<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 June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-13692
Commission file number 33-92734-01
AMERIGAS PARTNERS, L.P.
AMERIGAS FINANCE CORP.
(Exact name of registrants as specified in their charters)
Delaware 23-2787918
Delaware 23-2800532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 North Gulph Road, King of Prussia, PA
(Address of principal executive offices)
19406
(Zip Code)
(610) 337-7000
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
At July 31, 2000, the registrants had units and shares of common stock
outstanding as follows:
AmeriGas Partners, L.P. - 32,078,293 Common Units
9,891,072 Subordinated Units
AmeriGas Finance Corp. - 100 shares
<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 June 30, 2000,
September 30, 1999 and June 30, 1999 1
Condensed Consolidated Statements of Operations for the three,
nine and twelve months ended June 30, 2000 and 1999 2
Condensed Consolidated Statements of Cash Flows for the nine
and twelve months ended June 30, 2000 and 1999 3
Condensed Consolidated Statement of Partners' Capital for the
nine months ended June 30, 2000 4
Notes to Condensed Consolidated Financial Statements 5-7
AmeriGas Finance Corp.
Balance Sheets as of June 30, 2000 and September 30, 1999 8
Note to Balance Sheets 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10-17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
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<PAGE> 3
AMERIGAS PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
June 30, September 30, June 30,
2000 1999 1999
---------- ------------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 17,330 $ 390 $ 8,078
Accounts receivable (less allowance for doubtful accounts
of $7,195, $5,998, and $7,048, respectively) 87,154 66,937 58,187
Inventories 60,236 53,455 33,904
Prepaid expenses and other current assets 13,349 19,787 13,715
---------- ---------- ----------
Total current assets 178,069 140,569 113,884
Property, plant and equipment (less accumulated depreciation and
amortization of $267,104, $236,628, and $227,313, respectively) 442,777 435,545 438,493
Intangible assets (less accumulated amortization of $183,742,
$165,676, and $159,597, respectively) 626,485 608,878 613,925
Other assets 11,944 11,469 11,902
---------- ---------- ----------
Total assets $1,259,275 $1,196,461 $1,178,204
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long-term debt $ 64,552 $ 17,394 $ 15,748
Bank loans 25,000 22,000 20,000
Accounts payable - trade 54,054 48,730 29,320
Accounts payable - related parties 2,402 2,151 2,037
Other current liabilities 68,038 97,632 67,962
---------- ---------- ----------
Total current liabilities 214,046 187,907 135,067
Long-term debt 793,876 727,331 706,242
Other noncurrent liabilities 37,127 43,802 46,665
Commitments and contingencies
Minority interest 3,174 3,380 3,939
Partners' capital 211,052 234,041 286,291
---------- ---------- ----------
Total liabilities and partners' capital $1,259,275 $1,196,461 $1,178,204
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 4
AMERIGAS PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Thousands of dollars, except per unit)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30, June 30, June 30,
-------------------------- -------------------------- --------------------------
2000 1999 2000 1999 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Propane $ 189,774 $ 142,490 $ 825,817 $ 638,911 $ 972,046 $ 767,998
Other 19,896 19,454 73,777 65,742 95,430 83,722
----------- ----------- ----------- ----------- ----------- -----------
209,670 161,944 899,594 704,653 1,067,476 851,720
----------- ----------- ----------- ----------- ----------- -----------
Costs and expenses:
Cost of sales - propane 111,109 62,986 461,759 276,870 538,952 334,599
Cost of sales - other 8,267 7,947 31,671 27,386 40,990 33,750
Operating and administrative
expenses 77,866 78,306 259,402 250,636 338,401 329,587
Depreciation and amortization 16,808 16,330 49,554 48,352 66,080 64,496
Other income, net (1,375) (1,373) (4,752) (3,377) (6,767) (646)
----------- ----------- ----------- ----------- ----------- -----------
212,675 164,196 797,634 599,867 977,656 761,786
----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss) (3,005) (2,252) 101,960 104,786 89,820 89,934
