32,078,293 9,891,072 $ 118,872 $ 35,542 $ 1,557 $ 155,971
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)
Note 1. Partnership Organization and Formation
Note 2. Summary of Significant Accounting Policies
Note 3. Quarterly Distributions of Available Cash
Note 4. Debt
Note 5. Employee Retirement Plans
Note 6. Inventories
Note 7. Property, Plant and Equipment
Note 8. Partners' Capital and Incentive Compensation Plans
Note 9. Commitments and Contingencies
Note 10. Related Party Transactions
Note 11. Other Current Liabilities
Note 12. Financial Instruments
Note 13. Other Income, Net
Note 14. Acquisitions
Note 15. Quarterly Data (Unaudited)
NOTE 1 - PARTNERSHIP ORGANIZATION AND FORMATION
AmeriGas Partners, L.P. ("AmeriGas Partners") was formed November 2, 1994 and is
a publicly traded limited partnership. AmeriGas Partners owns a 98.99% limited
partner interest in AmeriGas Propane, L.P. (the "Operating Partnership"). The
Operating Partnership was formed to acquire the propane businesses and assets of
AmeriGas Propane, Inc. (a Delaware corporation), AmeriGas Propane-2, Inc., and
Petrolane Incorporated ("Petrolane"). The Operating Partnership acquired such
assets on April 19, 1995. We refer to AmeriGas Partners, the Operating
Partnership, and their subsidiaries collectively as "the Partnership" or "we."
AmeriGas Partners and the Operating Partnership are Delaware limited
partnerships. The Operating Partnership is engaged in the distribution of
propane and related equipment and supplies. The Operating Partnership is one of
the largest retail propane distributors in the United States serving
residential, commercial, industrial, motor fuel and agricultural customers from
locations in 45 states, including Alaska and Hawaii.
AmeriGas Propane, Inc. (the "General Partner"), a Pennsylvania corporation,
holds a 1% general partner interest in AmeriGas Partners and a 1.01% general
partner interest in the Operating Partnership. At September 30, 2000, the
General Partner and its wholly owned subsidiary Petrolane owned a combined
14,283,932 Common Units and 9,891,072 Subordinated Units of AmeriGas Partners.
The remaining 17,794,361 Common Units are publicly held. These Common and
Subordinated units represent limited partner interests in AmeriGas Partners.
AmeriGas Partners and the Operating Partnership have no employees. The
General Partner conducts, directs and manages all activities of AmeriGas
Partners and the Operating Partnership and is reimbursed on a monthly basis for
all direct and indirect expenses it incurs on their behalf.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION PRINCIPLES. Our consolidated financial statements include the
accounts of AmeriGas Partners, the Operating Partnership and their subsidiaries.
We eliminate all significant intercompany accounts and transactions when we
consolidate. We account for the General Partner's 1.01% interest in the
Operating Partnership as a minority interest in the consolidated financial
statements.
USE OF ESTIMATES. We make estimates and assumptions when preparing financial
statements in conformity with accounting principles generally accepted in the
United States. These estimates and assumptions affect the reported amounts of
assets and liabilities, revenues and expenses, as well as the disclosure of
contingent assets and liabilities. Actual results could differ from these
estimates.
REVENUE RECOGNITION. We recognize revenues from the sale of propane principally
as product is shipped or delivered to customers. Revenue from the sale of
appliances and equipment is recognized at the time of sale or installation.
Revenue from repairs and maintenance is recognized upon completion of the
service. See "Accounting Principles Not Yet Adopted" below.
INVENTORIES AND PREPAID PROPANE PURCHASES. Our inventories are stated at the
lower of cost or market. We determine cost using an average cost method for
propane, specific identification for appliances, and the first-in, first-out
("FIFO") method for all other inventories. From time to time we enter into
contracts with certain of our suppliers under which we prepay all or a portion
of the purchase price of a fixed volume of propane for future delivery. These
prepayments are included in prepaid expenses and other current assets in the
Consolidated Balance Sheets.
PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION. We record property,
plant and equipment at cost. The amounts we assign to property, plant and
equipment of businesses we
14
<PAGE> 6
AmeriGas Partners, L.P. 2000 Annual Report
acquire are based upon estimated fair value at date of acquisition. When we
retire or dispose of plant and equipment, we remove from the accounts the cost
and accumulated depreciation and include in income any gains or losses.
We compute depreciation of property, plant and equipment using the
straight-line method over estimated service lives generally ranging from 15 to
40 years for buildings and improvements; 7 to 30 years for storage and customer
tanks and cylinders; and 5 to 10 years for vehicles, equipment and office
furniture and fixtures. Depreciation expense was $41,452 in 2000, $39,795 in
1999, and $38,133 in 1998.
