EXHIBIT 99.1
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
EIN # 51-0375688 PLAN NUMBER 001
FINANCIAL STATEMENTS
for the years ended December 31, 2003 and 2002
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
Page(s)
-------
Reports of Independent Auditors 2 to 3
Financial Statements:
Statements of Net Assets Available for Benefits at
December 31, 2003 and 2002 4
Statements of Changes in Net Assets Available for
Benefits for the years ended December 31, 2003 and
and 2002 5
Notes to Financial Statements 6 to 17
Item 4(i) - Schedule of Assets (Held at End of Year) 18 to 19
All other schedules to be filed with the Department of Labor in accordance with
the Employee Retirement Income Security Act of 1974 are not applicable and have
been omitted.
-1-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
UGI HVAC Enterprises, Inc. Savings Plan
We have audited the accompanying statement of net assets available for benefits
of UGI HVAC Enterprises, Inc. Savings Plan as of December 31, 2003, and the
related statement of changes in net assets available for benefits for the year
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of UGI HVAC
Enterprises, Inc. Savings Plan as of December 31, 2003, and changes in its net
assets available for benefits for the year then ended, in conformity with
accounting principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at end of year is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Cogen Sklar LLP
Bala Cynwyd, Pennsylvania
June 17, 2004
-2-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
UGI HVAC Enterprises, Inc. Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of UGI HVAC Enterprises, Inc. Savings Plan (the "Plan") at December 31, 2002,
and the changes in net assets available for benefits for the year ended December
31, 2002 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
October 10, 2003
-3-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
---------------------------
2003 2002
---- ----
Investments (Note 3) $ 7,580,700 $ 4,809,600
Loans to participants 186,402 153,788
Receivables:
Participants' contributions receivable 91,460 73,253
Employers' contributions receivable 30,630 25,247
----------- -----------
Net assets available for benefits $ 7,889,192 $ 5,061,889
=========== ===========
See accompanying notes to financial statements.
-4-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31,
2003 2002
------------ ------------
Participants' contributions $ 951,216 $ 805,255
Employers' contributions 296,475 249,777
Rollover contributions 378,312 16,619
Transfers of participant balances - 5,247
Investment income (loss):
Dividends 109,466 78,140
Net appreciation (depreciation) in value of investments 1,366,158 (1,006,722)
Distributions to participants (286,053) (445,669)
Loan administration fees (1,733) (1,730)
Other, primarily interest on loans 13,462 19,759
------------ ------------
Net increase (decrease) 2,827,303 (279,324)
Net assets available for benefits - beginning of year 5,061,889 5,341,213
------------ ------------
Net assets available for benefits - end of year $ 7,889,192 $ 5,061,889
============ ============
See accompanying notes to financial statements.
-5-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following brief description of the UGI HVAC Enterprises, Inc. Savings Plan
(the "Plan") provides general information on the provisions of the Plan in
effect on December 31, 2003 and during the periods covered by the financial
statements. More complete information is included in the Plan document.
GENERAL. The Plan is a defined contribution plan which covers employees of UGI
HVAC Enterprises, Inc. (the "Company") and certain affiliated companies
(collectively, "the Employers"). The Company is a wholly owned subsidiary of UGI
Enterprises, Inc. ("Enterprises"). Enterprises is a wholly owned subsidiary of
UGI Corporation ("UGI"). Employees of the Employers are eligible upon hire to
participate in the Plan. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The Plan is administered by
the UGI Enterprises, Inc. Retirement Committee ("Plan Administrator") whose
members are appointed by the Board of Directors of the Company.
CONTRIBUTIONS. A participant may elect to contribute to the Plan on a before-tax
basis through payroll reduction an amount equal to from 1% to 15%, in whole
percentages, of eligible compensation. In addition, a participant may elect to
contribute to the Plan on an after-tax basis through payroll deduction an amount
equal to from 1% to 15%, in whole percentages, of eligible compensation,
provided that the combination of before-tax and after-tax contributions does not
exceed 20% of eligible compensation. Effective January 1, 2004, a participant
may elect to contribute to the Plan on a before-tax basis through payroll
deduction an amount equal to from 1% to 50%, in whole percentages, of eligible
compensation. In addition, a participant may elect to contribute to the Plan on
an after-tax basis through payroll deduction an amount equal to from 1% to 15%,
in whole percentages, of eligible compensation provided that the combination of
before-tax and after-tax contributions does not exceed 50% of eligible
compensation. Calendar year before-tax and after-tax contribution amounts are
subject to limits prescribed by the Internal Revenue Code ("IRC") and the Plan,
respectively. For the 2003 and 2002 Plan Years, the IRC before-tax contribution
limits were $12,000 and $11,000, respectively. For each of the 2003 and 2002
Plan Years, the after-tax contribution limit set by the Plan was $12,000. A
participant may increase the rate of, or reduce or suspend, his or her
before-tax or after-tax contributions four times per year by contacting the
Plan's record keeper, Fidelity Institutional Retirement Services Company
("FIRSCO").
The plan allows for "catch-up contributions." The catch-up contribution
provision allows certain employees to make before-tax contributions over and
above the IRS and Plan limits. In order to be eligible to make catch-up
contributions, employees must be at least 50 years of age and must be
contributing the IRC or Plan limit. The maximum catch-up contribution for the
2003 and 2002 Plan Years was $2,000 and $1,000, respectively, which amount shall
increase $1,000 per year through 2006. Catch-up contributions are not eligible
for the Employers' matching contribution (as described below).
During 2003 the Company acquired Devault Refrigeration Services, Inc. Plan
participants who were enrolled in the Devault Refrigeration Services, Inc. 401-K
Profit Sharing Plan and Trust and
-6-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
became eligible to participate in the UGI HVAC Enterprises, Inc. Plan were
permitted to rollover their before-tax account balances into the Plan.
Before-tax balances include before-tax contributions, company match, any
before-tax monies previously rolled into the Devault 401-K Profit Sharing Plan
and Trust, and investment earnings on all contributions, including earnings on
after-tax contributions.
The Plan also accepts on behalf of any employee (i) the entire amount of cash
received as a distribution from another qualified trust forming part of a plan
described in section 401(a) of the IRC or from a "rollover" individual
retirement plan described in section 408 of the IRC, but only if the deposit
qualifies as a tax-free rollover as defined in section 402 or (ii) a direct
transfer from another plan qualified under Section 401(a) of the IRC. The Plan
accepts after-tax rollover contributions.
For each month during a Plan year, the Employers will make a contribution to the
Plan equal to 50% of participant before-tax and after-tax contributions, up to a
total of 5% of compensation (as defined in the Plan document) for each
participant who has made before-tax and/or after-tax contributions during the
month. The Employers' contributions for the years ended December 31, 2003 and
2002 were invested in accordance with participant investment elections in effect
on the dates of the contributions.
A participant is immediately fully vested in the portion of his or her account
attributable to participant contributions as well as matching contributions made
by the Employers.
INVESTMENT FUNDS. A participant may elect to have his or her funds invested in
one or more investment funds. Generally, participants may transfer amounts
between funds at any time with no limit. Participants may change their
investment elections for future contributions at any time. Fidelity Management
Trust Company is the Plan's Trustee for all investment assets of the Plan.
References to "Fidelity" below refer to investment funds managed by Fidelity
Management and Research Company ("FMR").
Following are brief descriptions of the investment options available to
participants and the strategies and objectives of each fund.
Money Market Fund
- - Fidelity Cash Reserves Fund
This fund is an unaffiliated registered investment company mutual fund that
invests in U.S. dollar-denominated money market securities and repurchase
agreements, and may enter into reverse repurchase agreements. The fund's
objective is to provide as high a level of current income as is consistent with
the preservation of capital and liquidity.
-7-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Managed Income Fund
- - Fidelity Managed Income Portfolio II Fund
This fund is an unaffiliated commingled pool whose investments principally
comprise investment contracts issued by insurance companies and financial
institutions and certain types of fixed income securities. The fund's objective
is to preserve principal while earning interest income.
Income Funds
- - Fidelity Intermediate Bond Fund
This fund is an unaffiliated registered investment company mutual fund which
normally invests in investment-grade bonds while normally maintaining a
dollar-weighted average maturity between three and ten years. The fund's
objective is to provide a high level of current income.
- - Fidelity Capital & Income Fund
This fund is an unaffiliated registered investment company mutual fund that
invests mainly in equity and debt securities, including defaulted securities,
with an emphasis on lower-quality debt securities. The fund invests in companies
in troubled or uncertain financial condition and in domestic and foreign
issuers. The fund's objective is to provide income and capital growth.
- - Fidelity U.S. Bond Index Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in bonds included in the Lehman Brothers Aggregate Bond
Index. The fund's objective is to provide investment results that correspond to
the total returns of bonds in the Lehman Brothers Aggregate Bond Index.
Balanced Funds
- - Fidelity Balanced Fund - Fidelity Puritan Fund
These funds are unaffiliated registered investment company mutual funds that
invest in stocks and other equity securities and in bonds and other debt
securities. The funds seek income and capital growth.
-8-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Growth and Income Funds
- - Fidelity Spartan U.S. Equity Index Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks included in the Standard and Poor's 500
Index (S&P 500) a widely recognized, unmanaged index of 500 U.S. common stocks.
The fund's objective is to match the total return of the S&P 500.
- - Fidelity Equity Income Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in income-producing equity securities. The fund's objective
is to provide reasonable income while considering the potential for capital
appreciation.
- - Fidelity Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks. The fund may also invest a portion of
assets in bonds, including lower-quality debt securities. The fund seeks
long-term capital growth.
- - Fidelity Growth & Income Portfolio
This fund is an unaffiliated registered investment company mutual fund that
normally invests a majority of total assets in common stocks with a focus on
those that pay current dividends and show potential for capital appreciation.
The fund may also invest in bonds. The fund seeks high total return through a
combination of current income and capital appreciation.
- - Fidelity Equity Income II Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in income-producing equity securities. The fund seeks
reasonable income and the potential for capital appreciation.
- - Fidelity Real Estate Investment Portfolio
This fund is an unaffiliated registered investment company mutual fund that
principally invests in equity securities of companies principally engaged in the
real estate industry. The fund seeks above-average income and long-term capital
growth consistent with reasonable risk.
-9-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Growth Funds
- - Fidelity Magellan Fund
This fund is an unaffiliated registered investment company mutual fund that
invests primarily in common stocks of domestic and foreign issuers. The fund
seeks capital appreciation.
- - Fidelity Growth Company Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers that are
expected to have above-average growth potential. The fund seeks capital
appreciation.
- - Fidelity OTC Portfolio
This fund is an unaffiliated registered investment company mutual fund that
principally invests in securities traded on the over-the-counter (OTC) market.
The fund seeks capital appreciation.
- - Fidelity Capital Appreciation Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers. The fund
seeks capital appreciation.
- - Fidelity Blue Chip Growth Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of well-known and established companies.
The fund invests in securities of domestic and foreign issuers. The fund seeks
growth of capital over the long term.
- - Fidelity Low-Priced Stock Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in low-priced common stocks. The fund seeks capital
appreciation.
- - Fidelity Small Cap Independence Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers with small
market capitalizations. The fund seeks capital appreciation.
- - Fidelity Value Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of companies that possess valuable fixed
assets or that are believed to be
-10-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
undervalued in relation to the issuing company's assets, earnings, or growth
potential. The fund seeks capital appreciation.
International Funds
- - Fidelity Overseas Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in foreign securities. The fund invests primarily in common
stocks and seeks long-term growth of capital.
- - Fidelity Worldwide Fund
This fund is an unaffiliated registered investment company mutual fund that
invests primarily in common stocks issued anywhere in the world. The fund seeks
growth of capital.
- - Fidelity International Growth & Income Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in foreign securities including common stocks with a focus
on those that pay current dividends and have the potential for capital
appreciation. The fund seeks capital growth and current income.
Fidelity Freedom
- - Fidelity Freedom Income Fund - Fidelity Freedom 2020 Fund
- - Fidelity Freedom 2000 Fund - Fidelity Freedom 2030 Fund
- - Fidelity Freedom 2010 Fund - Fidelity Freedom 2040 Fund
These funds are unaffiliated registered investment company mutual funds that
invest in a combination of underlying Fidelity funds according to an asset
allocation strategy that becomes increasingly conservative over time as each
fund's target retirement date approaches. When each of these target retirement
date funds matches the asset allocation of the Fidelity Freedom Income fund
(approximately five to ten years after the respective fund's target retirement
date), it is expected that each fund will be combined with the Fidelity Freedom
Income Fund. These funds' investment objectives are to achieve high current
income and capital appreciation.
