Filed Pursuent to Rule 424(B(5)
Registration No. 333-73686
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 30, 2001)
[LOGO] AmeriGas
America's Propane Company
4,200,000 Common Units
Representing Limited Partner Interests
AmeriGas Partners, L.P.
$21.50 per unit
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We are selling 1,843,047 common units and the offering unitholder is selling
2,356,953 common units with this prospectus supplement and the accompanying
prospectus. We will not receive any proceeds from the sale of the common units
by the offering unitholder. We have granted the underwriters an option to
purchase up to 630,000 additional common units to cover over-allotments.
Our common units are listed on the New York Stock Exchange under the symbol
"APU." The last reported sale price of our common units on the New York Stock
Exchange on December 5, 2001 was $21.50 per unit.
-------------
Investing in our common units involves risks. Limited partner interests are
inherently different from the capital stock of a corporation. See "Risk
Factors" beginning on page 4 of the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
-------------
Per Unit Total
-------- -----
Public Offering Price $21.5000 $90,300,000
Underwriting Discount $ 0.9138 $ 3,837,960
Proceeds to AmeriGas Partners, L.P., before expenses $20.5862 $37,941,334
Proceeds to the Offering Unitholder, before expenses $20.5862 $48,520,706
The underwriters expect to deliver the common units to purchasers on or
about December 11, 2001.
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Salomon Smith Barney
Banc of America Securities LLC
Credit Suisse First Boston
UBS Warburg
December 5, 2001
TABLE OF CONTENTS
Prospectus Supplement
Prospectus Supplement Summary.............. S-1
AmeriGas Partners, L.P.................... S-1
Our Structure............................. S-4
The Offering.............................. S-6
Tax Considerations........................ S-7
Risk Factors............................... S-8
Use of Proceeds............................ S-8
Capitalization............................. S-9
Price Range of Our Common Units and Cash
Distributions............................ S-10
Selected Historical and Pro Forma Financial
and Other Data........................... S-11
Business and Properties.................... S-13
Management................................. S-15
Underwriting............................... S-18
Legal Matters.............................. S-20
Forward-Looking Statements................. S-20
Prospectus
Who We Are............................. 1
About this Prospectus.................. 1
Where You Can Find More Information.... 1
Incorporation of Document by Reference. 2
Forward-Looking Statements............. 3
Risk Factors........................... 4
Risks Associated with the Propane
Distribution Businesses Acquired From
Columbia Energy Group................ 4
Risks Inherent in Our Business........ 5
Risks Inherent in an Investment in Us. 7
Tax Risks............................. 12
Use of Proceeds........................ 14
Description of Common Units............ 15
Tax Considerations..................... 18
Offering Unitholder.................... 28
Plan of Distribution................... 29
Legal Opinions......................... 31
Experts................................ 31
This document is in two parts. The first part is the prospectus supplement,
which describes our business and the specific terms of this offering. The
second part, the accompanying prospectus, gives more general information, some
of which may not apply to this offering. Generally, when we refer only to the
"prospectus," we are referring to both parts combined.
If the description of the offering varies between the prospectus supplement
and the accompanying prospectus, you should rely on the information in the
prospectus supplement.
You should rely only on the information contained in or incorporated by
reference into this prospectus supplement or the accompanying prospectus. We
have not, and the underwriters have not, authorized anyone to provide you with
different information. We and the offering unitholder are not making an offer
of these securities in any state where the offer is not permitted. You should
not assume that the information contained in this prospectus supplement or the
accompanying prospectus, as well as the information we previously filed with
the Securities and Exchange Commission that is incorporated by reference
herein, is accurate as of any date other than its respective date.
i
AmeriGas Partners, L.P.
[MAP]
[This map shows our district locations in 46 states.]
ii
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights some basic information in this prospectus
supplement and the accompanying prospectus to help you understand the common
units. It may not contain all of the information that is important to you.
This summary should be read in conjunction with, and is qualified in its
entirety by, the more detailed information and financial statements
(including the accompanying notes) appearing elsewhere in, or incorporated by
reference into, this prospectus supplement. You should carefully read the
prospectus supplement, the accompanying prospectus and the documents
incorporated by reference to understand fully the terms of the common units,
as well as the tax and other considerations that are important to you in
making your investment decision. You should pay special attention to the
"Risk Factors" section beginning on page 4 of the accompanying prospectus to
determine whether an investment in the common units is appropriate for you.
For purposes of this prospectus supplement and the accompanying prospectus,
unless the context otherwise indicates, the terms "AmeriGas Partners," "us,"
"we," "our," or "ours" are sometimes used as abbreviated references to
AmeriGas Partners, L.P. itself or AmeriGas Partners, L.P. and its
consolidated subsidiaries, which includes our operating partnership, AmeriGas
Propane, L.P. and its subsidiary, AmeriGas Eagle Propane, L.P. (formerly
Columbia Propane, L.P.). References to our general partner refer to AmeriGas
Propane, Inc.
AmeriGas Partners, L.P.
Who We Are
We are the largest retail propane distributor in the United States. We serve
approximately 1.3 million residential, commercial, industrial, agricultural and
motor fuel customers from approximately 700 district locations in 46 states.
Our competitive strengths are our experienced and dedicated work force, our
national distribution infrastructure and our intense focus on customer
satisfaction. Our operations are located primarily in the East Coast,
Southeast, Midwest, Mountain Central and West Coast regions of the United
States.
On August 21, 2001, we acquired Columbia Energy Group's propane distribution
businesses, which we refer to as "Columbia Propane." Our results for the fiscal
year ended September 30, 2001 include the results of Columbia Propane after
August 21, 2001. For the twelve months ended June 30, 2001, approximately 72%
of the total propane gallons we sold were to retail customers, while the
remaining 28% were to wholesale customers. For that period, residential
customers accounted for 29% of total propane gallons we sold;
industrial/commercial customers, 27%; motor fuel customers, 10%; and
agricultural customers, 6%. Although sales to residential customers represented
only 29% of total propane gallons sold, they accounted for 50% of our total
propane margin, reflecting the higher margins for this segment of the market.
Temperatures based upon heating degree days were 2.9% colder than normal in
the twelve-month period ended June 30, 2001 compared to weather that was 13.8%
warmer than normal in the twelve-month period ended June 30, 2000, using
historical national weather statistics. Retail propane gallons sold during the
twelve-month period ended June 30, 2001 increased 40.3 million gallons to 813.4
million gallons. The increase was mainly because of the higher number of
residential heating, commercial and industrial propane gallons sold due to the
colder weather and the impact of acquisitions. Total margin increased 16.1% to
$566 million in the twelve-month period ended June 30, 2001. The increase was
due to higher-than-normal average retail unit margins and greater retail
volumes sold. Unit margins in the twelve months ended June 30, 2001 benefited
from gains on derivative hedge instruments and favorably priced supply
arrangements.
Since our initial public offering in 1995, we have made 48 acquisitions of
propane operations, including Columbia Propane, for an aggregate purchase price
of approximately $314 million in cash and 89,000 of our common units. In
addition, we funded $50 million of the purchase price for Columbia Propane
through the sale
S-1
of 2,356,953 of our common units to the offering unitholder, Columbia Energy
Group. We typically have an annual target to acquire propane operations with
aggregate annual sales of approximately 10 million gallons of propane. In
fiscal year 2002, our focus will be on integrating Columbia Propane into our
operations.
Recent Developments
Acquisition of Columbia Propane
On August 21, 2001, our operating partnership, AmeriGas Propane, L.P.,
acquired the propane distribution businesses of Columbia Energy Group for
approximately $202 million in cash. These businesses were conducted through
Columbia Propane Corporation and its 99% owned subsidiary, Columbia Propane,
L.P. Prior to the acquisition, Columbia Propane, based in Richmond, Virginia,
was the seventh largest retail propane marketer in the United States, selling
approximately 308 million gallons annually from 186 locations in 29 states. In
connection with the Columbia Propane acquisition, we added a total of five
storage facilities and terminals, including a 476,000 barrel refrigerated
storage facility in Virginia. The Virginia storage facility is used in
connection with waterborne imports. These facilities further enhance our supply
and logistics infrastructure.
For the twelve months ended June 30, 2001, approximately 79% of the propane
gallons that Columbia Propane sold were to retail customers, while the
remaining 21% were to wholesale customers. For that period, residential
customers accounted for 38% of total propane gallons sold by Columbia Propane;
industrial/commercial customers, 32%; motor fuel customers, 1%; and
agricultural customers, 8%.
We funded the purchase price for the acquisition and related fees and
expenses through the net proceeds of the offering of $200 million of our 8 7/8%
senior notes due 2011, the sale of common units to Columbia Energy Group, the
offering unitholder, and capital contributions of approximately $3.1 million
from our general partner. AmeriGas Propane, L.P. used approximately $202
million to pay for the Columbia Propane acquisition, $40 million to pay down
existing debt under its bank credit facilities and the remainder to pay fees
and expenses of the transactions.
For the twelve months ended June 30, 2001, Columbia Propane generated
approximately $29 million of EBITDA (as defined on page S-12), without giving
effect to the allocation of charges by its then parent entity, Columbia Energy
Group, on total revenues of $402 million. During the twelve-month period ended
June 30, 2001, the propane industry experienced a period of rapidly escalating
product costs and market volatility which may have resulted in
higher-than-normal unit margins for Columbia Propane during this period. These
higher-than-normal unit margins may not be sustainable or indicative of
Columbia Propane's future results. We anticipate being able to achieve
annualized operating cost savings and synergies over the next two fiscal years
of up to $24 million as we integrate Columbia Propane into our existing
business. We expect to achieve these operating cost savings and synergies from
the elimination of redundant operations and facilities and productivity
improvements. Although we believe these forward-looking statements are
reasonable, these operating cost savings, operating synergies and productivity
improvements may not be achieved. We caution you that our actual results are
likely to be different from the estimates presented above. The differences may
be material, depending on the circumstances, and may arise because actual facts
may differ from our assumptions. For example, we may not be able to achieve
operating synergies on a timely basis and actual costs associated with
elimination of redundant operations and facilities may exceed our estimates.
Recent Financial Results
On November 20, 2001, we reported record net income of $53.0 million, or
$1.18 per limited partner unit, for the fiscal year ended September 30, 2001,
excluding the beneficial cumulative effect of accounting changes of $0.28 per
limited partner unit disclosed in our earlier periodic reports on Form 10-Q.
This represents a 249% increase compared to $15.2 million, or $0.36 per limited
partner unit, for the fiscal year ended September 30, 2000. EBITDA of $208.6
million for fiscal 2001 was 32% higher than the $157.6 million recorded in
fiscal 2000. Weather was slightly colder than normal in fiscal 2001 compared to
14% warmer than normal in fiscal 2000
S-2
according to information published by the National Oceanic and Atmospheric
Administration. Our results for fiscal 2001 include the results of Columbia
Propane after August 21, 2001, the date we acquired Columbia Propane.
Retail propane sales volumes in fiscal 2001 were 820.8 million gallons, an
increase of more than 6% compared to 771.2 million gallons in the prior year.
Operating and administrative expenses increased from $342.7 million in the
fiscal year ended September 30, 2000 to $380.0 million for the fiscal year
ended September 30, 2001. Higher operating and administrative expenses for the
year were related mainly to higher sales volumes, higher vehicle and
compensation expenses, internal growth initiatives and acquisitions.
For the fourth quarter of fiscal 2001, EBITDA increased to $7.5 million from
$6.1 million in the prior-year quarter as higher total margin more than offset
an increase in operating expenses, resulting primarily from internal growth
initiatives, acquisitions and vehicle and compensation expense. Retail volumes
sold in the quarter were 142.7 million gallons versus 135.3 million gallons in
last year's fourth quarter. We recorded a seasonal net loss of $33.5 million,
or $0.73 per limited partner unit, for the quarter ended September 2001,
compared with a net loss of $31.8 million, or $0.75 per limited partner unit,
for the year-earlier period.
Business Strategy
Our business strategy is to increase market share through acquisitions and
internal growth, leverage our national and local economies of scale and achieve
operating efficiencies through business process improvements.
Acquisitions
The domestic propane industry is highly fragmented, with over 3,500 retail
propane distribution companies. Based upon our acquisition of Columbia Propane,
our combined retail volumes make us the largest propane distributor in the
United States. Our management believes that we will continue to have numerous
opportunities to grow through acquisitions. We have successfully integrated
many large and small businesses, including entities that, at the time of their
acquisition, were larger than ourselves. We achieve efficiencies by reducing
operating costs, introducing more effective pricing and operational systems and
improving marketing and management programs.
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 compete for acquisitions with others engaged in the propane
distribution business. Although we believe that there are numerous potential
acquisition candidates in the industry, some of which would be material, we may
not find attractive candidates in the future, or we may not be able to acquire
these candidates on economically acceptable terms.
Leveraging our National Presence
Our national presence serves an important role in differentiating us from
our competition and growing our business. With our national infrastructure, we
can offer full service to large, national companies that want to consolidate
vendors and reduce operating costs. Two areas of focus for us are our grill
cylinder exchange program and our national accounts program. Participation in
these programs affords our customers more efficient centralized account
management and consistently high-quality service at every location.
PPX Program. Our PPX Prefilled Propane Xchange(R) program enables
consumers to exchange their empty 20-pound propane grill cylinders for
filled cylinders at various retail locations, such as home centers and
convenience stores. We inspect, maintain, refill and transport the cylinders
and supply one invoice to our PPX retailers. This provides convenience to
consumers and profitability to the retailers. The PPX program is also
attractive to us because its sales profile is counter-seasonal to our
heating sales profile and, accordingly, it moderates our weather sensitivity
by generating revenues outside of the propane heating
S-3
season. PPX is currently available at approximately 16,500 retail locations
throughout the country, which has increased from 6,000 locations in fiscal
year 1999. Our customers include many of the nation's leading retailers and
grocery chains, including Home Depot, Albertson's, Wal-Mart, Lowe's and
Circle K.
National Accounts Program. Through our national accounts program, we
encourage large, multi-location propane users to enter into a supply
agreement with us rather than with many small suppliers. We have a dedicated
sales force to service our national account customers. As a result, our
national accounts program has increased its market share with home
improvement centers, national merchandisers and distribution companies. Our
national account gallons increased by nearly 30% in fiscal year 2001. Our
national account customers include large forklift users, such as
Consolidated Freightways and United Parcel Service, along with companies
that refill grill cylinders, like U-Haul.
Operational Initiatives
We are committed to developing new ways to offer better service to our
customers and to improve our productivity. We are implementing changes to our
management structure and business processes that are designed to improve the
efficiency of field operations, such as dispatching delivery trucks, responding
to customer calls and handling vital administrative functions. We are shifting
to a more functional structure with managers specializing in one activity
rather than performing several. We expect these efforts to result in higher
customer and employee satisfaction and lower costs as this new structure is
fully implemented over the next few years.
In addition, we are employing a company-wide customer profitability system
which allows us to track profit contribution and return on investment by
customer. This system enables us to service our customers more profitably
primarily by determining the most appropriate tank size for customers,
improving delivery schedules and rationalizing customer pricing. Using this
system, we are also targeting our marketing efforts to grow the most profitable
customer segments.
Our Structure
AmeriGas Propane, Inc., our sole general partner and a wholly owned indirect
subsidiary of UGI Corporation (NYSE:UGI), manages our activities and conducts
our business. We also utilize the employees of, and management services
provided by, UGI Corporation. The chart below depicts our ownership structure
after giving effect to the offering described in this prospectus supplement,
excluding any exercise of the underwriters' over-allotment option.
The percentages reflected in the following chart represent the approximate
expected ownership interests in AmeriGas Partners, L.P. itself. Expected
effective ownership interests in AmeriGas Propane, L.P. are shown separately in
the box located in the upper left corner of the chart.
S-4
[Chart depicting ownership structure of AmeriGas Partners, L.P.
after giving effect to the offering]
S-5
The Offering
Securities offered............ 1,843,047 common units by us and 2,356,953 common
units by the offering unitholder (2,473,047
common units by us if the underwriters exercise
their over-allotment option in full)
Percent of
Number of Total Limited
Units Partner Interests
Units to be outstanding
after the offering.......... Common Units 38,954,286 79.8%
Subordinated Units 9,891,072 20.2%
---------- -----
Total Limited
Partner Interests 48,845,358 100.0%
========== =====
If the underwriters exercise their over-allotment
option in full, we will issue an additional
630,000 common units, which will result in
39,584,286 common units outstanding representing
80.0% of the limited partner interests
outstanding and 9,891,072 subordinated units
outstanding representing 20.0% of the limited
partner interests outstanding.
Use of proceeds............... We estimate that we will receive approximately
$37.5 million from the sale of the common units,
or $50.5 million if the underwriters' over-
allotment option is exercised in full, in each
case, after deducting underwriting discounts and
commissions and offering expenses. We will not
receive any proceeds from the sale of the common
units by the offering unitholder. We plan to use
the net proceeds that we receive from this
offering, including any from the exercise of the
underwriters' over-allotment option, to reduce
indebtedness under our revolving credit and
acquisition facilities and for working capital.