INTANGIBLE ASSETS. Intangible assets comprise the following at September 30:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Goodwill (less accumulated
amortization of $125,007 and
$109,596, respectively) $513,248 $494,144
Excess reorganization value
(less accumulated amortization of
$60,244 and $52,301, respectively) 101,263 109,205
Other (less accumulated amortization
of $3,404 and $3,779, respectively) 7,409 5,529
-------- --------
Total intangible assets $621,920 $608,878
======== ========
</TABLE>
We amortize goodwill resulting from purchase business combinations on a
straight-line basis over 40 years. We amortize excess reorganization value
(resulting from Petrolane's July 15, 1993 reorganization under Chapter 11 of the
U.S. Bankruptcy Code) on a straight-line basis over 20 years. We amortize other
intangible assets over the estimated periods of benefit which do not exceed ten
years. Amortization expense of intangible assets was $25,007 in 2000, $24,295 in
1999, and $24,922 in 1998.
We evaluate the impairment of long-lived assets, including intangibles,
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. We evaluate recoverability based upon
undiscounted future cash flows expected to be generated by such assets.
OTHER ASSETS. Included in other assets are net deferred debt issuance costs of
$9,991 at September 30, 2000 and $10,017 at September 30, 1999. We are
amortizing these costs over the term of the related debt.
COMPUTER SOFTWARE COSTS. Prior to October 1, 1999, we included in property,
plant and equipment external and incremental internal costs associated with
computer software we developed or obtained for use in our business. Effective
October 1, 1999, we adopted Statement of Position No. 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"),
which requires companies to capitalize the cost of computer software, including
nonincremental internal costs, once certain criteria have been met. We amortize
computer software costs on a straight-line basis over periods of five to seven
years once the installed software is ready for its intended use. The adoption of
SOP 98-1 did not have a material effect on our financial position or results of
operations.
ENVIRONMENTAL LIABILITIES. We accrue environmental investigation and cleanup
costs when it is probable that a liability exists and the amount or range of
amounts can be reasonably estimated. Our estimated liability for environmental
contamination is reduced to reflect anticipated participation of other
responsible parties but is not reduced for possible recovery from insurance
carriers. We do not discount to present value the costs of future expenditures
for environmental liabilities.
INCOME TAXES. AmeriGas Partners and the Operating Partnership are not directly
subject to federal income taxes. Instead, their taxable income or loss is
allocated to the individual partners. The Operating Partnership does, however,
have corporate subsidiaries which are directly subject to federal income taxes.
Accordingly, our consolidated financial statements reflect income taxes related
to these corporate subsidiaries. Net income for financial statement purposes may
differ significantly from taxable income reportable to unitholders. This is a
result of (1) differences between the tax basis and financial reporting basis of
assets and liabilities and (2) the taxable income allocation requirements of the
Agreement of Limited Partnership of AmeriGas Partners ("Partnership Agreement")
and the Internal Revenue Code.
UNIT-BASED COMPENSATION. As permitted by Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"), we apply the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), in recording compensation
expense for grants of equity instruments to employees. Our compensation expense
under APB 25 was not materially different from amounts determined under the
provisions of SFAS 123.
NET INCOME PER UNIT. Net income per unit is computed by dividing net income,
after deducting the General Partner's 1% interest, by the weighted average
number of Common and Subordinated units outstanding. There were no potentially
dilutive securities outstanding during the periods presented.
15
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)
DERIVATIVE INSTRUMENTS. We use derivative instruments, including futures
contracts, price swap agreements and option contracts, to hedge exposure to
market risk associated with a portion of our anticipated propane purchases.
Additionally, on occasion we enter into interest rate protection agreements to
reduce interest rate risk associated with anticipated issuances of debt.
We recognize gains or losses on derivative instruments associated with these
forecasted transactions when such transactions affect earnings. When it is
probable that the original forecasted transaction will not occur, we immediately
recognize in earnings any gain or loss on the related derivative instrument. If
such derivative instrument is terminated early for other economic reasons, we
defer any gain or loss as of the termination date until such time as the
forecasted transaction affects earnings.
CONSOLIDATED STATEMENTS OF CASH FLOWS. We define cash equivalents as all highly
liquid investments with maturities of three months or less when purchased. We
record cash equivalents at cost plus accrued interest, which approximates market
value. We paid interest totaling $75,317 in 2000, $66,984 in 1999, and $67,069
in 1998.
COMPREHENSIVE INCOME. SFAS No. 130, "Reporting Comprehensive Income" ("SFAS
130"), establishes standards for reporting and displaying comprehensive income,
comprising net income and other nonowner changes in equity, in the financial
statements. For all periods presented, comprehensive income was the same as net
income.
SEGMENT INFORMATION. SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" ("SFAS 131") defines operating segments as components
of an enterprise for which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Based upon the way we organize
our business for making operating decisions and assessing performance, we have
determined that we have a single reportable operating segment which engages in
the distribution of propane and related equipment and supplies. No single
customer represents ten percent or more of consolidated revenues. In addition,
virtually all of the Partnership's revenues are derived from sources within the
U.S. and virtually all of its long-lived assets are located in the U.S.