Interest expense (18,749) (16,618) (54,764) (49,691) (71,658) (65,832)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes (21,754) (18,870) 47,196 55,095 18,162 24,102
Income tax benefit 318 231 323 110 155 35
Minority interest 190 162 (559) (636) (291) (348)
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) $ (21,246) $ (18,477) $ 46,960 $ 54,569 $ 18,026 $ 23,789
=========== =========== =========== =========== =========== ===========
General partner's interest in
net income (loss) $ (212) $ (185) $ 470 $ 546 $ 180 $ 238
=========== =========== =========== =========== =========== ===========
Limited partners' interest in
net income (loss) $ (21,034) $ (18,292) $ 46,490 $ 54,023 $ 17,846 $ 23,551
=========== =========== =========== =========== =========== ===========
Income (loss) per limited
partner unit - basic and diluted $ (0.50) $ (0.44) $ 1.11 $ 1.29 $ 0.43 $ 0.56
=========== =========== =========== =========== =========== ===========
Average limited partner units
outstanding (thousands) 41,969 41,927 41,969 41,901 41,969 41,898
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 5
AMERIGAS PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended Twelve Months Ended
June 30, June 30,
------------------------- -------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 46,960 $ 54,569 $ 18,026 $ 23,789
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 49,554 48,352 66,080 64,496
Other, net (52) 2,644 (3,637) 779
--------- --------- --------- ---------
96,462 105,565 80,469 89,064
Net change in:
Accounts receivable (22,606) (2,636) (31,432) (1,729)
Inventories and prepaid propane purchases (2,339) 16,385 (23,567) 21,534
Accounts payable 5,575 (9,338) 25,099 (2,856)
Other current assets and liabilities (31,453) (36,920) (7,733) (7,482)
--------- --------- --------- ---------
Net cash provided by operating activities 45,639 73,056 42,836 98,531
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (22,449) (25,804) (27,698) (35,355)
Proceeds from disposals of assets 2,801 2,995 5,511 4,887
Acquisitions of businesses, net of cash acquired (55,914) (3,242) (56,570) (4,447)
--------- --------- --------- ---------
Net cash used by investing activities (75,562) (26,051) (78,757) (34,915)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (69,949) (69,814) (93,265) (93,086)
Minority interest activity (765) (746) (1,055) (1,034)
Increase in bank loans 3,000 10,000 5,000 9,000
Issuance of long-term debt 196,000 75,770 216,237 85,770
Repayment of long-term debt (81,423) (63,026) (81,744) (63,666)
Capital contribution from General Partner -- 16 -- 16
--------- --------- --------- ---------
Net cash provided (used) by financing activities 46,863 (47,800) 45,173 (63,000)
--------- --------- --------- ---------
Cash and cash equivalents increase (decrease) $ 16,940 $ (795) $ 9,252 $ 616
========= ========= ========= =========
CASH AND CASH EQUIVALENTS:
End of period $ 17,330 $ 8,078 $ 17,330 $ 8,078
Beginning of period 390 8,873 8,078 7,462
--------- --------- --------- ---------
Increase (decrease) $ 16,940 $ (795) $ 9,252 $ 616
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 6
AMERIGAS PARTNERS, L.P.
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, 1999 32,078,293 9,891,072 $ 177,947 $ 53,756 $ 2,338 $ 234,041
Net income 35,534 10,956 470 46,960
Distributions (52,930) (16,320) (699) (69,949)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE JUNE 30, 2000 32,078,293 9,891,072 $ 160,551 $ 48,392 $ 2,109 $ 211,052
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 7
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Thousands of dollars, except per unit)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
AmeriGas Partners, L.P. ("AmeriGas Partners"), its subsidiary AmeriGas
Propane, L.P. (the "Operating Partnership"), and their corporate
subsidiaries, together referred to in this report as "the Partnership"
or "we." We eliminate all significant intercompany accounts and
transactions when we consolidate. We account for AmeriGas Propane,
Inc.'s (the "General Partner's") 1.01% interest in the Operating
Partnership as a minority interest in the condensed consolidated
financial statements. Certain prior-period balances have been
reclassified to conform with the current period presentation.
