Form 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006
Commission file number 1-13692
AMERIGAS PARTNERS, L.P.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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23-2787918
(I.R.S. Employer Identification No.) |
460 North Gulph Road, King of Prussia, PA 19406
(Address of Principal Executive Offices) (Zip Code)
(610) 337-7000
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
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Name of each Exchange on Which Registered |
Common Units representing limited partner interests
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New York Stock Exchange, Inc. |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes þ No o.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act
Yes o No þ.
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 þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Securities Exchange Act of 1934). Yes o No þ
The aggregate market value of AmeriGas Partners, L.P. Common Units held by non-affiliates of
AmeriGas Partners, L.P. on March 31, 2006 was approximately $963,600,797. At December 1, 2006,
there were outstanding 56,805,605 Common Units representing limited partner interests.
Documents Incorporated By Reference: Portions of the AmeriGas Partners, L.P. Annual Report for the
year ended September 30, 2006 are incorporated by reference in Part II of this Form 10-K.
PART I:
ITEM 1. BUSINESS
General
AmeriGas Partners, L.P. (AmeriGas Partners or the Partnership) is a publicly traded
limited partnership formed under Delaware law on November 2, 1994. We are the largest retail
propane distributor in the United States based on the volume of propane gallons distributed
annually. As of September 30, 2006, we served approximately 1.3 million residential, commercial,
industrial, agricultural and motor fuel customers from approximately 600 district locations in 46
states. The reduction in district locations from approximately 650 district locations as of
September 30, 2005 is primarily a result of the combination of district locations situated in close
geographic proximity to each other.
We are a holding company and we conduct our business principally through our subsidiary,
AmeriGas Propane, L.P. (AmeriGas OLP) and its subsidiary, AmeriGas Eagle Propane, L.P. (Eagle
OLP and together with AmeriGas OLP, the Operating Partnership), both Delaware limited
partnerships. Our common units (Common Units), which represent limited partner interests, are
traded on the New York Stock Exchange under the symbol APU. Our executive offices are located at
460 North Gulph Road, King of Prussia, Pennsylvania 19406, and our telephone number is (610)
337-7000. In this report, the terms Partnership and AmeriGas Partners, as well as the terms
our, we, and its, are used sometimes as abbreviated references to AmeriGas Partners, L.P.
itself or collectively, AmeriGas Partners, L.P. and its consolidated subsidiaries, including the
Operating Partnership.
AmeriGas Propane, Inc. is our general partner (the General Partner) and is responsible for
managing our operations. The General Partner is a wholly owned subsidiary of UGI Corporation
(UGI), a public company listed on the New York Stock Exchange and the Philadelphia Stock
Exchange. The General Partner has an approximate 44% effective ownership interest in the
Partnership. See Notes 1 and 2 to the Partnerships Consolidated Financial Statements.
Business Strategy
Our strategy is to increase market share through acquisitions and internal growth, leverage
our national and local economies of scale and achieve operating efficiencies through productivity
improvements. We regularly consider and evaluate opportunities for growth through the acquisition
of local, regional and national propane distributors. Acquisitions are an important part of our
strategy because only modest growth in total demand for propane is foreseen. We compete for
acquisitions with others engaged in the propane distribution business. Internal growth will be
provided in part from expansion of our AmeriGas Cylinder Exchange (ACE) program (formerly PPX
Prefilled Propane Xchange® or PPX), through which consumers can exchange an empty propane grill
cylinder for a filled one, and our Strategic Accounts program, through which the Partnership
encourages large, multi-location propane users to enter into a supply agreement with us rather than
with many small suppliers. In addition, we believe opportunities exist to grow our business
internally through sales and marketing programs designed to attract and retain customers.
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General Partner Information
The Partnerships website can be found at www.amerigas.com. The Partnership makes available
free of charge at this website (under the Investor Relations & Corporate Governance SEC filings
caption) copies of its reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, including its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q and its Current Reports on Form 8-K. The General Partners Principles of Corporate
Governance, Code of Ethics for the Chief Executive Officer and Senior Financial Officers, Code of
Business Conduct and Ethics for Directors, Officers and Employees, and charters of the Corporate
Governance, Audit and Compensation/Pension Committees of the Board of Directors of the General
Partner are also available on the Partnerships website, under the caption Investor Relations &
Corporate Governance Corporate Governance. All of these documents are also available free of
charge by writing to Robert W. Krick, Vice President and Treasurer, AmeriGas Propane, Inc., P.O.
Box 965, Valley Forge, PA 19482.
Forward-Looking Statements
Some information contained in this Annual Report on Form 10-K may contain forward-looking
statements. Such statements use forward-looking words such as believe, plan, anticipate,
continue, estimate, expect, may, will, or other similar words. These statements discuss
plans, strategies, events or developments that we expect or anticipate will or may occur in the
future.
A forward-looking statement may include a statement of the assumptions or bases underlying the
forward-looking statement. We believe that we have chosen these assumptions or bases in good faith
and that they are reasonable. However, we caution you that actual results almost always vary from
assumed facts or bases, and the differences between actual results and assumed facts or bases can
be material, depending on the circumstances. When considering forward-looking statements, you
should keep in mind the following important factors which could affect our future results and could
cause those results to differ materially from those expressed in our forward-looking statements:
(1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability of
propane, and the capacity to transport propane to our market areas; (3) changes in laws and
regulations, including safety, tax and accounting matters; (4) competitive pressures from the same
and alternative energy sources; (5) failure to acquire new customers thereby reducing or limiting
any increase in revenues; (6) liability for environmental claims; (7) increased customer
conservation measures due to high energy prices and improvements in energy efficiency and
technology resulting in reduced demand; (8) adverse labor relations; (9) large customer,
counterparty or supplier defaults; (10) liability in excess of insurance coverage for personal
injury and property damage arising from explosions and other catastrophic events, including acts of
terrorism, resulting from operating hazards and risks incidental to transporting, storing and
distributing propane, butane and ammonia; (11) political, regulatory and economic conditions in the
United States and foreign countries; and (12) reduced access to capital markets and interest rate
fluctuations.
These factors are not necessarily all of the important factors that could cause actual results
to differ materially from those expressed in any of our forward-looking statements. Other unknown
or unpredictable factors could also have material adverse effects on future results. We undertake
no obligation to update publicly any forward-looking statement whether as a result of new
information or future events except as required by the federal securities laws.
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General Industry Information
Propane is separated from crude oil during the refining process and also extracted from
natural gas or oil wellhead gas at processing plants. Propane is normally transported and stored in
a liquid state under moderate pressure or refrigeration for economy and ease of handling in
shipping and distribution. When the pressure is released or the temperature is increased, it is
usable as a flammable gas. Propane is colorless and odorless; an odorant is added to allow its
detection. Propane is clean burning, producing negligible amounts of pollutants when properly
consumed.
The primary customers for propane are residential, commercial, industrial, motor fuel and
agricultural users to whom natural gas is not readily available. Propane is typically more
expensive than natural gas and fuel oil and, in most areas, cheaper than electricity on an
equivalent energy basis.
Products, Services and Marketing
As of September 30, 2006, the Partnership served approximately 1.3 million customers from
district locations in 46 states. In addition to distributing propane, the Partnership also sells,
installs and services propane appliances, including heating systems. In certain markets, the
Partnership also installs and services propane fuel systems for motor vehicles. Typically, district
locations are found in suburban and rural areas where natural gas is not readily available.
Districts generally consist of an office, appliance showroom, warehouse, and service facilities,
with one or more 18,000 to 30,000 gallon storage tanks on the premises. As part of its overall
transportation and distribution infrastructure, the Partnership operates as an interstate carrier
in 48 states throughout the United States. It is also licensed as a carrier in the Canadian
Providences of Alberta, British Columbia and Quebec.
The Partnership sells propane primarily to five markets: residential, commercial/industrial,
motor fuel, agricultural and wholesale. The Partnership distributed over one billion gallons of
propane in fiscal year 2006. Approximately 89% of the Partnerships fiscal year 2006 sales (based
on gallons sold) were to retail accounts and approximately 11% were to wholesale customers. Sales
to residential customers in fiscal year 2006 represented approximately 39% of retail gallons sold;
commercial/industrial customers 35%; motor fuel customers 15%; and agricultural customers 5%.
Transport gallons, which are large-scale deliveries to retail customers other than residential,
accounted for 6% of 2006 retail gallons. No single customer represents, or is anticipated to
represent, more than 5% of the Partnerships consolidated revenues.
The Partnership continues to expand its ACE program. At September 30, 2006, ACE cylinders were
available at approximately 21,900 retail locations throughout the United States. Sales of our ACE
grill cylinders to retailers are included in the commercial/industrial market. The ACE program
enables consumers to exchange their empty 20-pound propane grill cylinders for filled cylinders or
to purchase filled cylinders at various retail locations such as home centers, gas stations, mass
merchandisers, grocery and convenience stores.
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In the residential market, which includes both conventional and manufactured housing, propane
is used primarily for home heating, water heating and cooking purposes. Commercial users, which
include motels, hotels, restaurants and retail stores, generally use propane for the same purposes as residential customers. Industrial customers use propane to fire furnaces, as
a cutting gas and in other process applications. Other industrial customers are large-scale heating
accounts and local gas utility customers who use propane as a supplemental fuel to meet peak load
deliverability requirements. As a motor fuel, propane is burned in internal combustion engines that
power over-the-road vehicles, forklifts and stationary engines. Agricultural uses include tobacco
curing, chicken brooding and crop drying. In its wholesale operations, the Partnership principally
sells propane to large industrial end-users and other propane distributors.
Retail deliveries of propane are usually made to customers by means of bobtail and rack
trucks. Propane is pumped from the bobtail truck, which generally holds 2,400 to 3,000 gallons of
propane, into a stationary storage tank on the customers premises. The Partnership owns most of
these storage tanks and leases them to its customers. The capacity of these tanks ranges from
approximately 120 gallons to approximately 1,200 gallons. The Partnership also delivers propane to
retail customers in portable cylinders with capacities of 4 to 24 gallons. Some of these deliveries
are made to the customers location, where empty cylinders are either picked up for replenishment
or filled in place.
Propane Supply and Storage
The Partnership has over 250 domestic and international sources of supply, including the spot
market. Supplies of propane from the Partnerships sources historically have been readily
available. During the year ended September 30, 2006, over 90% of the Partnerships propane supply
was purchased under supply agreements with terms of 1 to 3 years. The availability of propane
supply is dependent upon, among other things, the severity of winter weather, the price and
availability of competing fuels such as natural gas and crude oil, and the availability of imported
supply. Although no assurance can be given that supplies of propane will be readily available in
the future, management currently expects to be able to secure adequate supplies during fiscal year
2007. If supply from major sources were interrupted, however, the cost of procuring replacement
supplies and transporting those supplies from alternative locations might be materially higher and,
at least on a short-term basis, margins could be affected. Aside from BP Products North America
Inc. and BP Canada Energy Marketing Corp. (collectively), Enterprise Products Operating LP and
Targa Midstream Services LP, no single supplier provided more than 10% of the Partnerships total
propane supply in fiscal year 2006. In certain market areas, however, some suppliers provide more
than 50% of the Partnerships requirements. Disruptions in supply in these areas could also have an
adverse impact on the Partnerships margins.
The Partnerships supply contracts typically provide for pricing based upon (i) index formulas
using the current prices established at major storage points such as Mont Belvieu, Texas, or
Conway, Kansas, or (ii) posted prices at the time of delivery. In addition, some agreements provide
maximum and minimum seasonal purchase volume guidelines. The percentage of contract purchases, and
the amount of supply contracted for at fixed prices, will vary from year to year as determined by
the General Partner. The Partnership uses a number of interstate pipelines, as well as railroad
tank cars, delivery trucks and barges, to transport propane from suppliers to storage and
distribution facilities. The Partnership stores propane at large storage facilities in Arizona and
Pennsylvania, as well as at smaller facilities in several other states.
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Because the Partnerships profitability is sensitive to changes in wholesale propane costs,
the Partnership generally seeks to pass on increases in the cost of propane to customers. There is
no assurance, however, that the Partnership will always be able to pass on product cost increases
fully, particularly when product costs rise rapidly. Product cost increases can be triggered by
periods of severe cold weather, supply interruptions, increases in the prices of base commodities
such as crude oil and natural gas, or other unforeseen events. The General Partner has adopted
supply acquisition and product cost risk management practices to reduce the effect of volatility on
selling prices. These practices currently include the use of summer storage, forward purchases and
derivative commodity instruments such as options and propane price swaps. See Managements
Discussion and Analysis of Financial Condition and Results of Operations Market Risk
Disclosures.
The following graph shows the average prices of propane on the propane spot market during the
last 5 fiscal years at Mont Belvieu, Texas and Conway, Kansas, two major storage areas.
Average Propane Spot Market
Prices
Competition
Propane competes with other sources of energy, some of which are less costly for equivalent
energy value. Propane distributors compete for customers with suppliers of electricity, fuel oil
and natural gas, principally on the basis of price, service, availability and
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portability. Electricity is a major competitor of propane, but propane generally enjoys a
competitive price advantage over electricity for space heating, water heating, and cooking. Fuel
oil is also a major competitor of propane and is generally less expensive than propane. Furnaces
and appliances that burn propane will not operate on fuel oil, and vice versa, and, therefore, a
conversion from one fuel to the other requires the installation of new equipment. Propane serves as
an alternative to natural gas in rural and suburban areas where natural gas is unavailable or
portability of product is required. Natural gas is generally a less expensive source of energy than
propane, although in areas where natural gas is available, propane is used for certain industrial
and commercial applications and as a standby fuel during interruptions in natural gas service. The
gradual expansion of the nations natural gas distribution systems has resulted in the availability
of natural gas in some areas that previously depended upon propane. However, natural gas pipelines
are not present in many regions of the country where propane is sold for heating and cooking
purposes.
In the motor fuel market, propane competes with gasoline and diesel fuel as well as electric
batteries and fuel cells. Wholesale propane distribution is a highly competitive, low margin
business. Propane sales to other retail distributors and large-volume, direct-shipment industrial
end-users are price sensitive and frequently involve a competitive bidding process.
The retail propane industry is mature, with only modest growth in total demand for the product
foreseen. Therefore, the Partnerships ability to grow within the industry is dependent on its
ability to acquire other retail distributors and to achieve internal growth, which includes
expansion of the ACE program and the Strategic Accounts program as well as the success of its sales
and marketing programs designed to attract and retain customers. The failure of the Partnership to
retain and grow its customer base would have an adverse effect on its results.
The domestic propane retail distribution business is highly competitive. The Partnership
competes in this business with other large propane marketers, including other full-service
marketers, and thousands of small independent operators. Some rural electric cooperatives and fuel
oil distributors have expanded their businesses to include propane distribution and the Partnership
competes with them as well. The ability to compete effectively depends on providing high quality
customer service, maintaining competitive retail prices and controlling operating expenses.
Based on the most recent annual survey by the American Petroleum Institute, 2004 domestic
retail propane sales (annual sales for other than chemical uses) totaled approximately 11.1 billion
gallons and, based on LP-GAS magazine rankings, 2005 sales volume of the ten largest propane
companies (including AmeriGas Partners) represented approximately 40% of domestic retail sales.
Based upon 2004 sales data, management believes the Partnerships 2006 retail volume represents
approximately 9% of domestic retail sales.
Trade Names, Trade and Service Marks
The Partnership markets propane principally under the AmeriGas®, and Americas Propane
Company® trade name and related service marks. UGI owns, directly or indirectly, all the right,
title and interest in the AmeriGas name and related trade and service marks. The General Partner
owns all right, title and interest in the Americas Propane Company trade name and related service marks.
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The Partnership has an exclusive (except for use by UGI, AmeriGas,
Inc. and the General Partner), royalty-free license to use these names and trade and service marks.
UGI and the General Partner each have the option to terminate its respective license agreement (on
12 months prior notice in the case of UGI), without penalty, if the General Partner is removed as
general partner of the Partnership other than for cause. If the General Partner ceases to serve as
the general partner of the Partnership for cause, the General Partner has the option to terminate
its license agreement upon payment of a fee equal to the fair market value of the licensed trade
names. UGI has a similar termination option; however, UGI must provide 12 months prior notice in
addition to paying the fee.
Seasonality
Because many customers use propane for heating purposes, the Partnerships retail sales volume
is seasonal. Approximately 55% to 60% of the Partnerships retail sales volume occurs, and
substantially all of the Partnerships income is earned, during the five-month peak heating season
from November through March. As a result of this seasonality, sales are higher in the Partnerships
first and second fiscal quarters (October 1 through March 31). Cash receipts are greatest during
the second and third fiscal quarters when customers pay for propane purchased during the winter
heating season.
Sales volume for the Partnership traditionally fluctuates from year-to-year in response to
variations in weather, prices, competition, customer mix and other factors, such as conservation
efforts and general economic conditions. For historical information on national weather statistics,
see Managements Discussion and Analysis of Financial Condition and Results of Operations.
Government Regulation
The Partnership is subject to various federal, state and local environmental, safety and
transportation laws and regulations governing the storage, distribution and transportation of
propane and the operation of bulk storage LPG terminals. These laws include, among others, the
Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA or, the Superfund Law), the Clean Air Act, the Occupational Safety and
Health Act, the Homeland Security Act of 2002, the Emergency Planning and Community Right to Know
Act, the Clean Water Act and comparable state statutes. CERCLA imposes joint and several liability
on certain classes of persons considered to have contributed to the release or threatened release
of a hazardous substance into the environment without regard to fault or the legality of the
original conduct. Propane is not a hazardous substance within the meaning of federal and state
environmental laws. See Notes 2 and 11 to the Companys Consolidated Financial Statements.
All states in which the Partnership operates have adopted fire safety codes that regulate the
storage and distribution of propane. In some states these laws are administered by state agencies,
and in others they are administered on a municipal level. The Partnership conducts training
programs to help ensure that its operations are in compliance with applicable governmental
regulations. With respect to general operations, National Fire Protection Association (NFPA)
Pamphlets No. 54 and No. 58, which establish a set of rules and procedures governing the safe
handling of propane, or comparable regulations, have been adopted by all states in which the
Partnership operates. The latest version of NFPA Pamphlet No. 58, adopted by a majority of states, requires certain stationary cylinders that are filled in
place to be re-qualified periodically, depending on the age of the cylinders. Management believes
that the policies and procedures currently in effect at all of its facilities for the handling,
storage and distribution of propane are consistent with industry standards and are in compliance in
all material respects with applicable environmental, health and safety laws.
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With respect to the transportation of propane by truck, the Partnership is subject to
regulations promulgated under federal legislation, including the Federal Motor Carrier Safety Act
and the Homeland Security Act of 2002. Regulations under these statutes cover the security and
transportation of hazardous materials and are administered by the United States Department of
Transportation (DOT). The Natural Gas Safety Act of 1968 required the DOT to develop and enforce
minimum safety regulations for the transportation of gases by pipeline. The DOTs pipeline safety
code applies to, among other things, a propane gas system which supplies 10 or more residential
customers or 2 or more commercial customers from a single source and a propane gas system any
portion of which is located in a public place. The code requires operators of all gas systems to
provide training and written instructions for employees, establish written procedures to minimize
the hazards resulting from gas pipeline emergencies, and to conduct and keep records of inspections
and testing. Operators are subject to the Pipeline Safety Improvement Act of 2002, which, among
other things, protects from adverse employment actions employees who provide information to their
employers or to the federal government as to pipeline safety.
Employees
The Partnership does not directly employ any persons responsible for managing or operating the
Partnership. The General Partner provides these services and is reimbursed for its direct and
indirect costs and expenses, including all compensation and benefit costs. At September 30, 2006,
the General Partner had approximately 5,900 employees, including approximately 433 part-time,
seasonal and temporary employees, working on behalf of the Partnership. UGI also performs certain
financial and administrative services for the General Partner on behalf of the Partnership and is
reimbursed by the Partnership.
ITEM 1A. RISK FACTORS
Decreases in the demand for propane because of warmer-than-normal heating season weather or
poor weather may adversely affect our results of operations.
Because many of our customers rely on propane as a heating fuel, our results of operations are
adversely affected by warmer-than-normal heating season weather. Weather conditions have a
significant impact on the demand for propane for both heating and agricultural purposes.
Accordingly, the volume of propane sold is at its highest during the five-month peak heating season
of November through March and is directly affected by the severity of the winter weather. For
example, historically approximately 55% to 60% of our annual retail propane volumes are sold during
these months. There can be no assurance that normal winter weather in our service territories will
occur in the future.
The agricultural demand for propane is also affected by weather, as dry or warm weather during
the harvest season may reduce the demand for propane. Our ACE operations experience higher volumes
in the spring and summer, mainly due to the grilling season. Sustained periods of
poor weather can negatively affect our ACE revenues. Poor weather may also cause a reduction
in the purchase and use of grills and other propane-filled appliances which could reduce the demand
for our portable propane tank exchange services.
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Our profitability is subject to propane pricing and inventory risk.