ACCOUNTING PRINCIPLES NOT YET ADOPTED. In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133"). SFAS 133 was amended in June 2000 by SFAS No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities" ("SFAS 138"), which addressed a limited number of issues causing
implementation difficulties. SFAS 133, as amended, establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivative instruments as either assets or
liabilities and measure them at fair value. The accounting for changes in fair
value depends upon the purpose of the derivative instrument and whether it is
designated and qualifies for hedge accounting. To the extent derivative
instruments qualify and are designated as hedges of the variability in cash
flows associated with forecasted transactions, the effective portion of the gain
or loss on such derivative instruments will generally be reported in other
comprehensive income and the ineffective portion, if any, will be reported in
net income. Such amounts recorded in accumulated other comprehensive income will
be reclassified into net income when the forecasted transaction affects
earnings. To the extent derivative instruments qualify and are designated as
hedges of changes in the fair value of an existing asset, liability or firm
commitment, the gain or loss on the hedging instrument will be recognized
currently in earnings along with changes in the fair value of the hedged asset,
liability or firm commitment attributable to the hedged risk.
The Partnership was required to adopt the provisions of SFAS 133 effective
October 1, 2000. Virtually all of the Partnership's derivative instruments
outstanding as of October 1, 2000 qualify and have been designated as hedging
the variability in cash flows associated with forecasted transactions. The
adoption of SFAS 133 will result in a cumulative effect charge to net income of
$736 and a cumulative effect increase to accumulated other comprehensive income
of $8,921. Because the Partnership's derivative instruments historically have
been highly effective in hedging the exposure to changes in cash flows
associated with forecasted purchases or sales of propane, changes in the fair
value of propane inventories, and changes in the risk-free rate of interest on
anticipated issuances of long-term debt, we do not expect the adoption of SFAS
133 to have a material impact on our future results of operations.
Although the Partnership expects the derivative instruments it currently uses
to hedge to continue to be highly effective, if they are deemed not highly
effective in the future, or if the Partnership uses derivative instruments that
do not meet the stringent requirements for hedge accounting under SFAS 133, our
future earnings could reflect greater volatility. Additionally, if a cash flow
hedge is discontinued because the original forecasted transaction is no longer
expected to occur, any gain or loss in accumulated other
16
<PAGE> 8
AmeriGas Partners, L.P. 2000 Annual Report
comprehensive income associated with the hedged transaction will be immediately
recognized in net income.
In order to comply with the provisions of the Securities and Exchange
Commission Staff Accounting Bulletin No. 101 entitled "Revenue Recognition"
("SAB 101"), which is effective for the Partnership on October 1, 2000, we will
record a cumulative effect charge to net income of approximately $6,500 related
to our method of recognizing revenue associated with nonrefundable tank fees
largely for residential customers. Consistent with a number of our competitors
in the propane industry, we receive nonrefundable fees for installed
Partnership-owned tanks. Historically, such fees, which are generally received
annually, were recorded as revenue when billed. In accordance with SAB 101,
effective October 1, 2000, we will record such nonrefundable fees on a
straight-line basis over one year. The adoption of SAB 101 is not expected to
have a material impact on the Partnerships's future financial condition or
results of operations.
Also, during fiscal 2001, the Partnership plans to change its method of
accounting for tank installation costs which are not billed to customers.
Currently, all direct costs to install Partnership-owned tanks at a customer
location are expensed as incurred. We believe that these costs should now be
capitalized and amortized over the period benefited. On date of adoption, this
change in accounting method will result in a cumulative effect increase to net
income. The Partnership is in the process of evaluating the impact of such
change on its financial condition and results of operations.
NOTE 3 - QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH
The Partnership makes distributions to its partners approximately 45 days after
the end of each fiscal quarter in a total amount equal to its Available Cash for
such quarter. Available Cash generally means:
1. all cash on hand at the end of such quarter,
2. plus all additional cash on hand as of the date of determination resulting
from borrowings after the end of such quarter,
3. less the amount of cash reserves established by the General Partner in its
reasonable discretion.
The General Partner may establish reserves for the proper conduct of the
Partnership's business and for distributions during the next four quarters. In
addition, certain of the Partnership's debt agreements require reserves be
established for the payment of debt principal and interest.
Distributions of Available Cash will generally be made 98% to the Common and
Subordinated unitholders and 2% to the General Partner. The Partnership may pay
an incentive distribution if Available Cash exceeds the Minimum Quarterly
Distribution of $0.55 ("MQD") on all units. If there is sufficient Available
Cash, the holders of Common Units have the right to receive the MQD, plus any
arrearages, before the distribution of Available Cash to holders of Subordinated
Units. Common Units will not accrue arrearages for any quarter after the
Subordination Period (as defined below), and Subordinated Units will not accrue
arrearages for any quarter.
