1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-13692
AMERIGAS PARTNERS, L.P.
AMERIGAS FINANCE CORP.
(Exact name of registrants as specified in their charters)
Delaware 23-2787918
Delaware 23-2800532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 North Gulph Road, King of Prussia, PA
(Address of principal executive offices)
19406
(Zip Code)
(610) 337-7000
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ -----
At January 31, 1997, the registrants had units and shares of common
stock outstanding as follows:
AmeriGas Partners, L.P. - 21,949,272 Common Units
19,782,146 Subordinated Units
AmeriGas Finance Corp. - 100 shares
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AMERIGAS PARTNERS, L.P.
TABLE OF CONTENTS
PAGES
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
AmeriGas Partners, L.P.
-----------------------
Condensed Consolidated Balance Sheets as of December 31, 1996,
September 30, 1996 and December 31, 1995 1
Condensed Consolidated Statements of Operations for the three
months ended December 31, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows for the three months
ended December 31, 1996 and 1995 3
Condensed Consolidated Statement of Partners' Capital for the
three months ended December 31, 1996 4
Notes to Condensed Consolidated Financial Statements 5 - 7
AmeriGas Finance Corp.
----------------------
Balance Sheets as of December 31, 1996 and September 30, 1996 8
Note to Balance Sheets 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10 - 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)
December 31, September 30, December 31,
1996 1996 1995
-------------- --------------- --------------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 23,689 $ 2,122 $ 7,583
Accounts receivable (less allowances for doubtful accounts
of $7,265, $6,579 and $5,614, respectively) 152,313 85,926 124,086
Inventories 93,767 82,957 66,387
Prepaid expenses and other current assets 24,465 29,375 6,739
------------ ------------ ------------
Total current assets 294,234 200,380 204,795
Property, plant and equipment (less accumulated depreciation and
amortization of $147,455, $138,850 and $113,890, respectively) 451,343 454,112 458,584
Intangible assets (less accumulated amortization of $98,343,
$94,785 and $80,566, respectively) 685,959 691,688 735,270
Other assets 26,154 26,043 38,652
------------ ------------ ------------
Total assets $ 1,457,690 $ 1,372,223 $ 1,437,301
============ ============ ============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Current maturities of long-term debt $ 7,098 $ 5,150 $ 5,006
Bank loans 70,000 15,000 18,000
Accounts payable - trade 79,590 46,891 52,046
Accounts payable - related parties 3,200 2,552 437
Other current liabilities 82,407 108,667 59,358
------------ ------------ ------------
Total current liabilities 242,295 178,260 134,847
Long-term debt 691,074 687,303 660,788
Other noncurrent liabilities 59,624 58,927 79,361
Minority interest 5,694 5,497 6,677
Partners' capital 459,003 442,236 555,628
------------ ------------ ------------
Total liabilities and partners' capital $ 1,457,690 $ 1,372,223 $ 1,437,301
============ ============ ============
The accompanying notes are an integral part of these financial statements.
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Thousands of dollars, except per unit)
Three Months Ended
December 31,
--------------------------------
1996 1995
--------------- -------------
Revenues:
Propane $ 331,894 $ 256,649
Other 28,222 29,147
--------------- -------------
360,116 285,796
--------------- -------------
Costs and expenses:
Cost of sales-propane 191,925 148,060
Cost of sales-other 12,783 14,660
Operating and administrative expenses 83,607 76,920
Depreciation and amortization 15,500 15,472
Miscellaneous income, net (1,398) (2,844)
--------------- -------------
302,417 252,268
--------------- -------------
Operating income 57,699 33,528
Interest expense (16,706) (15,563)
--------------- -------------
Income before income taxes 40,993 17,965
Income taxes (608) (334)
Minority interest (434) (204)
--------------- -------------
Net income $ 39,951 $ 17,427
=============== =============
General partner's interest in net income $ 400 $ 174
=============== =============
Limited partners' interest in net income $ 39,551 $ 17,253
=============== =============
Income per limited partner unit $ .95 $ .41
=============== =============
Average limited partner units outstanding (thousands) 41,731 41,723
=============== =============
The accompanying notes are an integral part of these financial statements.