The retail propane business is a margin-based business in which gross profits are dependent
upon the excess of the sales price over the propane supply costs. Propane is a commodity, and, as
such, its unit price is subject to volatile fluctuations in response to changes in supply or other
market conditions. We have no control over these market conditions. Consequently, the unit price of
the propane that we and other marketers purchase can change rapidly over a short period of time.
Most of our propane product supply contracts permit suppliers to charge posted prices at the time
of delivery or the current prices established at major storage points such as Mont Belvieu, Texas
or Conway, Kansas. Because our profitability is sensitive to changes in wholesale propane supply
costs, it will be adversely affected if we cannot pass on increases in the cost of propane to our
customers. Due to competitive pricing in the industry, we may not be able to pass on product cost
increases to our customers when product costs rise rapidly, or when our competitors do not raise
their product prices. Finally, market volatility may cause us to sell inventory at less than the
price we purchased it, which could adversely affect our operating results.
High propane costs can lead to customer conservation, resulting in reduced demand for our
product.
Prices for propane are subject to volatile fluctuations in response to changes in supply and
other market conditions. During periods of high propane costs such as those experienced in fiscal
years 2006 and 2005, our prices generally increase. High prices can lead to customer conservation,
resulting in reduced demand for our product.
Supplier defaults may have a negative effect on our operating results.
When the Company enters into fixed price sales contracts with customers, it also enters into
fixed price purchase contracts with suppliers. Depending on changes in the market prices of
products compared to the prices secured in our contracts with suppliers of propane, a default of
one or more of our suppliers under such contracts could cause us to purchase propane at higher
prices which would have a negative impact on our operating results.
Changes in commodity market prices may have a negative effect on our liquidity.
Depending on the terms of our contracts with suppliers, a change in the market price of
propane could create a margin payment obligation by the Company and expose us to an increased
liquidity risk.
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Our operations may be adversely affected by competition from other energy sources.
Propane competes with other sources of energy, some of which are less costly for equivalent
energy value. In addition, we cannot predict the effect that the development of alternative energy
sources might have on our operations. We compete for customers against suppliers of electricity,
fuel oil and natural gas.
Electricity is a major competitor of propane, but propane generally enjoys a competitive price
advantage over electricity for space heating, water heating and cooking. Fuel oil is also a major
competitor of propane and is generally less expensive than propane. Furnaces and appliances that
burn propane will not operate on fuel oil and vice versa, however, so a conversion from one fuel to
the other requires the installation of new equipment. Our customers generally have an incentive to
switch to fuel oil only if fuel oil becomes significantly less expensive than propane. Except for
certain industrial and commercial applications, propane is generally not competitive with natural
gas in areas where natural gas pipelines already exist because natural gas is generally a less
expensive source of energy than propane. The gradual expansion of the nations natural gas
distribution systems has resulted in the availability of natural gas in some areas that previously
depended upon propane.
Our ability to increase revenues is adversely affected by the maturity of the retail propane
industry.
The retail propane industry is mature, with only modest growth in total demand for the product
foreseen. Given this limited growth, we expect that year-to-year industry volumes will be
principally affected by weather patterns. Therefore, our ability to grow within the industry is
dependent on our ability to acquire other retail distributors and to achieve internal growth, which
includes expansion of our ACE and Strategic Accounts programs, as well as the success of our
marketing programs designed to attract and retain customers. Any failure to retain and grow our
customer base would have an adverse effect on our results.
Our ability to grow will be adversely affected if we are not successful in making
acquisitions or in integrating the acquisitions we have made.
We have historically expanded our propane business through acquisitions. We regularly consider
and evaluate opportunities for growth through the acquisition of local, regional and national
propane distributors. We may choose to finance future acquisitions with debt, equity, cash or a
combination of the three. We can give no assurances that we will find attractive acquisition
candidates in the future, that we will be able to acquire such candidates on economically
acceptable terms, that any acquisitions will not be dilutive to earnings and distributions or that
any additional debt incurred to finance an acquisition will not affect our ability to make
distributions.
To the extent we are successful in making acquisitions, such acquisitions involve a number of
risks, including, but not limited to, the assumption of material liabilities, the diversion of
managements attention from the management of daily operations to the integration of operations,
difficulties in the assimilation and retention of employees and difficulties in the assimilation of
different cultures and practices, as well as in the assimilation of broad and geographically
dispersed personnel and operations. The failure to successfully integrate
acquisitions could have an adverse affect on our business, financial condition and results of
operations.
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We are subject to operating and litigation risks that may not be covered by insurance.
Our operations are subject to all of the operating hazards and risks normally incidental to
handling, storing, transporting and otherwise providing combustible liquids such as propane for use
by consumers. As a result, we are sometimes a defendant in legal proceedings and litigation arising
in the ordinary course of business. We believe that we are adequately insured for claims in excess
of our self-insurance; however, certain types of damages, such as punitive damages and penalties,
if any, may not be covered by insurance. There can be no assurance that our insurance will be
adequate to protect us from all material expenses related to pending and future claims or that such
levels of insurance will be available in the future at economical prices.
We may be unable to respond effectively to competition, which may adversely affect our
operating results.
We may be unable to timely respond to changes within the propane sectors that may result from
regulatory initiatives to further increase competition within our industry. Such regulatory
initiatives may create opportunities for additional competitors to enter our markets, and, as a
result, we may be unable to maintain our revenues or continue to pursue our current business
strategy.
Our net income will decrease if we are required to incur additional costs to comply with new
governmental safety, health, transportation and environmental regulation.
We are subject to various federal, state and local safety, health, transportation and
environmental laws and regulations governing the storage, distribution and transportation of
propane. We have implemented safety and environmental programs and policies designed to avoid
potential liability and costs under applicable laws. It is possible, however, that we will incur
increased costs as a result of complying with new safety, health, transportation and environmental
regulations and that such costs will reduce our net income. It is also possible that material
environmental liabilities will be incurred, including those relating to claims for damages to
property and persons.
The IRS could treat us as a corporation for tax purposes or changes in law could subject us
to entity-level taxation, which would substantially reduce the cash available for
distribution to holders of common units.
The availability to a common unitholder of the federal income tax benefits of an investment in
the common units depends, in large part, on our classification as a partnership for federal income
tax purposes. No ruling from the IRS as to this status has been or is expected to be requested.
If we were classified as a corporation for federal income tax purposes, we would be required
to pay tax on our income at corporate tax rates (currently a 35% federal rate), and distributions
received by the common unitholders would generally be taxed a second time as corporate
distributions. Because a tax would be imposed upon us as an entity, the cash available for
distribution to the common unitholders would be substantially reduced. Treatment of us as a
corporation would cause a material reduction in the anticipated cash flow and after-tax return
to the common unitholders, likely causing a substantial reduction in the value of the common units.
11
The law could be changed so as to cause us to be treated as a corporation for federal income
tax purposes or otherwise to be subject to entity-level taxation. If we become subject to
widespread entity-level taxation for state tax purposes, it could substantially reduce
distributions to our unitholders. Our partnership agreement provides that if a law is enacted or
existing law is modified or interpreted in a manner that subjects us to taxation as a corporation
or otherwise subjects us to entity-level taxation for federal, state or local income tax purposes,
certain provisions of our partnership agreement will be subject to change. These changes would
include a decrease in the minimum quarterly distribution and the target distribution levels to
reflect the impact of this law on us. Any such reductions could increase our general partners
percentage of cash distributions and decrease our limited partners percentage of cash
distributions.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of September 30, 2006, the Partnership owned approximately 83% of its district locations.
The Partnership subleases 3 one-million barrel underground storage caverns in Arizona to store
propane and butane for itself and third parties, and it leases a 1.3 million gallon storage
terminal in Pennsylvania. In addition, the Partnership also owns a 600,000 barrel refrigerated,
above-ground storage facility located on leased property in California. The California facility,
which the Partnership operates, is currently leased to several refiners for the storage of butane.
The transportation of propane requires specialized equipment. The trucks and railroad tank
cars utilized for this purpose carry specialized steel tanks that maintain the propane in a
liquefied state. As of September 30, 2006, the Partnership operated a transportation fleet with the
following assets:
|
|
|
|
|
|
|
|
|
|
|
Approximate Quantity & Equipment Type |
|
% Owned |
|
% Leased |
530
|
|
Trailers
|
|
|
93 |
|
|
|
7 |
|
280
|
|
Tractors
|
|
|
34 |
|
|
|
66 |
|
180
|
|
Railroad tank cars
|
|
|
0 |
|
|
|
100 |
|
2,520
|
|
Bobtail trucks
|
|
|
10 |
|
|
|
90 |
|
310
|
|
Rack trucks
|
|
|
8 |
|
|
|
92 |
|
2,130
|
|
Service and delivery trucks
|
|
|
12 |
|
|
|
88 |
|
Other assets owned at September 30, 2006 included approximately 847,000 stationary
storage tanks with typical capacities of 121 to 2,000 gallons and approximately 2.4 million
portable propane cylinders with typical capacities of 1 to 120 gallons. The Partnership also owned
approximately 5,200 large volume tanks which are used for its own storage requirements.
12
ITEM 3. LEGAL PROCEEDINGS
With the exception of the matter set forth below, no material legal proceedings are pending
involving the Partnership, any of its subsidiaries, or any of their properties, and no such
proceedings are known to be contemplated by governmental authorities other than claims arising in
the ordinary course of the Partnerships business.
Swiger, et al. v. UGI/AmeriGas, Inc. et al. Plaintiffs Samuel and Brenda Swiger and their
son (the Swigers) sustained personal injuries and property damage as a result of a fire that
occurred when propane that leaked from an underground line ignited. In July 1998, the Swigers filed
a class action lawsuit against AmeriGas OLP (named incorrectly as UGI/AmeriGas, Inc.), in the
Circuit Court of Monongalia County, West Virginia (Civil Action No. 98-C-298), in which they sought
to recover an unspecified amount of compensatory and punitive damages and attorneys fees, for
themselves and on behalf of persons in West Virginia for whom the defendants had installed propane
gas lines, allegedly resulting from the defendants failure to install underground propane lines at
depths required by applicable safety standards. In 2003, AmeriGas settled the individual personal
injury and property damage claims of the Swigers. In 2004, the court granted the plaintiffs motion
to include customers acquired from Columbia Propane in August 2001 as additional potential class
members, and the plaintiffs amended their complaint to name additional parties pursuant to such
ruling. Subsequently, in March 2005, AmeriGas filed a cross-claim against Columbia Energy Group,
former owner of Columbia Propane, seeking indemnification for conduct undertaken by Columbia
Propane prior to AmeriGas acquisition. Class counsel has indicated that the class is seeking
compensatory damages in excess of $12 million plus punitive damages, civil penalties and attorneys
fees. The defendants believe they have good defenses to the claims of the class members and intend
to vigorously defend against the remaining claims in this lawsuit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the last fiscal quarter of the
2006 fiscal year.
PART II:
|
|
|
ITEM 5. |
|
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED SECURITY HOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Each Common Unit represents a limited partner interest in the Partnership. Common Units are
listed on the New York Stock Exchange, which is the principal trading market for such securities,
under the symbol APU. The following table sets forth, for the periods indicated, the high and low
sale prices per Common Unit, as reported on the New York Stock Exchange (NYSE) Composite
Transactions tape, and the amount of cash distributions paid per Common Unit.
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Range |
|
|
Cash |
|
2006 Fiscal Year |
|
High |
|
|
Low |
|
|
Distribution |
|
Fourth Quarter |
|
$ |
31.27 |
|
|
$ |
29.40 |
|
|
$ |
0.58 |
|
Third Quarter |
|
|
31.35 |
|
|
|
28.27 |
|
|
|
0.58 |
|
Second Quarter |
|
|
31.83 |
|
|
|
28.22 |
|
|
|
0.56 |
|
First Quarter |
|
|
32.54 |
|
|
|
27.10 |
|
|
|
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Range |
|
|
Cash |
|
2005 Fiscal Year |
|
High |
|
|
Low |
|
|
Distribution |
|
Fourth Quarter |
|
$ |
35.00 |
|
|
$ |
30.16 |
|
|
$ |
0.56 |
|
Third Quarter |
|
|
32.88 |
|
|
|
29.15 |
|
|
|
0.56 |
|
Second Quarter |
|
|
31.23 |
|
|
|
28.36 |
|
|
|
0.55 |
|
First Quarter |
|
|
30.56 |
|
|
|
26.11 |
|
|
|
0.55 |
|
As of November 1, 2006, there were 1,438 record holders of the Partnerships Common Units.
The Partnership makes quarterly distributions to its partners in an aggregate amount equal to
its Available Cash, as defined in the Third Amended and Restated Agreement of Limited Partnership
of AmeriGas Partners, L.P. (the Partnership Agreement), which is an exhibit to this Report.
Available Cash generally means, with respect to any fiscal quarter of the Partnership, all cash on
hand at the end of such quarter, plus all additional cash on hand as of the date of determination
resulting from borrowings subsequent to the end of such quarter, less the amount of cash reserves
established by the General Partner in its reasonable discretion for future cash requirements.
Certain reserves are maintained to provide for the payment of principal and interest under the
terms of the Partnerships debt agreements and other reserves may be maintained to provide for the
proper conduct of the Partnerships business, and to provide funds for distribution during the next
four fiscal quarters. The information concerning restrictions on distributions required by Item 5
of this report is incorporated herein by reference to Notes 5 and 6 to the Partnerships
Consolidated Financial Statements which are incorporated herein by reference.
14
ITEM 6. SELECTED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
(Thousands of dollars, except per unit) |
|
FOR THE PERIOD: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income statement data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
2,119,266 |
|
|
$ |
1,963,256 |
|
|
$ |
1,775,900 |
|
|
$ |
1,628,424 |
|
|
$ |
1,307,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
91,158 |
|
|
$ |
60,845 |
|
|
$ |
91,854 |
|
|
$ |
71,958 |
|
|
$ |
55,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners interest
in net income |
|
$ |
90,246 |
|
|
$ |
60,237 |
|
|
$ |
90,935 |
|
|
$ |
71,238 |
|
|
$ |
54,812 |
|
Income per limited partner
unit basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1.59 |
|
|
$ |
1.10 |
|
|
$ |
1.71 |
|
|
$ |
1.42 |
|
|
$ |
1.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions declared
per limited partner unit |
|
$ |
2.28 |
|
|
$ |
2.22 |
|
|
$ |
2.20 |
|
|
$ |
2.20 |
|
|
$ |
2.20 |
|
AT PERIOD END: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
$ |
368,209 |
|
|
$ |
417,740 |
|
|
$ |
298,116 |
|
|
$ |
250,244 |
|
|
$ |
238,401 |
|
Total assets |
|
|
1,611,767 |
|
|
|
1,663,075 |
|
|
|
1,550,227 |
|
|
|
1,496,088 |
|
|
|
1,486,176 |
|
Current liabilities (excluding debt) |
|
|
378,331 |
|
|
|
338,928 |
|
|
|
292,402 |
|
|
|
253,255 |
|
|
|
250,984 |
|
Total debt |
|
|
933,746 |
|
|
|
913,502 |
|
|
|
901,351 |
|
|
|
927,286 |
|
|
|
955,784 |
|
Minority interests |
|
|
10,448 |
|
|
|
8,570 |
|
|
|
7,749 |
|
|
|
7,005 |
|
|
|
6,232 |
|
Partners capital |
|
|
221,503 |
|
|
|
337,417 |
|
|
|
289,038 |
|
|
|
253,683 |
|
|
|
228,366 |
|
OTHER DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (including
capital leases) |
|
$ |
70,915 |
|
|
$ |
63,584 |
|
|
$ |
62,303 |
|
|
$ |
53,429 |
|
|
$ |
53,472 |
|
Retail propane gallons sold (millions) |
|
|
975.2 |
|
|
|
1,034.9 |
|
|
|
1,059.1 |
|
|
|
1,074.9 |
|
|
|
987.5 |
|
Degree days % (warmer) colder
than normal (a) |
|
|
(10.2 |
) |
|
|
(6.9 |
) |
|
|
(4.9 |
) |
|
|
0.2 |
|
|
|
(10.0 |
) |
(a) |
|
Deviation from average heating degree days based upon national weather
statistics provided by the National Oceanic and Atmospheric
Administration (NOAA) for 335 airports in the United States, excluding
Alaska. |
15
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Our Managements Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) relates to AmeriGas Partners and the Operating Partnership. Our MD&A should be read in
conjunction with our consolidated financial statements and related notes thereto incorporated by
reference in this Annual Report on Form 10-K.
EXECUTIVE OVERVIEW
AmeriGas Partners, the largest retail propane marketer in the United States, achieved net
income of $91.2 million during Fiscal 2006, an increase of $30.3 million compared to Fiscal 2005.
Fiscal 2006 results include a $17.1 million loss on early extinguishment of debt related to debt
refinancings. Fiscal 2005 results included a $33.6 million loss on early extinguishment of debt
related to debt refinancings and an after-tax gain of $7.1 million in connection with the November
2004 sale of our 50% ownership interest in Atlantic Energy, Inc. (Atlantic Energy). Fiscal 2006
was a challenging year due in large part to continued high energy prices and approximately 10%
warmer than normal weather. The Partnerships retail gallons sold during Fiscal 2006 reflect the
negative effects of the warmer than normal weather conditions and customer conservation resulting
from higher propane costs and selling prices. Although the Partnership experienced reduced
volumes, we were able to effectively manage customer pricing and product costs, which enabled us to
more than offset the adverse effect of the lower volumes.
The propane industry is mature, with only modest growth in residential customer demand
foreseen. Accordingly, our growth strategy focuses on acquisition of other propane marketers and
internal growth to be achieved by leveraging our geographical scope to secure regional and national
accounts, serving the growing grill cylinder business and offering superior customer service,
including various pricing and payment programs.
In Fiscal 2007 and beyond, we will continue to focus on growing our traditional customer base,
including growth through acquisitions. We expect to achieve base business growth by providing
best-in-class customer service and improving the effectiveness of our sales force, while
maintaining competitive prices. In addition, we plan to control operating and administrative
expenses by executing a series of initiatives to enhance productivity.
ANALYSIS OF RESULTS OF OPERATIONS
The following analysis compares the Partnerships results of operations for (1) the year ended
September 30, 2006 (Fiscal 2006) with the year ended September 30, 2005 (Fiscal 2005) and (2)
Fiscal 2005 with the year ended September 30, 2004 (Fiscal 2004).
16
The following table provides gallon, weather and certain financial information for the Partnership
and should be read in conjunction with Fiscal 2006 Compared to Fiscal 2005 and Fiscal 2005
Compared to Fiscal 2004:
(Millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Gallons sold (millions): |
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
|
975.2 |
|
|
|
1,034.9 |
|
|
|
1,059.1 |
|
Wholesale |
|
|
119.7 |
|
|
|
148.7 |
|
|
|
225.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,094.9 |
|
|
|
1,183.6 |
|
|
|
1,284.1 |
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Retail propane |
|
$ |
1,816.0 |
|
|
$ |
1,679.2 |
|
|
$ |
1,480.1 |
|
Wholesale propane |
|
|
137.7 |
|
|
|
140.5 |
|
|
|
159.6 |
|
Other |
|
|
165.6 |
|
|
|
143.6 |
|
|
|
136.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,119.3 |
|
|
$ |
1,963.3 |
|
|
$ |
1,775.9 |
|
|
|
|
|
|
|
|
|
|
|
Total margin (a) |
|
$ |
775.5 |
|
|
$ |
743.3 |
|
|
$ |
746.7 |
|
EBITDA (b) |
|
$ |
237.9 |
|
|
$ |
215.9 |
|
|
$ |
255.9 |
|
Operating income |
|
$ |
184.1 |
|
|
$ |
177.3 |
|
|
$ |
176.7 |
|
Net income |
|
$ |
91.2 |
|
|
$ |
60.8 |
|
|
$ |
91.9 |
|
Degree days % warmer than normal (c) |
|
|
10.2 |
% |
|
|
6.9 |
% |
|
|
4.9 |
% |
(a) |
|
Total margin represents total revenues less total cost of sales. |
|
(b) |
|
EBITDA (earnings before interest expense, income taxes, depreciation and amortization) should
not be considered as an alternative to net income (as an indicator of operating performance)
or as an alternative to cash flow (as a measure of liquidity or ability to service debt
obligations) and is not a measure of performance or financial condition under accounting
principles generally accepted in the United States of America (GAAP). Management believes
EBITDA is a meaningful non-GAAP financial measure used by investors to compare the
Partnerships operating performance with other companies within the propane industry and to
evaluate the Partnerships ability to meet loan covenants. The Partnerships definition of
EBITDA may be different from that used by other companies. Weather significantly impacts
demand for propane and profitability because many customers use propane for heating purposes.