Pursuant to the Partnership Agreement, because required cash generation-based
objectives were achieved as of March 31, 1999, a total of 9,891,074 Subordinated
Units held by the General Partner and its wholly owned subsidiary, Petrolane,
were converted into Common Units on May 18, 1999. The remaining outstanding
9,891,072 Subordinated Units, all of which are held by the General Partner, are
eligible to convert to Common Units on the first day after the record date for
any quarter ending on or after March 31, 2000 in respect of which:
1. distributions of Available Cash from Operating Surplus (as defined in the
Partnership Agreement) equal or exceed the MQD on each of the outstanding
Common and Subordinated units for each of the four consecutive
nonoverlapping four-quarter periods immediately preceding such date,
2. the Adjusted Operating Surplus (as defined in the Partnership Agreement)
generated during both (i) each of the two immediately preceding
nonoverlapping four-quarter periods and (ii) the immediately preceding
sixteen-quarter period, equals or exceeds the MQD on each of the Common
and Subordinated units outstanding during those periods, and
3. there are no arrearages on the Common Units.
The ability of the Partnership to attain the cash-based performance and
distribution requirements will depend upon a number of factors including highly
seasonal operating results, changes in working capital, asset sales and debt
refinancings. Due to the historical "look-back" provisions of the conversion
test, the possibility is remote that the Partnership will satisfy the cash-based
performance requirements for conversion any earlier than in respect of the
quarter ending March 31, 2002.
17
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)
NOTE 4 - DEBT
Long-term debt comprises the following at September 30:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
AmeriGas Partners Senior Notes,
10.125%, due April 2007 $ 100,000 $ 100,000
Operating Partnership First Mortgage Notes:
Series A, 9.34% - 11.71%, due April 2000
through April 2009 (including unamortized
premium of $10,649 and $12,118,
respectively, calculated at an 8.91%
effective rate) 208,649 220,118
Series B, 10.07%, due April 2001 through
April 2005 (including unamortized premium
of $5,931 and $7,969, respectively,
calculated at an 8.74% effective rate) 205,931 207,969
Series C, 8.83%, due April 2003 through
April 2010 110,000 110,000
Series D, 7.11%, due March 2009
(including unamortized premium of
$2,671 and $2,899, respectively,
calculated at a 6.52% effective rate) 72,671 72,899
Series E, 8.50%, due July 2010 (including
unamortized premium of $173 calculated
at an 8.47% effective rate) 80,173 --
Operating Partnership Acquisition Facility 70,000 23,000
Other (including capital lease obligations of
$2,751 and $3,540, respectively) 9,810 10,739
--------- ---------
Total long-term debt 857,234 744,725
Less current maturities (64,512) (17,394)
--------- ---------
Total long-term debt due after one year $ 792,722 $ 727,331
========= =========
</TABLE>
Scheduled repayments of long-term debt for each of the next five fiscal years
ending September 30 are as follows:
2001 - $64,512; 2002 - $66,509; 2003 - $59,959; 2004 - $56,709; 2005 - $56,192.
AMERIGAS PARTNERS SENIOR NOTES. The 10.125% Senior Notes of AmeriGas Partners
are redeemable prior to their maturity date. A redemption premium applies until
April 15, 2004. In addition, AmeriGas Partners may, under certain circumstances
following the disposition of assets or a change of control, be required to offer
to prepay the Senior Notes.
FIRST MORTGAGE NOTES. The Operating Partnership's First Mortgage Notes are
collateralized by substantially all of its assets. The General Partner and
Petrolane are co-obligors of the Series A, B, and C First Mortgage Notes, and
the General Partner is co-obligor of the Series D and E First Mortgage Notes.
The Operating Partnership may prepay the First Mortgage Notes, in whole or in
part. These prepayments include a make whole premium. Following the disposition
of assets or a change of control, the Operating Partnership may be required to
offer to prepay the First Mortgage Notes, in whole or in part.
BANK CREDIT AGREEMENT. The Operating Partnership's Bank Credit Agreement
consists of a Revolving Credit Facility and an Acquisition Facility. The
Operating Partnership's obligations under the Bank Credit Agreement are
collateralized by substantially all of its assets. The General Partner and
Petrolane are co-obligors of amounts outstanding under the Bank Credit
Agreement.
Under the Revolving Credit Facility, the Operating Partnership may borrow up
to $100,000 (including a $35,000 sublimit for letters of credit) subject to
restrictions in the 10.125% Senior Notes of AmeriGas Partners (see "Restrictive
Covenants" below). The Revolving Credit Facility expires September 15, 2002, but
may be extended for additional one-year periods with the consent of the
participating banks representing at least 80% of the commitments thereunder. The
Revolving Credit Facility permits the Operating Partnership to borrow at various
prevailing interest rates, including the Base Rate, defined as the higher of the
Federal Funds Rate plus 0.50% or the agent bank's reference rate (9.50% at
September 30, 2000), or at two-week, one-, two-, three-, or six-month offshore
interbank offering rates ("IBOR"), plus a margin. The margin on IBOR borrowings
(which ranges from 0.50% to 1.75%) and the Revolving Credit Facility commitment
fee rate are dependent upon the Operating Partnership's ratio of funded debt to
earnings before interest expense, income taxes, depreciation and amortization
("EBITDA"), each as defined in the Bank Credit Agreement. The Operating
Partnership had borrowings under the Revolving Credit Facility totaling $30,000
at September 30, 2000 and $22,000 at September 30, 1999, which we classify as
bank loans. The weighted-average interest rates on the bank loans outstanding
were 8.11% as of September 30, 2000 and 6.26% as of September 30, 1999. Issued
and outstanding letters of credit under the Revolving Credit Facility totaled
$1,500 at September 30, 2000 and $5,855 at September 30, 1999.
