Form 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010
Commission file number 1-13692
AMERIGAS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
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Delaware
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23-2787918 |
(State or Other Jurisdiction of
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(I.R.S. Employer Identification No.) |
Incorporation or Organization) |
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460 North Gulph Road, King of Prussia, PA 19406
(Address of Principal Executive Offices) (Zip Code)
(610) 337-7000
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
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Name of each Exchange on Which Registered |
Common Units representing limited partner interests
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New York Stock Exchange, Inc. |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
The aggregate market value of AmeriGas Partners, L.P. Common Units held by non-affiliates of
AmeriGas Partners, L.P. on March 31, 2010 was approximately $1,291,747,698. At November 15, 2010,
there were outstanding 57,091,659 Common Units representing limited partner interests.
FORWARD-LOOKING INFORMATION
Information contained in this Annual Report on Form 10-K may contain forward-looking
statements. Such statements use forward-looking words such as believe, plan, anticipate,
continue, estimate, expect, may, will, or other similar words. These statements discuss
plans, strategies, events or developments that we expect or anticipate will or may occur in the
future.
A forward-looking statement may include a statement of the assumptions or bases underlying the
forward-looking statement. We believe that we have chosen these assumptions or bases in good faith
and that they are reasonable. However, we caution you that actual results almost always vary from
assumed facts or bases, and the differences between actual results and assumed facts or bases can
be material, depending on the circumstances. When considering forward-looking statements, you
should keep in mind the following important factors which could affect our future results and could
cause those results to differ materially from those expressed in our forward-looking statements:
(1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability of
propane, and the capacity to transport propane to our customers; (3) the availability of, and our
ability to consummate, acquisition or combination opportunities; (4) successful integration and
future performance of acquired assets or businesses; (5) changes in laws and regulations, including
safety, tax and accounting matters; (6) competitive pressures from the same and alternative energy
sources; (7) failure to acquire new customers thereby reducing or limiting any increase in
revenues; (8) liability for environmental claims; (9) increased customer conservation measures due
to high energy prices and improvements in energy efficiency and technology resulting in reduced
demand; (10) adverse labor relations; (11) large customer, counter-party or supplier defaults; (12)
liability in excess of insurance coverage for personal injury and property damage arising from
explosions and other catastrophic events, including acts of terrorism, resulting from operating
hazards and risks incidental to transporting, storing and distributing propane, butane and ammonia;
(13) political, regulatory and economic conditions in the United States and foreign countries; (14)
capital market conditions, including reduced access to capital markets and interest rate
fluctuations; (15) changes in commodity market prices resulting in significantly higher cash
collateral requirements; (16) the impact of pending and future legal proceedings; and (17) the
timing and success of our acquisitions and investments to grow our business.
These factors are not necessarily all of the important factors that could cause actual results
to differ materially from those expressed in any of our forward-looking statements. Other unknown
or unpredictable factors could also have material adverse effects on future results. We undertake
no obligation to update publicly any forward-looking statement whether as a result of new
information or future events except as required by the federal securities laws.
PART I:
ITEM 1. BUSINESS
General
AmeriGas Partners, L.P. is a publicly traded limited partnership formed under Delaware law on
November 2, 1994. We are the largest retail propane distributor in the United States based on the
volume of propane gallons distributed annually. The Partnership serves approximately 1.3 million
residential, commercial, industrial, agricultural and motor fuel customers in all 50 states from
nearly 1,200 propane distribution locations.
We are a holding company and we conduct our business principally through our subsidiary,
AmeriGas Propane, L.P. (AmeriGas OLP) and its subsidiary, AmeriGas Eagle Propane, L.P. (Eagle
OLP and together with AmeriGas OLP, the Operating Partnership), both Delaware limited
partnerships. Our common units (Common Units), which represent limited partner interests, are
traded on the New York Stock Exchange under the symbol APU. Our executive offices are located at
460 North Gulph Road, King of Prussia, Pennsylvania 19406, and our telephone number is (610)
337-7000. In this report, the terms Partnership and AmeriGas Partners, as well as the terms
our, we, and its, are used sometimes as abbreviated references to AmeriGas Partners, L.P.
itself or collectively, AmeriGas Partners, L.P. and its consolidated subsidiaries, including the
Operating Partnership. The terms Fiscal 2010 and Fiscal 2009 refer to the fiscal years ended
September 30, 2010 and September 30, 2009, respectively. Effective October 1, 2010, Eagle OLP
merged with and into AmeriGas OLP.
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AmeriGas Propane, Inc. is our general partner (the General Partner,) and is responsible for
managing our operations. The General Partner is a wholly owned subsidiary of UGI Corporation
(UGI), a publicly traded company listed on the New York Stock Exchange. The General Partner has
an approximate 44% effective ownership interest in the Partnership.
Business Strategy
Our strategy is to grow by (i) acquisitions and internal sales and marketing programs, (ii)
leveraging our scale and driving productivity, and (iii) achieving world class safety performance.
We regularly consider and evaluate opportunities for growth through the acquisition of local,
regional and national propane distributors. We compete for acquisitions with others engaged in the
propane distribution business. During Fiscal 2010, we completed the acquisition of 15 propane
distribution businesses. We expect that internal growth will be provided in part from the continued
expansion of our AmeriGas Cylinder Exchange (ACE) program through which consumers can purchase or
exchange empty propane grill cylinders at various retail locations, and our Strategic Accounts
program, through which the Partnership encourages large, multi-location propane users to enter into
a supply agreement with us rather than with many small suppliers. In addition, we believe
opportunities exist to grow our business internally through other sales and marketing programs
designed to attract and retain customers.
General Partner Information
The Partnerships website can be found at www.amerigas.com. The Partnership makes available
free of charge at this website (under the tabs Investor Relations, SEC FILINGS) copies of its
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, including its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q and its Current
Reports on Form 8-K. The General Partners Principles of Corporate Governance, Code of Ethics for
the Chief Executive Officer and Senior Financial Officers, Code of Business Conduct and Ethics for
Directors, Officers and Employees, and charters of the Corporate Governance, Audit and
Compensation/Pension Committees of the Board of Directors of the General Partner are also available
on the Partnerships website (under the tab Investor Relations, caption Corporate Governance).
All of these documents are also available free of charge by writing to Hugh J. Gallagher, Director,
Treasury Services and Investor Relations, UGI Corporation, P.O. Box 858, Valley Forge, PA 19482.
Products, Services and Marketing
The Partnership serves approximately 1.3 million customers in all 50 states from nearly 1,200
propane distribution locations. In addition to distributing propane, the Partnership also sells,
installs and services propane appliances, including heating systems. In certain areas, the
Partnership also installs and services propane fuel systems for motor vehicles. Typically, district
locations are found in suburban and rural areas where natural gas is not readily available.
Districts generally consist of an office, appliance showroom, warehouse, and service facilities,
with one or more 18,000 to 30,000 gallon storage tanks on the premises. As part of its overall
transportation and distribution infrastructure, the Partnership operates as an interstate carrier
in 48 states throughout the continental United States. It is also licensed as a carrier in the
Canadian Provinces of Ontario and Quebec.
The Partnership sells propane primarily to residential, commercial/industrial, motor fuel,
agricultural and wholesale customers. The Partnership distributed over one billion gallons of
propane in Fiscal 2010. Approximately 87% of the Partnerships Fiscal 2010 sales (based on gallons
sold) were to retail accounts and approximately 13% were to wholesale customers. Sales to
residential customers in Fiscal 2010 represented approximately 40% of retail gallons sold;
commercial/industrial customers 37%; motor fuel customers 13%; and agricultural customers 5%.
Transport gallons, which are large-scale deliveries to retail customers other than residential,
accounted for 5% of Fiscal 2010 retail gallons. No single customer represents, or is anticipated to
represent, more than 5% of the Partnerships consolidated revenues.
The Partnership continues to expand its AmeriGas Cylinder Exchange (ACE) program. At
September 30, 2010, ACE cylinders were available at approximately 30,000 retail locations
throughout the United States. Sales of our ACE grill cylinders to retailers are included in
commercial/industrial sales. The ACE program enables consumers to purchase or exchange their empty
propane grill cylinders at various retail locations such as home centers, gas stations, mass
merchandisers and grocery and convenience stores. We also supply retailers with large propane tanks
to enable retailers to replenish customers propane grill cylinders directly at the retailers
location.
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Residential customers use propane primarily for home heating, water heating and cooking
purposes. Commercial users, which include motels, hotels, restaurants and retail stores, generally
use propane for the same purposes as residential customers. Industrial customers use propane to
fire furnaces, as a cutting gas and in other process applications. Other industrial customers are
large-scale heating accounts and local gas utility customers who use propane as a supplemental fuel
to meet peak load deliverability requirements. As a motor fuel, propane is burned in internal
combustion engines that power over-the-road vehicles, forklifts and stationary engines.
Agricultural uses include tobacco curing, chicken brooding and crop drying. In its wholesale
operations, the Partnership principally sells propane to large industrial end-users and other
propane distributors.
Retail deliveries of propane are usually made to customers by means of bobtail and rack
trucks. Propane is pumped from the bobtail truck, which generally holds 2,400 to 3,000 gallons of
propane, into a stationary storage tank on the customers premises. The Partnership owns most of
these storage tanks and leases them to its customers. The capacity of these tanks ranges from
approximately 120 gallons to approximately 1,200 gallons. The Partnership also delivers propane in
portable cylinders, including ACE propane grill cylinders. Some of these deliveries are made to the
customers location, where empty cylinders are either picked up or replenished in place.
Propane Supply and Storage
The Partnership has over 250 domestic and international sources of supply, including the spot
market. Supplies of propane from the Partnerships sources historically have been readily
available. During the year ended September 30, 2010, approximately 90% of the Partnerships propane
supply was purchased under supply agreements with terms of 1 to 3 years. The availability of
propane supply is dependent upon, among other things, the severity of winter weather, the price and
availability of competing fuels such as natural gas and crude oil, and the amount and availability
of imported supply. Although no assurance can be given that supplies of propane will be readily
available in the future, management currently expects to be able to secure adequate supplies during
fiscal year 2011. If supply from major sources were interrupted, however, the cost of procuring
replacement supplies and transporting those supplies from alternative locations might be materially
higher and, at least on a short-term basis, margins could be affected. BP Products North America
Inc. and BP Canada Energy Marketing Corp. (collectively), Enterprise Products Operating LP and
Targa Midstream Services LP, supplied approximately 43% of the Partnerships Fiscal 2010 propane
supply. No other single supplier provided more than 10% of the Partnerships total propane supply
in Fiscal 2010. In certain areas, however, a single supplier provides more than 50% of the
Partnerships requirements. Disruptions in supply in these areas could also have an adverse impact
on the Partnerships margins.
The Partnerships supply contracts typically provide for pricing based upon (i) index formulas
using the current prices established at a major storage point such as Mont Belvieu, Texas, or
Conway, Kansas, or (ii) posted prices at the time of delivery. In addition, some agreements provide
maximum and minimum seasonal purchase volume guidelines. The percentage of contract purchases, and
the amount of supply contracted for at fixed prices, will vary from year to year as determined by
the General Partner. The Partnership uses a number of interstate pipelines, as well as railroad
tank cars, delivery trucks and barges, to transport propane from suppliers to storage and
distribution facilities. The Partnership stores propane at various storage facilities and terminals
located in strategic areas across the United States.
Because the Partnerships profitability is sensitive to changes in wholesale propane costs,
the Partnership generally seeks to pass on increases in the cost of propane to customers. There is
no assurance, however, that the Partnership will always be able to pass on product cost increases
fully, particularly when product costs rise rapidly. Product cost increases can be triggered by
periods of severe cold weather, supply interruptions, increases in the prices of base commodities
such as crude oil and natural gas, or other unforeseen events. The General Partner has adopted
supply acquisition and product cost risk management practices to reduce the effect of volatility on
selling prices. These practices currently include the use of summer storage, forward purchases and
derivative commodity instruments, such as options and propane price swaps. See Managements
Discussion and Analysis of Financial Condition and Results of Operations Market Risk
Disclosures.
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The following graph shows the average prices of propane on the propane spot market during the
last 5 fiscal years at Mont Belvieu, Texas, a major storage area.
Average Propane Spot Market Prices
General Industry Information
Propane is separated from crude oil during the refining process and also extracted from
natural gas or oil wellhead gas at processing plants. Propane is normally transported and stored in
a liquid state under moderate pressure or refrigeration for economy and ease of handling in
shipping and distribution. When the pressure is released or the temperature is increased, it is
usable as a flammable gas. Propane is colorless and odorless; an odorant is added to allow for its
detection. Propane is clean burning, producing negligible amounts of pollutants when properly
consumed.
Competition
Propane competes with other sources of energy, some of which are less costly for equivalent
energy value. Propane distributors compete for customers with suppliers of electricity, fuel oil
and natural gas, principally on the basis of price, service, availability and portability.
Electricity is a major competitor of propane, but propane generally enjoys a competitive price
advantage over electricity for space heating, water heating, and cooking. In some areas electricity
may have a competitive price advantage or be relatively equivalent in price to propane due to
government regulated rate caps on electricity. Additionally, high efficiency electric heat pumps
have led to a decrease in the cost of electricity for heating. Fuel oil is also a major competitor
of propane and is generally less expensive than propane. Furnaces and appliances that burn propane
will not operate on fuel oil, and vice versa, and, therefore, a conversion from one fuel to the
other requires the installation of new equipment. Propane serves as an alternative to natural gas
in rural and suburban areas where natural gas is unavailable or portability of product is required.
Natural gas is generally a less expensive source of energy than propane, although in areas where
natural gas is available, propane is used for certain industrial and commercial applications and as
a standby fuel during interruptions in natural gas service. The gradual expansion of the nations
natural gas distribution systems has resulted in the availability of natural gas in some areas that
previously depended upon propane. However, natural gas pipelines are not present in many regions of
the country where propane is sold for heating and cooking purposes.
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For motor fuel customers, propane competes with gasoline and diesel fuel as well as electric
batteries and fuel cells. Wholesale propane distribution is a highly competitive, low margin
business. Propane sales to other retail distributors and large-volume, direct-shipment industrial
end-users are price sensitive and frequently involve a competitive bidding process.
The retail propane industry is mature, with no growth in total demand foreseen in the next
several years. Therefore, the Partnerships ability to grow within the industry is dependent on its
ability to acquire other retail distributors and to achieve internal growth, which includes
expansion of the ACE program and the Strategic Accounts program, as well as the success of its
sales and marketing programs designed to attract and retain customers. The failure of the
Partnership to retain and grow its customer base would have an adverse effect on its long-term
results.
The domestic propane retail distribution business is highly competitive. The Partnership
competes in this business with other large propane marketers, including other full-service
marketers, and thousands of small independent operators. Some rural electric cooperatives and fuel
oil distributors have expanded their businesses to include propane distribution and the Partnership
competes with them as well. The ability to compete effectively depends on providing high quality
customer service, maintaining competitive retail prices and controlling operating expenses. The
Partnership also offers customers various payment and service options, including fixed price and
guaranteed price programs.
In Fiscal 2010, the Partnerships retail propane sales totaled approximately 893 million
gallons. Based on the most recent annual survey by the American Petroleum Institute, 2008 domestic
retail propane sales (annual sales for other than chemical uses) in the United States totaled
approximately 9.3 billion gallons. Based on LP-GAS magazine rankings, 2008 sales volume of the ten
largest propane companies (including AmeriGas Partners) represented approximately 41% of domestic
retail sales.
Trade Names, Trade and Service Marks
The Partnership markets propane principally under the AmeriGas® and Americas
Propane Company® trade names and related service marks. UGI owns, directly or
indirectly, all the right, title and interest in the AmeriGas name and related trade and service
marks. The General Partner owns all right, title and interest in the Americas Propane Company
trade name and related service marks. The Partnership has an exclusive (except for use by UGI,
AmeriGas, Inc. and the General Partner), royalty-free license to use these trade names and related
service marks. UGI and the General Partner each have the option to terminate its respective license
agreement (on 12 months prior notice in the case of UGI), without penalty, if the General Partner
is removed as general partner of the Partnership other than for cause. If the General Partner
ceases to serve as the general partner of the Partnership for cause, the General Partner has the
option to terminate its license agreement upon payment of a fee to UGI equal to the fair market
value of the licensed trade names. UGI has a similar termination option; however, UGI must provide
12 months prior notice in addition to paying the fee to the General Partner.
Seasonality
Because many customers use propane for heating purposes, the Partnerships retail sales volume
is seasonal. Approximately 65% to 70% of the Partnerships retail sales volume occurs, and
substantially all of the Partnerships operating income is earned, during the peak heating season
from October through March. As a result of this seasonality, sales are higher in the Partnerships
first and second fiscal quarters (October 1 through March 31). Cash receipts are generally greatest
during the second and third fiscal quarters when customers pay for propane purchased during the
winter heating season.
Sales volume for the Partnership traditionally fluctuates from year-to-year in response to
variations in weather, prices, competition, customer mix and other factors, such as conservation
efforts and general economic conditions. For historical information on national weather statistics,
see Managements Discussion and Analysis of Financial Condition and Results of Operations.
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Government Regulation
The Partnership is subject to various federal, state and local environmental, safety and
transportation laws and regulations governing the storage, distribution and transportation of
propane and the operation of bulk storage LPG terminals. These laws include, among others, the
Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), the Clean Air Act, the Occupational Safety and Health Act, the Homeland
Security Act of 2002, the Emergency Planning and Community Right to Know Act, the Clean Water Act
and comparable state statutes. CERCLA imposes joint and several liability on certain classes of
persons considered to have contributed to the release or threatened release of a hazardous
substance into the environment without regard to fault or the legality of the original conduct.
Propane is not a hazardous substance within the meaning of federal and most state environmental
laws.
All states in which the Partnership operates have adopted fire safety codes that regulate the
storage and distribution of propane. In some states these laws are administered by state agencies,
and in others they are administered on a municipal level. The Partnership conducts training
programs to help ensure that its operations are in compliance with applicable governmental
regulations. With respect to general operations, National Fire Protection Association (NFPA)
Pamphlets No. 54 and No. 58, which establish a set of rules and procedures governing the safe
handling of propane, or comparable regulations, have been adopted by all states in which the
Partnership operates. Management believes that the policies and procedures currently in effect at
all of its facilities for the handling, storage and distribution of propane are consistent with
industry standards and are in compliance in all material respects with applicable environmental,
health and safety laws.
With respect to the transportation of propane by truck, the Partnership is subject to
regulations promulgated under federal legislation, including the Federal Motor Carrier Safety Act
and the Homeland Security Act of 2002. Regulations under these statutes cover the security and
transportation of hazardous materials and are administered by the United States Department of
Transportation (DOT). The Natural Gas Safety Act of 1968 required the DOT to develop and enforce
minimum safety regulations for the transportation of gases by pipeline. The DOTs pipeline safety
regulations apply to, among other things, a propane gas system which supplies 10 or more
residential customers or 2 or more commercial customers from a single source and a propane gas
system any portion of which is located in a public place. The code requires operators of all gas
systems to provide training and written instructions for employees, establish written procedures to
minimize the hazards resulting from gas pipeline emergencies, and to conduct and keep records of
inspections and testing. Operators are subject to the Pipeline Safety Improvement Act of 2002,
which, among other things, protects employees who provide information to their employers or to the
federal government as to pipeline safety from adverse employment actions.
Employees
The Partnership does not directly employ any persons responsible for managing or operating the
Partnership. The General Partner provides these services and is reimbursed for its direct and
indirect costs and expenses, including all compensation and benefit costs. At September 30, 2010,
the General Partner had approximately 5,800 employees, including approximately 400 part-time,
seasonal and temporary employees, working on behalf of the Partnership. UGI also performs certain
financial and administrative services for the General Partner on behalf of the Partnership and is
reimbursed by the Partnership.
Global Climate Change
There continues to be concern, both nationally and internationally, about climate change and
the contribution of greenhouse gas (GHG) emissions, most notably carbon dioxide, to global
warming. While some states have adopted laws regulating the emission of GHGs for some industry
sectors, there is currently no federal regulation mandating the reduction of GHG emissions in the
United States. In June 2009, the United States House of Representatives passed the American Clean
Energy and Security Act (ACES Act). The ACES Act would establish an economy-wide GHG
cap-and-trade system to reduce GHG emissions over time. The United States Senate has been
considering a number of related proposals, ranging from energy only bills to proposals that place
an economy-wide cap on greenhouse gas emissions. No legislation can be enacted until a final
reconciled bill is approved by both the House of Representatives and
the Senate and signed by the President.
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Even if Congress does not pass legislation mandating GHG emissions reductions, there continue
to be regulatory developments under the Clean Air Act applicable to GHGs. In September 2009, the
Environmental Protection Agency (EPA) issued a final rule establishing a system for mandatory
reporting of GHG emissions. In November 2010, the EPA expanded the reach of its GHG reporting
requirements to include the petroleum and natural gas industries. Petroleum and natural gas
facilities subject to the rule, which include facilities of our natural gas distribution and
electricity generation businesses, are required to begin emissions monitoring in January 2011 and
to submit detailed annual reports beginning in March 2012. The rule does not require affected
facilities to implement GHG emission controls or reductions. In December 2009, the EPA published
its findings that emissions of GHGs constitute an endangerment to public health and the
environment. These findings allow the EPA to adopt and implement regulations that would restrict
emissions of GHGs under existing provisions of the Clean Air Act. Accordingly, the EPA has proposed
two sets of regulations that would limit GHG emissions from new motor vehicles and that would
impose permit requirements for GHG emissions from certain stationary sources. Legal challenges have
been filed against many of EPAs rulemakings, and we are unable to predict the results of those
challenges.
Because propane is considered a clean alternative fuel under the federal Clean Air Act
Amendments of 1990, we anticipate that this will provide us with a competitive advantage over other
sources of energy, such as fuel oil and coal, when new climate change regulations become effective.
In addition, we are in the process of refining and implementing our strategy to identify both our
GHG emissions and our energy consumption in order to be in a position to comply with new
regulations and to take advantage of any opportunities that may arise from the regulation of such
emissions.
ITEM 1A. RISK FACTORS
There are many factors that may affect our business and results of operations. Additional
discussion regarding factors that may affect our businesses and operating results is included
elsewhere in this Report.
Risks Related to Our Business
Decreases in the demand for propane because of warmer-than-normal heating season weather or
unfavorable weather may adversely affect our results of operations.
Because many of our customers rely on propane as a heating fuel, our results of operations are
adversely affected by warmer-than-normal heating season weather. Weather conditions have a
significant impact on the demand for propane for both heating and agricultural purposes.
Accordingly, the volume of propane sold is at its highest during the peak heating season of October
through March and is directly affected by the severity of the winter weather. For example,
historically approximately 65% to 70% of our annual retail propane volumes are sold during these
months. There can be no assurance that normal winter weather in our service territories will occur
in the future.
The agricultural demand for propane is also affected by weather, as dry or warm weather during
the harvest season may reduce the demand for propane. Our ACE operations experience higher volumes
in the spring and summer, mainly due to the grilling season. Sustained periods of unfavorable
weather conditions can negatively affect our ACE revenues. Unfavorable weather conditions may also
cause a reduction in the purchase and use of grills and other propane appliances which could reduce
the demand for our portable propane grill cylinder exchange services.
Our profitability is subject to propane pricing and inventory risk.
The retail propane business is a margin-based business in which gross profits are dependent
upon the excess of the sales price over the propane supply costs. Propane is a commodity, and, as
such, its unit price is subject to volatile fluctuations in response to changes in supply or other
market conditions. We have no control over these market conditions. Consequently, the unit price of
the propane that we and other marketers purchase can change rapidly over a short period of time.
Most of our propane product supply contracts permit suppliers to charge posted prices at the time
of delivery or the current prices established at major storage points such as Mont Belvieu, Texas
or Conway, Kansas. Because our profitability is sensitive to changes in wholesale propane supply
costs, it will be adversely affected if we cannot pass on increases in the cost of propane to our
customers. Due to competitive pricing in the industry, we may not be able to pass on product cost
increases to our customers when product costs rise rapidly, or when our competitors do not raise
their product prices. Finally, market volatility may cause us to sell inventory at less than the
price we purchased it, which would adversely affect our operating results.
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High propane prices can lead to customer conservation and attrition, resulting in reduced demand
for our product.
Prices for propane are subject to volatile fluctuations in response to changes in supply and
other market conditions. During periods of high propane costs our prices generally increase. High
prices can lead to customer conservation and attrition, resulting in reduced demand for our
product.
Volatility in credit and capital markets may restrict our ability to grow, increase the likelihood
of defaults by our customers and counterparties and adversely affect our operating results.
The recent volatility in credit and capital markets may create additional risks to our
business in the future. We are exposed to financial market risk (including refinancing risk)
resulting from, among other things, changes in interest rates and conditions in the credit and
capital markets. Recent developments in the credit markets increase our possible exposure to the
liquidity, default and credit risks of our suppliers, counterparties associated with derivative
financial instruments and our customers. Although we believe that recent financial market
conditions, if they were to continue for the foreseeable future, will not have a significant impact
on our ability to fund our existing operations, such market conditions could restrict our ability
to grow through acquisitions, limit the scope of major capital projects if access to credit and
capital markets is limited or could adversely affect our operating results.
Supplier defaults may have a negative effect on our operating results.
When we enter into fixed-price sales contracts with customers, we typically enter into
fixed-price purchase contracts with suppliers. Depending on changes in the market prices of
products compared to the prices secured in our contracts with suppliers of propane, a default of
one or more of our suppliers under such contracts could cause us to purchase propane at higher
prices which would have a negative impact on our operating results.
We are dependent on our principal propane suppliers, which increases the risks from an interruption
in supply and transportation.
During Fiscal 2010, AmeriGas Propane purchased approximately 82% of its propane needs from ten
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, our earnings could be affected. Additionally, in certain areas, a
single supplier may provide more than 50% of our propane requirements. Disruptions in supply in
these areas could also have an adverse impact on our earnings.
Changes in commodity market prices may have a negative effect on our liquidity.
Depending on the terms of our contracts with suppliers as well as our use of financial
instruments to reduce volatility in the cost of propane, changes in the market price of propane can
create margin payment obligations for us and expose us to an increased liquidity risk.
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 on an equivalent
energy basis. In addition, we cannot predict the effect that the development of alternative energy
sources might have on our operations. We compete for customers against suppliers of electricity,
fuel oil and natural gas.
Electricity is a major competitor of propane, but propane generally enjoys a competitive price
advantage over electricity for space heating, water heating and cooking. Fuel oil is also a major
competitor of propane and is generally less expensive than propane. Furnaces and appliances that
burn propane will not operate on fuel oil and vice versa, and, therefore, 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. As long as natural gas remains a less
expensive energy source than propane, our business will lose customers in each region into which
natural gas distribution systems are expanded. The gradual expansion of the nations natural gas
distribution systems has resulted, and may continue to result, in the availability of natural gas
in some areas that previously depended upon propane.
9
Our ability to increase revenues is adversely affected by the maturity of the retail propane
industry.
The retail propane industry is mature, with no growth in total demand foreseen in the next
several years. Accordingly, we expect that year-to-year industry volumes will be principally
affected by weather patterns. Therefore, our ability to grow within the industry is dependent on
our ability to acquire other retail distributors and to achieve internal growth, which includes
expansion of our ACE and Strategic Accounts programs, as well as the success of our marketing
programs designed to attract and retain customers. Any failure to retain and grow our customer base
would have an adverse effect on our results.
Our ability to grow will be adversely affected if we are not successful in making acquisitions or
integrating the acquisitions we have made.
We have historically expanded our propane business through acquisitions. We regularly consider
and evaluate opportunities for growth through the acquisition of local, regional and national
propane distributors. We may choose to finance future acquisitions with debt, equity, cash or a
combination of the three. We can give no assurances that we will find attractive acquisition
candidates in the future, that we will be able to acquire such candidates on economically
acceptable terms, that we will be able to finance acquisitions on economically acceptable terms,
that any acquisitions will not be dilutive to earnings and distributions or that any additional
debt incurred to finance an acquisition will not affect our ability to make distributions.
To the extent we are successful in making acquisitions, such acquisitions involve a number of
risks, including, but not limited to, the assumption of material liabilities, the diversion of
managements attention from the management of daily operations to the integration of operations,
difficulties in the assimilation and retention of employees and difficulties in the assimilation of
different cultures and practices, as well as in the assimilation of broad and geographically
dispersed personnel and operations. The failure to successfully integrate acquisitions could have
an adverse affect on our business, financial condition and results of operations.
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 often a defendant in legal proceedings and litigation arising in
the ordinary course of business. There can be no assurance that our insurance will be adequate to
protect us from all material expenses related to pending and future claims or that such levels of
insurance will be available in the future at economical prices.
Our net income will decrease if we are required to incur additional costs to comply with new
governmental safety, health, transportation, tax and environmental regulations.
We are subject to various federal, state and local safety, health, transportation, tax 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 such costs will reduce our net income. It is also possible that material
environmental liabilities will be incurred, including those relating to claims for damages to
property and persons.
10
Our operations, capital expenditures and financial results may be affected by regulatory changes
and/or market responses to global climate change.
There continues to be concern, both nationally and internationally, about climate change and
the contribution of greenhouse gas (GHG) emissions, most notably carbon dioxide, to global
warming. In response to this concern, the United States House of Representatives passed the
American Clean Energy and Security Act (ACES Act) in June of 2009 to establish an economy-wide
GHG cap-and-trade system to reduce GHG emissions over time. Subsequently, the United States Senate
has been considering a number of related proposals, ranging from energy only bills to proposals
that place an economy-wide cap on greenhouse gas emissions. No legislation can be enacted until a
final reconciled bill is approved by both the House of
Representatives and the Senate and signed by the President.
Even if Congress does not pass legislation mandating GHG emissions reductions, there continue to be
regulatory developments under the Clean Air Act applicable to GHGs. In September 2009, the
Environmental Protection Agency (EPA) issued a final rule establishing a system for mandatory
reporting of GHG emissions. In November 2010, the EPA expanded the reach of its GHG reporting
requirements to include the petroleum and natural gas industries. Petroleum and natural gas
facilities subject to the rule, which include facilities of our natural gas distribution and
electricity generation businesses, are required to begin emissions monitoring in January 2011 and
to submit detailed annual reports beginning in March 2012. The rule does not require affected
facilities to implement GHG emission controls or reductions. In December 2009, the EPA published
its findings that emissions of GHGs constitute an endangerment to public health and the
environment. These findings allow the EPA to adopt and implement regulations that would restrict
emissions of GHGs under existing provisions of the Clean Air Act. Accordingly, the EPA has proposed
two sets of regulations that would limit GHG emissions from new motor vehicles and that would
impose permit requirements for GHG emissions from certain stationary sources. Legal challenges have
been filed against many of EPAs rulemakings, and we are unable to predict the results of those
challenges.
It is expected that climate change legislation will continue to be part of the legislative and
regulatory discussion for the foreseeable future. Increased regulation of GHG emissions, especially
in the transportation sector, could impose significant additional costs on us and our customers.
The impact of legislation and regulations on us will depend on a number of factors, including (i)
what industry sectors would be impacted, (ii) the timing of required compliance, (iii) the overall
GHG emissions cap level, (iv) the allocation of emission allowances to specific sources, and (v)
the costs and opportunities associated with compliance. At this time, we cannot predict the effect
that climate change regulation may have on our business, financial condition or results of
operations in the future.
Unforeseen difficulties with the implementation or operation of our information systems could
adversely affect our internal controls and our business.
We contracted with third-party consultants to assist us with the design and implementation of
an information system that supports our Order-to-Cash business processes. The efficient execution
of our business is dependent upon the proper functioning of our internal systems. Any significant
failure or malfunction of our information system may result in disruptions of our operations. Our
results of operations could be adversely affected if we encounter unforeseen problems with respect
to the operation of this system.
Risks Inherent in an Investment in Our Common Units
Cash distributions are not guaranteed and may fluctuate with our performance.
Although we distribute all of our available cash each quarter, the amount of cash that we
generate each quarter fluctuates. As a result, we cannot guarantee that we will pay the current
regular quarterly distribution each 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 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. The actual amount of cash that is available to be distributed each quarter will depend
upon numerous factors, including:
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our cash flow generated by operations; |
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the weather in our areas of operation; |
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our borrowing capacity under our bank credit facilities; |
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required principal and interest payments on our debt; |
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fluctuations in our working capital; |
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our cost of acquisitions (including related debt service payments); |
11
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restrictions contained in our debt instruments; |
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our capital expenditures; |
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our issuances of debt and equity securities; |
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reserves made by our General Partner in its discretion; |
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prevailing economic and industry conditions; and |
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financial, business and other factors, a number of which are beyond our control. |
Our General Partner has broad discretion to determine the amount of available cash for
distribution to holders of our equity securities through the establishment and maintenance of cash
reserves, thereby potentially lessening and limiting the amount of available cash eligible for
distribution.
Our General Partner determines the timing and amount of our distributions and has broad
discretion in determining the amount of funds that will be recognized as available cash. Part of
this discretion comes from the ability of our General Partner to establish reserves. Decisions as
to amounts to be reserved have a direct impact on the amount of available cash for distributions
because reserves are taken into account in computing available cash. Each fiscal quarter, our
General Partner may, in its reasonable discretion, determine the amounts to be reserved, subject to
restrictions on the purposes of the reserves. Reserves may be made, increased or decreased for any
proper purpose, including, but not limited to, reserves:
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to comply with terms of any of our agreements or obligations, including the
establishment of reserves to fund the future payment of interest and principal on our debt
securities; |
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to provide for level distributions of cash notwithstanding the seasonality of our
business; and |
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to provide for future capital expenditures and other payments deemed by our General
Partner to be necessary or advisable. |
The decision by our General Partner to establish reserves may limit the amount of cash
available for distribution to holders of our equity securities. Holders of our equity securities
will not receive payments unless we are able to first satisfy our own obligations and the
establishment of any reserves.
Holders of Common Units may experience dilution of their interests.
We may issue an unlimited number of additional limited partner interests and other equity
securities, 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. We also may issue an unlimited number of partnership interests junior
to the Common Units without a unitholder vote. When we issue additional equity securities, a
unitholders 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 power of each previously outstanding unit.
Please read 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.
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 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 effect of these provisions
and the change of control provisions in our debt instruments may be to diminish the price at which
the Common Units will trade under certain circumstances.
12
Restrictive covenants in the agreements governing our indebtedness and other financial obligations
may reduce our operating flexibility.
The various agreements governing our and the Operating Partnerships indebtedness and other
financing transactions restrict quarterly distributions. These agreements contain various negative
and affirmative covenants applicable to us and the Operating Partnership and some of these
agreements require us and the Operating Partnership to maintain specified financial ratios. If we
or the Operating Partnership violate any of these covenants
or requirements, a default may result and distributions would be limited. These covenants
limit our and the Operating Partnerships ability to, among other things:
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incur additional indebtedness; |
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engage in transactions with affiliates; |
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create or incur liens; |
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sell assets; |
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make restricted payments, loans and investments; |
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enter into business combinations and asset sale transactions; and |
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engage in other lines of business. |
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 or its
directors, and our General Partner generally may not be removed except pursuant to the vote of the
holders of not less than two-thirds of the outstanding units. In addition, removal of the general
partner may result in a default under our debt instruments and loan agreements. 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 (but not the obligation) 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. They may also
incur a tax liability upon a sale of their Common Units.
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.
13
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 Partners 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 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:
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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 affect
whether and the extent to which there is sufficient available cash from operating surplus
to make quarterly distributions in a given quarter. In addition, actions by our General
Partner may have the effect of enabling the General Partner to receive distributions that
exceed 2% of total distributions. |
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AmeriGas Partners does not have any employees and relies solely on employees of the
General Partner and its affiliates. |
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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. |
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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. |
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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 arms-length negotiations. |
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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. |
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 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 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.
14
Our General Partner may voluntarily withdraw or sell its general partner interest.
Our General Partner may withdraw as the general partner of AmeriGas Partners and the Operating
Partnership without the approval of our unitholders. Our General Partner may also sell its general
partner interest in AmeriGas Partners and the Operating Partnership without the approval of our
unitholders. Any such withdrawal or sale could have a material adverse effect on us and could
substantially change the management and resolutions of conflicts of interest, as described above.
Tax Risks
The IRS could treat us as a corporation for tax purposes or changes in federal or state laws could
subject us to entity-level taxation, which would substantially reduce the cash available for
distribution to holders of Common Units.
The availability to a common unitholder of the federal income tax benefits of an investment in
the Common Units depends, in large part, on our classification as a partnership for federal income
tax purposes. No ruling from the IRS as to this status has been or is expected to be requested.
If we were classified as a corporation for federal income tax purposes, we would be required
to pay tax on our income at corporate tax rates (currently a 35% federal rate), and distributions
received by the Common Unitholders would generally be taxed a second time as corporate
distributions. Because a tax would be imposed upon us as an entity, the cash available for
distribution to the Common Unitholders would be substantially reduced. Treatment of us as a
corporation would cause a material reduction in the anticipated cash flow and after-tax return to
the Common Unitholders, likely causing a substantial reduction in the value of the Common Units.
The law could be changed so as to cause us to be treated as a corporation for federal income
tax purposes or otherwise to be subject to entity-level taxation. If we become subject to
widespread entity-level taxation for state tax purposes, it could substantially reduce
distributions to our unitholders. Our Partnership Agreement provides that if a law is enacted or
existing law is modified or interpreted in a manner that subjects us to taxation as a corporation
or otherwise subjects us to entity-level taxation for federal, state or local income tax purposes,
certain provisions of our Partnership Agreement will be subject to change. These changes would
include a decrease in the current regular quarterly distribution and the target distribution levels
to reflect the impact of this law on us. Any such reductions could increase our General Partners
percentage of cash distributions and decrease our limited partners percentage of cash
distributions.
States may subject partnerships to entity-level taxation in the future; thereby decreasing the
amount of cash available to us for distributions and potentially causing a decrease in our
distribution levels.
Several states have enacted or are evaluating ways to subject partnerships to entity-level
taxation through the imposition of state income, franchise or other forms of taxation. If
additional states were to impose a tax upon us as an entity, the cash available for distribution to
unitholders would be reduced.
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.
15
A successful IRS contest of the federal income tax positions that we take may adversely affect the
market for Common Units and the costs of any contest will be borne directly or indirectly by the
unitholders and our General Partner.
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 herein 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.
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 unitholders 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 unitholders allocable share of our taxable income or even the tax liability to the
unitholder resulting from that income.
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. Distributions to foreign persons will be reduced by withholding taxes.
There are limits on the deductibility of losses that may adversely affect holders of Common Units.
In the case of taxpayers subject to the passive loss rules (generally, individuals,
closely-held corporations and regulated investment companies), 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 unitholders entire investment in us in a fully taxable transaction with
an unrelated party. A unitholders 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.
Tax gain or loss on disposition of Common Units could be different than expected.
A unitholder who sells Common Units will recognize the gain or loss equal to the difference
between the amount realized, including the unitholders share of our nonrecourse liabilities, and
the unitholders adjusted tax basis in the Common Units. Prior distributions in excess of
cumulative net taxable income allocated for a Common Unit which decreased a unitholders tax basis
in that unit will, in effect, become taxable income if the Common Unit is sold at a price greater
than the unitholders tax basis in that Common Unit, even if the price is less than the units
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 Schedule K-1 that sets forth the unitholders 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 unitholders individual tax return and increased liabilities for taxes because of adjustments
resulting from the audit. 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 unitholders personal tax
return.
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 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of September 30, 2010, the Partnership owned approximately 86% of its district locations.
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, 2010, the Partnership operated a transportation fleet with the following
assets:
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Approximate Quantity & Equipment Type |
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% Owned |
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% Leased |
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1,400 |
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Trailers |
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89 |
% |
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11 |
% |
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300 |
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Tractors |
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13 |
% |
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87 |
% |
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188 |
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Railroad tank cars |
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0 |
% |
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100 |
% |
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2,460 |
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Bobtail trucks |
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14 |
% |
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86 |
% |
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267 |
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Rack trucks |
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1 |
% |
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99 |
% |
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2,125 |
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Service and delivery trucks |
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15 |
% |
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85 |
% |
Other assets owned at September 30, 2010 included approximately 837,000 stationary storage
tanks with typical capacities ranging from 121 to 2,000 gallons and approximately 3.3 million
portable propane cylinders with typical capacities of 1 to 120 gallons. The Partnership also owned
approximately 5,700 large volume tanks with typical capacities of more than 2,000 gallons which are
used for its own storage requirements.
ITEM 3. LEGAL PROCEEDINGS
With the exception of the matters set forth in Note 13 to Consolidated Financial Statements
included in Item 8 of this Report, no material legal proceedings are pending involving the
Partnership, any of its subsidiaries, or any of
their properties, and no such proceedings are known to be contemplated by governmental
authorities other than claims arising in the ordinary course of the Partnerships business.
17
ITEM 4. (REMOVED AND RESERVED)
PART II:
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED SECURITY HOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Each Common Unit represents a limited partner interest in the Partnership. Common Units are
listed on the New York Stock Exchange, which is the principal trading market for such securities,
under the symbol APU. The following table sets forth, for the periods indicated, the high and low
sale prices per Common Unit, as reported on the New York Stock Exchange (NYSE) Composite
Transactions tape, and the amount of cash distributions paid per Common Unit.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Range |
|
|
Cash |
|
2010 Fiscal Year |
|
High |
|
|
Low |
|
|
Distribution |
|
Fourth Quarter |
|
$ |
46.42 |
|
|
$ |
40.38 |
|
|
$ |
0.705 |
|
Third Quarter |
|
|
43.30 |
|
|
|
35.00 |
|
|
$ |
0.705 |
|
Second Quarter |
|
|
42.94 |
|
|
|
38.14 |
|
|
$ |
0.670 |
|
First Quarter |
|
|
40.00 |
|
|
|
34.61 |
|
|
$ |
0.670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Range |
|
|
Cash |
|
2009 Fiscal Year |
|
High |
|
|
Low |
|
|
Distribution |
|
Fourth Quarter |
|
$ |
38.00 |
|
|
$ |
32.95 |
|
|
$ |
0.840 |
(1) |
Third Quarter |
|
|
34.75 |
|
|
|
28.10 |
|
|
|
0.670 |
|
Second Quarter |
|
|
32.60 |
|
|
|
23.37 |
|
|
|
0.640 |
|
First Quarter |
|
|
31.98 |
|
|
|
17.98 |
|
|
|
0.640 |
|
|
|
|
(1) |
|
Includes a one-time distribution of $0.17 from the proceeds of the Partnerships November 13,
2008 sale of its storage facility in California. |
As
of November 15, 2010, there were 1,094 record holders of the Partnerships Common Units.
The Partnership makes quarterly distributions to its partners in an aggregate amount equal to
its Available Cash, as defined in the Fourth Amended and Restated Agreement of Limited Partnership
of AmeriGas Partners, L.P. (the Partnership Agreement). Available Cash generally means, with
respect to any fiscal quarter of the Partnership, all cash on hand at the end of such quarter, plus
all additional cash on hand as of the date of determination resulting from borrowings subsequent to
the end of such quarter, less the amount of cash reserves established by the General Partner in its
reasonable discretion for future cash requirements. Certain reserves are maintained to provide for
the payment of principal and interest under the terms of the Partnerships debt agreements and
other reserves may be maintained to provide for the proper conduct of the Partnerships business,
and to provide funds for distribution during the next four fiscal quarters. The information
concerning restrictions on distributions required by Item 5 of this Report is incorporated herein
by reference to Notes 6 and 7 to Consolidated Financial Statements which are incorporated herein by
reference.