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Thousands of dollars)
Three Months Ended
December 31,
-----------------------------
1996 1995
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 39,951 $ 17,427
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 15,500 15,472
Other, net 1,570 846
------------- ------------
57,021 33,745
Net change in:
Accounts receivable (67,743) (62,603)
Inventories (10,593) 13,073
Accounts payable 33,345 15,698
Other current assets and liabilities (21,597) (23,387)
------------- ------------
Net cash used by operating activities (9,567) (23,474)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (6,553) (7,201)
Proceeds from disposals of assets 743 1,217
Decrease in short-term investments - 9,000
Acquisitions of businesses, net of cash acquired (918) (523)
------------- ------------
Net cash provided (used) by investing activities (6,728) 2,493
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (23,184) (23,175)
Minority interest activity (237) (236)
Increase in bank loans 55,000 18,000
Issuance of long-term debt 7,000 8
Repayment of long-term debt (717) (850)
Capital contribution from General Partner - 8
------------- ------------
Net cash provided (used) by financing activities 37,862 (6,245)
------------- ------------
PARTNERSHIP FORMATION TRANSACTIONS:
Fees and expenses - (4,758)
------------- ------------
Cash and cash equivalents increase (decrease) $ 21,567 $ (31,984)
============= ============
CASH AND CASH EQUIVALENTS:
End of period $ 23,689 $ 7,583
Beginning of period 2,122 39,567
============= ============
Increase (decrease) $ 21,567 $ (31,984)
============= ============
The accompanying notes are an integral part of these financial statements.
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(unaudited)
(Thousands, except unit data)
Number of units Total
--------------- General partners'
Common Subordinated Common Subordinated partner capital
------------ ------------- ----------- ------------- ---------- ------------
BALANCE SEPTEMBER 30, 1996 21,949,272 19,782,146 $ 230,376 $ 207,439 $ 4,421 $ 442,236
Net income 20,802 18,749 400 39,951
Distributions (12,072) (10,880) (232) (23,184)
------------- ----------- -------------- ---------------- ------------- -------------
BALANCE DECEMBER 31, 1996 21,949,272 19,782,146 $ 239,106 $ 215,308 $ 4,589 $ 459,003
============= =========== ============== ================ ============= =============
The accompanying notes are an integral part of these financial statements.
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AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Thousands of dollars, except per unit)
1. BASIS OF PRESENTATION
AmeriGas Partners, L.P. (AmeriGas Partners), through its subsidiary
AmeriGas Propane L.P. (the "Operating Partnership"), is the largest
retail propane distributor in the United States serving residential,
commercial, industrial, motor fuel and agricultural customers from
locations in 44 states, including Alaska and Hawaii. AmeriGas
Partners and the Operating Partnership are Delaware limited
partnerships. AmeriGas Propane, Inc. (the "General Partner") serves
as the general partner of AmeriGas Partners and the Operating
Partnership. The General Partner holds a 1% general partner interest
in AmeriGas Partners and a 1.01% general partner interest in the
Operating Partnership. In addition, the General Partner and certain
of its wholly owned subsidiaries own an effective 56.7% limited
partner interest in the Operating Partnership.
The condensed consolidated financial statements include the accounts
of AmeriGas Partners, the Operating Partnership and their
subsidiaries, collectively referred to herein as the Partnership. The
General Partner's 1.01% interest in the Operating Partnership is
accounted for in the condensed consolidated financial statements as a
minority interest. The accompanying condensed consolidated financial
statements are unaudited and have been prepared in accordance with the
rules and regulations of the U.S. Securities and Exchange Commission.
They include all adjustments which the Partnership considers necessary
for a fair statement of the results for the interim periods presented.
Such adjustments consisted only of normal recurring items unless
otherwise disclosed. These financial statements should be read in
conjunction with the financial statements and notes thereto included
in the Partnership's Report on Form 10-K for the year ended September
30, 1996. Due to the seasonal nature of the Partnership's propane
business, the results of operations for interim periods are not
necessarily indicative of the results to be expected for a full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and revenues and expenses during
the reporting period. Actual results could differ from these
estimates.
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AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
2. DISTRIBUTIONS OF AVAILABLE CASH
A distribution of 55 cents per limited partner unit (the "Minimum
Quarterly Distribution" or "MQD") for the quarter ended September 30,
1996 was paid on November 18, 1996 on all Common and Subordinated
units. On January 27, 1997, the Partnership declared the MQD on all
Common and Subordinated units for the quarter ended December 31, 1996,
payable February 18, 1997 to holders of record on February 7, 1997.
3. RELATED PARTY TRANSACTIONS
In accordance with the Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, the General Partner is entitled to
reimbursement of all direct and indirect expenses incurred or payments
it makes on behalf of the Partnership, and all other necessary or
appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with the
Partnership's business. These costs totaled $47,301 and $47,561
during the three months ended December 31, 1996 and 1995,
respectively. In addition, UGI provides certain financial and
administrative services to the General Partner. UGI bills the General
Partner for these direct and indirect corporate expenses and the
General Partner is reimbursed by the Partnership for these expenses.