The following table includes reconciliations of net income to EBITDA for the fiscal years
presented: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Net income |
|
$ |
91.2 |
|
|
$ |
60.8 |
|
|
$ |
91.9 |
|
Income tax expense |
|
|
0.2 |
|
|
|
1.5 |
|
|
|
0.2 |
|
Interest expense |
|
|
74.1 |
|
|
|
79.9 |
|
|
|
83.2 |
|
Depreciation |
|
|
67.8 |
|
|
|
68.2 |
|
|
|
75.5 |
|
Amortization |
|
|
4.6 |
|
|
|
5.5 |
|
|
|
5.1 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
237.9 |
|
|
$ |
215.9 |
|
|
$ |
255.9 |
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Deviation from average heating degree days based upon national weather statistics provided
by the National Oceanic and Atmospheric Administration (NOAA) for 335 airports in the United
States, excluding Alaska. |
17
Fiscal 2006 Compared with Fiscal 2005
Temperatures in our service territories based upon heating degree days during Fiscal 2006 were
10.2% warmer than normal compared with temperatures that were 6.9% warmer than normal during Fiscal
2005. Retail propane volumes sold decreased approximately 5.8%
principally due to the warmer winter weather and the negative effects of customer conservation
driven by continued high propane selling prices.
Retail propane revenues increased $136.8 million reflecting a $233.8 million increase due to
higher average selling prices partially offset by a $97.0 million decrease due to the lower retail
volumes sold. Wholesale propane revenues decreased $2.8 million reflecting a $27.4 million decrease
due to lower volumes sold partially offset by a $24.6 million increase due to higher average
selling prices. In Fiscal 2006, our average retail propane product cost per retail gallon sold was
approximately 18% higher than in Fiscal 2005 resulting in higher year-over-year prices to our
customers. The average wholesale cost per gallon of propane during Fiscal 2006 at Mont Belvieu, one
of the major supply points in the United States, was approximately 21% greater than the average
cost per gallon during Fiscal 2005. Total cost of sales was $1,343.8 million in Fiscal 2006
compared to $1,220.0 million in Fiscal 2005, primarily reflecting the increase in propane product
costs partially offset by the decreased volumes sold. Total margin increased $32.2 million
principally due to higher average propane margins per gallon and higher fees in response to
increases in operating and administrative expenses.
EBITDA during Fiscal 2006 increased $22.0 million compared to Fiscal 2005 as a result of the
previously mentioned increase in total margin and a $16.5 million decrease in the loss on the early
extinguishments of debt from $33.6 million in Fiscal 2005 to $17.1 million in Fiscal 2006. These
changes were partially offset by a $17.2 million increase in operating and administrative expenses
and a $9.5 million decrease in other income primarily reflecting the absence of the $9.1 million
pre-tax gain on the sale of Atlantic Energy recognized during Fiscal 2005. The $17.1 million loss
on the early extinguishments of debt that was incurred during Fiscal 2006 was associated with the
refinancings of AmeriGas OLPs Series A and Series C
First Mortgage Notes totaling $228.8 million,
$59.6 million of the Partnerships $60 million 10%
Senior Notes, and a $35 million term loan with $350 million of 7.125%
Senior Notes due 2016. The increase in
operating and administrative expenses principally resulted from higher (1) vehicle fuel and lease costs, (2) employee
compensation and benefits, and (3) repairs and maintenance. These increases were partially offset by a $7.2 million favorable net expense
reduction related to general insurance and litigation, primarily reflecting improved claims
history. The Partnership recovered significant increases in certain costs, such as vehicle fuel,
through delivery surcharges. Although EBITDA is not an alternative to net income or cash flow as a
measure of liquidity, performance or financial condition under GAAP, management believes EBITDA is
a meaningful non-GAAP financial measure used by investors to compare the Partnerships operating
performance with other companies within the propane industry and to evaluate the Partnerships
ability to meet loan covenants.
Operating income increased $6.8 million reflecting the previously mentioned increase in total
margin and a $1.2 million decrease in depreciation and amortization expense, largely offset by the
aforementioned increase in operating and administrative expenses and decrease in other income. Net
income in Fiscal 2006 increased $30.3 million principally reflecting the previously mentioned
increase in EBITDA and a $5.8 million decrease in interest expense related to the previously
mentioned debt refinancings and reduced use of our revolving credit facility.
18
Fiscal 2005 Compared with Fiscal 2004
Temperatures in our service territories based upon heating degree days during Fiscal 2005 was
6.9% warmer than normal compared with weather that was 4.9% warmer than normal during Fiscal 2004.
Retail propane volumes sold decreased approximately 2.3% principally due to the warmer than normal
winter weather and the negative effects of customer conservation on volumes sold, which is
primarily attributed to significantly higher propane selling prices.
Retail propane revenues increased $199.1 million reflecting a $232.9 million increase due to
higher average selling prices partially offset by a $33.8 million decrease due to the lower retail
volumes sold. Wholesale propane revenues decreased $19.1 million reflecting a $54.1 million
decrease due to lower volumes sold partially offset by a $35.0 million increase due to higher
average selling prices. The higher average retail and wholesale selling prices per gallon reflect
significantly higher propane product costs. The average wholesale cost per gallon of propane during
Fiscal 2005 at Mont Belvieu was approximately 28% greater than the average cost per gallon during
Fiscal 2004. Total cost of sales increased $190.8 million reflecting the higher propane product
costs.
Total margin decreased $3.4 million principally due to the lower retail volumes sold partially
offset by higher margin from ancillary sales and services and, to a much lesser extent, slightly
higher average retail propane margins per gallon. Contributing to the decline in total margin
during Fiscal 2005 was lower margin generated by our AmeriGas
Cylinder Exchange program largely due
to competitive pricing pressures and the high cost of propane.
EBITDA during Fiscal 2005 decreased $40.0 million compared to Fiscal 2004 as a result of (1)
the $33.6 million loss on early extinguishment of debt resulting from the Partnerships refinancing
of its Senior Notes in May 2005, (2) a $17.1 million increase in operating and administrative
expenses and (3) a $3.4 million decrease in total margin all of which were partially offset by a
$14.0 million increase in other income. The increase in operating and administrative expenses was
primarily due to a $6.3 million increase in vehicle fuel expense and a $3.7 million increase in
vehicle lease costs. Increases in maintenance and repairs, uncollectible accounts expense and
general insurance expense among others also contributed to the higher operating and administrative
expenses. The increase in other income primarily reflects the $9.1 million pre-tax gain on the sale
of Atlantic Energy and higher gains on fixed asset disposals.
Operating income increased slightly reflecting the previously mentioned increase in other
income and a $7.3 million decrease in depreciation expense largely offset by the aforementioned
higher operating and administrative expenses and lower total margin. As previously mentioned, the
increased other income reflects the gain on the sale of Atlantic Energy. The decrease in
depreciation expense is largely attributed to lower capital expenditures related to our AmeriGas
Cylinder Exchange program. Net income in Fiscal 2005 decreased reflecting the $33.6 million loss
on early extinguishment of debt and increased income taxes resulting from the Partnerships gain on
the sale of its ownership interest in Atlantic Energy which were slightly offset by $3.3 million
lower interest expense and the slightly higher operating income.
19
FINANCIAL CONDITION AND LIQUIDITY
Capitalization and Liquidity
The Partnerships long-term debt outstanding at September 30, 2006 totaled $933.7 million.
There were no amounts outstanding under AmeriGas OLPs Credit Agreement at September 30, 2006.
AmeriGas OLP has a Credit Agreement (Credit Agreement) that consists of (1) a Revolving
Credit Facility and (2) an Acquisition Facility. The General Partner and Petrolane are guarantors
of amounts outstanding under the Credit Agreement. Effective November 6, 2006, AmeriGas OLP
entered into a new unsecured Credit Agreement with substantially the same terms and conditions
except as described below. Reference made to the Credit Agreement relates to both the former and
new Credit Agreement as appropriate.
Under the Revolving Credit Facility, AmeriGas OLP may borrow up to $125 million (including a
$100 million sublimit for letters of credit), which is subject to restrictions in the AmeriGas
Partners Senior Notes indentures. The Revolving Credit Facility may be used for working capital
and general purposes of AmeriGas OLP and expires on October 15, 2011 but may be extended for
additional one-year periods with the consent of the participating banks representing at least 80%
of the commitments thereunder. There were no borrowings outstanding under AmeriGas OLPs Revolving
Credit Facility at September 30, 2006 and 2005. Issued and outstanding letters of credit, which
reduce the amount available for borrowings under the Revolving Credit Facility, totaled $58.9
million and $56.3 million at September 30, 2006 and 2005, respectively.
The Acquisition Facility provides AmeriGas OLP with the ability to borrow up to $75 million to
finance the purchase of propane businesses or propane business assets or, to the extent it is not
so used, for working capital and general purposes, subject to restrictions in the AmeriGas
Partners Senior Notes indentures. The Acquisition Facility operates as a revolving facility
through October 15, 2011, at which time amounts then outstanding, will be immediately due and
payable. There were no amounts outstanding under the Acquisition Facility at September 30, 2006
and 2005.
AmeriGas OLPs short-term borrowing needs are seasonal and are typically greatest during the
fall and winter heating-season months due to the need to fund higher levels of working capital. Due
in part to the issuance of 2.3 million Common Units in September 2005, the Partnership generally
did not need to use its Revolving Credit Facility to fund its operations during Fiscal 2006. The
average daily and peak loan borrowings outstanding under the Credit Agreement during Fiscal 2005
were $27.9 million and $98.0 million, respectively.
AmeriGas Partners periodically issues equity securities and may continue to do so. Proceeds
from the Partnerships equity offerings have generally been used by the Partnership to reduce
indebtedness and for general Partnership purposes, including funding acquisitions. The Partnership
also has an effective unallocated debt and equity shelf registration statement with the U.S.
Securities and Exchange Commission (SEC) under which it may issue Common Units or Senior Notes
due 2016 in underwritten public offerings.
In order to borrow under its Credit Agreement, AmeriGas OLP must satisfy certain financial
covenants including, but not limited to, a minimum interest coverage ratio, a maximum debt to
EBITDA ratio and a minimum EBITDA, as defined. AmeriGas OLPs financial
20
conditions calculated as of
September 30, 2006 permitted it to borrow up to the maximum amount available under either the
former or new Credit Agreement. At September 30, 2006, the Partnership was in compliance with its financial covenants. For a more detailed discussion of
the Partnerships credit facilities, see Note 6 to Consolidated Financial Statements. Based upon
existing cash balances, cash expected to be generated from operations and borrowings available
under its Credit Agreement, the Partnerships management believes that the Partnership will be able
to meet its anticipated contractual commitments and projected cash needs in Fiscal 2007.
Partnership Distributions
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 as defined in the Third Amended
and Restated Agreement of Limited Partnership (the Partnership Agreement) 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 Partnerships
business and for distributions during the next four quarters. In addition, certain of the
Partnerships debt agreements require reserves be established for the payment of debt principal and
interest. Distributions of Available Cash are made 98% to limited partners and 2% to the General
Partner. The Partnership may pay an incentive distribution to the General Partner if Available Cash
exceeds the Minimum Quarterly Distribution of $0.55 and the First Target Distribution of $0.055 per
unit on all units.
In April 2006, the General Partner declared an increase in the Partnerships regular quarterly
distribution from $0.56 to $0.58 per limited partner unit which was payable on May 18, 2006 to unit
holders of record on May 10, 2006. A reasonable proxy for the amount of cash available for
distribution that is generated by the Partnership can be calculated by subtracting from the
Partnerships EBITDA interest expense and capital expenditures needed to maintain operating
capacity and adding back losses on extinguishments of debt associated with refinancings.
Partnership distributable cash as calculated under this method for Fiscal 2006, 2005 and 2004 is as
follows:
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
2006 |
|
|
2005 |
|
|
2004 |
|
(Millions of dollars) |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
91.2 |
|
|
$ |
60.8 |
|
|
$ |
91.9 |
|
Income tax expense |
|
|
0.2 |
|
|
|
1.5 |
|
|
|
0.2 |
|
Interest expense |
|
|
74.1 |
|
|
|
79.9 |
|
|
|
83.2 |
|
Depreciation |
|
|
67.8 |
|
|
|
68.2 |
|
|
|
75.5 |
|
Amortization |
|
|
4.6 |
|
|
|
5.5 |
|
|
|
5.1 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
237.9 |
|
|
|
215.9 |
|
|
|
255.9 |
|
Interest expense |
|
|
(74.1) |
|
|
|
(79.9) |
|
|
|
(83.2 |
) |
Maintenance capital expenditures |
|
|
(23.6) |
|
|
|
(19.3) |
|
|
|
(23.1 |
) |
Loss on extinguishment of debt |
|
|
17.1 |
|
|
|
33.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable cash |
|
$ |
157.3 |
|
|
$ |
150.3 |
|
|
$ |
149.6 |
|
|
|
|
|
|
|
|
|
|
|
Although distributable cash is a reasonable estimate of the amount of cash available for
distribution by the Partnership, it does not reflect, among other things, the impact of changes in
working capital and the amount of distributable cash used to finance growth capital expenditures,
which can significantly affect cash available for distribution. Distributable cash 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 GAAP. Management believes distributable
cash is a meaningful non-GAAP measure for evaluating the Partnerships ability to declare and pay
distributions pursuant to the terms of the Partnership Agreement. The Partnerships definition of
distributable cash may be different from that used by other companies. The ability of the
Partnership to pay distributions on all units depends upon a number of factors. These factors
include (1) the level of Partnership earnings; (2) the cash needs of the Partnerships operations
(including cash needed for maintaining and increasing operating capacity); (3) changes in operating
working capital; and (4) the Partnerships ability to borrow under its Credit Agreement, to
refinance maturing debt and to increase its long-term debt. Some of these factors are affected by
conditions beyond our control including weather, competition in markets we serve, the cost of
propane and changes in capital market conditions.
22
Contractual Cash Obligations and Commitments
The Partnership has certain contractual cash obligations that extend beyond Fiscal 2006
including obligations associated with long-term debt, interest on long-term fixed-rate debt, lease
obligations and propane supply contracts. The following table presents significant contractual cash
obligations as of September 30, 2006 (in millions of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
|
|
|
|
|
|
1 year |
|
|
2 - 3 |
|
|
4 - 5 |
|
|
After |
|
|
|
Total |
|
|
or less |
|
|
years |
|
|
years |
|
|
5 years |
|
Long-term debt |
|
$ |
932.5 |
|
|
$ |
1.4 |
|
|
$ |
71.2 |
|
|
$ |
94.9 |
|
|
$ |
765.0 |
|
Interest on long-term fixed rate debt |
|
|
811.3 |
|
|
|
68.1 |
|
|
|
133.7 |
|
|
|
119.4 |
|
|
|
490.1 |
|
Operating leases |
|
|
228.6 |
|
|
|
48.5 |
|
|
|
76.1 |
|
|
|
53.3 |
|
|
|
50.7 |
|
Propane supply contracts |
|
|
20.7 |
|
|
|
20.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,993.1 |
|
|
$ |
138.7 |
|
|
$ |
281.0 |
|
|
$ |
267.6 |
|
|
$ |
1,305.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows
Operating activities. Due to the seasonal nature of the Partnerships business, cash flows from
operating activities are generally strongest during the second and third fiscal quarters when
customers pay for propane consumed during the heating season months. Conversely, operating cash
flows are generally at their lowest levels during the first and fourth fiscal quarters when the
Partnerships investment in working capital, principally accounts receivable and inventories, is
generally greatest. The Partnership uses its Credit Agreement to satisfy its seasonal operating
cash flow needs. Cash flow from operating activities was $178.0 million in Fiscal 2006, $184.1
million in Fiscal 2005 and $177.7 million in Fiscal 2004. Cash flow from operating activities
before changes in operating working capital was $185.4 million in Fiscal 2006, $167.5 million in
Fiscal 2005 and $179.9 million in Fiscal 2004. Cash required to fund changes in operating working
capital totaled $7.5 million compared to cash provided of $16.7 million in Fiscal 2005 and cash
used of $2.2 million in Fiscal 2004. The change in cash required to fund operating working capital
during Fiscal 2006 primarily reflects the effects of higher propane product costs on customer
accounts receivable offset by higher customer deposits.
Investing activities. Cash flow used in investing activities was $63.1 million in Fiscal 2006,
$55.4 million in Fiscal 2005 and $90.5 million in Fiscal 2004. We spent $70.7 million for property,
plant and equipment (comprising $23.6 million of maintenance capital expenditures and $47.1 million
of growth capital expenditures) in Fiscal 2006 compared to expenditures of $62.6 million for
property, plant and equipment (comprising $19.3 million of maintenance capital expenditures and
$43.3 million of growth capital expenditures) in Fiscal 2005. Proceeds received from disposals of
assets decreased $7.9 million reflecting the higher number of district locations sold during Fiscal
2005 compared to Fiscal 2006. During Fiscal 2006, the Partnership
used approximately $2.8 million in cash to acquire two propane distribution businesses and a
cylinder refurbishing business.
Financing
activities. Cash flow used by financing activities was $129.3 million in Fiscal 2006,
$70.1 million in Fiscal 2005 and $92.4 million in Fiscal 2004. The Partnerships financing
activities are typically the result of repayments and issuances of long-term debt, borrowings under
our Credit Agreement, issuances of Common Units and distributions on partnership interests. As
previously mentioned, during Fiscal 2006 the Partnership refinanced AmeriGas OLPs Series A and
Series C First Mortgage Notes totaling $228.8 million, $59.6 million of AmeriGas Partners $60 million 10% Senior Notes due 2006, pursuant to a
tender offer, and its $35 million term loan due October 1,
2006, through the issuance of $350 million of 7.125% Senior Notes due 2016. The
Partnership also incurred a $17.1 million loss on extinguishment of debt in connection with the
refinancing.
23
RELATED PARTY TRANSACTIONS
Pursuant to the Partnership Agreement and a Management Services Agreement among AmeriGas Eagle
Holdings, Inc., the general partner of Eagle OLP, and the General Partner, the General Partner is
entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on
behalf of the Partnership. These costs, which totaled $313.6 million $303.6 and $304.6 million in
Fiscal 2006, 2005 and 2004, respectively, include employee compensation and benefit expenses of
employees of the General Partner and general and administrative expenses.
UGI Corporation (UGI) provides certain financial and administrative services to the General
Partner. UGI bills the General Partner for all direct and indirect corporate expenses incurred in
connection with providing these services and the General Partner is reimbursed by the Partnership
for these expenses. Such corporate expenses totaled $10.4 million, $13.1 million and $11.3 million
in Fiscal 2006, 2005 and 2004, respectively. In addition, UGI and certain of its subsidiaries
(excluding Atlantic Energy which is discussed separately) provide office space and automobile
liability insurance and sold propane to the Partnership. These costs totaled $3.1 million in 2006,
$3.8 million in 2005, and $3.0 million in 2004.
Prior to the November 2004 sale of our 50% ownership interest in Atlantic Energy, we purchased
propane on behalf of Atlantic Energy. Atlantic Energy reimbursed AmeriGas OLP for its purchases
plus interest as Atlantic Energy sold such propane to third parties or to AmeriGas OLP itself. The
total dollar value of propane purchased on behalf of Atlantic Energy was $2.4 million in Fiscal
2005, all of which occurred prior to the sale of our ownership interests. The total dollar value of
propane purchased on behalf of Atlantic Energy was $30.0 million in Fiscal 2004. AmeriGas OLP
still purchases propane from Atlantic Energy, now owned by a subsidiary of UGI. Purchases of
propane by AmeriGas OLP from Atlantic Energy during Fiscal 2006, 2005 and 2004 totaled $37.3
million, $27.8 million and $29.3 million, respectively.
In November 2004, in conjunction with the sale of our 50% ownership interest in Atlantic
Energy, UGI Asset Management, Inc. and AmeriGas OLP entered into a Product Sales Agreement whereby
UGI Asset Management, Inc. has agreed to sell and AmeriGas OLP has agreed to purchase a specified
amount of propane annually at the Atlantic Energy terminal in Chesapeake, Virginia. The Product
Sales Agreement took effect on April 1, 2005 and will continue for an initial term of five years
with an option to extend the agreement for up to an
additional five years. The price to be paid for product purchased under the agreement will be
determined annually using a contractual formula that takes into account published index prices and
the locational value of deliveries at the Atlantic Energy terminal.
Prior to the sale of Atlantic Energy, the General Partner also provided it with other services
including accounting, insurance and other administrative services and was reimbursed for the
related costs. Such costs were not material during Fiscal 2005 or 2004. In addition,
AmeriGas OLP
entered into product cost hedging contracts on behalf of Atlantic Energy. When these contracts
were settled, AmeriGas OLP was reimbursed the cost of any losses by, or distributed the proceeds of
any gains to, Atlantic Energy.
24
Amounts due to Atlantic Energy at September 30, 2006 and 2005 totaled $3.1 million and $2.5
million, respectively, which are included in accounts payable related parties in our
Consolidated Balance Sheets.
The Partnership sold propane to certain affiliates of UGI. Such amounts were not material
during Fiscal 2006, 2005 or 2004.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off balance sheet arrangements that are expected to have an effect on the
Partnerships financial condition, change in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
MARKET RISK DISCLOSURES
Our primary financial market risks include commodity prices for propane and interest rates on
borrowings.