The Acquisition Facility provides the Operating Partnership with the ability
to borrow up to $75,000 to finance the purchase of propane businesses or propane
business assets. The Acquisition Facility operates as a revolving facility
through September 15, 2002, at which time amounts then outstanding are
immediately due and payable. The Acquisition Facility permits the Operating
Partnership to borrow at the Base Rate or at two-week, one-, two-, three-, or
six-month IBOR, plus a margin. The margin on IBOR borrowings and the Acquisition
Facility commitment fee rate are dependent upon the Operating Partnership's
ratio of funded debt to EBITDA, as defined. The weighted-average interest rates
on Acquisition Facility loans outstanding were 8.12% as of September 30, 2000
and 6.02% as of September 30, 1999.
18
<PAGE> 10
AmeriGas Partners, L.P. 2000 Annual Report
GENERAL PARTNER FACILITY. The Operating Partnership also has a revolving credit
agreement with the General Partner under which it may borrow up to $20,000 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 except that 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 IBOR.
Commitment fees are determined in the same manner as fees under the Revolving
Credit Facility. UGI Corporation ("UGI") has agreed to contribute up to $20,000
to the General Partner to fund such borrowings.
RESTRICTIVE COVENANTS. The 10.125% Senior Notes of AmeriGas Partners restrict
the ability of the Partnership to, among other things, incur additional
indebtedness, make investments, incur liens, issue preferred interests, prepay
subordinated indebtedness, and effect mergers, consolidations and sales of
assets. Under the Senior Notes Indenture, AmeriGas Partners is generally
permitted to make cash distributions equal to available cash, as defined, as of
the end of the immediately preceding quarter, if certain conditions are met.
These conditions include:
1. no event of default exists or would exist upon making such distributions
and
2. the Partnership's consolidated fixed charge coverage ratio, as defined, is
greater than 1.75-to-1.
If the ratio in item 2 above is less than or equal to 1.75-to-1, the
Partnership may make cash distributions in a total amount not to exceed $24,000
less the total amount of distributions made during the immediately preceding 16
fiscal quarters. At September 30, 2000, such ratio was 2.14-to-1.
The Bank Credit Agreement and the First Mortgage Notes restrict the
incurrence of additional indebtedness and also restrict certain liens,
guarantees, investments, loans and advances, payments, mergers, consolidations,
sales of assets and other transactions. They also require the ratio of total
indebtedness, as defined, to EBITDA, as defined (calculated on a rolling
four-quarter basis or eight-quarter basis divided by two), to be less than or
equal to 5.25-to-1. In addition, the Bank Credit Agreement requires that the
Operating Partnership maintain a ratio of EBITDA to interest expense, as
defined, of at least 2.25-to-1 on a rolling four-quarter basis. Generally, as
long as no default exists or would result, the Operating Partnership is
permitted to make cash distributions not more frequently than quarterly in an
amount not to exceed available cash, as defined, for the immediately preceding
calendar quarter. At September 30, 2000, the Partnership was in compliance with
its financial covenants.
NOTE 5 - EMPLOYEE RETIREMENT PLANS
The General Partner sponsors a 401(k) savings plan for eligible employees.
Participants in the savings plan may contribute a portion of their compensation
on a before-tax basis. We match employee contributions on a dollar-for-dollar
basis up to 5% of eligible compensation. The cost of benefits under our savings
plan was $4,741 in 2000, $3,713 in 1999, and $4,101 in 1998.
We provide postretirement health care benefits to a closed group of retired
employees, and we also provide limited life insurance benefits to nearly all
active employees and certain retired employees. The cost of postretirement
medical and life insurance benefits for 2000, 1999 and 1998, and the related
accumulated benefit obligations as of the end of such periods, were not
material.
NOTE 6 - INVENTORIES
Inventories comprise the following at September 30:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Propane gas $45,570 $37,135
Materials, supplies and other 15,556 12,162
Appliances for sale 4,363 4,158
------- -------
$65,489 $53,455
======= =======
</TABLE>
In addition to inventories on hand, we also enter into contracts to purchase
propane to meet a portion of our supply requirements. Generally, such contracts
have terms of less than one year and call for payment based on either fixed
prices or market prices at date of delivery.