The accompanying condensed consolidated financial statements are
unaudited and have been prepared in accordance with the rules and
regulations of the U.S. Securities and Exchange Commission. They
include all adjustments which we consider necessary for a fair
statement of the results for the interim periods presented. Such
adjustments consisted only of normal recurring items unless otherwise
disclosed. These financial statements should be read in conjunction
with the financial statements and related notes included in our Annual
Report on Form 10-K for the year ended September 30, 1999. Weather
significantly impacts demand for propane and profitability because many
customers use propane for heating purposes. Due to the seasonal nature
of the Partnership's propane business, the results of operations for
interim periods are not necessarily indicative of the results to be
expected for a full year. The Partnership's comprehensive income as
determined under Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income," was the same as its net
income for all periods presented.
2. RELATED PARTY TRANSACTIONS
In accordance with the Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, the General Partner is entitled to
reimbursement of all direct and indirect expenses incurred or payments
it makes on behalf of the Partnership, and all other necessary or
appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with the
Partnership's business. These costs totaled $43,080, $147,326 and
$191,764 during the three, nine and twelve months ended June 30, 2000,
respectively, and $43,721, $144,674 and $188,787 during the three, nine
and twelve months ended June 30, 1999, respectively. In addition, UGI
Corporation ("UGI") provides certain financial and administrative
services to the General Partner. UGI
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<PAGE> 8
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
(Thousands of dollars, except per unit)
bills the General Partner for these direct and indirect corporate
expenses, and the General Partner is reimbursed by the Partnership for
these expenses. Such corporate expenses totaled $924, $2,831 and $4,189
during the three, nine and twelve months ended June 30, 2000,
respectively, and $1,371, $4,138 and $5,797 during the three, nine and
twelve months ended June 30, 1999, respectively.
3. COMMITMENTS AND CONTINGENCIES
The Partnership has succeeded to certain lease guarantee obligations of
Petrolane Incorporated ("Petrolane"), a predecessor company of the
Partnership, relating to Petrolane's divestiture of nonpropane
operations before its 1989 acquisition by QFB Partners. Future lease
payments under these leases total approximately $35,000 at June 30,
2000. The leases expire through 2010, and some of them are currently in
default. The Partnership has succeeded to the indemnity agreement of
Petrolane by which Texas Eastern Corporation ("Texas Eastern"), a prior
owner of Petrolane, agreed to indemnify Petrolane against any
liabilities arising out of the conduct of businesses that do not relate
to, and are not a part of, the propane business, including lease
guarantees. To date, Texas Eastern has directly satisfied defaulted
lease obligations without the Partnership's having to honor its
guarantee.
In addition, the Partnership has succeeded to Petrolane's agreement to
indemnify Shell Petroleum N.V. ("Shell") for various scheduled claims,
including claims related to antitrust actions, that were pending
against Tropigas de Puerto Rico ("Tropigas"). Petrolane had entered
into this indemnification agreement in conjunction with its sale of the
international operations of Tropigas to Shell in 1989. The Partnership
also succeeded to Petrolane's right to seek indemnity on these claims
first from International Controls Corp., which sold Tropigas to
Petrolane, and then from Texas Eastern. To date, neither the
Partnership nor Petrolane has paid any sums under this indemnity. In
1999, a case brought by an unsuccessful entrant into the Puerto Rican
propane market was dismissed by the Supreme Court of Puerto Rico for
lack of subject matter jurisdiction, with the Court concluding that the
Public Service Commission of Puerto Rico has exclusive jurisdiction
over the matter. In the only pending litigation, the Supreme Court of
Puerto Rico denied the motion of the defendants to dismiss, remanding
the matter to the trial court for proceedings consistent with its
ruling. In this case the plaintiff seeks treble damages in excess of
$11,700.
We believe the probability that we will be required to directly satisfy
the above-described lease obligations and the remaining claim subject
to the indemnification agreements is remote.
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<PAGE> 9
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
(Thousands of dollars, except per unit)
In addition to these matters, there are other pending claims and legal
actions arising in the normal course of our business. We cannot predict
with certainty the final results of these matters. However, it is
reasonably possible that some of them could be resolved unfavorably to
us. Management believes, after consultation with counsel, that damages
or settlements, if any, recovered by the plaintiffs in such claims or
actions will not have a material adverse effect on our financial
position. However, such damages or settlements could be material to our
operating results or cash flows in future periods depending on the
nature and timing of future developments with respect to these matters
and the amounts of future operating results and cash flows.
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<PAGE> 10
AMERIGAS FINANCE CORP.