18
ITEM 6. SELECTED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
(Thousands of dollars, except per share amounts) |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
FOR THE PERIOD: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income statement data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
2,320,342 |
|
|
$ |
2,260,095 |
|
|
$ |
2,815,189 |
|
|
$ |
2,277,375 |
|
|
$ |
2,119,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
167,494 |
|
|
$ |
227,610 |
(a) |
|
$ |
160,306 |
(a) |
|
$ |
193,397 |
(a) |
|
$ |
92,698 |
(a) |
Less: net income attributable to
noncontrolling interests |
|
|
(2,281 |
) |
|
|
(2,967 |
)(a) |
|
|
(2,287 |
)(a) |
|
|
(2,613 |
)(a) |
|
|
(1,540 |
)(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AmeriGas
Partners, L.P. |
|
$ |
165,213 |
|
|
$ |
224,643 |
(a) |
|
$ |
158,019 |
(a) |
|
$ |
190,784 |
(a) |
|
$ |
91,158 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners interest in net income
attributable to AmeriGas Partners, L.P. |
|
$ |
160,522 |
|
|
$ |
217,906 |
|
|
$ |
155,741 |
|
|
$ |
185,184 |
|
|
$ |
90,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per limited partner unit basic and
diluted (b) |
|
$ |
2.80 |
|
|
$ |
3.59 |
|
|
$ |
2.70 |
|
|
$ |
3.15 |
|
|
$ |
1.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash distributions declared per limited
partner unit |
|
$ |
2.75 |
|
|
$ |
2.79 |
|
|
$ |
2.50 |
|
|
$ |
2.63 |
|
|
$ |
2.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT PERIOD END: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
$ |
325,858 |
|
|
$ |
316,507 |
|
|
$ |
425,096 |
|
|
$ |
375,020 |
|
|
$ |
368,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
1,696,219 |
|
|
|
1,657,564 |
|
|
|
1,725,073 |
|
|
|
1,696,784 |
|
|
|
1,611,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities (excluding debt) |
|
|
349,139 |
|
|
|
338,380 |
|
|
|
461,095 |
|
|
|
376,668 |
|
|
|
378,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt |
|
|
882,402 |
|
|
|
865,644 |
|
|
|
933,390 |
|
|
|
933,042 |
|
|
|
933,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners capital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AmeriGas Partners, L.P. partners capital |
|
|
380,848 |
|
|
|
364,459 |
|
|
|
247,375 |
|
|
|
311,228 |
|
|
|
221,503 |
|
Noncontrolling interests |
|
|
12,038 |
|
|
|
11,866 |
|
|
|
10,723 |
|
|
|
11,386 |
|
|
|
10,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total partners capital |
|
|
392,886 |
|
|
|
376,325 |
|
|
|
258,098 |
|
|
|
322,614 |
|
|
|
231,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure (including capital leases) |
|
$ |
83,170 |
|
|
$ |
78,739 |
|
|
$ |
62,756 |
|
|
$ |
73,764 |
|
|
$ |
70,915 |
|
Retail propane gallons sold (millions) |
|
|
893.4 |
|
|
|
928.2 |
|
|
|
993.2 |
|
|
|
1,006.7 |
|
|
|
975.2 |
|
Degree days % (warmer) than
normal (c) |
|
|
(2.2 |
)% |
|
|
(3.1 |
)% |
|
|
(3.0 |
)% |
|
|
(6.5 |
)% |
|
|
(10.2 |
)% |
|
|
|
(a) |
|
As adjusted in accordance
with transition provisions for accounting for and presentation of noncontrolling interests in
consolidated subsidiaries (see Note 3 to Consolidated Financial
Statements). |
|
(b) |
|
Calculated in accordance with accounting guidance regarding the application of the two-class
method for determining earnings per share as it relates to master
limited partnerships (see Note 3 to Consolidated Financial
Statements). |
|
(c) |
|
Deviation from average heating degree days for the 30-year period of 1971-2000 based upon
national weather statistics provided by the National Oceanic and Atmospheric Administration
(NOAA) for 335 airports in the United States, excluding Alaska. |
19
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Managements Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) discusses our results of operations and our financial condition. MD&A should be read in
conjunction with our Items 1 Business, 1A Risk Factors, and 2 Properties and our
Consolidated Financial Statements in Item 8 below.
Executive Overview
Net income attributable to AmeriGas Partners for Fiscal 2010 was $165.2 million compared
with net income attributable to AmeriGas Partners for Fiscal 2009 of $224.6 million. Net income
attributable to AmeriGas Partners in Fiscal 2010 reflects the negative impact of a $12.2
million loss on the discontinuance of interest rate hedges recorded in March 2010 while net
income attributable to AmeriGas Partners in Fiscal 2009 reflects the benefit of a $39.9 million
gain on the sale of the Partnerships California LPG storage terminal. Average temperatures in
the Partnerships service territories were slightly warmer than normal in both Fiscal 2010 and
Fiscal 2009. Retail volumes sold were approximately 3.7% lower in Fiscal 2010 reflecting the
lingering effects of the economic recession, customer conservation and customer attrition
partially offset by volumes acquired through acquisitions. Total margin was 1.9% lower in
Fiscal 2010 primarily due to the lower retail volumes sold. Fiscal 2010 operating and
administrative expenses were slightly lower notwithstanding a $7.0 million increase in
a litigation accrual recorded in the fourth quarter of Fiscal 2010.
As further described in Note 3 to Consolidated Financial Statements, effective October 1,
2009, we adopted guidance regarding the accounting for and presentation of noncontrolling
interests in consolidated financial statements. The new guidance changed the accounting and
reporting relating to noncontrolling interests in a consolidated subsidiary. In accordance with
the new guidance, prior-year periods have been adjusted. The new guidance on accounting for and
presentation of noncontrolling interests had no effect on basic or diluted earnings per unit.
Also as described in Note 3 to Consolidated Financial Statements, effective October 1, 2009 we
adopted new guidance regarding the application of the two-class method for determining income
per unit as it relates to MLPs. The new guidance requires retrospective application to all
periods presented. The new guidance on the application of the two-class method for determining
income per unit had no effect on the full-year calculation of earnings per limited partner unit
for Fiscal 2009 and Fiscal 2008.
We believe that the Partnership has sufficient liquidity in the form of revolving credit
agreements. Additionally, AmeriGas OLP expects to renew its credit agreements, which are scheduled
to expire in June 2011 and October 2011, during the second-half of Fiscal 2011.
Analysis of Results of Operations
The following analyses compares the Partnerships results of operations for (1) Fiscal 2010
with Fiscal 2009 and (2) Fiscal 2009 with the year ended September 30, 2008 (Fiscal 2008). As
previously mentioned, our consolidated results of operations for Fiscal 2009 and Fiscal 2008
reflect the retroactive effects of the Financial Accounting Standards Boards accounting guidance
for the presentation of noncontrolling interests in consolidated financial statements.
20
Fiscal 2010 Compared with Fiscal 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
2010 |
|
|
2009 |
|
|
(Decrease) |
|
(millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gallons sold (millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
|
893.4 |
|
|
|
928.2 |
|
|
|
(34.8 |
) |
|
|
(3.7 |
)% |
Wholesale |
|
|
129.2 |
|
|
|
119.7 |
|
|
|
9.5 |
|
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,022.6 |
|
|
|
1,047.9 |
|
|
|
(25.3 |
) |
|
|
(2.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail propane |
|
$ |
1,996.2 |
|
|
$ |
1,976.0 |
|
|
$ |
20.2 |
|
|
|
1.0 |
% |
Wholesale propane |
|
|
162.6 |
|
|
|
115.9 |
|
|
|
46.7 |
|
|
|
40.3 |
% |
Other |
|
|
161.5 |
|
|
|
168.2 |
|
|
|
(6.7 |
) |
|
|
(4.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,320.3 |
|
|
$ |
2,260.1 |
|
|
$ |
60.2 |
|
|
|
2.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total margin (a) |
|
$ |
925.3 |
|
|
$ |
943.6 |
|
|
$ |
(18.3 |
) |
|
|
(1.9 |
)% |
EBITDA (b) |
|
$ |
321.0 |
|
|
$ |
381.4 |
|
|
$ |
(60.4 |
) |
|
|
(15.8 |
)% |
Operating income |
|
$ |
235.9 |
|
|
$ |
300.5 |
|
|
$ |
(64.6 |
) |
|
|
(21.5 |
)% |
Net income attributable to AmeriGas Partners |
|
$ |
165.2 |
|
|
$ |
224.6 |
|
|
$ |
(59.4 |
) |
|
|
(26.4 |
)% |
Heating degree days % (warmer) than normal (c) |
|
|
(2.2 |
)% |
|
|
(3.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Total margin represents total revenues less
cost of sales propane and cost of sales
other. |
|
(b) |
|
Earnings before interest expense, income taxes, depreciation and amortization (EBITDA)
should not be considered as an alternative to net income attributable to AmeriGas Partners
(as an indicator of operating performance) and is not a measure of performance or financial
condition under accounting principles generally accepted in the United States of America
(GAAP). Management believes EBITDA is a meaningful non-GAAP financial measure used by
investors to (1) compare the Partnerships operating performance with other companies within
the propane industry and (2) assess its ability to meet loan covenants. The Partnerships
definition of EBITDA may be different from that used by other companies. Management uses
EBITDA to compare year-over-year profitability of the business without regard to capital
structure as well as to compare the relative performance of the Partnership to that of other
master limited partnerships without regard to their financing methods, capital structure,
income taxes or historical cost basis. In view of the omission of interest, income taxes,
depreciation and amortization from EBITDA, management also assesses the profitability of the
business by comparing net income attributable to AmeriGas Partners for the relevant years.
Management also uses EBITDA to assess the Partnerships profitability because its parent,
UGI Corporation, uses the Partnerships EBITDA to assess the profitability of the
Partnership. UGI Corporation discloses the Partnerships EBITDA as the profitability measure
to comply with the GAAP requirement to provide profitability information about its domestic
propane segment. EBITDA in Fiscal 2010 includes a pre-tax loss of $12.2 million associated
with the discontinuance of interest rate hedges and a pre-tax loss of $7 million associated with an
increase in a litigation accrual. EBITDA in Fiscal 2009 includes a pre-tax gain of $39.9
million from the sale of a California LPG storage facility. |
21
The following table includes reconciliations of net income attributable to AmeriGas Partners
to EBITDA for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to AmeriGas Partners |
|
$ |
165.2 |
|
|
$ |
224.6 |
|
Income tax expense |
|
|
3.3 |
|
|
|
2.7 |
|
Interest expense |
|
|
65.1 |
|
|
|
70.3 |
|
Depreciation |
|
|
79.7 |
|
|
|
78.5 |
|
Amortization |
|
|
7.7 |
|
|
|
5.3 |
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
321.0 |
|
|
$ |
381.4 |
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Deviation from average heating degree days for the 30-year period 1971-2000 based upon
national weather statistics provided by the National Oceanic and Atmospheric Administration
(NOAA) for 335 airports in the United States, excluding Alaska. Fiscal 2009 data has been
adjusted to correct a NOAA error. |
Based upon heating degree-day data, average temperatures in our service territories were 2.2%
warmer than normal during Fiscal 2010 compared with temperatures in the prior year that were 3.1%
warmer than normal. Fiscal 2010 retail gallons sold were lower reflecting, among other things, the
lingering effects of the economic recession, customer conservation and customer attrition partially
offset by volumes acquired through business acquisitions.
Retail propane revenues increased $20.2 million during Fiscal 2010 reflecting an increase as a
result of higher average retail sales prices ($94.3 million) partially offset by lower retail
volumes sold ($74.1 million). Wholesale propane revenues increased $46.7 million principally
reflecting higher year-over-year wholesale selling prices ($37.5 million) and, to a lesser extent,
higher wholesale volumes sold ($9.2 million). Average wholesale propane prices at Mont Belvieu,
Texas, were approximately 47% higher during Fiscal 2010 compared with average wholesale propane
prices during Fiscal 2009. The lower average wholesale propane prices in Fiscal 2009 principally
resulted from a precipitous decline in prices that occurred during the first quarter of Fiscal
2009. Other revenues decreased $6.7 million in Fiscal 2010 compared with Fiscal 2009. Total cost
of sales increased $78.6 million, to $1,395.1 million, principally reflecting the higher 2010
wholesale propane product costs.
Total margin was $18.3 million lower in Fiscal 2010 primarily due to lower total retail margin
($21.9 million). The lower total retail margin reflects the effects of the lower retail volumes
sold ($31.4 million) partially offset by the effects of slightly higher average retail unit margins
($9.5 million) including higher unit margins in our AmeriGas Cylinder Exchange program.
The $60.4 million decrease in Partnership EBITDA during Fiscal 2010 reflects (1) the absence
of a pre-tax gain recorded in Fiscal 2009 associated with the November 2008 sale of the
Partnerships California LPG storage facility ($39.9 million); (2) the previously mentioned decline
in Fiscal 2010 total margin ($18.3 million); and (3) a loss from the discontinuance of interest
rate hedges ($12.2 million). During the three months ended March 31, 2010, the Partnerships
management determined that it was likely that it would not issue a previously anticipated $150
million of long-term debt during the summer of 2010. As a result, the Partnership discontinued cash
flow hedge accounting treatment for interest rate protection agreements associated with this
previously anticipated debt issuance and recorded a $12.2 million loss which is reflected in other
(income) expense, net on the Fiscal 2010 Consolidated Statement of Income. These previously
mentioned declines in EBITDA were partially offset by a decrease in operating and administrative
expenses ($5.4 million) largely due to lower self-insured liability and casualty expenses ($9.2
million) and lower compensation and benefits expense ($4.7 million) partially offset by an increase
in a litigation accrual recorded during the fourth quarter of Fiscal 2010 ($7.0 million).
Operating income in Fiscal 2010 decreased $64.6 million reflecting the previously mentioned
decrease in EBITDA ($60.4 million) and slightly higher depreciation and amortization expense
associated with fixed assets acquired during the past year ($3.6 million). Partnership interest
expense was $5.2 million lower in Fiscal 2010 principally reflecting lower interest expense on
lower long-term debt outstanding.
22
Fiscal 2009 Compared with Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
2009 |
|
|
2008 |
|
|
(Decrease) |
|
(millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gallons sold (millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
|
928.2 |
|
|
|
993.2 |
|
|
|
(65.0 |
) |
|
|
(6.5 |
)% |
Wholesale |
|
|
119.7 |
|
|
|
111.2 |
|
|
|
8.5 |
|
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,047.9 |
|
|
|
1,104.4 |
|
|
|
(56.5 |
) |
|
|
(5.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail propane |
|
$ |
1,976.0 |
|
|
$ |
2,439.2 |
|
|
$ |
(463.2 |
) |
|
|
(19.0 |
)% |
Wholesale propane |
|
|
115.9 |
|
|
|
185.4 |
|
|
|
(69.5 |
) |
|
|
(37.5 |
)% |
Other |
|
|
168.2 |
|
|
|
190.6 |
|
|
|
(22.4 |
) |
|
|
(11.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,260.1 |
|
|
$ |
2,815.2 |
|
|
$ |
(555.1 |
) |
|
|
(19.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total margin (a) |
|
$ |
943.6 |
|
|
$ |
906.9 |
|
|
$ |
36.7 |
|
|
|
4.0 |
% |
EBITDA (b) |
|
$ |
381.4 |
|
|
$ |
313.0 |
|
|
$ |
68.4 |
|
|
|
21.9 |
% |
Operating income |
|
$ |
300.5 |
|
|
$ |
234.9 |
|
|
$ |
65.6 |
|
|
|
27.9 |
% |
Net income attributable to AmeriGas Partners |
|
$ |
224.6 |
|
|
$ |
158.0 |
|
|
$ |
66.6 |
|
|
|
42.2 |
% |
Heating degree days % (warmer) than normal (c) |
|
|
(3.1 |
)% |
|
|
(3.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Total margin represents total revenues
less cost of sales propane and cost of sales
other. |
|
(b) |
|
Earnings before interest expense, income taxes, depreciation and amortization (EBITDA)
should not be considered as an alternative to net income attributable to AmeriGas Partners
(as an indicator of operating performance) and is not a measure of performance or financial
condition under accounting principles generally accepted in the United States of America
(GAAP). Management believes EBITDA is a meaningful non-GAAP financial measure used by
investors to (1) compare the Partnerships operating performance with other companies within
the propane industry and (2) assess its ability to meet loan covenants. The Partnerships
definition of EBITDA may be different from that used by other companies. Management uses
EBITDA to compare year-over-year profitability of the business without regard to capital
structure as well as to compare the relative performance of the Partnership to that of other
master limited partnerships without regard to their financing methods, capital structure,
income taxes or historical cost basis. In view of the omission of interest, income taxes,
depreciation and amortization from EBITDA, management also assesses the profitability of the
business by comparing net income attributable to AmeriGas Partners for the relevant years.
Management also uses EBITDA to assess the Partnerships profitability because its parent,
UGI Corporation, uses the Partnerships EBITDA to assess the profitability of the
Partnership. UGI Corporation discloses the Partnerships EBITDA as the profitability measure
to comply with the GAAP requirement to provide profitability information about its domestic
propane segment. EBITDA in Fiscal 2009 includes a pre-tax gain of
$39.9 million from the sale of a California LPG storage facility. |
The following
table includes reconciliations of net income attributable to AmeriGas Partners
to EBITDA for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to AmeriGas Partners |
|
$ |
224.6 |
|
|
$ |
158.0 |
|
Income tax expense |
|
|
2.7 |
|
|
|
1.7 |
|
Interest expense |
|
|
70.3 |
|
|
|
72.9 |
|
Depreciation |
|
|
78.5 |
|
|
|
75.7 |
|
Amortization |
|
|
5.3 |
|
|
|
4.7 |
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
381.4 |
|
|
$ |
313.0 |
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Deviation from average heating degree days for the 30-year period 1971-2000 based upon
national weather statistics provided by the National Oceanic and Atmospheric Administration
(NOAA) for 335 airports in the United States, excluding Alaska. Fiscal 2009 data has been
adjusted to correct a NOAA error. |
23
Based upon heating degree-day data, average temperatures in our service territories during
Fiscal 2009 were 3.1% warmer than normal compared with temperatures in the prior year that were
3.0% warmer than normal. Fiscal 2009 retail gallons sold were 6.5% lower than Fiscal 2008
reflecting, among other things, the adverse effects of the significant deterioration in general
economic activity which occurred over the last year and continued customer conservation. During
Fiscal 2009, average wholesale propane commodity prices at Mont Belvieu, Texas, one of the major
supply points in the U.S., were more than 50% lower than such prices in Fiscal 2008. The decrease
in the average wholesale commodity prices in Fiscal 2009 reflects the effects of a precipitous
decline in commodity propane prices principally during the first quarter of Fiscal 2009 following a
substantial increase in prices during most of the second half of Fiscal 2008. Although wholesale
propane prices in Fiscal 2009 rebounded modestly from prices experienced earlier in the year, at
September 30, 2009 such prices remained approximately 35% lower than at September 30, 2008.
Retail propane revenues declined $463.2 million in Fiscal 2009 reflecting a decrease as a
result of the lower retail volumes sold ($303.6 million) and a decrease due to lower average
selling prices ($159.6 million). Wholesale propane revenues declined $69.5 million reflecting a
decrease from lower wholesale selling prices ($83.7 million) partially offset by an increase from
higher wholesale volumes sold ($14.2 million). Total cost of sales decreased $591.8 million to
$1,316.5 million principally reflecting the effects of the previously mentioned lower propane
commodity prices.
Total margin was $36.7 million greater in Fiscal 2009 reflecting the beneficial impact of
higher than normal retail unit margins resulting from the previously mentioned rapid decline in
propane commodity costs that occurred primarily as we entered the critical winter heating season in
the first quarter of Fiscal 2009.
The $68.4 million increase in Fiscal 2009 Partnership EBITDA reflects the effects of a pre-tax
gain from the November 2008 sale of the Partnerships California LPG storage facility ($39.9
million) and the previously mentioned increase in total margin ($36.7 million). These increases
were partially offset by slightly higher operating and administrative expenses ($4.7 million) and
slightly lower other income ($2.8 million). The slightly higher operating and administrative
expenses reflects, in large part, an increase in compensation and benefit expenses ($9.1 million)
and higher costs associated with facility maintenance projects ($6.4 million) offset principally
by lower vehicle fuel expenses ($14.2 million) due to lower propane, diesel and gasoline prices.
Operating income increased $65.6 million in Fiscal 2009 reflecting the previously mentioned
increase in EBITDA ($68.4 million) partially offset by slightly higher depreciation and
amortization expense ($3.4 million) reflecting acquisitions and plant and equipment expenditures
made since the prior year.
Financial Condition and Liquidity
Capitalization and Liquidity
The Partnerships debt outstanding at September 30, 2010 totaled $882.4 million (including
current maturities of long-term debt of $20.1 million and bank loans of $91 million). The
Partnerships debt outstanding at September 30, 2009 totaled $865.6 million (including current
maturities of long-term debt of $82.2 million and no bank loans outstanding). Total debt
outstanding at September 30, 2010 includes long-term debt comprising $779.7 million of AmeriGas
Partners Senior Notes and $11.7 million of other long-term debt. In July 2010, AmeriGas OLP repaid
$80 million of maturing First Mortgage Notes with borrowings under its Revolving Credit Facility
and cash from operations (as described below).
24
AmeriGas OLPs short-term borrowing needs are seasonal and are typically greatest during the
fall and winter heating-season months due to the need to fund higher levels of working capital. In
order to meet its short-term cash needs, AmeriGas OLP has a $200 million unsecured credit agreement
(Credit Agreement) which expires on October 15, 2011. AmeriGas OLP also has a $75 million
unsecured revolving credit facility (2009 Supplemental Credit Agreement) which expires on June
30, 2011. AmeriGas OLP expects to renew these credit agreements prior to their expiration. AmeriGas
OLPs Credit Agreement consists of (1) a $125 million Revolving Credit Facility and (2) a $75
million Acquisition Facility. The Revolving Credit Facility may be used for working capital and
general purposes of AmeriGas OLP. The Acquisition Facility provides AmeriGas OLP with the ability
to borrow up to $75 million to finance the purchase of propane businesses or propane business
assets or, to the extent it is not so used, for working capital and general purposes. The 2009
Supplemental Credit Agreement permits AmeriGas OLP to borrow up to $75 million for working capital
and general purposes.
At September 30, 2010, there were $91 million of borrowings outstanding under the Credit
Agreement and no amounts outstanding under the 2009 Supplemental Credit Agreement. The average
interest rate on Credit Agreement borrowings outstanding at September 30, 2010 was 1.31%. There
were no borrowings under the AmeriGas OLPs credit agreements at September 30, 2009. Borrowings
under our credit agreements are classified as bank loans on the Consolidated Balance Sheets. Issued
and outstanding letters of credit under the Revolving Credit Facility, which reduce the amount
available for borrowings, totaled $35.7 million at September 30, 2010 and $37.0 million at
September 30, 2009. The average daily and peak bank loan borrowings outstanding under the credit
agreements during Fiscal 2010 were $43.9 million and $135 million, respectively. The average daily
and peak bank loan borrowings outstanding under the credit agreements during Fiscal 2009 were $43.8
million and $184.5 million, respectively. The higher peak bank loan borrowings in Fiscal 2009
resulted from amounts borrowed to fund counterparty cash collateral obligations associated with
derivative financial instruments used by the Partnership to manage price risk associated with fixed
sales price commitments to customers. These collateral obligations resulted from the precipitous
decline in propane commodity prices that occurred early in Fiscal 2009. At September 30, 2010, the
Partnerships available borrowing capacity under the credit agreements was $148.3 million.
Based on existing cash balances, cash expected to be generated from operations, and borrowings
available under AmeriGas OLPs Credit Agreement and the 2009 Supplemental Credit Agreement, the
Partnerships management believes that the Partnership will be able to meet its anticipated
contractual commitments and projected cash needs during Fiscal 2011. For a more detailed discussion
of the Partnerships credit facilities, see Note 7 to Consolidated Financial Statements.
Partnership Distributions
The Partnership makes distributions to its partners approximately 45 days after the end of
each fiscal quarter in a total amount equal to its Available Cash as defined in the Fourth Amended
and Restated Agreement of Limited Partnership (the Partnership Agreement) for such quarter.
Available Cash generally means:
|
1. |
|
cash on hand at the end of such quarter, |
|
2. |
|
plus all additional cash on hand as of the date of determination resulting from
borrowings after the end of such quarter, |
|
3. |
|
less the amount of cash reserves established by the General Partner in its reasonable
discretion. |
The General Partner may establish reserves for the proper conduct of the Partnerships
business and for distributions during the next four quarters. In addition, certain of the
Partnerships debt agreements require reserves be established for the payment of debt principal and
interest.
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner
(giving effect to the 1.01% interest of the General Partner in distributions of Available Cash from
AmeriGas OLP to AmeriGas Partners) until Available Cash exceeds the Minimum Quarterly Distribution
of $0.55 and the First Target Distribution of $0.055 per Common Unit (or a total of $0.605 per
Common Unit). When Available Cash exceeds $0.605 per Common Unit in any quarter, the General
Partner will receive a greater percentage of the total Partnership distribution but only with
respect to the amount by which the distribution per Common Unit to limited partners exceeds $0.605.
25
Quarterly distributions of Available Cash per limited partner unit paid during Fiscal 2010,
Fiscal 2009 and Fiscal 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
1st Quarter |
|
$ |
0.67 |
|
|
$ |
0.64 |
|
|
$ |
0.61 |
|
2nd Quarter |
|
|
0.67 |
|
|
|
0.64 |
|
|
|
0.61 |
|
3rd Quarter |
|
|
0.705 |
|
|
|
0.67 |
|
|
|
0.64 |
|
4th Quarter |
|
|
0.705 |
|
|
|
0.84 |
|
|
|
0.64 |
|
The Partnership has made quarterly distributions to Common Unitholders in excess of $0.605 per
limited partner unit since the quarterly distribution paid May 18, 2007. As a result, beginning
with the quarterly distribution paid May 18, 2007 and every quarter thereafter, the General Partner
has received a greater percentage of the total Partnership distributions than its aggregate 2%
general partner interests in AmeriGas OLP and AmeriGas Partners. The General Partner distribution
based on its aggregate 2% general partner ownership interests totaled $6.9 million in Fiscal 2010,
$8.5 million in Fiscal 2009 and $4.3 million in Fiscal 2008. Included in these amounts are
incentive distributions received by the General Partner during Fiscal 2010, Fiscal 2009 and Fiscal
2008 of $3.0 million, $4.5 million and $0.7 million, respectively.
On July 27, 2009, the General Partners Board of Directors approved a distribution of $0.84
per Common Unit payable on August 18, 2009 to unitholders of record on August 10, 2009. This
distribution included the regular quarterly distribution of $0.67 per Common Unit and $0.17 per
Common Unit reflecting a one-time distribution of a portion of the proceeds from the Partnerships
sale of its California storage facility in November 2008.
Cash Flows
Operating activities. Due to the seasonal nature of the Partnerships business, cash flows from
operating activities are generally strongest during the second and third fiscal quarters when
customers pay for propane consumed during the heating season months. Conversely, operating cash
flows are generally at their lowest levels during the first and fourth fiscal quarters when the
Partnerships investment in working capital, principally accounts receivable and inventories, is
generally greatest. The Partnership may use its credit agreements to satisfy its seasonal operating
cash flow needs. Due in large part to declining propane commodity prices, Fiscal 2009 cash flows
from operations were significantly greater than in Fiscal 2010 or Fiscal 2008 primarily the result
of lower cash required to fund changes in working capital as further described below.
Cash flow from operating activities was $218.8 million in Fiscal 2010, $367.5 million in
Fiscal 2009 and $180.2 million in Fiscal 2008. Cash flow from operating activities before changes
in operating working capital was $269.5 million in Fiscal 2010, $281.2 million in Fiscal 2009 and
$255.1 million in Fiscal 2008. Cash provided (used) to fund changes in operating working capital
totaled ($50.7) million in Fiscal 2010, $86.3 million in Fiscal 2009 and ($74.9) million in Fiscal
2008. The higher cash needed to fund changes in working capital in Fiscal 2010 resulted from the
greater cash needed to fund changes in operating working capital, principally accounts receivable
and inventories, due to the year-over-year increase in wholesale propane product prices. The
greater cash provided by changes in operating working capital in Fiscal 2009 compared to Fiscal
2008 reflects lower net cash required to fund changes in accounts receivable and inventories due in
large part to the effects of declining wholesale propane product costs during the year. Cash flow
from changes in operating working capital in Fiscal 2009 also reflects reimbursements of $17.8
million of counterparty collateral deposits paid in Fiscal 2008.
Investing activities. Investing activity cash flow is principally affected by expenditures for
property, plant and equipment, cash paid for acquisitions of businesses and proceeds from sales of
assets. Cash flow used in investing activities was $114.9 million in Fiscal 2010, $79.5 million in
Fiscal 2009 and $55.6 million in Fiscal 2008. We spent $83.2 million for property, plant and
equipment (comprising $41.1 million of maintenance capital expenditures and $42.1 million of growth
capital expenditures) in Fiscal 2010; $78.7 million for property, plant and equipment
(comprising $37.5 million of maintenance capital expenditures and $41.2 million of growth capital
expenditures) in Fiscal 2009; and $62.8 million for property, plant and equipment (comprising $29.1
million of maintenance capital expenditures and $33.7 million of growth capital expenditures) in
Fiscal 2008. The greater capital expenditures in Fiscal 2010 and 2009 include expenditures
associated with an ongoing system software replacement. In November 2008, the Partnership sold its
California 600,000 barrel LPG storage facility for net cash proceeds of $42.4 million.
26
Financing activities. Changes in cash flow from financing activities are primarily due to
distributions on AmeriGas Partners Common Units, issuances and repayments of long-term debt,
borrowings under credit agreements, and issuances of AmeriGas Partners Common Units. Cash flow used
by financing activities was $155.4 million in Fiscal 2010, $239.7 million in Fiscal 2009 and $147.7
million in Fiscal 2008. Distributions in Fiscal 2009 include an additional $0.17 per Common Unit to
distribute a portion of the proceeds from the Partnerships November 2008 sales of its California
storage facility. During Fiscal 2010, AmeriGas OLP repaid $80 million of maturing First Mortgage
Notes using borrowings under its Revolving Credit Facility and cash from operations. During Fiscal
2009, AmeriGas OLP repaid $70 million of maturing First Mortgage Notes using cash generated from
operations.
Capital Expenditures
In the following table, we present capital expenditures (which exclude acquisitions) for
Fiscal 2010, Fiscal 2009 and Fiscal 2008. We also provide amounts we expect to spend in Fiscal
2011. We expect to finance Fiscal 2011 capital expenditures principally from cash generated by
operations and borrowings under our credit agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
(millions of dollars) |
|
(estimate) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
$ |
79.9 |
|
|
$ |
83.2 |
|
|
$ |
78.7 |
|
|
$ |
62.8 |
|
Fiscal 2010 and Fiscal 2009 capital expenditures include expenditures associated with a
Partnership system software replacement.
Contractual Cash Obligations and Commitments
The Partnership has certain contractual cash obligations that extend beyond Fiscal 2010
including obligations associated with long-term debt, interest on long-term fixed-rate debt, lease
obligations,
capital expenditures and propane supply contracts. The following table presents
significant contractual cash obligations as of September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
Fiscal |
|
|
Fiscal 2016 |
|
|
|
|
|
|
|
Fiscal |
|
|
2012- |
|
|
2014- |
|
|
and |
|
(millions of dollars) |
|
Total |
|
|
2011 |
|
|
2013 |
|
|
2015 |
|
|
therafter |
|
Long-term debt (a) |
|
$ |
791.4 |
|
|
$ |
20.1 |
|
|
$ |
4.0 |
|
|
$ |
417.3 |
|
|
$ |
350.0 |
|
Interest on long-term
fixed-rate debt (b) |
|
|
302.5 |
|
|
|
57.5 |
|
|
|
110.0 |
|
|
|
110.1 |
|
|
|
24.9 |
|
Operating leases |
|
|
181.7 |
|
|
|
46.5 |
|
|
|
67.2 |
|
|
|
38.3 |
|
|
|
29.7 |
|
Propane supply contracts |
|
|
50.5 |
|
|
|
50.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other purchase obligations (c) |
|
|
12.6 |
|
|
|
12.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,338.7 |
|
|
$ |
187.2 |
|
|
$ |
181.2 |
|
|
$ |
565.7 |
|
|
$ |
404.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Based upon stated maturity dates. |
|
(b) |
|
Based upon stated interest rates. |
|
(c) |
|
Includes material capital expenditure obligations. |
The components of other noncurrent liabilities included in our Consolidated Balance Sheet at
September 30, 2010 principally consist of property and casualty liabilities and, to a much lesser
extent, liabilities associated with executive compensation plans and employee post-employment
benefit programs. These liabilities are not included in
the table of Contractual Cash Obligations and Commitments because they are estimates of future
payments and not contractually fixed as to timing or amount.
27
Partnership Sale of California Storage Facility
On November 13, 2008, AmeriGas OLP sold its 600,000 barrel refrigerated, above-ground storage
facility located on leased property in California. We recorded a pre-tax gain of $39.9 million
associated with this transaction, which increased net income attributable to AmeriGas Partners for
the year ended September 30, 2009 by $39.5 million.
Related Party Transactions
Pursuant to the Partnership Agreement and a Management Services Agreement among AEH, the
general partner of Eagle OLP, and the General Partner, the General Partner is entitled to
reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of the
Partnership. These costs, which totaled $350.2 million in Fiscal 2010, $355.0 million in Fiscal
2009 and $345.5 million in Fiscal 2008 include employee compensation and benefit expenses of
employees of the General Partner and general and administrative expenses.
UGI provides certain financial and administrative services to the General Partner. UGI bills
the General Partner monthly for all direct and indirect corporate expenses incurred in connection
with providing these services and the General Partner is reimbursed by the Partnership for these
expenses. The allocation of indirect UGI corporate expenses to the Partnership utilizes a weighted,
three-component formula based on the relative percentage of the Partnerships revenues, operating
expenses and net assets employed to the total of such items for all UGI operating subsidiaries for
which general and administrative services are provided. The General Partner believes that this
allocation method is reasonable and equitable to the Partnership. Such corporate expenses totaled
$10.8 million in Fiscal 2010, $12.2 million in Fiscal 2009 and $11.2 million in Fiscal 2008. In
addition, UGI and certain of its subsidiaries provide office space, stop loss medical coverage and
automobile liability insurance to the Partnership. The costs related
to these items totaled $2.3 million in Fiscal 2010, $3.3 million in
Fiscal 2009 and $2.7 million in Fiscal 2008.
AmeriGas OLP purchases propane from Atlantic Energy, Inc. (Atlantic Energy) a former
subsidiary of UGI Energy Services, Inc. (Energy Services) and a second-tier subsidiary of UGI,
pursuant to a propane sales agreement (Product Sales Agreement) whereby Atlantic Energy has
agreed to sell and AmeriGas OLP has agreed to purchase a specified amount of propane annually at a
terminal located in Chesapeake, Virginia. The Product Sales Agreement, which was originally
scheduled to terminate on April 30, 2010, was amended to extend the initial termination date to
April 30, 2015 and to provide for an option to extend beyond that date for an additional five
years. The price to be paid for product purchased under the agreement is determined annually using
a contractual formula that takes into account published index prices and the locational value of
deliveries at the terminal. On July 30, 2010, Energy Services sold its interest in Atlantic Energy.
In addition, from time to time, AmeriGas OLP purchases propane on an as needed basis from Energy
Services. The price of the purchases are generally based on market price at the time of purchase.
Purchases of propane by AmeriGas OLP from Energy Services and Atlantic Energy (through the date of
its sale) totaled $39.8 million, $24.3 million and $47.3 million during Fiscal 2010, Fiscal 2009 and
Fiscal 2008, respectively. The sale of the terminal did not effect the terms of the Product Sales
Agreement.
On October 1, 2008, AmeriGas OLP acquired all of the assets of Penn Fuel Propane, LLC (now
named UGI Central Penn Propane, LLC, (CPP) from CPP, a second-tier subsidiary of UGI Utilities,
Inc., for $32.0 million cash plus estimated working capital of $1.6 million. UGI Utilities, Inc. is
a wholly owned subsidiary of UGI. CPP sold propane to customers primarily in eastern Pennsylvania.
AmeriGas OLP funded the acquisition of the assets of CPP principally from borrowings under its
Credit Agreement. Pursuant to the acquisition agreement, in February 2009, AmeriGas OLP reached an
agreement with UGI Utilities on the working capital adjustment pursuant to which UGI Utilities
reimbursed AmeriGas OLP $1.4 million plus interest.
The Partnership also sells propane to other affiliates of UGI. Such amounts were not material
in Fiscal 2010, Fiscal 2009 or Fiscal 2008.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are expected to have an effect on the
Partnerships financial condition, change in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
28
Market Risk Disclosures
Our primary financial market risks include commodity prices for propane and interest rates on
borrowings.
Commodity Price Risk
The risk associated with fluctuations in the prices the Partnership pays for propane is
principally a result of market forces reflecting changes in supply and demand for propane and other
energy commodities. The Partnerships profitability is sensitive to changes in propane supply costs
and the Partnership generally passes on increases in such costs to customers. The Partnership may
not, however, always be able to pass through product cost increases fully or on a timely basis,
particularly when product costs rise rapidly. In order to reduce the volatility of the
Partnerships propane market price risk, we use contracts for the forward purchase or sale of
propane, propane fixed-price supply agreements, and over-the-counter derivative commodity
instruments including price swap and option contracts. Over-the-counter derivative commodity
instruments utilized by the Partnership to hedge forecasted purchases of propane are generally
settled at expiration of the contract. These derivative financial instruments contain collateral
provisions. Although we use derivative financial and commodity instruments to reduce market price
risk associated with forecasted transactions, we do not use derivative financial and commodity
instruments for speculative or trading purposes. The fair value of unsettled commodity price risk
sensitive instruments at September 30, 2010 and 2009 were gains of $8.0 million and $11.8 million,
respectively. A hypothetical 10% adverse change in the market price of propane would result in a
decrease in fair value of $18.7 million and $14.0 million, respectively.
Because the Partnerships propane derivative instruments generally qualify as hedges under
GAAP, we expect that changes in the fair value of derivative instruments used to manage propane
market price risk would be substantially offset by gains or losses on the associated anticipated
transactions.
Interest Rate Risk
The Partnership has both fixed-rate and variable-rate debt. Changes in interest rates impact
the cash flows of variable-rate debt but generally do not impact their fair value. Conversely,
changes in interest rates impact the fair value of fixed-rate debt but do not impact their cash
flows.
Our variable-rate debt includes borrowings under AmeriGas OLPs credit agreements. These
agreements have interest rates that are generally indexed to short-term market interest rates. At
September 30, 2010, there was $91 million of borrowings outstanding under the credit agreements.
Based upon the average level of borrowings outstanding under the credit agreements in Fiscal 2010,
an increase in short-term interest rates of 100 basis points (1%) would have increased annual
interest expense by $0.4 million.
The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point
increase in market interest rates would result in decreases in the fair value of this fixed-rate
debt of $42.9 million and $38.2 million at September 30, 2010 and 2009, respectively. A 100 basis
point decrease in market interest rates would result in increases in the fair market value of this
debt of $46.0 million and $40.7 million at September 30, 2010 and 2009, respectively.
Our long-term debt is typically issued at fixed rates of interest based upon market rates for
debt having similar terms and credit ratings. As these long-term debt issues mature, we may
refinance such debt with new debt having interest rates reflecting then-current market conditions.
This debt may have an interest rate that is more or less than the refinanced debt. In order to
reduce interest rate risk associated with forecasted issuances of fixed-rate debt, from time to
time we enter into interest rate protection agreements. As previously mentioned, during the three
months ended March 31, 2010, the Partnerships management determined that it was likely that it
would not issue $150 million of long-term debt during the summer of 2010 due to the Partnerships
strong cash flow and anticipated extension of all or a portion of the 2009 Supplemental Credit
Agreement. As a result, the Partnership discontinued cash flow hedge accounting treatment for
interest rate protection agreements associated with this previously anticipated $150 million
long-term debt issuance and recorded a $12.2 million loss which is reflected in other
income, net, on the Fiscal 2010 Consolidated Statements of Operations. There were no unsettled
interest rate protection agreements outstanding at September 30, 2010. The fair value of unsettled
interest rate protection agreements at September 30, 2009 was a loss of $15.9 million.
29
Derivative Financial Instruments Credit Risk
The Partnership is exposed to credit loss in the event of nonperformance by counterparties to
derivative financial and commodity instruments. Our counterparties principally consist of major
energy companies and major U.S. financial institutions. We maintain credit policies with regard to
our counterparties that we believe reduce overall credit risk. These policies include evaluating
and monitoring our counterparties financial condition, including their credit ratings, and
entering into agreements with counterparties that govern credit limits. Certain of these agreements
call for the posting of collateral by the counterparty or by the Partnership in the form of letters
of credit, parental guarantees or cash.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in compliance with GAAP
requires the selection and application of appropriate accounting principles to the relevant facts
and circumstances of the Partnerships operations and the use of estimates made by management. The
Partnership has identified the following critical accounting policies that are most important to
the portrayal of the Partnerships financial condition and results of operations. Changes in these
policies could have a material effect on the financial statements. The application of these
accounting policies necessarily requires managements most subjective or complex judgments
regarding estimates and projected outcomes of future events which could have a material impact on
the financial statements. Management has reviewed these critical accounting policies, and the
estimates and assumptions associated with them, with its Audit Committee. In addition, management
has reviewed the following disclosures regarding the application of these critical accounting
policies with the Audit Committee.
Litigation accruals and environmental liabilities. The Partnership is involved in litigation
regarding pending claims and legal actions that arise in the normal course of its business and may
own sites at which hazardous substances may be present. In accordance with GAAP, the Partnership
establishes reserves for pending claims and legal actions or environmental remediation liabilities
when it is probable that a liability exists and the amount or range of amounts can be reasonably
estimated. Reasonable estimates involve management judgments based on a broad range of information
and prior experience. These judgments are reviewed quarterly as more information is received and
the amounts reserved are updated as necessary. Such estimated reserves may differ materially from
the actual liability and such reserves may change materially as more information becomes available
and estimated reserves are adjusted.
Depreciation and amortization of long-lived assets. We compute depreciation on property, plant and
equipment on a straight-line basis over estimated useful lives generally ranging from 2 to 40
years. We also use amortization methods and determine asset values of intangible assets other than
goodwill using reasonable assumptions and projections. Changes in the estimated useful lives of
property, plant and equipment and changes in intangible asset amortization methods or values could
have a material effect on our results of operations. As of September 30, 2010, our net property,
plant and equipment totaled $642.8 million. Depreciation expense of $79.7 million was recorded
during Fiscal 2010.
Purchase price allocation. From time to time, we enter into material business combinations. In
accordance with accounting guidance associated with business combinations, the purchase price is
allocated to the various assets acquired and liabilities assumed at their estimated fair value.
Fair values of assets acquired and liabilities assumed are based upon available information and may
involve us engaging an independent third party to perform an appraisal. Estimating fair values can
be complex and subject to significant business judgment. Estimates most commonly impact property,
plant and equipment and intangible assets, including those with indefinite lives. Generally, we
have, if necessary, up to one year from the acquisition date to finalize the purchase price
allocation.
Newly Adopted and Recently Issued Accounting Pronouncements
See Note 3 to Consolidated Financial Statements for a discussion of the effects of accounting
guidance we adopted in Fiscal 2010.
30
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures About Market Risk are contained in Managements
Discussion and Analysis of Financial Condition and Results of Operations under the caption Market
Risk Disclosures and are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Managements Annual Report on Internal Control Over Financial Reporting and the financial
statements and financial statement schedules referred to in the Index contained on page F-2 of this
Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) |
|
The General Partners disclosure controls and procedures are designed to provide reasonable
assurance that the information required to be disclosed by the Partnership in reports filed
under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized,
and reported within the time periods specified in the SECs rules and forms, and (ii)
accumulated and communicated to our management, including the Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. The General Partners management, with the participation of the General Partners
Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the
Partnerships disclosure controls and procedures as of the end of the period covered by this
Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Partnerships disclosure controls and procedures, as of the end of the
period covered by this Report, were effective at the reasonable assurance level. |
(b) |
|
For Managements Annual Report on Internal Control Over Financial Reporting see Item 8 of
this Report (which information is incorporated herein by reference). |
(c) |
|
No change in the Partnerships internal control over financial reporting occurred during the
Partnerships most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Partnerships internal control over financial reporting. |
ITEM 9B. OTHER INFORMATION
None.
PART III:
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We do not directly employ any persons responsible for managing or operating the Partnership.