The risk associated with fluctuations in the prices the Partnership pays for propane is
principally a result of market forces reflecting changes in supply and demand for propane and other
energy commodities. The Partnerships profitability is sensitive to changes in propane supply costs
and the Partnership generally passes on increases in such costs to customers. The Partnership may
not, however, always be able to pass through product cost increases fully, particularly when
product costs rise rapidly. In order to reduce the volatility of the Partnerships propane market
price risk, we use contracts for the forward purchase or sale of propane, propane fixed-price
supply agreements, and over-the-counter derivative commodity instruments including price swap and
option contracts. Over-the-counter derivative commodity instruments utilized by the Partnership to
hedge forecasted purchases of propane are generally settled at expiration of the contract. In order
to minimize credit risk associated with derivative commodity contracts, we carefully monitor
established credit limits with the contract counterparties. Although we use derivative financial
and commodity instruments to reduce market price risk associated with forecasted transactions, we
do not use derivative financial and commodity instruments for speculative or trading purposes.
The Partnership has both fixed-rate and variable-rate debt. Changes in interest rates impact
the cash flows of variable-rate debt but generally do not impact its fair value. Conversely,
changes in interest rates impact the fair value of fixed-rate debt but do not impact their
cash flows.
Our variable rate debt includes borrowings under AmeriGas OLPs Credit Agreement. This
agreement has interest rates that are generally indexed to short-term market interest rates. As
previously mentioned, the Partnership generally did not need to use its Revolving Credit Facility
during Fiscal 2006 to fund its operations. At September 30, 2006 and 2005, there were no borrowings
outstanding under the Credit Agreement. Based upon weighted average
borrowings outstanding under
this agreement during Fiscal 2005, an increase in short-term interest rates of 100 basis points
(1%) would have increased our interest expense by approximately $0.4 million.
25
The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point
increase in market interest rates would result in decreases in the fair value of this fixed-rate
debt of $53.7 million and $42.1 million at September 30, 2006 and 2005, respectively. A 100 basis
point decrease in market interest rates would result in increases in the fair market value of this
debt of $58.4 million and $45.5 million at September 30, 2006 and 2005, respectively.
Our long-term debt is typically issued at fixed rates of interest based upon market rates for
debt having similar terms and credit ratings. As these long-term debt issues mature, we may
refinance such debt with new debt having interest rates reflecting then-current market conditions.
This debt may have an interest rate that is more or less than the refinanced debt. In order to
reduce interest rate risk associated with forecasted issuances of fixed-rate debt, from time to
time we enter into interest rate protection agreements.
The following table summarizes the fair values of unsettled market risk sensitive derivative
instruments held at September 30, 2006 and 2005. It also includes the changes in fair value that
would result if there were a ten percent adverse change in (1) the market price of propane and (2)
interest rates on ten-year U.S. treasury notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Fair |
|
|
|
Fair Value |
|
|
Value |
|
|
|
(Millions of dollars) |
|
September 30, 2006 |
|
|
|
|
|
|
|
|
Propane swapped option contracts |
|
$ |
(26.2 |
) |
|
$ |
(21.1 |
) |
Interest rate protection agreements |
|
|
(0.3 |
) |
|
|
(4.3 |
) |
September 30, 2005 |
|
|
|
|
|
|
|
|
Propane swapped option contracts |
|
$ |
50.6 |
|
|
$ |
(19.5 |
) |
Interest rate protection agreements |
|
|
(3.9 |
) |
|
|
(3.9 |
) |
Because the Partnerships derivative instruments generally qualify as hedges under
Statement of Financial Accounting Standards (SFAS) No. 133, we expect that changes in the fair
value of derivative instruments used to manage propane price or interest rate risk would be
substantially offset by gains or losses on the associated underlying transactions.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in compliance with generally
accepted accounting principles requires the selection and application of appropriate accounting
principles to the relevant facts and circumstances of the Partnerships operations and the use of
estimates made by management. The Partnership has identified the following critical accounting
policies that are most important to the portrayal of the Partnerships financial condition and
results of operations. Changes in these policies could have a material effect on the financial
statements. The application of these accounting policies necessarily requires managements most
26
subjective or complex judgments regarding estimates and projected outcomes of future events which
could have a material impact on the financial statements. Management has reviewed these critical
accounting policies, and the estimates and assumptions associated with them, with its Audit
Committee. In addition, management has reviewed the following disclosures regarding the application
of these critical accounting policies with the Audit Committee.
Litigation accruals. The Partnership is involved in litigation regarding pending claims and legal
actions that arise in the normal course of its business. In accordance with accounting principles
generally accepted in the United States of America, the Partnership establishes reserves for
pending claims and legal actions when it is probable that a liability exists and the amount or
range of amounts can be reasonably estimated. Reasonable estimates involve management judgments
based on a broad range of information and prior experience. These judgments are reviewed quarterly
as more information is received and the amounts reserved are updated as necessary. Such estimated
reserves may differ materially from the actual liability and such reserves may change materially as
more information becomes available and estimated reserves are adjusted.
Depreciation and amortization of long-lived assets. We compute depreciation on property, plant and
equipment on a straight-line basis over estimated useful lives generally ranging from 2 to 40
years. We also use amortization methods and determine asset values of intangible assets other than
goodwill using reasonable assumptions and projections. Changes in the estimated useful lives of
property, plant and equipment and changes in intangible asset amortization methods or values could
have a material effect on our results of operations. As of September 30, 2006, our net property,
plant and equipment totaled $580.6 million. Depreciation expense of $67.8 million was recorded
during Fiscal 2006.
Purchase Price Allocation. From time to time, we enter into material business combinations. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations (SFAS 141), the purchase price is allocated to the various assets and liabilities
acquired at their estimated fair value. Fair values of assets and liabilities are based upon
available information and may involve us engaging an independent third party to perform an
appraisal. Estimating fair values can be a complex and judgmental area and most commonly
impacts property, plant and equipment and intangible assets, including those with indefinite lives.
Generally, we have, if necessary, up to one year from the acquisition date to finalize the purchase
price allocation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In September, 2006, the FASB issued SFAS No. 157 Fair Value Measures and the SEC issued
Staff Accounting Bulletin 108 Considering the Effects of Prior Year Misstatements in Current Year
Financial Statements (SAB 108). See Note 2 to the Consolidated Financial Statements for
additional discussion of such pronouncements.
27
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures About Market Risk are contained in Managements
Discussion and Analysis of Financial Condition and Results of Operations under the caption Market
Risk Disclosures and are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Managements Annual Report on Internal Control Over Financial Reporting and the financial
statements and financial statement schedules referred to in the index contained on pages F-2 and
F-3 of this report are incorporated herein by reference.
|
|
|
ITEM 9. |
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE |
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) |
|
The General Partners management, with the participation of the Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the Partnerships disclosure controls
and procedures as of the end of the period covered by this report. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Partnerships disclosure controls and procedures as of the end of the period covered by this
report were designed and functioning effectively to provide reasonable assurance that the
information required to be disclosed by the Partnership in reports filed under the
Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms and (ii) accumulated
and communicated to management including the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding disclosure. |
|
(b) |
|
For Managements Annual Report on Internal Control Over Financial Reporting and the related
report of PricewaterhouseCoopers LLP, our Independent Registered Public Accounting Firm, see
Item 8 of this Report (which information is incorporated herein by reference). |
|
(c) |
|
No change in the Partnerships internal control over financial reporting occurred during the
Partnerships most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Partnerships internal control over financial reporting. |
28
ITEM 9B. OTHER INFORMATION
None.
PART III:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
We do not directly employ any persons responsible for managing or operating the Partnership.
The General Partner and UGI provide such services and are reimbursed for direct and indirect costs
and expenses including all compensation and benefit costs. See Certain Relationships and Related
Transactions and Note 12 to the Partnerships Consolidated Financial Statements.
The Board of Directors of the General Partner has an Audit Committee consisting of three
individuals, currently, Messrs. Marrazzo, Pratt and Stoeckel. Each member of the Audit Committee is
independent as defined by the New York Stock Exchange listing standards. In addition, the Board
of Directors of the General Partner has determined that all members of the Audit Committee qualify
as audit committee financial experts within the meaning of the Securities and Exchange Commission
regulations.
The Audit Committee has the authority to (i) make determinations or review determinations made
by management in transactions that require special approval by the Committee under the terms of the
Partnership Agreement and (ii) at the request of the General Partner, review specific matters as to
which the General Partner believes there may be a conflict of interest, in order to determine if
the resolution of such conflict is fair and reasonable to the Partnership. In addition, the Audit
Committee acts on behalf of the Board of Directors in fulfilling its responsibility to:
|
|
|
oversee the accounting and financial reporting processes and audits of the financial
statements of the Partnership; |
|
|
|
|
monitor the independence of the Partnerships independent accountants and the
performance of the independent accountants and internal audit staff; |
|
|
|
|
oversee the adequacy of the Partnerships controls relative to financial and
business risk; |
|
|
|
|
provide a means for open communication among the independent accountants,
management, internal audit staff and the Board of Directors; and |
|
|
|
|
oversee compliance with applicable legal and regulatory requirements. |
The Audit Committee has sole authority to appoint, retain, fix the compensation of and oversee
the work of the independent auditors. A copy of the current charter of the Audit Committee is
posted on the Partnerships website, www.amerigas.com; see Investor Relations Corporate
Governance.
29
The General Partner has adopted a Code of Ethics for the Chief Executive Officer and Senior
Financial Officers that applies to the General Partners Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer. The Code of Ethics is included as an exhibit to this Report
and is posted on the Partnerships website, www.amerigas.com; see Investor Relations Corporate
Governance. Copies of all corporate governance documents posted on the Partnerships website are
available free of charge by writing to Robert W. Krick, Vice President and Treasurer, AmeriGas
Propane, Inc., P. O. Box 965, Valley Forge, PA 19482.
Directors and Executive Officers of the General Partner
The following table sets forth certain information with respect to the directors and executive
officers of the General Partner. AmeriGas, Inc., as the sole shareholder of the General Partner,
elects directors annually. AmeriGas, Inc. is a wholly owned subsidiary of UGI. Executive officers
are elected for one-year terms. There are no family relationships between any of the directors or
any of the executive officers or between any of the executive officers and any of the directors.
|
|
|
|
|
|
|
Name |
|
Age |
|
Position with the General Partner |
|
|
|
|
|
|
|
Lon R. Greenberg
|
|
|
56 |
|
|
Chairman and Director |
|
|
|
|
|
|
|
Eugene V. N. Bissell
|
|
|
53 |
|
|
President, Chief Executive Officer and Director |
|
|
|
|
|
|
|
John L. Walsh
|
|
|
51 |
|
|
Vice Chairman and Director |
|
|
|
|
|
|
|
Stephen D. Ban
|
|
|
66 |
|
|
Director |
|
|
|
|
|
|
|
Richard C. Gozon
|
|
|
68 |
|
|
Director |
|
|
|
|
|
|
|
William J. Marrazzo
|
|
|
57 |
|
|
Director |
|
|
|
|
|
|
|
Gregory A. Pratt
|
|
|
58 |
|
|
Director |
|
|
|
|
|
|
|
Howard B. Stoeckel
|
|
|
60 |
|
|
Director |
|
|
|
|
|
|
|
James W. Stratton
|
|
|
70 |
|
|
Director |
|
|
|
|
|
|
|
William D. Katz
|
|
|
53 |
|
|
Vice President Human Resources |
|
|
|
|
|
|
|
Robert H. Knauss
|
|
|
53 |
|
|
Vice President, General Counsel and Corporate Secretary |
|
|
|
|
|
|
|
David L. Lugar
|
|
|
49 |
|
|
Vice President Supply and Logistics |
|
|
|
|
|
|
|
Carey M. Monaghan
|
|
|
55 |
|
|
Vice President Sales and Marketing |
|
|
|
|
|
|
|
Jerry E. Sheridan
|
|
|
41 |
|
|
Vice President Finance and Chief Financial Officer |
|
|
|
|
|
|
|
William J. Stanczak
|
|
|
51 |
|
|
Controller and Chief Accounting Officer |
30
Mr. Greenberg is a director (since 1994) and Chairman of the General Partner. He previously
served as President and Chief Executive Officer of the General Partner from 1996 until July 2000.
He is also a director (since 1994), Chairman (since 1996) and Chief Executive Officer (since 1995)
of UGI Corporation, having previously been Senior Vice President Legal and Corporate Development
of UGI (1989 to 1994). Mr. Greenberg previously served as Vice President and General Counsel of
AmeriGas, Inc. (1984 to 1994). He also serves as a director of UGI Utilities, Inc. and Aqua
America, Inc.
Mr. Bissell is President, Chief Executive Officer and a director of the General Partner (since
July 2000). He previously served as Senior Vice President Sales and Marketing of the General
Partner (October 1999 to July 2000), having served as Vice President Sales and Operations (1995
to 1999). Previously, he was Vice President Distributors and Fabrication, BOC Gases (1995),
having been Vice President National Sales (1993 to 1995) and Regional Vice President (Southern
Region) for Distributor and Cylinder Gases Division, BOC Gases (1989 to 1993). From 1981 to 1987,
Mr. Bissell held various positions with UGI Corporation and its subsidiaries, including Director,
Corporate Development. He is a member of the Board of Directors of the National Propane Gas
Association and a member of the Kalamazoo College Board of Trustees.
Mr. Walsh is Vice Chairman and a director of the General Partner (since April 2005). He is
also President, Chief Operating Officer and a director of UGI Corporation and he serves as Vice
Chairman and a director of UGI Utilities, Inc. (since April 2005). He previously served as Chief
Executive of the Industrial and Special Products division and executive director of BOC Group PLC,
an industrial gases company (2001 to 2005). From 1986 to 2001, he held various senior management
positions with the BOC Group. Prior to joining BOC Group, Mr. Walsh was
a Vice President of UGIs industrial gas division prior to its sale to BOC Group in 1989. From 1981
until 1986, Mr. Walsh held several management positions with affiliates of UGI.
Dr. Ban was elected a director of the General Partner on February 22, 2006. He is currently
serving as the Director of the Technology Transfer Division of the Argonne National Laboratory, a
science-based Department of Energy laboratory dedicated to advancing the frontiers of science in
energy, environment, biosciences and materials (March 2002 to present). He previously served as
President and Chief Executive Officer of the Gas Research Institute, a gas industry research and
development company funded by distributors, transporters, and producers of natural gas (1987
through 1999). He also served as Executive Vice President of GRI. Prior to joining GRI in 1981, he
was Vice President, Research and Development and Quality Control of Bituminous Materials, Inc. Dr.
Ban also serves as a director of UGI Utilities, Inc. and Energen Corporation.
Mr. Gozon was elected a director of the General Partner on February 24, 1998. He retired as
Executive Vice President of Weyerhaeuser Company in 2002, an integrated forest products company,
and Chairman of Norpac, a North Pacific Paper Company, a joint venture with Nippon Paper
Industries, positions he had held since 1994. Mr. Gozon was formerly a director (1984 to 1993), President and Chief Operating Officer of Alco Standard Corporation, a provider of paper and office
products (1988 to 1993); Executive Vice President and Chief Operating Officer (1988), President
(1985 to 1987) of Paper Corporation of America. He also serves as a director of UGI Corporation,
UGI Utilities, Inc., AmeriSource Bergen Corp., and Triumph Group, Inc.
31
Mr. Marrazzo was elected a director of the General Partner on April 23, 2001. He is Chief
Executive Officer and President of WHYY, Inc., a public television and radio company in the
nations fourth largest market (since 1997). Previously, he was Chief Executive Officer and
President of Roy F. Weston, Inc. (1988 to 1997); Water Commissioner for the Philadelphia Water
Department (1971 to 1988) and Managing Director for the City of Philadelphia (1983 to 1984). He
also serves as a director of American Water Corporation and Woodard & Curran Engineers.
Mr. Pratt was elected a director of the General Partner on May 24, 2005. He is Vice Chairman
and a director of OAO Technology Solutions, Inc. (OAOT), an information technology and professional
services company (2002 to present). He joined OAOT in 1998 as President and CEO after OAOT acquired
Enterprise Technology Group, Inc., a software engineering firm founded by Mr. Pratt. Mr. Pratt
served as President and COO of Intelligent Electronics, Inc. from 1991 through 1996, and was
co-founder, and served as CFO and President of Atari/(US) Corporation from 1984 through 1991.
Mr. Stoeckel was elected a director of the General Partner on September 30, 2006. Mr. Stoeckel
is currently President and Chief Executive Officer of Wawa, Inc. and also serves as Vice Chairman
of the Board of Directors of Wawa, Inc. Wawa, Inc. is a multi-state retailer of food products and
gasoline. He joined Wawa, Inc. in 1987 as Vice President Human Resources and was promoted to
various positions, including Chief Operating Officer, Executive Vice President, Chief Retail
Officer, and Vice President Marketing. He also serves as a director of Riddle Memorial Hospital
and a trustee for Rider University.
Mr. Stratton was elected a director of the General Partner on April 25, 1995. He has been the
Chairman, Chief Executive Officer and a Director of Stratton Holding Company, an
investment advisory and financial consulting firm, since 1972. In addition, Mr. Stratton is a
director of UGI Corporation, UGI Utilities, Inc., Stratton Multi Cap Value Fund, Inc., Stratton
Monthly Dividend REIT Shares, Inc., and Stratton Small-Cap Value Fund.
Mr. Katz is Vice President Human Resources of the General Partner (since December 1999),
having served as Vice President Corporate Development (1996 to 1999). Previously, he was Vice
President Corporate Development of UGI Corporation (1995 to 1996). Prior to joining UGI
Corporation, Mr. Katz was Director of Corporate Development with Campbell Soup Company for over
five years. He also practiced law for approximately 10 years, first with the firm of Jones, Day,
Reavis & Pogue, and later in the Legal Department at Campbell Soup Company.
Mr. Knauss is Vice President and General Counsel of the General Partner (since October 2003)
and UGI Corporation (since September 2003). He is also Corporate Secretary of the General Partner
(since 1994). Prior to October 2003, Mr. Knauss served as Vice President Law and Associate
General Counsel of the General Partner (1996 to 2003). Previously he was Group Counsel Propane
(1989 to 1996) of UGI Corporation. He joined UGI Corporation as Associate Counsel in 1985. Before
joining UGI Corporation, Mr. Knauss was an associate at the firm of Ballard, Spahr, Andrews &
Ingersoll in Philadelphia, Pennsylvania.
32
Mr. Lugar is Vice President Supply and Logistics of the General Partner (since September
2000). Previously, he served as Director NGL Marketing for Conoco, Inc., where he spent 20 years
in increasingly responsible positions in propane marketing, operations, and supply.
Mr. Monaghan is Vice President Sales and Marketing of the General Partner (since May 2000).
Prior to joining the General Partner, he was Vice President-General Manager, Dry Soup for Campbell
Soup Company (since 1997), where he also served as a Business Director and General Manager of a
number of Campbell Soup Divisions for the 10 prior years.
Mr. Sheridan is Vice President Finance and Chief Financial Officer of the General Partner
(since August 2005). From 2003 to 2005, he served as President and Chief Executive Officer of
Potters Industries, Inc., a global manufacturer of engineered glass materials and a wholly-owned
subsidiary of PQ Corporation. In addition, Mr. Sheridan served as Executive Vice President (2003 to
2005) and as Vice President and Chief Financial Officer (1999 to 2003) of PQ Corporation, a global
producer of inorganic specialty chemicals.
Mr. Stanczak is Controller and Chief Accounting Officer of the General Partner (since
September 2004). Previously he held the position of Director Corporate Accounting and Reporting
of UGI Corporation (2003 to 2004). Mr. Stanczak also served as Controller of the Gas Utility
Division of UGI Utilities, Inc., a subsidiary of UGI Corporation, from 1991 to 2003.
Director Independence
The Board of Directors of the General Partner has determined that, other than Messrs. Bissell,
Greenberg and Walsh, no director has a material relationship with the Partnership and each is an
independent director as defined under the rules of the New York Stock Exchange.
The Board of Directors has established the following guidelines to assist it in determining
director independence:
|
(i) |
|
service by a director on the Board of Directors of UGI Corporation and its subsidiaries
in and of itself will not be considered to result in a material relationship between such
director and the Partnership; |
|
|
(ii) |
|
if a director serves as an officer, director or trustee of a non-profit organization,
charitable contributions to that organization by the Partnership and its affiliates in an
amount up to $250,000 per year will not be considered to result in a material relationship
between such director and the Partnership; |
|
|
(iii) |
|
service by a director or his immediate family member as a non-management director of a
company that does business with the Partnership or an affiliate of the Partnership will not
be considered to result in a material relationship between such director and the
Partnership where the business is done in the ordinary course of the Partnerships or
affiliates business and on substantially the same terms and conditions as would be
available to similarly situated customers; and |
33
|
(iv) |
|
service by a director or his immediate family member as an executive officer or
employee of a company that makes payments to, or receives payments from, the Partnership or
its affiliates for property or services in an amount which, in any of the last three fiscal
years, does not exceed the greater of $1 million or 2% of such other companys consolidated
gross revenues, will not be considered to result in a material relationship between such
director and the Partnership. |
Non-management Directors
Non-management directors meet at regularly scheduled executive sessions without management
present. These sessions are led by Mr. Stratton, who currently holds the position of Presiding
Director.