New York Stock Exchange
symbol....................... APU
S-6
Tax Considerations
The tax consequences to you of an investment in common units will depend in
part on your own tax circumstances. For a discussion of the principal federal
income tax considerations associated with our operations and the purchase,
ownership and disposition of units, please read "Tax Considerations" beginning
on page 18 of the accompanying prospectus. You should consult your own tax
advisor about the federal, state and local tax consequences particular to your
circumstances.
We estimate that if you purchase a common unit in this offering and hold the
unit through the record date for the distribution with respect to the quarter
ending September 30, 2004 (assuming that quarterly distributions on the common
units with respect to that period are equal to the current minimum quarterly
distribution rate of $0.55 per common unit), you will be allocated an amount of
federal taxable income for that period that is less than or equal to
approximately 25% of the amount of cash distributed to you with respect to that
period. This estimate is based upon many assumptions regarding our business and
operations, including assumptions as to weather conditions in our area of
operations, capital expenditures, cash flows and anticipated cash
distributions. This estimate and our assumptions are subject to, among other
things, numerous business, economic, regulatory and competitive uncertainties
beyond our control. Further, the estimate is based on current tax law and tax
reporting positions that we have adopted and with which the Internal Revenue
Service could disagree. Accordingly, we cannot assure you that the estimate
will be correct. The actual percentage of distributions that will constitute
taxable income could be higher or lower, and any differences could materially
affect the value of the common units.
Ownership of common units by tax-exempt entities, regulated investment
companies and foreign investors raises issues unique to these persons. Please
read "Tax Considerations -- Tax-Exempt Organizations and Certain Other
Investors" in the accompanying prospectus.
S-7
RISK FACTORS
The common units offered by this prospectus supplement and the accompanying
prospectus may involve a high degree of risk. You should read carefully the
discussion of the material risks relating to an investment in the common units
beginning on page 4 of the accompanying prospectus, including the discussion
about the impact of weather on our results. The weather in November 2001 was
warmer than normal, which could adversely impact our results for the first
quarter ending December 31, 2001.
USE OF PROCEEDS
We expect that we will receive approximately $37.5 million from the sale of
our common units, or $50.5 million if the underwriters' over-allotment option
is exercised in full, in each case, after deducting underwriting discounts and
commissions and offering expenses. We will not receive any of the proceeds from
the sale of common units offered by the offering unitholder. We plan to use the
net proceeds from this offering, including any from the exercise of the
underwriters' over-allotment option, to reduce indebtedness under our revolving
credit and acquisition facilities and for working capital.
As of June 30, 2001, our revolving credit facility bore interest at a rate
of 5.31% with a final maturity of September 15, 2002. As of June 30, 2001, our
acquisition facility bore interest at a rate of 5.18% with a final maturity of
September 15, 2002. Over the past twelve months, we used borrowings from our
revolving credit facility and our acquisition facility for working capital,
acquisitions and capital expenditures.
S-8
CAPITALIZATION
The following table sets forth our consolidated capitalization as of June
30, 2001 (a) on an actual basis, (b) on a pro forma basis giving effect to (1)
the Columbia Propane acquisition (including funding of an estimated working
capital adjustment as of June 30, 2001 of $12.7 million through borrowings
under the acquisition facility), (2) the offering and sale of the 8 7/8% senior
notes, (3) the issuance of common units to Columbia Energy Group, the offering
unitholder, (4) the sale of 350,000 of our common units to our general partner
on October 5, 2001, (5) the capital contributions by our general partner in
order to maintain its aggregate 2% general partner interest in us and AmeriGas
Propane, L.P., (6) the application of the proceeds from the financings, and (7)
the optional redemption of $15 million of the 10 1/8% senior notes on November
16, 2001, as if these transactions all occurred on June 30, 2001, and (c) as
adjusted to give effect to (1) the use of the net proceeds of this offering,
assuming that the underwriters' over-allotment option is not exercised, and (2)
the capital contributions by our general partner in order to maintain its
aggregate 2% general partner interest in us and AmeriGas Propane, L.P. as a
result of issuing the additional common units in this offering. You should read
this table in conjunction with our unaudited pro forma condensed combined
financial statements and consolidated financial statements and the notes to
those financial statements included in or incorporated by reference into this
prospectus supplement and the accompanying prospectus.
As of June 30, 2001
---------------------------------
Actual Pro Forma As Adjusted
---------- ---------- -----------
(Thousands of dollars)
Short-term debt, including current portion of long-term debt:
Bank loans................................................ $ 9,000 $ -- $ --
Current maturities of long-term debt...................... 66,639 66,801 66,801
---------- ---------- ----------
Total short-term debt................................. 75,639 66,801 66,801
---------- ---------- ----------
Long-term debt:..............................................
10 1/8% senior notes due 2007............................. 100,000 85,000 85,000
10% senior notes due 2006................................. 59,769 59,769 59,769
8 7/8% senior notes due 2011.............................. -- 200,000 200,000
First mortgage notes...................................... 553,223 553,223 553,223
Acquisition facility...................................... 70,000 45,640 7,333
Other..................................................... 4,323 6,431 6,431
---------- ---------- ----------
Total long-term debt.................................. 787,315 950,063 911,756
---------- ---------- ----------
Minority interest......................................... 3,780 6,800 7,187
Partners' capital......................................... 211,503 273,479 311,399
---------- ---------- ----------
Total capitalization.................................. $1,078,237 $1,297,143 $1,297,143
========== ========== ==========
S-9
PRICE RANGE OF OUR COMMON UNITS AND CASH DISTRIBUTIONS
The common units are listed for trading on the New York Stock Exchange under
the symbol "APU." The table below shows, for the quarters indicated, the high
and low sales prices for our common units, as reported on the New York Stock
Exchange Composite Tape, and the amount of cash distributions paid per common
unit.
Price Range Cash
------------- Distributions
Fiscal Year High Low Per Common Unit
----------- ------ ------ ---------------
1998
First Quarter..................... $27.25 $23.38 $0.55
Second Quarter.................... 27.00 24.38 0.55
Third Quarter..................... 26.44 22.75 0.55
Fourth Quarter.................... 25.06 21.00 0.55
1999
First Quarter..................... $26.00 $21.50 $0.55
Second Quarter.................... 25.13 17.00 0.55
Third Quarter..................... 22.13 18.88 0.55
Fourth Quarter.................... 20.56 18.31 0.55
2000
First Quarter..................... $19.88 $12.75 $0.55
Second Quarter.................... 18.50 14.38 0.55
Third Quarter..................... 17.44 14.94 0.55
Fourth Quarter.................... 19.38 16.88 0.55
2001
First Quarter..................... $19.50 $15.06 $0.55
Second Quarter.................... 21.00 16.63 0.55
Third Quarter..................... 24.50 20.05 0.55
Fourth Quarter.................... 24.75 18.05 0.55
2002
First Quarter (through December 5) $25.35 $21.50 $0.55
S-10
SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OTHER DATA
The following table sets forth selected historical financial and other data
of AmeriGas Partners as of and for the fiscal years ended September 30, 1996
through 2000 and as of and for the nine months ended June 30, 2000 and 2001. It
also sets forth selected unaudited pro forma consolidated financial data which
give effect to the acquisition of Columbia Propane as if the acquisition and
related transactions had occurred as of the beginning of each of the periods
presented with respect to income statement data, and June 30, 2001 with respect
to balance sheet data.
The selected historical financial data of AmeriGas Partners as of and for
the fiscal years ended September 30, 1998, 1999 and 2000 are derived from the
audited consolidated financial statements of AmeriGas Partners, which are
incorporated herein by reference. The selected historical financial data as of
and for the fiscal years ended September 30, 1996 and 1997 are derived from
audited consolidated financial statements of AmeriGas Partners. The selected
historical financial data of AmeriGas Partners as of and for the nine months
ended June 30, 2000 and 2001 are derived from unaudited consolidated financial
statements of AmeriGas Partners, which are incorporated herein by reference. We
believe, unless otherwise disclosed, that these unaudited consolidated
financial statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of these financial
statements. Results of operations for the interim periods are not necessarily
indicative of the results of operations for the entire year due to the seasonal
nature of our business.
The selected pro forma financial data are not necessarily indicative of the
operating results or financial position of AmeriGas Partners had the
acquisition of Columbia Propane been completed as of the dates indicated, nor
are they necessarily indicative of future operating results or financial
position. The selected pro forma financial data are derived from the unaudited
pro forma condensed combined financial statements, which are incorporated
herein by reference.
The selected historical and pro forma financial and other data of AmeriGas
Partners should be read in conjunction with "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Condensed Combined Financial Statements" and our
consolidated financial statements and notes related thereto, included in, or
incorporated by reference into, this prospectus supplement and the accompanying
prospectus.
S-11
Selected Historical and Pro Forma Financial and Other Data
(In thousands, except per unit data, percentages and gallons)
Year Ended September 30, Nine Months Ended June 30,
------------------------------------------------------------- ------------------------------
Pro Forma Pro Forma
1996 1997 1998 1999 2000 2000 (a) 2000 2001 2001 (a)
---------- ---------- -------- -------- ---------- ---------- -------- ---------- ----------
Statement of Income Data:
Revenues................... $1,013,225 $1,077,825 $914,378 $872,535 $1,120,056 $1,428,147 $899,594 $1,209,084 $1,555,017
Operating income........... 72,866 110,373 87,918 92,646 90,207 93,644 101,960 145,814 173,264
Income before income taxes. 10,084 44,715 21,729 26,061 15,443 112 47,196 86,651 100,869
Income (loss) before
accounting changes........ 10,238 43,980 21,402 25,635 15,196 (53) 46,960 86,551 100,577
Limited partner interest in
income before accounting
changes................... 10,136 43,540 21,188 25,379 15,044 (52) 46,490 85,685 99,571
Income per limited partner
unit before accounting
changes - basic and
diluted................... 0.24 1.04 0.51 0.61 0.36 0.00 1.11 1.94 2.14
Average limited partner
units outstanding - basic
and diluted............... 41,729 41,799 41,886 41,918 41,969 44,326 41,969 44,149 46,506
September 30, June 30, 2001
------------------------------------------------------ ------------------------
1996 1997 1998 1999 2000 Actual Pro Forma (a)
---------- ---------- ---------- ---------- ---------- ---------- -------------
Balance Sheet Data:
Current assets...................... $ 199,452 $ 183,091 $ 133,346 $ 140,569 $ 188,845 $ 188,748 $ 234,551
Total assets........................ 1,360,292 1,318,661 1,217,216 1,196,461 1,258,220 1,252,897 1,507,833
Current liabilities (excluding debt) 157,182 146,449 144,229 148,513 172,501 137,424 156,337
Total debt.......................... 707,453 718,728 718,994 766,725 887,234 862,954 1,038,938
Minority interest................... 5,497 5,043 4,049 3,380 2,587 3,780 6,730
Partners' capital................... 442,236 397,537 299,875 234,041 155,971 211,503 266,475
Year Ended September 30, Nine Months Ended June 30,
--------------------------------------------------------- ----------------------------
Pro Forma Pro Forma
1996 1997 1998 1999 2000 2000(a) 2000 2001 2001(a)
-------- -------- -------- -------- -------- --------- -------- -------- ---------
Other Data:
EBITDA (b).................... $134,497 $172,377 $151,143 $157,524 $157,588 $176,346 $151,514 $201,049 $236,761
Capital expenditures.......... 21,908 24,470 31,577 34,577 30,427 58,656 22,449 28,624 42,777
Total propane margin (c)...... 398,555 430,241 423,914 431,077 436,062 550,460 364,058 436,965 554,792
Total margin.................. 443,498 477,453 470,618 481,767 491,775 617,542 406,164 480,380 610,461
Retail propane gallons sold
(millions)................... 855.4 807.4 785.3 783.2 771.2 1,003.1 635.9 678.1 889.9
Degree days -% colder (warmer)
than normal (d).............. 1.7 (1.2) (8.7) (9.9) (13.7) (13.7) (14.1) 3.0 3.0
--------
(a)For a description of the assumptions used in preparing the selected pro
forma financial and other data, see "Unaudited Pro Forma Condensed Combined
Financial Statements" incorporated herein by reference.
(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. We believe that EBITDA is a useful
supplement to net income and other income statement data in understanding
cash flows from operations that are available for the payment of income
taxes, debt service, capital expenditures and distributions. In addition,
EBITDA does not reflect the impact on operating cash flow that may result
from changes in working capital. Our methods of computing EBITDA may not be
comparable to similarly titled measures of other companies.
(c)Revenues less related cost of sales.
(d)Deviation from average heating degree days during the 30-year period from
1961 to 1990, based upon national weather statistics provided by the
National Oceanic and Atmospheric Administration for 335 airports in the
continental U.S.
S-12
BUSINESS AND PROPERTIES
Products, Services and Marketing
Upon completion of the Columbia Propane acquisition, we became the largest
propane distributor in the United States, serving approximately 1.3 million
customers from approximately 700 district locations in 46 states. Our
operations are located primarily in the East Coast, Southeast, Midwest,
Mountain Central and West Coast regions of the United States. We also sell,
install and service propane appliances, including heating systems. In some
markets, we also install and service propane fuel systems for motor vehicles.
Typically, district locations are found in suburban and rural areas where
natural gas is not 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 our overall
transportation and distribution infrastructure, we operate as an interstate
carrier in 48 states throughout the United States and are also licensed as a
carrier in Canada.
We sell propane primarily to five markets: residential,
commercial/industrial, motor fuel, agricultural and wholesale. For fiscal year
2000, approximately 75% of the total propane gallons that we sold were sold to
retail customers, while the remaining 25% were to wholesale customers. In
fiscal year 2000, residential customers accounted for 30% of total propane
gallons we sold; commercial/industrial customers, 28%; motor fuel customers,
11%; and agricultural customers, 6%. Although sales to residential customers
represented only 30% of total propane gallons sold, they accounted for 49% of
our total propane margin, reflecting the higher margins for this segment of the
market. No single customer accounted for 1% or more of our consolidated
revenues for fiscal year 2000.
In the residential market, which includes both conventional and mobile
homes, 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. Sales of PPX cylinders to retailers are included in the
commercial/industrial market. 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 and crop drying.
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 customer's premises. We own most of these storage tanks and lease
them to our customers. The capacity of these tanks ranges from approximately
100 gallons to approximately 1,200 gallons.
We also deliver propane to retail customers in portable cylinders with
capacities of 4 to 30 gallons. Some of these deliveries are made to the
customer's location, where empty cylinders are either picked up for
replenishment or filled in place. Our PPX program enables customers to exchange
their empty 20-pound propane grill cylinders at various retail locations such
as home centers and convenience stores. We continue to expand our PPX program.
This program is currently available at approximately 16,500 retail locations
throughout the country. In our wholesale operations, we principally sell
propane to large industrial end-users and other propane distributors.
Propane Supply and Storage
Supplies of propane historically have been readily available to us. During
our fiscal year ended September 30, 2000, we purchased approximately 65% of our
propane from 10 suppliers, including Enterprise Products Operating LP
(approximately 18%), BP (approximately 17%) and Dynegy Inc. (approximately
13%). Management believes that if supplies from these sources were interrupted,
we would be able to secure adequate propane supplies from other sources without
a material disruption of our operations; 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, our margins
could be affected. Aside from Enterprise Products, BP and
S-13
Dynegy, no single supplier provided more than 10% of our total propane supply
in fiscal year 2000. In certain market areas, however, some suppliers provide
70% to 80% of our propane requirements. Disruptions in supply in these areas
could also have an adverse impact on our margins.
We have over 200 sources of supply, and we also make purchases on the spot
market. We purchase our propane supplies from domestic and international
suppliers. Over 90% of our propane purchases in fiscal year 2000 were on a
contractual basis under one- or two-year agreements subject to annual review.
More than 90% of those supply contracts provide for pricing based upon posted
prices at the time of delivery or the current prices established at major
storage points such as Mont Belvieu, Texas or Conway, Kansas. In addition, some
agreements provide maximum and minimum seasonal purchase volume guidelines. The
percentage of supply purchased under contract, and the amount of supply
contracted for at fixed prices, will vary from year to year as determined by
our general partner. We use 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. We store propane at
facilities in several states.
Because our profitability is sensitive to changes in wholesale propane
costs, we generally seek to pass through increases in the cost of propane to
customers. For example, when the Mont Belvieu monthly average price per gallon
of propane increased from $0.469 in April 2000 to $0.776 in December 2000, we
were able to maintain our profitability through the use of risk management
techniques designed to control product costs and by passing product cost
increases through to end users. Our general partner has adopted supply
acquisition and product price risk management practices to reduce the effect of
price volatility on product costs. These practices currently include the use of
summer storage, prepaid contracts for future product delivery and derivative
commodity instruments, such as options and propane price swaps. We may not,
however, always be able to pass through product cost increases fully,
particularly when product costs rise rapidly.