Employer Stock Fund
- - UGI Common Stock Fund
Effective January 1, 2003, the UGI Common Stock Fund was added to the Plan. The
UGI Common Stock Fund invests principally in shares of UGI Corporation Common
Stock. Participants in the fund do not individually own shares of UGI
Corporation Common Stock but rather own units in a fund that invests in such
shares and in short-term investments.
-11-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The value of a unit in the UGI Common Stock Fund was initially set at $10.00 and
is recalculated daily by dividing the fair value of the fund's assets
(comprising shares of UGI Corporation Common Stock and temporary cash
investments) by the total number of units outstanding. Generally, participant
requests to redeem units from the UGI Common Stock Fund are processed on the day
received if such request is received by Fidelity before the close of the New
York Stock Exchange and provided that there are sufficient short-term
investments in the fund for liquidity. In such case, the participant will
receive the net asset value, or closing price for the units, calculated using
the closing price for UGI Corporation Common Stock on the New York Stock
Exchange for that day. However, on days of unusually heavy requests for sale,
the UGI Common Stock Fund may not have sufficient short-term investments for
liquidity. In such case, requests to sell units received before the close of the
New York Stock Exchange may not be processed on that day at that date's closing
price but may be suspended until sufficient liquidity is restored. Units will be
redeemed generally on a first-in, first-out basis at the closing price for the
processing date. Loans, withdrawals and distributions from the UGI Common Stock
Fund will be given priority over exchanges with other funds.
DISTRIBUTIONS. The Plan benefit of a participant who terminates employment for
any reason other than death shall be equal to the proceeds of liquidation of
100% of the balance of his or her account. Participants may elect to receive
their interest in the UGI Common Stock Fund in the form of shares of UGI
Corporation Common Stock. Where the amount to be distributed exceeds $5,000, no
distribution shall be made to any Plan participant prior to his or her normal
retirement age (as defined in the Plan document) unless the participant elects
to receive such distribution. Where the amount to be distributed does not exceed
$5,000, a Plan participant's benefit will be distributed as soon as practicable
after the participant becomes entitled to receive a distribution.
A participant who continues to work past age 70 1/2 will receive a distribution
upon termination of employment.
DEATH. If a participant dies prior to receiving a distribution of his or her
account, the participant's designated beneficiary shall be entitled to receive a
lump-sum distribution of the proceeds of liquidation of 100% of the balance
credited to the participant's account. Generally, the beneficiary may request a
distribution of the participant's account balance as soon as practicable
following the date of the participant's death. The beneficiary of a participant
who is married at the time of the participant's death will be the participant's
spouse, unless the participant designated another beneficiary and the spouse
consented to such designation in accordance with procedures specified by the
Plan document.
WITHDRAWALS. Generally, a participant may withdraw up to 50% of the balance of
his or her Voluntary Participant Contribution Account, as defined in the Plan
document. However, the withdrawal must be in an amount of at least $500. A
participant may withdrawal up to 100% of the balance of his or her Rollover
Account, as defined in the Plan document, at any time. No more than one
withdrawal in any calendar year is permitted from each of the Voluntary
Participant Contribution Account and Rollover Account portions of a
participant's account.
-12-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
A participant may withdraw before-tax contributions (but not earnings
attributable thereto) only on account of financial hardship resulting from (a)
medical expenses as defined in section 213(d) of the IRC; (b) educational
expenses for the next twelve months of post-secondary education of the
participant, or his or her spouse, children or dependents; (c) foreclosure on a
primary residence; or (d) costs directly related to the purchase of a primary
residence. A hardship withdrawal will be permitted if the Plan Administrator
determines that (i) the withdrawal is on account of an immediate and heavy
financial need of the participant and (ii) the withdrawal is necessary to
satisfy such financial need.
LOAN PROVISION. The Plan includes an employee loan provision. Generally, at the
time a loan is to be made, the amount of all loans to be outstanding may not
exceed the lesser of (a) 50% of a participant's before-tax and rollover account
balances, or (b) $50,000 less the excess of the highest balance of all loans
during the prior twelve month period. Each loan bears interest at a rate
determined in accordance with generally prevailing market conditions for similar
types of loans. The minimum loan amount is $1,000. The amount of the loan
withdrawn from a participant's account is allocated in proportion to the value
of the participant's salary deferral and rollover account balances in each
investment fund. Repayments, including interest, are made in equal installments
through payroll deductions and are allocated to participant accounts in
accordance with current investment elections. No loan may have a final maturity
in excess of five years except that, if the loan is used to purchase a principal
residence for the participant, the loan may have a final maturity of up to ten
years. No participant shall be permitted to have more than two loans outstanding
at any one time.
ADMINISTRATIVE EXPENSES. Administrative expenses of the Plan are chargeable to
the Plan unless paid for by the Employers. The Employers currently pay such
expenses. Loan administration and withdrawal fees are paid by participants.
Mutual fund expenses are paid to fund managers from mutual fund assets.
PLAN TERMINATION. Although it has not expressed any intent to do so, the Company
has the right to terminate the Plan in whole or in part at any time for any
reason.
PLAN AMENDMENT. The Company may amend the Plan at any time for any reason by
written action of its Board of Directors. Amendments required to comply with
applicable legal requirements, however, may be made by The Retirement Committee
without Board approval.
VOTING RIGHTS OF UGI COMMON STOCK FUND PARTICIPANTS. A participant has the right
to instruct the trustee of the Plan how to vote, at each meeting of
shareholders, all shares of UGI Corporation Common Stock (including fractional
shares) represented by the value of the participant's interest in the UGI Common
Stock Fund. A participant also has the right to direct the trustee of the Plan
whether or not to tender shares in response to a tender offer.
2. ACCOUNTING POLICIES
The accompanying financial statements are prepared on the accrual basis of
accounting.
-13-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The Plan's investments in registered investment company mutual funds are valued
at quoted market prices, which represent the net asset value of shares held by
the Plan. Investment contracts included in the Fidelity Managed Income Portfolio
II fund, an unaffiliated commingled pool, are carried at contract value which
represents deposits plus accrued interest. The Plan Administrator believes
contract value approximates fair value. Shares of UGI Corporation Common Stock
included in the UGI Common Stock Fund are reflected at fair value based on
quoted market prices.
Dividend income is recorded on the record date. Interest earned on investments
is recorded on the accrual basis. Purchases and sales of securities are recorded
on a trade date basis.
The Plan presents in the Statement of Changes in Net Assets Available for
Benefits the net appreciation (depreciation) in fair value of investments which
consists of realized gains or losses and unrealized appreciation (depreciation)
in the fair value of those investments.
Distributions are made to Plan participants based upon the fair value of each
participant's investment account (except for investments of the Managed Income
Fund for which distributions are based upon contract value) as of the dates of
the distribution. Distributions to participants are recorded when paid.
Transfers of participant balances represent amounts transferred to or from the
AmeriGas Propane, Inc. Savings Plan and the UGI Utilities, Inc. Savings Plan,
affiliate plans.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Plan
Administrator to make estimates and assumptions that affect the reported amounts
of net assets available for benefits and changes therein. Actual results could
differ from these estimates.
-14-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRUST INVESTMENTS
The components of trust investments by fund at December 31, 2003 and 2002 are as
follows:
December 31,
2003 2002
---- ----
Fidelity Cash Reserves (shares -- 242,481 and 186,839, respectively) $ 242,481 $ 186,839
------------ ---------
Fidelity Managed Income Portfolio II (shares -- 101,216 and 42,161, respectively) 101,216 42,161
------------ ---------
Fidelity Intermediate Bond Fund (shares -- 8,941 and 6,261, respectively) 95,314 67,182
------------ ---------
Fidelity Capital & Income Fund (shares -- 16,625 and 13,267, respectively) 133,999 83,318
------------ ---------
Fidelity U.S. Bond Index Fund (shares -- 12,565 and 13,034, respectively) 140,607 146,503
------------ ---------
Fidelity Spartan U.S. Equity Index Fund (shares -- 4,611 and 3,750, respectively) 181,706 116,805
------------ ---------
Fidelity Equity Income Fund (shares -- 1,123 and 605, respectively) 55,860 24,005
------------ ---------
Fidelity Fund (shares -- 2,479 and 1,797, respectively) 69,621 40,005
------------ ---------
Fidelity Growth & Income Portfolio (shares -- 6,268 and 5,369, respectively) 223,328 162,738
------------ ---------
Fidelity Equity Income Fund II (shares -- 11,569 and 9,559, respectively) 263,533 166,236
------------ ---------
Fidelity Real Estate Investment Portfolio (shares --10,034 and 8,233, respectively) 237,898 151,401
------------ ---------
Fidelity Balanced Fund (shares -- 8,340 and 5,080, respectively) 139,688 67,512
------------ ---------
Fidelity Puritan Fund (shares -- 7,337 and 5,783, respectively) 135,516 91,306
------------ ---------
Fidelity Magellan Fund (shares -- 8,801 and 7,257, respectively) 860,167 * 573,028 *
------------ ---------
Fidelity Growth Company Fund (shares -- 11,669 and 10,667, respectively) 584,279 * 377,816 *
------------ ---------
Fidelity OTC Portfolio (shares -- 9,694 and 8,453, respectively) 314,766 202,104
------------ ---------
Fidelity Capital Appreciation Fund (shares -- 4,027 and 2,730, respectively) 98,713 44,166
------------ ---------
Fidelity Blue Chip Growth Fund (shares -- 16,347 and 13,924, respectively) 647,841 * 444,739 *
------------ ---------
Fidelity Low-Priced Stock Fund (shares -- 10,393 and 9,316, respectively) 363,536 234,490
------------ ---------
Fidelity Small Cap Independence Fund (shares -- 7,280 and 5,388, respectively) 130,602 71,658
------------ ---------
Fidelity Value Fund (shares -- 1,032 and 594, respectively) 64,044 27,577
------------ ---------
Fidelity Overseas Fund (shares -- 1,529 and 1,406, respectively) 48,069 30,931
------------ ---------
-15-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRUST INVESTMENTS (CONTINUED)
December 31,
2003 2002
---- ----
Fidelity Worldwide Fund (shares -- 6,882 and 6,311, respectively) 112,662 74,975
------------ -----------
Fidelity International Growth & Income Fund (shares -- 5,244 and 3,464, respectively) 125,432 58,257
------------ -----------
Fidelity Freedom Income Fund (shares -- 2,546 and 525, respectively) 28,236 5,569
------------ -----------
Fidelity Freedom 2000 Fund (shares -- 6,202 and 5,124, respectively) 73,063 56,419
------------ -----------
Fidelity Freedom 2010 Fund (shares -- 34,177 and 26,745, respectively) 444,981 * 305,962 *
------------ -----------
Fidelity Freedom 2020 Fund (shares -- 50,241 and 47,807, respectively) 654,132 * 508,664 *
------------ -----------
Fidelity Freedom 2030 Fund (shares -- 51,764 and 30,800, respectively) 670,348 * 315,392 *
------------ -----------
Fidelity Freedom 2040 Fund (shares -- 29,920 and 22,499, respectively) 226,192 131,843
------------ -----------
UGI Common Stock Fund
UGI Corporation Unitized Stock Fund (shares -- 8,544 in 2003) 112,010 -
Dividends receivable 860 -
------------ -----------
Total trust investments - fair value, except for group annuity contracts
included in the Fidelity Managed Income Portfolio II Fund
which are carried at contract value $ 7,580,700 $ 4,809,600
============ ===========
Total trust investments - cost $ 7,827,731 $ 6,428,730
============ ===========
* - Investment represents five percent or more of the net assets available for
benefits.
The net appreciation (depreciation) in fair value of investments during the
years ended December 31, 2003 and 2002 by major investment category follows:
Year Year
Ended Ended
December 31, December 31,
2003 2002
------------- ------------
Registered investment company mutual funds $ 1,351,620 $ (1,006,722)
UGI Common Stock Fund 14,538 -
------------- ------------
Total net appreciation (depreciation) in fair value $ 1,366,158 $ (1,006,722)
============ ============
-16-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
During the 2003 Plan Year the Plan purchased, at market prices, 1,585 shares of
UGI Corporation Common Stock directly from UGI Corporation for $49,053.