Communications with the Board of Directors and Non-management Directors
Interested persons wishing to communicate directly with the Board of Directors or the
non-management directors as a group may do so by sending written communications addressed to them
c/o AmeriGas Propane, Inc., P.O. Box 965, Valley Forge, PA 19482. Any communications directed to
the Board of Directors or the non-management directors as a group from employees or others that
concern complaints regarding accounting, internal controls or auditing matters will be handled in
accordance with procedures adopted by the Audit Committee of the Board.
All other communications directed to the Board of Directors or the non-management directors as
a group are initially reviewed by the General Counsel. The Chairman of the Corporate Governance
Committee is advised promptly of any such communication that alleges misconduct on the part of
management or raises legal, ethical or compliance concerns about the policies or practices of the
General Partner.
On a periodic basis, the Chairman of the Corporate Governance Committee receives updates on
other communications that raise issues related to the affairs of the Partnership but do not fall
into the two prior categories. The Chairman of the Corporate Governance Committee determines which
of these communications he would like to review. The Corporate Secretary maintains a log of all
such communications that is available for review for one year upon request of any member of the
Board.
Typically, the General Partner does not forward to the Board of Directors communications from
Unitholders or other parties which are of a personal nature or are not related to the duties and
responsibilities of the Board, including junk mail, customer complaints, job inquiries, surveys and
polls, and business solicitations.
These procedures have been posted on the Partnerships website at www.amerigas.com (click the
Investor Relations and Corporate Governance caption, then click on Contact AmeriGas Propane, Inc.
Board of Directors).
34
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the directors and certain
officers of the General Partner and any 10% beneficial owners of the Partnership to send reports of
their beneficial ownership of Common Units and changes in beneficial ownership to the Securities
and Exchange Commission. Based on our records, we believe that during Fiscal 2006 all of such
reporting persons complied with all Section 16(a) filing requirements applicable to them except
that Mr. Sheridan did not timely report on a Form 4 the purchase of 32 Common Units under a
dividend reinvestment plan in August of 2006. This failure was inadvertent and the transaction was
reported on a Form 5 in November of 2006.
ITEM 11. EXECUTIVE COMPENSATION
The following table shows cash and other compensation paid or accrued to the General Partners
Chief Executive Officer and each of its four other most highly compensated executive officers,
(collectively, the Named Executives) for the last three fiscal years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Compensation Table |
|
|
|
|
|
|
|
Annual Compensation |
|
|
Long Term Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
|
Payouts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual |
|
|
Restricted |
|
|
underlying |
|
|
|
|
|
|
|
Name and Principal |
|
Fiscal |
|
|
|
|
|
|
|
|
|
|
Compen- |
|
|
Unit/Stock |
|
|
Options / |
|
|
LTIP |
|
|
All Other |
|
Position |
|
Year |
|
|
Salary |
|
|
Bonus (1) |
|
|
sation (2) |
|
|
Awards (3) |
|
|
SARs |
|
|
Payouts (4) |
|
|
Compensation (5) |
|
Eugene V. N. Bissell, |
|
|
2006 |
|
|
$ |
409,625 |
|
|
$ |
188,805 |
|
|
$ |
1,762 |
|
|
$ |
337,560 |
(a) |
|
|
65,000 |
|
|
$ |
0 |
|
|
$ |
62,074 |
|
President and Chief |
|
|
2005 |
|
|
$ |
399,442 |
|
|
$ |
306,000 |
|
|
$ |
2,250 |
|
|
$ |
296,000 |
|
|
|
96,000 |
|
|
$ |
0 |
|
|
$ |
86,164 |
|
Executive Officer |
|
|
2004 |
|
|
$ |
383,458 |
|
|
$ |
480,602 |
|
|
$ |
3,052 |
|
|
$ |
420,150 |
|
|
|
104,000 |
|
|
$ |
0 |
|
|
$ |
95,329 |
|
Lon R. Greenberg, |
|
|
2006 |
|
|
$ |
920,000 |
|
|
$ |
997,234 |
|
|
$ |
17,172 |
|
|
$ |
1,024,000 |
(b) |
|
|
250,000 |
|
|
$ |
386,558 |
|
|
$ |
64,050 |
|
Chairman (6) |
|
|
2005 |
|
|
$ |
874,565 |
|
|
$ |
1,634,000 |
|
|
$ |
16,724 |
|
|
$ |
1,227,000 |
|
|
|
350,000 |
|
|
$ |
5,194,121 |
|
|
$ |
119,346 |
|
|
|
|
2004 |
|
|
$ |
801,788 |
|
|
$ |
1,179,856 |
|
|
$ |
13,649 |
|
|
$ |
1,186,500 |
|
|
|
360,000 |
|
|
$ |
0 |
|
|
$ |
68,344 |
|
John L. Walsh, Vice |
|
|
2006 |
|
|
$ |
560,000 |
|
|
$ |
511,168 |
|
|
$ |
0 |
|
|
$ |
512,000 |
(b) |
|
|
105,000 |
|
|
$ |
23,295 |
|
|
$ |
21,796 |
|
Chairman (6) (7) |
|
|
2005 |
|
|
$ |
261,702 |
|
|
$ |
405,015 |
|
|
$ |
80,136 |
|
|
$ |
114,800 |
(c) |
|
|
270,000 |
|
|
$ |
0 |
|
|
$ |
5,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
344,400 |
(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
688,800 |
(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
918,400 |
(d) |
|
|
|
|
|
|
|
|
|
|
|
|
Jerry E. Sheridan, Vice |
|
|
2006 |
|
|
$ |
260,000 |
|
|
$ |
77,279 |
|
|
$ |
0 |
|
|
$ |
70,325 |
(a) |
|
|
18,000 |
|
|
$ |
0 |
|
|
$ |
24,228 |
|
President Finance and |
|
|
2005 |
|
|
$ |
25,000 |
|
|
$ |
19,890 |
|
|
$ |
0 |
|
|
$ |
10,629 |
(e) |
|
|
15,000 |
|
|
$ |
0 |
|
|
$ |
52,245 |
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
31,920 |
(e) |
|
|
|
|
|
|
|
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
53,211 |
(e) |
|
|
|
|
|
|
|
|
|
|
|
|
Robert H. Knauss, Vice |
|
|
2006 |
|
|
$ |
275,195 |
|
|
$ |
197,699 |
|
|
$ |
1,988 |
|
|
$ |
153,600 |
(b) |
|
|
40,000 |
|
|
$ |
0 |
|
|
$ |
12,050 |
|
President and General |
|
|
2005 |
|
|
$ |
260,113 |
|
|
$ |
255,996 |
|
|
$ |
1,800 |
|
|
$ |
163,600 |
|
|
|
40,000 |
|
|
$ |
0 |
|
|
$ |
15,953 |
|
Counsel (6) |
|
|
2004 |
|
|
$ |
221,960 |
|
|
$ |
181,010 |
|
|
$ |
1,913 |
|
|
$ |
101,700 |
|
|
|
38,000 |
|
|
$ |
0 |
|
|
$ |
9,696 |
|
(1) |
|
Messrs. Greenberg, Walsh and Knauss participate in the UGI Annual Bonus Plan. Messrs.
Bissell and Sheridan participate in the AmeriGas Propane, Inc. Annual Bonus Plan. Awards
under both Plans are for the year reported, regardless of the year paid. Awards under both
Plans are based on the achievement of business and/or financial performance objectives that
support business plans and goals. |
|
(2) |
|
Amounts represent tax payment reimbursements benefits, except for Mr. Walsh, whose amount
in 2005 represents reimbursement of relocation expenses. |
35
|
|
|
(3) (a) |
|
Effective January 1, 2006, the Board of Directors of the General Partner approved a
phantom performance-contingent restricted Common Unit award (Restricted Units) to Messrs.
Bissell and Sheridan under the 2000 AmeriGas Propane, Inc. Long-Term Incentive Plan (AmeriGas
Plan). Each Restricted Unit represents the right to receive a Common Unit of AmeriGas
Partners or an amount based on the value of a Common Unit, if specified performance goals and
other conditions are met. Distribution Equivalents will accumulate on the Restricted Units
awarded. These Distribution Equivalents may be leveraged based on performance described
below. The performance period for the award will end on December 31, 2008. If the recipient
ceases to be employed by the General Partner before December 31, 2008, other than by reason of
retirement, disability or death, all awards of Restricted Units and Distribution Equivalents
will be forfeited. The performance requirement for the awards shown is that the Partnerships
total unitholder return (TR) during the relevant measurement period equals the median TR of
a peer group of publicly traded limited partnerships. The actual amount of the award may be
higher or lower than the original grant, or even zero, based on the Partnerships TR
percentile rank relative to that of the partnerships in the peer group. The maximum payout
potential is 200% of the original award. |
|
(b) |
|
Effective January 1, 2006, the Board of Directors of UGI approved performance unit
awards (Performance Units) to Messrs. Greenberg, Walsh and Knauss under the UGI
Corporation 2004 Omnibus Equity Compensation Plan (2004 Plan). Each Performance Unit
represents the right of the recipient to receive a share of UGI Common Stock (Stock) or
an amount based on the value of a share of Stock, if specified performance goals and other
conditions are met. Dividend Equivalents will accumulate on the Performance Units
awarded. A Dividend Equivalent is an amount determined by multiplying the number of
Performance Units credited to a recipients account by the per-Share cash dividend, or the
per-Share fair market value of any non-cash dividend, paid by UGI on its Shares on a
dividend payment date. These Dividend Equivalents will also be leveraged based on UGIs
total shareholder return (TSR) performance as described below and distributed when the
performance period on the Performance Units ends on December 31, 2008. If the recipient
ceases to be employed by UGI before the end of the performance period, other than by
reason of retirement, disability or death, awards of Performance Units and Dividend
Equivalents will be forfeited. The performance requirement for the awards shown is that
UGIs TSR during the relevant performance period equals the median of a peer group. The
peer group is the group of companies that comprise the S&P Utilities Index. The actual
amount of the award may be higher or lower than the original grant, or even zero, based on
UGIs TSR percentile rank relative to the companies in the S&P Utilities Index. The
maximum payout potential is 200% of the original award. The maximum number of Shares to
be issued in respect of awards of Performance Units will be the target number of Shares
originally awarded. All leverage on awards of Performance Units will be paid in cash, as
will Dividend Equivalents. |
|
|
(c) |
|
Effective April 1, 2005, the Board of Directors of UGI approved an award of 50,000
Performance Units under the 2004 Plan to Mr. Walsh. Dividend Equivalents will accumulate
on the Performance Units
awarded. The Units have separate performance measurement periods as follows: 5,000 Units
January 1, 2003 through December 31, 2005; 15,000 Units January 1, 2004 through December
31, 2006; and 30,000 Units January 1, 2005 through December 31, 2007. The performance
requirement is the same as the TSR performance described above. |
|
|
(d) |
|
Effective April 1, 2005, the Board of Directors of UGI also approved an award of
40,000 Stock Units with Dividend Equivalents under the 2004 Plan to Mr. Walsh. Each Stock
Unit represents the right of Mr. Walsh to receive a share of Stock or an amount based on
the value of a share of Stock after the expiration of a restriction period. The
restriction period will end on March 31, 2007. UGI expects to pay the Stock Units
partially in cash, to the extent of tax withholding requirements. Accumulated Dividend
Equivalents will be paid in cash. If Mr. Walsh ceases to be employed by UGI or its
affiliates before the end of the applicable restriction period, other than by reason of
retirement, death or disability, the Stock Units and Dividend Equivalents will be
forfeited. |
|
|
(e) |
|
Effective August 15, 2005, the Board of Directors of the General Partner approved an
award of 3,000 Restricted Units under the AmeriGas Plan to Mr. Sheridan. Each Restricted
Unit represents the right of Mr. Sheridan to receive a Common Unit of AmeriGas Partners or
an amount based on the value of a Common Unit, if specified performance goals and other
conditions are met. Distribution Equivalents will accumulate on the Restricted Units
awarded. The Units have separate performance measurement periods as follows: 333 Units
January 1, 2003 through December 31, 2005; 1,000 Units January 1, 2004 through December
31, 2006; and 1,667 Units January 1, 2005 through December 31, 2007. The performance
requirement is the same as the TR performance described above in footnote 3(a). |
36
|
|
The dollar values shown in the Restricted Unit/Stock Awards column of the table above for
all years represent the aggregate value of each award on the date of grant, determined by
multiplying the number of Performance Units and Stock Units (collectively, Restricted
Units/Shares) awarded by the closing price of a Common Unit of AmeriGas Partners, or in the
case of Messrs. Greenberg, Walsh and Knauss, by the closing price of UGI Common Stock, on
the New York Stock Exchange on the effective dates of the respective grants. The total
number of Restricted Units/Shares reflected in the table above, and the total market value
of those Restricted Units/Shares as of September 30, 2006 are as follows: Mr. Bissell,
37,000 Restricted Units market value $1,141,820; Mr. Sheridan, 5,167 Restricted Units -
market value $159,454; Mr. Greenberg, 180,000 Restricted Shares market value $4,401,000;
Mr. Walsh, 110,000 Restricted Shares market value $2,689,500; and Mr. Knauss, 21,500
Restricted Shares market value $525,675. |
|
(4) |
|
Effective January 1, 2003, The Board of Directors of UGI approved awards of Performance
Units to Mr. Greenberg under the UGI Corporation 2000 Stock Incentive Plan. Dividend
Equivalents accumulated on the Performance Units awarded and were subject to leverage based
on UGIs TSR for the performance period established for each award. The performance period
was January 1, 2003 through December 31, 2005. Mr. Walsh was granted Performance Units with
the same performance period upon joining the Company in 2005. For these awards, UGI achieved
a 59.5 TSR percentile ranking in its peer group (the companies in the S&P 500 Utilities
Index). Accordingly, a payout in the amount of 122% of the original awards was earned. The
LTIP Payout column in the Summary Compensation Table above for 2006 reflects the cash paid in
respect of the leverage above 100% of the original awards of Performance Units. |
|
|
|
Effective January 1, 2002, The Board of Directors of UGI approved three awards of restricted
shares to Mr. Greenberg under the UGI Corporation 2000 Stock Incentive Plan. Dividend
equivalents accumulated on the restricted shares awarded and were subject to leverage
based on UGIs TSR for the performance period established for each award. The
performance periods were as follows: January 1, 2002 through December 31, 2002;
January 1, 2002 through December 31, 2003; and January 1, 2002 through December 31,
2004. The restriction period for all three awards ended on December 31, 2004. UGI
ranked first in TSR in its peer group (the companies in the S&P 500 Utilities Index)
for each performance period. Accordingly, the maximum payout potential of 200% of the
original awards was earned. The LTIP Payout column in the Summary Compensation Table
above reflects the cash paid in respect of the leverage above 100% of the original
awards of restricted stock. |
|
(5) |
|
The amounts represent contributions by the General Partner or UGI in accordance with the
provisions of the AmeriGas Propane, Inc. Employee Savings Plan (the AmeriGas Employee
Savings Plan), the UGI Utilities, Inc. Employee Savings Plan (the UGI Employee Savings
Plan), allocations under the UGI Corporation Supplemental Executive Retirement Plan (the
UGI Executive Retirement Plan), and/or allocations under the AmeriGas Propane, Inc.
Supplemental Executive Retirement Plan (the AmeriGas
Executive Retirement Plan). During fiscal years 2006, 2005 and 2004, the following
contributions were made to the Named Executives: (i) under the AmeriGas Employee Savings
Plan: Mr. Bissell, $12,731, $10,606 and $9,673; (ii) under the UGI Employee Savings Plan:
Mr. Greenberg, $4,725, $4,613 and $4,500; Mr. Knauss, $4,725, $4,613 and $4,500; (iii)
under the UGI Executive Retirement Plan: Mr. Greenberg, $52,740, $114,733 and $63,844; Mr.
Knauss, $7,227, $11,340 and $5,196 (iv) under the AmeriGas Executive Retirement Plan: Mr.
Bissell, $49,343, $75,558 and $85,656. For fiscal years 2006 and 2005, UGI made contributions
to Mr. Walsh of $4,725 and $941 under the UGI Employee Savings
Plan and $16,988 and $4,947
under the UGI Executive Retirement Plan. For fiscal years 2006 and 2005, contributions were
made to Mr. Sheridan of $1,000, and $0 under the AmeriGas
Employee Savings Plan and $23,228
and $2,245 under the AmeriGas Executive Retirement Plan. Mr. Sheridan also received a
hiring bonus of $50,000 when he joined the General Partner in 2005. |
|
(6) |
|
Compensation reported for Messrs. Greenberg, Walsh and Knauss is paid by UGI
Corporation and is attributable to their respective positions with UGI. |
|
(7) |
|
Mr. Walsh joined the General Partner on April 1, 2005. |
|
(8) |
|
Mr. Sheridan joined the General Partner on August 15, 2005. |
37
Option Exercises in Last Fiscal Year
The following table shows information on UGI stock option exercises in the last fiscal year for
each of the Named Executives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UGI Stock Option Exercises in Last Fiscal Year |
|
and Fiscal Year-End Option Values |
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
|
Value of Unexercised |
|
|
|
|
|
|
|
|
|
|
|
Options at |
|
|
In-The-Money Options |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year End (#) |
|
|
at Fiscal Year End (1) |
|
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
(#) |
|
|
Realized (2) |
|
|
Exercisable |
|
|
Unexercisable |
|
|
Exercisable |
|
|
Unexercisable |
|
Eugene V. N. Bissell |
|
|
0 |
|
|
|
0 |
|
|
|
136,333 |
|
|
|
163,667 |
|
|
$ |
1,060,384 |
|
|
$ |
771,386 |
|
Lon R. Greenberg |
|
|
100,000 |
|
|
$ |
1,205,872 |
|
|
|
976,666 |
|
|
|
603,334 |
|
|
$ |
10,236,531 |
|
|
$ |
2,816,369 |
|
John L. Walsh |
|
|
0 |
|
|
|
0 |
|
|
|
90,000 |
|
|
|
285,000 |
|
|
$ |
137,700 |
|
|
$ |
692,250 |
|
Jerry E. Sheridan |
|
|
0 |
|
|
|
0 |
|
|
|
5,000 |
|
|
|
28,000 |
|
|
$ |
0 |
|
|
$ |
71,460 |
|
Robert H. Knauss |
|
|
0 |
|
|
|
0 |
|
|
|
62,666 |
|
|
|
79,334 |
|
|
$ |
527,170 |
|
|
$ |
359,430 |
|
(1) |
|
The closing price of UGIs Common Stock as reported on the New York Stock Exchange
Composite tape on September 29, 2006 was $24.45 and is used in calculating the value of
unexercised options. |
|
(2) |
|
Value realized is calculated based on the difference between the option exercise price and
the closing market price of UGIs Common Stock on the date of exercise multiplied by the
number of shares to which the exercise relates. |
Option Grants in Last Fiscal Year
The following table shows information on grants of UGI stock options during fiscal year 2006
to each of the Named Executives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Grants in Last Fiscal Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date |
|
Individual Grants |
|
|
Value |
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
% of Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying |
|
|
Options Granted |
|
|
|
|
|
|
|
|
|
|
Grant Date |
|
|
|
Options |
|
|
to Employees in |
|
|
Exercise |
|
|
|
|
|
|
Present |
|
Name |
|
Granted |
|
|
Fiscal Year (1) |
|
|
or Base Price |
|
|
Expiration Date |
|
|
Value (2) |
|
Eugene V. N. Bissell |
|
|
65,000 |
|
|
|
5.96 |
% |
|
$ |
20.48 |
|
|
|
12/31/2015 |
|
|
$ |
241,800 |
|
Lon R. Greenberg |
|
|
250,000 |
|
|
|
22.91 |
% |
|
$ |
20.48 |
|
|
|
12/31/2015 |
|
|
$ |
930,000 |
|
John L. Walsh |
|
|
105,000 |
|
|
|
9.62 |
% |
|
$ |
20.48 |
|
|
|
12/31/2015 |
|
|
$ |
390,600 |
|
Jerry E. Sheridan |
|
|
18,000 |
|
|
|
1.65 |
% |
|
$ |
20.48 |
|
|
|
12/31/2015 |
|
|
$ |
66,960 |
|
Robert H. Knauss |
|
|
40,000 |
|
|
|
3.67 |
% |
|
$ |
20.48 |
|
|
|
12/31/2015 |
|
|
$ |
148,800 |
|
38
|
(1) |
|
A total of 1,091,100 options were granted to employees and executive officers
of UGI and its subsidiaries, including the General Partner, during fiscal year 2006
under the UGI 2004 Omnibus Equity Compensation Plan. Under this Plan, the option
exercise price is not less than 100% of the fair market value of UGIs Common Stock
on the effective date of the grant. These options become exercisable in three equal
annual installments beginning on the first anniversary of the grant date. All
options are nontransferable and generally exercisable only while the optionee is
employed by UGI or an affiliate, with exceptions for exercise following retirement,
disability and death. Options are subject to adjustment in the event of
recapitalizations, stock splits, mergers, and other similar corporate transactions
affecting UGIs Common Stock. |
|
|
(2) |
|
Based on the Black-Scholes options pricing model, the assumptions used
in calculating the grant date present value for all executives are as follows: |
|
|
|
|
|
|
|
|
|
Three years of closing monthly stock price and
dividend observations were used to calculate the stock
volatility and dividend yield assumptions. |
|
|
Stock volatility
|
|
|
18.14 |
% |
|
|
Stocks dividend yield
|
|
|
3.39 |
% |
|
|
Length of option term
|
|
10 years
|
|
|
Annualized risk-free interest rate
|
|
|
4.51 |
% |
|
|
Discount for risk of forfeiture
|
|
3 % per year
|
All options were granted at fair market value. The actual value, if any, the
executive may realize will depend on the excess of the stock price on the date the
option is exercised over the exercise price. There is no assurance that the value
realized by the executive will be at or near the value estimated by the Black-Scholes
model.