Properties
As of September 30, 2000, we owned approximately 83% of our district
locations. In addition, we sublease three one-million barrel underground
storage caverns in Arizona to store propane and butane for ourselves and third
parties. We also lease a 600,000 barrel refrigerated, above-ground storage
facility in California, which could be used in connection with waterborne
imports or exports of propane or butane. The California facility, which we
operate, is currently subleased 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, 2000, we
operated a fleet of approximately 165 transport trucks, 40% of which were
leased. We owned approximately 320 transport trailers and leased 270 railroad
tank cars. In addition, our fleet included over 2,600 bobtail and rack trucks
and approximately 1,800 other delivery and service vehicles. Approximately 38%
of these vehicles were owned. Other assets owned as of September 30, 2000
included more than one million stationary storage tanks with typical capacities
of 100 to 1,000 gallons and over 1.3 million portable propane cylinders with
typical capacities of 4 to 100 gallons. We also owned more than 2,200 large
volume tanks which are used for our own storage requirements.
S-14
MANAGEMENT
As is commonly the case with publicly traded master limited partnerships, we
do not employ any of the persons responsible for managing or operating us, but
instead reimburse our general partner and its affiliates for their services.
The following table sets forth certain information as of November 1, 2001,
regarding the executive officers and directors of our general partner.
Directors are elected annually by our general partner's sole shareholder,
AmeriGas, Inc., a Pennsylvania corporation, and hold office until their
successors are duly elected and qualified. AmeriGas, Inc. is a wholly owned
subsidiary of UGI Corporation. Each executive officer named in the following
table has been elected to serve until his or her successor is duly appointed or
elected or until the earlier of his or her death, removal or resignation from
office. 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... 51 Chairman of the Board of Directors
Eugene V.N. Bissell 48 President, Chief Executive Officer and Director
Thomas F. Donovan.. 68 Director
Richard C. Gozon... 63 Director
William J. Marrazzo 52 Director
James W. Stratton.. 64 Director
Stephen A. Van Dyck 58 Director
Roger B. Vincent... 56 Director
Martha B. Lindsay.. 49 Vice President -- Finance and Chief Financial Officer
Brendan P. Bovaird. 53 Vice President and General Counsel
Richard R. Eynon... 54 Controller and Chief Accounting Officer
R. Paul Grady...... 48 Senior Vice President -- Operations and Chief Operating
Officer
William D. Katz.... 48 Vice President -- Human Resources
Robert H. Knauss... 48 Vice President -- Law, Associate General Counsel and
Corporate Secretary
David L. Lugar..... 44 Vice President -- Supply and Logistics
Carey M. Monaghan.. 50 Vice President -- Business Transformation and Marketing
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)
and Chairman (since 1996), Chief Executive Officer (since 1995), and President
(since 1994) 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.
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 currently President-Elect and a member of the
Board of Directors of the National Propane Gas Association, the national trade
association of the propane industry.
Mr. Donovan was elected a director of the general partner on April 25, 1995.
He retired as Vice Chairman of Mellon Bank on January 31, 1997, a position he
had held since 1988. He also serves as a director of UGI Corporation, UGI
Utilities, Inc. and Nuclear Electric Insurance Ltd.
S-15
Mr. Gozon was elected a director of the general partner on February 24,
1998. He is Executive Vice President of Weyerhaeuser Company (an integrated
forest products company), a position he has 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 (1987); Vice
President (1982 to 1988); and President (1979 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.
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 nation's fourth largest market (since
1997). Previously, he was Chief Executive Officer and President of Roy F.
Weston, Inc. (1988-1997); Water Commissioner for the Philadelphia Water
Department (1971-1988) and Managing Director for the City of Philadelphia
(1983). He also serves as a director of Tenet Health Corp.-Hahnemann University
Hospital.
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 Management Company (investment advisory and financial consulting firm)
since 1972. He has also been Chairman and a director of EFI (financial services
firm) since 1979. In addition, Mr. Stratton is a director of UGI Corporation,
UGI Utilities, Inc., Stratton Growth Fund, Inc., Stratton Monthly Dividend REIT
Shares, Inc., Stratton Small-Cap Value Fund, Teleflex, Inc. and BE&K, Inc.
Mr. Van Dyck was elected a director of the general partner on June 15, 1995.
He is Chairman of the Board and Chief Executive Officer of Maritrans Inc.
(since 1987), the nation's largest independent marine transporter of petroleum.
He also serves as Chairman of the Board of West of England Mutual Insurance
Association.
Mr. Vincent was elected a director of the general partner on January 8,
1998. He is President of Springwell Corporation, a corporate finance advisory
firm (since 1989). Mr. Vincent served in various capacities at Bankers Trust
Company (1971 to 1989), including managing director (1984 to 1989). He is also
a trustee of the GCG Trust of the Golden American Life Insurance Company, a
management investment company registered under the Investment Company Act of
1940 and a subsidiary of the ING Group.
Ms. Lindsay was elected Vice President -- Finance and Chief Financial
Officer of the general partner on January 5, 1998. She previously served as
Vice President and Treasurer (1994 to 1997) and as Treasurer (1994) of
Tambrands Inc., a manufacturer of personal products. Prior to 1994, Ms. Lindsay
held the positions of Director of Business Development (1987 to 1989) and
Assistant Treasurer (1990 to 1993) at Tambrands, Inc.
Mr. Bovaird is Vice President and General Counsel of the general partner
(since 1995). He is also Vice President and General Counsel of UGI Corporation,
UGI Utilities, Inc. and AmeriGas, Inc. (since 1995). Mr. Bovaird previously
served as Division Counsel and Member of the Executive and Operations
Committees of Wyeth-Ayerst International Inc. (1992 to 1995) and Senior Vice
President, General Counsel and Secretary of Orion Pictures Corporation (1990 to
1991).
Mr. Eynon was elected Controller and Chief Accounting Officer of the general
partner on January 5, 1998. Prior to his election, Mr. Eynon was Controller of
the general partner (March 1997 to January 1998) and Assistant Controller of
UGI Corporation (1985 to 1997). Previously, he was a Senior Manager with Price
Waterhouse (now known as PriceWaterhouseCoopers).
Mr. Grady is Senior Vice President -- Operations of the general partner
(since October 1999) and Chief Operating Officer (since July 2000), having
previously served as Vice President -- Sales and Operations (1995 to 1999). He
was also Vice President -- Corporate Development of UGI Corporation (1994 to
1995) and Director, Corporate Development (1990 to 1994). Mr. Grady was
previously Director, Corporate Development Services of Campbell Soup Company
(1985 to 1990). He is currently Vice Chairman -- Marketers of the Propane
Education Research Council, which promotes propane as a preferred energy source.
S-16
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 -- Law and Associate General Counsel of the
general partner (since 1996) and Corporate Secretary of the general partner
(since 1994), having previously served as 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.
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 -- Business Transformation and Marketing of
the general partner (since May 2000). Prior to that, 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 almost 10 years.
S-17
UNDERWRITING
Salomon Smith Barney Inc. is acting as sole bookrunning manager of the
offering, and, together with Banc of America Securities LLC, Credit Suisse
First Boston Corporation and UBS Warburg LLC are acting as representatives of
the underwriters named below. Subject to the terms and conditions stated in the
underwriting agreement dated the date of this prospectus supplement, each
underwriter named below has agreed to purchase, and we and the offering
unitholder have agreed to sell to that underwriter, the number of common units
set forth opposite the underwriter's name.
Number of
Underwriters Common Units
------------ ------------
Salomon Smith Barney Inc.............. 1,190,000
Banc of America Securities LLC........ 630,000
Credit Suisse First Boston Corporation 1,190,000
UBS Warburg LLC....................... 1,190,000
---------
Total.............................. 4,200,000
=========
The underwriting agreement provides that the obligations of the underwriters
to purchase the common units included in this offering are subject to approval
of legal matters by counsel and to other conditions. The underwriters are
obligated to purchase all of the common units (other than those covered by the
over-allotment option described below) if they purchase any of the common units.
The underwriters propose to offer some of the common units directly to the
public at the public offering price set forth on the cover page of this
prospectus supplement and some of the common units to dealers at the public
offering price less a concession not to exceed $0.52 per unit. The underwriters
may allow, and dealers may reallow, a concession not to exceed $0.10 per unit
on sales to other dealers. If all of the common units are not sold at the
initial offering price, the representatives may change the public offering
price and the other selling terms.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus supplement, to purchase up to 630,000 additional
common units at the public offering price less the underwriting discount. The
underwriters may exercise the option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent the
option is exercised, each underwriter must purchase a number of additional
common units approximately proportionate to that underwriter's initial purchase
commitment.
We, our general partner, an affiliate of our general partner and certain
officers of our general partner have agreed not to directly or indirectly sell,
offer to sell, grant any option for the sale of, or otherwise dispose of any
common units, or securities convertible into or exchangeable for common units
or rights to acquire common units, other than pursuant to employee benefit
plans, for a period of 90 days from the date of this prospectus supplement,
without the prior written consent of Salomon Smith Barney. These agreements do
not apply to the acquisition of assets, businesses or the capital stock or
other ownership interests of businesses by us in exchange for units if the
recipient of such units agrees not to dispose of any units received in
connection with the acquisition during that period. Salomon Smith Barney in its
sole discretion may release any of the common units subject to these lock-up
agreements at any time without notice.
The common units are listed on the New York Stock Exchange under the symbol
"APU."
The following table shows the underwriting discounts and commissions that we
and the offering unitholder are to pay to the underwriters in connection with
this offering. These amounts are shown assuming both no exercise and full
exercise of the underwriters' option to purchase up to 630,000 additional
common units.
Paid by AmeriGas Partners Paid by Offering Unitholder
-------------------------- ---------------------------
No Exercise Full Exercise
------------ -------------
Per Unit. $ 0.9138 $ 0.9138 $ 0.9138
------------ ------------ ------------
Total. $ 1,684,176 $ 2,259,870 $ 2,153,784
============ ============ ============
S-18
In connection with the offering, Salomon Smith Barney on behalf of the
underwriters, may purchase and sell common units in the open market. These
transactions may include short sales, syndicate covering transactions and
stabilizing transactions. Short sales involve syndicate sales of common units
in excess of the number of units to be purchased by the underwriters in the
offering, which creates a syndicate short position. "Covered" short sales are
sales of common units made in an amount up to the number of common units
represented by the underwriters' over-allotment option. In determining the
source of common units to close out the covered syndicate short position, the
underwriters will consider, among other things, the price of common units
available for purchase in the open market as compared to the price at which
they may purchase common units through the over-allotment option. Transactions
to close out the covered syndicate short position involve either purchases of
the common units in the open market after the distribution has been completed
or the exercise of the over-allotment option. The underwriters may also make
"naked" short sales of common units in excess of the over-allotment option. The
underwriters must close out any naked short position by purchasing common units
in the open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the common units in the open market after pricing that could adversely affect
investors who purchase in the offering. Stabilizing transactions consist of
bids for or purchases of common units in the open market while the offering is
in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney repurchases common units originally sold by that syndicate
member in order to cover syndicate short positions or make stabilizing
purchases.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the common units. They may also cause the price
of the common units to be higher than the price that would otherwise exist in
the open market in the absence of these transactions. The underwriters may
conduct these transactions on the New York Stock Exchange or in the
over-the-counter market, or otherwise. If the underwriters commence any of
these transactions, they may discontinue them at any time.
We estimate that our total expenses of this offering, excluding underwriting
discounts and commissions, will be approximately $500,000. The underwriters
have agreed to reimburse us and the offering unitholder for certain expenses.
Certain of the underwriters and their respective affiliates have from time
to time performed, and may in the future perform, various financial advisory,
commercial banking and investment banking services for us, the offering
unitholder and NiSource Inc., the parent company of the offering unitholder,
for which they received or will receive customary fees.
This prospectus supplement and the accompanying prospectus may be made
available in electronic format on the websites maintained by one or more of the
underwriters. The representatives may agree to allocate a number of common
units to underwriters for sale to their online brokerage account holders. The
representatives will allocate common units to underwriters that may make
Internet distributions on the same basis as other allocations. In addition,
common units may be sold by the underwriters to securities dealers who resell
common units to online brokerage account holders.
We and the offering unitholder have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments the underwriters may be required to make
because of any of those liabilities.
Because the National Association of Securities Dealers, Inc. views the
common units offered by this prospectus supplement and the accompanying
prospectus as interests in a direct participation program, the offering is
being made in compliance with Rule 2810 of the National Association of
Securities Dealers' Conduct Rules.
S-19
LEGAL MATTERS
Certain legal and tax matters relating to the common units being offered
will be passed upon for us by Morgan, Lewis & Bockius LLP and Baker Botts
L.L.P., Houston, Texas. Certain legal matters in connection with an offering of
common units made by this prospectus supplement and the accompanying prospectus
will be passed upon for the underwriters by Andrews & Kurth Mayor, Day,
Caldwell & Keeton L.L.P., Houston, Texas.
FORWARD-LOOKING STATEMENTS
Some information in this prospectus supplement, the accompanying prospectus
and the documents that we have incorporated by reference may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 risk factors and other
cautionary statements in this prospectus supplement, the accompanying
prospectus and the documents that we have incorporated by reference. We will
not update these statements unless the securities laws require us to do so.
S-20
PROSPECTUS
9,056,953 COMMON UNITS
OF
AMERIGAS PARTNERS, L.P.
REPRESENTING LIMITED PARTNER INTERESTS
-----------------
This prospectus provides you with a general description of the common units
that we or the offering unitholder named in this prospectus may offer for sale
from time to time. We may offer 6,700,000 common units from time to time. In
addition, from time to time the offering unitholder may offer for sale
2,356,953 common units. We will not receive any of the proceeds from the sale
of common units offered by the offering unitholder. Each time that we sell
common units we will provide a prospectus supplement that will contain specific
information about the terms of that offering. Each time that the offering
unitholder sells common units we may provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
The common units are traded on the New York Stock Exchange under the symbol
"APU." On November 16, 2001, the last reported sales price for the common units
as reported on the New York Stock Exchange Composite Transactions Tape was
$23.86 per common unit.
We or the offering unitholder may sell these securities to underwriters or
dealers, through agents, or directly to other purchasers. See "Plan of
Distribution." The prospectus supplement will list any underwriters, dealers,
or agents and the compensation they will receive.
The common units are limited partner interests, which are inherently
different from the capital stock of a corporation. You should carefully
consider the risks relating to investing in common units and each of the other
risk factors described under "Risk Factors" beginning on page 4 of this
prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
-----------------
The date of this prospectus is November 30, 2001.
You should rely only on the information contained in or incorporated by
reference into this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information provided by this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of this prospectus or any prospectus supplement.
-----------------
TABLE OF CONTENTS
Page
----
Who We Are....................................................................................... 1
About This Prospectus............................................................................ 1
Where You Can Find More Information.............................................................. 1
Incorporation of Documents by Reference.......................................................... 2
Forward-Looking Statements....................................................................... 3
Risk Factors..................................................................................... 4
Risks Associated with the Propane Distribution Businesses Acquired From Columbia Energy Group. 4
Risks Inherent in Our Business................................................................ 5
Risks Inherent in an Investment in Us......................................................... 7
Tax Risks..................................................................................... 12
Use of Proceeds.................................................................................. 14
Description of Common Units...................................................................... 15
Tax Considerations............................................................................... 18
Offering Unitholder.............................................................................. 28
Plan of Distribution............................................................................. 29
Legal Opinions................................................................................... 31
Experts.......................................................................................... 31
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WHO WE ARE
AmeriGas Partners, L.P. is a publicly traded Delaware limited partnership
formed on November 2, 1994. Our recent acquisition of the propane distribution
businesses of Columbia Energy Group on August 21, 2001 makes us the largest
retail propane distributor in the United States, distributing more than one
billion gallons of propane annually. We currently serve approximately 1.3
million residential, commercial, industrial, agricultural and motor fuel
customers from approximately 700 district locations in 46 states. Our
operations are located primarily in the East Coast, Southeast, Midwest,
Mountain Central and West Coast regions of the United States.
We conduct our business principally through our subsidiary, AmeriGas
Propane, L.P., and its subsidiary, AmeriGas Eagle Propane, L.P. Both of these
entities are Delaware limited partnerships. We refer to these partnerships
collectively as our operating partnership. On April 19, 1995, AmeriGas Propane,
L.P. acquired the propane distribution businesses and assets of AmeriGas
Propane, Inc., AmeriGas Propane-2, Inc. and Petrolane Incorporated. These
acquisitions took place concurrently with the initial public offering of our
common units. On August 21, 2001, AmeriGas Propane, L.P. acquired the propane
distribution businesses of Columbia Energy Group.
The 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 prospectus, the terms "AmeriGas
Partners," "our," "us" and "we" are sometimes used as abbreviated references to
AmeriGas Partners, L.P. itself or AmeriGas Partners, L.P. and its consolidated
subsidiaries, which includes the operating partnership.
AmeriGas Propane, Inc., a Pennsylvania corporation, is our general partner.