The General Partner and UGI provide such services and are reimbursed for direct and indirect costs
and expenses including all compensation and benefit costs. See Certain Relationships and Related
Transactions, and Director Independence Related Person Transactions and Note 14 to Consolidated
Financial Statements.
The Board of Directors of the General Partner has an Audit Committee, Compensation/Pension
Committee, Corporate Governance Committee and an Executive Committee. The functions of and other
information about these committees is summarized below.
31
The Audit Committee has the authority to (i) make determinations or review determinations made
by management in transactions that require special approval by the Committee under the terms of the
Partnership Agreement and (ii) at the request of the General Partner, review specific matters as to
which the General Partner believes there may be a conflict of interest, in order to determine if
the resolution of such conflict is fair and reasonable to the Partnership. In addition, the Audit
Committee acts on behalf of the Board of Directors in fulfilling its responsibility to:
|
|
|
oversee the accounting and financial reporting processes and audits of the financial
statements of the Partnership; |
|
|
|
monitor the independence of the Partnerships independent registered public accounting
firm and the performance of the independent registered public accountants and internal
audit staff; |
|
|
|
oversee the adequacy of the Partnerships controls relative to financial and business
risk; |
|
|
|
provide a means for open communication among the independent registered public
accountants, management, internal audit staff and the Board of Directors; and |
|
|
|
oversee compliance with applicable legal and regulatory requirements.
|
The Audit Committee has sole authority to appoint, retain, fix the compensation of and oversee
the work of the Partnerships independent registered public accounting firm. A copy of the current
charter of the Audit Committee is posted on the Partnerships website, www.amerigas.com; see
Investor Relations Corporate Governance.
The Audit Committee members are Messrs. Pratt (Chairman), Marrazzo and Stoeckel. Each member
of the Audit Committee is independent as defined by the New York Stock Exchange listing
standards. In addition, the Board of Directors of the General Partner has determined that all
members of the Audit Committee qualify as audit committee financial experts within the meaning of
the Securities and Exchange Commission regulations.
The Compensation/Pension Committee members are Messrs. Schlanger (Chairman) and Marrazzo and
Dr. Ban. The Committee establishes executive compensation policies and programs, confirms that
executive compensation plans do not encourage unnecessary risk-taking; recommends to the
independent members of the Board of Directors base salary, annual bonus target levels and long-term
compensation awards for executives, approves corporate goals and objectives relating to the Chief
Executive Officers compensation, assists the Board in establishing a succession plan for the
Chief Executive Officer, and reviews the General Partners plans for senior management succession
and management development. Each member of the Compensation/Pension Committee is independent as
defined by the New York Stock Exchange listing standards.
The Executive Committee members are Messrs. Gozon (Chairman), Greenberg and Schlanger. The
Committee has the full authority of the Board to act on matters between meetings of the Board, with
specified limitations relating to major transactions.
The Corporate Governance Committee members are Messrs. Gozon (Chairman), Pratt and Stoeckel.
The Committee identifies nominees and reviews qualifications of persons eligible to stand for
election as Directors and makes recommendations to the Board on these matters, advises the Board
with respect to significant developments in corporate governance matters, reviews and assesses the
performance of the Board and each Committee, and reviews and makes recommendations to the Board of
Directors regarding director compensation. Each member of the Corporate Governance Committee is
independent as defined by the New York Stock Exchange listing standards.
32
When considering whether the Boards Directors and nominees have the experience,
qualifications, attributes and skills, taken as a whole, to satisfy the oversight responsibilities
of the Board, the Corporate Governance Committee and the Board considered primarily the information
about the backgrounds and experiences of the
Directors contained under the section of this Report entitled Directors, Executive Officers and
Corporate Governance Directors and Executive Officers of the General Partner. In particular,
with regard to Mr. Greenberg, the Board considered his executive leadership and vision demonstrated
in leading the Partnerships successful growth for more than 15 years, and his extensive industry
knowledge and experience. With regard to Mr. Bissell, the Board considered his senior management
experience as the General Partners Chief Executive Officer and his extensive industry knowledge.
With regard to Mr. Walsh, the Board considered his experience serving as Vice Chairman of the
General Partner, his senior management experience with UGI Corporation and another global public
company, and his broad industry knowledge and insight. With regard to Dr. Ban, the Board
considered his extensive energy industry and emerging energy technologies knowledge and experience,
including his experience as Chief Executive Officer of the Gas Research Institute, and his public
company directorship and committee experience. With regard to Mr. Gozon, the Board considered his
extensive senior executive experience with publicly-traded global business organizations, and his
significant public and private company directorship and committee experience, including experience
as chairman of the board. With regard to Mr. Marrazzo, the Board considered his extensive
experience as Chief Executive Officer of both non-profit and public companies, his city government
leadership experience, and his public and private company directorship and committee experience.
With regard to Mr. Pratt, the Board considered his extensive executive and financial management
experience, his knowledge of the information technology field, and his public and private company
directorship and committee experience. With regard to Mr. Schlanger, the Board considered his
senior management experience as Chief Executive Officer, Chief Operating Officer, and Chief
Financial Officer of Arco Chemical Company, a large public company, and his experience serving as
chairman, director and committee member of the boards of directors of large public and private
international companies, including his experience representing a major private equity firms
shareholder interest. With regard to Mr. Stoeckel, the Board considered his management experience
as Chief Executive Officer of a large private company sharing similarities with the Partnership,
such as a similar workforce and a large number of geographically dispersed retail locations, and
his private company directorship experience.
The General Partner has adopted a Code of Ethics for the Chief Executive Officer and Senior
Financial Officers that applies to the General Partners Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer. The Code of Ethics is included as an exhibit to this Report
and is posted on the Partnerships website, www.amerigas.com; see Investor Relations Corporate
Governance. Copies of all corporate governance documents posted on the Partnerships website are
available free of charge by writing to Hugh J. Gallagher, Director, Treasury Services and Investor
Relations, UGI Corporation, P. O. Box 858, Valley Forge, PA 19482.
Directors and Executive Officers of the General Partner
The following table sets forth certain information with respect to the directors and executive
officers of the General Partner. AmeriGas, Inc., as the sole shareholder of the General Partner,
elects directors annually. AmeriGas, Inc. is a wholly owned subsidiary of UGI. Executive officers
are elected for one-year terms. There are no family relationships between any of the directors or
any of the executive officers or between any of the executive officers and any of the directors.
|
|
|
|
|
|
|
Name |
|
Age |
|
|
Position with the General Partner |
Lon R. Greenberg |
|
|
60 |
|
|
Chairman and Director |
Eugene V. N. Bissell |
|
|
57 |
|
|
President, Chief Executive Officer and Director |
John L. Walsh |
|
|
55 |
|
|
Vice Chairman and Director |
Stephen D. Ban |
|
|
69 |
|
|
Director |
Richard C. Gozon |
|
|
72 |
|
|
Director |
William J. Marrazzo |
|
|
61 |
|
|
Director |
Gregory A. Pratt |
|
|
62 |
|
|
Director |
Marvin O. Schlanger |
|
|
62 |
|
|
Director |
Howard B. Stoeckel |
|
|
65 |
|
|
Director |
Randy A. Hannigan |
|
|
59 |
|
|
Vice President Field Operations, South |
John S. Iannarelli |
|
|
46 |
|
|
Vice President Field Operations, North |
William D. Katz |
|
|
57 |
|
|
Vice President Human Resources |
Robert H. Knauss |
|
|
57 |
|
|
Vice President, General Counsel and Corporate Secretary |
David L. Lugar |
|
|
53 |
|
|
Vice President Supply and Logistics |
Andrew J. Peyton |
|
|
42 |
|
|
Vice President Sales and Marketing |
Kevin Rumbelow |
|
|
50 |
|
|
Vice President Operations Support |
Jerry E. Sheridan |
|
|
45 |
|
|
Vice President Finance and Chief Financial Officer |
William J. Stanczak |
|
|
55 |
|
|
Controller and Chief Accounting Officer |
33
Mr. Greenberg is a director (since 1994) and Chairman of the Board of Directors of the General
Partner. He previously served as President and Chief Executive Officer of the General Partner from
1996 until July 2000. He is also a director (since 1994), Chairman (since 1996) and Chief Executive
Officer (since 1995) of UGI Corporation, having previously been President (1994 to 2005) and Senior
Vice President Legal and Corporate Development of UGI (1989 to 1994). Mr. Greenberg previously
served as Vice President and General Counsel of AmeriGas, Inc. (1984 to 1994). He also serves as a
director of UGI Utilities, Inc. and Aqua America, Inc.
Mr. Bissell is President, Chief Executive Officer and a director of the General Partner (since
July 2000), having served as Senior Vice President Sales and Marketing of the General Partner
(1999 to 2000) and 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. Mr. Bissell
is a member of the Board of Directors of the National Propane Gas Association and a member of the
Kalamazoo College Board of Trustees.
Mr. Walsh is a director and Vice Chairman of the General Partner (since April 2005). He also
serves as a director and President and Chief Operating Officer of UGI Corporation (since April
2005). In addition, Mr. Walsh is a director (since April 2005) and President and Chief Executive
Officer (since July 2009) of UGI Utilities, Inc. Previously, Mr. Walsh was the Chief Executive of
the Industrial and Special Products division of the BOC Group plc, an industrial gases company, a
position he assumed in 2001. He was also an Executive Director of BOC (2001 to 2005). He joined
BOC in 1986 as Vice President-Special Gases and held various senior management positions in BOC,
including President of Process Gas Solutions, North America (2000 to 2001) and President of BOC
Process Plants (1996 to 2000).
Dr. Ban was elected a director of the General Partner on February 22, 2006. He is currently
working as a consultant in private industry. Dr. Ban recently retired as Director of the
Technology Transfer Division of the Argonne National Laboratory, a science-based Department of
Energy laboratory dedicated to advancing the frontiers of science in energy, environment,
biosciences and materials (2001 to 2010). He previously served as President and Chief Executive
Officer of the Gas Research Institute, a gas industry research and development company funded by
distributors, transporters, and producers of natural gas (1987 to 1999). He also served as
Executive Vice President of Gas Research Institute. Prior to joining Gas Research Institute in
1981, he was Vice President, Research and Development and Quality Control of Bituminous Materials,
Inc. Dr. Ban also serves as a director of UGI Corporation, UGI Utilities, Inc. and Energen
Corporation.
Mr. Gozon was elected a director of the General Partner on February 24, 1998. He retired as
Executive Vice President of Weyerhaeuser Company in 2002, an integrated forest products company,
and Chairman of Norpac, a North Pacific Paper Company, a joint venture with Nippon Paper
Industries, positions he had held since 1994. Mr. Gozon was formerly a director (1984 to 1993),
President and Chief Operating Officer of Alco Standard Corporation, a provider of paper and office
products (1988 to 1993); Executive Vice President and Chief Operating Officer (1988), President
(1985 to 1987) of Paper Corporation of America. He also serves as a director of UGI Corporation,
UGI Utilities, Inc., AmerisourceBergen 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
nations fourth largest market (since 1997). Previously, he was Chief Executive Officer and
President of Roy F. Weston, Inc. (1988 to 1997); Water Commissioner for the Philadelphia Water
Department (1971 to 1988) and Managing Director for the City of Philadelphia (1983 to 1984). He
also serves as a director of American Water Works Company, Inc. and Woodard & Curran Engineers.
Mr. Pratt was elected a director of the General Partner on May 24, 2005. He is Chairman of the
Board of Carpenter Technology Corporation, a manufacturer and distributor of stainless steel and
specialty alloys (since October 2009). Mr. Pratt also served as interim Chief Executive Officer and
President of Carpenter Technology
Corporation until July 1, 2010. He is the former Vice Chairman and a director of OAO
Technology Solutions, Inc. (OAOT), an information technology professional services company (2002 to
2010). He joined OAOT in 1998 as President and Chief Executive Officer after OAOT acquired
Enterprise Technology Group, Inc., a software engineering firm founded by Mr. Pratt. Mr. Pratt also
serves as President and a director of the Capital Area Chapter of the National Association of
Corporate Directors, a non-profit organization. He previously served as a director, President and
Chief Operating Officer of Intelligent Electronics, Inc. (1991 to 1996), and was co-founder, and
served as Chief Financial Officer of Atari Corp. and President of Atari (US) Corp. (1984 to 1991).
34
Mr. Schlanger was elected a director of the General Partner on January 26, 2009. Mr. Schlanger
is a Principal in the firm of Cherry Hill Chemical Investments, L.L.C., a company that provides
management services and capital to the chemical and allied industries (since October 1998). Mr.
Schlanger also serves as Chairman of the Board of LyondellBassell Industries N.V. (since June
2010), Chairman of the Board of CEVA Group, Plc (since February 2009), and Vice Chairman of Hexion
Specialty Chemicals, Inc. (since June 2005). He was previously Chairman and Chief Executive Officer
of Resolution Performance Products, Inc., a manufacturer of specialty and intermediate chemicals
(2000 to 2005), Chairman of Covalence Specialty Materials Corp. (2006 to 2007), and Chairman of
Resolution Specialty Materials, LLC (2004 to 2005). Mr. Schlanger also serves as a Director of UGI
Corporation, UGI Utilities, Inc., and Momentive Performance Materials Inc.
Mr. Stoeckel was elected a director of the General Partner on September 30, 2006. Mr. Stoeckel
is President and Chief Executive Officer of Wawa, Inc. and also serves as Vice Chairman of the
Board of Directors of Wawa, Inc. Wawa, Inc. is a multi-state retailer of food products and
gasoline. He joined Wawa, Inc. in 1987 as Vice President Human Resources and was promoted to
various positions, including Chief Operating Officer, Executive Vice President, Chief Retail
Officer, and Vice President Marketing. He also serves as a trustee for Rider University.
Mr. Hannigan is Vice President Field Operations, South of the General Partner (since March
2010), having served previously as Vice President Field Operations of the General Partner (2007
to 2010). He joined the General Partner as a District Manager in 1978 and has spent over 25 years
in positions of increasing responsibility including Region Vice President and General Manager (1997
to 2006). Mr. Hannigan retired effective October 15, 2010.
Mr. Iannarelli is Vice President Field Operations, North of the General Partner (since March
2010), having served previously as Vice President Midwest Operations of the General Partner
(January 2009 to March 2010) and Vice President Business Reengineering (2005 to 2009). Prior to
2005, he held various positions of increasing responsibility with the General Partner including
Region Vice President (2004 to 2005), Director of Region Operations (2001 to 2004), and Director of
Corporate Development (2000 to 2001). He joined the General Partner in December 1987.
Mr. Katz is Vice President Human Resources of the General Partner (since December 1999),
having served as Vice President Corporate Development (1996 to 1999). Previously, he was Vice
President Corporate Development of UGI Corporation (1995 to 1996). Prior to joining UGI
Corporation, Mr. Katz was Director of Corporate Development with Campbell Soup Company for over
five years. He also practiced law for approximately 10 years, first with the firm of Jones, Day,
Reavis & Pogue, and later in the Legal Department at Campbell Soup Company.
Mr. Knauss is Vice President and General Counsel of the General Partner (since October 2003)
and UGI Corporation (since September 2003). He is also Corporate Secretary of the General Partner
(since 1994). Prior to October 2003, Mr. Knauss served as Vice President Law and Associate
General Counsel of the General Partner (1996 to 2003). Previously he was Group Counsel Propane
(1989 to 1996) of UGI Corporation. He joined UGI Corporation as Associate Counsel in 1985. Before
joining UGI Corporation, Mr. Knauss was an associate at the firm of Ballard, Spahr, Andrews &
Ingersoll in Philadelphia, Pennsylvania.
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. Peyton is Vice President Sales and Marketing of the General Partner (since March 2010).
Previously, he served as General Manager, Southern Region and Northeast Region of the General
Partner (2009 to 2010) and as
General Manager, Southern Region (2006 to 2009). Prior to joining the General Partner, Mr.
Peyton served in a variety of positions, including national accounts and product management, during
his more than ten year tenure at Ryerson, Inc.
35
Mr. Rumbelow is Vice President Operations Support of the General Partner (since May 2006).
Previously, Mr. Rumbelow spent over 20 years at Rohm and Haas Company in Philadelphia,
Pennsylvania, and the United Kingdom, in positions of increasing responsibility including Corporate
Logistics/Supply Chain Director (2000 to 2006), North American Region Logistics Manager (1998 to
2000), and Inter Regional Logistics Manager (1996 to 1998).
Mr. Sheridan is Vice President Finance and Chief Financial Officer of the General Partner
(since August 2005). From 2003 to 2005, he served as President and Chief Executive Officer of
Potters Industries, Inc., a global manufacturer of engineered glass materials and a whollyowned
subsidiary of PQ Corporation. In addition, Mr. Sheridan served as Executive Vice President (2003 to
2005) and as Vice President and Chief Financial Officer (1999 to 2003) of PQ Corporation, a global
producer of inorganic specialty chemicals.
Mr. Stanczak is Controller and Chief Accounting Officer of the General Partner (since
September 2004). Previously he held the position of Director Corporate Accounting and Reporting
of UGI Corporation (2003 to 2004). Mr. Stanczak also served as Controller of the Gas Utility
Division of UGI Utilities, Inc., a subsidiary of UGI Corporation, from 1991 to 2003.
Director Independence
The Board of Directors of the General Partner has determined that, other than Messrs. Bissell,
Greenberg and Walsh, no director has a material relationship with the Partnership and each is an
independent director as defined under the rules of the New York Stock Exchange. The Board of
Directors has established the following guidelines to assist it in determining director
independence:
|
(i) |
|
service by a director on the Board of Directors of UGI Corporation and its subsidiaries
in and of itself will not be considered to result in a material relationship between such
director and the Partnership; |
|
(ii) |
|
if a director serves as an officer, director or trustee of a non-profit organization,
charitable contributions to that organization by the Partnership and its affiliates in an
amount up to $250,000 per year will not be considered to result in a material relationship
between such director and the Partnership; |
|
(iii) |
|
service by a director or his immediate family member as a non-management director of a
company that does business with the Partnership or an affiliate of the Partnership will not
be considered to result in a material relationship between such director and the
Partnership where the business is done in the ordinary course of the Partnerships or
affiliates business and on substantially the same terms and conditions as would be
available to similarly situated customers; and |
|
(iv) |
|
service by a director or his immediate family member as an executive officer or
employee of a company that makes payments to, or receives payments from, the Partnership or
its affiliates for property or services in an amount which, in any of the last three fiscal
years, does not exceed the greater of $1 million or 2% of such other companys consolidated
gross revenues, will not be considered to result in a material relationship between such
director and the Partnership. |
In making its determination of independence, the Board of Directors considered charitable
contributions and underwriting support given by the Partnership and its affiliates in prior years
to WHYY, of which Mr. Marrazzo is the Chief Executive Officer, as well as ordinary course business
transactions between the Partnership and its affiliates and Carpenter Technology Corporation, where
Mr. Pratt serves as Chairman of the Board and formerly served as interim President and Chief
Executive Officer during a portion of 2010. All such transactions were in compliance with the
categorical standards set by the Board of Directors for determining director independence.
Non-management Directors
Non-management directors meet at regularly scheduled executive sessions without management
present. These sessions are led by Mr. Gozon, who currently holds the position of Presiding
Director.
36
Communications with the Board of Directors and Non-management Directors
Interested persons wishing to communicate directly with the Board of Directors or the
non-management directors as a group may do so by sending written communications addressed to them
c/o AmeriGas Propane, Inc., P.O. Box 965, Valley Forge, PA 19482. Any communications directed to
the Board of Directors or the non-management directors as a group from employees or others that
concern complaints regarding accounting, internal controls or auditing matters will be handled in
accordance with procedures adopted by the Audit Committee of the Board.
All other communications directed to the Board of Directors or the non-management directors as
a group are initially reviewed by the General Counsel. The Chairman of the Corporate Governance
Committee is advised promptly of any such communication that alleges misconduct on the part of
management or raises legal, ethical or compliance concerns about the policies or practices of the
General Partner.
On a periodic basis, the Chairman of the Corporate Governance Committee receives updates on
other communications that raise issues related to the affairs of the Partnership but do not fall
into the two prior categories. The Chairman of the Corporate Governance Committee determines which
of these communications he would like to review. The Corporate Secretary maintains a log of all
such communications that is available for review for one year upon request of any member of the
Board.
Typically, the General Partner does not forward to the Board of Directors communications from
Unitholders or other parties which are of a personal nature or are not related to the duties and
responsibilities of the Board, including customer complaints, job inquiries, surveys and polls and
business solicitations.
These procedures have been posted on the Partnerships website at www.amerigas.com (click the
Investor Relations and Corporate Governance caption, then click on Contact AmeriGas Propane,
Inc. Board of Directors).
37
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the directors and certain
officers of the General Partner and any 10% beneficial owners of the Partnership to send reports of
their beneficial ownership of Common Units and changes in beneficial ownership to the Securities
and Exchange Commission. Based on our records, we believe that during Fiscal 2010 all of such
reporting persons complied with all Section 16(a) filing requirements applicable to them.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation/Pension Committee of the General Partner are Messrs. Schlanger
(Chairman) and Marrazzo and Dr. Ban. None of the members is a former or current officer or employee
of the General Partner or any of its subsidiaries. None of the members has any relationship
required to be disclosed under this caption under the rules of the Securities and Exchange
Commission.
REPORT OF THE COMPENSATION/PENSION COMMITTEE
The Compensation/Pension Committee has reviewed and discussed the Compensation Discussion and
Analysis with management. Based on this review and discussion, the Committee recommended to the
General Partners Board of Directors, and the Board of Directors approved, the inclusion of the
Compensation Discussion and Analysis in the Partnerships Annual Report on Form 10-K for the year
ended September 30, 2010.
Compensation/Pension Committee
Marvin O. Schlanger, Chairman
Stephen D. Ban
William J. Marrazzo
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
In this Compensation Discussion and Analysis, we address the compensation paid or awarded to
Messrs. Bissell, Sheridan, Greenberg, Walsh and Knauss. We refer to these executive officers as our
named executive officers.
Compensation decisions for Messrs. Bissell and Sheridan were made by the independent members
of the Board of Directors of the General Partner after receiving the recommendation of its
Compensation/Pension Committee. Compensation decisions for Messrs. Greenberg, Walsh and Knauss were
made by the independent members of the Board of Directors of UGI, after receiving the
recommendations of its Compensation and Management Development Committee. For ease of
understanding, we will use the term we to refer to AmeriGas Propane, Inc. and/or UGI Corporation
and the term Committee or Committees to refer to the AmeriGas Propane, Inc.
Compensation/Pension Committee and/or the UGI Corporation Compensation and Management Development
Committee as appropriate in the relevant compensation decisions, unless the context indicates
otherwise.
Compensation Philosophy and Objectives
We believe that our compensation program for our named executive officers is designed to
provide a competitive level of total compensation necessary to attract and retain talented and
experienced executives. Additionally, our compensation program is intended to motivate and
encourage our executives to contribute to our success and reward our executives for leadership
excellence and performance that promotes sustainable growth in unitholder and shareholder value.
38
In Fiscal 2010, the components of our compensation program included salary, annual bonus
awards, a discretionary cash bonus, long-term incentive compensation (performance unit awards and UGI Corporation stock option
grants), perquisites, retirement benefits, and other benefits, all as described in greater detail
in this Compensation Discussion and Analysis. We also consider granting discretionary special
equity awards from time to time, although no such awards were made to the named executive officers
during Fiscal 2010. We believe that the elements of our compensation program are essential
components of a balanced and competitive compensation program to support our annual and long-term
goals.
Determination of Competitive Compensation
In determining Fiscal 2010 compensation, the Committees engaged Towers Perrin as their
compensation consultant. In early 2010, Towers Perrin merged with Watson Wyatt, another human
resources consulting firm, and is now called Towers Watson. Towers Watson supported the Committees
in performing their responsibilities with respect to our executive compensation program. The
primary duties of Towers Watson were to:
|
|
|
provide the Committees with independent and objective market data; |
|
|
|
conduct compensation analysis; |
|
|
|
review and advise on pay programs and salary, target bonus and long-term incentive
levels applicable to our executives; and |
|
|
|
review components of our compensation program as requested from time to time by the
Committees and recommend plan design changes as appropriate. |
Towers Watson also performs other services for us and our affiliates under separate
agreements. These services include providing (i) actuarial services for UGIs pension plans, (ii)
consulting services with respect to benefits programs, (iii) non-discrimination testing for
qualified benefit plans, and (iv) assistance in determining the accounting fair value of our equity
awards. Towers Watson was selected by the Committees as their compensation consultant independent
of any consideration of the services that Towers Watson provides for us and our affiliates. None
of the Towers Watson consultants that provided services to the Committees and none of the Towers
Watson executive compensation consultants were involved in any of the actuarial and benefits
consulting services provided to us and our affiliates. Towers Watson has served as the actuary for
UGIs qualified pension plans for many years, and its knowledge and experience with our retirement
and benefit plans are considered valuable. In Fiscal 2010, we and our affiliates paid Towers
Watson $736,605 for these services. We and our affiliates paid Towers Watson $83,234 in Fiscal
2010 for executive compensation-related services, and the Committees approved Towers Watsons fee
structure for those services. Management engaged Towers Watson for all other services provided by
that firm, and management reviewed and approved all Towers Watson fees.
In July of Fiscal 2010, based on their review of the Towers Watson relationship, and to avoid
any appearance of a conflict, the Committees decided to retain Pay Governance LLC as their
compensation consultant for Fiscal 2011. Because Pay Governance LLC currently employs the
consultant who formerly served the Committees as our lead compensation consultant when he was
employed by Towers Perrin, the Committees did not lose the benefit of their lead consultants
knowledge of our compensation policies and programs. We will not engage Pay Governance LLC to
provide any additional consulting services.
39
In assessing competitive compensation, we referenced market data provided to us in Fiscal 2009
by Towers Watson. For Messrs. Bissell and Sheridan, Towers Watson provided us with two reports: the
2009 Executive Cash Compensation Review and the 2009 Executive Long-Term Incentive Review.
Each of these reports includes an executive compensation analysis. We utilize similar but
separate Towers Watson market data for UGI, including an executive compensation analysis, in
determining compensation for Messrs. Greenberg, Walsh and Knauss. We do not benchmark against
specific companies in the Towers Watson reports. Our Committees do benchmark, however, by using
(through Towers Watson) compensation databases that include numerous companies as a reference point
to provide a framework for compensation decisions. Our Committees exercise discretion and also
review other factors, such as internal equity and sustained individual and company performance,
when setting our executives compensation.
For Messrs. Bissell and Sheridan, the executive compensation analysis is based on general
industry data in Towers Watsons General Industry Executive Compensation Database, which includes
approximately 430 companies. For Messrs. Greenberg, Walsh and Knauss, the analysis was weighted 75
percent based on the General Industry Executive Compensation Database and 25 percent based on
Towers Watsons Energy Services Executive Compensation Database. This weighting is designed to
approximate the relative sizes of UGIs non-utility and utility businesses. Towers Watsons General
Industry Executive Compensation Database is comprised of companies from a broad range of
industries, including oil and gas, aerospace, automotive and transportation, chemicals, computer,
consumer products, electronics, food and beverages, metals and mining, pharmaceutical and
telecommunications. The Towers Watson Energy Services database is comprised of approximately 100
companies, primarily utilities.
We generally seek to position a named executive officers salary grade so that the midpoint of
the salary range for his salary grade approximates the 50th percentile of salaries for comparable
executives included in the executive compensation database material referenced by Towers Watson. By
comparable executive, we mean an executive having a similar range of responsibilities and the
experience to fully perform those responsibilities. Towers Watson uses regression analysis on
compensation data for the applicable positions in its databases to provide us with information on
market rates of compensation. Regression analysis is an objective calculation that identifies a
relationship between one variable (in this case, compensation) and another variable that is closely
related to it. For utilities and broader general industry companies, revenue provides the firmest
relationship to compensation. In other words, a larger company would be more likely to pay a
higher amount of compensation for the same position than a smaller company. Using this
relationship, market rates are developed for positions comparable to those of our executives, as if
the companies in the Executive Compensation and Energy Services databases had revenues similar to
ours. We believe that Towers Watsons regression analysis on the applicable positions in these
databases is an appropriate method for establishing market rates. After consultation with Towers
Watson, we considered salaries that were within 15 percent of market median salary levels developed
by Towers Watson to be competitive.
Elements of Compensation
Salary
Salary is designed to compensate executives for their level of responsibility and sustained
individual performance. We pay our executive officers a salary that is competitive with that of
other executive officers providing comparable services, taking into account the size and nature of
the business of AmeriGas Partners or UGI, as the case may be.
As noted above, we seek to establish the midpoint of the salary grade for the positions held
by our named executive officers to approximate the 50th percentile of salaries for executives in
comparable positions as determined in the applicable Towers Watson executive compensation
databases. Based on the data provided by Towers Watson, we increased the range of salary in each
salary grade for each named executive officer, other than Mr. Greenberg, by 1.5 percent. The
Committee established Mr. Greenbergs
Fiscal 2010 salary grade midpoint at the market median of comparable executives as identified
by Towers Watsons executive compensation databases. For Mr. Greenberg, this resulted in a slight
reduction of the midpoint from the prior year.
40
Historically, individual salaries have been adjusted to reflect merit increases based on
subjective performance evaluations and the individuals position
within the salary range for his salary grade. For Fiscal 2010, however, in response to the challenging economy and period of evolving market dynamics,
our named executive officers did not receive base salary increases.
All named executive officers received a salary in Fiscal 2010 that was within 86 percent to 106 percent of
the midpoint for his salary range.
The following table sets forth each named executive officers Fiscal 2010 salary. As
previously discussed, our named executive officers did not receive a base salary increase in Fiscal
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Increase |
|
|
|
|
|
|
|
over Fiscal 2009 |
|
Name |
|
Salary |
|
|
Salary |
|
|
|
|
|
|
|
|
|
|
E. V. N. Bissell |
|
$ |
490,000 |
|
|
|
0 |
% |
J. E. Sheridan |
|
$ |
302,356 |
|
|
|
0 |
% |
L. R. Greenberg |
|
$ |
1,067,500 |
|
|
|
0 |
% |
J. L. Walsh |
|
$ |
648,440 |
|
|
|
0 |
% |
R. H. Knauss |
|
$ |
340,340 |
|
|
|
0 |
% |
Annual Bonus Awards
Either our General Partner or UGI annual bonus plans provide our named executive officers with
the opportunity to earn annual cash incentives provided that certain performance goals are
satisfied. Our annual cash incentives are intended to motivate our executives to focus on the
achievement of our annual business objectives by providing competitive incentive opportunities to
those executives who have the ability to significantly impact our financial performance. We believe
that basing a meaningful portion of an executives compensation on financial performance emphasizes
our pay for performance philosophy and will result in the enhancement of partnership unitholder or
shareholder value.
In determining each executive positions target award level under our annual bonus plans, we
considered information in the Towers Watson executive compensation databases regarding the
percentage of salary payable upon achievement of target goals for executives in similar positions
at other companies as described above. In establishing the target award level, we position the
amount within the 50th to 75th percentiles for comparable positions. We determined that the 50th to
75th percentile range was appropriate because we believe that the annual bonus opportunities should
have a significant reward potential to recognize the difficulty of achieving the annual goals and
the significant beneficial impact to the Partnership of such achievement. For Fiscal 2010, Mr.
Bissells opportunity was set at approximately the 56th percentile and the other named executive
officers opportunities were set between the 50th and 63rd percentiles.
Messrs. Bissell and Sheridan participate in the AmeriGas Propane, Inc. Executive Annual Bonus
Plan. For Messrs. Bissell and Sheridan, the entire target award opportunity was based on earnings
per Common Unit (EPU) of AmeriGas Partners, with the bonus achieved based on EPU subject to
adjustment based on achievement of our customer growth goal, as described below. We believe that
annual bonus payments to our most senior executives should reflect our overall financial results
for the fiscal year and EPU provides a straightforward, bottom line measure of the performance of
an executive in a large, well-established business. In addition, we believe that customer growth for AmeriGas Partners is an
important corollary to EPU because we foresee no growth in total demand for propane in the next
several years, and, therefore, customer growth is an important factor in our ability to improve the
Partnerships long-term financial performance. Additionally, the customer growth adjustment serves
to balance the risk of achieving our short-term annual financial goals at the expense of our
long-term goal to grow our customer base.
41
Messrs. Greenberg, Walsh and Knauss participate in the UGI Corporation Executive Annual Bonus
Plan. For reasons similar to those underlying our use of EPU as a goal for Messrs. Bissell and
Sheridan, the entire target award for Messrs. Greenberg, Walsh and Knauss was based on UGIs
earnings per share (EPS). We also believe that EPS is an appropriate measure for Messrs.
Greenberg, Walsh and Knauss, whose duties encompass UGI and its affiliated enterprises, including
the General Partner and the Partnership. The EPS measure is not subject to adjustment based on
customer growth or any other metric.
As noted above, each of Messrs. Bissells and Sheridans target award opportunity was based on
EPU of the Partnership, subject to modification based on customer growth. The EPU target for bonus
purposes during Fiscal 2010 was established to be in the range of $2.97 to $3.14 per Common Unit.
Under the target bonus criteria applicable to Mr. Bissell, no bonus would be paid if the EPU amount
was less than approximately 80 percent of the EPU target, while 200 percent of the target bonus
might be payable if EPU was approximately 120 percent or more of the target. The percentage of
target bonus payable based on various levels of EPU is referred to as the EPU Leverage Factor.
The amount of the award determined by applying the EPU Leverage Factor is then adjusted to reflect
the degree of achievement of a predetermined customer growth objective (Customer Growth Leverage
Factor). For Fiscal 2010, the adjustment ranged from 90 percent if the growth objective was not
achieved, to 110 percent if the growth objective exceeded approximately 150 percent of the growth
target. The customer growth adjustment for Fiscal 2010 was modified to reflect our assessment of
growth prospects after considering current and projected economic and housing market conditions.
We believe the Customer Growth Leverage Factor for Fiscal 2010 represented an aggressive but
achievable growth target. Once the EPU Leverage Factor and Customer Growth Leverage Factor are
determined, the EPU Leverage Factor is multiplied by the Customer Growth Leverage Factor to obtain
an adjusted leverage factor. This adjusted leverage factor is then multiplied by the target bonus
opportunity to arrive at the bonus award payable for the fiscal year.
Each Committee has discretion to adjust performance results for
extraordinary items or other events as the Committee deems
appropriate. For Fiscal 2010, the Committee deemed it appropriate to
adjust EPU to exclude the loss associated with the discontinuance of
the Partnerships interest rate hedges. This adjustment resulted
in EPU slightly less than the EPU target. During Fiscal 2010, the
Partnerships management decided not to issue $150 million
of long-term debt as previously planned due to the Partnerships
strong cash flows and the adequate level of funds available under its
revolving loan agreements. Accordingly, the Partnership discontinued
cash flow accounting treatment for interest rate protection
agreements associated with the anticipated debt issuance which
resulted in a loss in Fiscal 2010. The discretionary exclusion of
this loss from EPU resulted in a 13.8 percentage point increase to
the EPU Leverage Factor, which was then modified because the customer
growth target was not achieved. Accordingly, each of Messrs. Bissell
and Sheridan received a bonus payout equal to 89.2 percent of his
target award.
The bonus award opportunity for each of Messrs. Greenberg, Walsh and Knauss was
structured so that no amounts would be paid unless UGIs EPS was at least 80 percent of the
target amount, with the target bonus award being paid out if
UGIs EPS was 100 percent of the
targeted EPS. The maximum bonus, equal to 200 percent of the target bonus, would be payable if
the EPS equaled or exceeded 120 percent of the EPS target. The
targeted EPS for bonus purposes
for Fiscal 2010 was established to be in the range of $2.20 to $2.30 per share. For Fiscal 2010,
the Committee excluded from the calculation of the EPS Leverage Factor all of the gain
associated with the divestiture of UGIs indirect subsidiary,
Atlantic Energy, due to its unusual
nature. The Committee also excluded the loss associated with the discontinuance of the
Partnerships interest rate hedges for the reasons previously discussed. The exclusion of the gain
associated with the divestiture of Atlantic Energy resulted in a 27.3 percentage point reduction to
the EPS Leverage Factor. The exclusion of the loss associated with the discontinuance of the
Partnerships interest rate hedges resulted in a 5.5 percentage
point increase to the EPS Leverage
Factor. Accordingly, for Fiscal 2010 Messrs. Greenberg, Walsh and Knauss each received a
bonus payout equal to 107.3 percent of his target bonus.
42
The following annual bonus payments were made for Fiscal 2010:
|
|
|
|
|
|
|
|
|
|
|
Percent of |
|
|
|
|
|
|
|
Target |
|
|
|
Amount |
|
Name |
|
Bonus Paid |
|
|
|
of Bonus |
|
E. V. N. Bissell |
|
89.2 |
% |
|
|
$ |
349,664 |
|
J. E. Sheridan |
|
89.2 |
% |
|
|
$ |
134,851 |
|
L. R. Greenberg |
|
107.3 |
% |
|
|
$ |
1,145,428 |
|
J. L. Walsh |
|
107.3 |
% |
|
|
$ |
591,410 |
|
R. H. Knauss |
|
107.3 |
% |
|
|
$ |
237,370 |
|
Discretionary
Bonus
On
November 19, 2010, the Committee and the independent members of
the UGI Board of Directors approved a discretionary bonus of $45,000
to Mr. Knauss. This bonus was in recognition of
Mr. Knauss extraordinary leadership efforts relating to
the restoration of our corporate headquarters building following a
fire in December of 2009.
Long-Term Compensation Fiscal 2010 Equity Awards
Our long-term incentive compensation is intended to create a strong financial incentive for
achieving or exceeding long-term performance goals and to encourage executives to hold a
significant equity stake in our company in order to align the executives interests with unitholder
interests. Additionally, we believe our long-term incentives provide us the ability to attract and
retain talented executives in a competitive market. We awarded our long-term compensation effective
December 31, 2009 for Messrs. Bissell and Sheridan under the 2000 AmeriGas Propane, Inc. Long-Term
Incentive Plan, and effective January 1, 2010 under the 2004 Plan. Messrs. Greenberg, Walsh and
Knauss received long-term compensation awards under the 2004 Plan.
Our long-term compensation for Fiscal 2010 included UGI stock option grants and either
AmeriGas Partners performance unit awards or UGI performance unit awards. Messrs. Bissell and
Sheridan were each awarded AmeriGas Partners performance unit awards tied to the three-year total
return performance of AmeriGas Partners Common Units relative to that of the limited partnerships
in the Alerian MLP Index. Messrs. Greenberg, Walsh and Knauss were each awarded UGI Corporation
performance units tied to the three-year total return performance of UGIs common stock relative to
that of the companies in the S&P Utilities Index. Each performance unit represents the right of the
recipient to receive a Common Unit or a share of common stock if specified performance goals and
other conditions are met.
As is the case with cash compensation and annual bonus awards, we referenced Towers Watsons
executive compensation databases in establishing equity compensation. In determining the total
dollar value of the long-term compensation opportunity to be provided in Fiscal 2010, we initially
referenced (i) market median salary information and (ii) the percentage of the market median base
salary for each position to be delivered as a long-term compensation opportunity, both as
calculated by Towers Watson. The aforementioned percentage was developed using the applicable
executive compensation databases and was targeted to produce long-term compensation opportunity at
the 50th percentile level.
We initially applied approximately 50 percent of the amount of the long-term incentive
opportunity to stock options and approximately 50 percent to performance units. We have bifurcated
long-term compensation in this manner since 2000 and believe it provides a good balance between two
related, but discrete goals. Stock options are designed to align the executives interests with
shareholder interests, because the value of stock options is a function of the appreciation or
depreciation of UGIs stock price. As explained in more detail below, the performance units are
designed to encourage total unitholder or shareholder return that compares favorably relative to a
competitive peer group.
43
In providing award calculations, Towers Watson valued UGI stock options by applying a binomial
model. The stock price used in the model for January 1, 2010 awards was $25.11 which was the three
month average UGI stock price from May 10, 2009 through August 10, 2009. The model also
assumes 5 percent turnover annually over the vesting period to account for options forfeited by
terminating participants. As a result of this analysis, Towers Watson valued the stock options at
$2.27 per underlying share. Based on its valuation, Towers Watson calculated the number of options
to be granted to the named executive officers covering a specified number of underlying shares.
The remaining approximately 50 percent of the long-term compensation opportunity is awarded as
performance units. In calculating the number of AmeriGas Partners performance units to be awarded
to each of Messrs. Bissell and Sheridan, Towers Watson placed a value of $25.92 per unit. The value
was computed by taking an average price for AmeriGas Partners common units from May 10, 2009
through August 10, 2009, and adjusting the price based on Towers Watsons standard assumptions,
including the same 5 percent turnover assumption used in valuing stock options. The number of UGI
performance units awarded was computed in a similar fashion, subject to the same 5 percent turnover
assumption. In calculating the number of UGI performance units to be awarded to Messrs. Greenberg,
Walsh and Knauss, Towers Watson placed a value of $19.45 per share underlying a UGI performance
unit, based on the average price of UGI common stock over the three month period from May 10, 2009
through August 10, 2009.
While management used the Towers Watson calculations as a starting point, in accordance with
past practice, management recommended adjustments to the aggregate number of UGI stock options and
AmeriGas Partners and UGI performance units calculated by Towers Watson. The adjustments were
designed to address historic grant practices, internal pay equity and the policy of UGI that the
three year average of the annual number of UGI equity awards, expressed as a percentage of UGI
common shares outstanding at fiscal year-end, made under the 2004 Plan for the fiscal years 2008
through 2010 will not exceed 2 percent. Despite the significant decrease in the UGI Corporation
stock option value between Fiscal 2009 and Fiscal 2010 as calculated by Towers Watson for the
purpose of valuing UGI stock options, management, in response to challenging economic conditions,
did not increase the number of stock options granted to Messrs. Greenberg and Walsh in Fiscal 2010.
In addition, management only modestly increased the number of stock options granted to the other
named executive officers in Fiscal 2010. For purposes of calculating the annual number of equity
awards used in this calculation: (i) each stock option granted is deemed to equal one share and
(ii) each performance unit earned and paid in shares of stock and each stock unit granted and
expected to be paid in shares of stock is deemed to equal four shares.
As a result of the Committees acceptance of managements recommendations, the named
executives received between approximately 82 percent and 95 percent of the total dollar value of
long-term compensation opportunity recommended by Towers Watson. The total dollar value of the
long-term compensation received by the named executive officers in Fiscal 2010 was approximately 25
percent to 39 percent less than the dollar value of long-term compensation awarded in Fiscal 2009.
The actual grant amounts are set forth below:
|
|
|
|
|
|
|
|
|
|
|
Shares Underlying |
|
|
|
|
|
|
Stock Options |
|
|
Performance Units |
|
Name |
|
# Granted |
|
|
# Granted |
|
E. V. N. Bissell |
|
|
80,000 |
|
|
|
17,000 |
|
J. E. Sheridan |
|
|
22,000 |
|
|
|
3,800 |
|
L. R. Greenberg |
|
|
300,000 |
|
|
|
70,000 |
(1) |
J. L. Walsh |
|
|
125,000 |
|
|
|
28,000 |
(1) |
R. H. Knauss |
|
|
57,000 |
|
|
|
11,000 |
(1) |
|
|
|
(1) |
|
Constitutes UGI performance units. |
44
While the number of performance units awarded to the named executive officers was determined
as described above, the actual number of shares or Common Units underlying performance units that
are paid out at the expiration of the three-year performance period will be based upon comparative
AmeriGas
Partners total unitholder return (TUR) or UGI total shareholder return (TSR) over the
period from January 1, 2010 to December 31, 2012. In computing TUR, we use the average of the daily
closing prices for our Common Units and those of each of the limited partnerships in the Alerian
MLP Index for the ninety calendar days prior to January 1 of the beginning and end of a given
three-year performance period. In addition, TUR gives effect to all distributions throughout the
three-year performance period as if they had been reinvested. For the AmeriGas Partners performance
units awarded to Messrs. Bissell and Sheridan, we compare the TUR of AmeriGas Partners Common
Units to the TUR performance of each of the 50 limited partnerships in the Alerian MLP Index. If a
partnership is added to the Alerian MLP Index during a three-year performance period, we do not
include that partnership in our TUR analysis. We will only remove a partnership that was included
in the Alerian MLP Index at the beginning of a performance period if such partnership ceases to
exist during the applicable performance period. Prior to Fiscal 2010, we compared the TUR
performance of AmeriGas Partners Common Units to the TUR performance of a peer group consisting of
selected publicly traded limited partnerships engaged in the propane, pipeline and coal industries.