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise the following at September 30:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Land $ 54,238 $ 52,064
Buildings and improvements 55,250 53,376
Transportation equipment 64,221 59,832
Storage facilities 66,936 64,343
Equipment, primarily cylinders
and tanks 463,168 436,481
Capital leases 4,216 3,116
Other 5,880 2,961
--------- ---------
Gross property, plant and equipment 713,909 672,173
Less accumulated depreciation
and amortization (277,790) (236,628)
--------- ---------
Net property, plant and equipment $ 436,119 $ 435,545
========= =========
</TABLE>
19
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)
NOTE 8 - PARTNERS' CAPITAL AND INCENTIVE COMPENSATION PLANS
During the Subordination Period as defined in the Partnership Agreement, we may
issue up to 9,400,000 additional Common Units (excluding Common Units issued in
connection with (1) employee benefit plans and (2) the conversion of
Subordinated Units into Common Units) or an equivalent number of securities
ranking on a parity with the Common Units without the approval of a majority of
the Common Unitholders. We may issue an unlimited number of additional Common
Units or parity securities without Common Unitholder approval if:
1. such issuance occurs in connection with acquisitions, including, in
certain circumstances, the repayment of debt incurred in connection with
an acquisition or
2. such issuance is for the repayment of up to $150,000 of long-term
indebtedness of the Partnership.
After the Subordination Period, the General Partner may, in its sole discretion,
cause the Partnership to issue an unlimited number of additional Common Units
and other equity securities of the Partnership ranking on a parity with the
Common Units.
In June 1998, the General Partner revised its estimate of the tax basis of
certain assets contributed to the Partnership in conjunction with the
Partnership's formation. The change in estimate resulted in the following
adjustments to the Consolidated Balance Sheet: (1) a $27,227 decrease in
partners' capital; (2) a $279 decrease in minority interest; (3) a $17,945
decrease in goodwill; and (4) a $9,561 decrease in excess reorganization value.
On December 13, 1999, the General Partner adopted the AmeriGas Propane, Inc.
2000 Long-Term Incentive Plan ("2000 Long-Term Plan"). Under the 2000 Long-Term
Plan, the General Partner may grant to key employees the rights to receive a
total of 500,000 AmeriGas Partners Common Units, or cash generally equivalent to
the fair market value of such Common Units, upon the achievement of objective
performance goals. In addition, the 2000 Long-Term Plan provides that grants may
provide for the crediting of Partnership distribution equivalents to
participants' accounts. Distribution equivalents will be paid in cash, and such
payment may, at the participant's request, be deferred. Generally, each grant,
unless paid, will terminate when the participant ceases to be employed by the
General Partner. At September 30, 2000, no grants had been made under this Plan.
Under the AmeriGas Propane, Inc. 1997 Long-Term Incentive Plan ("1997 Propane
Incentive Plan"), the General Partner could grant to key employees the right to
receive AmeriGas Partners Common Units, or cash generally equivalent to their
fair market value on the payment date. In addition, the 1997 Propane Incentive
Plan provided for the crediting of Partnership distribution equivalents to
participants' accounts. The actual number of Common Units (or their cash
equivalent) awarded, and the amount of the distribution equivalent, depended
upon when the cash generation-based requirements for early conversion of
Subordinated Units were met. Because such requirements were achieved at March
31, 1999, 81,226 Common Units were issued, and $1,110 in cash payments were
made, in May 1999. We recorded compensation expense for the 1997 Propane
Incentive Plan of $1,052 in 1999 and $164 in 1998.
In October 2000, subsequent to the Partnership's year end, the Partnership
issued 2,300,000 Common Units in a public offering. The net proceeds from the
Common Unit offering and related capital contributions from the General Partner
of approximately $40,600 were used to reduce Bank Credit Agreement indebtedness
and for working capital purposes. The Common Units were issued under a shelf
registration statement covering 9,000,000 Common Units filed with the U.S.
Securities and Exchange Commission which was declared effective September 22,
2000.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
We lease various buildings and transportation, computer, and office equipment
under operating leases. Certain of the leases contain renewal and purchase
options and also contain escalation clauses. Our aggregate rental expense for
such leases was $28,990 in 2000, $30,449 in 1999, and $29,026 in 1998.
Minimum future payments under noncancelable capital and operating leases are
as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------ ------
<S> <C> <C>
Year ending September 30,
2001 $ 985 $ 28,382
2002 2,235 23,106
2003 - 17,874
2004 - 14,814
2005 - 12,414
Thereafter - 27,438
-------- --------
Total minimum lease obligations 3,220 $124,028
========
Less imputed interest (469)
--------
Present value of capital
lease obligations $ 2,751
========
</TABLE>
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 $32,000 at September 30, 2000. The leases expire through
2010,
20
<PAGE> 12
AmeriGas Partners, L.P. 2000 Annual Report
and some of them are currently in default. The Partnership has succeeded to the
indemnity agreement of Petrolane by which Texas Eastern Corporation ("Texas
Eastern"), a prior owner of Petrolane, agreed to indemnify Petrolane against any
liabilities arising out of the conduct of businesses that do not relate to, and
are not a part of, the propane business, including lease guarantees. To date,
Texas Eastern has directly satisfied defaulted lease obligations without the
Partnership's having to honor its guarantee.