Our general partner is a wholly owned indirect subsidiary of UGI Corporation, a
public company listed on the New York and Philadelphia stock exchanges. Through
various subsidiaries, UGI has been in the propane distribution business for
over 40 years. Our general partner and its subsidiary, Petrolane Incorporated,
own an aggregate 53.1% interest in AmeriGas Partners.
ABOUT THIS PROSPECTUS
This prospectus is part of two registration statements that we have filed
with the SEC using a "shelf" registration process. Under this shelf
registration process, we or the offering unitholder may sell from time to time
the common units representing limited partner interests described in this
prospectus in one or more offerings. The offering unitholder may sell none,
some or all of the common units offered by this prospectus. This prospectus
provides you with a general description of us and the common units, our
registered securities. Each time that we sell common units under this
prospectus we will provide a prospectus supplement that will contain specific
information about the terms of that offering. Each time that the offering
unitholder sells common units under this prospectus we may provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add to, update or change
information in this prospectus. The information in this prospectus is accurate
as of its date. You should carefully read this prospectus, the prospectus
supplement and the documents that we have incorporated by reference below.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
SEC. You can inspect and/or copy these reports and other information at
locations maintained by the SEC, including:
. The principal offices of the SEC located at Judiciary Plaza, Public
Reference Room, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
. The regional offices of the SEC located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661;
1
. The regional offices of the SEC located at 233 Broadway, New York, New
York 10279; and
. The SEC's website at http://www.sec.gov.
Copies of such materials can be obtained by mail at prescribed rates from the
Public Reference Room of the SEC, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call 1-800 SEC-0330 for further information
about the operation of the Public Reference Room.
We also provide information to the New York Stock Exchange because the
common units are traded on the New York Stock Exchange. You may obtain reports
and other information at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference into this prospectus the
information that we file with the SEC. This means that we can disclose to you
important information contained in other documents filed with the SEC by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. Information that we file later with the
SEC will automatically update and may supersede information in this prospectus
or information previously filed with the SEC. We incorporate by reference the
documents listed below:
1) our annual report on Form 10-K for the year ended September 30, 2000;
2) our quarterly reports on Form 10-Q for the quarters ended December
31, 2000, March 31, 2001 and June 30, 2001;
3) our current reports on Form 8-K dated October 11, 2000, November 10,
2000, January 11, 2001, January 31, 2001, April 10, 2001, May 2, 2001, July
23, 2001, August 8, 2001 (as amended on August 9, 2001), August 21, 2001 (as
amended on November 5, 2001), November 9, 2001 and November 28, 2001; and
4) the description of the common units in our registration statement
filed pursuant to the Securities Exchange Act of 1934 on Form 8-A (File No.
001-13692), dated March 28, 1995, as amended by Amendment No. 1 to Form 8-A,
dated April 11, 1995, and by Amendment No. 2 to Form 8-A, dated January 17,
1997, and any amendments or reports filed after the date hereof to update
the description.
We also incorporate by reference all documents filed by us under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 between the
date of this prospectus and the sale of all of the common units offered by this
prospectus.
If information in incorporated documents conflicts with information in this
prospectus you should rely on the most recent information. If information in an
incorporated document conflicts with information in another incorporated
document, you should rely on the most recent incorporated document.
You may request a copy of these filings at no cost by writing or telephoning
us at the following address or phone number:
AmeriGas Propane, Inc.
Attention: Robert W. Krick, Treasurer
P.O. Box 965
Valley Forge, Pennsylvania 19482
Telephone: (610) 337-7000
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FORWARD-LOOKING STATEMENTS
Some information in this prospectus, any prospectus supplement and the
documents that we have incorporated by reference may contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. 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. Specific factors which could cause actual
results to differ from those in the forward-looking statements include:
. significant indemnity obligations;
. inability to achieve expected operating cost savings, synergies and
productivity improvements from the integration of the propane distribution
businesses acquired from Columbia Energy Group;
. adverse weather conditions resulting in reduced demand;
. competitive pressures from the same and alternative energy sources;
. price volatility and availability of propane;
. the availability of capacity to transport propane to market areas;
. operating hazards and risks incidental to transporting, storing and
distributing propane, butane and ammonia, including the risk of explosions
and fires resulting in personal injury and property damage;
. inability to make business acquisitions on economically acceptable terms;
. improvements in energy efficiency and technology resulting in reduced
demand;
. liability for environmental claims;
. changes in laws and regulations, including safety, tax and accounting
matters;
. adverse labor relations;
. regional and global economic conditions, including those resulting from
the effects of ongoing military actions against terrorists; and
. interest rate fluctuations and other capital market conditions.
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 assumed facts or bases almost always vary from actual
results, and the differences between assumed facts or bases and actual results
can be material, depending on the circumstances. When considering
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this prospectus, any prospectus supplement and the
documents that we have incorporated by reference. We will not update these
statements unless the securities laws require us to do so.
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RISK FACTORS
Common units are inherently different from capital stock of a corporation,
although many of the business risks to which we are subject are similar to
those that would be faced by a corporation engaged in the same business. You
should carefully consider the following risk factors, together with other
information contained in this prospectus, any prospectus supplement and the
information that we have incorporated by reference before investing in the
common units. Any of the events or conditions described below could materially
and adversely affect our business, financial condition or results of
operations. In such case, we may be unable to make distributions to the holders
of our common units, the trading price of our common units may decline and you
may lose all or part of your investment.
Risks Associated with the Propane Distribution Businesses Acquired From
Columbia Energy Group
We may be adversely affected by restrictions on our operations and indemnity
obligations.
On August 21, 2001, we acquired the propane distribution businesses of
Columbia Energy Group, which were conducted through Columbia Propane
Corporation (now known as AmeriGas Eagle Propane, Inc.) and its 99% owned
subsidiary, Columbia Propane, L.P. (now known as AmeriGas Eagle Propane, L.P.).
We now own AmeriGas Eagle Propane, Inc. and substantially all of AmeriGas Eagle
Propane, L.P. As part of our acquisition of the propane distribution businesses
of Columbia Energy Group, AmeriGas Propane, L.P. became the payee under a $138
million intercompany note of AmeriGas Eagle Propane, L.P. In connection with
this note and the purchase agreement (the "1999 purchase agreement") under
which the predecessor of AmeriGas Eagle Propane, Inc. acquired a propane
distribution business from an affiliate of Triarc Companies, Inc. ("Triarc"),
we have become subject to restrictions on our ability to operate AmeriGas Eagle
Propane, L.P. These restrictions, which effectively continue until July 2009,
will limit our ability to, among other things:
. prepay, defease, purchase or otherwise retire the intercompany note unless
it is replaced by equivalent debt with no greater amortization;
. modify the intercompany note so as to eliminate or limit the recourse
liability of Triarc;
. convert AmeriGas Eagle Propane, L.P. into a corporation for federal income
tax purposes, including by way of any merger or consolidation;
. allow any third party to assume, guarantee, indemnify against or otherwise
incur any liability relating to the intercompany note; or
. take or fail to take any action that would reduce the share of the
intercompany note allocated to Triarc for federal income tax purposes.
Without becoming obligated to indemnify Triarc for any resulting tax losses,
we may not:
. make any material change in certain federal income tax positions, methods,
principles or elections of AmeriGas Eagle Propane, L.P.;
. sell or dispose of certain assets of AmeriGas Eagle Propane, L.P. if doing
so would result in a gain of more than $5 million per year on a cumulative
basis to be allocated to Triarc; or
. increase the carrying value of certain assets of AmeriGas Eagle Propane,
L.P. for income tax purposes.
These restrictions on our ability to operate AmeriGas Eagle Propane, L.P.
could have a material adverse effect on us.
AmeriGas Eagle Propane, L.P. and certain of its affiliates are obligated to
indemnify Triarc and its affiliates for tax or other cash losses they may incur
as a result of the breach of the foregoing restrictions and any other
4
actions in violation of the 1999 purchase agreement that cause Triarc to
recognize a taxable gain or result in other losses for Triarc. These include
breaches that Triarc may claim result from our acquisition of the propane
distribution businesses of Columbia Energy Group and related transactions.
Under the agreement for our acquisition of the propane distribution businesses
of Columbia Energy Group, we agreed to apportion between us and Columbia Energy
Group any losses under the Triarc indemnity. In addition, AmeriGas Propane,
L.P. agreed with AmeriGas Eagle Propane, Inc. to take all actions necessary to
ensure that AmeriGas Eagle Propane, Inc. will have sufficient available funds
to satisfy all of its obligations and liabilities to Triarc under the
indemnification provisions of the 1999 purchase agreement.
We may be unable to achieve expected operating cost savings, synergies and
productivity improvements from the integration of the propane distribution
businesses acquired from Columbia Energy Group.
Upon acquiring the propane distribution businesses from Columbia Energy
Group, we significantly increased our size. Our ability to integrate these
propane distribution businesses with our existing business will impact the
future success of our business, and thus our ability to make distributions to
the holders of common units. We may be unable to achieve the anticipated cost
savings and synergies from the acquisition on a timely basis. In addition, the
integration requires additional attention from, and places substantial demands
upon, our senior management, which may make it more difficult for them to
manage our business.
Risks Inherent in Our Business
Decreases in the demand for propane because of warmer weather adversely
affect our results of operations.
Weather conditions have a significant impact on the demand for propane for
both heating and agricultural purposes. Many of our customers rely heavily on
propane as a heating fuel. 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. Approximately 55%
to 60% of our annual retail propane volumes are sold during these months. In
years prior to fiscal 2001, warmer-than-normal weather in our service territory
reduced demand for propane and other energy sources for heating purposes below
normal levels, which had an adverse effect on our operating results. There can
be no assurance that normal winter weather in our service territory will occur
in the future.
Our ability to increase revenues is adversely affected by the maturity of,
and competition within, the retail propane industry.
The retail propane industry is mature, with only limited growth in total
demand for the product foreseen. We expect the demand for propane to remain
relatively constant for the foreseeable future, with year-to-year industry
volumes being affected primarily 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
PPX Prefilled Propane Xchange(R) program (through which consumers can exchange
an empty propane grill cylinder for a filled one) and National Accounts program
(through which we encourage large, multi-location propane users to enter into a
supply agreement with us rather than with many small suppliers), as well as the
success of our marketing programs designed to increase customers in targeted
segments. If we are unable to compete effectively in the propane business, we
may lose existing customers or fail to acquire new customers.
We compete with other distributors of propane, including several major
companies and thousands of small independent operators. In recent years, some
rural electric cooperatives and fuel oil distributors have expanded their
businesses to include propane distribution and we compete with them as well.
Generally, warmer-than-normal weather further intensifies competition. Our
ability to compete effectively depends upon the reliability of our service, our
responsiveness to customers and our ability to maintain competitive retail
prices and to control operating expenses.
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. We compete for customers against suppliers of
electricity, fuel oil and natural gas. Electricity is a major
5
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
nation's natural gas distribution systems has resulted in the availability of
natural gas in some areas that previously depended upon propane. In addition,
we cannot predict the effect that the development of alternative energy sources
might have on our operations.
Our profitability is subject to 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 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. There is no assurance,
however, that we will always be able to pass on product cost increases fully,
particularly when product costs rise rapidly. In addition, high product prices
may lead to customer conservation, resulting in reduced demand.
We are dependent on our principal suppliers, which increases the risks from
an interruption in supply and transportation.
During the year ended September 30, 2000, we purchased approximately 65% of
our propane from 10 suppliers. If supplies from these sources were interrupted,
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. Additionally, in certain market areas some of
our suppliers provide 70% to 80% of our propane requirements. Disruptions in
supply in these areas could also have an adverse impact on our margins.
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 various legal proceedings and litigation arising in
the ordinary course of business. We maintain insurance policies with insurers
in such amounts and with such coverages and deductibles as we believe are
reasonable and prudent. There can be no assurance, however, that such insurance
will be adequate to protect us from all material expenses related to potential
future claims for personal and property damage or that such levels of insurance
will be available in the future at economical prices.
Our ability to grow will be adversely affected if we are not successful in
making acquisitions and our profitability may be adversely affected by the
terms of our indebtedness.
We have historically expanded our propane business through acquisitions and
internal growth. We regularly consider and evaluate opportunities for growth
through the acquisition of local, regional and national propane
6
distributors. We may choose to finance future acquisitions with debt, equity,
cash or a combination of the three. There is significant competition for
acquisitions among publicly traded master limited partnerships engaged in the
propane distribution business. Although we believe that there are numerous
potential acquisition candidates in the industry, some of which represent
material acquisition opportunities, there can be no assurance 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. In addition, our bank credit facilities and first mortgage notes
impose restrictions on our ability to make acquisitions through AmeriGas Eagle
Propane, L.P., which may adversely affect our growth in certain geographic
areas.
Our operations will be adversely affected if energy conservation and
efficiency and technology trends decrease demand for propane.
Retail customers primarily use propane for home heating, water heating and
cooking purposes. We are not able to predict the effect that future
conservation measures or advances in heating, conservation or other devices
might have on our operations.
Our results of operations and financial condition may be adversely affected
by governmental safety, health, transportation and environmental regulation
and associated costs.
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 have an
adverse impact on our results of operations. It is also possible that material
environmental liabilities will be incurred, including those relating to claims
for damages to property and persons.
Current economic and political conditions may harm our business.
Deteriorating regional and global economic conditions and the effects of
ongoing military actions against terrorists may cause significant disruptions
to commerce throughout the world. To the extent that such conditions and
disruptions result in delays or cancellations of customer orders, impair our
ability to effectively market or acquire propane, or cause or prolong an
economic recession, our business, results of operations and financial condition
could be adversely affected. In addition, our ability to raise capital for
acquisitions, capital expenditures and ongoing operations is dependent upon
ready access to capital markets. During times of adverse economic and political
conditions, investor confidence in and accessibility to capital markets could
decrease. If capital markets are not available to us over an extended period of
time, we could be unable to make acquisitions, refinance debt, invest in
capital expenditures and fund operations, which could adversely affect our
business, results of operations and financial condition.
Risks Inherent in an Investment in Us
Cash distributions are not guaranteed and may fluctuate with our performance.
Although we distribute all of our "available cash" (as defined in
"Description of Common Units," below) each quarter, the amount of cash that we
generate each quarter fluctuates. As a result, we cannot guarantee that we will
pay the minimum quarterly distribution (as described more fully in "Description
of Common Units," below) each quarter. The actual amount of cash that is
available to be distributed each quarter will depend upon numerous factors,
including:
. our cash flow generated by operations;
. the weather in our areas of operation;
. our borrowing capacity under our revolving credit facility;
7
. required principal and interest payments on our debt;
. fluctuations in our working capital;
. our cost of acquisitions (including related debt service payments);
. restrictions contained in our debt instruments;
. our capital expenditures;
. our issuances of debt and equity securities;
. reserves made by our general partner in its discretion;
. prevailing economic and industry conditions; and
. financial, business and other factors, a number of which are beyond our
control.
The amount of available cash needed annually to pay the minimum quarterly
distribution on all of the currently outstanding common units, subordinated
units and the general partner interest is $105.5 million. Of that, $81.6
million and $21.8 million are needed to pay the minimum quarterly distribution
on the outstanding common units and subordinated units, respectively (described
more fully in "Description of Common Units," below). A reasonable proxy for the
amount of cash available for distribution can be calculated by subtracting from
our EBITDA (earnings before interest expense, income taxes, depreciation and
amortization) (1) cash interest expense and (2) capital expenditures needed to
maintain operating capacity. Although we believe that distributable cash flow
calculated in this manner is a reasonable estimate of the amount of available
cash, it does not reflect changes in working capital which can significantly
affect actual cash available for distribution and it is not a measure of
performance, financial condition or cash flow under generally accepted
accounting principles. Distributable cash flow calculated in this manner for
the twelve months ended June 30, 2001 was approximately $111.5 million. During
that period, we declared and paid the full minimum quarterly distribution on
all of the then-outstanding common and subordinated units and the general
partner interest, for a total of $98.1 million.
If weather during fiscal year 2002 is significantly warmer than normal, we
may not generate sufficient cash from operations to cover the full minimum
quarterly distribution on the subordinated units, in which event we may elect
to borrow under our revolving credit facility, as we have in the past, to fund
this shortfall. Any borrowing to pay distributions increases our leverage and
interest expense and reduces the borrowing capacity under our revolving credit
facility until such borrowings are repaid.
Our indebtedness may limit our ability to make distributions and may
adversely affect our operations.