We believe using a published index maintained by an independent third party is preferable to using
a selected group of partnerships because it lends greater impartiality to the AmeriGas Propane
long-term incentive compensation program. The limited partnerships comprising the Alerian MLP
Index as of December 31, 2009 were as follows:
|
|
|
|
|
Alliance Holdings GP, L.P.
|
|
Enterprise GP Holdings LP
|
|
Penn Virginia GP Holdings, L.P. |
|
|
|
|
|
Alliance Resource Partners, L.P.
|
|
EV Energy Partners, L.P.
|
|
Penn Virginia Resource Partners, L.P. |
|
|
|
|
|
Boardwalk Pipeline Partners, LP
|
|
Ferrellgas Partners, L.P.
|
|
Pioneer Southwest Energy Partners L.P. |
|
|
|
|
|
Buckeye GP Holdings L.P.
|
|
Genesis Energy, L.P.
|
|
Plains All American Pipeline, L.P. |
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|
|
|
|
Buckeye Partners, L.P.
|
|
Holly Energy Partners, L.P.
|
|
Regency Energy Partners LP |
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|
Calumet Specialty Products Partners, L.P.
|
|
Inergy, L.P.
|
|
Spectra Energy Partners, LP |
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|
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|
Copano Energy, L.L.C.
|
|
Kinder Morgan Energy Partners, L.P.
|
|
Star Gas Partners, L.P. |
|
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|
DCP Midstream Partners, LP
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Kinder Morgan Management, LLC
|
|
Suburban Propane Partners, L.P. |
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Dorchester Minerals, L.P.
|
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Legacy Reserves LP
|
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Sunoco Logistics Partners L.P. |
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|
Duncan Energy Partners L.P.
|
|
Linn Energy, LLC
|
|
TC PipeLines, LP |
|
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|
El Paso Pipeline Partners, L.P.
|
|
Magellan Midstream Partners, L.P.
|
|
Targa Resources Partners LP |
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|
|
Enbridge Energy Management, L.L.C.
|
|
Markwest Energy Partners, L.P.
|
|
Teekay LNG Partners L.P. |
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Enbridge Energy Partners, L.P.
|
|
Natural Resource Partners L.P.
|
|
Teekay Offshore Partners L.P. |
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|
Encore Energy Partners LP
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Navios Maritime Partners L.P.
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Western Gas Partners, LP |
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Energy Transfer Equity, L.P.
|
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NuStar Energy L.P.
|
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Williams Partners L.P. |
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Energy Transfer Partners, L.P.
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|
NuStar GP Holdings, LLC
|
|
Williams Pipeline Partners L.P. |
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|
Enterprise Products Partners L.P.
|
|
ONEOK Partners, L.P. |
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|
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|
|
45
In determining the number of UGI performance units to be paid out, UGI will compare the TSR of
UGI common stock relative to the TSR performance of those companies comprising the Standard and
Poors 500 Utilities Index (S&P Utilities Index) as of the beginning of a performance period. In
computing TSR, UGI uses the average of the daily closing prices for its common stock and the common
stock of each company in the S&P Utilities Index for the ninety calendar days prior to January 1 of
the beginning and end of a given three-year performance period. In addition, TSR gives effect to
all dividends throughout the three-year performance period as if they had been reinvested. If a
company is added to the S&P Utilities Index during a three-year performance period, UGI does not
include that company in its TSR analysis. UGI will only remove a company that was included in the
S&P Utilities Index at the beginning of a performance period if such company ceases to exist during
the applicable performance period. Those companies in the S&P Utilities Index as of December 31,
2009 were as follows:
|
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|
|
Allegheny Energy, Inc.
|
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EQT Corporation
|
|
PPL Corporation |
|
|
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|
|
Ameren Corporation
|
|
Exelon Corporation
|
|
Progress Energy, Inc. |
|
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|
|
American Electric Power Company, Inc.
|
|
FirstEnergy Corp.
|
|
Public Service Enterprise Group Inc. |
|
|
|
|
|
Centerpoint Energy, Inc.
|
|
FPL Group, Inc.
|
|
Questar Corporation |
|
|
|
|
|
CMS Energy Corporation
|
|
Integrys Energy Group, Inc.
|
|
SCANA Corporation |
|
|
|
|
|
Consolidated Edison, Inc.
|
|
Nicor Inc.
|
|
Sempra Energy |
|
|
|
|
|
Constellation Energy Group, Inc.
|
|
NiSource Inc.
|
|
TECO Energy, Inc. |
|
|
|
|
|
Dominion Resources, Inc.
|
|
Northeast Utilities
|
|
The AES Corporation |
|
|
|
|
|
DTE Energy Company
|
|
PG&E Corporation
|
|
The Southern Company |
|
|
|
|
|
Duke Energy Corporation
|
|
Pepco Holdings, Inc.
|
|
Wisconsin Energy Corporation |
|
|
|
|
|
Edison International
|
|
Pinnacle West Capital Corp.
|
|
Xcel Energy Inc. |
|
|
|
|
|
Entergy Corporation |
|
|
|
|
Each award payable to the named executive officers provides a number of AmeriGas Partners
Common Units or UGI shares equal to the number of performance units earned. After the Committee has
determined that the conditions for payment have been satisfied, management of the General Partner
or UGI, as the case may be, has the authority to provide for a cash payment to the named executives
in lieu of the Common Units or shares payable. The cash payment is based on the value of the
securities at the end of the performance period and is designed to meet minimum statutory tax
withholding requirements. In the event that UGI executives earn shares in excess of the target
award, the value of the above target shares is paid entirely in cash.
The minimum award, equivalent to 50 percent of the number of performance units, will be
payable if the TUR or TSR rank is at the 40th percentile of the Alerian MLP Index or S&P Utilities
Index companies, as applicable. The target award, equivalent to 100 percent of the number of
performance units, will be payable if the TUR or TSR rank is at the 50th percentile. The maximum
award, equivalent to 200 percent of the number of performance units, will be payable if the TUR or
TSR rank is the highest of all Alerian MLP Index limited partnerships or S&P Utilities Index
companies, as applicable.
46
All performance units have partnership distribution or dividend equivalent rights, as
applicable. A distribution equivalent is an amount determined by multiplying the number of
performance units credited to a recipients account by the per-unit cash distribution, or the
per-unit fair market value of any non-cash distribution, paid by AmeriGas Partners during the
performance period on its Common Units on a distribution payment date. Accrued distribution and
dividend (in the case of UGI performance units) equivalents are payable on the number of Common
Units or common shares payable, if any, at the end of the performance period and are paid in cash.
Long-Term Compensation Payout of Performance Units for 2007-2009 Period
During Fiscal 2010, we paid out awards to those executives who received performance units in
fiscal year 2007 for the period from January 1, 2007 to December 31, 2009. For that period, the
Partnerships TUR ranked 6th relative to its peer group of 18 other partnerships, placing the
Partnership at just above the 72nd percentile ranking, resulting in a 145.4 percent payout of the
target award. UGIs TSR ranked 13th relative to the 29 other companies in the S&P 500 Utilities
Index, placing UGI just above the 58th percentile ranking, resulting in a 121.6 percent payout of
the target award. The performance criteria for AmeriGas Partners and UGIs performance unit awards
during that period was the same as those for the performance units granted for 2009-2011, described
above, except that the Partnerships TUR was compared to that of each member of a peer group of
publicly-traded master limited partnerships in the propane, pipeline and coal industries as of the
January 1, 2007 award date. As a result of the foregoing, the payouts on performance unit awards
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Unit |
|
Name |
|
Performance Unit Payout (#) |
|
|
Payout Value(1) ($) |
|
E. V. N. Bissell |
|
|
20,356 |
|
|
|
969,149 |
|
J. E. Sheridan |
|
|
3,926 |
|
|
|
186,907 |
|
L. R. Greenberg |
|
|
72,960 |
|
|
|
1,931,707 |
|
J. L. Walsh |
|
|
31,616 |
|
|
|
837,073 |
|
R. H. Knauss |
|
|
10,944 |
|
|
|
289,756 |
|
|
|
|
(1) |
|
Includes distribution equivalent or dividend equivalent payout. |
Perquisites
We provide limited perquisite opportunities to our executive officers. We provide
reimbursement for tax preparation services, certain health maintenance services and limited spousal
travel. The aggregate cost of perquisites for all named executive officers in Fiscal 2010 was less
than $20,000.
Other Benefits
Our named executive officers participate in various retirement, deferred compensation and
severance plans which are described in greater detail in the Ongoing Plans and Post-Employment
Agreements section of this Compensation Discussion and Analysis. We also provide employees,
including the named executive officers, with a variety of other benefits, including medical and
dental benefits, disability benefits, life insurance, and paid holidays and vacations. These
benefits generally are available to all of our full-time employees.
47
Ongoing Plans and Post-Employment Agreements
We have several plans and agreements (described below) that enable our named executive
officers to accrue retirement benefits as the executives continue to work for us, provide severance
benefits upon certain types of termination of employment events or provide other forms of deferred
compensation.
AmeriGas Propane, Inc. Savings Plan (the AmeriGas Propane Savings Plan)
This plan is a tax-qualified defined contribution plan for General Partner employees. Under
the plan, an employee may contribute, subject to Code limitations (which, among other things,
limited annual contributions in 2010 to $16,500), up to 50 percent of his or her eligible
compensation on a pre-tax basis, and the General Partner provides a matching contribution equal to
100 percent of the first 5 percent of eligible compensation contributed in any pay period. Amounts
credited to an employees account in the plan may be invested among a number of funds, including a
UGI stock fund. Messrs. Bissell and Sheridan are eligible to participate in the AmeriGas Propane
Savings Plan.
UGI Utilities, Inc. Savings Plan (the UGI Savings Plan)
This plan is a tax-qualified defined contribution plan available to, among others, employees
of UGI. Under the plan, an employee may contribute, subject to Code limitations (which, among other
things, limited annual contributions in 2010 to $16,500), up to a maximum of 50 percent of his or
her eligible compensation on a pre-tax basis and up to 20 percent of his or her eligible
compensation on an after-tax basis. The combined maximum of pre-tax and after-tax contributions is
50 percent of his or her eligible compensation. UGI provides matching contributions targeted at 50
percent of the first 3 percent of eligible compensation contributed by the employee in any pay
period, and 25 percent of the next 3 percent. For participants entering the UGI Savings Plan on or
after January 1, 2009, who are not eligible to participate in the UGI Pension Plan, the Company
provides matching contributions targeted at 100 percent of the first 5 percent of eligible
compensation contributed by the employee in any pay period. Like the AmeriGas Propane Savings
Plan, participants in the UGI Savings Plan may invest amounts credited to their account among a
number of funds, including a UGI stock fund. Messrs. Greenberg, Walsh and Knauss are eligible to
participate in the UGI Savings Plan.
Retirement Income Plan for Employees of UGI Utilities, Inc. (the UGI Pension Plan)
This plan is a tax-qualified defined benefit plan available to, among others, employees of UGI
and certain of its subsidiaries, but not including the General Partner. The UGI Pension Plan was
closed to new participants as of January 1, 2009. The UGI Pension Plan provides an annual
retirement benefit based on an employees earnings and years of service, subject to maximum benefit
limitations. Messrs. Greenberg, Walsh and Knauss are eligible to participate in the UGI Pension
Plan. Mr. Bissell has a vested benefit in the UGI Pension Plan, but he no longer participates. See
the Pension Benefits Table Fiscal 2010 and accompanying narrative for additional information.
UGI Corporation Supplemental Executive Retirement Plan and Supplemental Savings Plan
UGI Corporation Supplemental Executive Retirement Plan
This plan is a nonqualified defined benefit plan that provides retirement benefits that would
otherwise be provided under the UGI Pension Plan, but are restricted from being paid from the UGI
Pension Plan by Code limits. The plan also provides additional benefits in the event of certain
terminations of employment covered by a change in control agreement. Messrs. Greenberg, Walsh and
Knauss
participate in the UGI Corporation Supplemental Executive Retirement Plan. See the Pension
Benefits Table Fiscal 2010 and accompanying narrative for additional information.
48
UGI Corporation Supplemental Savings Plan
This plan is a nonqualified deferred compensation plan that provides benefits that would be
provided under the qualified UGI Savings Plan in the absence of Code limitations. The Supplemental
Savings Plan is intended to pay an amount substantially equal to the difference between the Company
matching contribution to the qualified UGI Savings Plan and the matching contribution that would
have been made under the qualified UGI Savings Plan if the Code limitations were not in effect. At
the end of each plan year, a participants account is credited with earnings equal to the weighted
average return on two indices: 60 percent on the total return of the Standard and Poors 500 Index
and 40 percent on the total return of the Barclays Capital U.S. Aggregate Bond Index. The plan
also provides additional benefits in the event of certain terminations of employment covered by a
change in control agreement. Messrs. Greenberg, Walsh and Knauss are each eligible to participate
in the UGI Corporation Supplemental Savings Plan and each will receive a benefit if his
contribution to the UGI Savings Plan satisfies the requirements under the UGI Corporation
Supplemental Savings Plan. See the Nonqualified Deferred Compensation Table Fiscal 2010 and
accompanying narrative for additional information.
AmeriGas Propane, Inc. Supplemental Executive Retirement Plan
The General Partner maintains a supplemental executive retirement plan, which is a
nonqualified deferred compensation plan for highly compensated employees of the General Partner.
Under the plan, the General Partner credits to each participants account 5 percent of the
compensation below the Code compensation limits and 10 percent of excess compensation. In addition,
if any portion of the General Partners matching contribution under the AmeriGas Propane, Inc.
Savings Plan is forfeited due to nondiscrimination requirements under the Code, the forfeited
amount, adjusted for earnings and losses on the amount, will be credited to a participants
account. Participants direct the investment of the amounts in their accounts among a number of
mutual funds. Messrs. Bissell and Sheridan participate in the AmeriGas Propane, Inc. Supplemental
Executive Retirement Plan. See the Nonqualified Deferred Compensation Table Fiscal 2010 and
accompanying narrative for additional information.
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan On Behalf of AmeriGas Partners, L.P.
Effective July 30, 2010, this plan succeeded the AmeriGas Propane, Inc. 2000 Long-Term
Incentive Plan On Behalf of AmeriGas Partners, L.P., which expired on December 31, 2009. The plan
provides (i) designated employees of the General Partner and its affiliates and (ii) non-employee
members of the Board of Directors of the General Partner with the opportunity to receive grants of
options, phantom units, performance units, unit awards, unit appreciation rights, distribution
equivalents and other unit-based awards. The plan also provides that if there is a change of
control of AmeriGas Partners or UGI Corporation, then the following will generally occur: (i)
AmeriGas Partners will provide the participant with written notification of the change of control,
(ii) all outstanding options and unit appreciation rights will automatically vest and become
exercisable, (iii) the restrictions and conditions on outstanding unit awards will lapse, (iv)
phantom units and performance units will become payable in cash in an amount not less than their
target amount or in a larger amount, up to the maximum grant value, as determined by the
Compensation/Pension Committee, and (v) distribution equivalents and other unit-based awards will
become payable in full in cash, in amounts determined by the Compensation/Pension Committee.
Messrs. Bissell and Sheridan are eligible to participate in the AmeriGas Propane, Inc. 2010
Long-Term Incentive Plan On Behalf of AmeriGas Partners, L.P.
49
AmeriGas Propane, Inc. Nonqualified Deferred Compensation Plan
The General Partner maintains a nonqualified deferred compensation plan under which
participants may defer up to $10,000 of their annual compensation. Deferral elections are made
annually by eligible participants in respect of compensation to be earned for the following year.
Participants may direct the investment of deferred amounts into a number of mutual funds. Payment
of amounts accrued for the account of a participant generally is made following the participants
termination of employment. Messrs. Bissell and Sheridan are eligible to participate in the AmeriGas
Propane, Inc. Nonqualified Deferred Compensation Plan. See the Nonqualified Deferred Compensation
Table Fiscal 2010 and accompanying narrative for additional information.
UGI Corporation 2009 Deferral Plan, As Amended and Restated Effective June 1, 2010
This plan provides deferral options that comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended, related to (i) all phantom units and stock units granted
to the General Partners and UGIs non-employee Directors, (ii) benefits payable under the UGI
Corporation Supplemental Executive Retirement Plan, and (iii) benefits payable under the AmeriGas
Propane, Inc. Supplemental Executive Retirement Plan. If an eligible participant elects to defer
payment under the plan, the participant may receive future benefits after separation from service
as (i) a lump sum payment, (ii) annual installment payments over a period between two and ten
years, or (iii) one to five retirement distribution accounts to be paid in a lump sum in the year
specified by the individual. Deferred benefits, other than phantom units and stock units, will be
deemed to be invested in investment funds selected by the participant from among a list of
available funds. Messrs. Bissell, Sheridan, Greenberg, Walsh and Knauss elected to defer benefits
under this plan. The plan also provides newly eligible participants with a deferral election that
must be acted upon promptly.
Severance Pay Plans for Senior Executive Employees
The General Partner and UGI each maintain a severance pay plan that provides severance
compensation to certain senior level employees. The plans are designed to alleviate the financial
hardships that may be experienced by executive employee participants whose employment is terminated
without just cause, other than in the event of death or disability. The General Partner plan covers
Messrs. Bissell and Sheridan and the UGI plan covers Messrs. Greenberg, Walsh and Knauss. See
Potential Payments Upon Termination of Employment or Change in Control below for further
information regarding the severance plans.
Change in Control Agreements
The General Partner has change in control agreements with Messrs. Bissell and Sheridan, and
UGI has change in control agreements with Messrs. Greenberg, Walsh and Knauss. The change in
control agreements are designed to reinforce and encourage the continued attention and dedication
of the executives without distraction in the face of potentially disturbing circumstances arising
from the possibility of a change in control and to serve as an incentive to their continued
employment with us. The agreements provide for payments and other benefits if we terminate an
executives employment without cause or if the executive terminates employment for good reason
within two years following a change in control of UGI (and, in the case of Messrs. Bissell and
Sheridan, the General Partner or AmeriGas Partners). The agreements also provide that if change in
control payments exceed certain threshold amounts, we or UGI, as the case may be, will make
additional payments to reimburse the executives for excise and related taxes imposed under the
Code. See Potential Payments Upon Termination of Employment or Change in Control for further
information regarding the change in control agreements.
50
Equity Ownership Guidelines
We seek to align executives interests with unitholder and shareholder interests through our
equity ownership guidelines. We believe that by encouraging our executives to maintain a meaningful
equity interest in AmeriGas Partners or, if applicable, UGI, we will enhance the link between our
executives and unitholders or shareholders. Under our guidelines, an executive must meet 10 percent
of the ownership requirement within one year from the date of employment or promotion and must use
10 percent of his gross annual bonus award to purchase Common Units or UGI stock (or, in the case
of Messrs. Greenberg and Walsh, UGI stock) until his equity ownership requirement is met. In
addition, the guidelines require that 50 percent of the net proceeds from a cashless exercise of
UGI stock options be used to purchase equity until the ownership requirement is met. Up to 20
percent of the ownership requirement may be satisfied through holdings of UGI common stock in the
executives account in the relevant savings plan.
Messrs. Bissell, Sheridan and Knauss are each permitted to satisfy their requirements through
ownership of Common Units, UGI common stock, or a combination of Common Units and UGI common stock,
with each Common Unit equivalent to 1.5 shares of UGI common stock. The stock ownership guidelines
further permit any UGI executive, who was formerly employed by the General Partner, to satisfy up
to 50 percent of his or her stock ownership requirement with Common Units. The following table
provides information regarding our equity ownership guidelines for, and the number of common units
and shares held at September 30, 2010, by our named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required Ownership |
|
|
|
|
|
|
|
|
|
of AmeriGas |
|
|
|
|
|
|
|
|
|
Partners Common |
|
|
Number of AmeriGas |
|
|
Number of Shares |
|
|
|
Units1 or UGI |
|
|
Partners Common |
|
|
of UGI Corporation |
|
|
|
Corporation |
|
|
Units Held at |
|
|
Stock Held at |
|
Name |
|
Common Stock2 |
|
|
9/30/20103 |
|
|
9/30/20103 |
|
E. V. N. Bissell |
|
|
40,000 |
1 |
|
|
64,600 |
|
|
|
68,197 |
|
J. E. Sheridan |
|
|
5,333 |
1 |
|
|
16,703 |
|
|
|
1,036 |
|
L. R. Greenberg |
|
|
250,000 |
2 |
|
|
11,000 |
|
|
|
406,305 |
|
J. L. Walsh |
|
|
100,000 |
2 |
|
|
7,000 |
|
|
|
110,249 |
|
R. H. Knauss |
|
|
20,000 |
2 |
|
|
14,108 |
|
|
|
21,908 |
|
|
|
|
1. |
|
Common Units of AmeriGas Partners. |
|
2. |
|
Shares of Common Stock of UGI Corporation. |
|
3. |
|
All officers are in compliance with the ownership guidelines, which require the accumulation
of equity over time. |
Stock Option Grant Practices
The Committees approve annual stock option grants to executive officers in the last calendar
quarter of each year, effective the following January 1. The exercise price per share of the
options is equal to the closing share price of UGI common stock on the last trading day of
December. A grant to a new employee is generally effective on the later of the date the employee
commences employment with us or the date the Committee authorizes the grant. In either case the
exercise price is equal to the closing price per share of UGI common stock on the effective date of
grant. From time to time, management recommends stock option grants for non-executive employees,
and the grants, if approved by the Committee, are effective on the date of Committee action and
have an exercise price equal to the closing price per share of UGI common stock on the date of
grant. We believe that our stock option grant
practices are appropriate and effectively eliminate any question regarding timing of grants
in anticipation of material events.
51
Role of Executive Officers in Determining Executive Compensation
In connection with Fiscal 2010 compensation, Messrs. Bissell, Greenberg and Walsh, aided by
our human resources personnel, provided statistical data and recommendations to the
Compensation/Pension Committee (and Mr. Greenberg to UGIs Compensation and Management Development
Committee) to assist each Committee in determining compensation levels. Messrs. Bissell, Greenberg
and Walsh did not make recommendations as to their own respective compensation and each was excused
from the Committee meeting when his compensation was discussed by the Committee. While the
Committees utilized this information, and valued the observations of Messrs. Bissell, Greenberg and
Walsh with regard to other executive officers, the ultimate decisions regarding executive
compensation were made by the independent members of the appropriate Board of Directors following
Committee recommendations.
RISKS RELATED TO COMPENSATION POLICIES AND PRACTICES
Management conducted a risk assessment of our compensation policies and practices for Fiscal
2010. Based on its evaluation, management does not believe that any such policies or practices
create risks that are reasonably likely to have a material adverse effect on the Partnership.
SUMMARY COMPENSATION TABLE
The following tables, narrative and footnotes provide information regarding the compensation
of our Chief Executive Officer, Chief Financial Officer and our 3 other most highly compensated
executive officers in fiscal year 2010.
Summary Compensation Table Fiscal 2010
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|
|
|
|
|
|
Change in Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Value and |
|
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|
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|
|
|
|
|
Non-Equity |
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
Incentive |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Plan |
|
|
Compensation |
|
|
All Other |
|
|
|
|
Name and |
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
Principal |
|
Fiscal |
|
|
Salary |
|
|
Bonus |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Position |
|
Year |
|
|
($) |
|
|
($) |
|
|
(1) |
|
|
(1) |
|
|
(2) |
|
|
(3) |
|
|
(4) |
|
|
(5) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
E. V.N. Bissell
President and Chief |
|
|
2010 |
|
|
|
490,006 |
|
|
|
0 |
|
|
|
715,700 |
|
|
|
359,200 |
|
|
|
349,664 |
|
|
|
3,778 |
|
|
|
85,475 |
|
|
|
2,003,823 |
|
Executive Officer |
|
|
2009 |
|
|
|
487,820 |
|
|
|
0 |
|
|
|
643,400 |
|
|
|
304,500 |
|
|
|
450,800 |
|
|
|
5,943 |
|
|
|
97,151 |
|
|
|
1,989,614 |
|
|
|
|
2008 |
|
|
|
442,000 |
|
|
|
0 |
|
|
|
467,520 |
|
|
|
330,200 |
|
|
|
252,960 |
|
|
|
376 |
|
|
|
70,200 |
|
|
|
1,563,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. E. Sheridan
Vice President |
|
|
2010 |
|
|
|
302,349 |
|
|
|
0 |
|
|
|
159,980 |
|
|
|
98,780 |
|
|
|
134,851 |
|
|
|
0 |
|
|
|
43,720 |
|
|
|
739,680 |
|
Finance and Chief |
|
|
2009 |
|
|
|
301,369 |
|
|
|
0 |
|
|
|
144,765 |
|
|
|
85,260 |
|
|
|
173,855 |
|
|
|
0 |
|
|
|
50,548 |
|
|
|
755,797 |
|
Financial Officer |
|
|
2008 |
|
|
|
280,646 |
|
|
|
0 |
|
|
|
97,400 |
|
|
|
86,360 |
|
|
|
96,393 |
|
|
|
0 |
|
|
|
40,396 |
|
|
|
601,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. R. Greenberg
Chairman |
|
|
2010 |
|
|
|
1,067,500 |
|
|
|
0 |
|
|
|
1,590,400 |
|
|
|
1,347,000 |
|
|
|
1,145,428 |
|
|
|
1,971,422 |
|
|
|
69,853 |
|
|
|
7,191,603 |
|
|
|
|
2009 |
|
|
|
1,067,975 |
|
|
|
0 |
|
|
|
1,957,200 |
|
|
|
1,218,000 |
|
|
|
1,591,643 |
|
|
|
2,640,022 |
|
|
|
65,416 |
|
|
|
8,540,256 |
|
|
|
|
2008 |
|
|
|
1,026,300 |
|
|
|
0 |
|
|
|
2,123,800 |
|
|
|
1,524,000 |
|
|
|
964,722 |
|
|
|
945,498 |
|
|
|
81,405 |
|
|
|
6,665,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. L. Walsh
Vice Chairman |
|
|
2010 |
|
|
|
648,440 |
|
|
|
0 |
|
|
|
636,160 |
|
|
|
561,250 |
|
|
|
591,410 |
|
|
|
377,873 |
|
|
|
33,081 |
|
|
|
2,848,214 |
|
|
|
|
2009 |
|
|
|
648,202 |
|
|
|
0 |
|
|
|
782,880 |
|
|
|
507,500 |
|
|
|
821,800 |
|
|
|
330,768 |
|
|
|
25,979 |
|
|
|
3,117,129 |
|
|
|
|
2008 |
|
|
|
616,933 |
|
|
|
0 |
|
|
|
819,180 |
|
|
|
609,600 |
|
|
|
493,383 |
|
|
|
147,550 |
|
|
|
24,494 |
|
|
|
2,711,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. H. Knauss
Vice President and |
|
|
2010 |
|
|
|
340,340 |
|
|
|
45,000
|
(6) |
|
|
249,920 |
|
|
|
255,930 |
|
|
|
237,370 |
|
|
|
389,944 |
|
|
|
14,872 |
|
|
|
1,533,376 |
|
General Counsel |
|
|
2009 |
|
|
|
340,146 |
|
|
|
0 |
|
|
|
602,040 |
|
|
|
203,000 |
|
|
|
329,841 |
|
|
|
455,185 |
|
|
|
13,594 |
|
|
|
1,943,806 |
|
|
|
|
2008 |
|
|
|
314,619 |
|
|
|
0 |
|
|
|
273,060 |
|
|
|
228,600 |
|
|
|
177,698 |
|
|
|
262,102 |
|
|
|
10,521 |
|
|
|
1,266,600 |
|
|
|
|
(1) |
|
The amounts shown in columns (e) and (f) above represent the aggregate fair value of awards
of performance units, stock units and stock options, as the case may be, on the grant date.
The assumptions used in the calculation of the amounts shown are included in Note 2 and Note
12 to our Consolidated Financial Statements for Fiscal 2010 and in Exhibit No. 99 to this
Report. |
52
|
|
|
(2) |
|
The amounts shown in this column represent payments made under the applicable
performance-based annual bonus plan. |
|
(3) |
|
The amounts shown in column (h) of the Summary Compensation Table Fiscal 2010 reflect (i)
for Messrs. Bissell, Greenberg, Walsh and Knauss, the change from September 30, 2009 to
September 30, 2010 in the actuarial present value of the named executive officers accumulated
benefit under UGIs defined benefit and actuarial pension plans, including the UGI Corporation
Supplemental Executive Retirement Plan, and (ii) the above-market portion of earnings, if any,
on nonqualified deferred compensation accounts. The change in pension value from year to year
as reported in this column is subject to market volatility and may not represent the value
that a named executive officer will actually accrue under the UGI pension plans during any
given year. Mr. Bissell has a vested annual benefit of approximately $3,300 under UGIs
defined benefit pension plan, based on prior credited service. Mr. Bissell is not a current
participant in that plan or in the UGI Corporation Supplemental Executive Retirement Plan. Mr.
Sheridan is not eligible to participate in the UGI pension plan. The material terms of the
pension plans and deferred compensation plans are described in the Pension Benefits Table
Fiscal 2010 and the Nonqualified Deferred Compensation Table Fiscal 2010, and the related
narratives to each. Earnings on deferred compensation are considered above-market to the
extent that the rate of interest exceeds 120 percent of the applicable federal long-term rate.
For purposes of the Summary Compensation Table Fiscal 2010, the market rate on deferred
compensation most analogous to the rate at the time the interest rate is set under the UGI
plan for Fiscal 2010 was 5.02 percent, which is 120 percent of the federal long-term rate for
December 2009. Messrs. Bissells and Sheridans earnings on deferred compensation are
market-based, calculated by reference to externally managed mutual funds. The amounts
included in column (h) of the Summary Compensation Table Fiscal 2010 are itemized below. |
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
Above-Market |
|
|
|
Pension |
|
|
Earnings on |
|
Name |
|
Value |
|
|
Deferred Compensation |
|
E. V.N. Bissell |
|
$ |
3,778 |
|
|
$ |
0 |
|
J. E. Sheridan |
|
$ |
0 |
|
|
$ |
0 |
|
L. R. Greenberg |
|
$ |
1,903,027 |
|
|
$ |
68,395 |
|
J. L. Walsh |
|
$ |
369,494 |
|
|
$ |
8,379 |
|
R. H. Knauss |
|
$ |
386,862 |
|
|
$ |
3,082 |
|
|
|
|
(4) |
|
The table below shows the components of the amounts included for each named executive officer
under the All Other Compensation column in the Summary Compensation Table Fiscal 2010.
Other than as set forth below, the named executive officers did not receive perquisites with
an aggregate value of $10,000 or more. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to AmeriGas |
|
|
|
|
|
|
|
|
|
|
|
|
Employer |
|
|
Supplemental |
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to |
|
|
Executive |
|
|
|
|
|
|
|
|
|
|
|
|
401(k) |
|
|
Retirement Plan/UGI |
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
|
Supplemental Savings |
|
|
Tax |
|
|
|
|
|
|
|
Name |
|
Plan |
|
|
Plan |
|
|
Reimbursement |
|
|
Perquisites |
|
|
Total |
|
E. V.N. Bissell |
|
$ |
13,758 |
|
|
$ |
71,717 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
85,475 |
|
J. E. Sheridan |
|
$ |
12,250 |
|
|
$ |
31,470 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
43,720 |
|
L. R. Greenberg (a) |
|
$ |
5,513 |
|
|
$ |
54,318 |
|
|
$ |
0 |
|
|
$ |
10,022 |
|
|
$ |
69,853 |
|
J. L. Walsh |
|
$ |
5,513 |
|
|
$ |
27,568 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
33,081 |
|
R. H. Knauss |
|
$ |
5,305 |
|
|
$ |
9,567 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
14,872 |
|
|
|
|
(a) |
|
The perquisites shown for Mr. Greenberg include spousal travel expenses when attending
industry-related events where it is customary that officers attend with their spouses, tax
preparation fees and occasional use of UGIs tickets for sporting events for personal rather
than business purposes. The incremental cost to UGI for these benefits are based on the actual
costs or charges incurred by UGI for the benefits and are included in the totals above. |
|
(5) |
|
The compensation reported for Messrs. Greenberg, Walsh and Knauss is paid by UGI. For Fiscal
2010, UGI charged the Partnership 36 percent of the total compensation expense, other than the
change in pension value, for Messrs. Greenberg, Walsh and Knauss. |
|
(6) |
|
Discretionary bonus awarded
in recognition of Mr. Knauss extraordinary leadership
efforts relating to the restoration of our corporate headquarters
building following a fire in December of 2009. |
53
Grants of Plan-Based Awards In Fiscal Year 2010
The following table and footnotes provide information regarding equity and non-equity plan
grants to the named executive officers in Fiscal 2010.
Grants of Plan-Based Awards Table Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Awards: |
|
|
Exercise |
|
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Number of |
|
|
or Base |
|
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
|
Estimated Future Payouts Under |
|
|
Number of |
|
|
Securities |
|
|
Price of |
|
|
of |
|
|
|
|
|
|
|
Board |
|
|
Awards(1) |
|
|
Equity Incentive Plan Awards (2) |
|
|
Shares of |
|
|
Underlying |
|
|
Option |
|
|
Stock and |
|
|
|
Grant |
|
|
Action |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Stock or |
|
|
Options (#) |
|
|
Awards |
|
|
Option |
|
Name |
|
Date |
|
|
Date |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
Units (#) |
|
|
(3) |
|
|
($/Sh) |
|
|
Awards |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
|
(k) |
|
|
(l) |
|
|
(m) |
|
E. V.N. Bissell |
|
|
10/1/09 |
|
|
|
11/19/09 |
|
|
|
211,680 |
|
|
|
392,000 |
|
|
|
784,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
80,000 |
|
|
|
24.19 |
|
|
|
359,200 |
|
|
|
|
12/31/09 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500 |
|
|
|
17,000 |
|
|
|
34,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
715,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. E. Sheridan |
|
|
10/1/09 |
|
|
|
11/19/09 |
|
|
|
81,636 |
|
|
|
151,178 |
|
|
|
302,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
22,000 |
|
|
|
24.19 |
|
|
|
98,780 |
|
|
|
|
12/31/09 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,900 |
|
|
|
3,800 |
|
|
|
7,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. R. Greenberg |
|
|
10/1/09 |
|
|
|
11/19/09 |
|
|
|
640,500 |
|
|
|
1,067,500 |
|
|
|
2,135,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
300,000 |
|
|
|
24.19 |
|
|
|
1,347,000 |
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
|
70,000 |
|
|
|
140,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,590,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. L. Walsh |
|
|
10/1/09 |
|
|
|
11/19/09 |
|
|
|
330,704 |
|
|
|
551,174 |
|
|
|
1,102,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
125,000 |
|
|
|
24.19 |
|
|
|
561,250 |
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000 |
|
|
|
28,000 |
|
|
|
56,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
636,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. H. Knauss |
|
|
10/1/09 |
|
|
|
11/19/09 |
|
|
|
132,733 |
|
|
|
221,221 |
|
|
|
442,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
57,000 |
|
|
|
24.19 |
|
|
|
255,930 |
|
|
|
|
1/1/10 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500 |
|
|
|
11,000 |
|
|
|
22,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249,920 |
|
|
|
|
10/1/09 |
|
|
|
11/19/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
322,440 |
|
|
|
|
(1) |
|
The amounts shown under this heading relate to bonus opportunities under the relevant
companys annual bonus plan for Fiscal 2010. See Compensation Discussion and Analysis for a
description of the annual bonus plans. Payments for these awards have already been determined
and are included in the Non-Equity Incentive Plan Compensation column (column (g)) of the
Summary Compensation Table Fiscal 2010. The threshold amount shown for Messrs. Bissell and
Sheridan is based on achievement of 83 percent of the financial goal with the resulting amount
reduced to the maximum extent provided for below-target achievement of customer growth
objectives. The threshold amount shown for Messrs. Greenberg, Walsh and Knauss is based on
achievement of 80 percent of the UGI financial goal. |
|
(2) |
|
The awards shown for Messrs. Bissell and Sheridan are performance units under the 2000
AmeriGas Long-Term Incentive Plan, as described in Compensation Discussion and Analysis.
Performance units are forfeitable until the end of the performance period in the event of
termination of employment, with pro-rated forfeitures in the case of termination of employment
due to retirement, death or disability. In the case of a change in control, outstanding
performance units and distribution equivalents will be paid in cash in an amount equal to the
greater of (i) the target award, or (ii) the award amount that would be paid as if the
performance period ended on the date of the change in control, based on the Partnerships
achievement of the performance goal as of the date of the change in control, as determined by
the Compensation/Pension Committee. |
|
|
|
The awards shown for Messrs. Greenberg, Walsh and Knauss are performance units under the UGI
Corporation 2004 Plan, as described in Compensation Discussion and Analysis. Terms of these
awards with respect to forfeitures and change in control, as defined in the UGI Corporation 2004
Plan, are analogous to the terms of the performance units granted under the 2000 AmeriGas
Long-Term Incentive Plan. |
|
(3) |
|
Options are granted under the UGI Corporation 2004 Plan. Under this Plan, the option exercise
price is not less than 100 percent of the fair market value of UGIs Common Stock on the
effective date of the grant, which is either the date of the grant or a specified future date.
The term of each option is generally 10 years, which is the maximum allowable term. The
options become exercisable in three equal annual installments beginning on the first
anniversary of the grant date. All options are nontransferable and generally exercisable only
while the optionee is employed by the General Partner, UGI or an affiliate, with exceptions
for exercise following termination without cause, retirement, disability and death. In the
case of termination without cause, the option will be exercisable only to the extent that it
has vested as of the date of termination of employment and the option will terminate upon the
earlier of the expiration date of the option or the expiration of the 13-month period
commencing on the date of termination of employment. If termination of employment occurs due
to
retirement or disability, the option term is shortened to the earlier of the third anniversary
of the date of such termination of employment, or the original expiration date, and vesting
continues in accordance with the original vesting schedule. In the event of death of the
optionee while an employee, the option will become fully vested and the option term will be
shortened to the earlier of the expiration of the 12-month period following the optionees
death, or the original expiration date. Options are subject to adjustment in the event of
recapitalizations, stock splits, mergers, and other similar corporate transactions affecting
UGIs common stock. |
54
Outstanding Equity Awards at Year-End
The table below shows the outstanding equity awards as of September 30, 2010 for each of the
named executive officers:
Outstanding Equity Awards at Year-End Table Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Equity |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
Incentive |
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Shares or |
|
|
Plan Awards: |
|
|
Plan Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
Units of |
|
|
Number of |
|
|
Market |
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Stock/ |
|
|
Unearned |
|
|
or Payout Value |
|
|
|
Securities |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Stock/ |
|
|
Partnership |
|
|
Shares, Units |
|
|
of Unearned |
|
|
|
Underlying |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Partnership |
|
|
Units |
|
|
or Other |
|
|
Shares, Units or |
|
|
|
Unexercised |
|
|
Underlying |
|
|
Option |
|
|
|
|
|
|
Units that |
|
|
That Have |
|
|
Rights That |
|
|
Other Rights |
|
|
|
Options |
|
|
Options |
|
|
Exercise |
|
|
Option |
|
|
Have Not |
|
|
Not |
|
|
Have Not |
|
|
That Have Not |
|
|
|
(#) |
|
|
(#) |
|
|
Price |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
E. V.N. Bissell |
|
|
21,667 |
3 |
|
|
|
|
|
|
20.48 |
|
|
|
12/31/2015 |
|
|
|
0 |
|
|
|
0 |
|
|
|
15,636 |
20 |
|
|
700,649 |
|
|
|
|
70,000 |
4 |
|
|
|
|
|
|
27.28 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
20,000 |
21 |
|
|
896,200 |
|
|
|
|
43,333 |
5 |
|
|
21,667 |
5 |
|
|
27.25 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
17,000 |
22 |
|
|
761,770 |
|
|
|
|
25,000 |
6 |
|
|
50,000 |
6 |
|
|
24.42 |
|
|
|
12/31/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000 |
7 |
|
|
24.19 |
|
|
|
12/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. E. Sheridan |
|
|
15,000 |
|
|
|
|
|
|
|
27.57 |
|
|
|
08/14/2015 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,258 |
|
|
|
145,991 |
|
|
|
|
18,000 |
|
|
|
|
|
|
|
20.48 |
|
|
|
12/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
4,500 |
|
|
|
201,645 |
|
|
|
|
18,000 |
|
|
|
|
|
|
|
27.28 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
3,800 |
|
|
|
170,278 |
|
|
|
|
11,333 |
|
|
|
5,667 |
|
|
|
27.25 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000 |
|
|
|
14,000 |
|
|
|
24.42 |
|
|
|
12/31/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
24.19 |
|
|
|
12/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. R. Greenberg |
|
|
135,000 |
1 |
|
|
|
|
|
|
16.99 |
|
|
|
12/31/2013 |
|
|
|
0 |
|
|
|
0 |
|
|
|
123,060 |
17 |
|
|
3,520,747 |
|
|
|
|
350,000 |
2 |
|
|
|
|
|
|
20.47 |
|
|
|
12/31/2014 |
|
|
|
|
|
|
|
|
|
|
|
70,000 |
18 |
|
|
2,002,700 |
|
|
|
|
250,000 |
3 |
|
|
|
|
|
|
20.48 |
|
|
|
12/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
70,000 |
19 |
|
|
2,002,700 |
|
|
|
|
280,000 |
4 |
|
|
|
|
|
|
27.28 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
5 |
|
|
100,000 |
5 |
|
|
27.25 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
6 |
|
|
200,000 |
6 |
|
|
24.42 |
|
|
|
12/31/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000 |
7 |
|
|
24.19 |
|
|
|
12/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. L. Walsh |
|
|
270,000 |
8 |
|
|
|
|
|
|
22.92 |
|
|
|
03/31/2015 |
|
|
|
0 |
|
|
|
0 |
|
|
|
47,466 |
17 |
|
|
1,358,002 |
|
|
|
|
120,000 |
4 |
|
|
|
|
|
|
27.28 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
28,000 |
18 |
|
|
801,080 |
|
|
|
|
80,000 |
5 |
|
|
40,000 |
5 |
|
|
27.25 |
|
|
|
12/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
28,000 |
19 |
|
|
801,080 |
|
|
|
|
41,666 |
6 |
|
|
83,334 |
6 |
|
|
24.42 |
|
|
|
12/31/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000 |
7 |
|
|
24.19 |
|
|
|
12/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. H. Knauss |
|
|
45,000 |
4 |
|
|
|
|
|
|
27.28 |
|
|
|
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
15,822 |
17 |
|
|
452,667 |
|
|
|
|
30,000 |
5 |
|
|
15,000 |
5 |
|
|
27.25 |
|
|
|
12/31/2017 |
|
|
|
12,000 |
16 |
|
|
343,320 |
|
|
|
10,000 |
18 |
|
|
286,100 |
|
|
|
|
16,666 |
6 |
|
|
33,334 |
6 |
|
|
24.42 |
|
|
|
12/31/2018 |
|
|
|
|
|
|
|
|
|
|
|
11,000 |
19 |
|
|
314,710 |
|
|
|
|
|
|
|
|
57,000 |
7 |
|
|
24.19 |
|
|
|
12/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
Column (d) was intentionally omitted. |
|
(1) |
|
These options were granted effective January 1, 2004 and were fully vested on January 1,
2007. |
|
(2) |
|
These options were granted effective January 1, 2005 and were fully vested on January 1,
2008. |
|
(3) |
|
These options were granted effective January 1, 2006 and were fully vested on January 1,
2009. |
|
(4) |
|
These options were granted effective January 1, 2007 and were fully vested on January 1,
2010. |
|
(5) |
|
These options were granted effective January 1, 2008. These options vest 33 1/3 percent on
each anniversary of the grant date and will be fully vested on January 1, 2011. |
|
(6) |
|
These options were granted effective January 1, 2009. These options vest 33 1/3 percent on
each anniversary of the grant date and will be fully vested on January 1, 2012. |
|
(7) |
|
These options were granted effective January 1, 2010. These options vest 33 1/3 percent on
each anniversary of the grant date and will be fully vested on January 1, 2013. |
|
(8) |
|
These options were granted effective April 1, 2005 and were fully vested on April 1, 2008. |
|
(9) |
|
These options were granted effective September 4, 2007 and were fully vested on September 4,
2010. |
|
(10) |
|
These options were granted effective January 1, 2005 and were fully vested on January 1,
2009. |
|
(11) |
|
These options were granted effective January 1, 2006 and were fully vested on January 1,
2010. |
55
|
|
|
(12) |
|
These options were granted effective January 1, 2007 and will be fully vested on January 1,
2011. |
|
(13) |
|
These options were granted effective June 17, 2008 and will be fully vested on June 17, 2012. |
|
(14) |
|
These options were granted effective August 13, 2009 and will be fully vested on August 13,
2013. |
|
(15) |
|
These options were granted effective January 1, 2010 and will be fully vested on January 1,
2014. |
|
(16) |
|
These stock units were granted effective January 1, 2009 and will fully vest on January 1,
2012 or upon death, disability or retirement. |
|
(17) |
|
The amount shown is an estimate based on a target award of performance units effective
January 1, 2008. The performance measurement period for these performance units is January 1,
2008 through December 31, 2010. The estimated number of performance units which may be earned
at the end of the performance period is based on the Companys TSR for the period January 1,
2008 through September 30, 2010, relative to that of each of the companies in the S&P
Utilities Index as of December 31, 2007. As of September 30, 2010, the Companys TSR ranking
qualified for 175.8 % leverage of the target number of performance units originally granted.