The investments of the separate investment funds are exposed to various risks
such as interest rate, market and credit risk. The degree and concentration of
these risks vary by fund. Due to the level of risk associated with the separate
investment funds, it is reasonably possible that changes in risk in the near
term could materially affect participants' account balances and the amounts
reported in the Statements of Net Assets Available for Benefits and the
Statements of Changes in Net Assets Available for Benefits.
4. FEDERAL INCOME TAX STATUS
On December 6, 2002, the Internal Revenue Service issued a favorable
determination letter concerning the qualified status of the Plan in effect as of
November 27, 2002 under Section 401(a) of the IRC. The Plan Administrator
believes that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC. No U.S. income taxes are required
to be paid by the trust created under the Plan (the "Trust") and participants
are not taxed on Employers' contributions to the Trust or income earned by the
Trust. When a participant, or his or her beneficiary or estate, receives a
distribution under the Plan, the taxability of the value of such distribution
depends on the form and time of payment.
-17-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
ITEM 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
--------------------------------------------------------
Number of
Shares or Fair Value/
Principal Contract
Name of Issuer and Title of Issue Amount Cost Value % (2)
- --------------------------------- --------- ---- ----------- -----
FIDELITY CASH RESERVES FUND (3) 242,481 shrs $ 242,481 $ 242,481 100.00%
---------- ----------- ------
FIDELITY MANAGED INCOME PORTFOLIO II FUND (3) 101,216 shrs 101,216 101,216 100.00%
---------- ----------- ------
FIDELITY INTERMEDIATE BOND FUND (3) 8,941 shrs 94,290 95,314 100.00%
---------- ----------- ------
FIDELITY CAPITAL & INCOME FUND (3) 16,625 shrs 118,554 133,999 100.00%
---------- ----------- ------
FIDELITY U.S. BOND INDEX FUND (3) 12,565 shrs 136,148 140,607 100.00%
---------- ----------- ------
FIDELITY SPARTAN U.S. EQUITY INDEX FUND (3) 4,611 shrs 192,754 181,706 100.00%
---------- ----------- ------
FIDELITY EQUITY INCOME FUND (3) 1,123 shrs 52,937 55,860 100.00%
---------- ----------- ------
FIDELITY FUND (3) 2,479 shrs 72,461 69,621 100.00%
---------- ----------- ------
FIDELITY GROWTH & INCOME PORTFOLIO (3) 6,268 shrs 245,486 223,328 100.00%
---------- ----------- ------
FIDELITY EQUITY INCOME II FUND (3) 11,569 shrs 271,516 263,533 100.00%
---------- ----------- ------
FIDELITY REAL ESTATE INVESTMENT PORTFOLIO (3) 10,034 shrs 191,081 237,898 100.00%
---------- ----------- ------
FIDELITY BALANCED FUND (3) 8,340 shrs 127,290 139,688 100.00%
---------- ----------- ------
FIDELITY PURITAN FUND (3) 7,337 shrs 130,888 135,516 100.00%
---------- ----------- ------
FIDELITY MAGELLAN FUND (1) (3) 8,801 shrs 951,995 860,167 100.00%
---------- ----------- ------
FIDELITY GROWTH COMPANY FUND (1) (3) 11,669 shrs 714,407 584,279 100.00%
---------- ----------- ------
FIDELITY OTC PORTFOLIO (3) 9,694 shrs 406,198 314,766 100.00%
---------- ----------- ------
FIDELITY CAPITAL APPRECIATION FUND (3) 4,027 shrs 80,251 98,713 100.00%
---------- ----------- ------
FIDELITY BLUE CHIP GROWTH FUND (1)(3) 16,347 shrs 750,290 647,841 100.00%
---------- ----------- ------
FIDELITY LOW-PRICED STOCK FUND (3) 10,393 shrs 262,377 363,536 100.00%
---------- ----------- ------
FIDELITY SMALL CAP INDEPENDENCE FUND 7,280 shrs 116,934 130,602 100.00%
---------- ----------- ------
FIDELITY VALUE FUND (3) 1,032 shrs 50,338 64,044 100.00%
---------- ----------- ------
FIDELITY OVERSEAS FUND (3) 1,529 shrs 48,991 48,069 100.00%
---------- ----------- ------
FIDELITY WORLDWIDE FUND (3) 6,882 shrs 114,053 112,662 100.00%
---------- ----------- ------
-18-
UGI HVAC ENTERPRISES, INC.
SAVINGS PLAN
Item 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) (CONTINUED)
December 31, 2003
--------------------------------------------------------
Number of
Shares or Fair Value/
Principal Contract
Name of Issuer and Title of Issue Amount Cost Value % (2)
- --------------------------------- --------- ---- ----------- -----
FIDELITY INTERNATIONAL GROWTH & INCOME FUND (3) 5,244 shrs 106,313 125,432 100.00%
---------- ----------- ------
FIDELITY FREEDOM INCOME FUND (3) 2,546 shrs 28,167 28,236 100.00%
---------- ----------- ------
FIDELITY FREEDOM 2000 FUND (3) 6,202 shrs 75,290 73,063 100.00%
---------- ----------- ------
FIDELITY FREEDOM 2010 FUND (1) (3) 34,177 shrs 456,217 444,981 100.00%
---------- ----------- ------
FIDELITY FREEDOM 2020 FUND (1) (3) 50,241 shrs 696,170 654,132 100.00%
---------- ----------- ------
FIDELITY FREEDOM 2030 FUND (1) (3) 51,764 shrs 665,539 670,348 100.00%
---------- ----------- ------
FIDELITY FREEDOM 2040 FUND (3) 29,920 shrs 228,910 226,192 100.00%
---------- ----------- ------
UGI COMMON STOCK FUND (3)
UGI Corporation Unitized Stock Fund 8,544 units 97,328 112,010 100.00%
------
Dividends receivable $ 860 860 860
---------- -----------
98,188 112,870
PARTICIPANT LOANS
Loan principal outstanding (5.00 % - 10.50 %) (3)(4) - 186,402 100.00%
---------- ----------- ------
Total - all funds $7,827,731 $ 7,767,102
========== ===========
(1) Investment represents 5% or more of the net assets available for benefits.
(2) Percentages represent percentage of fair value of each fund.
(3) Party in interest.
(4) Range of interest rates for loans outstanding as of December 31, 2003.
-19-
UGI UTILITIES, INC.
SAVINGS PLAN
EIN #23-1174060 PLAN NUMBER 008
FINANCIAL STATEMENTS
for the years ended December 31, 2003 and 2002
UGI UTILITIES, INC.
SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
Page(s)
--------
Reports of Independent Auditors 2 to 3
Financial Statements:
Statements of Net Assets Available for Benefits at
December 31, 2003 and 2002 4
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 2003 and 2002 5
Notes to Financial Statements 6 to 18
Item 4(i) - Schedule of Assets (Held at End of Year) 19 to 20
All other schedules to be filed with the Department of Labor in accordance with
the Employee Retirement Income Security Act of 1974 are not applicable and have
been omitted
-1-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
UGI Utilities, Inc. Savings Plan
We have audited the accompanying statement of net assets available for benefits
of UGI Utilities, Inc. Savings Plan as of December 31, 2003, and the related
statement of changes in net assets available for benefits for the year then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of UGI Utilities,
Inc. Savings Plan as of December 31, 2003, and changes in its net assets
available for benefits for the year then ended, in conformity with accounting
principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at end of year is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Cogen Sklar LLP
Bala Cynwyd, Pennsylvania
June 17, 2004
-2-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
UGI Utilities, Inc. Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of UGI Utilities, Inc. Savings Plan (the "Plan") at December 31, 2002, and the
changes in net assets available for benefits for the year ended December 31,
2002 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
June 23, 2003
-3-
UGI UTILITIES, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
---------------------------------
2003 2002
-------------- -------------
Investments (Note 3) $ 71,424,505 $ 54,121,195
Loans to participants 2,032,114 1,605,663
Employers' contributions receivable 1,401,005 1,313,094
-------------- -------------
Net assets available for benefits $ 74,857,624 $ 57,039,952
============== =============
See accompanying notes to financial statements.
-4-
UGI UTILITIES, INC.
SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31,
2003 2002
------------- -------------
Participants' contributions $ 4,587,043 $ 4,339,074
Rollover contributions 206,130 54,826
Employers' contributions 1,401,005 1,313,094
Investment income (loss):
Dividends 1,554,924 1,237,263
Net appreciation (depreciation) in value of investments 11,429,214 (8,409,768)
Other, primarily interest on loans 108,572 122,806
Net transfers of participants' balances 81,857 (66,839)
Distributions to participants (1,551,073) (2,806,158)
------------- -------------
Net increase (decrease) 17,817,672 (4,215,702)
Net assets available for benefits - beginning of year 57,039,952 61,255,654
------------- -------------
Net assets available for benefits - end of year $ 74,857,624 $ 57,039,952
============= =============
See accompanying notes to financial statements.
-5-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following brief description of the UGI Utilities, Inc. Savings Plan (the
Plan) provides general information on the provisions of the Plan in effect on
December 31, 2003 and during the periods covered by the financial statements.
More complete information is included in the Plan document.
GENERAL. The Plan is a defined contribution plan covering employees of UGI
Utilities, Inc. (UGI Utilities), its holding company parent UGI Corporation
(UGI), and certain affiliated companies (collectively, the Employers). Employees
of the Employers are eligible upon hire to participate in the Plan. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan is administered by the UGI Utilities, Inc. Retirement
Committee (Plan Administrator) whose members are appointed by the Board of
Directors of UGI Utilities.
CONTRIBUTIONS. A participant may elect to contribute to the Plan on a before-tax
basis through payroll reduction an amount equal to from 1% to 50%, in whole
percentages, of eligible compensation. In addition, a participant may elect to
contribute to the Plan on an after-tax basis through payroll deduction an amount
equal to from 1% to 6%, in whole percentages, of eligible compensation, provided
that the combination of before-tax and after-tax contributions does not exceed
50% of eligible compensation. Calendar year before-tax and after-tax
contribution amounts are subject to limits prescribed by the Internal Revenue
Code (IRC) and the Plan, respectively. For the 2003 and 2002 Plan Years, the IRC
before-tax contribution limits were $12,000 and $11,000, respectively. For each
of the 2003 and 2002 Plan Years, the after-tax contribution limit set by the
Plan was $12,000. A participant may increase the rate of, or reduce or suspend
his or her before-tax or after-tax contributions at any time by contacting
Fidelity Institutional Retirement Services Co. (FIRSCO).
The Plan allows for "catch-up contributions." The catch-up contribution
provision allows certain employees to make before-tax contributions over and
above the IRS and Plan limits. In order to be eligible to make catch-up
contributions, employees must be at least 50 years of age and must be
contributing the IRC or Plan limit. The maximum catch-up contribution for the
2003 and 2002 Plan Years was $2,000 and $1,000, respectively, which amount shall
increase $1,000 per year through 2006. Catch-up contributions are not eligible
for the Employers' matching contribution (as described below).
A participant will at all times be fully (100%) vested in the portion of his or
her account attributable to participant contributions.
The Plan also accepts on behalf of any employee (i) the entire amount of cash
received as a distribution from another qualified trust forming part of a plan
described in section 401(a) of the IRC or from a "rollover" individual
retirement plan described in section 408 of the IRC, but only if the deposit
qualifies as a tax-free rollover as defined in section 402 or (ii) a direct
transfer from another plan qualified under Section 401(a) of the IRC. The Plan
accepts after-tax rollover contributions.
For each Plan Year, each of the Employers may, at their discretion, make a
contribution to the Plan equal to a percentage of participant before-tax and
after-tax contributions, up to a total of 6% of compensation (as defined in the
Plan document) for each eligible participant. In order to be entitled to the
Employers' contribution, a participant must either (i) be actively employed by
any of the
-6-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Employers, or on an excused leave of absence (as defined in the Plan document)
on the last day of the Plan year or (ii) have retired, become disabled (as
defined in the Plan), or died while an employee during the Plan year. Employers'
contributions for the 2003 Plan Year and the 2002 Plan Year, which were made in
January 2004 and January 2003, respectively, were invested in accordance with
participant investment elections in effect on the dates of the contributions.