Our debt outstanding as of June 30, 2001 totaled $863.0 million, consisting
of $854.0 million of long-term debt (including current maturities of $66.6
million and acquisition facility borrowings of $70 million) and $9 million
under the revolving credit facility. After giving effect to our acquisition of
the propane distribution businesses of Columbia Energy Group in August 2001 and
related transactions, our pro forma outstanding debt as of June 30, 2001 would
have been approximately $1,038.9 million. Our ability to make principal and
interest payments depends on future performance, which performance is subject
to many factors, some of which will be outside of our control. In addition,
approximately two-thirds of our indebtedness on a pro forma basis as of June
30, 2001 was secured by substantially all of our assets and all of our pro
forma indebtedness contains restrictive covenants that limit our ability to
distribute cash and to incur additional indebtedness. The first mortgage notes
and the bank credit facilities require our general partner to serve as our sole
general partner and as the sole general partner of AmeriGas Propane, L.P., and
the first mortgage notes require our general partner to maintain with its
affiliates an aggregate 30% partnership interest in AmeriGas Partners and
AmeriGas Propane, L.P. and to be a direct or indirect wholly owned subsidiary
of UGI. Failure to maintain these ownership interests would constitute an event
of default under the first mortgage notes and the bank credit facilities. We
will be required to offer to purchase the senior notes at 101% of the principal
amount thereof upon a change of control as defined in
8
the applicable indentures. AmeriGas Propane, L.P. will be required to offer to
purchase the first mortgage notes at a purchase price specified in the first
mortgage note agreements upon a change of control, as defined in such
agreements. Payment of principal and interest on our pro forma indebtedness, as
well as compliance with the requirements and covenants of such indebtedness,
limits our ability to make distributions to unitholders. Our leverage may also
adversely affect our ability to finance future operations and capital needs,
limit our ability to pursue other business opportunities and make our results
of operations more susceptible to adverse business conditions.
Holders of common units may experience dilution of their interests.
Our partnership agreement generally allows us to issue additional limited
partner interests and other equity securities without the approval of the
unitholders, as well as an unlimited number of partnership interests junior to
the common units without a unitholder vote. During the subordination period, as
defined in "Description of Common Units" below, the number of common units or
other parity securities that we may issue is subject to certain limitations.
These limitations do not apply to issuances in connection with acquisitions or
capital improvements that are accretive, the repayment of certain indebtedness,
the conversion of the subordinated units in accordance with the partnership
agreement, or certain employee benefit plans. A "subordinated unit" (described
more fully in "Description of Common Units," below) is a unit that receives
distributions only once the holders of common units have received all required
minimum quarterly distributions. When we issue additional equity securities,
your proportionate partnership interest will decrease and the amount of cash
distributed on each unit and the market price of the common units could
decrease. Issuance of additional common units will also diminish the relative
limited voting strength of each previously outstanding unit. See "Holders of
common units have limited voting rights, management and control of us," below.
The ultimate effect of any such issuance may be to dilute the interests of
holders of units in AmeriGas Partners and to make it more difficult for a
person or group to remove our general partner or otherwise change our
management.
After the subordination period, we may issue an unlimited number of
additional general and limited partner interests and other equity securities of
AmeriGas Partners, including senior equity securities, for such consideration
and on such terms and conditions as shall be established by our general partner
in its sole discretion, without the approval of any unitholders.
Holders of common units have limited voting rights, management and control of
us.
Our general partner manages and operates AmeriGas Partners. Unlike the
holders of common stock in a corporation, holders of outstanding common units
have only limited voting rights on matters affecting our business. Holders of
common units have no right to elect the general partner on an annual or other
continuing basis, and our general partner generally may not be removed except
pursuant to the vote of the holders of not less than 66 2/3% of the outstanding
units. In addition, removal of the general partner may result in a default
under our bank credit facilities and first mortgage notes. As a result, holders
of common units have limited say in matters affecting our operations and others
may find it difficult to attempt to gain control or influence our activities.
Holders of common units may be required to sell their common units against
their will.
If at any time our general partner and its affiliates hold 80% or more of
the issued and outstanding common units, our general partner will have the
right to purchase all, but not less than all, of the remaining common units
held by nonaffiliates at certain specified prices pursuant to the partnership
agreement. Accordingly, under certain circumstances holders of common units may
be required to sell their common units against their will and the price that
they receive for those securities may be less than they would like to receive.
The market price of the common units may be adversely affected by various
change of management provisions.
Our partnership agreement contains certain provisions that are intended to
discourage a person or group from attempting to remove our general partner as
general partner or otherwise change the management of
9
AmeriGas Partners. If any person or group other than the general partner or its
affiliates acquires beneficial ownership of 20% or more of the common units,
such person or group will lose its voting rights with respect to all of its
common units. The partnership agreement also provides that if our general
partner is removed other than for cause, the subordination period will end, all
arrearages on the common units will terminate and all outstanding subordinated
units (if any) will convert into common units. The effect of these provisions
and the change of control provisions in our debt instruments described above
may be to diminish the price at which the common units will trade under certain
circumstances.
Our general partner can protect itself against dilution but holders of common
units cannot.
Whenever we issue equity securities to any person other than our general
partner and its affiliates, our general partner has the right to purchase
additional limited partnership interests on the same terms to maintain its
percentage interest in AmeriGas Partners. No other unitholder has a similar
right. Therefore, only our general partner may protect itself against dilution
caused by the issuance of additional equity securities.
Holders of common units may not have limited liability in certain
circumstances and may be liable for the return of distributions that cause
our liabilities to exceed our assets.
The limitations on the liability of holders of common units for the
obligations of a limited partnership have not been clearly established in some
states. If it were determined that AmeriGas Partners had been conducting
business in any state without compliance with the applicable limited
partnership statute, or that the right or the exercise of the right by the
holders of common units as a group to remove or replace our general partner, to
make certain amendments to our partnership agreement or to take other action
pursuant to that partnership agreement constituted participation in the
"control" of the business of AmeriGas Partners, then a holder of common units
could be held liable under certain circumstances for our obligations to the
same extent as our general partner. We are not obligated to inform holders of
common units about whether we are in compliance with the limited partnership
statutes of any states.
Holders of common units may also have to repay AmeriGas Partners amounts
wrongfully returned or distributed to them. Under Delaware law, we may not make
a distribution to holders of common units if the distribution causes our
liabilities to exceed the fair value of our assets. Liabilities to partners on
account of their partnership interests and nonrecourse liabilities are not
counted for purposes of determining whether a distribution is permitted.
Delaware law provides that a limited partner who receives such a distribution
and knew at the time of the distribution that the distribution violated
Delaware law will be liable to the limited partnership for the distribution
amount for three years from the distribution date.
Additionally, under Delaware law an assignee who becomes a substituted
limited partner of a limited partnership is liable for the obligations of the
assignor to make contributions to the partnership. However, such an assignee is
not obligated for liabilities unknown to him or her at the time he or she
became a limited partner if the liabilities could not be determined from the
partnership agreement.
Our general partner has conflicts of interest and limited fiduciary
responsibilities, which may permit our general partner to favor its own
interest to the detriment of holders of common units.
Conflicts of interest can arise as a result of the relationships between
AmeriGas Partners, on the one hand, and the general partner and its affiliates,
on the other. The directors and officers of the general partner have fiduciary
duties to manage the general partner in a manner beneficial to the general
partner's sole shareholder, AmeriGas, Inc., a wholly owned subsidiary of UGI
Corporation. At the same time, the general partner has fiduciary duties to
manage AmeriGas Partners in a manner beneficial to both it and the unitholders.
The duties of
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our general partner to AmeriGas Partners and the unitholders, therefore, may
come into conflict with the duties of the directors and officers of our general
partner to its sole shareholder, AmeriGas, Inc.
Such conflicts of interest might arise in the following situations, among
others:
(i) Decisions of our general partner with respect to the amount and
timing of cash expenditures, borrowings, issuances of additional units and
reserves in any quarter affects whether or the extent to which there is
sufficient available cash from operating surplus to meet the minimum
quarterly distribution and target distributions (as defined in "Description
of Common Units," below) on all units in a given quarter. In addition,
actions by our general partner (including those taken in projecting future
operating results and adjusted operating surplus) may have the effect of
enabling the general partner to receive distributions that exceed 2% of
total distributions or hastening the expiration of the subordination period
or the conversion of subordinated units, all of which are owned by our
general partner, into common units.
(ii) AmeriGas Partners does not have any employees and relies solely on
employees of the general partner and its affiliates.
(iii) Under the terms of the partnership agreement, we reimburse our
general partner and its affiliates for costs incurred in managing and
operating AmeriGas Partners, including costs incurred in rendering corporate
staff and support services to us.
(iv) Whenever possible, the general partner limits our liability under
contractual arrangements to all or particular assets of AmeriGas Partners,
with the other party thereto to have no recourse against our general partner
or its assets.
(v) Any agreements between us and our general partner and its affiliates
do not grant to the holders of common units, separate and apart from
AmeriGas Partners, the right to enforce the obligations of our general
partner and such affiliates in our favor. Therefore, the general partner, in
its capacity as the general partner of AmeriGas Partners, is primarily
responsible for enforcing such obligations.
(vi) Under the terms of the partnership agreement, our general partner
is not restricted from causing us to pay the general partner or its
affiliates for any services rendered on terms that are fair and reasonable
to us or entering into additional contractual arrangements with any of such
entities on behalf of AmeriGas Partners. Neither the partnership agreement
nor any of the other agreements, contracts and arrangements between us, on
the one hand, and the general partner and its affiliates, on the other, are
or will be the result of arm's-length negotiations.
(vii) Our general partner may exercise its right to call for and
purchase units as provided in the partnership agreement or assign such right
to one of its affiliates or to us.
(viii) Under the terms of the partnership agreement, it does not
constitute a breach of our general partner's fiduciary duties to us or the
unitholders for the general partner or its affiliates to engage in certain
activities of the type conducted by us, even if in direct competition with
us, and the general partner and such affiliates have no obligation to
present business opportunities to us.
Unless provided otherwise in the partnership agreement, Delaware law
generally requires a general partner of a Delaware limited partnership to
adhere to fiduciary duty standards under which it owes the partnership's
limited partners the highest duties of good faith, fairness and loyalty and
which generally prohibit such general partner from taking any action or
engaging in any transaction as to which it has a conflict of interest. Our
partnership agreement expressly permits our general partner to resolve
conflicts of interest between itself or its affiliates, on the one hand, and us
or the unitholders, on the other, and to consider, in resolving such conflicts
of interest, the interests of other parties in addition to the interests of the
unitholders. In addition, the partnership agreement provides that a purchaser
of common units is deemed to have consented to certain conflicts of interest
and actions of our general partner and its affiliates that might otherwise be
prohibited and to have agreed that such conflicts of interest and actions do
not constitute a breach by the general partner of any duty stated or implied by
law or equity. The general partner is not in breach of its obligations under
the partnership agreement
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or its duties to us or the unitholders if the resolution of such conflict is
fair and reasonable to us. The latitude given in the partnership agreement to
the general partner in resolving conflicts of interest may significantly limit
the ability of a unitholder to challenge what might otherwise be a breach of
fiduciary duty. Our general partner believes, however, that such latitude is
necessary and appropriate to enable it to serve as the general partner of
AmeriGas Partners without undue risk of liability.
Our partnership agreement expressly limits the liability of our general
partner by providing that the general partner, its affiliates and its officers
and directors are not liable for monetary damages to us, the limited partners
or assignees for errors of judgment or for any actual omissions if the general
partner and other persons acted in good faith. In addition, we are required to
indemnify our general partner, its affiliates and their respective officers,
directors, employees and agents to the fullest extent permitted by law, against
liabilities, costs and expenses incurred by our general partner or such other
persons, if the general partner or such persons acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, our best interests
and, with respect to any criminal proceedings, had no reasonable cause to
believe the conduct was unlawful.
Tax Risks
The IRS could treat us as a corporation for tax purposes, 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. We believe
that we have been and will continue to be classified as a partnership for
federal income tax purposes. However, no ruling from the Internal Revenue
Service (the "IRS") as to this status has been or is expected to be requested.
We are instead relying on the opinion of Baker Botts L.L.P., our tax counsel,
which is not binding on the IRS.
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.
We cannot guarantee that the law will not 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. 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.
A successful IRS contest of the federal income tax positions that we take may
adversely affect the market for common units.
We have not requested a ruling from the IRS with respect to our
classification as a partnership for federal income tax purposes, the
classification of any of the revenue from our propane operations as "qualifying
income" under Section 7704 of the Internal Revenue Code or any other matter
affecting us. Accordingly, the IRS may adopt positions that differ from the
conclusions expressed in this prospectus or the positions taken by us. It may
be necessary to resort to administrative or court proceedings in an effort to
sustain some or all of such conclusions or the positions taken by us. A court
may not concur with some or all of our positions. Any contest with the IRS may
materially and adversely impact the market for the common units and the prices
at which they trade. In addition, the costs of any contest with the IRS will be
borne directly or indirectly by the unitholders and our general partner.
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Holders of common units may be required to pay taxes even if they do not
receive any cash distributions.
A unitholder will be required to pay federal income taxes and, in some
cases, state and local income taxes on the unitholder's allocable share of our
income, even if the unitholder receives no cash distributions from us. We
cannot guarantee that a unitholder will receive cash distributions equal to the
unitholder's allocable share of our taxable income or even the tax liability to
the unitholder resulting from that income. Further, a unitholder may incur a
tax liability, in excess of the amount of cash received, upon the sale of the
unitholder's common units.
Ownership of common units may have adverse tax consequences for tax-exempt
organizations and certain other investors.
Investment in common units by certain tax-exempt entities, regulated
investment companies and foreign persons raises issues unique to them. For
example, virtually all of our taxable income allocated to organizations exempt
from federal income tax, including individual retirement accounts and other
retirement plans, will be unrelated business taxable income and thus will be
taxable to the unitholder. Very little of our income will be qualifying income
to a regulated investment company. Distributions to foreign persons will be
reduced by withholding taxes.
There are limits on the deductibility of losses which may adversely affect
holders of common units.
In the case of taxpayers subject to the passive loss rules (generally,
individuals and closely-held corporations), any losses generated by us will
only be available to offset our future income and cannot be used to offset
income from other activities, including other passive activities or
investments. Unused losses may be deducted when the unitholder disposes of the
unitholder's entire investment in us in a fully taxable transaction with an
unrelated party. A unitholder's share of our net passive income may be offset
by unused losses from us carried over from prior years, but not by losses from
other passive activities, including losses from other publicly traded
partnerships.
Our tax shelter registration could increase the risk of a potential audit by
the IRS.
We are registered with the IRS as a "tax shelter." The IRS has issued to us
the following tax shelter registration number: 95-192000149. Issuance of the
registration number does not indicate that an investment in us or the claimed
tax benefits have been reviewed, examined or approved by the IRS. We cannot
guarantee that we will not be audited by the IRS or that tax adjustments will
not be made. The rights of a unitholder owning less than a 1% profits interest
in us to participate in the income tax audit process are very limited. Further,
any adjustments in our tax returns will lead to adjustments in the unitholders'
tax returns and may lead to audits of unitholders' tax returns and adjustments
of items unrelated to us. Each unitholder would bear the cost of any expenses
incurred in connection with an examination of the unitholder's personal tax
return.
Tax gain or loss on disposition of common units could be different than
expected.
A unitholder who sells common units will recognize gain or loss equal to the
difference between the amount realized, including the unitholder's share of our
nonrecourse liabilities, and the unitholder's adjusted tax basis in the common
units. Prior distributions in excess of cumulative net taxable income allocated
for a common unit which decreased a unitholder's tax basis in that common unit
will, in effect, become taxable income if the common unit is sold at a price
greater than the unitholder's tax basis in that common unit, even if the price
is less than the unit's original cost. A portion of the amount realized,
whether or not representing gain, may be ordinary income. Furthermore, should
the IRS successfully contest some conventions used by us, a unitholder could
recognize more gain on the sale of common units than would be the case under
those conventions, without the benefit of decreased income in prior years.
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The reporting of partnership tax information is complicated and subject to
audits.
We will furnish each unitholder with a Substitute Schedule K-1 that sets
forth the unitholder's share of our income, gains, losses and deductions. In
preparing these schedules, we will use various accounting and reporting
conventions and adopt various depreciation and amortization methods. We cannot
guarantee that these schedules will yield a result that conforms to statutory
or regulatory requirements or to administrative pronouncements of the IRS.
Further, our tax return may be audited, which could result in an audit of a
unitholder's individual tax return and increased liabilities for taxes because
of adjustments resulting from the audit.
Because our taxable year ends on September 30, a calendar-year unitholder
who sells units during the period from October 1 to December 31 may have to
include more than twelve months of income on a single tax return. The
Substitute Schedule K-1 with respect to the income allocated to the period from
October 1 to the date of sale will not be available for up to fifteen months
after the end of the calendar year even though such income is includable on the
unitholder's tax return for the calendar year in which the sale is made.
There is a possibility of loss of tax benefits relating to nonconformity of
common units and nonconforming depreciation conventions.
Because we cannot match transferors and transferees of common units,
uniformity of the tax characteristics of the common units to a purchaser of
common units of the same class must be maintained. To maintain uniformity and
for other reasons, we have adopted certain depreciation and amortization
conventions which we believe conform to Treasury Regulations under Section
743(b) of the Internal Revenue Code. A successful challenge to those
conventions by the IRS could adversely affect the amount of tax benefits
available to a purchaser of common units and could have a negative impact on
the value of the common units.
Holders of common units will likely be subject to state, local and other
taxes in states where holders of common units live or as a result of an
investment in the common units.