(a wholly owned subsidiary of AmeriGas Partners, L.P.)
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
-------- -----------
<S> <C> <C>
ASSETS
Cash $1,000 $1,000
------ ------
Total assets $1,000 $1,000
====== ======
STOCKHOLDER'S EQUITY
Common stock, $.01 par value; 100 shares authorized,
issued and outstanding $ 1 $ 1
Additional paid-in capital 999 999
------ ------
Total stockholder's equity $1,000 $1,000
====== ======
</TABLE>
See accompanying note to consolidated financial statements.
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<PAGE> 11
AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
NOTE TO BALANCE SHEETS
AmeriGas Finance Corp. ("AmeriGas Finance"), a Delaware corporation, was formed
on March 13, 1995 and is a wholly owned subsidiary of AmeriGas Partners, L.P.
("AmeriGas Partners").
On April 19, 1995, AmeriGas Partners issued $100,000,000 face value of 10.125%
Senior Notes due April 2007. AmeriGas Finance serves as a co-obligor of these
notes.
AmeriGas Partners owns all 100 shares of AmeriGas Finance Common Stock
outstanding.
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<PAGE> 12
AMERIGAS PARTNERS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
The following analyses compare the Partnership's results of operations for (1)
the three months ended June 30, 2000 ("2000 three-month period") with the three
months ended June 30, 1999 ("1999 three-month period"); (2) the nine months
ended June 30, 2000 ("2000 nine-month period") with the nine months ended June
30, 1999 ("1999 nine-month period"); and (3) the twelve months ended June 30,
2000 ("2000 twelve-month period") with the twelve months ended June 30, 1999
("1999 twelve-month period"). AmeriGas Finance Corp. has nominal assets and does
not conduct any operations. Accordingly, a discussion of the results of
operations and financial condition and liquidity of AmeriGas Finance Corp. is
not presented.
2000 THREE-MONTH PERIOD COMPARED WITH 1999 THREE-MONTH PERIOD
<TABLE>
<CAPTION>
Increase
Three Months Ended June 30, 2000 1999 (Decrease)
--------------------------------- ---------- --------- --------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
Gallons sold (millions):
Retail 135.4 140.5 (5.1) (3.6)%
Wholesale 58.5 32.2 26.3 81.7 %
------- ------- -------
193.9 172.7 21.2 12.3 %
======= ======= =======
Revenues:
Retail propane $ 156.9 $ 129.8 $ 27.1 20.9 %
Wholesale propane 32.9 12.6 20.3 161.1 %
Other 19.9 19.5 0.4 0.2 %
------- ------- -------
$ 209.7 $ 161.9 $ 47.8 29.5 %
======= ======= =======
Total margin $ 90.3 $ 91.0 $ (0.7) (0.8)%
EBITDA (a) $ 13.8 $ 14.1 $ (0.3) (2.1)%
Operating loss $ (3.0) $ (2.3) $ 0.7 30.4 %
Heating degree days - % warmer
than normal (b) 9.0 3.8 -- --
</TABLE>
(a) EBITDA (earnings before interest expense, income taxes, depreciation
and amortization) should not be considered as an alternative to net
income (as an indicator of operating performance) or as an alternative
to cash flow (as a measure of liquidity or ability to service debt
obligations) and is not a measure of performance or financial condition
under generally accepted accounting principles.
(b) Based upon national weather statistics provided by the National Oceanic
and Atmospheric Administration ("NOAA") for 335 airports in the
continental U.S.
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<PAGE> 13
AMERIGAS PARTNERS, L.P.
Weather during the 2000 three-month period was 9.0% warmer than normal and 5.4%
warmer than last year. Temperatures in the Partnership's mountain and western
regions, which typically comprise a substantial portion of heating-related
volume in the spring season, were significantly warmer than normal. The warmer
temperatures and price-induced deferrals of purchases by customers resulted in a
5.1 million gallon decrease in retail volumes sold. Wholesale volumes of propane
sold increased 26.3 million gallons reflecting higher sales associated with
product cost management activities.