The actual number of performance units and accompanying dividend equivalents earned may be
higher (up to 200% of the target award) or lower than the amount shown, based on TSR
performance through the end of the performance period. See Compensation Discussion and
Analysis Long-Term Compensation Fiscal 2010 Equity Awards for more information on the TSR
performance goal measurements. |
|
(18) |
|
These performance units were awarded January 1, 2009. The measurement period for the
performance goal is January 1, 2009 through December 31, 2011. The performance goal is the
same as described in footnote 17, but it is measured for a different three-year period. The
performance units will be payable, if at all, on January 1, 2012. |
|
(19) |
|
These performance units were awarded January 1, 2010. The measurement period for the
performance goal is January 1, 2010 through December 31, 2012. The performance goal is the
same as described in footnote 17, but it is measured for a different three-year period. The
performance units will be payable, if at all, on January 1, 2013. |
|
(20) |
|
The amount shown is an estimate based on a target award of restricted units effective January
1, 2008. The performance measurement period for these restricted units is January 1, 2008
through December 31, 2010. The estimated number of restricted units which may be earned at
the end of the performance period is based on the AmeriGas Partners TUR for the period
January 1, 2008 through September 30, 2010, relative to that of each member of a peer group of
publicly-traded master limited partnerships in the propane, pipeline and coal industries as of
the award date. As of September 30, 2010, the AmeriGas Partners TUR ranking qualified for
130.3% leverage of the target number of restricted units originally granted. The actual
number of restricted units and accompanying distribution equivalents earned may be higher (up
to 200% of the target award) or lower than the amount shown, based on TUR performance through
the end of the performance period. See Compensation Discussion and Analysis Long-Term
Compensation Fiscal 2010 Equity Awards for more information on the TUR performance goal
measurements. |
|
(21) |
|
These restricted units were awarded January 1, 2009. The measurement period for the
performance goal is January 1, 2009 through December 31, 2011. The performance goal is the
same as described in footnote 20, but it is measured for a different three-year period. The
restricted units will be payable, if at all, on January 1, 2012. |
|
(22) |
|
These restricted units were
awarded December 31, 2009. The measurement period for the performance goal is January 1, 2010 through December 31, 2012. The performance goal is the
same as described in footnote 20, but it is measured for a different three-year period and
AmeriGas Partners TUR is measured relative to that of each of the master limited partnerships
in the Alerian MLP Index as of December 31, 2009. The performance units will be payable, if
at all, on January 1, 2013. |
56
Option Exercises and Stock Vested Table Fiscal 2010
The following table sets forth (1) the number of shares of UGI common stock acquired by the
named executive officers in Fiscal 2010 from the exercise of stock options, (2) the value realized
by those officers upon the exercise of stock options based on the difference between the market
price for UGIs common stock on the date of exercise and the exercise price for the options, (3)
for Messrs. Greenberg, Walsh and Knauss, the number of UGI performance units previously granted
that vested in Fiscal 2010, (4) for Messrs. Bissell and Sheridan, the number of AmeriGas
performance units previously granted that vested in Fiscal 2010, and (5) the value realized by
those officers upon the vesting of such units based on the average of the high and low sales prices
for AmeriGas Partners common units on the New York Stock Exchange (NYSE), or, for Messrs.
Greenberg, Walsh and Knauss, the closing price on the NYSE for shares of UGI common stock, on the
vesting date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock/Unit Awards |
|
|
|
Number of Shares |
|
|
|
|
|
|
Number of Shares/Units |
|
|
|
|
|
|
Acquired on |
|
|
Value Realized |
|
|
Acquired on |
|
|
Value Realized |
|
|
|
Exercise |
|
|
on Exercise |
|
|
Vesting |
|
|
on Vesting |
|
Name |
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
E. V.N. Bissell |
|
|
0 |
|
|
|
0 |
|
|
|
20,356 |
|
|
|
806,098 |
|
J. E. Sheridan |
|
|
0 |
|
|
|
0 |
|
|
|
3,926 |
|
|
|
155,461 |
|
L. R. Greenberg |
|
|
150,000 |
|
|
|
1,522,500 |
|
|
|
72,960 |
|
|
|
1,764,902 |
|
J. L. Walsh |
|
|
65,000 |
|
|
|
428,724 |
|
|
|
31,616 |
|
|
|
764,791 |
|
R. H. Knauss |
|
|
80,000 |
|
|
|
656,400 |
|
|
|
10,944 |
|
|
|
264,735 |
|
Retirement Benefits
The following table shows the number of years of credited service for the named executive
officers under the UGI Utilities, Inc. Retirement Income Plan (which we refer to below as the UGI
Utilities Retirement Plan) and the UGI Corporation Supplemental Executive Retirement Plan (which
we refer to below as the UGI SERP) and the actuarial present value of accumulated benefits under
those plans as of September 30, 2010 and any payments made to the named executive officers in
Fiscal 2010 under those plans.
Pension Benefits Table Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
Payments |
|
|
|
|
|
|
|
Years Credited |
|
|
Present Value of |
|
|
During Last |
|
|
|
|
|
|
|
Service |
|
|
Accumulated Benefit |
|
|
Fiscal Year |
|
Name(1) |
|
Plan Name |
|
|
(#) |
|
|
($) |
|
|
($) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
E. V.N. Bissell (2) |
|
UGI Utilities Retirement Plan |
|
|
6 |
|
|
|
32,835 |
|
|
|
0 |
|
|
L. R. Greenberg |
|
UGI SERP |
|
|
30 |
|
|
|
14,360,305 |
|
|
|
0 |
|
|
|
UGI Utilities Retirement Plan |
|
|
30 |
|
|
|
1,453,430 |
|
|
|
0 |
|
|
J. L. Walsh |
|
UGI SERP |
|
|
5 |
|
|
|
1,011,343 |
|
|
|
0 |
|
|
|
UGI Utilities Retirement Plan |
|
|
5 |
|
|
|
195,653 |
|
|
|
0 |
|
|
R. H. Knauss |
|
UGI SERP |
|
|
23 |
|
|
|
1,202,014 |
|
|
|
0 |
|
|
|
UGI Utilities Retirement Plan |
|
|
23 |
|
|
|
734,823 |
|
|
|
0 |
|
|
|
|
(1) |
|
Mr. Sheridan does not participate in any defined benefit pension plan. |
|
(2) |
|
Mr. Bissell has a vested annual benefit of approximately $3,300 under the UGI Utilities
Retirement Plan based on prior credited service. He is not a current participant in that Plan. |
57
UGI participates in the UGI Utilities Retirement Plan, a qualified defined benefit retirement
plan (Pension Plan) to provide retirement income to its employees. The Pension Plan pays benefits
based upon final average earnings, consisting of base salary or wages and annual bonuses, and years
of credited service. Benefits vest after the participant completes 5 years of vesting service.
The Pension Plan provides normal annual retirement benefits at age 65, unreduced early
retirement benefits at age 62 with 10 years of service, and reduced, but subsidized, early
retirement benefits at age 55 with 10 years of service. Employees terminating employment prior to
early retirement eligibility are eligible to receive a benefit under the plan formula commencing at
age 65 or an unsubsidized benefit as early as age 55, provided they had 10 years of service at
termination. Employees who have attained age 50 with 15 years of service and are involuntarily
terminated by UGI prior to age 55 are also eligible for subsidized early retirement benefits,
beginning at age 55.
The Pension Plans normal retirement benefit formula is (A) (B) and is shown below:
|
(A)(1) = |
|
(1.9% of final five-year average earnings) multiplied by (years of
credited service) |
minus
|
(B) = |
|
(1% of the estimated primary Social Security benefit) multiplied by (years of
credited service at termination date up to 35 years). |
|
|
|
(1) |
|
(A) may not exceed 60% of the average monthly earnings for the highest consecutive 12-month
period during an employees last 120 consecutive months of employment. |
The amount of the benefit produced by the formula will be reduced by an early retirement
factor based on the employees actual age in years and months as of his early retirement date. The
reduction factors range from 65 percent at age 55 to 100 percent (no reduction) at age 62.
The normal form of benefit under the Pension Plan for a married employee is a 50 percent joint
and survivor lifetime annuity. Regardless of marital status, a participant may choose from a number
of lifetime annuity payments. Lump sum payments are not permitted unless the present value of the
lump sum benefit is $5,000 or less.
The Pension Plan is subject to qualified-plan Code limits on the amount of annual benefit that
may be paid, and on the amount of compensation that may be taken into account in calculating
retirement benefits under the plan. For 2010, the limit on the compensation that may be used is
$245,000 and the limit on annual benefits payable for an employee retiring at age 65 in 2010 is
$195,000. Benefits in excess of those permitted under the statutory limits are paid to certain
employees under the UGI Corporation Supplemental Executive Retirement Plan, described below.
Messrs. Bissell, Greenberg and Knauss are eligible for early retirement benefits under the
Pension Plan.
UGI Corporation Supplemental Executive Retirement Plan
The UGI Corporation Supplemental Executive Retirement Plan (UGI SERP) is a non-qualified
defined benefit plan that provides retirement benefits that would otherwise be provided under the
Pension Plan for Pension Plan participants, but are prohibited from being paid from the Pension
Plan by Code limits. The benefit paid by the UGI SERP is approximately equal to the difference
between the benefits provided under the Pension Plan and benefits that would have been provided by
the Pension Plan if not for the limitations of the Employee Retirement Income Security Act of 1974,
as amended, and the Code. Benefits vest after the participant completes 5 years of vesting service.
The benefits earned under the UGI SERP are payable in the form of a lump sum payment. For
participants who attained age 50 prior to January 1, 2004, the lump sum payment is calculated using
two interest rates. One rate is for the service prior to January 1, 2004 and the other is for
service after January 1, 2004. The rate for pre-January 1, 2004 service is the daily average of
Moodys Aaa bond yields for the month in which the participants termination date occurs, plus 50
basis points, and tax-adjusted using the highest marginal federal tax rate. The interest rate for
post-January 1, 2004 service is the daily average of ten-year Treasury Bond yields in effect for
the month in which the participants termination date occurs. The latter rate is used for
calculating the lump sum payment for participants attaining age 50 on or after January 1, 2004.
Payment is due within 60 days after termination of
employment, except as required by Section 409A of the Code. If payment is required to be
delayed by Section 409A of the Code, payment is made within 15 days after expiration of a six-month
postponement period following separation from service as defined in the Code. Amounts due under
the UGI SERP may be deferred in accordance with the UGI Corporation 2009 Deferral Plan. See
Compensation Discussion and Analysis-UGI Corporation 2009 Deferral Plan.
58
Actuarial Assumptions Used to Determine Values in the Pension Benefits Table
The amounts shown in the Pension Benefits table are actuarial present values of the benefits
accumulated through September 30, 2010. An actuarial present value is calculated by estimating
expected future payments starting at an assumed retirement age, weighting the estimated payments by
the estimated probability of surviving to each post-retirement age, and discounting the weighted
payments at an assumed discount rate to reflect the time value of money. The actuarial present
value represents an estimate of the amount which, if invested today at the discount rate, would be
sufficient on an average basis to provide estimated future payments based on the current
accumulated benefit. The assumed retirement age for each named executive officer is age 62, which
is the earliest age at which the executive could retire without any benefit reduction due to age.
Actual benefit present values will vary from these estimates depending on many factors, including
an executives actual retirement age. The key assumptions included in the calculations are as
follows:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
September 30, 2009 |
Discount rate for Pension Plan for all
purposes and for UGI SERP, for
pre-commencement calculations
|
|
|
5.00 |
% |
|
|
5.50 |
% |
UGI SERP lump sum rate
|
|
|
3.30 |
% |
|
|
3.60 |
% |
Retirement age
|
|
|
62 |
|
|
|
62 |
|
Post-retirement mortality for Pension Plan
|
|
RP-2000, combined,
healthy table
projected to 2017
using Scale AA
without collar
adjustments
|
|
RP-2000, combined,
healthy table
projected to 2015
using Scale AA
without collar
adjustments
|
Post-retirement mortality for UGI SERP
|
|
1994 GAR unisex
|
|
1994 GAR unisex
|
Pre-retirement mortality
|
|
None
|
|
None
|
Termination and disability rates
|
|
None
|
|
None
|
Form of payment for Pension Plan
|
|
Single life annuity
|
|
Single life annuity
|
Form of payment for UGI SERP
|
|
Lump sum
|
|
Lump sum
|
Nonqualified Deferred Compensation
The following table shows the contributions, earnings, withdrawals and account balances for
each of the named executive officers in the AmeriGas Propane, Inc. Supplemental Executive
Retirement Plan (AmeriGas SERP), the AmeriGas Nonqualified Deferred Compensation Plan and the UGI
Corporation Supplemental Savings Plan.
Nonqualified Deferred Compensation Table Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
|
Contributions |
|
|
Aggregate |
|
|
Aggregate |
|
|
Aggregate |
|
|
|
|
|
Contributions |
|
|
in Last Fiscal |
|
|
Earnings in Last |
|
|
Withdrawals/ |
|
|
Balance at Last |
|
|
|
|
|
in Last Fiscal Year |
|
|
Year |
|
|
Fiscal Year |
|
|
Distributions |
|
|
Fiscal Year |
|
Name |
|
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($)(2) |
|
(a) |
|
Plan Name |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
E. V.N. Bissell |
|
AmeriGas SERP |
|
|
0 |
|
|
|
71,717 |
(1) |
|
|
66,265 |
|
|
|
0 |
|
|
|
836,115 |
|
|
|
AmeriGas Non-Qualified Deferred Compensation Plan |
|
|
0 |
(3) |
|
|
0 |
|
|
|
2,607 |
|
|
|
0 |
|
|
|
33,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. E. Sheridan |
|
AmeriGas SERP |
|
|
0 |
|
|
|
31,470 |
(1) |
|
|
12,789 |
|
|
|
|
|
|
|
165,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. R. Greenberg |
|
UGI Supplemental Savings Plan |
|
|
0 |
|
|
|
54,318 |
(3) |
|
|
0 |
|
|
|
0 |
|
|
|
665,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. L. Walsh |
|
UGI Supplemental Savings Plan |
|
|
0 |
|
|
|
27,568 |
(3) |
|
|
0 |
|
|
|
0 |
|
|
|
102,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. H. Knauss (4) |
|
UGI Supplemental Savings Plan |
|
|
0 |
|
|
|
9,567 |
(3) |
|
|
0 |
|
|
|
0 |
|
|
|
37,110 |
|
|
|
AmeriGas SERP |
|
|
0 |
|
|
|
0 |
|
|
|
14,439 |
|
|
|
0 |
|
|
|
160,033 |
|
|
|
|
(1) |
|
This amount represents the employer contribution to the named executive officer under the
AmeriGas SERP, which is also reported in the Summary Compensation Table Fiscal 2010 in the
All Other Compensation column. |
|
(2) |
|
The aggregate balances include the following aggregate amounts previously reported in the
Summary Compensation Table as compensation in prior years:
Mr. Bissell, $635,662; Mr.
Sheridan, $125,430; Mr. Greenberg, $592,820; Mr. Walsh, $87,584; and Mr. Knauss, $181,536. |
59
|
|
|
(3) |
|
This amount represents the employer contribution to the named executive officer under the UGI
Supplemental Savings Plan which is also reported in the Summary Compensation Table Fiscal
2010 in the All Other Compensation column. |
|
(4) |
|
Mr. Knauss participated in the AmeriGas SERP prior to transferring to UGI in 2003. |
The AmeriGas Propane, Inc. Supplemental Executive Retirement Plan is a nonqualified deferred
compensation plan that is intended to provide retirement benefits to certain AmeriGas executive
officers. Under the plan, AmeriGas credits to each participants account annually an amount equal
to 5 percent of the participants compensation (salary and annual bonus) up to the Code
compensation limit ($245,000 in 2010) and 10 percent of compensation in excess of such limit. In
addition, if any portion of the General Partners matching contribution under the AmeriGas Propane,
Inc. qualified 401(k) Savings Plan is forfeited due to nondiscrimination requirements under the
Code, the forfeited amount, adjusted for earnings and losses on the amount, will be credited to a
participants account. Benefits vest on the fifth anniversary of a participants employment
commencement date. Participants direct the investment of their account balances among a number of
mutual funds, which are generally the same funds available to participants in the AmeriGas 401(k)
Savings Plan, other than the UGI stock fund. Account balances are payable in a lump sum within 60
days after termination of employment, except as required by Section 409A of the Code. If payment is
required to be delayed by Section 409A of the Code, payment is made within 15 days after expiration
of a six-month postponement period following separation from service as defined in the Code.
Amounts payable under the AmeriGas SERP may be deferred in accordance with the UGI Corporation 2009
Deferral Plan. See Compensation Discussion and Analysis-UGI Corporation 2009 Deferral Plan.
The AmeriGas Propane, Inc. Nonqualified Deferred Compensation Plan is a nonqualified deferred
compensation plan that provides benefits to certain named executive officers that would otherwise
be provided under the AmeriGas 401(k) Savings Plan. The plan is intended to permit participants to
defer up to $10,000 of annual compensation that would generally not be eligible for contribution to
the AmeriGas 401(k) Savings Plan due to Code limitations and nondiscrimination requirements.
Participants may direct the investment of deferred amounts into a number of funds. The funds
available are the same funds available under the AmeriGas 401(k) Savings Plan, other than the UGI
stock fund. Account balances are payable in a lump sum within 60 days after termination of
employment, except as required by Section 409A of the Code. If payment is required to be delayed by
Section 409A of the Code, payment is made within 15 days after expiration of a six-month
postponement period following separation from service as defined in the Code.
The UGI Corporation Supplemental Savings Plan (SSP) is a nonqualified deferred compensation
plan that provides benefits to certain named executive officers that would otherwise be provided
under UGIs qualified 401(k) Savings Plan in the absence of Code limitations. Benefits vest after
the participant completes 5 years of service. The SSP is intended to pay an amount substantially
equal to the difference between the UGI matching contribution that would have been made under the
401(k) Savings Plan if the Code limitations were not in effect, and the UGI match actually made
under the 401(k) Savings Plan. The Code compensation limits for 2008, 2009 and 2010 were $230,000,
$245,000 and $245,000, respectively. The Code contribution limit for 2009 and 2010 was $49,000.
Under the SSP, the participant is credited with a UGI match on compensation in excess of Code
limits using the same formula applicable to contributions to the UGI Corporation 401(k) Savings
Plan, which is a match of 50 percent of the first 3 percent of eligible compensation, and a match
of 25 percent on the next 3 percent, assuming that the employee contributed to the 401(k) Savings
Plan the lesser of 6 percent of eligible compensation or the maximum amount permissible under the
Code. Amounts credited to the participants account are credited with interest. The rate of
interest currently in effect is the rate produced by blending the annual return on the S&P 500
Index (60 percent weighting) and the annual return on the Lehman Brothers Bond Index (40 percent
weighting). Account balances are payable in a lump sum within 60 days after termination of
employment, except as required by Section 409A of the Code. If payment is required to be delayed by
Section 409A of the Code, payment is made within 15 days after expiration of a six-month
postponement period following separation from service as defined in the Code.
60
Potential Payments Upon Termination of Employment or Change in Control
Severance Pay Plan for Senior Executive Employees
Named Executive Officers Employed by the General Partner. The AmeriGas Propane, Inc. Senior
Executive Employee Severance Plan (the AmeriGas Severance Plan) provides for payment to certain
senior level employees of the General Partner, including Messrs. Bissell and Sheridan, in the event
their employment is terminated without fault on their part. Specified benefits are payable to a
senior executive covered by the AmeriGas Severance Plan if the senior executives employment is
involuntarily terminated for any reason other than for just cause or as a result of the senior
executives death or disability. Under the AmeriGas Severance Plan, just cause generally means
(i) dismissal of an executive due to misappropriation of funds, (ii) substance abuse or habitual
insobriety that adversely affects the executives ability to perform his or her job, (iii)
conviction of a crime involving moral turpitude, or (iv) gross negligence in the performance of
duties.
Except as provided herein, the AmeriGas Severance Plan provides for cash payments equal to a
participants compensation for a period of time ranging from 6 months to 18 months, depending on
length of service (the Continuation Period). In the case of Mr. Bissell, the Continuation Period
ranges from 12 months to 24 months, depending on length of service. In addition, a participant
receives the cash equivalent of his target bonus under the Annual Bonus Plan, pro-rated for the
number of months served in the fiscal year. However, if the termination occurs in the last 2 months
of the fiscal year, we have discretion to determine whether the participant will receive a
pro-rated target bonus, or the actual annual bonus which would have been paid after the end of the
fiscal year, provided that the weighting to be applied to the participants business/financial
goals under the Annual Bonus Plan will be deemed to be 100 percent, pro-rated for the number of
months served. The levels of severance payments were established by the Compensation/Pension
Committee based on competitive practice and are reviewed by management and the Compensation/Pension
Committee from time to time.
Under the AmeriGas Severance Plan, the participant also receives a payment equal to the cost
he would have incurred to continue medical and dental coverage under the General Partners plans
for the Continuation Period (less the amount the participant would be required to contribute for
such coverage if he were an active employee). This amount includes a tax gross-up payment equal to
75 percent of the payment relating to medical and dental coverage. The AmeriGas Severance Plan also
provides for outplacement services for a period of 12 months following a participants termination
of employment. Participants are entitled to receive reimbursement for tax preparation services for
the final year of employment. Provided that the participant is eligible to retire, all payments
under the AmeriGas Severance Plan may be reduced by an amount equal to the fair market value of
certain equity-based awards, other than stock options, payable to the participant after the
termination of employment.
In order to receive benefits under the AmeriGas Severance Plan, a participant is required to
execute a release which discharges the General Partner and its affiliates from liability for any
claims the senior executive may have against any of them, other than claims for amounts or benefits
due to the executive under any plan, program or contract provided by or entered into with the
General Partner or its affiliates. Each senior executive is also required to ratify any existing
post-employment activities agreement (which restricts the senior executive from competing with the
Partnership and its affiliates following termination of employment) and to cooperate in attending
to matters pending at the time of termination of employment.
Named Executive Officers Employed by UGI Corporation. The UGI Corporation Senior Executive
Employee Severance Plan (the UGI Severance Plan) provides for payment to certain senior level
employees of UGI, including Messrs. Greenberg, Walsh and Knauss, in the event their employment is
terminated without fault on their part. Benefits are payable to a senior executive covered by the
UGI Severance Plan if the senior executives employment is involuntarily terminated for any reason
other than for just cause or as a result of the senior executives death or disability. Under the
UGI Severance Plan, just cause generally means (i) dismissal of an executive due to
misappropriation of funds, (ii) substance abuse or habitual insobriety that adversely affects the
executives ability to perform his or her job, (iii) conviction of a crime involving moral
turpitude, or (iv) gross negligence in the performance of duties.
61
Except as provided herein, the UGI Severance Plan provides for cash payments equal to a
participants compensation for a period of time ranging from 6 months to 18 months, depending on
length of service (the Continuation Period). In the case of Mr. Greenberg, the Continuation
Period is 30 months; for Mr. Walsh, the Continuation Period ranges from 12 months to 24 months,
depending on the length of service. In addition, a participant receives the cash equivalent of his
target bonus under the Annual Bonus Plan, pro-rated for the number of months served in the fiscal
year prior to termination. However, if the termination occurs in the last 2 months of the fiscal
year, UGI has the discretion to determine whether the participant will receive a pro-rated target
bonus, or the actual annual bonus which would have been paid after the end of the fiscal year,
assuming that the participants entire bonus was contingent on meeting the applicable financial
performance goal, pro-rated for the number of months served. The levels of severance payment were
established by the Compensation and Management Development Committee based on competitive practice
and are reviewed by management and the Compensation and Management Development Committee from time
to time.
Under the UGI Severance Plan, the participant also receives a payment equal to the cost he
would have incurred to continue medical and dental coverage under UGIs plans for the Continuation
Period (less the amount the participant would be required to contribute for such coverage if the
participant were an active employee). This amount includes a tax gross-up payment equal to 75
percent of the payment relating to medical and dental coverage. The UGI Severance Plan also
provides for outplacement services for a period of 12 months following a participants termination
of employment. Participants are entitled to receive reimbursement for tax preparation services for
their final year of employment under the UGI Severance Plan. Provided that the participant is
eligible to retire, all payments under the Severance Plan may be reduced by an amount equal to the
fair market value of certain equity-based awards, other than stock options, payable to the
participant after the termination of employment.
In order to receive benefits under the UGI Severance Plan, a participant is required to
execute a release which discharges UGI and its subsidiaries from liability for any claims the
senior executive may have against any of them, other than claims for amounts or benefits due to the
executive under any plan, program or contract provided by or entered into with UGI or its
subsidiaries. Each senior executive is also required to ratify any existing post-employment
activities agreement (which restricts the senior executive from competing with UGI and its
affiliates following termination of employment) and to cooperate in attending to matters pending at
the time of termination of employment.
Change in Control Arrangements
Named Executive Officers Employed by the General Partner. Messrs. Bissell and Sheridan each
have an agreement with the General Partner that provides benefits in the event of a change in
control. The agreements have a term of 3 years with automatic one-year extensions beginning May
2011 unless in each case, prior to a change in control, the General Partner terminates an
agreement. In the absence of a change in control or termination by the General Partner, each
agreement will terminate when, for any reason, the executive terminates his or her employment with
the General Partner. A change in control is generally deemed to occur in the following instances:
|
|
|
any person (other than certain persons or entities affiliated with UGI), together with
all affiliates and associates of such person, acquires securities representing 20 percent
or more of either (i) the then outstanding shares of common stock, or (ii) the combined
voting power of UGIs then outstanding voting securities; |
|
|
|
individuals, who at the beginning of any 24-month period constitute the UGI Board of
Directors (the Incumbent Board) and any new Director whose election by the Board of
Directors, or nomination for election by UGIs shareholders, was approved by a vote of at
least a majority of the Incumbent Board, cease for any reason to constitute a majority; |
|
|
|
UGI is reorganized, merged or consolidated with or into, or sells all or substantially
all of its assets to, another corporation in a transaction in which former shareholders of
UGI do not own more than 50 percent of, respectively, the outstanding common stock and the
combined voting power of the then outstanding voting securities of the surviving or
acquiring corporation; |
62
|
|
|
the General Partner, Partnership or Operating Partnership is reorganized, merged or
consolidated with or into, or sells all or substantially all of its assets to, another
entity in a transaction with respect to which all of the individuals and entities who were
owners of the General Partners voting securities or of the outstanding units of the
Partnership immediately prior to such transaction do not, following such transaction, own
more than 50 percent of, respectively, the outstanding common stock and the combined voting
power of the then outstanding voting securities of the surviving or acquiring corporation,
or if the resulting entity is a partnership, the former unitholders do not own more than 50
percent of the outstanding common units in substantially the same proportion as their
ownership immediately prior to the transaction; |
|
|
|
UGI, the General Partner, the Partnership or the Operating Partnership is liquidated or
dissolved; |
|
|
|
UGI fails to own more than 50 percent of the general partnership interests of the
Partnership or the Operating Partnership; |
|
|
|
UGI fails to own more than 50 percent of the outstanding shares of common stock of the
General Partner; or |
|
|
|
AmeriGas Propane, Inc. is removed as the general partner of the Partnership or the
Operating Partnership. |
The General Partner will provide Messrs. Bissell and Sheridan with cash benefits (Benefits)
if we terminate the executives employment without cause or if the executive terminates
employment for good reason at any time within 2 years following a change in control of the
General Partner, AmeriGas Partners or UGI. Cause generally includes (i) misappropriation of
funds, (ii) habitual insobriety or substance abuse, (iii) conviction of a crime involving moral
turpitude, or (iv) gross negligence in the performance of duties, which gross negligence has had a
material adverse effect on the business, operations, assets, properties or financial condition of
the General Partner. Good reason generally includes a material diminution in authority, duties,
responsibilities or base compensation; a material breach by the General Partner of the terms of the
agreement; and substantial relocation requirements. If the events trigger a payment following a
change in control, the benefits payable to Messrs. Bissell and Sheridan will be as specified under
his change in control agreement unless payments under the AmeriGas Severance Plan described above
would be greater, in which case Benefits would be provided under the AmeriGas Severance Plan.
Benefits under this arrangement would be equal to 3 times Mr. Bissells base salary and annual
bonus and 2 times Mr. Sheridans base salary and annual bonus. Each named executive officer would
also receive the cash equivalent of his target bonus, prorated for the number of months served in
the fiscal year. In addition, Messrs. Bissell and Sheridan are each entitled to receive a payment
equal to the cost he would incur if he enrolled in the General Partners medical and dental plans
for 3 years in the case of Mr. Bissell and 2 years in the case of Mr. Sheridan (in each case less
the amount he would be required to contribute for such coverage if he were an active employee).
This payment would include a tax gross-up payment equal to 75 percent of the total amount payable.
Messrs. Bissell and Sheridan would also receive their benefits under the AmeriGas Supplemental
Executive Retirement Plan calculated as if he had continued in employment for 3 years or 2 years,
respectively. In addition, outstanding performance units and distribution equivalents will be paid
in cash based on the fair market value of Common Units in an amount equal to the greater of (i) the
target award or (ii) the award amount that would have been paid if the measurement period ended on
the date of the change in control, as determined by the Compensation/Pension Committee. For
treatment of stock options, see Grants of Plan-Based Awards Table Fiscal 2010.
The Benefits are subject to a conditional gross up for excise and related taxes in the event
they would constitute excess parachute payments, as defined in Section 280G of the Code. The
General Partner will provide the tax gross-up if the aggregate parachute value of Benefits is
greater than 110 percent of the maximum amount that may be paid under Section 280G of the Code
without imposition of an excise tax. If the parachute value does not exceed the 110 percent
threshold, the Benefits for each of Messrs. Bissell and Sheridan will be reduced to the extent
necessary to avoid imposition of the excise tax on excess parachute payments.
In order to receive benefits under his change in control agreement, each named executive is
required to execute a release which discharges the General Partner and its affiliates from
liability for any claims he may have against any
of them, other than claims for amounts or benefits due to the executive under any plan,
program or contract provided by or entered into with the General Partner or its affiliates.
63
Named Executive Officers Employed By UGI Corporation. Messrs. Greenberg, Walsh and Knauss each
have an agreement with UGI which provides benefits in the event of a change in control. The
agreements have a term of 3 years with automatic one-year extensions beginning May 2011, unless in
each case, prior to a change in control, UGI terminates an agreement. In the absence of a change in
control or termination by UGI, each agreement will terminate when, for any reason, the executive
terminates his or her employment with UGI. A change in control is generally deemed to occur in the
following instances:
|
|
|
any person (other than certain persons or entities affiliated with UGI), together with
all affiliates and associates of such person, acquires securities representing 20 percent
or more of either (i) the then outstanding shares of common stock, or (ii) the combined
voting power of UGIs then outstanding voting securities; |
|
|
|
individuals, who at the beginning of any 24-month period constitute the UGI Board of
Directors (the Incumbent Board) and any new Director whose election by the Board of
Directors, or nomination for election by UGIs shareholders, was approved by a vote of at
least a majority of the Incumbent Board, cease for any reason to constitute a majority; |
|
|
|
UGI is reorganized, merged or consolidated with or into, or sells all or substantially
all of its assets to, another corporation in a transaction in which former shareholders of
UGI do not own more than 50 percent of, respectively, the outstanding common stock and the
combined voting power of the then outstanding voting securities of the surviving or
acquiring corporation; or |
|
|
|
UGI Corporation is liquidated or dissolved. |
UGI will provide Messrs. Greenberg, Walsh and Knauss with cash benefits (Benefits) if UGI
terminates the executives employment without cause or if the executive terminates employment for
good reason at any time within 2 years following a change in control of UGI. Cause generally
includes (i) misappropriation of funds, (ii) habitual insobriety or substance abuse, (iii)
conviction of a crime involving moral turpitude, or (iv) gross negligence in the performance of
duties, which gross negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of UGI. Good reason generally includes material
diminution in authority, duties, responsibilities or base compensation; a material breach by UGI of
the terms of the agreement; and substantial relocation requirements. If the events trigger a
payment following a change in control, the Benefits payable to each of Messrs. Greenberg, Walsh and
Knauss will be as specified under his change in control agreement unless payments under the UGI
Severance Plan described above would be greater, in which case Benefits would be provided under the
UGI Severance Plan.
Benefits under this arrangement would be equal to 3 times the executive officers base salary
and annual bonus. Each would also receive the cash equivalent of his target bonus, prorated for the
number of months served in the fiscal year. In addition, Messrs. Greenberg, Walsh and Knauss are
each entitled to receive a payment equal to the cost he would incur if he enrolled in UGIs medical
and dental plans for 3 years (less the amount he would be required to contribute for such coverage
if he were an active employee). This payment would include a tax gross-up payment equal to 75
percent of the total amount payable. Messrs. Greenberg, Walsh and Knauss would also have benefits
under UGIs Supplemental Executive Retirement Plan calculated as if he had continued in employment
for 3 years. In addition, outstanding performance units, stock units and dividend equivalents will
be paid in cash based on the fair market value of UGIs common stock in an amount equal to the
greater of (i) the target award or (ii) the award amount that would have been paid if the
performance unit measurement period ended on the date of the change in control, as determined by
UGIs Compensation and Management Development Committee. For treatment of stock options, see
Grants of Plan-Based Awards Table Fiscal 2010.
The Benefits are subject to a conditional gross up for excise and related taxes in the event
they would constitute excess parachute payments, as
defined in Section 280G of the Code. UGI will
provide the tax gross-up if the aggregate parachute value of Benefits is greater than 110 percent
of the maximum amount that may be paid under Section 280G of the Code without imposition of an
excise tax. If the parachute value does not exceed the 110
percent threshold, the Benefits for each of Messrs. Greenberg, Walsh and Knauss will be
reduced to the extent necessary to avoid imposition of the excise tax on excess parachute
payments.
64
In order to receive benefits under his change in control agreement, each of Messrs. Greenberg,
Walsh and Knauss is required to execute a release which discharges UGI and its subsidiaries from
liability for any claims the senior executive may have against any of them, other than claims for
amounts or benefits due to the executive under any plan, program or contract provided by or entered
into with UGI or its subsidiaries.
Potential Payments Upon Termination or Change in Control Table Fiscal 2010
The amounts shown in the table below assume that each named executive officers termination
was effective as of September 30, 2010 and are merely estimates of the incremental amounts that
would be paid out to the named executive officers upon their termination. The actual amounts to be
paid out can only be determined at the time of such named executive officers termination of
employment. The amounts set forth in the table below do not include compensation to which each
named executive officer would be entitled without regard to his termination of employment,
including (i) base salary and short-term incentives that have been earned but not yet paid or (ii)
amounts that have been earned, but not yet paid, under the terms of the plans listed under the
Pension Benefits Table Fiscal 2010 and the Nonqualified Deferred Compensation Table Fiscal
2010. There are no incremental payments in the event of voluntary resignation, termination for
cause, disability or upon retirement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with |
|
|
Nonqualified |
|
|
Welfare & |
|
|
|
|
|
|
Severance |
|
|
Accelerated |
|
|
Retirement |
|
|
Other |
|
|
|
|
Name & Triggering Event |
|
Pay |
|
|
Vesting(3) |
|
|
Benefits(4) |
|
|
Benefits(5) |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. V.N. Bissell
Death |
|
$ |
0 |
|
|
$ |
2,144,606 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,144,606 |
|
Involuntary Termination Without Cause |
|
$ |
1,874,438 |
(1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
45,996 |
|
|
$ |
1,920,434 |
|
Termination Following Change in Control |
|
$ |
3,038,000 |
(2) |
|
$ |
2,951,186 |
|
|
$ |
227,850 |
|
|
$ |
2,151,443 |
|
|
$ |
8,368,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. E. Sheridan
Death |
|
$ |
0 |
|
|
$ |
500,787 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
500,787 |
|
Involuntary Termination Without Cause |
|
$ |
486,095 |
(1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
41,566 |
|
|
$ |
527,661 |
|
Termination Following Change in Control |
|
$ |
1,058,246 |
(2) |
|
$ |
681,521 |
|
|
$ |
99,310 |
|
|
$ |
706,137 |
|
|
$ |
2,545,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. R. Greenberg
Death |
|
$ |
0 |
|
|
$ |
8,206,630 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
8,206,630 |
|
Involuntary Termination Without Cause |
|
$ |
6,405,000 |
(1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
57,285 |
|
|
$ |
6,462,285 |
|
Termination Following Change in Control |
|
$ |
7,771,113 |
(2) |
|
$ |
10,827,497 |
|
|
$ |
6,423,775 |
|
|
$ |
41,142 |
|
|
$ |
25,063,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. L. Walsh
Death |
|
$ |
0 |
|
|
$ |
3,268,423 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,268,423 |
|
Involuntary Termination Without Cause |
|
$ |
2,055,305 |
(1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
39,571 |
|
|
$ |
2,094,876 |
|
Termination Following Change in Control |
|
$ |
4,300,495 |
(2) |
|
$ |
4,316,769 |
|
|
$ |
1,422,597 |
|
|
$ |
3,678,869 |
|
|
$ |
13,718,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. H. Knauss
Death |
|
$ |
0 |
|
|
$ |
1,562,434 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
1,562,434 |
|
Involuntary Termination Without Cause |
|
$ |
1,063,563 |
(1) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
34,488 |
|
|
$ |
1,098,051 |
|
Termination Following Change in Control |
|
$ |
1,920,961 |
(2) |
|
$ |
1,964,042 |
|
|
$ |
1,160,543 |
|
|
$ |
1,732,867 |
|
|
$ |
6,778,413 |
|
|
|
|
(1) |
|
Amounts shown under Severance Pay in the case of involuntary termination without cause are
calculated under the terms of the UGI Severance Plan for Messrs. Greenberg, Walsh and Knauss,
and the AmeriGas Severance Plan for Messrs. Bissell and Sheridan. We assumed that 100 percent
of the target annual bonus was paid. |
|
(2) |
|
Amounts shown under Severance Pay in the case of termination following a change in control
are calculated under the officers change in control agreement. |
|
(3) |
|
In calculating the amounts shown under Equity Awards with Accelerated Vesting, we assumed
(i) the continuation of AmeriGas Partners distribution (and UGIs dividend, as applicable) at
the rate in effect on September 30, 2010; and (ii) performance at the greater of actual
through September 30, 2010 or target levels with respect to performance units. |
65
|
|
|
(4) |
|
Amounts shown under Nonqualified Retirement Benefits are in addition to amounts shown in
the Pension Benefits Table Fiscal 2010 and Non-Qualified Deferred Compensation Table
Fiscal 2010. |
|
(5) |
|
Amounts shown under Welfare and Other Benefits include estimated payments for (i) medical
and dental and life insurance premiums, (ii) outplacement services, (iii) tax preparation
services, and (iv) an estimated Code Section 280G tax gross up payments of $2,109,205 for Mr.
Bissell, $1,709,892 for Mr. Knauss, $652,451 for Mr. Sheridan, and $3,637,727 for Mr. Walsh in
the event of a change in control. |
Compensation of Directors
The table below shows the components of director compensation for Fiscal 2010. A Director who
is an officer or employee of the General Partner or its subsidiaries is not compensated for service
on the Board of Directors or on any Committee of the Board.
Director Compensation Table Fiscal 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
and |
|
|
|
|
|
|
|
|
|
Fees Earned |
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Nonqualified |
|
|
All |
|
|
|
|
|
|
or Paid |
|
|
Stock |
|
|
Option |
|
|
Plan |
|
|
Deferred |
|
|
Other |
|
|
|
|
|
|
in Cash |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Compensation |
|
|
Compensation |
|
|
Total |
|
Name |
|
($)(2) |
|
|
($)(3) |
|
|
($) |
|
|
($) |
|
|
Earnings |
|
|
($) |
|
|
($) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
S. D. Ban |
|
|
65,000 |
|
|
|
21,390 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
86,390 |
|
|
R. C. Gozon |
|
|
65,000 |
|
|
|
21,390 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
86,390 |
|
|
W. J. Marrazzo (1) |
|
|
75,000 |
|
|
|
21,390 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
96,390 |
|
|
G. A. Pratt (1) |
|
|
80,000 |
|
|
|
21,390 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
101,390 |
|
|
M. O. Schlanger |
|
|
65,000 |
|
|
|
21,390 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
86,390 |
|
|
H. B. Stoeckel (1) |
|
|
75,000 |
|
|
|
21,390 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
96,390 |
|
|
|
|
(1) |
|
The Partnership pays its non-management directors an annual retainer of $65,000 for Board
service. It pays an additional annual retainer of $10,000 to members of the Audit Committee,
other than the chairperson. The chairperson of the Audit Committee is paid an additional
annual retainer of $15,000. |
|
(2) |
|
The Partnership pays no meeting attendance fees to its directors. |
|
(3) |
|
All Directors named above received 500 Phantom Units in Fiscal 2010 as part of their annual
compensation. The Phantom Units were awarded under the AmeriGas Propane, Inc. 2010 Long-Term
Incentive Plan on behalf of AmeriGas Partners, L.P. (the 2010 Plan) approved by the
Partnerships Common Unitholders on July 30, 2010. Each Phantom Unit represents the right to
receive an AmeriGas Partners, L.P. Common Unit and distribution equivalents when the Director
ends his service on the Board. Phantom Units earn distribution equivalents on each record
date for the payment of a distribution by the Partnership on its Common Units. Accrued
distribution equivalents are converted to additional Phantom Units annually, on the last date
of the calendar year, based on the closing price for the Partnerships Common Units on the
last trading day of the year. All Phantom Units and distribution equivalents are fully vested
when credited to the Directors account. Account balances become payable 65 percent in
AmeriGas Partners, L.P. Common Units and 35 percent in cash, based on the value of a Common
Unit, upon retirement or termination of service. In the case of a change in control of the
Partnership, the Phantom Units and distribution equivalents will be paid in cash based on the
fair market value of the Partnerships Common Units on the date of the change in control. The
amounts shown in column (c) above represent the grant date fair value of the awards of Phantom
Units. The assumptions used in the calculation of the amounts shown are included in Note 2
and Note 12 to our audited consolidated
financial statements for Fiscal 2010. For the number of Phantom Units credited to each
Directors account as of September 30, 2010, see Securities Ownership of certain beneficial
owners and management and related security holder matters Beneficial Ownership of
Partnership Common Units by the Directors and Named Executive Officers of the General Partner. |
66
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITY
HOLDER MATTERS
Ownership of Limited Partnership Units by Certain Beneficial Owners
The following table sets forth certain information regarding each person known by the General
Partner to have been the beneficial owner of more than 5 percent of the Partnerships voting
securities representing limited partner interests as of November 1, 2010. AmeriGas Propane, Inc. is
the sole general partner of the Partnership.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and |
|
|
|
|
|
|
|
|
|
|
Nature of |
|
|
|
|
|
|
|
|
|
|
Beneficial |
|
|
|
|
|
|
Name and Address (1) |
|
|
Ownership of |
|
|
Percent |
|
Title of Class |
|
of Beneficial Owner |
|
|
Partnership Units |
|
|
of Class |
|
Common Units |
|
UGI Corporation |
|
|
24,691,209 |
(2) |
|
|
43 |
% |
|
|
AmeriGas, Inc. |
|
|
24,691,209 |
(3) |
|
|
43 |
% |
|
|
AmeriGas Propane, Inc. |
|
|
24,691,209 |
(4) |
|
|
43 |
% |
|
|
Petrolane Incorporated |
|
|
7,839,911 |
(4) |
|
|
14 |
% |
|
|
|
(1) |
|
The address of each of UGI and the General Partner is 460 North Gulph Road, King of Prussia,
PA 19406. The address of each of AmeriGas, Inc. and Petrolane Incorporated (Petrolane) is
2525 N. 12th Street, Suite 360, Reading, PA 19612. |
|
(2) |
|
Based on the number of units held by its indirect, wholly-owned subsidiaries, Petrolane and
AmeriGas Propane, Inc. |
|
(3) |
|
Based on the number of units held by its direct and indirect, wholly-owned subsidiaries,
AmeriGas Propane, Inc. and Petrolane. |
|
(4) |
|
AmeriGas Propane, Inc.s beneficial ownership includes 7,839,911 Common Units held by its
subsidiary, Petrolane. Beneficial ownership of those Common Units is shared with UGI and
AmeriGas, Inc. |
Ownership of Partnership Common Units by the Directors and Named Executive Officers of the General
Partner
The table below sets forth as of October 1, 2010 the beneficial ownership of Partnership
Common Units by each director and each of the named executive officers, as well as by the directors
and all of the executive officers of the General Partner as a group. No director, named executive
officer or executive officer beneficially owns 1 percent or more of the Partnerships Common Units.