In addition to United States federal income taxes, unitholders will likely
be subject to other taxes, such as state and local taxes, unincorporated
business taxes and estate, inheritance or intangible taxes that are imposed by
the various jurisdictions in which the unitholder resides or in which we do
business or own property. A unitholder will likely be required to file state
and local income tax returns and pay state and local income taxes in some or
all of the various jurisdictions in which we do business or own property and
may be subject to penalties for failure to comply with those requirements. It
is the responsibility of each unitholder to file all applicable United States
federal, state and local tax returns. Our tax counsel has not rendered an
opinion on the tax consequences of an investment in us other than with regard
to the United States federal income tax consequences.
Holders of common units may have negative tax consequences if we default on
our debt or sell assets.
If we default on any of our debt, the lenders will have the right to sue us
for non-payment. This could cause an investment loss and negative tax
consequences for unitholders through the realization of taxable income by
unitholders without a corresponding cash distribution. Likewise, if we were to
dispose of assets and realize a taxable gain while there is substantial debt
outstanding and proceeds of the sale were applied to the debt, our unitholders
could have increased taxable income without a corresponding cash distribution.
USE OF PROCEEDS
We will use the net proceeds from our sale of the common units for general
business purposes, including repayment of the operating partnership's debt,
future acquisitions, capital expenditures and working capital. We may change
the potential uses of the net proceeds in a prospectus supplement. We will not
receive any proceeds from the sale of common units by the offering unitholder
named in this prospectus.
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DESCRIPTION OF COMMON UNITS
General
The common units represent limited partner interests that entitle the
holders to participate in AmeriGas Partners' distributions and exercise the
rights and privileges available to limited partners under our partnership
agreement.
Number of Units
As of October 31, 2001, we had 37,111,239 common units outstanding and
9,891,072 subordinated units outstanding. As of October 31, 2001, the public,
including the offering unitholder, owned an effective 46.9% economic interest
in us, and our general partner and its subsidiary owned an effective 53.1%
economic interest in us consisting of all of the subordinated units, 14,633,932
common units, a 1.0% general partner interest in us and a 1.0101% general
partner interest in AmeriGas Propane, L.P.
Under our partnership agreement we generally may issue, without further
unitholder action, an unlimited number of additional limited partner interests
and other equity securities with such rights, preferences and privileges as
shall be established by our general partner in its sole discretion, including
securities that may have special rights to which holders of common units are
not entitled. During the subordination period, however, there are restrictions
on the number of common units and parity securities that we may issue without
the prior approval of at least a majority of the outstanding common units. This
limitation does not apply to the issuance of common units or parity securities
in connection with certain accretive acquisitions or the repayment of certain
indebtedness. See "Subordination Period," below.
Listing
Our common units are listed on the New York Stock Exchange under the symbol
"APU." Any additional common units we issue will also be listed on the New York
Stock Exchange.
Voting
Each record holder has a vote according to his percentage interest in
AmeriGas Partners. Our partnership agreement provides, however, that any person
or group (other than our general partner and its affiliates) that owns
beneficially 20% or more of all of the outstanding common units cannot vote on
any matter, and those common units will not be considered to be outstanding
when we send notices of a meeting of unitholders, calculate required votes,
determine the presence of a quorum or take other similar actions under our
partnership agreement, unless otherwise required by law. Except as otherwise
provided by law or our partnership agreement, the holders of common units and
subordinated units vote as one class.
Cash Distributions
In General
Our partnership agreement requires us to distribute all of our available
cash to our unitholders and our general partner within 45 days following the
end of each fiscal quarter. "Available cash" generally means, with respect to
any fiscal quarter, all cash on hand at the end of each quarter, plus all
additional cash on hand as of the date of the determination of available cash
resulting from borrowings after the end of the quarter, less the amount of
reserves established by our general partner in its reasonable discretion to
provide for the proper conduct of our business, to comply with applicable law
or agreements, or to provide funds for future distributions to partners.
Cash distributions will be made either from "operating surplus" or from
"capital surplus." Available cash from operating surplus is distributed
differently from available cash from capital surplus.
15
"Operating surplus," with respect to any period, generally means:
. our cash balance on the closing date of our initial public offering
plus $40 million, plus all of our cash receipts since the closing of our
initial public offering, excluding cash receipts from interim capital
transactions (as defined below), plus working capital borrowings after the
end of such period, less
. all of our operating expenses, the payment of certain of our
indebtedness, maintenance capital expenditures and reserves established for
future operations, in each case since the closing of our initial public
offering.
Interim capital transactions generally include borrowings (other than for
working capital purposes), sales of debt and equity securities and sales or
other dispositions of assets for cash, other than sales of inventory in the
ordinary course of business, sales of other current assets and sales of assets
as part of normal retirements or replacements.
All available cash distributed is treated as distributed from operating
surplus until the sum of all available cash distributed since our initial
public offering equals the operating surplus as of the end of the quarter
before that distribution. Any available cash distributed in excess of operating
surplus will be treated as having been distributed from capital surplus.
If capital surplus is distributed on a common unit issued in the initial
public offering in an aggregate amount equal to the initial public offering
price of the common units of $21.25 per common unit, plus any arrearages in the
payment of the minimum quarterly distribution on the common units, then the
distinction between operating surplus and capital surplus will cease and all
subsequent distributions of available cash will be made from operating surplus.
Historically, we have not made any distributions of available cash from capital
surplus and we do not expect to do so in the foreseeable future.
Subordination Period
Currently, the common unitholders have the right to receive distributions of
available cash from operating surplus in an amount equal to the minimum
quarterly distribution of $0.55 per unit per quarter, plus any arrearages on
the common units, before any distributions of available cash from operating
surplus are made to the subordinated unitholders. If distributions from
available cash from operating surplus on the common units for any quarter
during the subordination period are less than $0.55 per unit, holders of common
units will be entitled to arrearages. Common unit arrearages will accrue and be
paid in a future quarter if there is available cash from operating surplus
remaining after the minimum quarterly distribution on the common units is paid
for that quarter from available cash from operating surplus. Common units will
not accrue arrearages for any quarter after the subordination period, and
subordinated units will not accrue any arrearages at any time.
The subordination period will extend until the first day of any quarter that
each of the following tests is met:
. distributions of available cash from operating surplus on each of the
outstanding common units and subordinated units equaled or exceeded the
minimum quarterly distribution for each of the four consecutive
non-overlapping four-quarter periods immediately preceding that date;
. the "adjusted operating surplus" generated during each of the two
immediately preceding, non-overlapping four-quarter periods and during the
immediately preceding sixteen-quarter period equaled or exceeded the minimum
quarterly distribution on each of the outstanding common units and
subordinated units during those periods; and
. there are no arrearages in payment of the minimum quarterly
distribution on the common units.
"Adjusted operating surplus" for any period generally means:
. operating surplus generated during that period; less
16
. any net increase in working capital borrowings during that period; less
. any net reduction in cash reserves during that period; plus
. any net increases in reserves to provide funds for distributions resulting
from operating surplus generated during the period.
Generally speaking, adjusted operating surplus is intended to reflect the cash
generated from operations during a particular period and therefore excludes net
increases in borrowings and net drawdowns of reserves of cash generated in
prior periods.
Upon the expiration of the subordination period, all remaining subordinated
units will convert into common units and will thereafter participate pro rata
with the other common units in distributions of available cash. In addition, if
our general partner is removed other than for cause, the subordination period
will end, any then-existing arrearages on the common units will terminate and
the subordinated units will immediately convert into common units.
Pursuant to the partnership agreement, a total of 9,891,074 subordinated
units held by the general partner and one of its subsidiaries were converted to
common units on May 18, 1999. Our ability to attain the cash-based performance
and distribution requirements described above and necessary to terminate the
subordination period and convert the remaining 9,891,072 subordinated units
depends upon a number of factors, including highly seasonal operating results,
changes in working capital, asset sales and debt refinancings. Due to
significantly warmer-than-normal weather in years prior to fiscal 2001 and the
impact of higher propane product costs on working capital, we have not yet
achieved the cash-based performance requirements for conversion of the
remaining subordinated units. Due to the historical "look-back" provisions of
the conversion test, the possibility is remote that we will satisfy the
cash-based performance requirements for conversion any earlier than in respect
of the quarter ending September 30, 2002.
Distributions of Available Cash from Operating Surplus
During the subordination period, we will distribute available cash from
operating surplus for each quarter as follows:
. first, 98% to the holders of common units, pro rata, and 2% to the
general partner, until the holders of common units have received the minimum
quarterly distribution of $0.55 per common unit for the quarter;
. second, 98% to the holders of common units, pro rata, and 2% to the
general partner, until the holders of common units have received an amount
equal to any arrearages in payment of the minimum quarterly distribution on
the common units for any prior quarters during the subordination period;
. third, 98% to the holders of subordinated units, pro rata, and 2% to
the general partner, until the holders of subordinated units have received
the minimum quarterly distribution of $0.55 per subordinated unit for the
quarter;
. fourth, 98% to all unitholders, pro rata, and 2% to the general
partner, until all unitholders have received the first target distribution,
resulting in a total of $0.605 per unit for that quarter;
. fifth, 85% to all unitholders, pro rata, and 15% to the general
partner, until all unitholders have received the second target distribution,
resulting in a total of $0.696 per unit for that quarter;
. sixth, 75% to all unitholders, pro rata, and 25% to the general
partner, until all unitholders have received the third target distribution,
resulting in a total of $0.904 per unit for that quarter; and
. thereafter, 50% to all unitholders, pro rata, and 50% to the general
partner.
17
Following the end of the subordination period, we will distribute available
cash from operating surplus as follows:
. first, 98% to all unitholders, pro rata, and 2% to the general partner,
until the unitholders have received the first target distribution, resulting
in $0.605 per unit for the quarter;
. second, 85% to all unitholders, pro rata, and 15% to the general
partner, until all unitholders have received the second target distribution,
resulting in a total of $0.696 per unit for that quarter;
. third, 75% to all unitholders, pro rata, and 25% to the general
partner, until all unitholders have received the third target distribution,
resulting in a total of $0.904 per unit for that quarter; and
. thereafter, 50% to all unitholders, pro rata, and 50% to the general
partner.
Transfer Restrictions
Common units are securities and are transferable according to the laws
governing the transfer of securities. Until the transfer of a common unit has
been registered on our books, we will treat the record holder as the absolute
owner for all purposes. Transfers of common units will not be recorded by the
transfer agent or recognized by us until the transferee executes and delivers a
transfer application. A purchaser or transferee of common units who does not
execute and deliver a transfer application (i) will not receive cash
distributions, unless the common units are held in nominee or "street" name and
the nominee or broker has executed and delivered a transfer application with
respect to the common units, and (ii) may not receive federal income tax
information and reports furnished to record holders of common units. We have
discretion to withhold consent to transfer.
Transfer Agent and Registrar
Our transfer agent and registrar for the common units is Mellon Investor
Services LLC. Their address is Overpeck Centre, 85 Challenger Road, Ridgefield
Park, New Jersey 07660.
TAX CONSIDERATIONS
This section is a summary of material tax considerations that may be
relevant to prospective unitholders. The following portion of this section and
the opinions of Baker Botts L.L.P., our tax counsel, that are set out herein
are based upon the Internal Revenue Code of 1986, as amended, regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change. Subsequent changes in such authorities may cause the tax
consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
federal income tax matters affecting us or the unitholders. Moreover, the
discussion focuses on unitholders who are individuals and who are citizens or
residents of the United States and has only limited application to
corporations, estates, trusts, non-resident aliens or other unitholders subject
to specialized tax treatment, such as tax-exempt institutions, foreign persons,
individual retirement accounts, REITs or mutual funds. Accordingly, each
prospective unitholder should consult, and should depend on, his or her own tax
advisor in analyzing the federal, state, local and foreign tax consequences of
the ownership or disposition of common units.
Legal Opinions and Advice
Our tax counsel is of the opinion, subject to the qualifications set forth
in the discussion that follows, that for federal income tax purposes (i)
AmeriGas Partners and the operating partnership will be treated as a
partnership and (ii) owners of common units, with certain exceptions as
described in "Partner Status" below, will be treated as partners of AmeriGas
Partners. In addition, all statements as to matters of law contained in this
section are the opinion of Baker Botts L.L.P. unless such statements are made
by us or others.
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An opinion of counsel represents only that particular counsel's best legal
judgment and does not bind the IRS or the courts. No assurance can be provided
that the opinions and statements set forth herein would be sustained by a court
if contested by the IRS. Any such contest with the IRS may materially and
adversely impact the market for the common units and the prices at which common
units trade even if we prevail. In addition, the costs of any contest with the
IRS will be borne directly or indirectly by the unitholders and our general
partner. Furthermore, no assurance is given that the federal income tax
consequences of an investment in us will not be significantly modified by
future legislative or administrative changes or court decisions. Any such
modification may even have retroactive effect.
We have not requested, and do not expect to request, a ruling from the IRS
with respect to our classification as a partnership for federal income tax
purposes or with respect to any other matter affecting us or holders of our
common units.
Partnership Status
A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account his share of
the items of income, gain, loss and deduction of the partnership in computing
his federal income tax liability, regardless of whether distributions are made.
Distributions of cash by a partnership to a partner are generally not taxable
unless the amount of cash distributed to a partner is in excess of the
partner's tax basis in his partnership interest.
Baker Botts L.L.P. is of the opinion that, based upon the authorities that
are identified above, we and the operating partnership have been and will each
be classified as a partnership for federal income tax purposes provided that:
(a) Neither we nor the operating partnership has elected or will elect to
be treated as a corporation.
(b) We and the operating partnership have been and will be operated in
accordance with (i) all applicable partnership statutes and (ii) the
partnership agreement or operating partnership agreement (whichever is
applicable).
(c) For each of our taxable years from and after our formation, more than
90% of our gross income has been and will be derived (i) from the
exploration, development, production, processing, refining, transportation
or marketing of any mineral or natural resource, including oil, gas or
products thereof, or (ii) from other items of "qualifying income" within the
meaning of Section 7704(d) of the Internal Revenue Code.
AmeriGas Partners believes that such assumptions have been true in the past and
expects that such assumptions will be true in the future.
Section 7704 of the Internal Revenue Code provides that publicly traded
partnerships will, as a general rule, be taxed as corporations. However, an
exception exists with respect to publicly traded partnerships of which 90% or
more of the gross income for every taxable year consists of "qualifying
income," as described in clause (c) above. If we fail to meet this qualifying
income exception in any taxable year, other than a failure that is determined
by the IRS to be inadvertent and which is cured within a reasonable time after
discovery, we will be treated as if we transferred all of our assets (subject
to liabilities) to a newly formed corporation, on the first day of such taxable
year in return for stock in that corporation, and as though we then distributed
that stock to our partners in liquidation of their interests in us. This
contribution and liquidation should be tax-free to our partners and to us, so
long as we do not have liabilities at that time in excess of the tax basis of
our assets. Thereafter, we would be treated as a corporation for federal income
tax purposes.
If we or the operating partnership were treated as a corporation in any
taxable year, either as a result of a failure to meet the qualifying income
exception or otherwise, our net income would be taxed at corporate rates.
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In addition, any distribution we made to a unitholder would be treated as
taxable dividend income to the extent of our current or accumulated earnings
and profits, would then be treated in the absence of earnings and profits as a
nontaxable return of capital, to the extent of the unitholder's tax basis in
his common units, and would thereafter be treated as taxable capital gain after
the unitholder's tax basis in the common units is reduced to zero. Accordingly,
treatment of either us or the operating partnership as a corporation would
result in a material reduction in a unitholder's cash flow and after-tax return
and thus would likely result in a substantial reduction of the value of the
common units.
The discussion below is based on the assumption that we and the operating
partnership will be classified as a partnership for federal income tax purposes.
Tax Treatment of Unitholders
Partner Status
Unitholders who have become our limited partners will be treated as our
partners for federal income tax purposes. Assignees who have executed and
delivered transfer applications, and are awaiting admission as limited partners
and unitholders whose common units are held in street name or by a nominee and
who have the right to direct the nominee in the exercise of the rights
attendant to the ownership of their common units will be treated as our
partners for federal income tax purposes. Because there is no direct authority
addressing assignees of common units who are entitled to execute and deliver
transfer applications but who fail to do so, such assignees may not be treated
as our partners for federal income tax purposes. No part of our income, gain,
deductions or losses is reportable by a unitholder who is not a partner for
federal income tax purposes, and any distributions received by such a
unitholder should therefore be fully taxable as ordinary income. These holders
should consult their own tax advisors with respect to their status as our
partners for federal income tax purposes.
An owner of common units whose common units have been transferred to a short
seller to complete a short sale would appear to lose his status as a partner
with respect to such common units for federal income tax purposes. If such a
person is not a partner, no part of our income, gain, deduction or loss with
respect to those common units would be reportable by that person, any payments
received by that person in lieu of cash distributions with respect to those
common units would be fully taxable and all of such payments would appear to be
treated as ordinary income. Unitholders desiring to assure their status as
partners should modify any applicable brokerage account agreements to prohibit
their brokers from borrowing their common units.