Total revenues from retail propane sales increased $27.1 million during the 2000
three-month period reflecting a $31.8 million increase as a result of higher
average selling prices partially offset by the impact of the lower retail
gallons sold. Wholesale propane revenues increased $20.3 million due about
equally to the higher volumes sold and higher average selling prices. The
increase in retail and wholesale selling prices resulted from higher propane
product costs. Cost of sales in the 2000 three-month period increased $48.4
million as a result of the higher propane product costs and the increase in
wholesale volumes.
Total margin for the 2000 three-month period was $0.7 million (0.8%) lower than
the prior-year period as the impact of lower retail volumes sold to residential
and commercial customers was offset by slightly higher average unit margins and
greater total margin from PPX Prefilled Propane Xchange(R) ("PPX(R)").
EBITDA for the 2000 three-month period was $0.3 million (2.1%) lower than the
prior-year period as the slightly lower total margin was offset by slightly
lower total operating expenses. Operating expenses of the Partnership were $77.9
million in the 2000 three-month period compared to $78.3 million in the prior
-year period. Operating expenses in the 2000 three-month period are net of $3.3
million of income from adjustments to employee compensation and benefit accruals
recorded earlier in the fiscal year. Excluding the impact of these adjustments,
operating expenses were higher reflecting expenses associated with recent
business acquisitions, higher vehicle fuel expenses, and expenses associated
with new business initiatives, primarily PPX(R). Operating income declined $0.7
million reflecting higher depreciation and amortization expense.
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<PAGE> 14
AMERIGAS PARTNERS, L.P.
2000 NINE-MONTH PERIOD COMPARED WITH 1999 NINE-MONTH PERIOD
<TABLE>
<CAPTION>
Increase
Nine Months Ended June 30, 2000 1999 (Decrease)
--------------------------------- ---------- --------- --------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
Gallons sold (millions):
Retail 635.9 646.0 (10.1) (1.6)%
Wholesale 201.8 147.1 54.7 37.2%
-------- -------- --------
837.7 793.1 44.6 5.6%
======== ======== ========
Revenues:
Retail propane $ 710.8 $ 583.0 $ 127.8 21.9%
Wholesale propane 115.0 56.0 59.0 105.4%
Other 73.8 65.7 8.1 12.3%
-------- -------- --------
$ 899.6 $ 704.7 $ 194.9 27.7%
======== ======== ========
Total margin $ 406.2 $ 400.4 $ 5.8 1.4%
EBITDA $ 151.5 $ 153.1 $ (1.6) (1.0)%
Operating income $ 102.0 $ 104.8 $ (2.8) (2.7)%
Heating degree days - % warmer
than normal 14.1 9.6 -- --
</TABLE>
Temperatures based upon heating degree days were 14.1% warmer than normal in the
2000 nine-month period and 4% warmer than the prior-year period. Retail propane
volumes sold declined 10.1 million gallons as a result of the warmer weather's
effect on heating-related sales partially offset by increased non-heating
related PPX(R) and motor fuel sales. Wholesale volumes increased 54.7 million
gallons as a result of higher wholesale sales associated with product cost
management activities.
Total retail propane revenues increased $127.8 million reflecting a $136.9
million increase from higher average selling prices partially offset by a $9.1
million decrease from the lower retail volumes sold. Wholesale propane revenues
increased $59.0 million reflecting a $38.2 million increase from higher
wholesale prices and $20.8 million from the higher wholesale volumes sold. As
previously mentioned, the higher propane selling prices reflect significantly
higher propane product costs during the 2000 nine-month period. Other revenues
increased $8.1 million reflecting, in part, higher customer fees and hauling,
tank rent, and PPX(R) cylinder sales revenue. Cost of sales in the 2000
nine-month period increased $189.2 million as a result of the higher propane
product costs and the greater wholesale volumes sold.
Notwithstanding the lower retail volumes in the 2000 nine-month period, total
margin increased $5.8 million principally as a result of (1) greater volumes
sold to higher margin PPX(R) customers, (2) slightly higher average unit
margins, and (3) an increase in margin from customer fees, tank rent and
ancillary sales and services.
-12-
<PAGE> 15
AMERIGAS PARTNERS, L.P.