During the three months ended December 31, 1996 and 1995, such
corporate expenses totaled $1,481 and $2,074, respectively.
4. COMMITMENTS AND CONTINGENCIES
The Partnership has succeeded to the lease guarantee obligations of
Petrolane Incorporated (Petrolane), a predecessor company of the
Partnership, relating to Petrolane's divestiture of nonpropane
operations prior to its 1989 acquisition by QFB Partners. These
leases are currently estimated to aggregate approximately $88,000
(subject to reduction in certain circumstances). The leases expire
through 2010 and some of them are currently in default. Under certain
circumstances such lease obligations may be reduced by the earnings of
such divested operations. The Partnership has succeeded to the
indemnity agreement of Petrolane by which Texas Eastern Corporation
(Texas Eastern), a prior owner of Petrolane, agreed to indemnify
Petrolane against any liabilities arising out of the conduct of
businesses that do not relate to, and are not a part of, the propane
business, including lease guarantees. To date, Texas Eastern has
directly satisfied its obligations without the Partnership's having to
honor its guarantee.
In addition, the Partnership has succeeded to Petrolane's agreement to
indemnify Shell Petroleum N.V. (Shell) for various scheduled claims
that were pending against Tropigas de Puerto Rico (Tropigas). This
indemnification agreement had been entered into by Petrolane in
conjunction with Petrolane's sale of the international operations of
Tropigas
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AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
to Shell in 1989. The Partnership also succeeded to Petrolane's right
to seek indemnity on these claims first from International Controls
Corp., which sold Tropigas to Petrolane, and then from Texas Eastern.
To date, neither the Partnership nor Petrolane has paid any sums under
this indemnity, but several claims by Shell, including claims related
to certain antitrust actions aggregating at least $68,000, remain
pending.
The Partnership has identified environmental contamination at several
of its properties. The Partnership's policy is to accrue
environmental investigation and cleanup costs when it is probable that
a liability exists and the amount or range of amounts is reasonably
estimable. However, in many circumstances future expenditures cannot
be reasonably quantified because of a number of factors, including
various costs associated with potential remedial alternatives, the
unknown number of other potentially responsible parties involved and
their ability to contribute to the costs of investigation and
remediation, and changing environmental laws and regulations. The
Partnership intends to pursue recovery of any incurred costs through
all appropriate means, although such recovery cannot be assured.
In addition to these environmental matters, there are various other
pending claims and legal actions arising out of the normal conduct of
the Partnership's business. The final results of environmental and
other matters cannot be predicted with certainty. However, it is
reasonably possible that some of them could be resolved unfavorably to
the Partnership. Management believes, after consultation with
counsel, that damages or settlements, if any, recovered by the
plaintiffs in such claims or actions will not have a material adverse
effect on the Partnership's financial position but could be material
to operating results and cash flows in future periods depending on the
nature and timing of future developments with respect to these matters
and the amounts of future operating results and cash flows.
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AMERIGAS FINANCE CORP.
(a wholly owned subsidiary of AmeriGas Partners, L.P.)
BALANCE SHEETS
(unaudited)
December 31, September 30,
ASSETS 1996 1996
- ------ ------------ -------------
Cash $ 1,000 $ 1,000
============ ============
STOCKHOLDER'S EQUITY
- ---------------------
Common stock, $.01 par value; 100 shares authorized,
issued and outstanding $ 1 $ 1
Additional paid-in capital 999 999
------------ ------------
Total stockholder's equity $ 1,000 $ 1,000
============ ============
The accompanying note is an integral part of these financial statements.
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AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
NOTE TO BALANCE SHEETS
AmeriGas Finance Corp. (AmeriGas Finance), a Delaware corporation, was formed
on March 13, 1995 and is a wholly owned subsidiary of AmeriGas Partners, L.P.