Retirement Benefits
The following Pension Plan Benefits Table shows the annual benefits payable upon retirement to
Messrs. Greenberg, Knauss and Walsh under the Retirement Income Plan for Employees of UGI
Utilities, Inc. (the Retirement Plan) and the UGI Corporation Supplemental
Executive Retirement Plan. The amounts shown assume the executive retires in 2006 at age 65, and
that the aggregate benefits are not subject to statutory maximums. The UGI Corporation Supplemental
Executive Retirement Plan provides for a lump sum payment at retirement equal to the present value
of the annual benefits shown in the table, to the extent these annual benefits are calculated using
amounts in excess of the statutory maximums applicable to UGIs qualified defined benefit
Retirement Plan. At September 30, 2006, Mr. Greenberg had 26 years of credited service, Mr. Knauss
had 19 years and Mr. Walsh had 1 year of credited service under these plans. Mr. Bissell has vested
annual retirement benefits of approximately $3,300, based on prior credited service with UGI and
its subsidiaries. Mr. Bissell does not currently participate in the Retirement Plan. Mr. Sheridan
does not participate in the Retirement Plan.
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan Benefits Table |
|
Annual Plan Benefit for Years Credited Service Shown (2) |
|
Final 5-Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Annual |
|
|
5 |
|
|
10 |
|
|
15 |
|
|
20 |
|
|
25 |
|
|
30 |
|
|
35 |
|
|
40 |
|
Earnings (1) |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
Years (3) |
|
$ |
200,000 |
|
|
$ |
19,000 |
|
|
$ |
38,000 |
|
|
$ |
57,000 |
|
|
$ |
76,000 |
|
|
$ |
95,000 |
|
|
$ |
114,000 |
|
|
$ |
133,000 |
|
|
$ |
136,800 |
|
|
|
$ |
400,000 |
|
|
$ |
38,000 |
|
|
$ |
76,000 |
|
|
$ |
114,000 |
|
|
$ |
152,000 |
|
|
$ |
190,000 |
|
|
$ |
228,000 |
|
|
$ |
266,000 |
|
|
$ |
273,600 |
|
|
|
$ |
600,000 |
|
|
$ |
57,000 |
|
|
$ |
114,000 |
|
|
$ |
171,000 |
|
|
$ |
228,000 |
|
|
$ |
285,000 |
|
|
$ |
342,000 |
|
|
$ |
399,000 |
|
|
$ |
410,400 |
|
|
|
$ |
800,000 |
|
|
$ |
76,000 |
|
|
$ |
152,000 |
|
|
$ |
228,000 |
|
|
$ |
304,000 |
|
|
$ |
380,000 |
|
|
$ |
456,000 |
|
|
$ |
532,000 |
|
|
$ |
547,200 |
|
|
|
$ |
1,000,000 |
|
|
$ |
95,000 |
|
|
$ |
190,000 |
|
|
$ |
285,000 |
|
|
$ |
380,000 |
|
|
$ |
475,000 |
|
|
$ |
570,000 |
|
|
$ |
665,000 |
|
|
$ |
684,000 |
|
|
|
$ |
1,200,000 |
|
|
$ |
114,000 |
|
|
$ |
228,000 |
|
|
$ |
342,000 |
|
|
$ |
456,000 |
|
|
$ |
570,000 |
|
|
$ |
684,000 |
|
|
$ |
798,000 |
|
|
$ |
820,800 |
|
|
|
$ |
1,400,000 |
|
|
$ |
133,000 |
|
|
$ |
266,000 |
|
|
$ |
399,000 |
|
|
$ |
532,000 |
|
|
$ |
665,000 |
|
|
$ |
798,000 |
|
|
$ |
931,000 |
|
|
$ |
957,600 |
|
|
|
$ |
1,600,000 |
|
|
$ |
152,000 |
|
|
$ |
304,000 |
|
|
$ |
456,000 |
|
|
$ |
608,000 |
|
|
$ |
760,000 |
|
|
$ |
912,000 |
|
|
$ |
1,064,000 |
|
|
$ |
1,094,400 |
|
|
|
$ |
1,800,000 |
|
|
$ |
171,000 |
|
|
$ |
342,000 |
|
|
$ |
513,000 |
|
|
$ |
684,000 |
|
|
$ |
855,000 |
|
|
$ |
1,026,000 |
|
|
$ |
1,197,000 |
|
|
$ |
1,231,200 |
|
|
|
$ |
2,000,000 |
|
|
$ |
190,000 |
|
|
$ |
380,000 |
|
|
$ |
570,000 |
|
|
$ |
760,000 |
|
|
$ |
950,000 |
|
|
$ |
1,140,000 |
|
|
$ |
1,330,000 |
|
|
$ |
1,368,000 |
|
|
|
$ |
2,200,000 |
|
|
$ |
209,000 |
|
|
$ |
418,000 |
|
|
$ |
627,000 |
|
|
$ |
836,000 |
|
|
$ |
1,045,000 |
|
|
$ |
1,254,000 |
|
|
$ |
1,463,000 |
|
|
$ |
1,504,800 |
|
|
|
$ |
2,400,000 |
|
|
$ |
228,000 |
|
|
$ |
456,000 |
|
|
$ |
684,000 |
|
|
$ |
912,000 |
|
|
$ |
1,140,000 |
|
|
$ |
1,368,000 |
|
|
$ |
1,596,000 |
|
|
$ |
1,641,600 |
|
|
|
$ |
2,600,000 |
|
|
$ |
247,000 |
|
|
$ |
494,000 |
|
|
$ |
741,000 |
|
|
$ |
988,000 |
|
|
$ |
1,235,000 |
|
|
$ |
1,482,000 |
|
|
$ |
1,729,000 |
|
|
$ |
1,778,400 |
|
|
|
$ |
2,800,000 |
|
|
$ |
266,000 |
|
|
$ |
532,000 |
|
|
$ |
798,000 |
|
|
$ |
1,064,000 |
|
|
$ |
1,330,000 |
|
|
$ |
1,596,000 |
|
|
$ |
1,862,000 |
|
|
$ |
1,915,200 |
|
|
|
$ |
3,000,000 |
|
|
$ |
285,000 |
|
|
$ |
570,000 |
|
|
$ |
855,000 |
|
|
$ |
1,140,000 |
|
|
$ |
1,425,000 |
|
|
$ |
1,710,000 |
|
|
$ |
1,995,000 |
|
|
$ |
2,052,000 |
|
|
|
$ |
3,200,000 |
|
|
$ |
304,000 |
|
|
$ |
608,000 |
|
|
$ |
912,000 |
|
|
$ |
1,216,000 |
|
|
$ |
1,520,000 |
|
|
$ |
1,824,000 |
|
|
$ |
2,128,000 |
|
|
$ |
2,188,800 |
|
|
|
$ |
3,400,000 |
|
|
$ |
323,000 |
|
|
$ |
646,000 |
|
|
$ |
969,000 |
|
|
$ |
1,292,000 |
|
|
$ |
1,615,000 |
|
|
$ |
1,938,000 |
|
|
$ |
2,261,000 |
|
|
$ |
2,325,600 |
|
|
|
$ |
3,600,000 |
|
|
$ |
342,000 |
|
|
$ |
684,000 |
|
|
$ |
1,026,000 |
|
|
$ |
1,368,000 |
|
|
$ |
1,710,000 |
|
|
$ |
2,052,000 |
|
|
$ |
2,394,000 |
|
|
$ |
2,462,400 |
|
|
|
$ |
3,800,000 |
|
|
$ |
361,000 |
|
|
$ |
722,000 |
|
|
$ |
1,083,000 |
|
|
$ |
1,444,000 |
|
|
$ |
1,805,000 |
|
|
$ |
2,166,000 |
|
|
$ |
2,527,000 |
|
|
$ |
2,599,200 |
|
|
|
$ |
4,000,000 |
|
|
$ |
380,000 |
|
|
$ |
760,000 |
|
|
$ |
1,140,000 |
|
|
$ |
1,520,000 |
|
|
$ |
1,900,000 |
|
|
$ |
2,280,000 |
|
|
$ |
2,660,000 |
|
|
$ |
2,736,000 |
|
|
|
(1) |
|
Consists of (i) base salary, commissions and cash payments under the Annual Bonus Plan, and
(ii) deferrals thereof permitted under the Code. |
|
(2) |
|
Annual benefits are computed on the basis of straight life annuity amounts. These amounts
include pension benefits, if any, to which a participant may be entitled as a result of
participation in a pension plan of a subsidiary during previous periods
of employment. The amounts shown do not take into account exclusion of up to 35% of the
estimated primary Social Security benefit. The Retirement Plan provides a minimum benefit equal
to 25% of a participants final 12-months earnings, reduced proportionately for less than 15
years of credited service at retirement. The minimum Retirement Plan benefit is not subject to
Social Security offset. |
|
(3) |
|
The maximum benefit under the Retirement Plan and the UGI Supplemental Executive Retirement
Plan is equal to 60% of a participants highest consecutive 12 months earnings during the
last 120 months. |
Severance Pay Plan for Senior Executive Employees
Named Executives Employed by UGI Corporation. The UGI Corporation Senior Executive Employee
Severance Pay Plan (the UGI Severance Plan) assists certain senior level employees of UGI,
including Messrs. Greenberg, Walsh and Knauss, in the event their employment is terminated without
fault on their part. Benefits are payable to a senior executive covered by the UGI Severance Plan
if the senior executives employment is involuntarily terminated for any reason other than for
cause or as a result of the senior executives death or disability.
40
The UGI Severance Plan provides for cash payments equal to a participants compensation for a
period of time ranging from 6 months to 18 months, depending on length of service. In the case of
Mr. Greenberg, the time period is 30 months; for Mr. Walsh, the time period is from 12 months to 24
months. In addition, a participant receives the cash equivalent of his or her target bonus under
the Annual Bonus Plan, pro-rated for the number of months served in the fiscal year. However, if
the termination occurs in the last two months of the fiscal year, the Chief Executive Officer has
the discretion to determine whether the participant will receive a pro-rated target bonus, or the
actual annual bonus which would have been paid after the end of the fiscal year, assuming that the
participants entire bonus was contingent on meeting the applicable financial performance goal.
Certain employee benefits are continued under the Plan for a period of up to 18 months (30
months in the case of Mr. Greenberg and 24 months in the case of Mr. Walsh). The UGI Severance Plan
also provides for outplacement services for a period of 12 months following a participants
termination of employment. Participants are entitled to receive tax preparation services for their
final year of employment under the UGI Severance Plan. UGI has the option to pay a participant the
cash equivalent of those employee benefits. Provided that the participant is eligible to retire,
all payments under the Severance Plan can be reduced by an amount equal to the fair market value of
certain equity-based awards, other than stock options, payable to the participant after the
termination of employment.
In order to receive benefits under the UGI Severance Plan, a senior executive is required to
execute a release which discharges UGI and its subsidiaries from liability for any claims the
senior executive may have against any of them, other than claims for amounts or benefits due to the
executive under any plan, program or contract provided by or entered into with UGI or its
subsidiaries. The senior executive is also required to ratify post-employment activities agreements
and to cooperate in attending to matters pending at the time of his or her termination of
employment.
Named Executives Employed by AmeriGas Propane. The AmeriGas Propane, Inc. Executive Employee
Severance Pay Plan (the AmeriGas Severance Plan) assists certain senior
level employees of the General Partner including Messrs. Bissell and Sheridan in the event their
employment is terminated without fault on their part. Specified benefits are payable to a senior
executive covered by the AmeriGas Severance Plan if the senior executives employment is
involuntarily terminated for any reason other than for cause or as a result of the senior
executives death or disability.
The AmeriGas Severance Plan provides for cash payments equal to a participants compensation
for 6 months (12 months in the case of Mr. Bissell). In addition, a participant receives the cash
equivalent of his or her target bonus under the Annual Bonus Plan, pro-rated for the number of
months served in the fiscal year. However, if the termination occurs in the last two months of the
fiscal year, the Chief Executive Officer has the discretion to determine whether the participant
will receive a pro-rated target bonus, or the actual annual bonus which would have been paid after
the end of the fiscal year, assuming that the participants entire bonus was contingent on meeting
the applicable financial performance goal. The Plan also provides for separation pay equal to one
days pay per month of service, not to exceed 12 months compensation. The Plan provides for a
minimum payment ranging from 6 to 12 months base salary, depending on the executives employment
grade.
41
Certain employee benefits are continued under the Plan for a period not exceeding 18 months
(24 months in the case of Mr. Bissell). The AmeriGas Severance Plan also provides for outplacement
services for a period of 12 months following a participants termination of employment.
Participants are entitled to receive tax preparation services for their final year of employment
under the AmeriGas Severance Plan. The General Partner has the option to pay a participant the cash
equivalent of those employee benefits. Provided that the participant is eligible to retire, all
payments under the AmeriGas Severance Plan can be reduced by an amount equal to the fair market
value of certain equity-based awards, other than stock options, payable to the participant after
the termination of employment.
In order to receive benefits under the AmeriGas Severance Plan, a senior executive is required
to execute a release which discharges the General Partner and its affiliates from liability for any
claims the senior executive may have against any of them, other than claims for amounts or benefits
due to the executive under any plan, program or contract provided by or entered into with the
General Partner or its affiliates. The senior executive is also required to ratify post-employment
activities agreements and to cooperate in attending to matters pending at the time of his or her
termination of employment.
Change of Control Arrangements
Named Executives Employed By UGI Corporation. Messrs. Greenberg, Walsh and Knauss (the UGI
Named Executives) each have an agreement with UGI Corporation which provides certain benefits in
the event of a change of control. The agreements are automatically extended for one-year terms,
beginning in 2008 unless, prior to a change of control, UGI terminates an agreement. In the absence
of a change of control or termination by the Company, each agreement will terminate when, for any
reason, the executive terminates his or her employment with UGI.
A change of control is generally deemed to occur if: (i) any person (other than the executive,
his or her affiliates and associates, UGI or any of its subsidiaries, any employee benefit plan of
UGI or any of its subsidiaries, or any person or entity organized, appointed, or
established by UGI or its subsidiaries for or pursuant to the terms of any such employee benefit
plan), together with all affiliates and associates of such person, acquires securities representing
20% or more of either (x) the then outstanding shares of Common Stock of UGI or (y) the combined
voting power of UGIs then outstanding voting securities; (ii) individuals who at the beginning of
any 24-month period constitute the Board of Directors (the Incumbent Board) and any new director
whose election by the Board, or nomination for election by UGIs shareholders, was approved by a
vote of at least a majority of the Incumbent Board, cease for any reason to constitute a majority
thereof; (iii) UGI is reorganized, merged or consolidated with or into, or sells all or
substantially all of its assets to, another corporation in a transaction in which former
shareholders of UGI do not own more than 50% of the outstanding Common Stock and the combined
voting power, respectively, of the then outstanding voting securities of the surviving or acquiring
corporation after the transaction; or (iv) UGI is liquidated or dissolved.
42
Severance benefits are payable under the agreements if there is a termination of the
executives employment without cause at any time within two years after a change of control. In
addition, following a change of control, the executive may elect to terminate his or her employment
without loss of severance benefits in certain specified contingencies, including termination of
officer status; a significant adverse change in authority, duties, responsibilities or
compensation; the failure of UGI to comply with and satisfy any of the terms of the agreement; or a
substantial relocation or excessive travel requirements.
Any UGI Named Executive who is terminated with rights to severance compensation under a change
in control agreement will receive a specified multiple of three times his or her base salary and
annual bonus. In addition, health and welfare benefits and supplemental executive retirement plan
benefits (or cash in lieu of benefits) will be provided for three years. The change in control
agreements provide a conditional gross-up for excise and related taxes in the event the severance
compensation and other payments to an executive would constitute excess parachute payments, as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the IRC). UGI will
provide the tax gross-up if the aggregate parachute value of all severance and other change in
control payments to the executive is greater than 110% of the maximum amount that may be paid under
Section 280G of the IRC without imposition of an excise tax. If the parachute value of an
executives payments does not exceed the 110% threshold, the executives payments under the change
in control agreement will be reduced to the extent necessary to avoid imposition of the excise tax
on excess parachute payments.
Named Executives Employed by the General Partner. Messrs. Bissell and Sheridan (the AmeriGas
Named Executives), each have an agreement with the General Partner that provides certain benefits
in the event of a change of control. The agreements are automatically extended for one-year terms
beginning in 2008 unless, prior to a change of control; the General Partner terminates an
agreement. In the absence of a change of control or termination by the General Partner, each
agreement will terminate when, for any reason, the executive terminates his or her employment with
the General Partner.
A change of control is generally deemed to occur if: (i) a change of control of UGI, as
defined above, occurs, (ii) the General Partner, AmeriGas Partners or AmeriGas OLP is reorganized,
merged or consolidated with or into, or sells all or substantially all of its assets to, another
corporation or partnership in a transaction in which the former shareholders of the General
Partner, or former limited partners, as the case may be, do not own more than 50% of the
outstanding Common Stock and combined voting power, or the outstanding Common Units
of such partnership, after the transaction, (iii) the General Partner, AmeriGas Partners or
AmeriGas OLP is liquidated or dissolved, (iv) UGI and its subsidiaries fail to own more than fifty
percent of the general partnership interests of AmeriGas Partners or AmeriGas OLP, (v) UGI and its
subsidiaries fail to own more than fifty percent of the combined voting power of the General
Partners then outstanding voting securities, or (vi) AmeriGas Propane, Inc. is removed as the
general partner of AmeriGas Partners by vote of the limited partners, or AmeriGas Propane, Inc. is
removed as the general partner of AmeriGas Partners or AmeriGas OLP as a result of judicial or
administrative proceedings.
Severance benefits are payable under the agreements if there is a termination of the
executives employment without cause at any time within two years after a change of control. In
addition, following a change of control, the executive may elect to terminate his or her employment
without loss of severance benefits in certain situations, including termination of
officer status; a significant adverse change in authority, duties, responsibilities or compensation; the failure of
the General Partner to comply with any of the terms of the agreement; or a substantial relocation
or excessive travel requirements.
43
Any AmeriGas executive officer who is terminated with rights to severance compensation under a
change in control agreement will receive a specified multiple of one to three times his or her base
salary and annual bonus (three times in the case of Mr. Bissell and two times in the case of Mr.
Sheridan). In addition, health and welfare benefits and supplemental executive retirement plan
benefits (or cash in lieu of benefits) will be provided for up to three years. The change in
control agreements provide a conditional gross-up for excise and related taxes in the event the
severance compensation and other payments to an executive would constitute excess parachute
payments, as defined in Section 280G of the IRC. The General Partner will provide the tax gross-up
if the aggregate parachute value of all severance and other change in control payments to the
executive is greater than 110% of the maximum amount that may be paid under Section 280G of the IRC
without imposition of an excise tax. If the parachute value of an executives payments does not
exceed the 110% threshold, the executives payments under the change in control agreement will be
reduced to the extent necessary to avoid imposition of the excise tax on excess parachute
payments.
Board of Directors
Officers of the General Partner receive no additional compensation for service on the Board of
Directors or on any Committee of the Board. The applicable annual retainers for fiscal year 2006
were as follows:
|
|
|
|
|
Annual retainer for non- management directors
|
|
$ |
55,000 |
|
|
|
|
|
|
Additional annual retainer for Audit Committee
members (other than the Chairman)
|
|
$ |
10,000 |
|
|
|
|
|
|
Additional annual retainer for Audit Committee
Chairman
|
|
$ |
15,000 |
|
The Directors are also offered employee rates on propane purchases. The General Partner reimburses
directors for expenses incurred by them (such as travel expenses) in serving on the
Board and Committees. The General Partner determines all expenses allocable to the Partnership,
including expenses allocable to the services of directors.
Compensation/Pension Committee
The members of the General Partners Compensation/Pension Committee are Richard C. Gozon
(Chairman), Stephen D. Ban and William J. Marrazzo.