A participant is fully vested in the portion of his or her account attributable
to Employers' matching contributions as follows: 25% after two years of service;
50% after three years of service; 75% after four years of service; and 100%
after five years of service. In addition, a participant is fully vested in the
portion of his or her account attributable to Company contributions upon the
attainment of normal retirement age (as defined in the Plan document), total
disability (as defined by the Plan document) or death while in the employ of the
Employers or an affiliated company. For Plan purposes, a participant will attain
normal retirement age on the later of his or her 65th birthday or the fifth
anniversary of his or her date of hire.
A participant who terminates employment before he or she is vested will forfeit
nonvested amounts attributable to the Employers' contributions. These forfeited
amounts remain in the Plan and are available to reduce future Employer
contributions. In the 2003 and 2002 Plan Years, forfeitures of $11,785 and
$19,082, respectively, were used to reduce the Employers' contributions. During
the 2003 Plan Year and the 2002 Plan Year, $11,787 and $29,742, respectively,
were forfeited from participants' accounts. As of December 31, 2003 and 2002,
there were $17,642 and $17,438, respectively, of forfeitures remaining in the
Plan.
INVESTMENT FUNDS. A participant may elect to have his or her funds invested in
one or more investment funds. Generally, participants may transfer amounts
between funds at any time with no limit. Participants may change their
investment elections for future contributions at any time. Fidelity Management
Trust Company is the Plan's trustee for all investment assets of the Plan.
References to "Fidelity" below refer to investment funds managed by Fidelity
Management and Research Company (FMR). Following are brief descriptions of the
investment options available to participants and the strategies and objectives
of each fund.
Money Market Fund
- - Fidelity Cash Reserves Fund
This fund is an unaffiliated registered investment company mutual fund that
invests in U.S. dollar-denominated money market securities and repurchase
agreements, and may enter into reverse repurchase agreements. The fund's
objective is to provide as high a level of current income as is consistent with
the preservation of capital and liquidity.
Managed Income Fund
- - Fidelity Managed Income Portfolio II Fund
This fund is an unaffiliated commingled pool whose investments principally
comprise investment contracts issued by insurance companies and financial
institutions and certain types
-7-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
of fixed income securities. The fund's objective is to preserve principal while
earning interest income.
Income Funds
- - Fidelity Intermediate Bond Fund
This fund is an unaffiliated registered investment company mutual fund which
normally invests in investment-grade bonds while normally maintaining a
dollar-weighted average maturity between three and ten years. The fund's
objective is to provide a high level of current income.
- - Fidelity Capital & Income Fund
This fund is an unaffiliated registered investment company mutual fund that
invests mainly in equity and debt securities, including defaulted securities,
with an emphasis on lower-quality debt securities. The fund invests in companies
in troubled or uncertain financial condition and in domestic and foreign
issuers. The fund's objective is to provide income and capital growth.
- - Fidelity U.S. Bond Index Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in bonds included in the Lehman Brothers Aggregate Bond
Index. The fund's objective is to provide investment results that correspond to
the total returns of bonds in the Lehman Brothers Aggregate Bond Index.
-8-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Balanced Funds
- - Fidelity Balanced Fund - Fidelity Puritan Fund
These funds are unaffiliated registered investment company mutual funds that
invest in stocks and other equity securities and in bonds and other debt
securities. The funds seek income and capital growth.
Growth and Income Funds
- - Fidelity Spartan U.S. Equity Index Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks included in the Standard and Poor's 500
Index (S&P 500) a widely recognized, unmanaged index of 500 U.S. common stocks.
The fund's objective is to match the total return of the S&P 500.
- - Fidelity Equity Income Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in income-producing equity securities. The fund's objective
is to provide reasonable income while considering the potential for capital
appreciation.
- - Fidelity Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks. The fund may also invest a portion of
assets in bonds, including lower-quality debt securities. The fund seeks
long-term capital growth.
- - Fidelity Growth & Income Portfolio
This fund is an unaffiliated registered investment company mutual fund that
normally invests a majority of total assets in common stocks with a focus on
those that pay current dividends and show potential for capital appreciation.
The fund may also invest in bonds. The fund seeks high total return through a
combination of current income and capital appreciation.
- - Fidelity Equity Income II Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in income-producing equity securities. The fund seeks
reasonable income and the potential for capital appreciation.
-9-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
- - Fidelity Real Estate Investment Portfolio
This fund is an unaffiliated registered investment company mutual fund that
principally invests in equity securities of companies principally engaged in the
real estate industry. The fund seeks above-average income and long-term capital
growth consistent with reasonable risk.
Growth Funds
- - Fidelity Magellan Fund
This fund is an unaffiliated registered investment company mutual fund that
invests primarily in common stocks of domestic and foreign issuers. The fund
seeks capital appreciation.
- - Fidelity Growth Company Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers that are
expected to have above-average growth potential. The fund seeks capital
appreciation.
- - Fidelity OTC Portfolio
This fund is an unaffiliated registered investment company mutual fund that
principally invests in securities traded on the over-the-counter (OTC) market.
The fund seeks capital appreciation.
- - Fidelity Capital Appreciation Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers. The fund
seeks capital appreciation.
- - Fidelity Blue Chip Growth Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of well-known and established companies.
The fund invests in securities of domestic and foreign issuers. The fund seeks
growth of capital over the long term.
- - Fidelity Low-Priced Stock Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in low-priced common stocks. The fund seeks capital
appreciation.
-10-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
- - Fidelity Small Cap Independence Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers with small
market capitalizations. The fund seeks capital appreciation.
- - Fidelity Value Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of companies that possess valuable fixed
assets or that are believed to be undervalued in relation to the issuing
company's assets, earnings, or growth potential. The fund seeks capital
appreciation.
International Funds
- - Fidelity Overseas Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in foreign securities. The fund invests primarily in common
stocks and seeks long-term growth of capital.
- - Fidelity Worldwide Fund
This fund is an unaffiliated registered investment company mutual fund that
invests primarily in common stocks issued anywhere in the world. The fund seeks
growth of capital.
- - Fidelity International Growth & Income Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in foreign securities including common stocks with a focus
on those that pay current dividends and have the potential for capital
appreciation. The fund seeks capital growth and current income.
Fidelity Freedom Funds
- - Fidelity Freedom Income Fund - Fidelity Freedom 2020 Fund
- - Fidelity Freedom 2000 Fund - Fidelity Freedom 2030 Fund
- - Fidelity Freedom 2010 Fund - Fidelity Freedom 2040 Fund
These funds are unaffiliated registered investment company mutual funds that
invest in a combination of underlying Fidelity funds according to an asset
allocation strategy that becomes increasingly conservative over time as each
fund's target retirement date approaches. When each of these target retirement
date funds matches the asset allocation of the Fidelity Freedom Income fund
(approximately five to ten years after the respective fund's target retirement
date), it is expected that each fund will be combined with the Fidelity Freedom
Income Fund. These funds' investment objectives are to achieve high current
income and capital appreciation.
-11-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Employer Stock Fund
- - UGI Common Stock Fund
This fund invests principally in shares of UGI Corporation Common Stock.
Participants in the fund do not individually own specific shares of UGI
Corporation Common Stock but rather own units in the fund that invests in such
shares and short-term investments. The value of a unit in the UGI Common Stock
Fund was initially set at $10.00 and is recalculated daily by dividing the fair
value of the fund's assets (comprising shares of UGI Corporation Common Stock
and temporary cash investments) by the total number of units outstanding.
Generally, participant requests to redeem units from the UGI Common Stock Fund
are processed on the day received if such request is received by Fidelity before
the close of the New York Stock Exchange and provided that there are sufficient
short-term investments in the fund for liquidity. In such case, the participant
will receive the net asset value, or closing price for the units, calculated
using the closing price for UGI Corporation Common Stock on the New York Stock
Exchange for that day. However, on days of unusually heavy requests for sale,
the UGI Common Stock Fund may not have sufficient short-term investments for
liquidity. In such case, requests to sell units received before the close of the
New York Stock Exchange may not be processed on that day at that date's closing
price but may be suspended until sufficient liquidity is restored. Units will be
redeemed generally on a first-in, first-out basis at the closing price for the
processing date. Loans, withdrawals and distributions from the UGI Common Stock
Fund will be given priority over exchanges with other funds. During the 2002
Plan Year, the UGI Common Stock Fund increased its temporary cash investments
from 2% to 3% of total assets to mitigate the potential need to defer
redemptions.
DISTRIBUTIONS. The Plan benefit of a participant who terminates employment as a
result of retirement or total disability, as defined by the Plan document, shall
be equal to the proceeds of liquidation of 100% of the balance of his or her
account. Participants may elect to receive their interest in the UGI Common
Stock Fund in the form of shares of UGI Corporation Common Stock. The Plan
benefit of a participant who terminates employment for reasons other than
retirement or total disability shall be equal to the proceeds of liquidation of
the vested portion of his or her account. Where the amount to be distributed
exceeds $5,000, no distribution shall be made to any Plan participant prior to
his or her normal retirement age (as defined in the Plan document) unless the
participant elects to receive such distribution. Where the amount to be
distributed does not exceed $5,000, a Plan participant's benefit will be
distributed as soon as practicable after the participant becomes entitled to
receive a distribution.
A participant who continues to work past age 70-1/2 will receive a distribution
upon termination of employment.
DEATH. If a participant dies prior to receiving a distribution of his or her
account, the participant's designated beneficiary shall be entitled to receive a
lump-sum distribution of the proceeds of liquidation of 100% of the vested
portion of his or her account. Generally, the beneficiary may request a
distribution of the participant's account balance as soon as practicable
following the date of the participant's death. The beneficiary of a participant
who is married at the time of the participant's death will be the participant's
spouse, unless the participant designated another beneficiary and the spouse
consented to such designation in accordance with procedures specified by the
Plan document.
-12-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
WITHDRAWALS. Generally, a participant may withdraw up to 50% of the balance of
his or her account attributable to after-tax contributions (including after-tax
contributions that were matched by the Employer) at any time. However, the
withdrawal must be in an amount of at least $250. If any portion of the amount
withdrawn is attributable to contributions that were matched by the Employers,
the participant's participation in the Plan will be suspended for the
three-month period following the withdrawal. No more than one withdrawal in any
calendar year is permitted from each of the matched and unmatched portions of a
participant's after-tax contribution account.
A participant may withdraw before-tax contributions (and earnings attributable
thereto credited as of December 31, 1988) and rollover contributions, only on
account of financial hardship resulting from (i) medical expenses as defined in
section 213(d) of the IRC; (ii) educational expenses for the next twelve months
of post-secondary education of the participant, or his or her spouse, children
or dependents; (iii) foreclosure on a primary residence; or (iv) costs directly
related to the purchase of a primary residence. A hardship withdrawal will be
permitted if the Plan Administrator determines that (i) the withdrawal is on
account of an immediate and heavy financial need of the participant and (ii) the
withdrawal is necessary to satisfy such financial need. A participant's
participation in the Plan is suspended for the six-month period following a
hardship withdrawal.
While a participant is still employed by any of the Employers, withdrawals of
amounts attributable to Employer's contributions and post-1988 earnings on
participant before-tax contributions, are not permitted.
LOAN PROVISION. The Plan includes an employee loan provision. Generally, at the
time a loan is to be made, the amount of all loans to be outstanding may not
exceed the lesser of (i) 50% of a participant's before-tax and rollover account
balances, or (ii) $50,000 less the highest balance of any loan during the prior
twelve-month period. Each loan bears interest at a rate determined in accordance
with generally prevailing market conditions for similar types of loans. The
minimum loan amount is $1,000. The amount of the loan withdrawn from a
participant's account is allocated in proportion to the value of the
participant's salary deferral and rollover account balances in each investment
fund. Repayments, including interest, are made in equal installments through
payroll deductions and are allocated to participant accounts in accordance with
current investment elections. No loan may have a final maturity in excess of
five years except that, if the loan is used to purchase a principal residence
for the participant, the loan may have a final maturity of up to ten years. No
participant shall be permitted to have more than two loans outstanding at any
one time.
-13-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
ADMINISTRATIVE EXPENSES. Administrative expenses of the Plan are chargeable to
the Plan unless paid for by the Employers. The Employers currently pay such
expenses. Loan administration and withdrawal fees are paid by participants.
Mutual fund expenses are paid to fund managers from mutual fund assets.
PLAN TERMINATION. Although it has not expressed any intent to do so, UGI
Utilities has the right to terminate the Plan in whole or in part at any time
for any reason. In the event of a complete or partial termination of the Plan,
the affected participants will become fully vested in their account balances.