In addition, the Partnership has succeeded to Petrolane's agreement to
indemnify Shell Petroleum N.V. ("Shell") for various scheduled claims, including
claims related to antitrust actions, that were pending against Tropigas de
Puerto Rico ("Tropigas"). Petrolane had entered into this indemnification
agreement in conjunction with its sale of the international operations of
Tropigas to Shell in 1989. The Partnership also succeeded to Petrolane's right
to seek indemnity on these claims first from International Controls Corp., which
sold Tropigas to Petrolane, and then from Texas Eastern. To date, neither the
Partnership nor Petrolane has paid any sums under this indemnity. In 1999, a
case brought by an unsuccessful entrant into the Puerto Rican propane market was
dismissed by the Supreme Court of Puerto Rico for lack of subject matter
jurisdiction, with the Court concluding that the Public Service Commission of
Puerto Rico has exclusive jurisdiction over the matter. In the only pending
litigation, the Supreme Court of Puerto Rico denied the motion of the defendants
to dismiss, remanding the matter to the trial court for proceedings consistent
with its ruling. In this case the plaintiff seeks treble damages in excess of
$11,700.
We believe that the probability that we will be required to directly satisfy
the lease obligations and the remaining claim subject to the indemnification
agreements is remote.
In addition to these matters, there are other pending claims and legal
actions arising in the normal course of our business. We cannot predict with
certainty the final results of these matters. However, it is reasonably possible
that some of them could be resolved unfavorably to us. Management believes,
after consultation with counsel, that damages or settlements, if any, recovered
by the plaintiffs in such claims or actions will not have a material adverse
effect on our financial position but 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.
NOTE 10 - RELATED PARTY TRANSACTIONS
Under the Partnership Agreement, 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 $192,910 in 2000,
$189,112 in 1999, and $184,917 in 1998, 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 these direct
and indirect corporate expenses, and the General Partner is reimbursed by the
Partnership for these expenses. Such corporate expenses totaled $3,985 in 2000,
$5,496 in 1999, and $5,935 in 1998. In addition, UGI and certain of its
subsidiaries provide office space and general liability, automobile and workers'
compensation insurance to the Partnership. These expenses totaled $1,155 in
2000, $2,528 in 1999, and $2,501 in 1998.
During 1998, the Partnership, in conjunction with a propane business
acquisition, issued 45,586 Common Units to the General Partner having a fair
value of $1,211.
NOTE 11 - OTHER CURRENT LIABILITIES
Other current liabilities comprise the following at September 30:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Self-insured property and casualty liability $ 8,132 $ 7,768
Insured property and casualty liability 1,568 4,568
Taxes other than income taxes 5,267 4,517
Other 5,997 4,865
------- -------
Total other current liabilities $20,964 $21,718
======= =======
</TABLE>
NOTE 12 - FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments included in current assets and
current liabilities (excluding current maturities of long-term debt) approximate
their fair values because of their short-term nature. We estimate the fair
values of our long-term debt to be $883,000 at September 30, 2000 and $761,000
at September 30, 1999. We make these estimates by using current market prices
and by discounting future cash flows using rates available for similar type
debt.
We have financial instruments such as trade accounts receivable which could
expose us to concentrations of credit risk. The credit risk from trade accounts
receivable is limited because we have a large customer base which extends across
many different U.S. markets. At September 30, 2000 and 1999, we had no
significant concentrations of credit risk.
We utilize derivative instruments to hedge market risk resulting from changes
in the price of propane and changes in interest rates. We attempt to minimize
our credit risk with our counterparties through the application of credit
policies.
At September 30, 2000 and 1999, we were a party to an interest rate
protection agreement covering $50,000 of long-term debt
21
<PAGE> 13
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)
to be issued in fiscal 2001. The counterparty to this agreement is a large
financial institution. The estimated fair value of this agreement was $2,467 at
September 30, 2000 and $3,242 at September 30, 1999.
At September 30, 2000 and 1999, we were a party to propane price swap
and option agreements with private counterparties with total notional amounts of
$74,800 and $12,900, respectively. These agreements mature through March 2001.
The total estimated fair values of these agreements were $6,545 and $2,911 at
September 30, 2000 and 1999, respectively.