44
|
|
|
ITEM 12. |
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY
HOLDER MATTERS |
Ownership of Limited Partnership Units by Certain Beneficial Owners
The following table sets forth certain information regarding each person known by the General
Partner to have been the beneficial owner of more than 5% of the Partnerships voting securities
representing limited partner interests as of November 1, 2006. AmeriGas Propane, Inc. is the sole
general partner of the Partnership.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and |
|
|
|
|
|
|
|
|
Nature of |
|
|
|
|
|
|
|
|
Beneficial |
|
|
|
|
|
|
Name and Address (1) |
|
Ownership of |
|
|
Percent |
|
Title of Class |
|
of Beneficial Owner |
|
Partnership Units |
|
|
of Class |
|
Common Units |
|
UGI Corporation |
|
|
24,525,004 |
(2) |
|
|
43 |
% |
|
|
AmeriGas, Inc. |
|
|
24,525,004 |
(3) |
|
|
43 |
% |
|
|
AmeriGas Propane, Inc. |
|
|
24,525,004 |
(4) |
|
|
43 |
% |
|
|
Petrolane Incorporated |
|
|
7,839,911 |
(4) |
|
|
14 |
% |
(1) |
|
The address of each of UGI and AmeriGas Propane, Inc. is 460 North Gulph Road, King of
Prussia, PA 19406. The address of each of AmeriGas, Inc. and Petrolane Incorporated is 100
Kachel Boulevard, Green Hills Corporate Center, Reading, PA 19607. |
|
(2) |
|
Based on the number of units held by its indirect, wholly-owned subsidiaries, Petrolane
Incorporated (Petrolane) and AmeriGas Propane, Inc. |
|
(3) |
|
Based on the number of units held by its direct and indirect, wholly-owned subsidiaries,
AmeriGas Propane, Inc. and Petrolane. |
|
(4) |
|
AmeriGas Propane, Inc.s beneficial ownership includes 7,839,911 Common Units held by its
subsidiary, Petrolane. Beneficial ownership of those Common Units is shared with UGI
Corporation and AmeriGas, Inc. |
45
Ownership of Partnership Common Units by the Directors and Named Executive Officers of the
General Partner
The table below sets forth as of October 1, 2006 the beneficial ownership of Partnership
Common Units by each director and each of the Named Executives, as well as by the directors and all
of the executive officers of the General Partner as a group. No director, Named Executive or
executive officer beneficially owns more than 1% of the Partnerships Common Units. The total
number of Common Units beneficially owned by the directors and executive officers of the
General Partner as a group represents less than 1% of the Partnerships outstanding Common Units.
|
|
|
|
|
|
|
Amount and Nature of |
|
Name of |
|
Beneficial Ownership of |
|
Beneficial Owner |
|
Partnership Common Units (1) |
|
Lon R. Greenberg |
|
|
2,000 |
|
John L. Walsh |
|
|
0 |
|
Stephen D. Ban |
|
|
0 |
|
Richard C. Gozon |
|
|
5,000 |
|
James W. Stratton |
|
|
1,000 |
(2) |
Gregory A. Pratt |
|
|
0 |
|
William J. Marrazzo |
|
|
500 |
(3) |
Eugene V. N. Bissell |
|
|
22,273 |
(4) |
Robert H. Knauss |
|
|
13,108 |
|
Jerry E. Sheridan |
|
|
3,388 |
(5) |
Howard B. Stoeckel |
|
|
0 |
|
Directors and executive officers as a group (15 persons) |
|
|
61,692 |
|
|
(1) |
|
Sole voting and investment power unless otherwise specified. |
|
|
(2) |
|
Mr. Strattons Units are held jointly with his spouse. |
|
|
(3) |
|
Mr. Marrazzos Units are held jointly with his spouse. |
|
|
(4) |
|
Mr. Bissells Units are held jointly with his spouse. |
|
|
(5) |
|
Mr. Sheridans Units are held jointly with his spouse. |
46
The General Partner is a wholly owned subsidiary of AmeriGas, Inc. which is a wholly
owned subsidiary of UGI. The table below sets forth, as of October 1, 2006, the beneficial
ownership of UGI Common Stock by each director and each of the Named Executives, as well as by the
directors and the executive officers of the General Partner as a group. Including the number of
shares of stock underlying exercisable options, Mr. Greenberg is the beneficial owner of
approximately 1.5% of UGIs Common Stock. All other directors, Named Executives and executive
officers own 1% of UGIs outstanding shares. The total number of shares beneficially owned by the
directors and executive officers as a group (including 1,588,134 shares subject to exercisable
options), represents approximately 2.5% of UGIs outstanding shares.
|
|
|
|
|
|
|
|
|
Number of UGI Shares |
|
|
|
|
|
|
and Nature of |
|
|
|
|
|
|
Beneficial Ownership |
|
Number of |
|
|
Name of |
|
Excluding |
|
Exercisable UGI |
|
|
Beneficial Owner |
|
UGI Stock Options (1) |
|
Stock Options |
|
Total |
Lon R. Greenberg |
|
638,177(2) |
|
976,666 |
|
1,614,783 |
John L. Walsh |
|
29,280(3) |
|
90,000 |
|
119,280 |
Stephen D. Ban |
|
59,670(4) |
|
49,500 |
|
109,170 |
Richard C. Gozon |
|
101,426(4) |
|
75,900 |
|
177,326 |
James W. Stratton |
|
77,381(4)(5) |
|
75,900 |
|
153,281 |
Gregory A. Pratt |
|
0 |
|
0 |
|
0 |
William J. Marrazzo |
|
0 |
|
0 |
|
0 |
Howard B. Stoeckel |
|
0 |
|
0 |
|
0 |
Eugene V. N. Bissell |
|
66,380(6) |
|
136,333 |
|
202,713 |
Robert H. Knauss |
|
22,512 |
|
62,667 |
|
85,179 |
Jerry E. Sheridan |
|
2,547(7) |
|
5,000 |
|
7,547 |
Directors and
executive officers
as a group (15
persons) |
|
1,037,387 |
|
1,588,134 |
|
2,625,521 |
|
(1) |
|
Sole voting and investment power unless otherwise specified. |
|
|
(2) |
|
Mr. Greenberg holds 315,360 shares jointly with his spouse and 20,611 shares are
represented by units held in the UGI Stock Fund of the 401(k) Employee Savings Plan. |
|
|
(3) |
|
Mr. Walsh holds these shares jointly with his spouse. |
|
|
(4) |
|
Included in the number of shares shown are Stock Units (Units) acquired through the
UGI Corporation 1997 Directors Equity Compensation Plan and the 2004 Omnibus Equity
Compensation Plan. Effective January 1, 2004, the Directors Equity Compensation Plan was
merged into the 2004 Plan. Each Unit will be in the form of shares of UGI Common Stock
(65%) and cash (35%) and paid out to directors upon their retirement or termination of
service. The number of Units included for the directors is as follows: Messrs. Ban 43,174,
Gozon 74,818 and Stratton 55,773. |
|
|
(5) |
|
Mr. Stratton holds 21,608 shares jointly with his spouse. |
|
|
(6) |
|
Mr. Bissell holds these shares jointly with his spouse. |
|
|
(7) |
|
Mr. Sheridan holds these shares jointly with his spouse. |
47
Equity Compensation Plan Information
The following table sets forth information as of the end of the Partnerships 2006 fiscal year
with respect to compensation plans under which equity securities of the Partnership are authorized
for issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
|
|
|
remaining available |
|
|
|
(a) |
|
|
(b) |
|
|
for future issuance |
|
|
|
Number of securities to |
|
|
Weighted average |
|
|
under equity |
|
|
|
be issued upon exercise |
|
|
exercise price of |
|
|
compensation plans |
|
|
|
of outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities |
|
Plan category |
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column (a)) |
|
Equity compensation
plans approved by
security holders
(1) |
|
|
113,517 |
|
|
|
0 |
|
|
|
497,722 |
|
Equity compensation
plans not approved
by security holders |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Total |
|
|
113,517 |
|
|
|
0 |
|
|
|
497,722 |
|
(1) |
|
The AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan and the AmeriGas Propane, Inc.
Discretionary Long-Term Incentive Plan for Non-Executive Key Employees were approved pursuant
to Section 6.4 of the Partnership Agreement. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner employs persons responsible for managing and operating the Partnership.
The Partnership reimburses the General Partner for the direct and indirect costs of providing these
services, including all compensation and benefit costs. For fiscal year 2006, these costs totaled
approximately $313.6 million.
During fiscal year 2006, the Operating Partnership had a revolving line of credit up to a
maximum of $20 million from the General Partner available until October 15, 2008, the termination
date of the Revolving Credit Facility. The commitment fees for this line of credit were computed on
the same basis as the facility fees under the Revolving Credit Facility, and totaled $11,829 and
$70,971 in fiscal years 2006 and 2005, respectively. See Note 6 to the Partnerships Consolidated
Financial Statements, which are filed as an exhibit to this report. The General Partner terminated
this line of credit effective November 30, 2005.
48
The Partnership and the General Partner also have extensive, ongoing relationships with UGI
and its affiliates. UGI performs certain financial and administrative services for the General
Partner on behalf of the Partnership. UGI does not receive a fee for such services, but is
reimbursed for all direct and indirect expenses incurred in connection with providing these
services, including all compensation and benefit costs. A wholly owned subsidiary of UGI provides the Partnership with automobile liability insurance with limits of $500,000 per
occurrence and, in the aggregate, $500,000 in excess of the deductible, and stop loss medical
coverage. Another wholly owned subsidiary of UGI leases office space to the General Partner for its
headquarters staff. In addition, a UGI master policy provides accidental death and business travel
and accident insurance coverage for employees of the General Partner. The General Partner is billed
directly by the insurer for this coverage. As discussed under BusinessTrade Names; Trade and
Service Marks, UGI and the General Partner have licensed the trade names AmeriGas and Americas
Propane Company and the related service marks and trademark to the Partnership on a royalty-free
basis. The Partnership obtains management information services from the General Partner, and
reimburses the General Partner for its direct and indirect expenses related to those services. The
rental payments and insurance premiums charged to the Partnership by UGI and its affiliates are
comparable to amounts charged by unaffiliated parties. In fiscal year 2006, the Partnership paid
UGI and its affiliates, including the General Partner, approximately $13.0 million for the services
and expense reimbursements referred to in this paragraph.
Prior to selling its 50% in Atlantic Energy, Inc. (Atlantic Energy) in November 2004, the
Partnership purchased propane on behalf of Atlantic Energy. Atlantic Energy reimbursed AmeriGas OLP
for its purchases as Atlantic Energy sold such propane to third parties or to the Partnership
itself. The total dollar value of propane purchased on behalf of Atlantic Energy was $2.4 million
in fiscal year 2005. No propane was purchased on Atlantic Energys behalf during fiscal year 2006.
In conjunction with the Partnerships sale of its ownership interest in Atlantic Energy, UGI Asset
Management, Inc. (UGI Asset Management), an affiliate of the General Partner, and AmeriGas OLP
entered into a Product Sales Agreement, effective April 1, 2005, whereby UGI Asset Management has
agreed to sell and AmeriGas OLP has agreed to purchase a minimum of 25 million gallons of propane
annually at the Atlantic Energy terminal in Chesapeake, Virginia. Purchases of propane by AmeriGas
OLP from Atlantic Energy during fiscal years 2006 and 2005 totaled $37.3 million and $27.8 million,
respectively.
The Partnership sold propane to certain affiliates of UGI. Such amounts were not material
during fiscal year 2006. The highest amount due from affiliates of the Partnership during fiscal
year 2006 and at November 1, 2006 was $2.0 million.
Prior to November 2004, AmeriGas OLP also provided other services to Atlantic Energy including
marketing, billing, accounting, insurance and other administrative services and was reimbursed for
the related costs. In addition, AmeriGas OLP entered into product cost hedging contracts on behalf
of Atlantic Energy. When these contracts were settled, AmeriGas OLP was reimbursed the cost of any
losses by, or distributed the proceeds of any gains to, Atlantic Energy. There was no amount due
from Atlantic Energy during fiscal year 2006. The highest amount due from Atlantic Energy during
fiscal year 2005 was $2.4 million. See Note 12 to the Partnerships Consolidated Financial
Statements.
The wife of William J. Stanczak, Controller and Chief Accounting Officer of the General
Partner, is employed by the General Partner, as well. The salary range for her grade level is
$66,800 $100,200 per annum.
49
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed by PricewaterhouseCoopers LLP, the Partnerships independent
registered public accountants, in fiscal years 2006 and 2005 were as follows:
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2005 |
|
Audit Fees1 |
|
$ |
1,311,595 |
|
|
$ |
1,634,000 |
|
Audit-Related Fees |
|
|
- 0 - |
|
|
|
- 0 - |
|
Tax Fees2 |
|
|
478,795 |
|
|
|
555,334 |
|
All Other Fees |
|
|
- 0 - |
|
|
|
- 0 - |
|
|
|
|
|
|
|
|
Total Fees for Services Provided |
|
$ |
1,790,390 |
|
|
$ |
2,189,334 |
|
|
|
|
|
|
|
|
1 Audit Fees were for audit services, including (i) the annual audit of the
consolidated financial statements of the Partnership, (ii) the audit of managements assessment of
the effectiveness of internal control over financial statements, (iii) subsidiary audits, (iv)
review of the interim financial statements included in the Quarterly Reports on Form 10-Q of the
Partnership, and (v) services that only the independent public accounting firm can reasonably be
expected to provide, such as services associated with SEC registration statements, and documents
issued in connection with securities offerings.
2 Tax Fees were for (i) the preparation of Substitute Schedule K-1 forms for unitholders
of the Partnership, and (ii) tax planning and advice.
In the course of its meetings, the Audit Committee considered whether the provision by
PricewaterhouseCoopers LLP of the professional services described under Tax Fees is compatible
with PricewaterhouseCoopers LLPs independence. The Committee concluded that the independent
auditor is independent from the Partnership and its management.
Consistent with SEC policies regarding auditor independence, the Audit Committee has
responsibility for appointing, setting compensation and overseeing the work of the Partnerships
independent accountants. In recognition of this responsibility, the Audit Committee has a policy of
pre-approving all audit and permissible non-audit services provided by the independent accountants.
Prior to engagement of the Partnerships independent accountants for the next years audit,
management submits a list of services and related fees expected to be rendered during that year
within each of the four categories of services noted above to the Audit Committee for approval.
PART IV:
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a) |
|
Documents filed as part of this report: |
(1) and (2) Financial Statements and Financial Statement Schedules
The financial statements and financial statement schedules incorporated by reference
or included in this report are listed in the accompanying Index to
Financial Statements and Financial Statement Schedules set forth on pages F-2 and
F-3 of this report, which is incorporated herein by reference.
50
(3) List of Exhibits:
The exhibits filed as part of this report are as follows (exhibits incorporated by
reference are set forth with the name of the registrant, the type of report and
registration number or last date of the period for which it was filed, and the
exhibit number in such filing):
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
2.1
|
|
Merger and Contribution Agreement among AmeriGas
Partners, L.P., AmeriGas Propane, L.P., New AmeriGas
Propane, Inc., AmeriGas Propane, Inc., AmeriGas
Propane-2, Inc., Cal Gas Corporation of America,
Propane Transport, Inc. and NORCO Transportation
Company
|
|
AmeriGas Partners,
L.P.
|
|
Registration
Statement on Form
S-4 (No. 33-92734)
|
|
|
10.21 |
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
Conveyance and Contribution Agreement among AmeriGas
Partners, L.P., AmeriGas Propane, L.P. and Petrolane
Incorporated
|
|
AmeriGas Partners,
L.P.
|
|
Registration
Statement on Form
S-4 (No. 33-92734)
|
|
|
10.22 |
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Third Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, L.P. dated as of
December 1, 2004
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (12/1/04)
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
3.1(a)
|
|
Second Amended and Restated Agreement of Limited
Partnership of AmeriGas Propane, L.P. dated as of
December 1, 2004
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/04)
|
|
|
3.1 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated Agreement of Limited
Partnership of AmeriGas Eagle Propane, L.P. dated
July 19, 1999
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Instruments defining the rights of security holders,
including indentures. (The Partnership agrees to
furnish to the Commission upon request a copy of any
instrument defining the rights of holders of
long-term debt not required to be filed pursuant to
Item 601(b)(4) of Regulation S-K) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Third Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, L.P. dated as of
December 1, 2004 referred to in 3.1 above |
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
4.2
|
|
Indenture, dated May 3, 2005, by and among AmeriGas
Partners, L.P., a Delaware limited partnership,
AmeriGas Finance Corp., a Delaware corporation, and
Wachovia Bank, National Association, as trustee
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (5/3/05)
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Indenture, dated January 26, 2006, by and among
AmeriGas Partners, L.P., a Delaware limited
partnership, AP Eagle Finance Corp., a Delaware
corporation, and U.S. Bank National Association, as
trustee
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (1/26/06)
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
Second Amended and Restated Agreement of Limited
Partnership of AmeriGas Propane, L.P. dated as of
December 1, 2004
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/04)
|
|
|
3.1 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
4.5
|
|
Amended and Restated Agreement of Limited
Partnership of AmeriGas Eagle Propane, L.P. dated as
of July 19, 1999
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/01)
|
|
|
3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Credit Agreement dated as of November 6, 2006 among
AmeriGas Propane, L.P., as Borrower, AmeriGas
Propane, Inc., as Guarantor, Petrolane Incorporated,
as Guarantor, Citigroup Global Markets Inc., as
Syndication Agent, J.P. Morgan Securities, Inc. and
Credit Suisse First Securities (USA) LLC, as Co-
Documentation Agents, Wachovia Bank, National
Association, as Agent, Issuing Bank and Swing Line
Bank, and the other financial institutions party
thereto
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K
(11/6/06)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
*10.2
|
|
Restricted Subsidiary Guarantee by the Restricted
Subsidiaries of AmeriGas Propane, L.P., as
Guarantors, for the benefit of Wachovia Bank,
National Association and the Banks dated as of
November 6, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*10.3
|
|
Release of Liens and Termination of Security
Documents dated November 6, 2006 by and among
AmeriGas Propane, Inc., Petrolane Incorporated,
AmeriGas Propane, L.P., AmeriGas Propane Parts &
Service, Inc. and Wachovia Bank, National
Association, as Collateral Agent for the Secured
Creditors, pursuant to the Intercreditor and Agency
Agreement dated as of April 19, 1995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4**
|
|
AmeriGas Propane, Inc. Executive Employee Severance
Pay Plan, as amended December 6, 2004
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/04)
|
|
|
10.4 |
|
52
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
10.5**
|
|
Description of AmeriGas Propane, Inc. Executive
Employee Severance Pay Plan, amended July 24, 2006
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (6/30/06)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
10.6**
|
|
AmeriGas Propane, Inc. Discretionary Long-Term
Incentive Plan for Non-Executive Key Employees
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/02)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
10.7**
|
|
AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan
on Behalf of AmeriGas Partners, L.P., as amended
December 15, 2003 (AmeriGas 2000 Plan)
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (6/30/04)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
10.8**
|
|
UGI Corporation 1997 Stock Option and Dividend
Equivalent Plan Amended and Restated as of May 24,
2005
|
|
UGI Corporation
|
|
Form 10-K (9/30/06)
|
|
|
10.10 |
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
Trademark License Agreement dated April 19, 1995
among UGI Corporation, AmeriGas, Inc., AmeriGas
Propane, Inc., AmeriGas Partners, L.P. and AmeriGas
Propane, L.P.
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (3/31/95)
|
|
|
10.6 |
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
Trademark License Agreement dated April 19, 1995
among AmeriGas Propane, Inc., AmeriGas Partners,
L.P. and AmeriGas Propane, L.P.
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (3/31/95)
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
Stock Purchase Agreement dated May 27, 1989, as
amended and restated July 31, 1989, between Texas
Eastern Corporation and QFB Partners
|
|
Petrolane
Incorporated/AmeriGas,
Inc.
|
|
Registration on
Form S-1 (No.