PLAN AMENDMENT. UGI Utilities may amend the Plan at any time for any reason by
written action of its Board of Directors. Amendments required to comply with the
IRC to maintain compliance with current laws or regulations or to correct errors
or omissions in the Plan document, however, may be made by the Retirement
Committee without Board approval.
VOTING RIGHTS OF UGI COMMON STOCK FUND PARTICIPANTS. A participant has the right
to instruct the trustee of the Plan how to vote, at each meeting of
shareholders, all shares of UGI Corporation Common Stock (including fractional
shares) represented by the value of the participant's interest in the UGI Common
Stock Fund. A participant also has the right to direct the trustee of the Plan
whether or not to tender shares in response to a tender offer.
2. ACCOUNTING POLICIES
The accompanying financial statements are prepared on the accrual basis of
accounting.
The Plan's investments in registered investment company mutual funds are valued
at quoted market prices which represent the net asset value of shares held by
the Plan. Investment contracts included in the Fidelity Managed Income Portfolio
II fund, an unaffiliated commingled pool, are carried at contract value which
represents deposits plus accrued interest. The Plan Administrator believes
contract value approximates fair value. Shares of UGI Common Stock included in
the UGI Common Stock Fund are reflected at fair value based upon quoted market
prices.
Dividend income is recorded on the record date. Interest earned on investments
is recorded on the accrual basis. Purchases and sales of securities are recorded
on a trade date basis.
The Plan presents in the Statements of Changes in Net Assets Available for
Benefits the net appreciation (depreciation) in fair value of investments which
consists of realized gains or losses and unrealized appreciation (depreciation)
in the fair value of those investments.
Distributions are made to Plan participants based upon the fair value of each
participant's investment account (except for investments of the Managed Income
Fund for which distributions are based upon contract value) as of the dates of
the distribution. Distributions to participants are recorded when paid.
Transfers of participant balances represent amounts transferred to or from the
AmeriGas Propane, Inc. Savings Plan and the UGI HVAC Enterprises, Inc. Savings
Plan, affiliate plans.
-14-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Plan Administrator to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits and changes therein. Actual results could differ from
these estimates.
-15-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRUST INVESTMENTS
The components of trust investments by fund at December 31, 2003 and 2002 are as
follows:
December 31,
2003 2002
-------------- ------------
Fidelity Cash Reserves Fund (shares -- 3,781,926 and 3,539,954, respectively) $ 3,781,926 * $ 3,539,954 *
------------- ------------
Fidelity Managed Income Portfolio II Fund (shares -- 11,548,528 and
9,936,543, respectively) 11,548,528 * 9,936,543 *
------------- ------------
Fidelity Intermediate Bond Fund (shares -- 128,626 and 110,560, respectively) 1,371,150 1,186,305
------------- ------------
Fidelity Capital & Income Fund ( shares -- 51,054 and 22,902, respectively) 411,496 143,827
------------- ------------
Fidelity U.S. Bond Index Fund (shares -- 77,474 and 66,454, respectively) 866,930 746,938
------------- ------------
Fidelity Balanced Fund (shares -- 17,532 and 17,376, respectively) 293,660 230,924
------------- ------------
Fidelity Puritan Fund (shares -- 24,290 and 17,242, respectively) 448,629 272,255
------------- ------------
Fidelity Spartan U.S. Equity Index Fund (shares -- 75,279 and 63,353, respectively) 2,966,741 1,973,458
------------- ------------
Fidelity Equity Income Fund (shares -- 206,984 and 194,262, respectively) 10,297,436 * 7,706,386 *
------------- ------------
Fidelity Fund (shares -- 62,120 and 61,191, respectively) 1,744,317 1,362,123
------------- ------------
Fidelity Growth & Income Portfolio (shares -- 13,285 and 10,204, respectively) 473,341 309,277
------------- ------------
Fidelity Equity Income II Fund (shares -- 28,002 and 10,202, respectively) 637,877 177,409
------------- ------------
Fidelity Real Estate Investment Portfolio (shares -- 26,340 and 21,230, respectively) 624,515 390,413
------------- ------------
Fidelity Magellan Fund (shares -- 167,677 and 163,165, respectively) 16,388,791 * 12,883,530 *
------------- ------------
Fidelity Growth Company Fund (shares -- 65,456 and 61,493, respectively) 3,277,261 2,178,077
------------- ------------
Fidelity OTC Portfolio (shares -- 31,161 and 33,969, respectively) 1,011,812 812,209
------------- ------------
Fidelity Capital Appreciation Fund (shares -- 16,382 and 6,488, respectively) 401,520 104,980
------------- ------------
Fidelity Blue Chip Growth Fund (shares -- 28,264 and 26,037, respectively) 1,120,111 831,633
------------- ------------
Fidelity Low-Priced Stock Fund (shares -- 40,019 and 33,670, respectively) 1,399,875 847,478
------------- ------------
Fidelity Small Cap Independence Fund (shares -- 21,522 and 18,325, respectively) 386,105 243,723
------------- ------------
Fidelity Value Fund (shares -- 13,137 and 11,591, respectively) 815,442 537,723
------------- ------------
-16-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRUST INVESTMENTS (CONTINUED)
December 31,
2003 2002
------------ ------------
Fidelity Overseas Fund (shares -- 28,763 and 24,353, respectively) 904,021 535,772
------------ ------------
Fidelity Worldwide Fund (shares -- 12,917 and 8,607, respectively) 211,453 102,256
------------ ------------
Fidelity International Growth & Income Fund (shares -- 10,469 and 7,861, respectively) 250,425 132,226
------------ ------------
Fidelity Freedom Income Fund (shares -- 7,148 and 3,891, respectively) 79,268 41,245
------------ ------------
Fidelity Freedom 2000 Fund (shares -- 7,039 and 5,471, respectively) 82,915 60,234
------------ ------------
Fidelity Freedom 2010 Fund (shares -- 76,780 and 53,029, respectively) 999,678 606,650
------------ ------------
Fidelity Freedom 2020 Fund (shares -- 54,644 and 46,672, respectively) 711,461 496,585
------------ ------------
Fidelity Freedom 2030 Fund (shares -- 17,883 and 19,224, respectively) 231,588 196,858
------------ ------------
Fidelity Freedom 2040 Fund (shares -- 5,445 and 3,256, respectively) 41,161 19,078
------------ ------------
UGI Common Stock Fund
UGI Corporation Unitized Stock Fund (units -- 354,193 and 345,352,
respectively) 7,579,722 * 5,456,559 *
Dividends receivable 65,350 58,567
------------ ------------
7,645,072 5,515,126
------------ ------------
Total trust investments - fair value, except for group annuity contracts
included in the Fidelity Managed Income Portfolio II Fund
which are carried at contract value $ 71,424,505 $ 54,121,195
============ ============
Total trust investments - cost $ 67,483,984 $ 61,857,272
============ ============
* - Investment represents five percent or more of the net assets available for
benefits.
The net appreciation (depreciation) in fair value of investments during the
years ended December 31, 2003 and 2002 by major investment category follows:
Year Year
Ended Ended
December 31, December 31,
2003 2002
--------------- --------------
Registered investment company mutual funds $ 9,349,586 $ (9,386,100)
UGI Common Stock Fund 2,079,628 976,332
------------ ------------
Total net appreciation (depreciation) in fair value $ 11,429,214 $ (8,409,768)
============ ============
-17-
UGI UTILITIES, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
During the 2003 Plan Year and the 2002 Plan Year, the Plan purchased, at market
prices, 15,465 and 11,763 shares of UGI Corporation Common Stock directly from
UGI Corporation for $464,480 and $250,364, respectively.
The investments of the separate investment funds are exposed to various risks
such as interest rate, market and credit risk. The degree and concentration of
these risks vary by fund. Due to the level of risk associated with the separate
investment funds, it is reasonably possible that changes in risk in the near
term could materially affect participants' account balances and the amounts
reported in the Statements of Net Assets Available for Benefits and the
Statements of Changes in Net Assets Available for Benefits.
4. FEDERAL INCOME TAX STATUS
On December 6, 2002, the Internal Revenue Service issued a favorable
determination letter concerning the qualified status of the Plan in effect as of
November 27, 2002 under Section 401(a) of the IRC. The Plan Administrator
believes that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC. No U.S. income taxes are required
to be paid by the trust created under the Plan (the Trust) and participants are
not taxed on Employers' contributions to the Trust or income earned by the
Trust. When a participant, or his or her beneficiary or estate, receives a
distribution under the Plan, the taxability of the value of such distribution
depends on the form and time of payment.
-18-
UGI UTILITIES, INC. SAVINGS PLAN
ITEM 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
-----------------------------------------------------------------------
Number of
Shares or Fair Value /
Principal Contract
NAME OF ISSUER AND TITLE OF ISSUE Amount Cost Value % (2)
- --------------------------------- ------------------- -------------- ------------ ------
FIDELITY CASH RESERVES FUND (1) (3) 3,781,926 shrs $ 3,781,926 $ 3,781,926 100.00%
-------------- ------------ ------
FIDELITY MANAGED INCOME PORTFOLIO II FUND (1) (3) 11,548,528 shrs 11,548,528 11,548,528 100.00%
-------------- ------------ ------
FIDELITY INTERMEDIATE BOND FUND (3) 128,626 shrs 1,334,786 1,371,150 100.00%
-------------- ------------ ------
FIDELITY CAPITAL & INCOME FUND (3) 51,054 shrs 399,848 411,496 100.00%
-------------- ------------ ------
FIDELITY U.S. BOND INDEX FUND (3) 77,474 shrs 853,144 866,930 100.00%
-------------- ------------ ------
FIDELITY BALANCED FUND (3) 17,532 shrs 260,043 293,660 100.00%
-------------- ------------ ------
FIDELITY PURITAN FUND (3) 24,290 shrs 420,814 448,629 100.00%
-------------- ------------ ------
FIDELITY SPARTAN U.S. EQUITY INDEX FUND (3) 75,279 shrs 2,876,102 2,966,741 100.00%
-------------- ------------ ------
FIDELITY EQUITY INCOME FUND (1) (3) 206,984 shrs 9,182,568 10,297,436 100.00%
-------------- ------------ ------
FIDELITY FUND (3) 62,120 shrs 1,938,423 1,744,317 100.00%
-------------- ------------ ------
FIDELITY GROWTH & INCOME PORTFOLIO (3) 13,285 shrs 495,508 473,341 100.00%
-------------- ------------ ------
FIDELITY EQUITY INCOME II FUND (3) 28,002 shrs 575,279 637,877 100.00%
-------------- ------------ ------
FIDELITY REAL ESTATE INVESTMENT PORTFOLIO (3) 26,340 shrs 501,461 624,515 100.00%
-------------- ------------ ------
FIDELITY MAGELLAN FUND (1) (3) 167,677 shrs 16,162,907 16,388,791 100.00%
-------------- ------------ ------
FIDELITY GROWTH COMPANY FUND (3) 65,456 shrs 3,995,927 3,277,261 100.00%
-------------- ------------ ------
FIDELITY OTC PORTFOLIO (3) 31,161 shrs 1,508,611 1,011,812 100.00%
-------------- ------------ ------
FIDELITY CAPITAL APPRECIATION FUND (3) 16,382 shrs 348,239 401,520 100.00%
-------------- ------------ ------
FIDELITY BLUE CHIP GROWTH FUND (3) 28,264 shrs 1,278,280 1,120,111 100.00%
-------------- ------------ ------
FIDELITY LOW-PRICED STOCK FUND (3) 40,019 shrs 1,145,902 1,399,875 100.00%
-------------- ------------ ------
FIDELITY SMALL CAP INDEPENDENCE FUND (3) 21,522 shrs 338,981 386,105 100.00%
-------------- ------------ ------
FIDELITY VALUE FUND (3) 13,137 shrs 672,211 815,442 100.00%
-------------- ------------ ------
FIDELITY OVERSEAS FUND (3) 28,763 shrs 941,321 904,021 100.00%
-------------- ------------ ------
-19-
UGI UTILITIES, INC. SAVINGS PLAN
ITEM 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) (CONTINUED)
December 31, 2003
-----------------------------------------------------------------------
Number of
Shares or Fair Value /
Principal Contract
NAME OF ISSUER AND TITLE OF ISSUE Amount Cost Value % (2)
- --------------------------------- ------------------- -------------- ------------ ------
FIDELITY WORLDWIDE FUND (3) 12,917 shrs 195,594 211,453 100.00%
-------------- ------------ ------
FIDELITY INTERNATIONAL GROWTH & INCOME FUND (3) 10,469 shrs 223,629 250,425 100.00%
-------------- ------------ ------
FIDELITY FREEDOM INCOME FUND (3) 7,148 shrs 78,963 79,268 100.00%
-------------- ------------ ------
FIDELITY FREEDOM 2000 FUND (3) 7,039 shrs 87,257 82,915 100.00%
-------------- ------------ ------
FIDELITY FREEDOM 2010 FUND (3) 76,780 shrs 992,225 999,678 100.00%
-------------- ------------ ------
FIDELITY FREEDOM 2020 FUND (3) 54,644 shrs 721,424 711,461 100.00%
-------------- ------------ ------
FIDELITY FREEDOM 2030 FUND (3) 17,883 shrs 250,194 231,588 100.00%
-------------- ------------ ------
FIDELITY FREEDOM 2040 FUND (3) 5,445 shrs 36,180 41,161 100.00%
-------------- ------------ ------
UGI COMMON STOCK FUND (1) (3)
UGI Corporation Unitized Stock Fund 354,193 units 4,272,359 7,579,722 99.15%
Dividends receivable $ 65,350 65,350 65,350 0.85%
-------------- ------------ ------
4,337,709 7,645,072 100.00%
-------------- ------------ ------
PARTICIPANT LOANS
Loan principal outstanding (3)(4) - 2,032,114 100.00%
-------------- ------------ ------
Total - all funds $ 67,483,984 $ 73,456,619
============== ============
(1) Investment represents 5% or more of the net assets available for benefits.