In the following portion of this section, the word "unitholder" refers to a
holder of our common units who is one of our partners.
Allocation of Partnership Income, Gain, Loss and Deduction
In general, if we have a net profit, our items of income, gain, loss and
deduction will be allocated among the general partner and the unitholders in
accordance with their respective percentage interests in us. At any time that
distributions are made with respect to the common units and not to the
subordinated units, or that the general partner receives distributions that
exceed 2% of the total distributions, gross income will be allocated to the
holders of common units to the extent of the distributions that were not made
to the holders of subordinated units and to the general partner to the extent
of the distributions that exceed 2% of total distributions. If we have a net
loss, our items of income, gain, loss and deduction will generally be allocated
to the general partner and the unitholders in accordance with their respective
percentage interests.
Certain items of our income, gain, loss or deduction will be allocated as
required or permitted by Section 704(c) of the Internal Revenue Code to account
for the difference between the tax basis and fair market value of property
heretofore contributed to us. Allocations may also be made to account for the
difference between the fair market value of our assets and their tax basis at
the time of any offering made pursuant to this prospectus.
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In addition, certain items of recapture income which we recognize on the
sale of any of our assets will be allocated to the extent provided in
regulations which generally require such depreciation recapture to be allocated
to the partner who (or whose predecessor in interest) was allocated the
deduction giving rise to the treatment of such gain as recapture income.
Alternative Minimum Tax
Each unitholder will be required to take into account his share of our items
of income, gain, loss or deduction for purposes of the alternative minimum tax.
A portion of our depreciation deductions may be treated as an item of tax
preference for this purpose. A unitholder's alternative minimum taxable income
derived from us may be higher than his share of our net income because we may
use accelerated methods of depreciation for federal income tax purposes.
Prospective unitholders should consult their tax advisors as to the impact of
an investment in common units on their liability for the alternative minimum
tax.
Treatment of Distributions by AmeriGas Partners
Our distributions to a unitholder generally will not be taxable to him for
federal income tax purposes to the extent of the tax basis he has in his common
units immediately before the distribution. Our distributions in excess of a
unitholder's tax basis generally will be gain from the sale or exchange of the
common units, taxable in accordance with the rules described under "Disposition
of Common Units," below. Any reduction in a unitholder's share of our
liabilities for which no partner, including the general partner, bears the
economic risk of loss ("nonrecourse liabilities") will be treated as a
distribution of cash to that unitholder. In particular, our issuance of
additional common units will decrease each unitholder's share of our
nonrecourse liabilities.
To the extent that our distributions cause the "at risk" amount of a
unitholder who is subject to the "at risk" rules to be less than zero at the
end of any taxable year, such unitholder must recapture losses deducted in
previous years that are equal to the amount of such shortfall.
A non-pro rata distribution of money or property may result in ordinary
income to a unitholder if such distribution reduces the unitholder's share of
our "unrealized receivables," including depreciation recapture or substantially
appreciated "inventory items," both as defined in Section 751 of the Internal
Revenue Code (collectively, "Section 751 assets"). In that event, the
unitholder will be treated as having received as a distribution the portion of
the Section 751 assets that used to be allocated to such partner and as having
exchanged such portion of our assets with us in return for the non-pro rata
portion of the actual distribution made to him. This latter deemed exchange
will generally result in the unitholder's realization of ordinary income the
amount of which is the excess of (1) the non-pro rata portion of such
distribution over (2) the unitholder's tax basis for the share of such Section
751 assets deemed relinquished in the exchange.
Basis of Common Units
A unitholder will have an initial tax basis for his common units equal to
the amount he paid for the common units plus his share of our nonrecourse
liabilities. His basis will be increased by his share of our income and by any
increase in his share of our nonrecourse liabilities. His basis will be
decreased, but not below zero, by his share of our distributions, by his share
of our losses, by any decrease in his share of our nonrecourse liabilities and
by his share of our expenditures that are not deductible in computing our
taxable income and are not required to be capitalized.
Limitations on Deductibility of AmeriGas Partners' Losses
The deduction by a unitholder of that unitholder's share of our losses will
be limited to the amount of that unitholder's tax basis in the common units
and, in the case of an individual unitholder or a corporate unitholder who is
subject to the "at risk" rules, to the amount for which the unitholder is
considered to be "at risk" with
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respect to our activities, if that is less than the unitholder's tax basis. A
unitholder must recapture losses deducted in previous years to the extent that
our distributions cause the unitholder's at risk amount to be less than zero at
the end of any taxable year. Losses disallowed to a unitholder or recaptured as
a result of these limitations will carry forward and will be allowable to the
extent that the unitholder's tax basis or at risk amount, whichever is the
limiting factor, subsequently increases. Upon the taxable disposition of a
common unit, any gain recognized by a unitholder can be offset by losses that
were previously suspended by the at risk limitation but may not be offset by
losses suspended by the basis limitation.
In general, a unitholder will be at risk to the extent of the unitholder's
tax basis in the unitholder's common units, excluding any portion of that basis
attributable to the unitholder's share of our nonrecourse liabilities, reduced
by any amount of money the unitholder borrows to acquire or hold the
unitholder's common units if the lender of such borrowed funds owns an interest
in us, is related to such a person or can look only to common units for
repayment. A unitholder's at risk amount will increase or decrease as the tax
basis of the unitholder's common units increases or decreases, other than tax
basis increases or decreases attributable to increases or decreases in the
unitholder's share of our nonrecourse liabilities.
The passive loss limitations generally provide that individuals, estates,
trusts, certain closely-held corporations and personal service corporations can
deduct losses from passive activities, which include any trade or business
activity in which the taxpayer does not materially participate, only to the
extent of the taxpayer's income from those passive activities. Moreover, the
passive loss limitations are applied separately with respect to each publicly
traded partnership. Consequently, any passive losses generated by us will only
be available to our partners who are subject to the passive loss rules to
offset future passive income generated by us and, in particular, will not be
available to offset income from other passive activities, investments or
salary. Passive losses that are not deductible because they exceed a
unitholder's share of our income may be deducted in full when the unitholder
disposes of the unitholder's entire investment in us in a fully taxable
transaction to an unrelated party. The passive activity loss rules are applied
after other applicable limitations on deductions such as the at risk rules and
the basis limitation.
Limitations on Interest Deductions
The deductibility of a non-corporate taxpayer's "investment interest
expense" is generally limited to the amount of such taxpayer's "net investment
income." The IRS has announced that Treasury Regulations will be issued to
characterize net passive income from a publicly traded partnership as
investment income for purposes of the limitations on the deductibility of
investment interest. In addition, the unitholder's share of our portfolio
income will be treated as investment income. Investment interest expense
includes (i) interest on indebtedness properly allocable to property held for
investment, (ii) our interest expense attributed to portfolio income, and (iii)
the portion of interest expense incurred to purchase or carry an interest in a
passive activity to the extent attributable to portfolio income. The
computation of a unitholder's investment interest expense will take into
account interest on any margin account borrowing or other loan incurred to
purchase or carry a common unit. Net investment income includes gross income
from property held for investment and amounts treated as portfolio income
pursuant to the passive loss rules less deductible expenses, other than
interest, directly connected with the production of investment income and
certain gains attributable to the disposition of property held for investment.
Tax Treatment of Operations
Accounting Method and Taxable Year
We currently use the year ending September 30 as our taxable year and we
have adopted the accrual method of accounting for federal income tax purposes.
Each unitholder will be required to include in income for each of the
unitholder's taxable years the unitholder's share of our income, gain, loss and
deduction for each of our taxable years that ends within or with each taxable
year. In addition, a unitholder who disposes of all of the unitholder's common
units following the close of our taxable year but before the close of the
unitholder's taxable
22
year must include the unitholder's share of our income, gain, loss and
deduction in income for the unitholder's taxable year with the result that the
unitholder will be required to report in income for the unitholder's taxable
year the unitholder's share for more than one year of our income, gain, loss
and deduction.
Initial Tax Basis, Depreciation, Amortization and Certain Nondeductible Items
We use the adjusted tax basis of our various assets for purposes of
computing depreciation and cost recovery deductions and gain or loss on any
disposition of such assets. If we dispose of depreciable property, all or a
portion of any gain may be subject to the recapture rules and taxed as ordinary
income rather than capital gain.
The costs incurred in promoting the issuance of common units (i.e.,
syndication expenses) must be capitalized and cannot be deducted by us
currently, ratably or upon our termination. Uncertainties exist regarding the
classification of costs as organization expenses, which may be amortized, and
as syndication expenses, which may not be amortized, but underwriting discounts
and commissions are treated as syndication costs.
Section 754 Election
We have made the election permitted by Section 754 of the Internal Revenue
Code, which permits us to adjust the tax basis of our assets as to each
purchaser of our common units pursuant to Section 743(b) of the Internal
Revenue Code to reflect the purchaser's purchase price. The Section 743(b)
adjustment is intended to provide a purchaser with the equivalent of an
adjusted tax basis in the purchaser's share of our assets equal to the value of
such share that is indicated by the amount that the purchaser paid for the
common units.
A Section 754 election is advantageous if the transferee's tax basis in the
transferee's common units is higher than such common units' share of the
aggregate tax basis of our assets immediately prior to the transfer because the
transferee would have, as a result of the election, a higher tax basis in the
transferee's share of our assets. Conversely, a Section 754 election is
disadvantageous if the transferee's tax basis in the transferee's common units
is lower than such common units' share of the aggregate tax basis of our assets
immediately prior to the transfer. The Section 754 election is irrevocable
without the consent of the IRS.
We intend to compute the effect of the Section 743(b) adjustment so as to
preserve our ability to determine the tax attributes of a common unit from its
date of purchase and the amount paid therefor. In that regard, we have adopted
depreciation and amortization conventions that we believe conform to Treasury
regulations under Section 743(b) of the Internal Revenue Code.
The calculations involved in the Section 754 election are complex and are
made by us on the basis of certain assumptions as to the value of our assets
and other matters. There is no assurance that the determinations made by us
will prevail if challenged by the IRS and that the deductions resulting from
them will not be reduced or disallowed altogether.
Valuation of AmeriGas Partners' Property and Basis of Properties
The federal income tax consequences of the ownership and disposition of
common units will depend in part on our estimates of the fair market values and
our determinations of the adjusted tax basis of our assets. Although we may
from time to time consult with professional appraisers with respect to
valuation matters, we will make many of the fair market value estimates
ourselves. These estimates and determinations are subject to challenge and will
not be binding on the IRS or the courts. If such estimates or determinations of
basis are subsequently found to be incorrect, the character and amount of items
of income, gain, loss or deductions previously reported by unitholders might
change, and unitholders might be required to adjust their tax liability for
prior years.
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Entity-Level Collections
If we are required or elect under applicable law to pay any federal, state
or local income tax on behalf of any partner, we are authorized to pay those
taxes from our funds. Such payment, if made, will be treated as a distribution
of cash to the partner on whose behalf the payment was made. If the payment is
made on behalf of a person whose identity cannot be determined, we are
authorized to treat the payment as a distribution to a current unitholder.
Disposition of Common Units
Recognition of Gain or Loss
A unitholder will recognize gain or loss on a sale of common units equal to
the difference between the amount realized and the unitholder's tax basis in
the common units sold. A unitholder's amount realized is measured by the sum of
the cash and the fair market value of other property received plus his share of
our nonrecourse liabilities. Because the amount realized includes a
unitholder's share of our nonrecourse liabilities, the gain recognized on the
sale of common units could result in a tax liability in excess of any cash
received from such sale.
Gain or loss recognized by a unitholder, other than a "dealer" in common
units, on the sale or exchange of a common unit will generally be a capital
gain or loss. Capital gain recognized on the sale of common units held for more
than one year will generally be taxed at a maximum rate of 20%. A portion of
this gain or loss (which could be substantial), however, will be separately
computed and will be classified as ordinary income or loss under Section 751 of
the Internal Revenue Code to the extent attributable to assets giving rise to
depreciation recapture or other unrealized receivables or to inventory items
owned by us. Ordinary income attributable to unrealized receivables, inventory
items and depreciation recapture may exceed net taxable gain realized upon the
sale of the common units and will be recognized even if there is a net taxable
loss realized on the sale of the common units. Thus, a unitholder may recognize
both ordinary income and a capital loss upon a disposition of common units. Net
capital loss may offset no more than $3,000 ($1,500 in the case of a married
individual filing a separate return) of ordinary income in the case of
individuals and may only be used to offset capital gain in the case of
corporations.
The IRS has ruled that a partner who acquires interests in a partnership in
separate transactions must combine those interests and maintain a single
adjusted tax basis. Upon a sale or other disposition of less than all of such
interests, a portion of that tax basis must be allocated to the interests sold
based upon relative fair market values. On the other hand, a selling unitholder
who can identify common units transferred with an ascertainable holding period
may elect to use the actual holding period of the common units transferred. A
unitholder electing to use the actual holding period of common units
transferred must consistently use that identification method for all later
sales or exchanges of common units.
Certain provisions of the Internal Revenue Code treat a taxpayer as having
sold an "appreciated" partnership interest, one in which gain would be
recognized if it were sold or assigned at its fair market value, if the
taxpayer or a related person enters into (i) a short sale, (ii) an offsetting
notional principal contract or (iii) a futures or forward contract with respect
to the partnership interest or substantially identical property. Moreover, if a
taxpayer has previously entered into a short sale, an offsetting notional
principal contract or a futures or forward contract with respect to a
partnership interest, the taxpayer will be treated as having sold such position
if the taxpayer or a related person acquires the partnership interest or
substantially similar property.
Allocations Between Transferors and Transferees
In general, we will prorate our annual taxable income and losses on a
monthly basis and such income as so prorated will be subsequently apportioned
among the unitholders in proportion to the number of common units owned by each
of them as of the opening of the principal national securities exchange on
which the common
24
units are then traded on the first business day of the month. However, gain or
loss realized on a sale or other disposition of our assets other than in the
ordinary course of business will be allocated among the unitholders on the date
in the month in which that gain or loss is recognized. As a result, a
unitholder transferring common units in the open market may be allocated
income, gain, loss and deduction accrued after the date of transfer.
If this method is not allowed under the Treasury Regulations, or only
applies to transfers of less than all of the unitholder's interest, our taxable
income or losses might be reallocated among the unitholders. We are authorized
to revise our method of allocation between transferors and transferees, as well
as among partners whose interests otherwise vary during a taxable period, to
conform to a method permitted under future Treasury Regulations.
Notification Requirements
A unitholder who sells or exchanges common units is required to notify us in
writing of that sale or exchange within 30 days after the sale or exchange and
in any event by no later than January 15 of the year following the calendar
year in which the sale or exchange occurred. We are required to notify the IRS
of that transaction and to furnish certain information to the transferor and
transferee. However, these reporting requirements do not apply with respect to
a sale by an individual who is a citizen of the United States and who effects
the sale or exchange through a broker. Additionally, a transferee of a common
unit will be required to furnish a statement to the IRS, filed with the
transferee's income tax return for the taxable year in which the sale or
exchange occurred, that sets forth the amount of the consideration paid for the
common unit. Failure to satisfy these reporting obligations may lead to the
imposition of substantial penalties.
Constructive Termination
AmeriGas Partners will be considered terminated if there is a sale or
exchange of 50% or more of the total interests in our capital and profits
within a 12-month period. Any such termination would result in the closing of
our taxable year for all unitholders. In the case of a unitholder reporting on
a taxable year that does not end with our taxable year, the closing of our
taxable year may result in more than 12 months of our taxable income or loss
being includable in that unitholder's taxable income for the year of
termination. New tax elections required to be made by us, including a new
election under Section 754 of the Internal Revenue Code, must be made
subsequent to a termination and a termination could result in a deferral of our
deductions for depreciation. A termination could also result in penalties if we
were unable to determine that the termination had occurred. Moreover, a
termination might either accelerate the application of, or subject us to, any
tax legislation enacted prior to the termination.
Tax-Exempt Organizations and Certain Other Investors
Ownership of common units by employee benefit plans, other tax-exempt
organizations, non-resident aliens, foreign corporations, other foreign persons
and regulated investment companies raises issues unique to such persons and, as
described below, may have substantially adverse tax consequences. Employee
benefit plans and most other organizations exempt from federal income tax,
including individual retirement accounts and other retirement plans, are
subject to federal income tax on unrelated business taxable income. Much of the
taxable income derived by such an organization from the ownership of a common
unit will be unrelated business taxable income and thus will be taxable to such
a unitholder.
A regulated investment company or "mutual fund" is required to derive 90% or
more of its gross income from interest, dividends, gains from the sale of
stocks or securities or foreign currency or certain related sources. We
anticipate that no significant amount of our gross income will include that
type of income.
Non-resident aliens and foreign corporations, trusts or estates which hold
common units will be considered to be engaged in business in the United States
on account of ownership of common units. As a consequence they will be required
to file federal tax returns in respect of their share of our income, gain, loss
or deduction and pay
25
federal income tax at regular rates on any net income or gain. Generally, a
partnership is required to pay a withholding tax on the portion of the
partnership's income which is effectively connected with the conduct of a
United States trade or business and which is allocable to the foreign partners,
regardless of whether any actual distributions have been made to such partners.