33-69450)
|
|
|
10.16 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
10.12**
|
|
UGI Corporation 2004 Omnibus Equity Compensation
Plan, as amended May 24, 2005
|
|
UGI Corporation
|
|
Form 10-K (9/30/06)
|
|
|
10.17 |
|
|
|
|
|
|
|
|
|
|
|
|
10.13**
|
|
UGI Corporation 2004 Omnibus Equity Compensation
Plan, as amended on December 7, 2004 Terms and
Conditions as amended December 6, 2005
|
|
UGI Corporation
|
|
Form 8-K (12/6/05)
|
|
|
10.10 |
|
|
|
|
|
|
|
|
|
|
|
|
10.14**
|
|
UGI Corporation 2000 Stock Incentive Plan Amended
and Restated as of May 24, 2005
|
|
UGI Corporation
|
|
Form 10-K
(9/30/06)
|
|
|
10.14 |
|
|
|
|
|
|
|
|
|
|
|
|
10.15**
|
|
UGI Corporation 2004 Omnibus Equity Compensation
Plan AmeriGas Employees Stock Option Grant Letter
dated as of January 1, 2006
|
|
UGI Corporation
|
|
Form 8-K (12/6/05)
|
|
|
10.6 |
|
|
|
|
|
|
|
|
|
|
|
|
10.16**
|
|
UGI Corporation 2004 Omnibus Equity Compensation
Plan UGI Employees Nonqualified Stock Option Grant
Letter dated as of January 1, 2006
|
|
UGI Corporation
|
|
Form 8-K (12/6/05)
|
|
|
10.4 |
|
53
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
10.17**
|
|
UGI Corporation 2004 Omnibus Equity Compensation
Plan UGI Employees Performance Unit Grant Letter
dated as of January 1, 2006
|
|
UGI Corporation
|
|
Form 10-K (9/30/06)
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
10.18**
|
|
UGI Corporation Annual Bonus Plan dated March 8, 1996
|
|
UGI Corporation
|
|
Form 10-Q (6/30/96)
|
|
|
10.4 |
|
|
|
|
|
|
|
|
|
|
|
|
10.19**
|
|
AmeriGas Propane, Inc. Annual Bonus Plan effective
October 1, 1998
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/99)
|
|
|
10.17 |
|
|
|
|
|
|
|
|
|
|
|
|
*10.20**
|
|
AmeriGas 2000 Plan Restricted Unit Grant Letter
dated as of January 1, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21**
|
|
UGI Corporation Senior Executive Employee Severance
Pay Plan as amended December 7, 2004
|
|
UGI Corporation
|
|
Form 10-K (9/30/04)
|
|
|
10.12 |
|
|
|
|
|
|
|
|
|
|
|
|
10.22**
|
|
UGI Corporation 2004 Omnibus Equity Compensation
Plan UGI Employees Stock Unit Grant Letter
|
|
UGI Corporation
|
|
Form 8-K (12/6/05)
|
|
|
10.9 |
|
|
|
|
|
|
|
|
|
|
|
|
10.23**
|
|
UGI Corporation 2002 Non-Qualified Stock Option Plan
Amended and Restated as of May 24, 2005
|
|
UGI Corporation
|
|
Form 10-K (9/30/06)
|
|
|
10.38 |
|
|
|
|
|
|
|
|
|
|
|
|
10.24**
|
|
UGI Corporation 1992 Non-Qualified Stock Option
Plan, Amended and Restated as of May 24, 2005
|
|
UGI Corporation
|
|
Form 10-K (9/30/06)
|
|
|
10.39 |
|
|
|
|
|
|
|
|
|
|
|
|
10.25**
|
|
AmeriGas Propane, Inc. Supplemental Executive
Retirement Plan, Amended and Restated as of March 1,
2005
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (3/31/05)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
10.26**
|
|
Description of AmeriGas Propane, Inc. Supplemental
Executive Retirement Plan, amended July 24, 2006
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (6/30/06)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
10.27**
|
|
UGI Corporation Supplemental Executive Retirement
Plan Amended and Restated effective October 1, 1996
|
|
UGI Corporation
|
|
Form 10-Q (6/30/98)
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
10.28**
|
|
Description of July 25, 2006 Amendment to the UGI
Corporation Supplemental Executive Retirement Plan
|
|
UGI Corporation
|
|
Form 10-Q (6/30/06)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
10.29**
|
|
Description of oral employment at-will arrangement
for Messrs. Greenberg and Walsh
|
|
UGI Corporation
|
|
Form 10-K (9/30/05)
|
|
|
10.30 |
|
|
|
|
|
|
|
|
|
|
|
|
10.30**
|
|
Description of oral employment at-will arrangements
for Messrs. Bissell, Knauss and Sheridan
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/05)
|
|
|
10.30 |
|
54
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
10.31**
|
|
Form of Confidentiality and Post-Employment
Activities Agreement with AmeriGas Propane, Inc., in
its own right and as general partner of AmeriGas
Partners, L.P., for Messrs. Bissell, and Knauss
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q (3/31/05)
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
10.32**
|
|
Confidentiality and Post-Employment Activities
Agreement between AmeriGas Propane, Inc., in its own
right and as general partner of AmeriGas Partners,
L.P., and Mr. Sheridan
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (8/15/05)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
10.33**
|
|
Form of Change in Control Agreement for Messrs.
Greenberg and Walsh
|
|
UGI Corporation
|
|
Form 8-K (12/6/05)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
10.34**
|
|
Form of Change in Control Agreement for Messrs.
Bissell, Knauss and Sheridan
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (12/5/05)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
Purchase Agreement by and among Columbia Energy
Group, Columbia Propane Corporation, CP Holdings,
Inc., Columbia Propane, L.P., AmeriGas Propane,
L.P., AmeriGas Partners, L.P. and AmeriGas Propane,
Inc. dated as of January 30, 2001 and amended and
restated August 7, 2001
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (8/8/01)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
Purchase Agreement by and among Columbia Propane,
L.P., CP Holdings, Inc., Columbia Propane
Corporation, National Propane Partners, L.P.,
National Propane Corporation, National Propane SPG,
Inc., and Triarc Companies, Inc. dated as of April
5, 1999
|
|
National Propane
Partners, L.P.
|
|
Form 8-K (4/19/99)
|
|
|
10.5 |
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
Capital Contribution Agreement dated as of August
21, 2001 by and between Columbia Propane, L.P. and
AmeriGas Propane, L.P. acknowledged and agreed to by
CP Holdings, Inc.
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (8/21/01)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
10.38
|
|
Promissory Note by National Propane L.P., a Delaware
limited partnership in favor of Columbia Propane
Corporation dated July 19, 1999
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
10.39 |
|
|
|
|
|
|
|
|
|
|
|
|
10.39
|
|
Loan Agreement dated July 19, 1999, between National
Propane, L.P. and Columbia Propane Corporation
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
10.40 |
|
|
|
|
|
|
|
|
|
|
|
|
10.40
|
|
First Amendment dated August 21, 2001 to Loan
Agreement dated July 19, 1999 between National
Propane, L.P. and Columbia Propane Corporation
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
10.41 |
|
55
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
10.41
|
|
Columbia Energy Group Payment Guaranty dated April
5, 1999
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
10.42 |
|
|
|
|
|
|
|
|
|
|
|
|
10.42
|
|
Keep Well Agreement by and between AmeriGas Propane,
L.P. and Columbia Propane Corporation dated August
21, 2001
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
10.46 |
|
|
|
|
|
|
|
|
|
|
|
|
*10.43**
|
|
Summary of Director Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*13
|
|
Pages 10 through 26 of the 2006 Annual Report to
Unitholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Code of Ethics for principal executive, financial
and accounting officers
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/03)
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
*21
|
|
Subsidiaries of AmeriGas Partners, L.P. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*23
|
|
Consent of PricewaterhouseCoopers LLP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.1
|
|
Certification by the Chief Executive Officer
relating to the Registrants Report on Form 10-K for
the year ended September 30, 2006, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.2
|
|
Certification by the Chief Financial Officer
relating to the Registrants Report on Form 10-K for
the year ended September 30, 2006, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32
|
|
Certification by the Chief Executive Officer and the
Chief Financial Officer relating to the Registrants
Report on Form 10-K for the fiscal year ended
September 30, 2006, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
** |
|
As required by Item 14(a)(3), this exhibit is identified as a compensatory plan or arrangement. |
56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
|
|
|
|
|
|
AMERIGAS PARTNERS, L.P. |
|
|
|
|
|
|
|
By:
|
|
AmeriGas Propane, Inc., |
|
|
|
|
Its General Partner |
|
|
|
|
|
Date: December 4, 2006
|
|
By:
|
|
/s/ Jerry E. Sheridan |
|
|
|
|
|
|
|
|
|
Jerry E. Sheridan |
|
|
|
|
Vice President Finance |
|
|
|
|
and Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below on December 4, 2006, by the following persons on behalf of the Registrant in the
capacities indicated.
|
|
|
Signature |
|
Title |
|
|
|
/s/ Eugene V. N. Bissell
Eugene V. N. Bissell
|
|
President
and Chief Executive Officer
(Principal Executive Officer)
and Director |
|
|
|
/s/ Lon R. Greenberg
|
|
Chairman and Director |
|
|
|
Lon R. Greenberg |
|
|
|
|
|
/s/ John L. Walsh
|
|
Vice Chairman and Director |
|
|
|
John L. Walsh |
|
|
|
|
|
/s/ Jerry E. Sheridan
Jerry E. Sheridan
|
|
Vice President Finance
and Chief Financial Officer
(Principal Financial Officer) |
|
|
|
/s/ William J. Stanczak
William J. Stanczak
|
|
Controller and Chief
Accounting Officer
(Principal Accounting Officer) |
57
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below on December 4, 2006, by the following persons on behalf of the Registrant in the
capacities indicated.
|
|
|
Signature |
|
Title |
|
|
|
/s/ Stephen D. Ban
|
|
Director |
|
|
|
Stephen D. Ban |
|
|
|
|
|
/s/ Richard C. Gozon
|
|
Director |
|
|
|
Richard C. Gozon |
|
|
|
|
|
/s/ William J. Marrazzo
|
|
Director |
|
|
|
William J. Marrazzo |
|
|
|
|
|
/s/ Gregory A. Pratt
|
|
Director |
|
|
|
Gregory A. Pratt |
|
|
|
|
|
/s/ Howard B. Stoeckel
|
|
Director |
|
|
|
Howard B. Stoeckel |
|
|
|
|
|
/s/ James W. Stratton
|
|
Director |
|
|
|
James W. Stratton |
|
|
58
AMERIGAS PARTNERS, L.P.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL
YEAR ENDED SEPTEMBER 30, 2006
F-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (continued)
The consolidated financial statements of AmeriGas Partners, L.P. and subsidiaries, together
with the report thereon of PricewaterhouseCoopers LLP dated December 8, 2006, and Managements
Report on Internal Control over
Financial Reporting listed in the following index, are included in AmeriGas Partners 2006 Annual
Report to Unitholders and are incorporated herein by reference. With the exception of the pages
listed in this index and information incorporated in Items 5, 8 and 9A(b), the 2006 Annual Report
to Unitholders is not to be deemed filed as part of this Report.
|
|
|
|
|
|
|
|
|
Annual Report |
|
|
Form 10-K |
|
to Unitholders |
|
|
(page) |
|
(page) |
|
|
|
|
|
AmeriGas Partners, L.P. and Subsidiaries |
|
|
|
|
|
|
|
|
|
Managements Report on Internal Control over Financial Reporting |
|
Exhibit 13 |
|
26 |
|
|
|
|
|
Financial Statements: |
|
|
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm |
|
Exhibit 13 |
|
25 |
|
|
|
|
|
Consolidated Balance Sheets as of September 30,
2006 and 2005 |
|
Exhibit 13 |
|
10 |
|
|
|
|
|
Consolidated Statements of Operations for the years
ended September 30, 2006, 2005 and 2004 |
|
Exhibit 13 |
|
11 |
|
|
|
|
|
Consolidated Statements of Cash Flows for the years
ended September 30, 2006, 2005 and 2004 |
|
Exhibit 13 |
|
12 |
|
|
|
|
|
Consolidated Statements of Partners Capital for the
years ended September 30, 2006, 2005 and 2004 |
|
Exhibit 13 |
|
13 |
|
|
|
|
|
Notes to Consolidated Financial Statements |
|
Exhibit 13 |
|
14-24 |
|
|
|
|
|
Supplementary Data (unaudited): |
|
|
|
|
Quarterly Data for the years ended
September 30, 2006 and 2005 |
|
Exhibit 13 |
|
24 |
|
|
|
|
|
Financial Statements Schedules: |
|
|
|
|
|
|
|
|
|
I - Condensed Financial Information of Registrant
(Parent Company) |
|
S-1 to S-3 |
|
|
|
|
|
|
|
II - Valuation and Qualifying Accounts |
|
S-4 to S-5 |
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting
Firm on Financial Statement Schedules |
|
S-6 |
|
|
F-2
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (continued)
We have omitted all other financial statement schedules because the required information is either
(1) not present; (2) not present in amounts sufficient to require submission of the schedule; or
(3) the information required is included elsewhere in the financial statements or related notes.
F-3
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,484 |
|
|
$ |
8,806 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,484 |
|
|
|
8,806 |
|
Investment in AmeriGas Propane, L.P. |
|
|
1,017,959 |
|
|
|
833,289 |
|
Other assets |
|
|
10,649 |
|
|
|
4,921 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,030,092 |
|
|
$ |
847,016 |
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS CAPITAL |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and other liabilities |
|
$ |
8,078 |
|
|
$ |
4,032 |
|
Accrued interest |
|
|
20,496 |
|
|
|
15,695 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
28,574 |
|
|
|
19,727 |
|
Long-term debt |
|
|
779,863 |
|
|
|
489,872 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Partners capital: |
|
|
|
|
|
|
|
|
Common unitholders |
|
|
250,637 |
|
|
|
289,396 |
|
General partner |
|
|
2,532 |
|
|
|
2,920 |
|
Accumulated other comprehensive income (loss) |
|
|
(31,514 |
) |
|
|
45,101 |
|
|
|
|
|
|
|
|
Total partners capital |
|
|
221,655 |
|
|
|
337,417 |
|
|
|
|
|
|
|
|
Total liabilities and partners capital |
|
$ |
1,030,092 |
|
|
$ |
847,016 |
|
|
|
|
|
|
|
|
Commitments and Contingencies: |
|
|
|
|
|
|
|
|
The only scheduled principal repayment of long-term debt during the next five fiscal years ending September 30 is
$14,640 due May 2011. |
S-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
Ended |
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
Operating (income) expenses, net |
|
$ |
151 |
|
|
$ |
42 |
|
|
$ |
(256 |
) |
Loss on extinguishments of debt |
|
|
(2,702 |
) |
|
|
(33,602 |
) |
|
|
|
|
Interest expense |
|
|
(51,648 |
) |
|
|
(39,834 |
) |
|
|
(39,639 |
) |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(54,199 |
) |
|
|
(73,394 |
) |
|
|
(39,895 |
) |
Income tax expense |
|
|
40 |
|
|
|
60 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
Loss before equity in income of AmeriGas Propane, L.P. |
|
|
(54,239 |
) |
|
|
(73,454 |
) |
|
|
(39,961 |
) |
Equity in income of AmeriGas Propane, L.P. |
|
|
145,397 |
|
|
|
134,299 |
|
|
|
131,815 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
91,158 |
|
|
$ |
60,845 |
|
|
$ |
91,854 |
|
|
|
|
|
|
|
|
|
|
|
General partners interest in net income |
|
$ |
912 |
|
|
$ |
608 |
|
|
$ |
919 |
|
|
|
|
|
|
|
|
|
|
|
Limited partners interest in net income |
|
$ |
90,246 |
|
|
$ |
60,237 |
|
|
$ |
90,935 |
|
|
|
|
|
|
|
|
|
|
|
Income per limited partner unit basic and diluted: |
|
$ |
1.59 |
|
|
$ |
1.10 |
|
|
$ |
1.71 |
|
|
|
|
|
|
|
|
|
|
|
Average limited partner units outstanding basic (thousands) |
|
|
56,797 |
|
|
|
54,602 |
|
|
|
53,097 |
|
|
|
|
|
|
|
|
|
|
|
Average limited partner units outstanding diluted (thousands) |
|
|
56,835 |
|
|
|
54,655 |
|
|
|
53,172 |
|
|
|
|
|
|
|
|
|
|
|
S-2
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
Ended |
|
|
|
September 30, |
|
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES (a) |
|
$ |
121,814 |
|
|
$ |
90,307 |
|
|
$ |
117,425 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to AmeriGas Propane, L.P. |
|
|
(282,207 |
) |
|
|
(73,415 |
) |
|
|
(82,493 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used by investing activities |
|
|
(282,207 |
) |
|
|
(73,415 |
) |
|
|
(82,493 |
) |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions |
|
|
(130,805 |
) |
|
|
(122,186 |
) |
|
|
(117,538 |
) |
Issuance of long-term debt |
|
|
343,875 |
|
|
|
410,550 |
|
|
|
30,135 |
|
Repayments of long-term debt |
|
|
(60,000 |
) |
|
|
(373,360 |
) |
|
|
|
|
Proceeds from issuance of Common Units |
|
|
|
|
|
|
72,675 |
|
|
|
51,197 |
|
Capital contribution from General Partner |
|
|
1 |
|
|
|
734 |
|
|
|
517 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by financing activities |
|
|
153,071 |
|
|
|
(11,587 |
) |
|
|
(35,689 |
) |
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents |
|
$ |
(7,322 |
) |
|
$ |
5,305 |
|
|
$ |
(757 |
) |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
|
|
|
|
|
|
End of year |
|
$ |
1,484 |
|
|
$ |
8,806 |
|
|
$ |
3,501 |
|
Beginning of year |
|
|
8,806 |
|
|
|
3,501 |
|
|
|
4,258 |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase |
|
$ |
(7,322 |
) |
|
$ |
5,305 |
|
|
$ |
(757 |
) |
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes distributions received from AmeriGas Propane, L.P. of $171,510, $161,058, and $155,488, for
the years ended September 30, 2006, 2005 and 2004, respectively. |
S-3
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
(credited) |
|
|
|
|
|
|
Balance at |
|
|
|
beginning |
|
|
to costs and |
|
|
|
|
|
|
end of |
|
|
|
of year |
|
|
expenses |
|
|
Other |
|
|
year |
|
Year Ended September 30, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves deducted from assets in
the consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
13,143 |
|
|
$ |
10,768 |
|
|
$ |
(9,451 |
)(1) |
|
$ |
14,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-insured property and casualty
liability |
|
$ |
60,620 |
|
|
$ |
11,856 |
|
|
$ |
(13,926 |
)(2) |
|
$ |
58,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insured property and casualty liability |
|
$ |
377 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental, litigation and other |
|
$ |
8,303 |
|
|
$ |
5,140 |
|
|
$ |
(528 |
)(2) |
|
$ |
12,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(235 |
)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves deducted from assets in
the consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
11,964 |
|
|
$ |
11,591 |
|
|
$ |
(10,412 |
)(1) |
|
$ |
13,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-insured property and casualty
liability |
|
$ |
53,172 |
|
|
$ |
23,486 |
|
|
$ |
(16,038 |
)(2) |
|
$ |
60,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insured property and casualty liability |
|
$ |
627 |
|
|
$ |
(250 |
) |
|
$ |
|
|
|
$ |
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental, litigation and other |
|
$ |
10,888 |
|
|
$ |
744 |
|
|
$ |
(4,249 |
)(2) |
|
$ |
8,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
920 |
(3) |
|
|
|
|
S-4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (continued)
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
(credited) |
|
|
|
|
|
|
Balance at |
|
|
|
beginning |
|
|
to costs and |
|
|
|
|
|
|
end of |
|
|
|
of year |
|
|
expenses |
|
|
Other |
|
|
year |
|
Year Ended September 30, 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves deducted from assets in
the consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
9,192 |
|
|
$ |
9,772 |
|
|
$ |
(8,819 |
)(1) |
|
$ |
11,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,819 |
(4) |
|
|
|
|
Other reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-insured property and casualty
liability |
|
$ |
45,856 |
|
|
$ |
22,166 |
|
|
$ |
(15,585 |
)(2) |
|
$ |
53,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
735 |
(3) |
|
|
|
|
Insured property and casualty liability |
|
$ |
627 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental, litigation and other |
|
$ |
12,358 |
|
|
$ |
1,730 |
|
|
$ |
(3,325 |
)(2) |
|
$ |
10,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125 |
(3) |
|
|
|
|
(1) |
|
Uncollectible accounts written off, net of recoveries. |
|
(2) |
|
Payments, net of any refunds |
|
(3) |
|
Other adjustments, primarily reclassifications |
|
(4) |
|
Acquisitions |
S-5
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedules
To the Board of Directors
of AmeriGas Partners, L.P.
and the Board of Directors of AmeriGas Propane Inc.:
Our audits of the consolidated financial statements, of managements assessment of the
effectiveness of internal control over financial reporting and of the effectiveness of internal
control over financial reporting referred to in our report dated
December 8, 2006 appearing in the
2006 Annual Report to Unitholders of AmeriGas Partners, L.P. (which report, consolidated financial
statements and assessment are incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K.
In our opinion, these financial statement schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related consolidated financial
statements.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 8, 2006
S-6
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Description |
|
|
|
10.2
|
|
Restricted Subsidiary Guarantee by the Restricted Subsidiaries of AmeriGas Propane,
L.P., as Guarantors, for the benefit of Wachovia Bank, National Association and the Banks
dated as of November 6, 2006 |
|
|
|
10.3
|
|
Release of Liens and Termination of Security Documents dated as of November 6, 2006 by
and among AmeriGas Propane, Inc., Petrolane Incorporated, AmeriGas Propane, L.P., AmeriGas
Propane Parts & Service, Inc. and Wachovia Bank, National Association, as Collateral Agent
for the Secured Creditors, pursuant to the Intercreditor and Agency Agreement dated as of
April 19, 1995 |
|
|
|
10.20
|
|
AmeriGas 2000 Plan Restricted Unit Grant Letter dated as of January 1, 2006 |
|
|
|
10.43
|
|
Summary of Director Compensation |
|
|
|
13
|
|
Pages 10 through 26 of the 2006 Annual Report to Unitholders |
|
|
|
21
|
|
Subsidiaries of the Registrant |
|
|
|
23
|
|
Consent of PricewaterhouseCoopers LLP |
|
|
|
31.1
|
|
Certification by the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act |
|
|
|
31.2
|
|
Certification by the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act |
|
|
|
32
|
|
Certification by the Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act |