(2) Percentages represent percentage of fair value of each fund.
(3) Party in interest.
(4) Interest rates on loans outstanding as of December 31, 2003 range from 5.00%
to 10.50%.
-20-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
EIN #23-2786294 PLAN NUMBER 002
FINANCIAL STATEMENTS
for the years ended December 31, 2003 and 2002
AMERIGAS PROPANE, INC.
SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
Page(s)
-------
Report of Independent Auditors 2 - 3
Financial Statements:
Statements of Net Assets Available for Benefits at
December 31, 2003 and 2002 4
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 2003 and 2002 5
Notes to Financial Statements 6 - 19
Item 4(i) - Schedule of Assets (Held at End of Year) 20 - 21
All other schedules to be filed with the Department of Labor in accordance with
the Employee Retirement Income Security Act of 1974 are not applicable and have
been omitted.
-1-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
AmeriGas Propane, Inc. Savings Plan
We have audited the accompanying statement of net assets available for benefits
of AmeriGas Propane, Inc. Savings Plan as of December 31, 2003, and the related
statement of changes in net assets available for benefits for the year then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of AmeriGas
Propane, Inc. Savings Plan as of December 31, 2003, and changes in its net
assets available for benefits for the year then ended, in conformity with
accounting principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at end of year is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Cogen Sklar LLP
Bala Cynwyd, Pennsylvania
June 17, 2004
-2-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
AmeriGas Propane, Inc. Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of AmeriGas Propane, Inc. Savings Plan (the "Plan") at December 31, 2002, and
the changes in net assets available for benefits for the year ended December 31,
2002 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
June 20, 2003
-3-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
2003 2002
------------------ -----------------
Investments (Note 3) $ 166,719,629 $ 137,724,658
Loans to participants 4,118,818 4,043,552
------------------ -----------------
Net assets available for benefits $ 170,838,447 $ 141,768,210
================== =================
See accompanying notes to financial statements.
-4-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31,
2003 2002
-------------------- -----------------
Participants' contributions $ 9,304,430 $ 8,904,183
Participants' rollover contributions 497,305 488,335
Company contributions 5,996,318 2,935,432
Investment income (loss):
Dividends 3,444,863 2,954,612
Net appreciation (depreciation) in value of investments 24,758,756 (21,004,618)
Administration fees (39,148) (36,661)
Other, primarily interest on loans 262,588 306,588
Net transfers of participants' balances (81,857) 61,592
Distributions to participants (15,073,018) (10,861,076)
-------------------- -----------------
Net increase (decrease) 29,070,237 (16,251,613)
Net assets available for benefits - beginning of year 141,768,210 158,019,823
-------------------- -----------------
Net assets available for benefits - end of year $ 170,838,447 $ 141,768,210
==================== =================
See accompanying notes to financial statements.
-5-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following brief description of the AmeriGas Propane, Inc. Savings Plan
(Plan) provides general information on the provisions of the Plan in effect on
December 31, 2003 and during the periods covered by the financial statements.
More complete information is included in the Plan document.
GENERAL. The Plan is a defined contribution plan covering employees of AmeriGas
Propane, Inc. (a Pennsylvania corporation, hereinafter referred to as "the
Company"). Employees are eligible upon hire to participate in the Plan. The Plan
also holds assets of certain defined contribution pension plans that were
terminated in prior years and were merged into the Plan. Such assets include
what is referred to as the "Pension Account" and "Predecessor Pension Rollover
Account" and do not impact the general provisions of the Plan. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan is administered by the AmeriGas Propane, Inc. Benefits
Committee (Plan Administrator), whose members are appointed by the President of
the Company and subject to approval by the Compensation/Pension Committee of the
Company's Board of Directors.
CONTRIBUTIONS. A participant may elect to contribute to the Plan on a before-tax
basis through payroll reduction an amount equal to from 1% to 50%, in whole
percentages, of eligible compensation. Calendar year contribution amounts are
subject to limits prescribed by the Internal Revenue Code (IRC). For the 2003
and 2002 Plan Years, the IRC before-tax contribution limits were $12,000 and
$11,000, respectively. A participant may increase, reduce or suspend his or her
contributions at any time by contacting Fidelity Institutional Retirement
Services Co. (FIRSCO).
The Plan allows for "catch-up contributions". The catch-up contribution
provision allows certain employees to make before-tax contributions over and
above the IRS and Plan limits. In order to be eligible to make catch-up
contributions, employees must be at least 50 years of age and must be
contributing the IRC or Plan limit. The maximum catch-up contribution for the
2003 Plan Year and 2002 Plan Year was $2,000 and $1,000, respectively, and shall
increase $1,000 per year through 2006. Catch-up contributions are not eligible
for the Company matching contribution (as described below).
The Plan also accepts on behalf of any employee (i) the entire amount of cash
received as a distribution from another qualified trust forming part of a plan
described in Section 401(a) of the IRC or from a "rollover" individual
retirement plan described in Section 408 of the IRC, but only if the deposit
qualifies as a tax free rollover as defined in section 402 or (ii) a direct
transfer from another plan qualified under Section 401(a) of the IRC. The Plan
accepts rollovers from after-tax contributions as permitted under the Act.
Generally the Company shall contribute to the Plan an amount equal to 100% of
contributions made by each eligible participant for each payroll period up to a
total of 5% of the participant's eligible compensation for each such payroll
period. A participant will be eligible to receive matching contributions after
he or she has completed a year of service as defined in the Plan document. In
conjunction with the implementation of a short-term cost savings program, the
Plan was amended to lower the Company contribution rate to 25% of contributions
made by each
-6-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
eligible participant for each payroll period up to a total of 5% of the
participant's eligible compensation for the period March 1, 2002 to September
30, 2002.
The Company may also make profit-sharing contributions for each Plan year, out
of its net profits, as shall be determined by its Board of Directors, in its
sole discretion, to all eligible participants. A participant will be eligible to
receive profit sharing contributions if he or she (i) has completed one year of
service; (ii) was not eligible to participate in the AmeriGas Propane, Inc.
Supplemental Executive Retirement Plan as of the last day of a Plan year; and
(iii) either (a) remained in the employ of the Company through the end of the
Plan year as of which such contribution is to be allocated; (b) retired,
experienced total disability (as defined in the Plan document), or died while in
service during the Plan year; or (c) was on an excused absence (as defined in
the Plan document) at the end of the Plan year. Subject to certain limitations,
the profit sharing contribution to be credited to a participant's accounts shall
be allocated as of the last day of the Plan year by dividing the total amount of
such contribution by the number of eligible Plan participants. No such amounts
were contributed to the Plan in respect of the 2003 Plan Year or the 2002 Plan
Year.
Any participant who (i) satisfies the eligibility requirements described in the
immediately preceding paragraph; (ii) was a participant in the former Retirement
Income Plan for Employees of AP Propane, Inc. as of December 31, 1988; and (iii)
had attained the age of 50 as of that date, is entitled to an additional
contribution as of the last day of each Plan year as follows:
Age as of Percentage of
December 31, 1988 Eligible Compensation
- ----------------- ---------------------
50 to 54 2%
55 to 59 3%
60 and over 4%
All contributions are invested in accordance with participant investment
elections in effect on the dates of the contributions.
A participant will at all times be fully (100%) vested in the portion of his or
her account attributable to the following sources: (i) Predecessor Account; (ii)
Predecessor Pension Rollover Account; (iii) Rollover/Dollar Builder Account;
(iv) Rollover ESOP Account; (v) Salary Deferral Account; and (vi) the Voluntary
Participant Contribution Account, each as defined in the Plan document. A
participant is fully vested in the portion of his or her account attributable to
Company contributions as follows: 25% after two years of service; 50% after
three years of service; 75% after four years of service; and 100% after five
years of service. In addition, a participant is fully vested in the portion of
his or her account attributable to Company contributions upon the attainment of
normal retirement age (as defined in the Plan document), total disability (as
defined in the Plan document) or death while in the employ of the Company or an
affiliated company. For Plan purposes, a participant will attain normal
retirement age on the later of his or her 65th birthday or the fifth anniversary
of his or her date of hire.
A participant who terminates employment before he or she is vested will forfeit
nonvested amounts attributable to Company contributions, among other things.
These forfeited amounts remain in the
-7-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Plan and are available to reduce future Company contributions. For the 2003 Plan
Year and 2002 Plan Year, forfeitures of $128,845 and $289,426, respectively,
were used to reduce Company contributions. During the 2003 Plan Year and 2002
Plan Year, $164,421 and $264,088, respectively, were forfeited from participant
accounts. As of December 31, 2003 and 2002, there were $122,046 and $85,744,
respectively, of forfeitures remaining in the Plan.
INVESTMENT FUNDS. A participant may elect to have his or her funds invested in
one or more investment funds. Generally, participants may transfer amounts
between funds at any time with no limit. Participants may change their
investment elections for future contributions at any time. Fidelity Management
Trust Company is the Plan's trustee for all investment assets of the Plan.
References to "Fidelity" below refer to investment funds managed by Fidelity
Management and Research (FMR). Following are brief descriptions of the
investment options available to participants and the strategies and objectives
of each fund.
-8-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Money Market Fund
- - Fidelity Cash Reserves Fund
This fund is an unaffiliated registered investment company mutual fund that
invests in U.S. dollar-denominated money market securities and repurchase
agreements, and may enter into reverse repurchase agreements. The fund's
objective is to provide as high a level of current income as is consistent with
the preservation of capital and liquidity.
Managed Income Fund
- - Fidelity Managed Income Portfolio II Fund
This fund is an unaffiliated commingled pool whose investments principally
comprise investment contracts issued by insurance companies and financial
institutions and certain types of fixed income securities. The fund's objective
is to preserve principal while earning interest income.
Income Funds
- - Fidelity Intermediate Bond Fund
This fund is an unaffiliated registered investment company mutual fund which
normally invests in investment-grade bonds while normally maintaining a
dollar-weighted average maturity between three and ten years. The fund's
objective is to provide a high level of current income.
- - Fidelity Capital & Income Fund
This fund is an unaffiliated registered investment company mutual fund that
invests mainly in equity and debt securities, including defaulted securities,
with an emphasis on lower-quality debt securities. The fund invests in companies
in troubled or uncertain financial condition and in domestic and foreign
issuers. The fund's objective is to provide income and capital growth.
- - Fidelity U.S. Bond Index Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in bonds included in the Lehman Brothers Aggregate Bond
Index. The fund's objective is to provide investment results that correspond to
the total returns of bonds in the Lehman Brothers Aggregate Bond Index.
-9-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Balanced Funds
- - Fidelity Balanced Fund - Fidelity Puritan Fund
These funds are unaffiliated registered investment company mutual funds that
invest in stocks and other equity securities and in bonds and other debt
securities. The funds seek income and capital growth.
Growth and Income Funds
- - Fidelity Spartan U.S. Equity Index Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks included in the Standard and Poor's 500
Index (S&P 500) a widely recognized, unmanaged index of 500 U.S. common stocks.