NOTE 13 - OTHER INCOME, NET
<TABLE>
<CAPTION>
2000 1999 1998
==================================================================
<S> <C> <C> <C>
Gain on sale of fixed assets $(3,577) $(2,190) $(1,411)
Finance charges (1,889) (1,346) (1,708)
Interest income (269) (315) (22)
Loss on interest rate
protection agreements -- -- 4,000
Other (2,798) (1,541) (1,604)
------------------------------------------------------------------
Total other income, net $(8,533) $(5,392) $ (745)
==================================================================
</TABLE>
NOTE 14 - ACQUISITIONS
During 2000, we acquired four retail propane businesses, including the West
Coast propane operations of All Star Gas Corporation, for total cash
consideration of $55,640. The excess of the purchase price over the fair value
of net assets acquired of approximately $38,000 is being amortized over forty
years. In conjunction with these acquisitions, liabilities in the amount of
$2,861 were assumed. The pro forma effect of these transactions was not material
to the Partnership's results of operations.
During 1999, we made several retail propane business acquisitions for
total cash consideration of $3,898. During 1998, we made several retail propane
business acquisitions for $8,076 in cash and the issuance of 45,586 Common
Units. In conjunction with these acquisitions, liabilities of $2,814 and $3,453,
respectively, were assumed. The pro forma effect of these transactions was not
material to the Partnership's results of operations.
These business acquisitions have been accounted for using the purchase
method of accounting. Their results of operations are included in our
consolidated results of operations from their respective dates of acquisition.
NOTE 15 - QUARTERLY DATA (UNAUDITED)
The following quarterly data includes all adjustments (consisting only of normal
recurring adjustments) which we consider necessary for a fair presentation. Our
quarterly results fluctuate because of the seasonal nature of our propane
business.
<TABLE>
<CAPTION>
December 31, March 31, June 30, September 30,
1999 1998 2000 1999 2000 1999 2000 1999
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 301,048 $ 237,784 $ 388,876 $ 304,925 $ 209,670 $ 161,944 $ 220,462 $ 167,882
Operating income (loss) 37,720 34,792 67,245 72,246 (3,005) (2,252) (11,753) (12,140)
Net income (loss) 19,199 17,655 49,007 55,391 (21,246) (18,477) (31,764) (28,934)
Net income (loss) per
limited partner unit 0.45 0.42 1.16 1.31 (0.50) (0.44) (0.75) (0.68)
==========================================================================================================================
</TABLE>
22
<PAGE> 14
AmeriGas Partners, L.P. 2000 Annual Report
--------------------------------------------------------------------------------
GENERAL PARTNER'S REPORT
The Partnership's consolidated financial statements and other financial
information contained in this Annual Report are prepared by the management of
the General Partner, AmeriGas Propane, Inc., which is responsible for their
fairness, integrity and objectivity. The consolidated financial statements and
related information were prepared in accordance with accounting principles
generally accepted in the United States and include amounts that are based on
management's best judgements and estimates.
The General Partner has established a system of internal controls.
Management of the General Partner believes the system provides reasonable
assurance that assets are safeguarded and that transactions are executed in
accordance with management's authorization and are properly recorded to permit
the preparation of reliable financial information. There are limits in all
systems of internal control, based on the recognition that the cost of the
system should not exceed the benefits to be derived. We believe that the
internal control system is cost effective and provides reasonable assurance that
material errors or irregularities will be prevented or detected within a timely
period. The internal control system and compliance therewith are monitored by
UGI Corporation's internal audit staff.
The Audit Committee of the Board of Directors of the General Partner is
composed of two members, neither of whom is an employee of the General Partner.
This Committee is responsible for overseeing the financial reporting process and
the adequacy of controls, and for monitoring the independence of the
Partnership's independent public accountants and the performance of the
independent accountants and internal audit staff. The Committee recommends to
the Board of Directors the engagement of the independent public accountants to
conduct the annual audit of the Partnership's consolidated financial statements.
The Committee is also responsible for maintaining direct channels of
communication between the Board of Directors and both the independent public
accountants and internal auditors.
The independent public accountants, who are appointed by the Board of
Directors of the General Partner, perform certain procedures, including an
evaluation of internal controls to the extent required by auditing standards
generally accepted in the United States, in order to express an opinion on the
consolidated financial statements and to obtain reasonable assurance that such
financial statements are free of material misstatement.
/s/ Eugene V. N. Bissell
Eugene V. N. Bissell
Chief Executive Officer
/s/ Martha B. Lindsay
Martha B. Lindsay
Chief Financial Officer
/s/ Richard R. Eynon
Richard R. Eynon
Chief Accounting Officer
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE PARTNERS OF AMERIGAS PARTNERS, L.P. AND THE
BOARD OF DIRECTORS OF AMERIGAS PROPANE, INC.:
We have audited the accompanying consolidated balance sheets of AmeriGas
Partners, L.P. and subsidiaries as of September 30, 2000 and 1999, and the
related consolidated statements of operations, partners' capital and cash flows
for each of the three years in the period ended September 30, 2000. These
financial statements are the responsibility of the management of AmeriGas
Propane, Inc. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AmeriGas Partners, L.P. and subsidiaries as of September 30, 2000 and 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended September 30, 2000, in conformity with accounting principles
generally accepted in the United States.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
November 10, 2000
23