EBITDA declined $1.6 million, notwithstanding the slightly higher total margin,
reflecting higher operating and administrative expenses in the 2000 nine-month
period. Operating and administrative expenses of the Partnership were $259.4
million in the 2000 nine-month period compared to $250.6 million in the
prior-year period. The increase in operating expenses includes (1) higher
vehicle fuel costs and (2) higher expenses associated with the expansion of
PPX(R) and other new business and acquisition activities. Operating income
decreased $2.8 million in the 2000 nine-month period reflecting the decline in
EBITDA and slightly higher charges for depreciation and amortization.
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<PAGE> 16
AMERIGAS PARTNERS, L.P.
2000 TWELVE-MONTH PERIOD COMPARED WITH 1999 TWELVE-MONTH PERIOD
<TABLE>
<CAPTION>
Increase
Twelve Months Ended June 30, 2000 1999 (Decrease)
----------------------------- --------- ----------- -----------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
Gallons sold (millions):
Retail 773.1 781.1 (8.0) (1.0)%
Wholesale 245.3 179.5 65.8 36.7%
--------- ----- ----
1,018.4 960.6 57.8 6.0%
======= ===== ====
Revenues:
Retail propane $ 837.6 $ 700.3 $ 137.3 19.6%
Wholesale propane 134.5 67.7 66.8 98.7%
Other 95.4 83.7 11.7 14.0%
--------- ----------- --------
$ 1,067.5 $ 851.7 $ 215.8 25.3%
========= =========== ========
Total margin $ 487.5 $ 483.4 $ 4.1 0.8%
EBITDA $ 155.9 $ 154.4 $ 1.5 1.0%
Operating income $ 89.8 $ 89.9 $ (0.1) (0.1)%
Heating degree days - % warmer
than normal 13.8 11.2 - -
</TABLE>
Temperatures based upon heating degree days were 13.8% warmer than normal in the
2000 twelve-month period and 2.6% warmer than the 1999 twelve-month period.
Retail propane gallons sold were 8.0 million gallons lower as reductions in
heating-related sales were partially offset by higher motor fuel and PPX(R)
sales. Wholesale volumes of propane sold increased 65.8 million gallons to 245.3
million gallons reflecting an increase in sales associated with propane product
cost management activities.
Total retail propane revenues increased $137.3 million due to higher average
retail propane selling prices. Wholesale propane revenue increased $66.8 million
reflecting (1) a $41.9 million increase as a result of higher prices and (2) a
$24.9 million increase as a result of higher wholesale volumes. Other revenues
increased $11.7 million reflecting higher customer fees and higher hauling, tank
rent, and ancillary sales and service revenue. Cost of sales increased $211.6
million as a result of higher propane product costs.
Total margin increased $4.1 million in the 2000 twelve-month period due to (1)
higher total margin from our expanding PPX(R) cylinder exchange business, (2)
slightly higher average unit margins, and (3) an increase in margin from
customer fees, tank rent and ancillary sales and services.
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<PAGE> 17
AMERIGAS PARTNERS, L.P.
EBITDA was $1.5 million higher in the 2000 twelve-month period as the increase
in total margin and a $6.1 million increase in other income was partially offset
by higher operating and administrative expenses. Other income in the 1999
twelve-month period is net of a $4.0 million loss from interest rate protection
agreements. Other income in the 2000 twelve-month period includes, among other
things, higher gains from asset sales and greater finance charge income.
Operating expenses of the Partnership were $338.4 million in the 2000
twelve-month period compared with $329.6 million in the prior-year period. The
increase in operating and administrative expenses includes higher vehicle fuel
and repairs and maintenance expenses and expenses associated with new business
activities. Operating income declined $0.1 million, despite the increase in
EBITDA, reflecting a $1.6 million increase in depreciation and amortization
expense.
FINANCIAL CONDITION AND LIQUIDITY
FINANCIAL CONDITION
The Partnership's debt outstanding at June 30, 2000 totaled $883.4 million
comprising $858.4 million of long-term debt (including current maturities of
$64.6 million) and $25.0 million under its Revolving Credit Facility. During the
nine months ended June 30, 2000, the Operating Partnership borrowed a total of
$116 million under its Acquisition Facility and made Acquisition Facility
repayments of $69.0 million. These repayments were funded through the Operating
Partnership's issuance of $80 million of ten-year, Series E First Mortgage Notes
at an effective interest rate of 8.47%. At June 30, 2000, there was $70 million
outstanding under the Acquisition Facility. In June 2000, the Operating
Partnership's Bank Credit Agreement was amended to, among other things, extend
the Acquisition Facility termination date to September 15, 2002.