The fund's objective is to match the total return of the S&P 500.
- - Fidelity Equity Income Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in income-producing equity securities. The fund's objective
is to provide reasonable income while considering the potential for capital
appreciation.
- - Fidelity Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks. The fund may also invest a portion of
assets in bonds, including lower-quality debt securities. The fund seeks
long-term capital growth.
- - Fidelity Growth & Income Portfolio
This fund is an unaffiliated registered investment company mutual fund that
normally invests a majority of total assets in common stocks with a focus on
those that pay current dividends and show potential for capital appreciation.
The fund may also invest in bonds. The fund seeks high total return through a
combination of current income and capital appreciation.
- - Fidelity Equity Income II Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in income-producing equity securities. The fund seeks
reasonable income and the potential for capital appreciation.
-10-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
- - Fidelity Real Estate Investment Portfolio
This fund is an unaffiliated registered investment company mutual fund that
principally invests in equity securities of companies principally engaged in the
real estate industry. The fund seeks above-average income and long-term capital
growth consistent with reasonable risk.
Growth Funds
- - Fidelity Magellan Fund
This fund is an unaffiliated registered investment company mutual fund that
invests primarily in common stocks of domestic and foreign issuers. The fund
seeks capital appreciation.
- - Fidelity Growth Company Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers that are
expected to have above-average growth potential. The fund seeks capital
appreciation.
- - Fidelity OTC Portfolio
This fund is an unaffiliated registered investment company mutual fund that
principally invests in securities traded on the over-the-counter (OTC) market.
The fund seeks capital appreciation.
- - Fidelity Capital Appreciation Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers. The fund
seeks capital appreciation.
- - Fidelity Blue Chip Growth Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of well-known and established companies.
The fund invests in securities of domestic and foreign issuers. The fund seeks
growth of capital over the long term.
- - Fidelity Low-Priced Stock Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in low-priced common stocks. The fund seeks capital
appreciation.
-11-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
- - Fidelity Small Cap Independence Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of domestic and foreign issuers with small
market capitalizations. The fund seeks capital appreciation.
- - Fidelity Value Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in common stocks of companies that possess valuable fixed
assets or that are believed to be undervalued in relation to the issuing
company's assets, earnings, or growth potential. The fund seeks capital
appreciation.
International Funds
- - Fidelity Overseas Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in foreign securities. The fund invests primarily in common
stocks and seeks long-term growth of capital.
- - Fidelity Worldwide Fund
This fund is an unaffiliated registered investment company mutual fund that
invests primarily in common stocks issued anywhere in the world. The fund seeks
growth of capital.
- - Fidelity International Growth & Income Fund
This fund is an unaffiliated registered investment company mutual fund that
principally invests in foreign securities including common stocks with a focus
on those that pay current dividends and have the potential for capital
appreciation. The fund seeks capital growth and current income.
Fidelity Freedom Funds
- - Fidelity Freedom Income Fund - Fidelity Freedom 2020 Fund
- - Fidelity Freedom 2000 Fund - Fidelity Freedom 2030 Fund
- - Fidelity Freedom 2010 Fund - Fidelity Freedom 2040 Fund
These funds are unaffiliated registered investment company mutual funds that
invest in a combination of underlying Fidelity funds according to an asset
allocation strategy that becomes increasingly conservative over time as each
fund's target retirement date approaches. When each of these target retirement
date funds matches the asset allocation of the Fidelity Freedom Income fund
(approximately five to ten years after the respective fund's target retirement
date), it is
-12-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
expected that each fund will be combined with the Fidelity Freedom Income Fund.
These funds' investment objectives are to achieve high current income and
capital appreciation.
Employer Stock Fund
- - UGI Common Stock Fund
This fund invests principally in shares of UGI Corporation Common Stock.
Participants in the fund do not individually own specific shares of UGI
Corporation Common Stock but rather own units in the fund that invests in such
shares and short-term investments. The value of a unit in the UGI Common Stock
Fund was initially set at $10.00 and is recalculated daily by dividing the fair
value of the fund's assets (comprising shares of UGI Corporation Common Stock
and temporary cash investments) by the total number of units outstanding.
Generally, participant requests to redeem units from the UGI Common Stock Fund
are processed on the day received if such request is received by Fidelity before
the close of the New York Stock Exchange and provided that there are sufficient
short-term investments in the fund for liquidity. In such case, the participant
will receive the closing price for the units calculated using the closing price
for UGI Corporation Common Stock on the New York Stock Exchange for that day.
However, on days of unusually heavy requests for sale, the UGI Common Stock Fund
may not have sufficient short-term investments for liquidity. In such case,
requests to sell units received before the close of the New York Stock Exchange
may not be processed on that day at that date's closing price but may be
suspended until sufficient liquidity is restored. Units will be redeemed
generally on a first-in, first-out basis at the closing price for the processing
date. Loans, withdrawals and distributions from the UGI Common Stock Fund will
be given priority over exchanges with other funds. During the 2002 Plan Year,
the UGI Common Stock Fund increased its temporary cash investments from 2 to 3%
of total assets to mitigate the potential need to defer redemptions.
DISTRIBUTIONS. The Plan benefit of a participant who terminates employment as a
result of retirement, death or total disability, as defined by the Plan
document, shall be equal to the proceeds of liquidation of 100% of the balance
of his or her account. Participants may elect to receive their interest in the
UGI Common Stock Fund in the form of shares of UGI Corporation Common Stock. The
Plan benefit of a participant who terminates employment for reasons other than
retirement, death or total disability shall be equal to the proceeds of
liquidation of the vested portion of his or her account.
Distributions will generally be made in the form of a lump sum. If the value of
a participant's account exceeds $5,000 and the participant is married, the
participant's Pension Account and Predecessor Pension Rollover Account will be
distributed in the form of a joint and survivor annuity. Under a joint and
survivor annuity, the participant will receive a monthly benefit for his or her
lifetime and upon the participant's death, the participant's surviving spouse,
if any, will receive a monthly benefit equal to 50% of the benefit the
participant was receiving. If the value of the participant's account exceeds
$5,000 and the participant is not married, the participant's Pension Account and
Predecessor Pension Rollover Account will be distributed in the form of a single
life annuity. In lieu of a joint and survivor annuity or a single life annuity,
a participant may generally elect to receive his or her Pension Account and
Predecessor Pension Rollover Account in the form of (i) a lump sum; (ii) a
single life annuity; (iii) a joint and survivor annuity with 50% or 100% of
-13-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
the participant's monthly payments continuing, after the participant's death,
for the life of the participant's beneficiary; or (iv) installments over 5 or 10
years, as elected by the participant. Any such election will be subject to
spousal consent, if applicable.
Where the amount to be distributed exceeds $5,000, no distribution shall be made
to any Plan participant prior to his or her normal retirement age unless the
participant elects to receive such distribution. Where the amount to be
distributed does not exceed $5,000 a Plan participant's benefit will be
distributed as soon as practicable after the participant becomes entitled to
receive a distribution from the Plan.
A participant who continues to work past age 70 1/2 will receive a distribution
upon termination of employment. Otherwise, distributions must generally be made
as soon as practicable after the participant reaches the normal retirement age
as defined above.
DEATH. If a participant dies prior to receiving a distribution of his or her
account, the participant's designated beneficiary shall be entitled to receive a
lump-sum distribution of the proceeds of liquidation of 100% of the vested
portion of his or her account. Generally, the beneficiary may request a
distribution of the participant's account balance as soon as practicable
following the date of the participant's death. The beneficiary of a participant
who is married at the time of the participant's death will be the participant's
spouse, unless the participant designated another beneficiary and the spouse
consented to such designation in accordance with procedures specified by the
Plan document.
Death benefits are generally paid in the form of a lump sum. Death benefits
payable to a spouse from the Pension Account and the Predecessor Pension
Rollover Account are paid in the form of a single life annuity unless the spouse
elects a lump sum distribution.
WITHDRAWALS. Generally, a participant may withdraw up to 50% of the balance of
his or her account attributable to previously permitted after-tax contributions
(including after-tax contributions that were matched by the Company) at any
time. However, the withdrawal must be in an amount of at least $250. No more
than one withdrawal is permitted in any calendar year.
A participant may withdraw once per calendar year up to 100% of amounts
attributable to participation in certain "predecessor plans" and rollover
contributions from other 401(a) or individual retirement plan accounts, however
the amount must be at least $500 or, if less, the total value of the applicable
account.
A participant may withdraw before-tax contributions (and earnings attributable
thereto credited as of December 31, 1988) only on account of financial hardship
resulting from (i) medical expenses as defined in section 213(d) of the IRC;
(ii) educational expenses for the next twelve months of post-secondary education
of the participant, or his or her spouse, children or dependents; (iii)
foreclosure on a primary residence; or (iv) costs directly related to the
purchase of a primary residence. A hardship withdrawal will be permitted if the
Plan Administrator determines that (i) the withdrawal is on account of an
immediate and heavy financial need of the participant and (ii) the withdrawal is
necessary to satisfy such financial need.
-14-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
While a participant is still employed by the Company, withdrawals of amounts
attributable to Company contributions, and post-1988 earnings on participant
before-tax contributions, are not permitted.
LOAN PROVISION. The Plan includes an employee loan provision. Generally, at the
time a loan is to be made, the amount of all loans to be outstanding may not
exceed the lesser of (i) 50% of a participant's before-tax and rollover account
balances, or (ii) $50,000 less the highest balance of any loan during the prior
twelve-month period. Each loan bears interest at a rate determined in accordance
with generally prevailing market conditions for similar types of loans. The
minimum loan amount is $1,000. The amount of the loan withdrawn from a
participant's account is allocated in proportion to the value of the
participant's salary deferral and rollover account balances in each investment
fund. Repayments, including interest, are made in equal installments through
payroll deductions and are allocated to participant accounts in accordance with
current investment elections. No loan may have a final maturity in excess of
five years except that, if the loan is used to purchase a principal residence
for the participant, the loan may have a final maturity of up to ten years. No
participant shall be permitted to have more than two loans outstanding at any
one time.
ADMINISTRATIVE EXPENSES. Administrative expenses of the Plan are chargeable to
the Plan unless paid for by the Company. The Company currently pays such
expenses. Loan administration fees are paid by participants. Mutual fund
expenses are paid to fund managers from mutual fund assets.
PLAN TERMINATION. Although it has not expressed any intent to do so, the Company
has the right to terminate the Plan in whole or in part at any time for any
reason. In the event of a complete or partial termination of the Plan, the
affected participants will become fully vested in their account balances.
PLAN AMENDMENT. The Company may amend the Plan at any time for any reason by
written action of its Board of Directors. Amendments required to comply with the
IRC to maintain compliance with current laws or regulations, or to correct
errors or omissions in the Plan document, however, may be made by an officer of
the Company without Board approval.
VOTING RIGHTS OF UGI COMMON STOCK FUND PARTICIPANTS. A participant has the right
to instruct the trustee of the Plan how to vote, at each meeting of
shareholders, all shares of UGI Corporation Common Stock (including fractional
shares) represented by the value of the participant's interest in the UGI Common
Stock Fund. A participant also has the right to direct the trustee of the Plan
whether or not to tender shares in response to a tender offer.
2. ACCOUNTING POLICIES
The accompanying financial statements are prepared on the accrual basis of
accounting.
The Plan's investments in registered investment company mutual funds are valued
at quoted market prices which represent the net asset value of shares held by
the Plan. Investment contracts included in the Fidelity Managed Income Portfolio
II Fund, an unaffiliated commingled pool, are carried at contract value which
represents deposits plus accrued interest. The Plan Administrator believes
-15-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
contract value approximates fair value. Shares of UGI Common Stock included in
the UGI Common Stock Fund are reflected at fair value based upon quoted market
prices.
Dividend income is recorded on the record date. Interest earned on investments
is recorded on the accrual basis. Purchases and sales of securities are recorded
on a trade date basis.
The Plan presents in the Statements of Changes in Net Assets Available for
Benefits the net appreciation (depreciation) in fair value of investments which
consists of realized gains or losses and unrealized appreciation (depreciation)
in the fair value of those investments.
Distributions are made to Plan participants based upon the fair value of each
participant's investment account (except for investments of the Managed Income
Fund for which distributions are based upon contract value and except for
distributions from the UGI Common Stock Fund, to the extent not all shares are
sold on the same date) as of the dates of distribution. Distributions to
participants are recorded when paid.