The total number of Common Units beneficially owned by the directors and executive officers of the
General Partner as a group represents less than 1 percent of the Partnerships outstanding Common
Units.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of |
|
|
|
|
|
|
Beneficial Ownership of |
|
|
Number of AmeriGas Partners |
|
Name of Beneficial Owner |
|
Partnership Common Units (1) |
|
|
Phantom Units (7) |
|
L. R. Greenberg |
|
|
11,000 |
|
|
|
0 |
|
J. L. Walsh |
|
|
7,000 |
(2) |
|
|
0 |
|
S. D. Ban |
|
|
0 |
|
|
|
500 |
|
R. C. Gozon |
|
|
5,000 |
|
|
|
500 |
|
M. O. Schlanger |
|
|
1,000 |
(3) |
|
|
500 |
|
G. A. Pratt |
|
|
0 |
|
|
|
500 |
|
W. J. Marrazzo |
|
|
1,000 |
(4) |
|
|
500 |
|
E. V. N. Bissell |
|
|
64,600 |
(5) |
|
|
0 |
|
R. H. Knauss |
|
|
14,108 |
|
|
|
0 |
|
J. E. Sheridan |
|
|
16,703 |
(6) |
|
|
0 |
|
H. B. Stoeckel |
|
|
0 |
|
|
|
500 |
|
Directors and executive
officers as a group (19
persons) |
|
|
168,066 |
|
|
|
3,000 |
|
|
|
|
(1) |
|
Sole voting and investment power unless otherwise specified. |
|
(2) |
|
Mr. Walshs Units are held jointly with his spouse. |
67
|
|
|
(3) |
|
The Units shown are owned by Mr. Schlangers spouse. Mr. Schlanger
disclaims beneficial ownership of his spouses Units. |
|
(4) |
|
Mr. Marrazzos Units are held jointly with his spouse. |
|
(5) |
|
Mr. Bissells Units are held jointly with his spouse. |
|
(6) |
|
Mr. Sheridans Units are held jointly with his spouse. |
|
(7) |
|
The 2010 Plan provides that Phantom Units will be converted to
AmeriGas Partners Common Units and paid out to Directors upon their
termination of service. |
The General Partner is a wholly owned subsidiary of AmeriGas, Inc. which is a wholly owned
subsidiary of UGI. The table below sets forth, as of October 1, 2010, the beneficial ownership of
UGI Common Stock by each director and each of the named executive officers, as well as by the
directors and the executive officers of the General Partner as a group. Including the number of
shares of stock underlying exercisable options, Mr. Greenberg is the beneficial owner of
approximately 1.6 percent of UGIs Common Stock. All other directors and executive officers own
less than 1 percent of UGIs outstanding shares. The total number of shares beneficially owned by
the directors and executive officers as a group (including 2,633,329 shares subject to exercisable
options and stock units held by directors under the 2004 plan) represents approximately 3 percent
of UGIs outstanding shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of UGI Shares |
|
|
|
|
|
|
|
|
|
and Stock Units and Nature |
|
|
|
|
|
|
|
|
|
of Beneficial Ownership |
|
|
Number of |
|
|
|
|
|
|
Excluding |
|
|
Exercisable UGI |
|
|
|
|
Name of Beneficial Owner |
|
UGI Stock Options(1)(4) |
|
|
Stock Options |
|
|
Total |
|
L. R. Greenberg |
|
|
406,305 |
(2) |
|
|
1,315,000 |
|
|
|
1,721,305 |
|
J. L. Walsh |
|
|
110,249 |
(3) |
|
|
511,666 |
|
|
|
621,915 |
|
S. D. Ban |
|
|
75,606 |
|
|
|
71,500 |
|
|
|
147,106 |
|
R. C. Gozon |
|
|
127,210 |
|
|
|
71,500 |
|
|
|
198,710 |
|
M. O. Schlanger |
|
|
58,942 |
(5) |
|
|
83,500 |
|
|
|
142,442 |
|
H. B. Stoeckel |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
G. A. Pratt |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
W. J. Marrazzo |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
E. V.N. Bissell |
|
|
68,197 |
(6) |
|
|
160,000 |
|
|
|
228,197 |
|
R. H. Knauss |
|
|
21,908 |
|
|
|
131,666 |
|
|
|
153,574 |
|
J. E. Sheridan |
|
|
1,036 |
(7) |
|
|
69,333 |
|
|
|
70,369 |
|
Directors and
executive officers as
a group (19 persons) |
|
|
917,364 |
|
|
|
2,633,329 |
|
|
|
3,550,693 |
|
|
|
|
(1) |
|
Sole voting and investment power unless otherwise specified. |
|
(2) |
|
Mr. Greenberg holds 249,848 shares jointly with his spouse. |
|
(3) |
|
Mr. Walsh holds these shares jointly with his spouse. |
|
(4) |
|
Included in the number of shares shown are Stock Units (Units) under the 2004 Plan. Each
Unit will be paid out to the director upon retirement or termination of service from the UGI
Board of Directors in the form of shares of UGI Common Stock (65 percent) and cash (35
percent). The number of Units included for the directors is as follows: Dr. Ban 59,110, Mr.
Gozon 94,602 and Mr. Schlanger 49,218. |
|
(5) |
|
Includes 2,000 shares owned by Mr. Schlangers spouse. Mr. Schlanger disclaims beneficial
ownership of his spouses shares. |
|
(6) |
|
Mr. Bissell holds these shares jointly with his spouse. |
|
(7) |
|
Mr. Sheridan holds these shares in his 401(k) Savings Plan. |
68
Equity Compensation Plan Information
The following table sets forth information as of the end of Fiscal 2010 with respect to
compensation plans under which equity securities of the Partnership are authorized for issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
|
|
|
remaining available |
|
|
|
(a) |
|
|
(b) |
|
|
for future issuance |
|
|
|
Number of securities to |
|
|
Weighted average |
|
|
under equity |
|
|
|
be issued upon exercise |
|
|
exercise price of |
|
|
compensation plans |
|
|
|
of outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities |
|
Plan category |
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column (a)) |
|
Equity compensation
plans approved by
security holders
(1)(2) |
|
|
146,600 |
|
|
|
0 |
|
|
|
2,796,550 |
(2) |
Equity compensation
plans not approved
by security holders |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Total |
|
|
146,600 |
|
|
|
|
|
|
|
2,796,550 |
|
|
|
|
(1) |
|
The AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan and the AmeriGas Propane, Inc.
Discretionary Long-Term Incentive Plan for Non-Executive Key Employees were approved pursuant
to Section 6.4 of the Partnership Agreement. |
|
(2) |
|
The sole plan with securities remaining for future issuance is the AmeriGas Propane, Inc.
2010 Long-Term Incentive Plan on behalf of AmeriGas Partners, L.P. (2010 Plan). The 2010
Plan was approved by security holders on July 30, 2010. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We do not have any employees. We are managed by our General Partner. Pursuant to the
Partnership Agreement and a Management Services Agreement among AmeriGas Eagle Holdings, Inc. and
the General Partner, the General Partner is entitled to reimbursement for all direct and indirect
expenses incurred or payments it makes on behalf of the Partnership. For information regarding our
related person transactions in general, please read Note 14 to Consolidated Financial Statements
included under Item 8 of this Report. The information summarizes our business relationships and
related transactions with our General Partner and its affiliates, including UGI, during Fiscal
2010.
Interests of the General Partner in the Partnership
We make quarterly cash distributions of all of our Available Cash, generally defined as all
cash on hand at the end of such quarter, plus all additional cash on hand as of the date of
determination resulting from borrowings subsequent to the end of such quarter, less the amount of
cash reserves established by the General Partner in its reasonable discretion for future cash
requirements. According to the Partnership Agreement, the General Partner receives cash
distributions as follows:
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner
(giving effect to the 1.01% interest of the General Partner in distributions of Available Cash from
AmeriGas OLP to the Partnership) until Available Cash exceeds the Minimum Quarterly Distribution of
$0.55 and the First Target Distribution of $0.055 per Common Unit (or a total of $0.605 per Common
Unit). When Available Cash exceeds $0.605 per Common Unit in any quarter, the General Partner will
receive a greater percentage of the total Partnership distribution but only with respect to the
amount by which the distribution per Common Unit to limited partners exceeds $0.605.
Related Person Transactions
The General Partner employs persons responsible for managing and operating the Partnership.
The Partnership reimburses the General Partner for the direct and indirect costs of providing these
services, including all compensation and benefit costs. For Fiscal 2010, these costs totaled
approximately $350 million.
69
The Partnership and the General Partner also have extensive, ongoing relationships with UGI
and its affiliates. UGI performs certain financial and administrative services for the General
Partner on behalf of the Partnership. UGI does not receive a fee for such services, but is
reimbursed for all direct and indirect expenses incurred in connection with providing these
services, including all compensation and benefit costs in accordance with an allocation formula. A wholly owned subsidiary of UGI provides the
Partnership with automobile liability insurance with limits of $0.5 million per occurrence and, in the
aggregate, $0.5 million in excess of the deductible, and stop loss
medical coverage per occurrence in excess of $0.3 million per employee per year. Another wholly
owned subsidiary of UGI leases office space to the General Partner for its headquarters staff. The
Partnership is also covered by UGI master policies. These UGI master policies generally include
excess liability, property and other standard insurance coverages. In general, the coverage
afforded by the UGI master policies is shared with other UGI domestic operating subsidiaries. As
discussed under Business-Trade Names, Trade and Service Marks, UGI and the General Partner have
licensed the trade names AmeriGas and Americas Propane Company and the related service marks
and trademark to the Partnership on a royalty-free basis in the U.S. The Partnership obtains
management information services from the General Partner, and reimburses the General Partner for
its direct and indirect expenses related to those services. For Fiscal 2010, the Partnership paid
approximately $13.1 million for the services referred to in this paragraph.
AmeriGas OLP purchases propane from UGI Energy Services, Inc. and its subsidiaries (Energy
Services), which are affiliates of UGI. Purchases of propane by AmeriGas OLP from Energy Services
totaled $39.8 million during Fiscal 2010. Of this amount, $37.2 million was pursuant to a 2005
Product Sales Agreement between Atlantic Energy, Inc., a subsidiary of Energy Services (AEI), and
AmeriGas OLP. This contract was amended during Fiscal 2010 to extend the initial termination date
to April 30, 2015. On July 30, 2010, Energy Services sold its interest in AEI. Amounts due to
Energy Services at September 30, 2010 were immaterial.
The Partnership
sold propane to certain affiliates of UGI which totaled approximately $2.0
million in Fiscal 2010. The highest amounts due from affiliates of the Partnership during Fiscal
2010 and at November 1, 2010 were $8.0 million and $7.0 million, respectively.
Policies Regarding Transactions with Related Persons
The Partnership Agreement, the Audit Committee Charter and the Codes of Conduct set forth
policies and procedures for the review and approval of certain transactions with persons affiliated
with the Partnership.
Pursuant to the Audit Committee Charter, the Audit Committee has responsibility to review, and
if acceptable, approve any transactions involving the Partnership or the General Partner in which a
director or executive officer has a material interest. The Audit Committee also has authority to
review and approve any transaction involving a potential conflict of interest between the General
Partner and any of its affiliates, on the one hand, or the Partnership or any partner or assignee,
on the other hand, based on the provisions of the Partnership Agreement for determining that a
transaction is fair and reasonable to the Partnership. Such determinations are made at the request
of the General Partner. In addition, the Audit Committee conducts an annual review of all related
person transactions, as defined by applicable rules of the SEC.
Director Independence
For a discussion of director independence, see Item 10 Directors, Executive Officers and
Corporate Governance Director Independence.
70
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed by PricewaterhouseCoopers LLP, the Partnerships independent
registered public accountants, in Fiscal 2010 and Fiscal 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Audit Fees(1) |
|
$ |
805,150 |
|
|
$ |
849,000 |
|
Audit-Related Fees |
|
|
-0- |
|
|
|
-0- |
|
Tax Fees(2) |
|
|
600,000 |
|
|
|
636,345 |
|
All Other Fees(3) |
|
|
136,000 |
|
|
|
161,363 |
|
|
|
|
|
|
|
|
Total Fees for Services Provided |
|
$ |
1,541,150 |
|
|
$ |
1,646,708 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit Fees were for audit services, including (i) the annual audit of the consolidated
financial statements and internal control over financial reporting of the Partnership, (ii)
subsidiary audits, (iii) review of the interim financial statements included in the Quarterly
Reports on Form 10-Q of the Partnership, and (iv) services that only the independent
registered public accounting firm can reasonably be expected to provide, such as services
associated with SEC registration statements, and documents issued in connection with
securities offerings. |
|
(2) |
|
Tax Fees were for the preparation of Substitute Schedule K-1 forms for unitholders of the
Partnership. |
|
(3) |
|
Fees related to evaluation of the design and operational effectiveness of the information
system that supports our Order-to-Cash business process. |
In the course of its meetings, the Audit Committee considered whether the provision by
PricewaterhouseCoopers LLP of the professional services described under Tax Fees was compatible
with PricewaterhouseCoopers LLPs independence. The Committee concluded that the independent
auditor is independent from the Partnership and its management.
Consistent with SEC policies regarding auditor independence, the Audit Committee has
responsibility for appointing, setting compensation and overseeing the work of the Partnerships
independent accountants. In recognition of this responsibility, the Audit Committee has a policy of
pre-approving all audit and permissible non-audit services provided by the independent accountants.
Prior to engagement of the Partnerships independent accountants for the next years audit,
management submits to the Audit Committee for approval a list of services expected to be rendered
during that year and fees related thereto for approval.
71
PART IV:
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1) Financial Statements:
Included under Item 8 are the following financial statements and supplementary data:
Managements Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of September 30, 2010 and 2009
Consolidated Statements of Operations for the years ended September 30, 2010, 2009 and
2008
Consolidated Statements of Cash Flows for the years ended September 30, 2010, 2009 and
2008
Consolidated Statements of Partners Capital for the years ended September 30, 2010,
2009 and 2008
Notes to Consolidated Financial Statements
Quarterly Data for the years ended September 30, 2010 and 2009
(2) Financial Statement Schedules:
I Condensed Financial Information of Registrant (Parent Company)
II Valuation and Qualifying Accounts for the years ended September 30, 2010, 2009 and
2008
We have omitted all other financial statement schedules because the required
information is (1) not present; (2) not present in amounts sufficient to require
submission of the schedule; or (3) included elsewhere in the financial statements or
notes thereto contained in this report.
(3) List of Exhibits:
The exhibits filed as part of this report are as follows (exhibits incorporated by
reference are set forth with the name of the registrant, the type of report and
registration number or last date of the period for which it was filed, and the exhibit
number in such filing):
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
|
Merger and Contribution
Agreement among AmeriGas
Partners, L.P., AmeriGas
Propane, L.P., New AmeriGas
Propane, Inc., AmeriGas
Propane, Inc., AmeriGas
Propane-2, Inc., Cal Gas
Corporation of America,
Propane Transport, Inc. and
NORCO Transportation Company
|
|
AmeriGas Partners, L.P.
|
|
Registration Statement on Form S-4
(No. 33-92734)
|
|
|
10.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2 |
|
|
Conveyance and Contribution
Agreement among AmeriGas
Partners, L.P., AmeriGas
Propane, L.P. and Petrolane
Incorporated
|
|
AmeriGas Partners, L.P.
|
|
Registration Statement on Form S-4
(No. 33-92734)
|
|
|
10.22 |
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
Fourth Amended and Restated
Agreement of Limited
Partnership of AmeriGas
Partners, L.P. dated as of
July 27, 2009
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(6/30/09)
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
|
Second Amended and Restated
Agreement of Limited
Partnership of AmeriGas
Propane, L.P. dated as of
December 1, 2004
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/04)
|
|
|
3.1 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3 |
|
|
Amended and Restated Agreement
of Limited Partnership of
AmeriGas Eagle Propane, L.P.
dated July 19, 1999
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
Instruments defining the
rights of security holders,
including indentures. (The
Partnership agrees to furnish
to the Commission upon request
a copy of any instrument
defining the rights of holders
of long-term debt not required
to be filed pursuant to Item
601(b)(4) of Regulation S-K) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1 |
|
|
Fourth Amended and Restated
Agreement of Limited
Partnership of AmeriGas
Partners, L.P. dated as of
July 27, 2009
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(6/30/09)
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2 |
|
|
Second Amended and Restated
Agreement of Limited
Partnership of AmeriGas
Propane, L.P. dated as of
December 1, 2004
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/04)
|
|
|
3.1 |
(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3 |
|
|
Amended and Restated Agreement
of Limited Partnership of
AmeriGas Eagle Propane, L.P.
dated as of July 19, 1999
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/01)
|
|
|
3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4 |
|
|
Indenture, dated May 3, 2005,
by and among AmeriGas
Partners, L.P., a Delaware
limited partnership, AmeriGas
Finance Corp., a Delaware
corporation, and Wachovia
Bank, National Association, as
trustee
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (5/3/05)
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.5 |
|
|
Indenture, dated January 26,
2006, by and among AmeriGas
Partners, L.P., a Delaware
limited partnership, AP Eagle
Finance Corp., a Delaware
corporation, and U.S. Bank
National Association, as
trustee
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K
(1/26/06)
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1 |
** |
|
UGI Corporation 2004 Omnibus
Equity Compensation Plan
Amended and Restated as of
December 5, 2006
|
|
UGI
|
|
Form 8-K
(3/27/07)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2 |
** |
|
UGI Corporation 2004 Omnibus
Equity Compensation Plan
Amended and Restated as of
December 5, 2006 Terms and
Conditions as amended and
restated effective January 1,
2009
|
|
UGI
|
|
Form 10-K
(9/30/09)
|
|
|
10.2 |
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3 |
** |
|
UGI Corporation 1997 Stock
Option and Dividend Equivalent
Plan Amended and Restated as
of May 24, 2005
|
|
UGI
|
|
Form 10-K
(9/30/10)
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4 |
** |
|
UGI Corporation 2000 Stock
Incentive Plan Amended and
Restated as of May 24, 2005
|
|
UGI
|
|
Form 10-K
(9/30/06)
|
|
|
10.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5 |
** |
|
UGI Corporation 2009 Deferral
Plan As Amended and Restated
Effective June 1, 2010
|
|
UGI
|
|
Form 10-Q
(6/30/10)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6 |
** |
|
UGI Corporation Senior
Executive Employee Severance
Plan as in effect as of
January 1, 2008
|
|
UGI
|
|
Form 10-Q
(3/31/08)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7a |
** |
|
UGI Corporation Supplemental
Executive Retirement Plan and
Supplemental Savings Plan, as
Amended and Restated effective
January 1, 2009
|
|
UGI
|
|
Form 10-K
(9/30/09)
|
|
|
10.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7b |
* |
|
Amendment 2009-1 to the UGI
Corporation Supplemental
Executive Retirement Plan and
Supplemental Savings Plan as
Amended and Restated effective
January 1, 2009
|
|
UGI
|
|
Form 10-Q (12/31/09)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7c |
** |
|
UGI Corporation 2009
Supplemental Executive
Retirement Plan For New
Employees
|
|
UGI
|
|
Form 10-Q (12/31/09)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8 |
** |
|
UGI Corporation Executive
Annual Bonus Plan effective as
of October 1, 2006
|
|
UGI
|
|
Form 10-K
(9/30/07)
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9a |
** |
|
AmeriGas Propane, Inc. 2000
Long-Term Incentive Plan on
Behalf of AmeriGas Partners,
L.P., as amended and restated
effective January 1, 2005
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/08)
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9b |
** |
|
AmeriGas Propane, Inc. 2010
Long-Term Incentive Plan on
Behalf of AmeriGas Partners,
L.P., Effective July 30, 2010
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (7/30/10)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*10.10 |
** |
|
AmeriGas Propane, Inc. 2010
Long-Term Incentive Plan on
Behalf of AmeriGas Partners,
L.P. Terms and Conditions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11 |
** |
|
AmeriGas Propane, Inc.
Non-Qualified Deferred
Compensation Plan, as amended
and restated effective January
1, 2009
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/08)
|
|
|
10.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12 |
** |
|
AmeriGas Propane, Inc. Senior
Executive Employee Severance
Plan, as in effect January 1,
2008
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/09)
|
|
|
10.12 |
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13 |
** |
|
AmeriGas Propane, Inc.
Executive Employee Severance
Plan, as in effect January 1,
2008
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/08)
|
|
|
10.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14 |
** |
|
AmeriGas Propane, Inc.
Supplemental Executive
Retirement Plan, as Amended
and Restated Effective January
1, 2009
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(12/31/09)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15 |
** |
|
AmeriGas Propane, Inc.
Executive Annual Bonus Plan,
effective as of October 1,
2006
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/07)
|
|
|
10.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16 |
** |
|
UGI Corporation 2004 Omnibus
Equity Compensation Plan Stock
Unit Grant Letter for UGI
Employees, dated January 1,
2009
|
|
UGI
|
|
Form 10-Q
(3/31/09)
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17 |
** |
|
UGI Corporation 2004 Omnibus
Equity Compensation Plan
Nonqualified Stock Option
Grant Letter for UGI
Employees, dated January 1,
2010
|
|
UGI
|
|
Form 10-Q
(3/31/10)
|
|
|
10.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18 |
** |
|
UGI Corporation 2004 Omnibus
Equity Compensation Plan
Nonqualified Stock Option
Grant Letter for AmeriGas
Employees, dated January 1,
2010
|
|
UGI
|
|
Form 10-Q
(3/31/10)
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19 |
** |
|
UGI Corporation 2004 Omnibus
Equity Compensation Plan
Performance Unit Grant Letter
for UGI Employees, dated
January 1, 2010
|
|
UGI
|
|
Form 10-Q
(3/31/10)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20 |
** |
|
AmeriGas Propane, Inc. 2000
Long-Term Incentive Plan on
Behalf of AmeriGas Partners,
L.P., as amended and restated
effective January 1, 2005,
Restricted Unit Grant Letter
dated as of December 31, 2009
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(3/31/10)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*10.21 |
** |
|
AmeriGas Propane, Inc. 2010
Long-Term Incentive Plan on
Behalf of AmeriGas Partners,
L.P Phantom Unit Grant Letter
dated as of July 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22a |
** |
|
Description of oral
compensation arrangements for
Messrs. Greenberg and Walsh
|
|
UGI
|
|
Form 10-K
(9/30/10)
|
|
|
10.32a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*10.22b |
** |
|
Description of oral
compensation arrangements for
Messrs. Bissell, Knauss and
Sheridan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*10.23 |
** |
|
Summary of Director
Compensation of AmeriGas
Propane, Inc. dated October 1,
2010 |
|
|
|
|
|
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24 |
** |
|
Form of Change in Control
Agreement Amended and Restated
as of May 12, 2008 for Messrs.
Greenberg, Knauss and Walsh
|
|
UGI
|
|
Form 10-Q
(6/30/08)
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25 |
** |
|
Form of Change in Control
Agreement Amended and Restated
as of May 12, 2008 for Mr.
Bissell
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(6/30/08)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26 |
** |
|
Form of Change in Control
Agreement Amended and Restated
as of May 12, 2008 for Mr.
Sheridan
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(6/30/08)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27 |
** |
|
Form of Confidentiality and
Post-Employment Activities
Agreement with AmeriGas
Propane, Inc. for Mr. Bissell
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(3/31/05)
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28 |
** |
|
Form of Confidentiality and
Post-Employment Activities
Agreement with AmeriGas
Propane, Inc. for Mr. Sheridan
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (8/15/05)
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29 |
** |
|
Form of Confidentiality and
Post-Employment Activities
Agreement with AmeriGas
Propane, Inc. for Mr. Knauss
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K (9/30/09)
|
|
|
10.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30 |
|
|
Trademark License Agreement
dated April 19, 1995 among UGI
Corporation, AmeriGas, Inc.,
AmeriGas Propane, Inc.,
AmeriGas Partners, L.P. and
AmeriGas Propane, L.P.
|
|
UGI
|
|
Form 10-K
(9/30/10)
|
|
|
10.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31 |
|
|
Trademark License Agreement,
dated April 19, 1995 among
AmeriGas Propane, Inc.,
AmeriGas Partners, L.P. and
AmeriGas Propane, L.P.
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-Q
(3/31/95)
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32a |
|
|
Credit Agreement, dated as of
April 17, 2009, among AmeriGas
Propane, L.P., as Borrower,
AmeriGas Propane, Inc., as
Guarantor, Petrolane
Incorporated, as Guarantor,
Citizens Bank of Pennsylvania,
as Syndication Agent, JPMorgan
Chase, N.A., as Documentation
Agent and Wachovia Bank,
National Association, as
Administrative Agent
|
|
UGI
|
|
Form 10-K
(9/30/10)
|
|
|
10.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32b |
|
|
Amendment No. 1 to Credit
Agreement, dated as of July 1,
2010, among the Partnership,
as Borrower, AmeriGas Propane,
Inc., as Guarantor, Petrolane
Incorporated, as Guarantor,
Citizens Bank of Pennsylvania,
as Syndication Agent, JPMorgan
Chase Bank, N.A., as
Documentation Agent and Wells
Fargo Bank, N.A., as
Administrative Agent.
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K (7/1/10)
|
|
|
10.1 |
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33 |
|
|
Restricted Subsidiary
Guarantee by the Restricted
Subsidiaries of AmeriGas
Propane, L.P., as Guarantors,
for the benefit of Wachovia
Bank, National Association and
the Banks, dated as of April
17, 2009
|
|
AmeriGas Partners,
L.P.
|
|
Form 8-K
(7/20/09)
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34 |
|
|
Credit Agreement dated as of
November 6, 2006 among
AmeriGas Propane, L.P., as
Borrower, AmeriGas Propane,
Inc., as Guarantor, Petrolane
Incorporated, as Guarantor,
Citigroup Global Markets Inc.,
as Syndication Agent, J.P.
Morgan Securities Inc. and
Credit Suisse Securities (USA)
LLC, as Co-Documentation
Agents, Wachovia Bank,
National Association, as
Agent, Issuing Bank and Swing
Line Bank, and the other
financial institutions party
thereto
|
|
UGI
|
|
Form 10-K
(9/30/10)
|
|
|
10.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35 |
|
|
Restricted Subsidiary
Guarantee by the Restricted
Subsidiaries of AmeriGas
Propane, L.P., as Guarantors,
for the benefit of Wachovia
Bank, National Association and
the Banks dated as of November
6, 2006
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/06)
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36 |
|
|
Release of Liens and
Termination of Security
Documents dated as of November
6, 2006 by and among AmeriGas
Propane, Inc., Petrolane
Incorporated, AmeriGas
Propane, L.P., AmeriGas
Propane Parts & Service, Inc.
and Wachovia Bank, National
Association, as Collateral
Agent for the Secured
Creditors, pursuant to the
Intercreditor and Agency
Agreement dated as of April
19, 1995
|
|
AmeriGas Partners,
L.P.
|
|
Form 10-K
(9/30/06)
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
Code of Ethics for principal
executive, financial and
accounting officers
|
|
UGI
|
|
Form 10-K
(9/30/03)
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*21 |
|
|
Subsidiaries of the Registrant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*23 |
|
|
Consent of
PricewaterhouseCoopers LLP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.1 |
|
|
Certification by the Chief
Executive Officer relating to
the Registrants Report on
Form 10-K for the fiscal year
ended September 30, 2010
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.2 |
|
|
Certification by the Chief
Financial Officer relating to
the Registrants Report on
Form 10-K for the fiscal year
ended September 30, 2010
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference |
Exhibit No. |
|
Exhibit |
|
Registrant |
|
Filing |
|
Exhibit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32 |
|
|
Certification by the Chief
Executive Officer and the
Chief Financial Officer
relating to the Registrants
Report on Form 10-K for the
fiscal year ended
September 30, 2010, pursuant
to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
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|
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|
|
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*99 |
|
|
UGI Corporation Equity-Based
Compensaiton Information |
|
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|
|
|
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|
|
|
|
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|
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|
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|
*101 |
|
|
The following materials from AmeriGas Partners, L.P.s Annual Report on Form 10-K for the
year ended September 30, 2010, formatted in XBRL (Extensible Business Reporting Language): (i) the
Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated
Statements of Cash Flows; (iv) the Consolidated Statements of Partners Capital; and (v) Notes to
Consolidated Financial Statements, tagged as blocks of text. This Exhibit 101 is deemed not filed
for purposes of Section 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities
Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
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|
|
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|
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* |
|
Filed herewith. |
|
** |
|
As required by Item 14(a)(3), this exhibit is identified as a compensatory plan or
arrangement. |
78
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
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|
|
AMERIGAS PARTNERS, L.P.
|
|
|
By: |
AmeriGas Propane, Inc.,
|
|
|
|
Its General Partner |
|
|
|
|
Date: November 19, 2010 |
By: |
/s/ Jerry E. Sheridan
|
|
|
|
Jerry E. Sheridan |
|
|
|
Vice President Finance and Chief Financial Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below on November 19, 2010, by the following persons on behalf of the Registrant in the
capacities indicated.
|
|
|
Signature |
|
Title |
|
|
|
/s/ Eugene V. N. Bissell
Eugene V. N. Bissell
|
|
President and Chief Executive Officer (Principal
Executive Officer) and Director |
|
|
|
/s/ Lon R. Greenberg
|
|
Chairman and Director |
Lon R. Greenberg |
|
|
|
|
|
/s/ John L. Walsh
John L. Walsh
|
|
Vice Chairman and Director |
|
|
|
/s/ Jerry E. Sheridan
Jerry E. Sheridan
|
|
Vice President Finance and Chief Financial Officer (Principal
Financial Officer) |
|
|
|
/s/ William J. Stanczak
William J. Stanczak
|
|
Controller and Chief Accounting Officer
(Principal Accounting Officer) |
|
|
|
/s/ Stephen D. Ban
Stephen D. Ban
|
|
Director |
|
|
|
/s/ Richard C. Gozon
Richard C. Gozon
|
|
Director |
|
|
|
/s/ William J. Marrazzo
William J. Marrazzo
|
|
Director |
|
|
|
/s/ Gregory A. Pratt
Gregory A. Pratt
|
|
Director |
|
|
|
/s/ Marvin O. Schlanger
Marvin O. Schlanger
|
|
Director |
|
|
|
/s/ Howard B. Stoeckel
Howard B. Stoeckel
|
|
Director |
79
EXHIBIT INDEX
|
|
|
|
|
Exhibit No. |
|
Description |
|
10.10 |
|
|
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P.
Terms and Conditions |
|
|
|
|
|
|
10.21 |
|
|
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P
Phantom Unit Grant Letter dated as of July 30, 2010 |
|
|
|
|
|
|
10.22b |
|
|
Description of oral compensation arrangements for Messrs. Bissell, Knauss and Sheridan |
|
|
|
|
|
|
10.23 |
|
|
Summary of Director Compensation of AmeriGas Propane, Inc. dated October 1, 2010 |
|
|
|
|
|
|
21 |
|
|
Subsidiaries of the Registrant |
|
|
|
|
|
|
23 |
|
|
Consent of PricewaterhouseCoopers LLP |
|
|
|
|
|
|
31.1 |
|
|
Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|
|
|
|
|
|
31.2 |
|
|
Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|
|
|
|
|
|
32 |
|
|
Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act |
|
|
|
|
|
|
99 |
|
|
UGI Corporation Equity-Based Compensation Information |
|
|
|
|
|
|
101 |
|
|
The following materials from AmeriGas Partners, L.P.s Annual Report on Form 10-K for the
year ended September 30, 2010, formatted in XBRL (Extensible Business Reporting Language): (i) the
Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated
Statements of Cash Flows; (iv) the Consolidated Statements of Partners Capital; and (v) Notes to
Consolidated Financial Statements, tagged as blocks of text. This Exhibit 101 is deemed not filed
for purposes of Section 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities
Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
80
AMERIGAS PARTNERS, L.P.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 2010
F-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
|
|
|
|
|
|
|
Pages |
|
|
|
|
|
|
|
|
|
F-4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-3 |
|
|
|
|
|
|
|
|
|
F-5 |
|
|
|
|
|
|
|
|
|
F-6 |
|
|
|
|
|
|
|
|
|
F-7 |
|
|
|
|
|
|
|
|
|
F-8 |
|
|
|
|
|
|
|
|
F-9 to F-29 |
|
|
|
|
|
Financial Statements Schedules: |
|
|
|
|
|
|
|
|
|
For the years ended September 30, 2010, 2009 and 2008: |
|
|
|
|
|
|
|
|
|
|
|
S-1 to S-3 |
|
|
|
|
|
|
|
S-4 to S-5 |
|
|
|
|
|
We have omitted all other financial statement schedules because the required information is either
(1) not present; (2) not present in amounts sufficient to require submission of the schedule; or
(3) included elsewhere in the financial statements or related notes.
F-2
Report of Independent Registered Public Accounting Firm
To the Partners of AmeriGas Partners, L.P. and the Board of Directors of AmeriGas Propane, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, of partners capital and of cash flows present fairly, in all material
respects, the financial position of AmeriGas Partners, L.P. and its subsidiaries at September 30,
2010 and 2009, and the results of their operations and their cash flows for each of the three years
in the period ended September 30, 2010 in conformity with accounting principles generally accepted
in the United States of America. In addition, in our opinion, the financial statement schedules
listed in the index appearing under Item 15 (a)(2) present fairly, in all material respects, the
information set forth therein when read in conjunction with the related consolidated financial
statements. Also in our opinion, the Partnership maintained, in all material respects, effective
internal control over financial reporting as of September 30, 2010 based on criteria established in
Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Partnerships management is responsible for these financial
statements and financial statement schedules, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in Managements Report on Internal Control over Financial Reporting. Our
responsibility is to express opinions on these financial statements, on the financial statement
schedules and the Partnerships internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all
material respects. Our audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
As discussed in Note 3 to the consolidated financial statements, the Company adopted new accounting
guidance regarding the accounting for and presentation of noncontrolling interests and the
application of the two-class method for determining income per unit effective October 1, 2009.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers
Philadelphia, Pennsylvania
November 19, 2010
F-3
General Partners Report
Financial Statements
The Partnerships consolidated financial statements and other financial information contained
in this Annual Report are prepared by the management of the General Partner, AmeriGas Propane,
Inc., which is responsible for their fairness, integrity and objectivity. The consolidated
financial statements and related information were prepared in accordance with accounting principles
generally accepted in the United States of America and include amounts that are based on
managements best judgments and estimates.
The Audit Committee of the Board of Directors of the General Partner is composed of three
members, none of whom is an employee of the General Partner. This Committee is responsible for
overseeing the financial reporting process and the adequacy of controls, and for monitoring the
independence and performance of the Partnerships independent registered public accounting firm and
internal auditors. The Committee is also responsible for maintaining direct channels of
communication among the Board of Directors, management and both the independent registered public
accounting firm and internal auditors.
PricewaterhouseCoopers LLP, our independent registered public accounting firm, is engaged to
perform audits of our consolidated financial statements. These audits are performed in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Our
independent registered public accounting firm was given unrestricted access to all financial
records and related data, including minutes of all meetings of the Board of Directors and
committees of the Board. The Partnership believes that all representations made to the independent
registered public accounting firm during their audits were valid and appropriate.
Managements Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting for the Partnership. In order to evaluate the effectiveness of internal control
over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, management
has conducted an assessment, including testing, of the Partnerships internal control over
financial reporting using the criteria in Internal Control Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO Framework).
Internal control over financial reporting refers to the process designed under the supervision
and participation of management including our Chief Executive Officer and Chief Financial Officer,
to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States and includes policies and procedures that, among
other things, provide reasonable assurance that assets are safeguarded and that transactions are
executed in accordance with managements authorization and are properly recorded to permit the
preparation of reliable financial information. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate due to changing conditions, or the degree of compliance with the policies or procedures
may deteriorate.
Based on its assessment, management has concluded that the Partnerships internal control over
financial reporting was effective as of September 30, 2010, based on the COSO Framework.
PricewaterhouseCoopers LLP, our independent registered public accounting firm, audited the
effectiveness of the Partnerships internal control over financial reporting as of September 30,
2010, as stated in their report, which appears herein.
/s/ Eugene V. N. Bissell
Chief Executive Officer
/s/ Jerry E. Sheridan
Chief Financial Officer
/s/ William J. Stanczak
Chief Accounting Officer
F-4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,726 |
|
|
$ |
59,213 |
|
Accounts receivable (less allowances for doubtful accounts
of $15,290 and $13,239, respectively) |
|
|
172,708 |
|
|
|
136,147 |
|
Accounts receivable related parties |
|
|
7,039 |
|
|
|
5,851 |
|
Inventories |
|
|
114,122 |
|
|
|
87,940 |
|
Derivative financial instruments |
|
|
7,478 |
|
|
|
14,970 |
|
Prepaid expenses and other current assets |
|
|
16,785 |
|
|
|
12,386 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
325,858 |
|
|
|
316,507 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment (less accumulated depreciation and
amortization of $867,250 and $804,239,
respectively) |
|
|
642,778 |
|
|
|
628,899 |
|
Goodwill |
|
|
678,721 |
|
|
|
665,663 |
|
Intangible assets |
|
|
37,590 |
|
|
|
32,611 |
|
Other assets |
|
|
11,272 |
|
|
|
13,884 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,696,219 |
|
|
$ |
1,657,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS CAPITAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
20,123 |
|
|
$ |
82,225 |
|
Bank loans |
|
|
91,000 |
|
|
|
|
|
Accounts payable trade |
|
|
130,575 |
|
|
|
115,041 |
|
Accounts payable related parties |
|
|
2,352 |
|
|
|
2,252 |
|
Employee compensation and benefits accrued |
|
|
37,550 |
|
|
|
36,055 |
|
Interest accrued |
|
|
20,533 |
|
|
|
22,203 |
|
Customer deposits and advances |
|
|
86,154 |
|
|
|
87,760 |
|
Derivative financial instruments |
|
|
|
|
|
|
19,284 |
|
Other current liabilities |
|
|
71,975 |
|
|
|
55,785 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
460,262 |
|
|
|
420,605 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
771,279 |
|
|
|
783,419 |
|
Other noncurrent liabilities |
|
|
71,792 |
|
|
|
77,215 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,303,333 |
|
|
|
1,281,239 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (note 13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners capital: |
|
|
|
|
|
|
|
|
AmeriGas Partners, L.P. partners capital: |
|
|
|
|
|
|
|
|
Common unitholders (units issued 57,088,509 and 57,046,388, respectively) |
|
|
372,220 |
|
|
|
367,708 |
|
General partner |
|
|
3,751 |
|
|
|
3,698 |
|
Accumulated other comprehensive income (loss) |
|
|
4,877 |
|
|
|
(6,947 |
) |
|
|
|
|
|
|
|
Total AmeriGas Partners, L. P. partners capital |
|
|
380,848 |
|
|
|
364,459 |
|
Noncontrolling interests |
|
|
12,038 |
|
|
|
11,866 |
(1) |
|
|
|
|
|
|
|
Total partners capital |
|
|
392,886 |
|
|
|
376,325 |
(1) |
|
|
|
|
|
|
|
Total liabilities and partners capital |
|
$ |
1,696,219 |
|
|
$ |
1,657,564 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As adjusted in accordance with the transition provisions for accounting for noncontrolling
interests in consolidated subsidiaries (Note 3). |
See accompanying notes to consolidated financial statements.
F-5
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per unit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Propane |
|
$ |
2,158,800 |
|
|
$ |
2,091,890 |
|
|
$ |
2,624,672 |
|
Other |
|
|
161,542 |
|
|
|
168,205 |
|
|
|
190,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,320,342 |
|
|
|
2,260,095 |
|
|
|
2,815,189 |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales propane (excluding depreciation shown below) |
|
|
1,340,615 |
|
|
|
1,254,332 |
|
|
|
1,836,917 |
|
Cost of sales other (excluding depreciation shown below) |
|
|
54,456 |
|
|
|
62,172 |
|
|
|
71,396 |
|
Operating and administrative expenses |
|
|
609,710 |
|
|
|
615,152 |
|
|
|
610,465 |
|
Depreciation |
|
|
79,679 |
|
|
|
78,528 |
|
|
|
75,679 |
|
Amortization |
|
|
7,721 |
|
|
|
5,260 |
|
|
|
4,723 |
|
Gain on sale of California LPG storage facility |
|
|
|
|
|
|
(39,887 |
) |
|
|
|
|
Other income, net |
|
|
(7,704 |
) |
|
|
(16,005 |
) |
|
|
(18,855 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,084,477 |
|
|
|
1,959,552 |
|
|
|
2,580,325 |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
235,865 |
|
|
|
300,543 |
|
|
|
234,864 |
|
Interest expense |
|
|
(65,106 |
) |
|
|
(70,340 |
) |
|
|
(72,886 |
) |
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
170,759 |
|
|
|
230,203 |
|
|
|
161,978 |
|
Income tax expense |
|
|
(3,265 |
) |
|
|
(2,593 |
) |
|
|
(1,672 |
) |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
167,494 |
|
|
|
227,610 |
(1) |
|
|
160,306 |
(1) |
Less: net income attributable to noncontrolling interests |
|
|
(2,281 |
) |
|
|
(2,967 |
)(1) |
|
|
(2,287 |
)(1) |
|
|
|
|
|
|
|
|
|
|
Net income attributable to AmeriGas Partners, L. P. |
|
$ |
165,213 |
|
|
$ |
224,643 |
(1) |
|
$ |
158,019 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General partners interest in net income
attributable to AmeriGas Partners, L.P. |
|
$ |
4,691 |
|
|
$ |
6,737 |
|
|
$ |
2,278 |
|
|
|
|
|
|
|
|
|
|
|
Limited partners interest in net income
attributable to AmeriGas Partners, L.P. |
|
$ |
160,522 |
|
|
$ |
217,906 |
|
|
$ |
155,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per limited partner unit basic (Note 2) |
|
$ |
2.80 |
|
|
$ |
3.59 |
|
|
$ |
2.70 |
|
|
|
|
|
|
|
|
|
|
|
Income per limited partner unit diluted (Note 2) |
|
$ |
2.80 |
|
|
$ |
3.59 |
|
|
$ |
2.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average limited partner units outstanding (thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
57,076 |
|
|
|
57,038 |
|
|
|
57,005 |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
57,123 |
|
|
|
57,082 |
|
|
|
57,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As adjusted in accordance with the transition provisions for accounting for noncontrolling
interests in consolidated subsidiaries (Note 3). |
See accompanying notes to consolidated financial statements.