Then-outstanding borrowings under the Acquisition Facility will be due in their
entirety on such date.
During the nine months ended June 30, 2000, the Partnership declared and paid
the minimum quarterly distribution of $0.55 (the "MQD") on all units for the
quarters ended September 30, 1999, December 31, 1999, and March 31, 2000. The
MQD for the quarter ended June 30, 2000 will be paid on August 18, 2000 to
holders of record on August 10, 2000 of all Common and Subordinated units. The
ability of the Partnership to declare and pay the MQD on all units depends upon
a number of factors. These factors include (1) the level of Partnership
earnings, (2) the cash needs of the Partnership's operations (including cash
needed for maintaining and growing operating capacity), (3) changes in operating
working capital, and (4) the Partnership's ability to borrow and refinance debt.
Some of these factors are affected by conditions beyond our control including
weather, competition in markets we serve, and the cost of propane.
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<PAGE> 18
AMERIGAS PARTNERS, L.P.
The 9,891,072 Subordinated Units of the Partnership which are held by the
General Partner are eligible to convert to Common Units on the first day after
the record date for any quarter ending on or after March 31, 2000 in respect of
which certain historical cash-based performance and distribution requirements
are met. The ability of the Partnership to attain the cash-based performance and
distribution requirements depends upon a number of factors including highly
seasonal operating results, changes in working capital, asset sales and debt
refinancings. Due to significantly warmer than normal weather and the impact of
higher propane product costs on working capital, the Partnership did not achieve
the cash-based performance requirements in respect of the quarters ended March
31, 2000 and June 30, 2000. Due to the historical "look-back" provisions of the
conversion test, the possibility is remote that the Partnership will satisfy the
cash-based performance requirements for conversion any earlier than in respect
of the quarter ending March 31, 2002.
CASH FLOWS
Due to the seasonal nature of the propane business, cash flows from operating
activities are generally strongest during the second and third fiscal quarters
when customers pay for propane purchased during the heating season and are
typically at their lowest levels during the first and fourth fiscal quarters.
Accordingly, cash flows from operations during the nine months ended June 30,
2000 are not necessarily indicative of cash flows to be expected for a full
year.
OPERATING ACTIVITIES. Cash provided by operating activities was $45.6 million
during the nine months ended June 30, 2000 compared with $73.1 million during
the prior-year nine-month period. Changes in operating working capital used
$50.8 million of cash in the 2000 nine-month period compared to $32.5 million in
the 1999 period reflecting the impact of higher propane product costs on
accounts receivable and inventories. Operating cash flow before changes in
working capital was $96.5 million in the 2000 nine-month period compared to
$105.6 million in the prior year principally reflecting the lower 2000
nine-month period results.
INVESTING ACTIVITIES. We spent $22.4 million for property, plant and equipment
(including maintenance capital expenditures of $7.9 million) during the 2000
nine-month period compared with $25.8 million (including maintenance capital
expenditures of $7.5 million) in the prior-year period. Acquisitions of propane
businesses used $55.9 million of cash in the nine months ended June 30, 2000
compared to $3.2 million in the prior-year period. These acquisitions were
funded principally through Acquisition Facility borrowings.
FINANCING ACTIVITIES. During each of the nine-month periods ended June 30, 2000
and 1999, we declared and paid the MQD on all Common and Subordinated units and
the general partner interests. During the 2000 nine-month period, the Operating
Partnership borrowed $116 million under the Acquisition Facility and made
Acquisition Facility repayments totaling $69 million. Acquisition Facility
repayments were made with the proceeds from the issuance of ten-year, Series E
First Mortgage Notes. During the 2000 nine-month period, the Operating
Partnership had net borrowings of $3 million under its Revolving Credit Facility
compared with borrowings of $10 million during the prior-year nine-month period.
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<PAGE> 19
AMERIGAS PARTNERS, L.P.
ADOPTION OF NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133") SFAS No. 133, as amended by SFAS No. 137, is
required to be adopted by the Partnership for the first quarter of fiscal 2001.