Transfers of participant balances represent amounts transferred to or from the
UGI Utilities, Inc. Savings Plan and the UGI HVAC Enterprises, Inc. Savings
Plan, which are affiliate plans.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan Administrator to make estimates and
assumptions that affect the reported amount of net assets available for benefits
and changes therein. Actual results could differ from these estimates.
-16-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRUST INVESTMENTS
The components of trust investments by fund at December 31, 2003 and 2002 are as
follows:
December 31,
2003 2002
------------ ------------
Fidelity Cash Reserves Fund (shares -- 20,420,462 and 22,711,199, respectively) $ 20,420,462 * $ 22,711,199 *
------------ ------------
Fidelity Managed Income Portfolio II Fund (shares -- 20,555,141 and
19,280,093, respectively) 20,555,141 * 19,280,093 *
------------ ------------
Fidelity Intermediate Bond Fund (shares -- 549,013 and 539,879, respectively) 5,852,479 5,792,901
------------ ------------
Fidelity Capital and Income Fund (shares -- 66,879 and 80,977, respectively) 539,043 508,536
------------ ------------
Fidelity U.S. Bond Index Fund (shares -- 163,569 and 150,516, respectively) 1,830,332 1,691,801
------------ ------------
Fidelity Balanced Fund (shares -- 142,575 and 111,558, respectively) 2,388,123 1,482,606
------------ ------------
Fidelity Puritan Fund (shares -- 63,300 and 49,604, respectively) 1,169,152 783,241
------------ ------------
Fidelity Spartan U.S. Equity Index Fund (shares -- 130,443 and 127,374, respectively) 5,140,760 3,967,686
------------ ------------
Fidelity Equity Income Fund (shares -- 472,291 and 486,210, respectively) 23,496,496 * 19,287,947 *
------------ ------------
Fidelity Fund (shares -- 159,855 and 165,267, respectively) 4,488,719 3,678,835
------------ ------------
Fidelity Growth & Income Portfolio (shares -- 58,674 and 49,844, respectively) 2,090,544 1,510,785
------------ ------------
Fidelity Equity Income II Fund (shares -- 28,704 and 19,110, respectively) 653,887 332,320
------------ ------------
Fidelity Real Estate Investment Portfolio (shares -- 70,862 and 59,358, respectively) 1,680,139 1,091,602
------------ ------------
Fidelity Magellan Fund (shares -- 355,004 and 355,694, respectively) 34,698,111 * 28,085,624 *
------------ ------------
Fidelity Growth Company Fund (shares -- 185,336 and 176,545, respectively) 9,279,781 * 6,253,226
------------ ------------
Fidelity OTC Portfolio (shares -- 49,824 and 48,533, respectively) 1,617,792 1,160,425
------------ ------------
Fidelity Capital Appreciation Fund (shares -- 35,138 and 24,271, respectively) 861,228 392,703
------------ ------------
Fidelity Blue Chip Growth Fund (shares -- 63,537 and 53,543, respectively) 2,517,964 1,710,155
------------ ------------
Fidelity Low-Priced Stock Fund (shares -- 66,514 and 53,457, respectively) 2,326,643 1,345,516
------------ ------------
Fidelity Small Cap Independence Fund (shares -- 24,922 and 25,259, respectively) 447,103 335,944
------------ ------------
-17-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRUST INVESTMENTS (CONTINUED)
December 31,
2003 2002
------------ ------------
Fidelity Value Fund (shares -- 23,334 and 19,807, respectively) 1,448,347 918,868
------------ ------------
Fidelity Overseas Fund (shares -- 65,393 and 62,355, respectively) 2,055,309 1,371,801
------------ ------------
Fidelity Worldwide Fund (shares --14,920 and 13,507, respectively) 244,248 160,469
------------ ------------
Fidelity International Growth and Income Fund (shares -- 34,247 and 26,269, respectively) 819,194 441,847
------------ ------------
Fidelity Freedom Income Fund (shares -- 17,866 and 21,196, respectively) 198,139 224,674
------------ ------------
Fidelity Freedom 2000 Fund (shares -- 28,506 and 41,793, respectively) 335,805 460,138
------------ ------------
Fidelity Freedom 2010 Fund (shares -- 258,789 and 183,621, respectively) 3,369,434 2,100,621
------------ ------------
Fidelity Freedom 2020 Fund (shares -- 248,968 and 196,975, respectively) 3,241,561 2,095,818
------------ ------------
Fidelity Freedom 2030 Fund (shares -- 138,653 and 114,144, respectively) 1,795,558 1,168,830
------------ ------------
Fidelity Freedom 2040 Fund (shares -- 14,790 and 10,531, respectively) 111,816 61,712
------------ ------------
UGI Common Stock Fund
UGI Corporation Unitized Stock Fund (units -- 512,466 and 456,831, respectively) 10,956,530 * 7,240,748 *
Dividends receivable 89,789 75,987
------------ ------------
11,046,319 7,316,735
------------ ------------
Total trust investments - fair value, except for group annuity contracts
included in the Fidelity Managed Income Portfolio II Fund which
are carried at contract value $166,719,629 $137,724,658
============ ============
Total trust investments - cost $159,571,242 $156,307,845
============ ============
* - Investment represents five percent or more of net assets available for
benefits.
The net appreciation (depreciation) in fair value of investments during the
years ended December 31, 2003 and 2002 by major investment category follows:
Year ended December 31,
2003 2002
------------ ------------
Registered investment company mutual funds $ 22,036,341 $(22,277,742)
UGI Common Stock Fund 2,722,415 1,273,124
------------ ------------
Total net appreciation (depreciation) in fair value $ 24,758,756 $(21,004,618)
============ ============
-18-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
During the 2003 Plan Year and 2002 Plan Year, the Plan purchased, at market
prices, 32,603 and 20,463 shares of UGI Corporation Common Stock directly from
UGI Corporation for $1,095,686 and $676,145, respectively.
The investments of the separate investment funds are exposed to various risks
such as interest rate, market and credit risk. The degree and concentration of
these risks vary by fund. Due to the level of risk associated with the separate
investment funds, it is reasonably possible that changes in risk in the near
term could materially affect participants' account balances in the amounts
reported in the Statements of Net Assets Available for Benefits and the
Statements of Changes in Net Assets Available for Benefits.
4. FEDERAL INCOME TAX STATUS
On December 6, 2002, the Internal Revenue Service issued a favorable
determination letter concerning the qualified status of the Plan in effect as of
November 27, 2002 under Section 401(a) of the IRC. The Plan Administrator
believes that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC. No U.S. income taxes are required
to be paid by the trust created under the Plan (the Trust) and participants are
not taxed on Company contributions to the Trust or income earned by the Trust.
When a participant, or his or her beneficiary or estate, receives a distribution
under the Plan, the taxability of the value of such distribution depends on the
form and time of payment.
-19-
AMERIGAS PROPANE, INC.
SAVINGS PLAN
Item 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
-------------------------------------------------------
Number of
Shares or Fair Value/
Principal Contract
NAME OF ISSUER AND TITLE OF ISSUE Amount Cost Value % (2)
--------------------------------- --------------- ------------ ------------ -------
FIDELITY CASH RESERVES FUND (1) (3) 20,420,462 shrs $ 20,420,462 $ 20,420,462 100.00%
------------ ------------ -------
FIDELITY MANAGED INCOME
PORTFOLIO II FUND (1) (3) 20,555,141 shrs 20,555,141 20,555,141 100.00%
------------ ------------ -------
FIDELITY INTERMEDIATE BOND FUND (3) 549,013 shrs 5,654,019 5,852,479 100.00%
------------ ------------ -------
FIDELITY CAPITAL AND INCOME FUND (3) 66,879 shrs 537,074 539,043 100.00%
------------ ------------ -------
FIDELITY U.S. BOND INDEX FUND (3) 163,569 shrs 1,809,554 1,830,332 100.00%
------------ ------------ -------
FIDELITY BALANCED FUND (3) 142,575 shrs 2,147,150 2,388,123 100.00%
------------ ------------ -------
FIDELITY PURITAN FUND (3) 63,300 shrs 1,114,692 1,169,152 100.00%
------------ ------------ -------
FIDELITY SPARTAN U.S. EQUITY INDEX FUND (3) 130,443 shrs 4,919,272 5,140,760 100.00%
------------ ------------ -------
FIDELITY EQUITY INCOME FUND (1) (3) 472,291 shrs 21,115,205 23,496,496 100.00%
------------ ------------ -------
FIDELITY FUND (3) 159,855 shrs 4,902,642 4,488,719 100.00%
------------ ------------ -------
FIDELITY GROWTH & INCOME
PORTFOLIO (3) 58,674 shrs 2,147,738 2,090,544 100.00%
------------ ------------ -------
FIDELITY EQUITY INCOME II FUND (3) 28,704 shrs 627,260 653,887 100.00%
------------ ------------ -------
FIDELITY REAL ESTATE INVESTMENT
PORTFOLIO (3) 70,862 shrs 1,371,347 1,680,139 100.00%
------------ ------------ -------
FIDELITY MAGELLAN FUND (1) (3) 355,004 shrs 33,500,463 34,698,111 100.00%
------------ ------------ -------
FIDELITY GROWTH COMPANY FUND (1) (3) 185,336 shrs 10,471,679 9,279,781 100.00%
------------ ------------ -------
FIDELITY OTC PORTFOLIO (3) 49,824 shrs 2,308,537 1,617,792 100.00%
------------ ------------ -------
FIDELITY CAPITAL APPRECIATION FUND (3) 35,138 shrs 807,629 861,228 100.00%
------------ ------------ -------
FIDELITY BLUE CHIP GROWTH FUND (3) 63,537 shrs 2,846,591 2,517,964 100.00%
------------ ------------ -------
FIDELITY LOW-PRICED STOCK FUND (3) 66,514 shrs 1,840,238 2,326,643 100.00%
------------ ------------ -------
FIDELITY SMALL CAP INDEPENDENCE FUND (3) 24,922 shrs 386,680 447,103 100.00%
------------ ------------ -------
FIDELITY VALUE FUND (3) 23,334 shrs 1,187,364 1,448,347 100.00%
------------ ------------ -------
FIDELITY OVERSEAS FUND (3) 65,393 shrs 2,105,900 2,055,309 100.00%
------------ ------------ -------
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AMERIGAS PROPANE, INC.
SAVINGS PLAN
Item 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) (continued)
December 31, 2003
-------------------------------------------------------
Number of
Shares or Fair Value/
Principal Contract
NAME OF ISSUER AND TITLE OF ISSUE Amount Cost Value % (2)
--------------------------------- --------------- ------------ ------------ -------
FIDELITY WORLDWIDE FUND (3) 14,920 shrs 230,402 244,248 100.00%
------------ ------------ -------
FIDELITY INTERNATIONAL GROWTH
& INCOME FUND (3) 34,247 shrs 762,225 819,194 100.00%
------------ ------------ -------
FIDELITY FREEDOM INCOME FUND (3) 17,866 shrs 196,783 198,139 100.00%
------------ ------------ -------
FIDELITY FREEDOM 2000 FUND (3) 28,506 shrs 339,466 335,805 100.00%
------------ ------------ -------
FIDELITY FREEDOM 2010 FUND (3) 258,789 shrs 3,357,859 3,369,434 100.00%
------------ ------------ -------
FIDELITY FREEDOM 2020 FUND (3) 248,968 shrs 3,383,971 3,241,561 100.00%
------------ ------------ -------
FIDELITY FREEDOM 2030 FUND (3) 138,653 shrs 1,764,090 1,795,558 100.00%
------------ ------------ -------
FIDELITY FREEDOM 2040 FUND (3) 14,790 shrs 97,338 111,816 100.00%
------------ ------------ -------
UGI COMMON STOCK FUND (1)(3)
UGI Corporation Unitized Stock Fund 512,466 units 6,572,682 10,956,530 99.19%
Dividends receivable $ 89,789 89,789 89,789 0.81%
------------ ------------ -------
6,662,471 11,046,319 100.00%
============ ============ =======
PARTICIPANT LOANS
Loan principal outstanding (4.75% - 10.5%) (3) (4) - 4,118,818 100.00%
------------ ------------ -------
Total - all funds $159,571,242 $170,838,447
============ ============
(1)Investment represents 5% or more of the net assets available for benefits.
(2)Percentages represent percentage of fair value / contract value of each fund.
(3)Party in interest.
(4)Range of interest rates for loans outstanding as of December 31, 2003
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