F-6
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
167,494 |
|
|
$ |
227,610 |
(1) |
|
$ |
160,306 |
(1) |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
87,400 |
|
|
|
83,788 |
|
|
|
80,402 |
|
Gain on sale
of California LPG storage facility |
|
|
|
|
|
|
(39,887 |
) |
|
|
|
|
Provision for uncollectible accounts |
|
|
12,459 |
|
|
|
9,345 |
|
|
|
15,852 |
|
Other, net |
|
|
2,146 |
|
|
|
320 |
|
|
|
(1,448 |
) |
Net change in: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(47,865 |
) |
|
|
74,134 |
|
|
|
(51,270 |
) |
Inventories |
|
|
(24,600 |
) |
|
|
57,847 |
|
|
|
(19,032 |
) |
Accounts payable |
|
|
15,637 |
|
|
|
(58,124 |
) |
|
|
8,136 |
|
Collateral deposits |
|
|
|
|
|
|
17,830 |
|
|
|
(17,830 |
) |
Other current assets |
|
|
(4,378 |
) |
|
|
16,210 |
|
|
|
(5,348 |
) |
Other current liabilities |
|
|
10,523 |
|
|
|
(21,575 |
) |
|
|
10,446 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
218,816 |
|
|
|
367,498 |
|
|
|
180,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for property, plant and equipment |
|
|
(83,170 |
) |
|
|
(78,739 |
) |
|
|
(62,756 |
) |
Proceeds from disposals of assets |
|
|
2,586 |
|
|
|
6,880 |
|
|
|
8,442 |
|
Net proceeds
from sale of California LPG storage facility |
|
|
|
|
|
|
42,426 |
|
|
|
|
|
Acquisitions of businesses, net of cash acquired |
|
|
(34,345 |
) |
|
|
(50,092 |
) |
|
|
(1,322 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used by investing activities |
|
|
(114,929 |
) |
|
|
(79,525 |
) |
|
|
(55,636 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions |
|
|
(161,626 |
) |
|
|
(165,282 |
) |
|
|
(144,659 |
) |
Noncontrolling interest activity |
|
|
(2,224 |
) |
|
|
(2,400 |
) |
|
|
(2,138 |
) |
Increase in bank loans |
|
|
91,000 |
|
|
|
|
|
|
|
|
|
Repayment of long-term debt |
|
|
(83,107 |
) |
|
|
(71,659 |
) |
|
|
(1,680 |
) |
Proceeds associated with equity based compensation plans, net of tax withheld |
|
|
566 |
|
|
|
(338 |
) |
|
|
766 |
|
Capital contributions from General Partner |
|
|
17 |
|
|
|
10 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
Net cash used by financing activities |
|
|
(155,374 |
) |
|
|
(239,669 |
) |
|
|
(147,703 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents (decrease) increase |
|
$ |
(51,487 |
) |
|
$ |
48,304 |
|
|
$ |
(23,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
|
|
|
|
|
|
End of year |
|
$ |
7,726 |
|
|
$ |
59,213 |
|
|
$ |
10,909 |
|
Beginning of year |
|
|
59,213 |
|
|
|
10,909 |
|
|
|
34,034 |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase |
|
$ |
(51,487 |
) |
|
$ |
48,304 |
|
|
$ |
(23,125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
65,147 |
|
|
$ |
69,745 |
|
|
$ |
70,801 |
|
|
|
|
(1) |
|
As adjusted in accordance with the transition provisions for accounting for noncontrolling
interests in consolidated subsidiaries (Note 3). |
See accompanying notes to consolidated financial statements.
F-7
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
(Thousands of dollars, except unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other |
|
|
AmeriGas |
|
|
|
|
|
|
Total |
|
|
|
Number of |
|
|
|
|
|
|
General |
|
|
comprehensive |
|
|
Partners, L.P. |
|
|
Noncontrolling |
|
|
partners |
|
|
|
Common Units |
|
|
Common |
|
|
partner |
|
|
income (loss) |
|
|
partners capital |
|
|
Interests |
|
|
capital |
|
Balance September 30, 2007 |
|
|
56,988,702 |
|
|
$ |
293,245 |
|
|
$ |
2,952 |
|
|
$ |
15,031 |
|
|
$ |
311,228 |
|
|
$ |
11,386 |
(1) |
|
$ |
322,614 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
155,741 |
|
|
|
2,278 |
|
|
|
|
|
|
|
158,019 |
|
|
|
2,287 |
(1) |
|
|
160,306 |
(1) |
Net losses on derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,925 |
) |
|
|
(25,925 |
) |
|
|
(267 |
)(1) |
|
|
(26,192 |
)(1) |
Reclassification of net gains on
derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(53,011 |
) |
|
|
(53,011 |
) |
|
|
(545 |
)(1) |
|
|
(53,556 |
)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
155,741 |
|
|
|
2,278 |
|
|
|
(78,936 |
) |
|
|
79,083 |
|
|
|
1,475 |
(1) |
|
|
80,558 |
(1) |
Distributions |
|
|
|
|
|
|
(142,515 |
) |
|
|
(2,144 |
) |
|
|
|
|
|
|
(144,659 |
) |
|
|
(2,138 |
)(1) |
|
|
(146,797 |
)(1) |
Unit-based compensation expense |
|
|
|
|
|
|
949 |
|
|
|
|
|
|
|
|
|
|
|
949 |
|
|
|
|
|
|
|
949 |
(1) |
Common Units issued in connection
with incentive compensation plans,
net of tax withheld |
|
|
21,249 |
|
|
|
766 |
|
|
|
8 |
|
|
|
|
|
|
|
774 |
|
|
|
|
|
|
|
774 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2008 |
|
|
57,009,951 |
|
|
|
308,186 |
|
|
|
3,094 |
|
|
|
(63,905 |
) |
|
|
247,375 |
|
|
|
10,723 |
(1) |
|
|
258,098 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
217,906 |
|
|
|
6,737 |
|
|
|
|
|
|
|
224,643 |
|
|
|
2,967 |
(1) |
|
|
227,610 |
(1) |
Net losses on derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(136,786 |
) |
|
|
(136,786 |
) |
|
|
(1,531 |
)(1) |
|
|
(138,317 |
)(1) |
Reclassification of net losses on
derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,744 |
|
|
|
193,744 |
|
|
|
2,107 |
(1) |
|
|
195,851 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
217,906 |
|
|
|
6,737 |
|
|
|
56,958 |
|
|
|
281,601 |
|
|
|
3,543 |
(1) |
|
|
285,144 |
(1) |
Distributions |
|
|
|
|
|
|
(159,139 |
) |
|
|
(6,143 |
) |
|
|
|
|
|
|
(165,282 |
) |
|
|
(2,400 |
)(1) |
|
|
(167,682 |
)(1) |
Unit-based compensation expense |
|
|
|
|
|
|
1,093 |
|
|
|
|
|
|
|
|
|
|
|
1,093 |
|
|
|
|
|
|
|
1,093 |
(1) |
Common Units issued in connection
with incentive compensation plans,
net of tax withheld |
|
|
36,437 |
|
|
|
(338 |
) |
|
|
10 |
|
|
|
|
|
|
|
(328 |
) |
|
|
|
|
|
|
(328 |
)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2009 |
|
|
57,046,388 |
|
|
|
367,708 |
|
|
|
3,698 |
|
|
|
(6,947 |
) |
|
|
364,459 |
|
|
|
11,866 |
(1) |
|
|
376,325 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
160,522 |
|
|
|
4,691 |
|
|
|
|
|
|
|
165,213 |
|
|
|
2,281 |
|
|
|
167,494 |
|
Net gains on derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,189 |
|
|
|
37,189 |
|
|
|
379 |
|
|
|
37,568 |
|
Reclassification of net gains on
derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,365 |
) |
|
|
(25,365 |
) |
|
|
(264 |
) |
|
|
(25,629 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
160,522 |
|
|
|
4,691 |
|
|
|
11,824 |
|
|
|
177,037 |
|
|
|
2,396 |
|
|
|
179,433 |
|
Distributions |
|
|
|
|
|
|
(156,971 |
) |
|
|
(4,655 |
) |
|
|
|
|
|
|
(161,626 |
) |
|
|
(2,224 |
) |
|
|
(163,850 |
) |
Unit-based compensation expense |
|
|
|
|
|
|
1,312 |
|
|
|
|
|
|
|
|
|
|
|
1,312 |
|
|
|
|
|
|
|
1,312 |
|
Common Units issued in connection
with incentive compensation plans,
net of tax withheld |
|
|
42,121 |
|
|
|
(351 |
) |
|
|
17 |
|
|
|
|
|
|
|
(334 |
) |
|
|
|
|
|
|
(334 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2010 |
|
|
57,088,509 |
|
|
$ |
372,220 |
|
|
$ |
3,751 |
|
|
$ |
4,877 |
|
|
$ |
380,848 |
|
|
$ |
12,038 |
|
|
$ |
392,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As adjusted in accordance with the transition provisions for accounting for noncontrolling
interests in consolidated subsidiaries (Note 3). |
See accompanying notes to consolidated financial statements.
F-8
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Index to Notes:
|
|
|
|
|
Note 1 Nature of Operations |
|
|
|
|
Note 2 Significant Accounting Policies |
|
|
|
|
Note 3 Accounting Changes |
|
|
|
|
Note 4 Acquisitions |
|
|
|
|
Note 5 Sale of California LPG Storage Facility |
|
|
|
|
Note 6 Quarterly Distributions of Available Cash |
|
|
|
|
Note 7 Debt |
|
|
|
|
Note 8 Employee Retirement Plans |
|
|
|
|
Note 9 Inventories |
|
|
|
|
Note 10 Property, Plant and Equipment |
|
|
|
|
Note 11 Goodwill and Intangible Assets |
|
|
|
|
Note 12 Partners Capital and Incentive Compensation Plans |
|
|
|
|
Note 13 Commitments and Contingencies |
|
|
|
|
Note 14 Related Party Transactions |
|
|
|
|
Note 15 Other Current Liabilities |
|
|
|
|
Note 16 Fair Value Measurements |
|
|
|
|
Note 17 Disclosures About Derivative Instruments and Hedging Activities |
|
|
|
|
Note 18 Other Income, Net |
|
|
|
|
Note 19 Quarterly Data (Unaudited) |
|
|
|
|
Note 1 Nature of Operations
AmeriGas Partners, L.P. (AmeriGas Partners) is a publicly traded limited partnership that
conducts a national propane distribution business through its principal operating subsidiaries
AmeriGas Propane, L.P. (AmeriGas OLP) and AmeriGas OLPs subsidiary, AmeriGas Eagle Propane, L.P.
(Eagle OLP). AmeriGas Partners, AmeriGas OLP and Eagle OLP are Delaware limited partnerships.
AmeriGas OLP and Eagle OLP are collectively referred to herein as the Operating Partnerships, and
AmeriGas Partners, the Operating Partnerships and all of their subsidiaries are collectively
referred to herein as the Partnership or we.
The Operating Partnerships are engaged in the distribution of propane and related equipment
and supplies. The Operating Partnerships comprise the largest retail propane distribution business
in the United States serving residential, commercial, industrial, motor fuel and agricultural
customers in all 50 states.
At September 30, 2010, AmeriGas Propane, Inc. (the General Partner), an indirect wholly
owned subsidiary of UGI Corporation (UGI), held a 1% general partner interest in AmeriGas
Partners and a 1.01% general partner interest in AmeriGas OLP. The General Partner and its wholly
owned subsidiary Petrolane Incorporated (Petrolane, a predecessor company of the Partnership)
also owned 24,691,209 AmeriGas Partners Common Units (Common Units). The remaining 32,397,300
Common Units are publicly held. The Common Units represent limited partner interests in AmeriGas
Partners.
AmeriGas Partners holds a 99% limited partner interest in AmeriGas OLP. AmeriGas OLP,
indirectly through subsidiaries, owns an effective 0.1% general partner interest and a direct
approximate 99.9% limited partner interest in Eagle OLP.
AmeriGas Partners and the Operating Partnerships have no employees. Employees of the General
Partner conduct, direct and manage our operations. The General Partner provides management and
administrative services to AmeriGas Eagle Holdings, Inc. (AEH), the general partner of Eagle OLP,
under a management services agreement. The General Partner is reimbursed monthly for all direct and
indirect expenses it incurs on our behalf (see Note 14).
Effective October 1, 2010, Eagle OLP merged with and into AmeriGas OLP.
F-9
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 2 Significant Accounting Policies
Basis of Presentation. Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP).
The preparation of financial statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues,
expenses and costs. These estimates are based on managements knowledge of current events,
historical experience and various other assumptions that are believed to be reasonable under the
circumstances. Accordingly, actual results may be different from these estimates and assumptions.
The consolidated financial statements have been adjusted in accordance with the Financial
Accounting Standards Boards (FASBs) accounting guidance regarding the presentation of
noncontrolling interests in consolidated financial statements and the application of the two-class
method for determining income per unit (see Note 3).
Principles of Consolidation. The consolidated financial statements include the accounts of AmeriGas
Partners and its majority-owned subsidiaries. We eliminate all significant intercompany accounts
and transactions when we consolidate. We account for the General Partners 1.01% interest in
AmeriGas OLP and a minority partners 0.1% limited partner interest in Eagle OLP (prior to its
redemption in July 2009) as noncontrolling interests in the consolidated financial statements.
Finance Corps. AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp. are
wholly-owned finance subsidiaries of AmeriGas Partners. Their sole purpose is to serve as
co-obligors for debt securities issued by AmeriGas Partners.
Fair Value Measurements. We apply fair value measurements to certain assets and liabilities,
principally our commodity and interest rate derivative instruments. We adopted new guidance with
respect to determining fair value measurements effective October 1, 2008. The new guidance defines
fair value as the price that would be received to sell an asset or paid to transfer a liability (an
exit price) in an orderly transaction between market participants at the measurement date. The new
guidance clarifies that fair value should be based upon assumptions that market participants would
use when pricing an asset or liability, including assumptions about risk and risks inherent in
valuation techniques and inputs to valuations. This includes not only the credit standing of
counterparties and credit enhancements but also the impact of our own nonperformance risk on our
liabilities. The new guidance requires fair value measurements to assume that the transaction
occurs in the principal market for the asset or liability or in the absence of a principal market,
the most advantageous market for the asset or liability (the market for which the reporting entity
would be able to maximize the amount received or minimize the amount paid). We evaluate the need
for credit adjustments to our derivative instrument fair values in accordance with the requirements
noted above. Such adjustments were not material to the fair values of our derivative instruments.
We use the following fair value hierarchy, which prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels:
|
|
Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities
that we have the ability to access at the measurement date. We did not have any derivative
financial instruments categorized as Level 1 at September 30, 2010 or 2009. |
|
|
Level 2 Inputs other than quoted prices included within Level 1 that are either directly or
indirectly observable for the asset or liability, including quoted prices for similar assets
or liabilities in active markets, quoted prices for identical or similar assets or liabilities
in inactive markets, inputs other than quoted prices that are observable for the asset or
liability, and inputs that are derived from observable market data by correlation or other
means. Instruments categorized in Level 2 include non-exchange traded derivatives such as
over-the-counter commodity price swap and option contracts and interest rate protection
agreements. |
|
|
Level 3 Unobservable inputs for the asset or liability including situations where there is
little, if any, market activity for the asset or liability. We did not have any derivative
financial instruments categorized as Level 3 at September 30, 2010 or 2009. |
F-10
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level
1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs to measure
fair value might fall into different levels of the fair value hierarchy. The lowest level input
that is significant to a fair value measurement in its entirety determines the applicable level in
the fair value hierarchy. Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgment, considering factors specific to the asset or
liability. The adoption of the new fair value guidance effective October 1, 2008 did not have a
material impact on our financial statements. See Note 16 for additional information on fair value
measurements.
Derivative Instruments. We account for derivative instruments and hedging activities in accordance
with guidance provided by the FASB which requires that all derivative instruments be recognized as
either assets or liabilities and measured at fair value. The accounting for changes in fair value
depends upon the purpose of the derivative instrument and whether it is designated and qualifies
for hedge accounting.
Substantially all of our derivative financial instruments are designated and qualify as cash
flow hedges. For cash flow hedges, changes in the fair value of the derivative financial
instruments are recorded in accumulated other comprehensive income (AOCI) or noncontrolling
interests, to the extent effective at offsetting changes in the hedged item, until earnings are
affected by the hedged item. We discontinue cash flow hedge accounting if the occurrence of the
forecasted transaction is determined to be no longer probable. Cash flows from derivative financial
instruments are included in cash flows from operating activities.
For a more detailed description of the derivative instruments we use, our accounting for
derivatives, our objectives for using them and related supplemental information required by GAAP,
see Note 17.
Revenue Recognition. Revenues from the sale of propane are recognized principally upon delivery.
Revenues from the sale of appliances and equipment are recognized at the later of sale or
installation. Revenues from repair or maintenance services are recognized upon completion of
services. Revenues from annually billed nonrefundable tank fees are recorded on a straight-line
basis over one year. We present revenue-related taxes collected from customers and remitted to
taxing authorities, principally sales and use taxes, on a net basis.
Delivery Expenses. Expenses associated with the delivery of propane to customers (including vehicle
expenses, expenses of delivery personnel, vehicle repair and maintenance and general liability
expenses) are classified as operating and administrative expenses on the Consolidated Statements of
Operations. Depreciation expense associated with delivery vehicles is classified in depreciation on
the Consolidated Statements of Operations.
Income Taxes. AmeriGas Partners and the Operating Partnerships are not directly subject to federal
income taxes. Instead, their taxable income or loss is allocated to their individual partners. The
Operating Partnerships have corporate subsidiaries which are directly subject to federal and state
income taxes. Accordingly, our consolidated financial statements reflect income taxes related to
these corporate subsidiaries. Legislation in certain states allows for taxation of partnerships
income and the accompanying financial statements reflect state income taxes resulting from such
legislation. Net income for financial statement purposes may differ significantly from taxable
income reportable to unitholders. This is a result of (1) differences between the tax basis and
financial reporting basis of assets and liabilities and (2) the taxable income allocation
requirements of the Fourth Amended and Restated Agreement of Limited Partnership of AmeriGas
Partners, L.P., (Partnership Agreement) and the Internal Revenue Code. At September 30, 2010, the
financial reporting basis of the Partnerships assets and liabilities exceeded the tax basis by
approximately $248,000.
Comprehensive Income. Comprehensive income comprises net income and other comprehensive income
(loss). Other comprehensive income (loss) results from gains and losses on derivative instruments
qualifying as cash flow hedges.
Cash and Cash Equivalents. All highly liquid investments with maturities of three months or less
when purchased are classified as cash equivalents.
Inventories. Our inventories are stated at the lower of cost or market. We determine cost using an
average cost method for propane, specific identification for appliances and the first-in, first-out
(FIFO) method for all other inventories.
F-11
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Property, Plant and Equipment and Related Depreciation. We record property, plant and equipment at
cost. The amounts we assign to property, plant and equipment of acquired businesses are based upon
estimated fair value at date of acquisition.
We compute depreciation expense on plant and equipment using the straight-line method over
estimated service lives generally ranging from 15 to 40 years for buildings and improvements; 7 to
30 years for storage and customer tanks and cylinders; and 2 to 10 years for vehicles, equipment
and office furniture and fixtures. Costs to install Partnership-owned tanks at customer locations,
net of amounts billed to customers, are capitalized and depreciated over the estimated period of
benefit not exceeding ten years.
We include in property, plant and equipment costs associated with computer software we develop
or obtain for use in our business. We amortize computer software costs on a straight-line basis
over expected periods of benefit not exceeding ten years once the installed software is ready for
its intended use.
No depreciation expense is included in cost of sales on the Consolidated Statements of
Operations.
Goodwill and Intangible Assets. In accordance with GAAP relating to goodwill and other intangibles,
we amortize intangible assets over their estimated useful lives unless we determine their lives to
be indefinite. We amortize customer relationship and noncompete agreement intangibles over their
estimated periods of benefit, which do not exceed 15 years. Goodwill is not amortized but is
subject to tests for impairment at least annually. We perform impairment tests more frequently than
annually if events or circumstances indicate that the value of goodwill might be impaired. For
purposes of the goodwill impairment test, the Partnership has determined it has one reporting unit.
Fair value of the reporting unit is estimated using a market value approach taking into account the
market price of AmeriGas Partners Common Units. No provisions for goodwill or other intangible
asset impairments were recorded during Fiscal 2010, Fiscal 2009 or Fiscal 2008.
No amortization expense is included in cost of sales on the Consolidated Statements of
Operations. For further information, see Note 11.
Impairment of Long-Lived Assets. We evaluate the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
We evaluate recoverability based upon undiscounted future cash flows expected to be generated by
such assets. No provisions for impairments were recorded during Fiscal 2010, Fiscal 2009 or Fiscal
2008.
Customer Deposits. We offer certain of our customers prepayment programs which require customers to
pay a fixed periodic amount, or to otherwise prepay a portion of their anticipated propane
purchases. Customer prepayments, in excess of associated billings, are classified as customer
deposits and advances on the Consolidated Balance Sheets.
Equity-Based Compensation. The General Partner may grant Common Unit awards (as further described
in Note 12) to employees and non-employee Directors under its Common Unit plans, and employees of
the General Partner may be granted stock options for UGI Common Stock. All of our equity-based
compensation is measured at fair value on the grant date, date of modification or end of the
period, as applicable, and recognized in earnings over the requisite service period. Depending upon
the settlement terms of the awards, all or a portion of the fair value of equity-based awards may
be presented as a liability or as equity in our Consolidated Balance Sheets. Equity-based
compensation costs associated with the portion of Common Unit awards classified as equity are
measured based upon their estimated fair value on the date of grant or modification. Equity-based
compensation costs associated with the portion of Common Unit awards classified as liabilities are
measured based upon their estimated fair value at the grant date and remeasured as of the end of
each period. For a further description of our equity-based compensation plans and related
disclosures, see Note 12.
Environmental Matters. We are subject to environmental laws and regulations intended to mitigate or
remove the effect of past operations and improve or maintain the quality of the environment. These
laws and regulations require the removal or remedy of the effect on the environment of the disposal
or release of certain specified hazardous substances at current or former operating sites.
F-12
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Environmental reserves are accrued when assessments indicate that it is probable that a
liability has been incurred and an amount can reasonably be estimated. Amounts recorded as
environmental liabilities on the balance sheets represent our best estimate of costs expected to be
incurred or, if no best estimate can be made, the minimum liability associated with a range of
expected environmental investigation and remediation costs. Our estimated liability for
environmental contamination is reduced to reflect anticipated participation of other responsible
parties but is not reduced for possible recovery from insurance carriers. We do not discount to
present value the costs of future expenditures for environmental liabilities. At September 30,
2010, the Partnerships accrued liability for environmental investigation and cleanup costs was not
material.
Allocation of Net Income. Net income attributable to AmeriGas Partners, L.P. for partners capital
and statement of operations presentation purposes is allocated to the General Partner and the
limited partners in accordance with their respective ownership percentages after giving effect to
amounts distributed to the General Partner in excess of its 1% general partner interest in AmeriGas
Partners based on its incentive distribution rights (IDRs) under the Partnership Agreement (see
Note 6).
Net Income Per Unit. Effective October 1, 2009, we adopted new accounting guidance regarding the
application of the two-class method for determining income per unit. This new guidance addresses
the application of the two-class method for master limited partnerships (MLPs) when IDRs are
present and entitle the holder of such rights to a portion of distributions from the MLP. The new
guidance addresses how current period earnings of the MLP should be allocated to the general
partner, limited partners and, when applicable, holders of IDRs for income per unit purposes.
The new guidance regarding the two-class method requires that income per limited partner unit be
calculated as if all earnings for the period were distributed and requires a separate calculation
for each quarter and year-to-date period. In periods when our net income attributable to AmeriGas
Partners exceeds our Available Cash, as defined in the Partnership Agreement, and is above certain
levels, the calculation according to the two-class method results in an increased allocation of
undistributed earnings to the General Partner. Generally, in periods when our Available Cash in
respect of the quarter or year-to-date periods exceeds our net income (loss) attributable to
AmeriGas Partners, the calculation according to the two-class method results in an allocation of
earnings to the General Partner greater than its relative ownership interest in the Partnership (or
in the case of a net loss attributable to AmeriGas Partners, an allocation of such net loss to the
Common Unitholders greater than their relative ownership interest in the Partnership). The new
guidance requires retrospective application of the guidance to all periods presented.
The following table sets forth the numerators and denominators of the basic and diluted (loss)
income per limited partner unit computations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Common Unitholders interest in
net income attributable to AmeriGas
Partners under the two-class method for MLPs |
|
$ |
160,037 |
|
|
$ |
205,039 |
|
|
$ |
153,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Units
outstanding basic (thousands) |
|
|
57,076 |
|
|
|
57,038 |
|
|
|
57,005 |
|
Potentially dilutive Common Units (thousands) |
|
|
47 |
|
|
|
44 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Units
outstanding diluted (thousands) |
|
|
57,123 |
|
|
|
57,082 |
|
|
|
57,044 |
|
|
|
|
|
|
|
|
|
|
|
Theoretical distributions of net income attributable to AmeriGas Partners, L.P. in accordance
with the two-class method for Fiscal 2010, Fiscal 2009 and Fiscal 2008 resulted in an increased
allocation of net income attributable to AmeriGas Partners, L.P. to the General Partner in the
computation of income per limited partner unit which had the effect of decreasing earnings per
limited partner unit by $0.01, $0.23 and $0.03, respectively. The retrospective application of the
new guidance described above did not impact the calculation of net income per limited partner unit
for the years ended September 30, 2009 or 2008 but did impact the calculations for the three-month
periods ended June 30, 2009 and September 30, 2009 (see Note 19).
F-13
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Segment Information. We have determined that we have a single reportable operating segment that
engages in the distribution of propane and related equipment and supplies. No single customer
represents ten percent or more of consolidated revenues on an accrual basis. In addition,
substantially all of our revenues are derived from sources within the United States and
substantially all of our long-lived assets are located in the United States.
Note 3 Accounting Changes
Adoption of New Accounting Standards
Noncontrolling Interests. Effective October 1, 2009, we adopted new guidance regarding the
accounting for and presentation of noncontrolling interests in consolidated financial statements.
The new guidance changed the accounting and reporting relating to noncontrolling interests in a
consolidated subsidiary. Noncontrolling interests are now classified within partners capital on
the Consolidated Balance Sheets, a change from their prior classification between liabilities and
partners capital. Earnings (losses) attributable to noncontrolling interests are now included in
net income (loss) and deducted from net income (loss) to determine net income (loss) attributable
to AmeriGas Partners, L.P. In addition, changes in a parents ownership interest while retaining
control are accounted for as equity transactions and any retained noncontrolling equity investments
in a former subsidiary are initially measured at fair value. In accordance with the new guidance,
previous periods have been adjusted to conform to the new presentation.
Earnings Per Unit. As previously mentioned, effective October 1, 2009, we adopted new accounting
guidance regarding the application of the two-class method for determining income per unit as it
relates to MLPs. This new guidance addresses the application of the two-class method for MLPs when
incentive distribution rights are present and entitle the holder of such rights to a portion of the
distributions. See Net Income Per Unit in Note 2 above for additional information.
Business Combinations. Effective October 1, 2009, we adopted new guidance on accounting for
business combinations. The new guidance applies to all transactions or other events in which an
entity obtains control of one or more businesses. The new guidance establishes, among other things,
principles and requirements for how the acquirer (1) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; (2) recognizes and measures the goodwill acquired in a business
combination or gain from a bargain purchase; and (3) determines what information with respect to a
business combination should be disclosed. The new guidance applies prospectively to business
combinations for which the acquisition date is on or after October 1, 2009. Among the more
significant changes in accounting for acquisitions are (1) transaction costs are generally expensed
(rather than being included as costs of the acquisition); (2) contingencies, including contingent
consideration, are generally recorded at fair value with subsequent adjustments recognized in
operations (rather than as adjustments to the purchase price); and (3) decreases in valuation
allowances on acquired deferred tax assets are recognized in operations (rather than as decreases
in goodwill). The new guidance did not have a material impact on our Fiscal 2010 financial
statements.
Intangible Asset Useful Lives. Effective October 1, 2009, we adopted new accounting guidance which
amends the factors that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under GAAP. The intent of the new
guidance is to improve the consistency between the useful life of a recognized intangible asset
under GAAP relating to intangible asset accounting and the period of expected cash flows used to
measure the fair value of the asset under GAAP relating to business combinations and other
applicable accounting literature. The new guidance must be applied prospectively to intangible
assets acquired after the effective date. The adoption of the new guidance did not impact our
financial statements.
Fair Value Measurements. In January 2010, the FASB issued new guidance with respect to fair value
measurements disclosures. The new guidance requires additional disclosure related to transfers
between Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements
related to Level 3. The new guidance clarifies existing disclosure guidance about inputs and
valuation techniques for fair value measurements and levels of disaggregation. We apply fair value
measurements to certain assets and liabilities, principally commodity and interest rate derivative
instruments. The new disclosures and clarifications of existing disclosures are effective for
interim and annual reporting periods beginning after December 15, 2009 except for the disclosures
about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair
value measurements. Those disclosures are effective for fiscal years beginning after December 15,
2009 (Fiscal 2011) and interim periods thereafter. The adoption of the new guidance that became
effective during Fiscal 2010 did not have a material effect on our disclosures. See Notes 2 and 16
for further information on fair value measurements.
F-14
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 4 Acquisitions
During
Fiscal 2010, the Partnership acquired a number of retail propane distribution businesses
for total net cash consideration of $34,345. During Fiscal 2009, the Partnership acquired several
retail propane distribution businesses, including all of the assets of the retail propane business
of Penn Fuel Propane, LLC (see Note 14), for total net cash consideration of $50,092. During Fiscal
2008, the Partnership acquired several retail propane distribution businesses for total net cash
consideration of $2,478 and received a working capital payment refund of $1,157 associated with a
Fiscal 2007 acquisition. In conjunction with these acquisitions, liabilities of $8,956 in Fiscal
2010, $3,786 in Fiscal 2009 and $2,445 in Fiscal 2008 were incurred. The operating results of these
businesses have been included in our operating results from their respective dates of acquisition.
The total purchase price of these acquisitions has been allocated to the assets acquired and
liabilities assumed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Net current assets (liabilities) |
|
$ |
3,578 |
|
|
$ |
1,916 |
|
|
$ |
(1,010 |
) |
Property, plant and equipment |
|
|
15,812 |
|
|
|
17,646 |
|
|
|
2,731 |
|
Goodwill |
|
|
12,930 |
|
|
|
24,048 |
|
|
|
751 |
|
Customer relationships and noncompete agreements
(estimated useful life of 10 and 5 years, respectively) |
|
|
10,981 |
|
|
|
10,268 |
|
|
|
2,451 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
43,301 |
|
|
$ |
53,878 |
|
|
$ |
4,923 |
|
|
|
|
|
|
|
|
|
|
|
The goodwill above is primarily the result of synergies between the acquired businesses and
our existing propane businesses. The pro forma effects of these transactions were not material.
Note 5 Sale of California LPG Storage Facility
On November 13, 2008, AmeriGas OLP sold its 600,000 barrel refrigerated, above-ground
liquefied petroleum gas (LPG) storage facility located on leased property in California. The
Partnership recorded a pre-tax gain of $39,887 associated with this transaction. The gain from this
transaction is included in Gain on sale of California storage facility on our Fiscal 2009
Consolidated Statement of Operations.
Note 6 Quarterly Distributions of Available Cash
The Partnership makes distributions to its partners approximately 45 days after the end of
each fiscal quarter in a total amount equal to its Available Cash (as defined in the Partnership
Agreement) for such quarter. Available Cash generally means:
1. |
|
all cash on hand at the end of such quarter, |
2. |
|
plus all additional cash on hand as of the date of determination resulting from borrowings
after the end of such quarter, |
3. |
|
less the amount of cash reserves established by the General Partner in its reasonable
discretion. |
The General Partner may establish reserves for the proper conduct of the Partnerships
business and for distributions during the next four quarters. In addition, certain of the
Partnerships debt agreements require reserves be established for the payment of debt principal and
interest.
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner
(giving effect to the 1.01% interest of the General Partner in distributions of Available Cash from
AmeriGas OLP to AmeriGas Partners) until Available Cash exceeds the Minimum Quarterly Distribution
of $0.55 and the First Target Distribution of $0.055 per Common Unit (or a total of $0.605 per
Common Unit). When Available Cash exceeds $0.605 per Common Unit in any quarter, the General
Partner will receive a greater percentage of the total Partnership distribution (the incentive
distribution) but only with respect to the amount by which the distribution per Common Unit to
limited partners exceeds $0.605.
F-15
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Quarterly distributions of Available Cash per limited partner unit during Fiscal 2010, Fiscal
2009 and Fiscal 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
1st Quarter |
|
$ |
0.67 |
|
|
$ |
0.64 |
|
|
$ |
0.61 |
|
2nd Quarter |
|
|
0.67 |
|
|
|
0.64 |
|
|
|
0.61 |
|
3rd Quarter |
|
|
0.705 |
|
|
|
0.67 |
|
|
|
0.64 |
|
4th Quarter |
|
|
0.705 |
|
|
|
0.84 |
|
|
|
0.64 |
|
The Partnership has made quarterly distributions to Common Unitholders in excess of $0.605 per
limited partner unit beginning with the quarterly distribution paid May 18, 2007. As a result,
beginning with the quarterly distribution paid May 18, 2007 the General Partner has received a
greater percentage of the total Partnership distribution than its aggregate 2% general partner
interest in AmeriGas OLP and AmeriGas Partners. The total amount of distributions received by the
General Partner with respect to its aggregate 2% general partner ownership interests totaled $6,879
in Fiscal 2010, $8,543 in Fiscal 2009 and $4,282 in Fiscal 2008. Included in these amounts
are incentive distributions received by the General Partner during Fiscal 2010, Fiscal 2009 and
Fiscal 2008 of $3,038, $4,491 and $698, respectively.
On July 27, 2009, the General Partners Board of Directors approved a distribution of $0.84
per Common Unit payable on August 18, 2009 to unitholders of record on August 10, 2009. This
distribution included the regular quarterly distribution of $0.67 per Common Unit and $0.17 per
Common Unit reflecting a one-time distribution of a portion of the proceeds from the Partnerships
November 2008 sale of its California LPG storage facility.
Note 7 Debt
Long-term debt comprises the following at September 30:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
AmeriGas Partners Senior Notes: |
|
|
|
|
|
|
|
|
8.875% Note, due May 2011 |
|
$ |
14,672 |
|
|
$ |
14,720 |
|
7.25% Note, due May 2015 |
|
|
415,000 |
|
|
|
415,000 |
|
7.125% Note, due May 2016 |
|
|
350,000 |
|
|
|
350,000 |
|
Series E, 8.50%, due July 2010 |
|
|
|
|
|
|
80,018 |
|
Other |
|
|
11,730 |
|
|
|
5,906 |
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
791,402 |
|
|
|
865,644 |
|
Less: current maturities |
|
|
(20,123 |
) |
|
|
(82,225 |
) |
|
|
|
|
|
|
|
Total long-term debt due after one year |
|
$ |
771,279 |
|
|
$ |
783,419 |
|
|
|
|
|
|
|
|
Scheduled principal repayments of long-term debt for each of the next five fiscal years ending
September 30 are as follows: Fiscal 2011 $20,091; Fiscal 2012 $2,247; Fiscal 2013 $1,754;
Fiscal 2014 $1,384; Fiscal 2015 $415,894.
AmeriGas Partners Senior Notes. The 8.875% and 7.25% Senior Notes may be redeemed at our option.
The 7.125% Senior Notes generally cannot be redeemed at our option prior to May 20, 2011. AmeriGas
Partners may, under certain circumstances involving excess sales proceeds from the disposition of
assets not reinvested in the business or a change of control, be required to offer to prepay its
7.25% and 7.125% Senior Notes.
AmeriGas OLP Credit Agreements. AmeriGas OLP has an unsecured credit agreement (Credit Agreement)
consisting of (1) a Revolving Credit Facility and (2) an Acquisition Facility. AmeriGas OLP also
has a $75,000 unsecured revolving credit facility (2009 Supplemental Credit Agreement). The
General Partner and Petrolane Incorporated, a wholly owned subsidiary of the General Partner, are
guarantors of amounts outstanding under the Credit Agreement and the 2009 Supplemental Credit
Agreement.
F-16
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Under the Credit Agreement Revolving Credit Facility, AmeriGas OLP may borrow up to $125,000
(including a $100,000 sublimit for letters of credit) which is subject to restrictions in the
Senior Notes indentures (see Restrictive Covenants below). The Credit Agreement Revolving Credit
Facility may be used for working capital and general purposes of AmeriGas OLP. The Credit Agreement
Revolving Credit Facility expires on October 15, 2011, but may be extended for additional one-year
periods with the consent of the participating banks representing at least 80% of the commitments
thereunder. The Credit Agreement Acquisition Facility provides AmeriGas OLP with the ability to
borrow up to $75,000 to finance the purchase of propane businesses or propane business assets or,
to the extent it is not so used, for working capital and general purposes, subject to restrictions
in the Senior Notes indentures. The Credit Agreement Acquisition Facility operates as a revolving
facility through October 15, 2011, at which time amounts then outstanding will be immediately due
and payable. At September 30, 2010, there was $56,000 of borrowings outstanding under the Credit
Agreement Revolving Credit Facility and $35,000 outstanding under the Credit Agreement Acquisition
Facility which amounts are reflected as Bank loans on the Consolidated Balance Sheet. There were
no such borrowings at September 30, 2009. The weighted-average interest rate on Credit Agreement
borrowings at September 30, 2010 was 1.31%. Issued and outstanding letters of credit, which reduce
available borrowings under the Credit Agreement Revolving Credit Facility, totaled $35,678 and
$37,022 at September 30, 2010 and 2009, respectively.
The Credit Agreement permits AmeriGas OLP to borrow at prevailing interest rates, including
the base rate, defined as the higher of the Federal Funds rate plus 0.50% or the agent banks prime
rate (3.25% at September 30, 2010), or at a two-week, one-, two-, three-, or six-month Eurodollar
Rate, as defined in the Credit Agreement, plus a margin. The margin on Eurodollar Rate borrowings
(which ranges from 1.00% to 1.75%) and the Credit Agreement facility fee rate (which ranges from
0.25% to 0.375%) are dependent upon AmeriGas OLPs ratio of funded debt to earnings before interest
expense, income taxes, depreciation and amortization (EBITDA), each as defined in the Credit
Agreement.
The 2009 Supplemental Credit Agreement expires on June 30, 2011 and permits AmeriGas OLP to
borrow up to $75,000 for working capital and general purposes subject to restrictive covenants in
the Senior Notes indentures. The 2009 Supplemental Credit Agreement permits AmeriGas OLP to borrow
at prevailing interest rates, including the base rate equal to the higher of the Federal Funds rate
plus 0.50%, the agent banks prime rate (3.25% at September 30, 2010), or a libor market index rate
(0.26% at September 30, 2010) plus 1%, or at a one-week, two-week or one-month Eurodollar rate, as
defined in the 2009 Supplemental Credit Agreement, plus a margin. The margin on base rate loans is
2.00% and the margin on Eurodollar loans is 3.00%. There were no amounts outstanding under the 2009
Supplemental Credit Agreement at September 30, 2010 and 2009.
Restrictive Covenants. The 7.25% and 7.125% Senior Notes of AmeriGas Partners restrict the ability
of the Partnership and AmeriGas OLP to, among other things, incur additional indebtedness, make
investments, incur liens, issue preferred interests, prepay subordinated indebtedness, and effect
mergers, consolidations and sales of assets. Under the 7.25% and 7.125% Senior Notes indentures,
AmeriGas Partners is generally permitted to make cash distributions equal to available cash, as
defined, as of the end of the immediately preceding quarter, if certain conditions are met. These
conditions include:
|
1. |
|
no event of default exists or would exist upon making such distributions and |
|
2. |
|
the Partnerships consolidated fixed charge coverage ratio, as defined, is greater than
1.75-to-1. |
If the ratio in item 2 above is less than or equal to 1.75-to-1, the Partnership may make cash
distributions in a total amount not to exceed $24,000 less the total amount of distributions made
during the immediately preceding 16 Fiscal quarters. At September 30, 2010, the Partnership was not
restricted by the consolidated fixed charge coverage ratio from making cash distributions. See the
provisions of the Partnership Agreement relating to distributions of Available Cash in Note 6.
F-17
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The AmeriGas OLP credit agreements restrict the incurrence of additional indebtedness and
also restrict certain liens, guarantees, investments, loans and advances, payments, mergers,
consolidations, asset transfers, transactions with affiliates, sales of assets, acquisitions and
other transactions. The AmeriGas OLP credit agreements require that AmeriGas OLP not exceed a ratio
of total indebtedness, as defined, to EBITDA, as defined (calculated on a rolling four-quarter
basis or eight-quarter basis divided by two), of 4.0-to-1. In addition, the credit agreements
require that AmeriGas OLP maintain a ratio of EBITDA to interest expense, as defined, of at least
3.0-to-1 on a rolling four-quarter basis, and a minimum EBITDA. Generally, as long as no default
exists or would result, AmeriGas OLP is permitted to make cash distributions not more frequently
than quarterly in an amount not to exceed available cash, as defined, for the immediately preceding
calendar quarter.
At September 30, 2010, the amount of net assets of the Partnerships subsidiaries that was
restricted from transfer as a result of the amount of Available Cash, computed in accordance with
the Partnership Agreement, applicable debt agreements and the partnership agreements of the
Partnerships subsidiaries, totaled approximately $1,000,000.
Note 8 Employee Retirement Plans
The General Partner sponsors a 401(k) savings plan for eligible employees. Participants in the
savings plan may contribute a portion of their compensation on a before-tax basis. Generally,
employee contributions are matched on a dollar-for-dollar (100%) basis up to 5% of eligible
compensation. The cost of benefits under our savings plan was $7,346 in Fiscal 2010, $7,365 in
Fiscal 2009 and $7,089 in Fiscal 2008.
The General Partner sponsors a nonqualified deferred compensation plan and a nonqualified
supplemental executive retirement plan. These plans provide benefits to executives that would
otherwise be provided under the Partnerships retirement plans but are prohibited due to
limitations imposed by the Internal Revenue Service. Costs associated with these plans were not
material in Fiscal 2010, Fiscal 2009 and Fiscal 2008.
Note 9 Inventories
Inventories comprise the following at September 30:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Propane gas |
|
$ |
94,561 |
|
|
$ |
67,945 |
|
Materials, supplies and other |
|
|
16,840 |
|
|
|
16,489 |
|
Appliances for sale |
|
|
2,721 |
|
|
|
3,506 |
|
|
|
|
|
|
|
|
Total inventories |
|
$ |
114,122 |
|
|
$ |
87,940 |
|
|
|
|
|
|
|
|
In addition to inventories on hand, we also enter into contracts to purchase propane to meet a
portion of our supply requirements. Generally, these contracts are one- to three-year agreements
subject to annual price and quantity adjustments.