The Partnership is currently assessing its impact on the Partnership's financial
position and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risk exposures are market prices for propane and changes in
interest rates. In order to manage a portion of our propane market price risk,
we use contracts for the forward purchase of propane, propane fixed-price supply
agreements, and derivative commodity instruments such as price swap and option
contracts. On occasion, we also enter into wholesale product cost management
activities to reduce price risk associated with changes in the fair value of a
portion of our propane storage inventory.
The Partnership has interest rate exposure associated with borrowings under its
Bank Credit Agreement. The Bank Credit Agreement provides for interest rates on
borrowings which are indexed to the agent bank's reference rate or offshore
interbank borrowing rates. Based upon Bank Credit Agreement average borrowings
during the most recent fiscal year ended September 30, 1999, an increase in
interest rates of 100 basis points (1.0%) would increase annual interest expense
by approximately $0.6 million. On occasion we enter into interest rate
protection agreements to reduce interest rate risk associated with forecasted
issuances of debt.
At June 30, 2000, the impact on the fair value of market risk sensitive
instruments resulting from an adverse change in (1) the market price of propane
of 10 cents a gallon and (2) interest rates on ten-year U.S. treasury notes of
100 basis points would not be materially different than that reported in the
Partnership's 1999 Annual Report on Form 10-K. We expect that any losses from
market risk sensitive instruments used to manage propane price or interest rate
market risk would be substantially offset by gains on the associated underlying
transactions.
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<PAGE> 20
AMERIGAS PARTNERS, L.P.
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
10.1 First Amendment dated as of March 16, 2000 to Note
Agreement dated as of March 15, 1999
10.2 Fourth Amendment dated as of March 16, 2000 to Note
Agreement dated as of April 12, 1995
10.3 Third Amendment dated as of March 22, 2000 to
Amended & Restated Credit Agreement
10.4 Fourth Amendment dated as of June 6, 2000 to Amended
& Restated Credit Agreement
10.5 Note Agreement dated as of March 15, 2000 among
AmeriGas Propane L.P., AmeriGas Propane, Inc., and
certain institutional investors
10.6 UGI Corporation 2000 Stock Incentive Plan is
incorporated by reference to Exhibit 10.1 to UGI
Corporation Form 10-Q for the Quarter ended June 30,
2000
27.1 Financial Data Schedule of AmeriGas Partners, L.P.
27.2 Financial Data Schedule of AmeriGas Finance Corp.
(b) No Current Report on Form 8-K was filed by either AmeriGas
Partners, L.P. or AmeriGas Finance Corp. during the fiscal
quarter ended June 30, 2000
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<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
AmeriGas Partners, L.P.
---------------------------------
(Registrant)
By: AmeriGas Propane, Inc.,
as General Partner
Date: August 11, 2000 By: /s/ Martha B. Lindsay
---------------------- --------------------------
Martha B. Lindsay
Vice President - Finance
and Chief Financial Officer
By: /s/ Richard R. Eynon
--------------------------
Richard R. Eynon
Controller and Chief
Accounting Officer
AmeriGas Finance Corp.
------------------------------
(Registrant)
Date: August 11, 2000 By: /s/ Martha B. Lindsay
---------------------- --------------------------
Martha B. Lindsay
Vice President - Finance
and Chief Financial Officer
By: /s/ Richard R. Eynon
--------------------------
Richard R. Eynon
Controller and Chief
Accounting Officer
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<PAGE> 22
AMERIGAS PARTNERS, L.P.
EXHIBIT INDEX
10.1 First Amendment dated as of March 16, 2000 to Note Agreement dated
as of March 15, 1999
10.2 Fourth Amendment dated as of March 16, 2000 to Note Agreement dated
as of April 12, 1995
10.3 Third Amendment dated as of March 22, 2000 to Amended & Restated
Credit Agreement
10.4 Fourth Amendment dated as of June 6, 2000 to Amended & Restated
Credit Agreement
10.5 Note Agreement dated as of March 15, 2000 among AmeriGas Propane
L.P., AmeriGas Propane, Inc. and certain institutional investors
27.1 Financial Data Schedule of AmeriGas Partners, L.P.
27.2 Financial Data Schedule of AmeriGas Finance Corp.