However, under rules applicable to publicly traded partnerships, we will
withhold taxes at the highest marginal rate applicable to individuals on actual
cash distributions made to foreign unitholders. Each foreign unitholder must
obtain a taxpayer identification number from the IRS and submit that number to
our transfer agent, Mellon Investor Services LLC, in order to obtain credit for
the taxes withheld. A change in applicable law may require us to change these
procedures.
Because a foreign corporation that owns common units will be treated as
engaged in a United States trade or business, such a corporation will also be
subject to United States branch profits tax at a rate of 30% (or any applicable
lower treaty rate) of the portion of any reduction in the foreign corporation's
"U.S. net equity," which is the result of our activities. In addition, such a
unitholder is subject to special information reporting requirements under
Section 6038C of the Internal Revenue Code.
Under a ruling by the IRS, gain recognized by a foreign unitholder who sells
or otherwise disposes of a common unit will be subject to federal income tax as
effectively connected with a United States trade or business of the foreign
unitholder in whole or in part. Apart from the ruling, a foreign unitholder
would not be taxed upon the disposition of a common unit if that foreign
unitholder has held 5% or less in value of the common units at all times during
the 5-year period ending on the date of the disposition and if the common units
are regularly traded on an established securities market at the time of the
disposition.
Administrative Matters
Information Returns and Audit Procedures
We intend to furnish to each unitholder, within 75 days after the close of
each calendar year, certain tax information, including a Substitute Schedule
K-1, that sets forth such unitholder's share of our income, gain, loss and
deduction for our preceding taxable year. In preparing this information, which
will generally not be reviewed by counsel, we will use various accounting and
reporting conventions. We cannot assure prospective unitholders that the IRS
will not successfully contend in court that such accounting and reporting
conventions are impermissible. Any such challenge by the IRS could negatively
affect the value of the common units.
The IRS may audit our federal income tax information returns. Adjustments
resulting from any such audit may require each unitholder to adjust a prior
year's tax liability, and possibly may result in an audit of the unitholder's
own return. Any audit of a unitholder's return could result in adjustments not
related to our returns as well as those related to our returns. Partnerships
generally are treated as separate entities for purposes of federal tax audits,
judicial review of administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income, gain, loss and
deduction is determined in a partnership proceeding rather than in separate
proceedings with the partners. The Internal Revenue Code provides for one
partner to be designated as the "tax matters partner" for these purposes. Our
partnership agreement appoints our general partner as our tax matters partner.
The tax matters partner will make certain elections on our behalf and on
behalf of the unitholders and can extend the statute of limitations for
assessment of tax deficiencies against unitholders with respect to items in our
returns. The tax matters partner may bind a unitholder with less than a 1%
profits interest in us to a settlement with the IRS unless that unitholder
elects, by filing a statement with the IRS, not to give such authority to the
tax matters partner. The tax matters partner may seek judicial review, by which
all of the unitholders are bound, of a final partnership administrative
adjustment and, if the tax matters partner fails to seek judicial review, such
review may be sought by any unitholder having at least a 1% interest in our
profits and by unitholders having in the aggregate at least a 5% profits
interest. However, only one action for judicial review will go forward, and
each unitholder with an interest in the outcome may participate. However, if we
elect to be treated as a large
26
partnership, which we do not intend to do, a unitholder will not have a right
to participate in settlement conferences with the IRS or to seek a refund.
A unitholder must file a statement with the IRS identifying the treatment of
any item on his federal income tax return that is not consistent with the
treatment of the item on our return. Intentional or negligent disregard of the
consistency requirement may subject a unitholder to substantial penalties.
Nominee Reporting
Persons who hold an interest in us as a nominee for another person are
required to furnish to us the following information: (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee; (b)
whether the beneficial owner is (i) a person that is not a United States
person, (ii) a foreign government, an international organization or any wholly
owned agency or instrumentality of either of the foregoing, or (iii) a
tax-exempt entity; (c) the amount and description of common units held,
acquired or transferred for the beneficial owner; and (d) certain information
including the dates of acquisitions and transfers, means of acquisitions and
transfers, and acquisition cost for purchases, as well as the amount of net
proceeds from sales. Brokers and financial institutions are required to furnish
additional information, including whether they are United States persons and
certain information on common units that they acquire, hold or transfer for
their own account. A penalty of $50 per failure, up to a maximum of $100,000
per calendar year, is imposed by the Internal Revenue Code for failure to
report such information to us. The nominee is required to supply the beneficial
owner of the common units with the information furnished to us.
Registration as a Tax Shelter
The Internal Revenue Code requires that "tax shelters" be registered with
the Secretary of the Treasury. Although we may not be subject to the
registration requirement on the basis that we do not constitute a tax shelter,
our general partner has registered us as a tax shelter with the Secretary of
the Treasury in light of the substantial penalties which might be imposed if
registration is required and not undertaken. The IRS has issued to us the
following tax shelter registration number: 95-192000149. ISSUANCE OF THE
REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN US OR THE CLAIMED
TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS. We must
furnish the registration number to the unitholders, and a unitholder who sells
or otherwise transfers a common unit in a subsequent transaction must furnish
the registration number to the transferee. The penalty for failure of the
transferor of a common unit to furnish the registration number to the
transferee is $100 for each such failure. The unitholders must disclose our tax
shelter registration number on Form 8271 to be attached to the tax return on
which any deduction, loss or other benefit generated by us is claimed or our
income is included. A unitholder who fails to disclose the tax shelter
registration number on the unitholder's return, without reasonable cause for
that failure, will be subject to a $250 penalty for each failure.
Accuracy-Related Penalties
An additional tax equal to 20% of the amount of any portion of an
underpayment of tax that is attributable to one or more specified causes,
including negligence or disregard of rules or regulations, substantial
understatements of income tax and substantial valuation misstatements, is
imposed by the Internal Revenue Code. No penalty will be imposed, however, with
respect to any portion of an underpayment if it is shown that there was a
reasonable cause for that portion and that the taxpayer acted in good faith
with respect to that portion.
A substantial understatement of income tax in any taxable year exists if the
amount of the understatement exceeds the greater of 10% of the tax required to
be shown on the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to penalty generally is
reduced if any portion is attributable to a position adopted on the return (i)
with respect to which there is, or was, "substantial authority" or (ii) as to
which there is a reasonable basis and the pertinent facts of such position are
disclosed on the return.
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More stringent rules apply to "tax shelters," a term that in this context does
not appear to include us. If any item of our income, gain, loss or deduction
included as a share of our income by a unitholder might result in such an
"understatement" of income for which no "substantial authority" exists, we must
disclose the pertinent facts on our return. In addition, we will make a
reasonable effort to furnish sufficient information for unitholders to make
adequate disclosure on their returns to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any property, or
the adjusted basis of any property, claimed on a tax return is 200% or more of
the amount determined to be the correct amount of such valuation or adjusted
basis. No penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement exceeds $5,000 ($10,000
for most corporations). If the valuation claimed on a return is 400% or more
than the correct valuation, the penalty imposed increases to 40%.
State, Local and Other Tax Considerations
In addition to federal income taxes, a unitholder will be subject to other
taxes, such as state and local income taxes, unincorporated business taxes, and
estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which such unitholder resides or in which we do business or
own property. Although an analysis of those various taxes is not presented
here, each prospective unitholder should consider their potential impact on
such unitholder's investment in us. We currently conduct business in 46 states
including California, New York, Michigan, Florida, Pennsylvania and North
Carolina. A unitholder will be required to file state income tax returns and
to pay state income taxes in some or all of the states in which we do business
or own property and may be subject to penalties for failure to comply with
those requirements. In certain states, tax losses may not produce a tax benefit
in the year incurred and also may not be available to offset income in
subsequent taxable years. Some of the states may require that we, or we may
elect to, withhold a percentage of income from amounts to be distributed to a
unitholder who is not a resident of the state. Our withholding of an amount,
which may be greater or less than a particular unitholder's income tax
liability to the state, generally does not relieve the non-resident unitholder
from the obligation to file an income tax return. Any amount that is withheld
will be treated as distributed to unitholders. Based on current law and our
estimate of future operations, we anticipate that any amounts required to be
withheld will not be material.
It is the responsibility of each unitholder to investigate the legal and tax
consequences of such unitholder's investment in us under the laws of pertinent
states and localities. Accordingly, each prospective unitholder should consult,
and must depend upon, his own tax counsel or other advisor with regard to those
matters. Further, it is the responsibility of each unitholder to file all state
and local, as well as U.S. federal, tax returns that may be required of such
unitholder. Baker Botts L.L.P. has not rendered an opinion on the state or
local tax consequences of an investment in us.
OFFERING UNITHOLDER
In addition to covering our offering of common units, this prospectus also
covers the offering for resale of 2,356,953 common units by the offering
unitholder, Columbia Energy Group. On August 21, 2001, we acquired from
Columbia Energy Group its propane distribution businesses for $201,750,000 in
cash. In connection with the acquisition, Columbia Energy Group acquired
2,356,953 of our common units. We agreed to register the resale by Columbia
Energy Group of its common units. Various subsidiaries of Columbia Energy
Group, which is owned by NiSource Inc., provide natural gas, transportation and
storage to our affiliates, UGI Utilities, Inc. and UGI Energy Services, Inc.
Columbia Energy Group currently owns 2,356,953 common units and may offer
and sell none, some or all of such 2,356,953 units under this prospectus. The
offering unitholder's current ownership amounts to 6.35% of our outstanding
common units.
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PLAN OF DISTRIBUTION
We or the offering unitholder may sell the common units described in this
prospectus and any prospectus supplement to one or more underwriters for public
offering and sale, or we or the offering unitholder may sell the common units
to investors directly or through dealers or agents. Any underwriter, dealer or
agent involved in the offer and sale of these common units will be named in the
applicable prospectus supplement.
The offering unitholder may act independently of us in making decisions with
respect to the timing, manner and size of each of its sales. The offering
unitholder may make sales on the New York Stock Exchange or otherwise, at
prices and under terms prevailing at the time of the sale, or at prices related
to the then-current market price, at fixed prices, or in privately negotiated
transactions. The offering unitholder may sell the common units offered by this
prospectus by one or more of, or a combination of, the following methods:
. purchases by a broker-dealer as principal and resales by such
broker-dealer for its own account pursuant to this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. block trades in which the broker-dealer so engaged will attempt to sell
the common units as agent, but may position and resell a portion of the
block as principal to facilitate the transaction; or
. privately negotiated transactions, which include direct sales to
purchasers and sales effected through agents.
In addition, any common units that qualify for sale under Rule 144 under the
Securities Act may be sold pursuant thereto rather than pursuant to this
prospectus. The offering unitholder may be required by the securities laws of
certain states to offer and sell the common units only through registered or
licensed brokers or dealers.
Underwriters may offer and sell these common units at fixed prices, which
may be changed, at prices related to the prevailing market prices at the time
of sale or at negotiated prices. We or the offering unitholder also may
authorize underwriters acting as our or their agents to offer and sell these
common units upon the terms and conditions as are set forth in the applicable
prospectus supplement. In connection with the sale of these common units,
underwriters may be deemed to have received compensation from us or the
offering unitholder in the form of underwriting discounts or commissions and
may also receive commissions from purchasers of these common units for whom
they may act as agent or to whom they sell as principals, or both. Underwriters
may sell these common units to or through dealers. Dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent or to whom they sell as principals, or both. A member firm of the New
York Stock Exchange may be engaged to act as the offering unitholder's agent in
the sale of common units by the offering unitholder.
Any underwriting compensation paid by us or the offering unitholder to
underwriters or agents in connection with the offering of these common units,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in the applicable prospectus
supplement. Underwriters, dealers and agents participating in the distribution
of these common units may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of these
common units may be deemed to be underwriting discounts and commissions under
the Securities Act of 1933.
We have agreed to indemnify the offering unitholder and each underwriter,
selling agent or other securities professional, if any, against certain
liabilities to which they may become subject in connection with the sale of the
common units owned by the offering unitholder and registered under this
prospectus, including liabilities arising under the Securities Act of 1933.
Agents, underwriters, brokers and dealers may be entitled under agreements
entered into with us to indemnification against certain liabilities, including
liabilities under the Securities Act of 1933.
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If a prospectus supplement so indicates, we or the offering unitholder will
authorize agents, underwriters or dealers to solicit offers by certain
institutional investors to purchase those common units to which such prospectus
supplement relates, providing for payment and delivery on a future date
specified in such prospectus supplement. There may be limitations on the
minimum amount that may be purchased by any institutional investor or on the
number of common units that may be sold pursuant to such arrangements.
Institutional investors include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as we may approve. The obligations of
the purchasers pursuant to such delayed delivery and payment arrangements will
not be subject to any conditions except that (i) the purchase by an institution
of the common units shall not be prohibited under the applicable laws of any
jurisdiction in the United States and (ii) if common units are being sold to
underwriters, we or the offering unitholder shall have sold to such
underwriters the total number of such common units less the number thereof
covered by such arrangements. Underwriters will not have any responsibility in
respect of the validity of such arrangements or our performance or that of such
institutional investors thereunder.
If a prospectus supplement so indicates, the underwriters engaged in an
offering of these common units may make short sales of such common units in
connection with the offering, resulting in the sale by the underwriters of a
greater number of common units than they are required to purchase pursuant to
the underwriting agreement. The short position resulting from those short sales
will be deemed a "covered" short position to the extent that it does not exceed
the number of common units subject to the underwriters' over-allotment option
and will be deemed a "naked" short position to the extent that it exceeds that
number. A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the trading price of the
common units in the open market that could adversely affect investors who
purchased common units in the offering. The underwriters may reduce or close
out their covered short positions either by exercising the over-allotment
option or by purchasing common units in the open market. In determining which
of these alternatives to pursue, the underwriters will consider the price at
which common units are available for purchase in the open market as compared to
the price at which they may purchase common units through the over-allotment
option. Any "naked" short position will be closed out by purchasing common
units in the open market. Similar to the other stabilizing transactions
described below, open market purchases made by the underwriters to cover all or
a portion of their short position may have the effect of preventing or
retarding a decline in the market price of our common units following this
offering. As a result, our common units may trade at a price that is higher
than the price that otherwise might prevail in the open market.
If a prospectus supplement so indicates, the underwriters may, pursuant to
Regulation M under the Securities Exchange Act of 1934, engage in transactions,
including stabilization bids or the imposition of penalty bids, that may have
the effect of stabilizing or maintaining the market price of the common units
at a level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of common units on behalf of the
underwriters for the purpose of fixing or maintaining the price of the common
units. A "penalty bid" is an arrangement permitting the representatives of the
underwriters to recover the selling concession otherwise accruing to an
underwriter or syndicate member in connection with the offering if the common
units originally sold by that underwriter or syndicate member are purchased by
or on behalf of the underwriters in the open market pursuant to a stabilizing
bid or to cover all or part of a syndicate short position. Any stabilizing bids
or open market purchases would be effected on the New York Stock Exchange or
otherwise and, if commenced, could be discontinued at any time.
Certain of the underwriters and their affiliates may be customers of, may
engage in transactions with and may perform services for us or our affiliates
in the ordinary course of business.
A prospectus in electronic form may be made available on the web sites
maintained by the underwriters. The underwriters may agree to allocate a number
of common units for sale to their online brokerage account holders. Such
allocations of common units for Internet distributions will be made on the same
basis as other allocations. In addition, common units may be sold by the
underwriters to securities dealers who resell shares to online brokerage
account holders.
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We will pay all costs and expenses incurred for the registration under the
Securities Act of 1933 of common units to be offered by the offering
unitholder, including without limitation all: (i) registration and filing fees;
(ii) listing fees; (iii) printing expenses; and (iv) fees and distributions of
counsel and accountants for AmeriGas Partners. The offering unitholder will pay
all brokerage fees and commissions, if any, incurred in the sale of common
units owned by the offering unitholder, and will pay all fees and expenses of
counsel retained by the offering unitholder.
LEGAL OPINIONS
Certain legal and tax matters relating to the common units being offered
will be passed upon for us by Morgan, Lewis & Bockius LLP and Baker Botts
L.L.P., Houston, Texas. If certain legal matters in connection with an offering
of common units made by this prospectus and a related prospectus supplement are
passed on by counsel for the underwriters of such offering, that counsel will
be named in the applicable prospectus supplement relating to that offering.
EXPERTS
The audited consolidated financial statements and schedules incorporated by
reference in this prospectus and elsewhere in the registration statements have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
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4,200,000 Common Units
AmeriGas Partners, L.P.
Representing Limited Partner Interests
[LOGO] AmeriGas
America's Propane Company
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PROSPECTUS SUPPLEMENT
December 5, 2001
(Including Prospectus Dated November 30, 2001)
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Salomon Smith Barney
Banc of America Securities LLC
Credit Suisse First Boston
UBS Warburg
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