Note 10 Property, Plant and Equipment
Property, plant and equipment comprise the following at September 30:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Land |
|
$ |
67,516 |
|
|
$ |
66,880 |
|
Buildings and improvements |
|
|
101,490 |
|
|
|
96,873 |
|
Transportation equipment |
|
|
76,061 |
|
|
|
73,000 |
|
Storage facilities |
|
|
128,801 |
|
|
|
121,857 |
|
Equipment, primarily cylinders and tanks |
|
|
1,093,894 |
|
|
|
1,035,402 |
|
Other, including construction in process |
|
|
42,266 |
|
|
|
39,126 |
|
|
|
|
|
|
|
|
Gross property, plant and equipment |
|
|
1,510,028 |
|
|
|
1,433,138 |
|
Less accumulated depreciation and amortization |
|
|
(867,250 |
) |
|
|
(804,239 |
) |
|
|
|
|
|
|
|
Net property, plant and equipment |
|
$ |
642,778 |
|
|
$ |
628,899 |
|
|
|
|
|
|
|
|
F-18
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 11 Goodwill and Intangible Assets
The Partnerships goodwill and intangible assets comprise the following at September 30:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Subject to amortization: |
|
|
|
|
|
|
|
|
Customer relationships and noncompete agreements |
|
$ |
65,203 |
|
|
$ |
56,581 |
|
Accumulated amortization |
|
|
(27,613 |
) |
|
|
(23,970 |
) |
|
|
|
|
|
|
|
|
|
|
37,590 |
|
|
|
32,611 |
|
|
|
|
|
|
|
|
Not subject to amortization: |
|
|
|
|
|
|
|
|
Goodwill |
|
$ |
678,721 |
|
|
$ |
665,663 |
|
|
|
|
|
|
|
|
Changes in the carrying amount of goodwill are as follows:
|
|
|
|
|
Balance September 30, 2008 |
|
$ |
640,843 |
|
Goodwill acquired (a) |
|
|
24,709 |
|
Purchase accounting
adjustments |
|
|
111 |
|
|
|
|
|
Balance September 30, 2009 |
|
|
665,663 |
|
Goodwill acquired |
|
|
12,930 |
|
Purchase accounting
adjustments |
|
|
128 |
|
|
|
|
|
Balance September 30, 2010 |
|
$ |
678,721 |
|
|
|
|
|
|
|
|
(a) |
|
Amount includes $661 related
to the July 2009 redemption of a minority partners 0.1% limited
partner interest in Eagle OLP. |
Amortization expense of intangible assets was $6,016 in Fiscal 2010, $5,237 in Fiscal 2009 and
$4,712 in Fiscal 2008. Estimated amortization expense of intangible assets during the next five
fiscal years is as follows: Fiscal 2011 $6,928; Fiscal 2012 $6,853; Fiscal 2013 $6,269;
Fiscal 2014 $5,321; Fiscal 2015 $3,989. There were no accumulated impairment losses at
September 30, 2010.
Note 12 Partners Capital and Incentive Compensation Plans
In accordance with the Partnership Agreement, the General Partner may, in its sole discretion,
cause the Partnership to issue an unlimited number of additional Common Units and other equity
securities of the Partnership ranking on a parity with the Common Units.
The General Partner grants equity-based awards to employees and non-employee directors
comprising grants of AmeriGas Partners equity instruments as further described below. We recognized
total pre-tax equity-based compensation expense of $3,127, $3,035 and $3,162 in Fiscal 2010,
Fiscal 2009 and Fiscal 2008, respectively.
On July 30, 2010, holders of AmeriGas Partners Common Units approved the AmeriGas Propane,
Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P. (2010 Propane Plan).
Under the 2010 Propane Plan, the General Partner may award to employees and non-employee directors
grants of Common Units, performance units, options, phantom units, unit appreciation rights and
other Common Unit-based awards. The total aggregate number of Common Units that may be issued under
the Plan is 2,800,000. The exercise price for options may not be less than the fair market value on
the date of grant. Awards granted under the 2010 Propane Plan may vest immediately or ratably over
a period of years, and options can be exercised no later than ten years from the grant date. In
addition, the 2010 Propane Plan provides that Common Unit-based awards may also provide for the
crediting of Common Unit distribution equivalents to participants accounts.
F-19
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The 2010 Propane Plan succeeds the AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan (2000
Propane Plan) which expired on December 31, 2009, and replaces the AmeriGas Propane, Inc.
Discretionary Long-Term Incentive Plan for Non-Executive Key Employees (Nonexecutive Propane
Plan). Under the 2000 Propane Plan, the General Partner could award to key employees the right to
receive Common Units (comprising performance units), or cash equivalent to the fair market value of
such Common Units. In addition, the 2000 Propane Plan authorizes the crediting of Common Unit
distribution equivalents to participants accounts. Under the Nonexecutive Propane Plan, the
General Partner could grant awards to key employees who did not participate in the 2000 Propane
Plan. Generally, awards under the Nonexecutive Propane Plan vest at the end of a three-year period
and are paid in Common Units and cash. Effective January 1, 2010, no additional grants will be made
under the 2000 Propane Plan. Effective July 30, 2010, no additional grants will be made under the
Nonexecutive Propane Plan.
Recipients of performance unit awards under the 2010 Propane Plan and, prior to its
expiration, the 2000 Propane Plan (AmeriGas Performance Units) are awarded a target number of
AmeriGas Performance Units. The number of AmeriGas Performance Units ultimately paid at the end of
the performance period (generally three years) may be higher or lower than the target amount based
upon AmeriGas Partners Total Unitholder Return (TUR) percentile rank relative to entities in a
peer group. Grantees of AmeriGas Performance Units will not be paid if AmeriGas Partners TUR is
below the 40th percentile of the peer group. At the 40th percentile, the grantee will be paid an
award equal to 50% of the target award; at the 50th percentile, 100%; and at the 100th
percentile, 200%. The actual amount of the award is interpolated between these percentile rankings.
Any Common Unit distribution equivalents earned are paid in cash. Generally, except in the event of
retirement, death or disability, each grant, unless paid, will terminate when the participant
ceases to be employed by the General Partner. There are certain change of control and retirement
eligibility conditions that, if met, generally result in accelerated vesting or elimination of
further service requirements.
Under GAAP relating to equity-based compensation plans, AmeriGas Performance Units are equity
awards with a market-based condition, which, if settled in Common Units, results in the recognition
of compensation cost over the requisite employee service period regardless of whether the
market-based condition is satisfied. The fair values of AmeriGas Performance Units are estimated
using a Monte Carlo valuation model. The fair value associated with the target award and the award
above the target, if any, which will be paid in Common Units, is accounted for as equity and the
fair value of all Common Unit distribution equivalents, which will be paid in cash, is accounted
for as a liability. The expected term of the AmeriGas Performance Unit awards is three years based
on the performance period. Expected volatility is based on the historical volatility of Common
Units over a three-year period. The risk-free interest rate is based on rates on U.S. Treasury
bonds at the time of grant. Volatility for all entities in the peer group is based on historical
volatility.
The following table summarizes the weighted-average assumptions used to determine the fair
value of AmeriGas Performance Unit awards and related compensation costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grants Awarded in Fiscal Year |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Risk-free rate |
|
|
1.7 |
% |
|
|
1.0 |
% |
|
|
3.1 |
% |
Expected life |
|
|
3 years |
|
|
|
3 years |
|
|
|
3 years |
|
Expected volatility |
|
|
35.0 |
% |
|
|
32.0 |
% |
|
|
17.7 |
% |
Dividend Yield |
|
|
6.8 |
% |
|
|
9.1 |
% |
|
|
6.8 |
% |
The General Partner granted awards under the 2010 Propane Plan, the 2000 Propane Plan and the
Nonexecutive Propane Plan (collectively, Awards) representing 57,750, 60,200 and 40,050 Common
Units in Fiscal 2010, Fiscal 2009 and Fiscal 2008, respectively, having weighted-average grant date
fair values per Common Unit subject to award of $41.39, $31.94 and $37.91, respectively. At
September 30, 2010, 2,796,550 Common Units were available for future award grants under the 2010
Propane Plan.
F-20
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The following table summarizes AmeriGas Common Unit-based award activity for Fiscal 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Vested |
|
|
Non-Vested |
|
|
|
Number of |
|
|
Weighted |
|
|
Number of |
|
|
Weighted |
|
|
Number of |
|
|
Weighted |
|
|
|
Common |
|
|
Average |
|
|
Common |
|
|
Average |
|
|
Common |
|
|
Average |
|
|
|
Units |
|
|
Grant Date |
|
|
Units |
|
|
Grant Date |
|
|
Units |
|
|
Grant Date |
|
|
|
Subject |
|
|
Fair Value |
|
|
Subject |
|
|
Fair Value |
|
|
Subject |
|
|
Fair Value |
|
|
|
to Award |
|
|
(per Unit) |
|
|
to Award |
|
|
(per Unit) |
|
|
to Award |
|
|
(per Unit) |
|
September 30, 2009 |
|
|
147,600 |
|
|
$ |
33.83 |
|
|
|
51,584 |
|
|
$ |
33.49 |
|
|
|
96,016 |
|
|
$ |
34.02 |
|
Granted |
|
|
57,750 |
|
|
$ |
41.39 |
|
|
|
|
|
|
$ |
|
|
|
|
57,750 |
|
|
$ |
41.39 |
|
Forfeited |
|
|
(11,400 |
) |
|
$ |
37.39 |
|
|
|
|
|
|
$ |
|
|
|
|
(11,400 |
) |
|
$ |
37.39 |
|
Vested |
|
|
|
|
|
$ |
|
|
|
|
49,617 |
|
|
$ |
36.24 |
|
|
|
(49,617 |
) |
|
$ |
36.24 |
|
Awards paid |
|
|
(47,350 |
) |
|
$ |
32.23 |
|
|
|
(47,350 |
) |
|
$ |
32.23 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 |
|
|
146,600 |
|
|
$ |
37.05 |
|
|
|
53,851 |
|
|
$ |
37.14 |
|
|
|
92,749 |
|
|
$ |
37.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During Fiscal 2010, Fiscal 2009 and Fiscal 2008, the Partnership paid AmeriGas Common
Unit-based awards in Common Units and cash as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Number of Common Units subject to original Awards granted |
|
|
49,650 |
|
|
|
38,350 |
|
|
|
39,767 |
|
Fiscal year granted |
|
|
2007 |
|
|
|
2006 |
|
|
|
2005 |
|
Payment of Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
AmeriGas Partners Common Units issued |
|
|
42,121 |
|
|
|
36,437 |
|
|
|
21,249 |
|
Cash paid |
|
$ |
1,219 |
|
|
$ |
879 |
|
|
$ |
809 |
|
As of September 30, 2010, there was $633 of unrecognized equity-based compensation expense
related to non-vested UGI stock options that is expected to be recognized over a weighted-average
period of 1.8 years. As of September 30, 2010, there was a total of approximately $2,331 of
unrecognized compensation cost associated with 146,600 Common Units subject to award that is
expected to be recognized over a weighted average period of 1.7 years. The total fair value of
Common Unit-based awards that vested during Fiscal 2010, Fiscal 2009 and Fiscal 2008 was $1,978,
$1,645 and $2,087, respectively. As of September 30, 2010 and 2009, total liabilities of $1,266 and
$1,417 associated with Common Unit-based awards are reflected in Employee compensation and
benefits accrued and Other noncurrent liabilities in the Consolidated Balance Sheets. It is the
Partnerships practice to issue new AmeriGas Partners Common Units for the portion of any Common
Unit-based awards paid out in AmeriGas Partners Common Units.
Note 13 Commitments and Contingencies
Commitments
We lease various buildings and other facilities and vehicles, computer and office equipment
under operating leases. Certain of the leases contain renewal and purchase options and also contain
step-rent provisions. Our aggregate rental expense for such leases was $54,513 in Fiscal 2010,
$54,277 in Fiscal 2009 and $55,825 in Fiscal 2008.
F-21
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Minimum future payments under noncancelable operating leases are as follows:
|
|
|
|
|
Year Ending September 30, |
|
|
|
|
2011 |
|
$ |
46,537 |
|
2012 |
|
|
36,953 |
|
2013 |
|
|
30,186 |
|
2014 |
|
|
22,760 |
|
2015 |
|
|
15,546 |
|
Thereafter |
|
|
29,718 |
|
|
|
|
|
Total minimum operating lease payments |
|
$ |
181,700 |
|
|
|
|
|
The Partnership enters into fixed-price contracts with suppliers to purchase a portion of its
propane supply requirements. These contracts generally have terms of less than one year. As of
September 30, 2010, obligations under these contracts totaled $50,531.
The Partnership also enters into contracts to purchase propane to meet additional supply
requirements. Generally, these contracts are one- to three-year agreements subject to annual price
and quantity adjustments.
Contingencies
Environmental Matters
By letter dated March 6, 2008, the New York State Department of Environmental Conservation
(DEC) notified AmeriGas OLP that DEC had placed property owned by the Partnership in Saranac
Lake, New York on its Registry of Inactive Hazardous Waste Disposal Sites. A site characterization
study performed by DEC disclosed contamination related to former manufactured gas plant (MGP)
operations on the site. DEC has classified the site as a significant threat to public health or
environment with further action required. The Partnership has researched the history of the site
and its ownership interest in the site. The Partnership has reviewed the preliminary site
characterization study prepared by the DEC, the extent of the contamination, and the possible
existence of other potentially responsible parties. The Partnership has communicated the results of
its research to DEC and is awaiting a response before doing any additional investigation. Because
of the preliminary nature of available environmental information, the ultimate amount of expected
clean up costs cannot be reasonably estimated.
Other Matters
On May 27, 2009, the General Partner was named as a defendant in a purported class action
lawsuit in the Superior Court of the State of California in which plaintiffs are challenging
AmeriGas OLPs weight disclosure with regard to its portable propane grill cylinders. The complaint
purports to be brought on behalf of a class of all consumers in the state of California during the
four years prior to the date of the California complaint, who exchanged an empty cylinder and were
provided with what is alleged to be only a partially filled cylinder. The plaintiffs seek
restitution, injunctive relief, interest, costs, attorneys fees and other appropriate relief.
Since that initial suit, various AmeriGas entities have been named in more than a dozen
similar suits that have been filed in various courts throughout the United States. These complaints
purport to be brought on behalf of nationwide classes, which are loosely defined as including all
purchasers of liquefied propane gas cylinders marketed or sold by AmeriGas OLP and another
unaffiliated entity nationwide. The complaints claim that defendants conduct constituted unfair
and deceptive practices that injured consumers and violated the consumer protection statutes of at
least thirty-seven states and the District of Columbia, thereby entitling the class to damages,
restitution, disgorgement, injunctive relief, costs and attorneys fees. Some of the complaints also
allege violation of state slack filling laws. Additionally, the complaints allege that defendants
were unjustly enriched by their conduct and they seek restitution of any unjust benefits received,
punitive or treble damages, and pre-judgment and post-judgment interest. A motion to consolidate
the purported class action lawsuits was heard by the Multidistrict Litigation Panel (MDL Panel)
on September 24, 2009 in the United States District Court for the District of Kansas. By Order,
dated October 6, 2009, the MDL Panel transferred the pending cases to the United States District
Court for the Western District of Missouri. The AmeriGas entities named in the consolidated class
action lawsuits have entered into a settlement agreement with the class. On May 19, 2010, the
United States District Court for the District of Kansas granted the classs motion seeking
preliminary approval of the settlement. On October 4, 2010, the District Court ruled that the
settlement was fair, reasonable and adequate to the class and granted final approval of the
settlement.
F-22
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
On or about October 21, 2009, the General Partner received a notice that the Offices of the
District Attorneys of Santa Clara, Sonoma, Ventura, San Joaquin and Fresno Counties and the City
Attorney of San Diego have commenced an investigation into AmeriGas OLPs cylinder labeling and
filling practices in California and issued an administrative subpoena seeking documents and
information relating to those practices. We are cooperating with these California governmental
investigations.
Samuel and Brenda Swiger and their son (the Swigers) sustained personal injuries and
property damage as a result of a fire that occurred when propane that leaked from an underground
line ignited. In July 1998, the Swigers filed a class action lawsuit against AmeriGas Propane, L.P.
(named incorrectly as UGI/AmeriGas, Inc.), in the Circuit Court of Monongalia County, West
Virginia, in which they sought to recover an unspecified amount of compensatory and punitive
damages and attorneys fees, for themselves and on behalf of persons in West Virginia for whom the
defendants had installed propane gas lines, resulting from the defendants alleged failure to
install underground propane lines at depths required by applicable
safety standards. In 2003, AmeriGas OLP settled the individual
personal injury and property damage claims of the Swigers. In 2004,
the court granted the plaintiffs motion to include customers acquired
from Columbia Propane Corporation in August 2001 as additional
potential class members and the plaintiffs amended their complaint to
name additional parties pursuant to such ruling. Subsequently, in
March 2005, AmeriGas OLP filed a crossclaim against Columbia Energy
Group, former owner of Columbia Propane Corporation, seeking
indemnification for conduct undertaken by Columbia Propane
Corporation prior to AmeriGas OLPs acquisition. In June 2010,
Columbia Energy Group filed a complaint in the Delaware Court of
Chancery seeking to enjoin AmeriGas OLP from pursuing its cross-claims
in the West Virginia litigation and asking the court to find that
AmeriGas OLPs cross-claims are without merit and barred. Class
counsel has indicated that the class is seeking compensatory damages
in excess of $12,000 plus punitive damages, civil penalties and
attorneys fees. The Circuit Court of Monongalia County has
tentatively scheduled a trial for the class action for the Spring of
2011.
In 2005, the Swigers also filed what purports to be a class action in the Circuit Court of
Harrison County, West Virginia against UGI, an insurance subsidiary of UGI, certain officers of UGI
and the General Partner, and their insurance carriers and insurance adjusters. In the Harrison
County lawsuit, the Swigers are seeking compensatory and punitive damages on behalf of the putative
class for violations of the West Virginia Insurance Unfair Trade Practice Act, negligence,
intentional misconduct and civil conspiracy. The Swigers have also requested that the Court rule
that insurance coverage exists under the policies issued by the defendant insurance companies for
damages sustained by the members of the class in the Monongalia County lawsuit. The Circuit Court
of Harrison County has not certified the class in the Harrison County lawsuit at this time and, in
October 2008, stayed that lawsuit pending resolution of the class action lawsuit in Monongalia
County. We believe we have good defenses to the claims in these actions.
We cannot predict with certainty the final results of any of the environmental or other
pending claims or legal actions described above. However, it is reasonably possible that some of
them could be resolved unfavorably to us and result in losses in excess of recorded amounts. We are
unable to estimate any possible losses in excess of recorded amounts. Although we currently
believe, after consultation with counsel, that damages or settlements, if any, recovered by the
plaintiffs in such claims or actions will not have a material adverse effect on our financial
position, damages or settlements could be material to our operating results or cash flows in future
periods depending on the nature and timing of future developments with respect to these matters and
the amounts of future operating results and cash flows. In addition to the matters described above,
there are other pending claims and legal actions arising in the normal course of our businesses.
While the results of these other pending claims and legal actions cannot be predicted with
certainty, we believe, after consultation with counsel, the final outcome of such other matters
will not have a significant effect on our consolidated financial position, results of operations or
cash flows.
Note 14 Related Party Transactions
Pursuant to the Partnership Agreement and a Management Services Agreement among AEH, the
general partner of Eagle OLP, and the General Partner, the General Partner is entitled to
reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of the
Partnership. These costs, which totaled $350,246 in Fiscal 2010, $355,043 in Fiscal 2009 and
$345,460 in Fiscal 2008 include employee compensation and benefit expenses of employees of the
General Partner and general and administrative expenses.
UGI provides certain financial and administrative services to the General Partner. UGI bills
the General Partner monthly for all direct and indirect corporate expenses incurred in connection
with providing these services and the General Partner is reimbursed by the Partnership for these
expenses. The allocation of indirect UGI corporate expenses to the Partnership utilizes a weighted,
three-component formula based on the relative percentage of the Partnerships revenues, operating
expenses and net assets employed to the total of such items for all UGI operating subsidiaries for
which general and administrative services are provided. The General Partner believes that this
allocation method is reasonable and equitable to the Partnership. Such corporate expenses totaled
$10,757 in Fiscal 2010, $12,183 in Fiscal 2009 and $11,197 in Fiscal 2008. In addition, UGI and
certain of its subsidiaries provide office space, stop loss medical coverage and automobile
liability insurance to the Partnership. The costs related to these
items totaled $2,296 in Fiscal 2010, $3,344 in Fiscal 2009 and $2,732
in Fiscal 2008.
F-23
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
AmeriGas OLP purchases propane from Atlantic Energy, Inc. (Atlantic Energy) a former
subsidiary of UGI Energy Services, Inc. (Energy Services) and a second-tier subsidiary of UGI,
pursuant to a propane sales agreement (Product Sales Agreement) whereby Atlantic Energy has
agreed to sell and AmeriGas OLP has agreed to purchase a specified amount of propane annually at a
terminal located in Chesapeake, Virginia. The Product Sales Agreement, which was originally
scheduled to terminate on April 30, 2010, was amended to extend the initial termination date to
April 30, 2015 and to provide for an option to extend beyond that date for an additional five
years. The price to be paid for product purchased under the agreement is determined annually using
a contractual formula that takes into account published index prices and the locational value of
deliveries at the terminal. On July 30, 2010, Energy Services sold its interest in Atlantic Energy.
In addition, from time to time, AmeriGas OLP purchases propane on an as needed basis from Energy
Services. The price of the purchases are generally based on market price at the time of purchase.
Purchases of propane by AmeriGas OLP from Energy Services and
Atlantic Energy (through the date of
its sale) totaled $39,807, $24,302 and $47,307 during Fiscal 2010, Fiscal 2009 and Fiscal 2008,
respectively. The sale of the terminal did not effect the terms of the Product Sales Agreement.
On October 1, 2008, AmeriGas OLP acquired all of the assets of Penn Fuel Propane, LLC (now
named UGI Central Penn Propane, LLC, CPP) from CPP, a second-tier subsidiary of UGI Utilities,
Inc., for $32,000 cash plus estimated working capital of $1,621. UGI Utilities, Inc. is a wholly
owned subsidiary of UGI. CPP sold propane to customers primarily in eastern Pennsylvania. AmeriGas
OLP funded the acquisition of the assets of CPP principally from borrowings under its Credit
Agreement. Pursuant to the acquisition agreement, in February 2009, AmeriGas OLP reached an
agreement with UGI Utilities on the working capital adjustment pursuant to which UGI Utilities
reimbursed AmeriGas OLP $1,352 plus interest.
The Partnership also sells propane to other affiliates of UGI. Such amounts were not material
in Fiscal 2010, Fiscal 2009 or Fiscal 2008.
Note 15 Other Current Liabilities
Other current liabilities comprise the following at September 30:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Litigation, property and casualty liabilities |
|
$ |
23,189 |
|
|
$ |
17,972 |
|
Taxes other than income taxes |
|
|
6,839 |
|
|
|
5,537 |
|
Propane exchange liabilities |
|
|
18,893 |
|
|
|
9,795 |
|
Deferred tank fee revenue |
|
|
12,642 |
|
|
|
12,225 |
|
Other |
|
|
10,412 |
|
|
|
10,256 |
|
|
|
|
|
|
|
|
Total other current liabilities |
|
$ |
71,975 |
|
|
$ |
55,785 |
|
|
|
|
|
|
|
|
F-24
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 16 Fair Value Measurements
Derivative Financial Instruments
The following table presents our financial assets and financial liabilities that are measured
at fair value on a recurring basis for each of the fair value hierarchy levels, including both
current and noncurrent portions, as of September 30, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset (Liability) |
|
|
|
Quoted Prices |
|
|
|
|
|
|
|
|
|
|
|
|
in Active |
|
|
|
|
|
|
|
|
|
|
|
|
Markets for |
|
|
Significant |
|
|
|
|
|
|
|
|
|
Identical |
|
|
Other |
|
|
|
|
|
|
|
|
|
Assets and |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
|
|
Liabilities |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Total |
|
September 30, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
$ |
|
|
|
$ |
8,025 |
|
|
$ |
|
|
|
$ |
8,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
$ |
|
|
|
$ |
13,001 |
|
|
$ |
|
|
|
$ |
13,001 |
|
Interest rate contracts |
|
$ |
|
|
|
$ |
2,249 |
|
|
$ |
|
|
|
$ |
2,249 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
$ |
|
|
|
$ |
(1,153 |
) |
|
$ |
|
|
|
$ |
(1,153 |
) |
Interest rate contracts |
|
$ |
|
|
|
$ |
(18,131 |
) |
|
$ |
|
|
|
$ |
(18,131 |
) |
The
fair values of our non-exchange traded commodity derivative contracts are based upon indicative
price quotations available through brokers, industry price publications or recent market
transactions and related market indicators. For commodity option contracts we use a Black Scholes
option pricing model that considers time value and volatility of the underlying commodity. The
fair values of interest rate contracts are based upon third-party quotes or indicative values based
on recent market transactions.
Other Financial Instruments
The carrying amounts of financial instruments included in current assets and current
liabilities (excluding unsettled derivative instruments and current maturities of long-term debt)
approximate their fair values because of their short-term nature. The carrying amount and estimated
fair value of our long-term debt at September 30, 2010 were $791,402 and $819,949, respectively.
The carrying amount and estimated fair value of our long-term debt at September 30, 2009 were
$865,644 and $836,561, respectively. We estimate the fair value of long-term debt by using current
market prices and by discounting future cash flows using rates available for similar type debt.
We have financial instruments such as short-term investments and trade accounts receivable
which could expose us to concentrations of credit risk. We limit our credit risk from short-term
investments by investing only in investment-grade commercial paper and U.S. Government securities.
The credit risk from trade accounts receivable is limited because we have a large customer base
which extends across many different U.S. markets.
Note 17 Disclosures About Derivative Instruments and Hedging Activities
The Partnership is exposed to certain market risks related to its ongoing business operations.
Management uses derivative financial and commodity instruments, among other things, to manage
these risks. The primary risks managed by derivative instruments are commodity price risk and
interest rate risk. Although we use derivative financial and commodity instruments to reduce
market risk associated with forecasted transactions, we do not use derivative financial and
commodity instruments for speculative or trading purposes. The use of derivative instruments is
controlled by our risk management and credit policies which govern, among other things, the
derivative instruments the Partnership can use, counterparty credit limits and contract
authorization limits. Because our derivative instruments generally qualify as hedges under GAAP, we
expect that changes in the fair value of derivative instruments used to manage commodity or
interest rate market risk would be substantially offset by gains or losses on the associated
anticipated transactions.
F-25
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Commodity Price Risk
In order to manage market risk associated with the Partnerships fixed-price programs which
permit customers to lock in the prices they pay for propane principally during the months of
October through March, the Partnership uses over-the-counter derivative commodity instruments,
principally price swap contracts. At September 30, 2010, there were 158.7 million gallons of
propane hedged with over-the-counter price swap and option contracts. The maximum period over which
we are currently hedging propane market price risk is 24 months with a weighted average of 5
months. In addition, the Partnership enters into price swap agreements to provide market price
risk support to a limited number of its wholesale customers. These agreements are not designated
as hedges for accounting purposes. The volume of propane subject to these wholesale customer
agreements were not material.
We account for substantially all of our commodity price risk contracts as cash flow hedges.
Changes in the fair values of contracts qualifying for cash flow hedge accounting are recorded in
AOCI and noncontrolling interests, to the extent effective in offsetting changes in the underlying
commodity price risk, until earnings are affected by the hedged item. At September 30, 2010, the
amount of net gains associated with commodity price risk hedges expected to be reclassified into
earnings during the next twelve months based upon current fair values is $7,254.
Interest Rate Risk
Our long-term debt is typically issued at fixed rates of interest. As these long-term debt
issues mature, we typically refinance such debt with new debt having interest rates reflecting
then-current market conditions. In order to reduce market rate risk on the underlying benchmark
rate of interest associated with near- to medium-term forecasted issuances of fixed-rate debt, from
time to time we enter into interest rate protection agreements (IRPAs). There are no unsettled
IRPAs outstanding at September 30, 2010. At September 30, 2010, the amount of net losses associated
with settled IRPAs expected to be reclassified into earnings during the next twelve months is $538.
Derivative Financial Instruments Credit Risk
The Partnership is exposed to credit loss in the event of nonperformance by counterparties to
derivative financial and commodity instruments. Our counterparties principally consist of major
energy companies and major U.S. financial institutions. We maintain credit policies with regard to
our counterparties that we believe reduce overall credit risk. These policies include evaluating
and monitoring our counterparties financial condition, including their credit ratings, and
entering into agreements with counterparties that govern credit limits. Certain of these agreements
call for the posting of collateral by the counterparty or by the Partnership in the forms of
letters of credit, parental guarantees or cash. Although we have concentrations of credit risk
associated with derivative financial instruments held by certain derivative financial instrument
counterparties, the maximum amount of loss due to credit risk that, based upon the gross fair
values of the derivative financial instruments, we would incur if these counterparties that make up
the concentration failed to perform according to the terms of their contracts was not material at
September 30, 2010. We generally do not have credit-risk-related contingent features in our
derivative contracts.
F-26
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The following table provides information regarding the balance sheet location and fair value
of derivative assets and liabilities existing as of September 30, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets |
|
|
Derivative (Liabilities) |
|
|
|
Balance Sheet |
|
|
Fair |
|
|
Balance Sheet |
|
|
Fair |
|
As of September 30, 2010: |
|
Location |
|
|
Value |
|
|
Location |
|
|
Value |
|
Derivatives Designated as
Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
Derivative financial instruments and Other assets |
|
|
$ |
8,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as
Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
Derivative financial instruments |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivatives |
|
|
|
|
|
$ |
8,025 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets |
|
|
Derivative (Liabilities) |
|
|
|
Balance Sheet |
|
|
Fair |
|
|
Balance Sheet |
|
|
Fair |
|
As of September 30, 2009: |
|
Location |
|
|
Value |
|
|
Location |
|
|
Value |
|
Derivatives Designated as
Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
Derivative financial instruments and Other assets |
|
|
$ |
11,730 |
|
|
|
|
|
|
|
|
|
Interest rate contracts |
|
Derivative financial instruments |
|
|
|
2,249 |
|
|
Derivative financial instruments |
|
|
$ |
(18,131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivatives Designated
as Hedging Instruments |
|
|
|
|
|
$ |
13,979 |
|
|
|
|
|
|
$ |
(18,131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as
Hedging Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
Derivative financial instruments |
|
$ |
1,271 |
|
|
Derivative financial instruments |
|
$ |
(1,153 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Derivatives |
|
|
|
|
|
$ |
15,250 |
|
|
|
|
|
|
$ |
(19,284 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides information on the effects of derivative instruments on the
Consolidated Statements of Operations and changes in AOCI and noncontrolling interests for Fiscal
2010 and Fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of |
|
|
|
|
|
|
Gain (Loss) |
|
|
Gain (Loss) |
|
|
Gain (Loss) |
|
|
|
Recognized in |
|
|
Reclassified from |
|
|
Reclassified from |
|
|
|
AOCI and Noncontrolling |
|
|
AOCI and Noncontrolling |
|
|
AOCI and Noncontrolling |
|
|
|
Interests |
|
|
Interests into Income |
|
|
Interests into Income |
|
Fiscal 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow |
|
|
|
|
|
|
|
|
|
|
|
|
Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
$ |
35,829 |
|
|
Cost of sales |
|
|
$ |
38,360 |
|
Interest rate contracts |
|
|
1,739 |
|
|
Interest expense/ other income |
|
|
|
(12,731 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
37,568 |
|
|
|
|
|
|
$ |
25,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow |
|
|
|
|
|
|
|
|
|
|
|
|
Hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
Propane contracts |
|
$ |
(128,214 |
) |
|
Cost of sales |
|
|
$ |
(193,364 |
) |
Interest rate contracts |
|
|
(10,104 |
) |
|
Interest expense / other income |
|
|
|
(2,487 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(138,318 |
) |
|
|
|
|
|
$ |
(195,851 |
) |
|
|
|
|
|
|
|
|
|
|
|
F-27
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The amounts of derivative gains or losses representing ineffectiveness, and the amounts of
gains or losses recognized in income as a result of excluding from ineffectiveness testing, were
not material for Fiscal 2010, Fiscal 2009 or Fiscal 2008. During the three months ended March 31,
2010, the Partnerships management determined that it was likely that the Partnership would not
issue $150,000 of long-term debt during the summer of 2010 due to the Partnerships strong cash
flow and anticipated extension of all or a portion of the 2009 Supplemental Credit Agreement. As a
result, the Partnership discontinued cash flow hedge accounting treatment for IRPAs associated with
this previously anticipated Fiscal 2010 $150,000 long-term debt issuance and recorded a $12,193
loss which is reflected in other income, net, on the Fiscal 2010 Consolidated Statement of
Operations. In March 2009, The Partnership recorded losses of $1,659 as a result of the
discontinuance of cash flow hedge accounting associated with IRPAs. The amount of net gains or
losses associated with propane contracts that are not designated as hedging instruments was not
material during Fiscal 2010, Fiscal 2009 and Fiscal 2008.
We are also a party to a number of contracts that have elements of a derivative instrument.
These contracts include, among others, binding purchase orders, contracts which provide for the
purchase and delivery of propane and service contracts that require the counterparty to provide
commodity storage or transportation service to meet our normal sales commitments. Although many of
these contracts have the requisite elements of a derivative instrument, these contracts qualify for
normal purchase and normal sale exception accounting under GAAP because they provide for the
delivery of products or services in quantities that are expected to be used in the normal course of
operating our business and the price in the contract is based on an underlying that is directly
associated with the price of the product or service being purchased or sold.
18 Other Income, Net
Other income, net, comprises the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Gains on sales of fixed assets (a) |
|
$ |
1,470 |
|
|
$ |
2,795 |
|
|
$ |
1,698 |
|
Finance charges |
|
|
11,346 |
|
|
|
11,717 |
|
|
|
11,822 |
|
Losses on IRPAs |
|
|
(12,193 |
) |
|
|
(1,659 |
) |
|
|
|
|
Other |
|
|
7,081 |
|
|
|
3,152 |
|
|
|
5,335 |
|
|
|
|
|
|
|
|
|
|
|
Total other income, net |
|
$ |
7,704 |
|
|
$ |
16,005 |
|
|
$ |
18,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Excludes gain on sale of California LPG storage facility in Fiscal 2009 of $39,887 (see
Note 5). |
Note 19 Quarterly Data (Unaudited)
The following unaudited quarterly data includes all adjustments (consisting only of normal
recurring adjustments with the exception of those indicated below) which we consider necessary for
a fair presentation. Our quarterly results fluctuate because of the seasonal nature of our propane
business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
March 31, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2009 |
|
|
2008 (a) |
|
|
2010 (b) |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 (c) |
|
|
2009 |
|
Revenues |
|
$ |
656,595 |
|
|
$ |
727,064 |
|
|
$ |
886,101 |
|
|
$ |
823,377 |
|
|
$ |
396,613 |
|
|
$ |
372,677 |
|
|
$ |
381,033 |
|
|
$ |
336,977 |
|
Operating income
(loss) |
|
$ |
102,614 |
|
|
$ |
144,766 |
|
|
$ |
153,248 |
|
|
$ |
168,115 |
|
|
$ |
5,320 |
|
|
$ |
4,329 |
|
|
$ |
(25,317 |
) |
|
$ |
(16,667 |
) |
Net income (loss) |
|
$ |
84,954 |
|
|
$ |
125,404 |
|
|
$ |
135,989 |
|
|
$ |
149,546 |
|
|
$ |
(12,323 |
) |
|
$ |
(13,522 |
) |
|
$ |
(41,126 |
) |
|
$ |
(33,818 |
) |
Net income (loss)
attributable to
AmeriGas
Partners, L.P. |
|
$ |
83,959 |
|
|
$ |
123,963 |
|
|
$ |
134,483 |
|
|
$ |
147,835 |
|
|
$ |
(12,372 |
) |
|
$ |
(13,525 |
) |
|
$ |
(40,857 |
) |
|
$ |
(33,630 |
) |
Income (loss) per
limited partner
unit basic
and diluted (d) |
|
$ |
1.15 |
|
|
$ |
1.50 |
|
|
$ |
1.59 |
|
|
$ |
1.71 |
|
|
$ |
(0.23 |
) |
|
$ |
(0.29 |
) (e) |
|
$ |
(0.73 |
) |
|
$ |
(0.59 |
) (e) |
|
|
|
(a) |
|
Includes gain on sale of the Partnerships California storage facility which increased
operating income by $39,887 and net income attributable to AmeriGas Partners, L.P. by $39,484
(see Note 5). |
F-28
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
|
|
|
(b) |
|
Includes loss from discontinuance of cash flow hedge treatment for IRPAs which decreased
operating income by $12,193 and net income attributable to AmeriGas Partners, L.P. by $12,070
(see Note 17). |
|
(c) |
|
Includes increase in litigation accrual which increased operating loss by $7,000 and net loss
attributable to AmeriGas Partners, L.P. by $6,930. |
|
(d) |
|
Theoretical distributions of net income (loss) attributable to AmeriGas Partners, L.P. in
accordance with accounting guidance regarding the application of the two-class method for
determining earnings per share resulted in a different allocation of net income attributable
to AmeriGas Partners, L.P. to the General Partner and the limited partners in the computation
of income per limited partner unit which had the effect of decreasing quarterly earnings per
limited partner unit for the quarters ended December 31 and March 31 and (increasing)
decreasing quarterly loss per limited partner unit for the quarters ended June 30, 2009 and
September 30, 2009, respectively, as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
March 31, |
|
|
June 30, |
|
|
September 30, |
|
Quarter ended: |
|
2009 |
|
|
2008 |
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
2009 |
|
Decrease in income
per limited partner unit |
|
$ |
(0.30 |
) |
|
$ |
(0.65 |
) |
|
$ |
(0.73 |
) |
|
$ |
(0.85 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in loss
per limited partner unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.05 |
) |
|
$ |
0.05 |
|
|
|
|
(e) |
|
The retrospective application of the new guidance regarding the application of the two-class
method for determining income per unit resulted in an increase in the net loss per limited
partner unit for the three months ended June 30, 2009 to $0.29 per limited partner unit from a
loss of $0.24 reported previously and a decrease in the net loss per limited partner unit for
the three months ended September 30, 2009 to $0.59 per limited partner unit from a loss of
$0.64 reported previously (see Note 2). |
F-29
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
302 |
|
|
$ |
965 |
|
Prepaids |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
326 |
|
|
|
965 |
|
|
|
|
|
|
|
|
|
|
Investment in AmeriGas Propane, L.P. |
|
|
1,177,953 |
|
|
|
1,161,091 |
|
Other assets |
|
|
5,821 |
|
|
|
7,010 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,184,100 |
|
|
$ |
1,169,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS CAPITAL |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
14,672 |
|
|
$ |
|
|
Accounts payable and other liabilities |
|
|
3,084 |
|
|
|
4,391 |
|
Accrued interest |
|
|
20,496 |
|
|
|
20,496 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
38,252 |
|
|
|
24,887 |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
765,000 |
|
|
|
779,720 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners capital: |
|
|
|
|
|
|
|
|
Common unitholders |
|
|
372,220 |
|
|
|
367,708 |
|
General partner |
|
|
3,751 |
|
|
|
3,698 |
|
Accumulated
other comprehensive income (loss) |
|
|
4,877 |
|
|
|
(6,947 |
) |
|
|
|
|
|
|
|
Total partners capital |
|
|
380,848 |
|
|
|
364,459 |
|
|
|
|
|
|
|
|
Total liabilities and partners capital |
|
$ |
1,184,100 |
|
|
$ |
1,169,066 |
|
|
|
|
|
|
|
|
Commitments and Contingencies:
Scheduled
principal repayments of long-term debt during the next five fiscal years ending
September 30 are $14,640 due May 2011 and $415,000 due May 2015.
S-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses, net |
|
$ |
(280 |
) |
|
$ |
(337 |
) |
|
$ |
(49 |
) |
Interest expense |
|
|
(58,003 |
) |
|
|
(58,003 |
) |
|
|
(58,003 |
) |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(58,283 |
) |
|
|
(58,340 |
) |
|
|
(58,052 |
) |
Income tax expense |
|
|
30 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
Loss before equity in income of AmeriGas Propane, L.P. |
|
|
(58,313 |
) |
|
|
(58,340 |
) |
|
|
(58,055 |
) |
Equity in income of AmeriGas Propane, L.P. |
|
|
223,526 |
|
|
|
282,983 |
|
|
|
216,074 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
165,213 |
|
|
$ |
224,643 |
|
|
$ |
158,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General partners interest in net income |
|
$ |
4,691 |
|
|
$ |
6,737 |
|
|
$ |
2,278 |
|
|
|
|
|
|
|
|
|
|
|
Limited partners interest in net income |
|
$ |
160,522 |
|
|
$ |
217,906 |
|
|
$ |
155,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per limited partner unit basic and diluted: |
|
$ |
2.80 |
|
|
$ |
3.59 |
|
|
$ |
2.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average limited partner units outstanding basic (thousands) |
|
|
57,076 |
|
|
|
57,038 |
|
|
|
57,005 |
|
|
|
|
|
|
|
|
|
|
|
Average limited partner units outstanding diluted (thousands) |
|
|
57,123 |
|
|
|
57,082 |
|
|
|
57,044 |
|
|
|
|
|
|
|
|
|
|
|
S-2
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES (a) |
|
$ |
160,380 |
|
|
$ |
165,616 |
|
|
$ |
144,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions |
|
|
(161,626 |
) |
|
|
(165,282 |
) |
|
|
(144,659 |
) |
Proceeds from issuance of Common Units, net of tax withheld |
|
|
566 |
|
|
|
(338 |
) |
|
|
766 |
|
Capital contribution from General Partner |
|
|
17 |
|
|
|
10 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
Net cash used by financing activities |
|
|
(161,043 |
) |
|
|
(165,610 |
) |
|
|
(143,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents |
|
$ |
(663 |
) |
|
$ |
6 |
|
|
$ |
779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
|
|
|
|
|
|
End of year |
|
$ |
302 |
|
|
$ |
965 |
|
|
$ |
959 |
|
Beginning of year |
|
|
965 |
|
|
|
959 |
|
|
|
180 |
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase |
|
$ |
(663 |
) |
|
$ |
6 |
|
|
$ |
779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes distributions received from AmeriGas Propane, L.P. of $217,950, $221,607 and $200,983
for the years ended September 30, 2010, 2009 and 2008, respectively. |
S-3
VALUATION AND QUALIFYING ACCOUNTS
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
(credited) |
|
|
|
|
|
|
Balance at |
|
|
|
beginning |
|
|
to costs and |
|
|
|
|
|
|
end of |
|
|
|
of year |
|
|
expenses |
|
|
Other |
|
|
year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves deducted from assets in
the consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
13,239 |
|
|
$ |
12,459 |
|
|
$ |
(10,408 |
)(1) |
|
$ |
15,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty liability |
|
$ |
62,658 |
|
|
$ |
12,308 |
|
|
$ |
(22,866 |
)(2) |
|
$ |
57,708 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,608 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental, litigation and other |
|
$ |
21,660 |
|
|
$ |
6,213 |
|
|
$ |
(1,183 |
)(2) |
|
$ |
26,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(93 |
)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves deducted from assets in
the consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
20,215 |
|
|
$ |
9,345 |
|
|
$ |
(16,321 |
)(1) |
|
$ |
13,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty liability |
|
$ |
71,172 |
|
|
$ |
20,482 |
|
|
$ |
(29,398 |
)(2) |
|
$ |
62,658 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
402 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental, litigation and other |
|
$ |
14,481 |
|
|
$ |
7,867 |
|
|
$ |
(968 |
)(2) |
|
$ |
21,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280 |
(3) |
|
|
|
|
S-4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (continued)
(Thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
(credited) |
|
|
|
|
|
|
Balance at |
|
|
|
beginning |
|
|
to costs and |
|
|
|
|
|
|
end of |
|
|
|
of year |
|
|
expenses |
|
|
Other |
|
|
year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves deducted from assets in
the consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
15,149 |
|
|
$ |
15,852 |
|
|
$ |
(10,786 |
)(1) |
|
$ |
20,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty liability |
|
$ |
57,714 |
|
|
$ |
31,498 |
|
|
$ |
(18,040 |
)(2) |
|
$ |
71,172 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental, litigation and other |
|
$ |
12,056 |
|
|
$ |
4,559 |
|
|
$ |
(2,280 |
)(2) |
|
$ |
14,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146 |
(3) |
|
|
|
|
|
|
|
(1) |
|
Uncollectible accounts written off, net of recoveries. |
|
(2) |
|
Payments, net of any refunds |
|
(3) |
|
Other adjustments, primarily reclassifications and refunds |
|
(4) |
|
At September 30, 2010, 2009, and 2008, the Partnership had insurance indemnification
receivables associated with its property and casualty liabilities totaling $6,329, $241, and
$17,926, respectively. |
S-5