(AmeriGas Partners). AmeriGas Partners was formed on November 2, 1994 as a
Delaware limited partnership. AmeriGas Partners was formed to acquire and
operate the propane businesses and assets of AmeriGas Propane, Inc., a Delaware
corporation (AmeriGas Propane), AmeriGas Propane-2, Inc. (AGP-2) and Petrolane
Incorporated (Petrolane) through AmeriGas Propane, L.P. (the "Operating
Partnership"). AmeriGas Partners holds a 98.99% limited partner interest in
the Operating Partnership and AmeriGas Propane, Inc., a Pennsylvania
corporation and the general partner of AmeriGas Partners (the "General
Partner"), holds a 1.01% general partner interest. On April 19, 1995, (i)
pursuant to a Merger and Contribution Agreement dated as of April 19, 1995,
AmeriGas Propane and certain of its operating subsidiaries and AGP-2 merged
into the Operating Partnership (the "Formation Merger"), and (ii) pursuant to a
Conveyance and Contribution Agreement dated as of April 19, 1995, Petrolane
conveyed substantially all of its assets and liabilities to the Operating
Partnership (the "Petrolane Conveyance"). As a result of the Formation Merger
and the Petrolane Conveyance, the General Partner and Petrolane received
limited partner interests in the Operating Partnership and the Operating
Partnership owns substantially all of the assets and assumed substantially all
of the liabilities of AmeriGas Propane, AGP-2 and Petrolane. AmeriGas Propane
conveyed its limited partner interest in the Operating Partnership to AmeriGas
Partners in exchange for 2,922,235 Common Units and 13,350,146 Subordinated
Units of AmeriGas Partners and Petrolane conveyed its limited partner interest
in the Operating Partnership to AmeriGas Partners in exchange for 1,407,911
Common Units and 6,432,000 Subordinated Units of AmeriGas Partners. Both
Common and Subordinated units represent limited partner interests in AmeriGas
Partners.
On April 19, 1995, AmeriGas Partners issued $100,000,000 face value of 10.125%
Senior Notes due April 2007. AmeriGas Finance serves as a co-obligor of these
notes.
AmeriGas Partners owns all 100 shares of AmeriGas Finance Common Stock
outstanding.
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AMERIGAS PARTNERS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED WITH THREE MONTHS ENDED
DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------------
Increase
Three Months Ended December 31, 1996 1995 (Decrease)
- ---------------------------------------------------------------------------------------------------------------------
(Millions, except per gallon and percentages)
Gallons sold:
Retail 251.7 244.3 7.4 3.0%
Wholesale 68.6 119.2 (50.6) (42.4)%
-------- -------- --------
320.3 363.5 (43.2) (11.9)%
======== ======== ========
Degree days - % colder (warmer)
than normal (a) (1.6)% 2.3% - -
Revenues:
Retail propane $285.9 $209.9 $ 76.0 36.2%
Wholesale propane 46.0 46.8 (.8) (1.7)%
Other 28.2 29.1 (.9) (3.1)%
-------- -------- --------
$360.1 $285.8 $ 74.3 26.0%
======== ======== ========
Total margin (b) $155.4 $123.1 $ 32.3 26.2%
EBITDA (c) $ 73.2 $ 49.0 $ 24.2 49.4%
Operating income $ 57.7 $ 33.5 $ 24.2 72.2%
- ---------------------------------------------------------------------------------------------------------------------
(a) Based on the weighted average deviation from average degree days
during the 30-year period 1961-1990, as contained in the National
Weather Service Climate Analysis Center database, for geographic areas
in which AmeriGas Partners operates.
(b) Total revenues less total cost of sales.
(c) EBITDA (earnings before interest, income taxes, depreciation and
amortization) should not be considered as an alternative to net income
(as an indicator of operating performance) or as an alternative to
cash flow (as a measure of liquidity or ability to service debt
obligations).
- ------------
Retail volumes of propane sold increased in the three months ended December 31,
1996, notwithstanding the warmer weather, reflecting the effects of
acquisitions, an increase in sales of
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AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
propane used for crop drying due to wet weather in much of the farm belt, and
volume growth. Wholesale volumes of propane sold were lower in the three
months ended December 31, 1996 reflecting reduced low-margin sales of storage
inventories.
Total revenues increased significantly in the three months ended December 31,
1996 as a result of higher average selling prices, reflecting higher propane
product costs, and, to a much lesser extent, the greater retail volumes. Propane
supply costs were significantly higher in the three months ended December 31,
1996 due in part to historically low U.S. propane inventory levels caused by a
number of factors including increased petrochemical demand for propane use as a
feedstock, an extended cold 1995/1996 winter in the eastern United States,
increased off-shore demand for propane resulting from colder weather in Europe,
and the impact of a midsummer explosion at a gas processing facility in Mexico.
The spot price of propane at Mont Belvieu, Texas, a major U.S. storage and
distribution hub, increased dramatically during the three months ended December
31, 1996 rising to a quarterly high of 70.5 cents per gallon on December 16,
1996. Propane spot market prices began to decline late in the quarter. This
general trend of decline has continued into the beginning of the second quarter
of fiscal 1997.
Total propane margin was significantly greater in the three months ended
December 31, 1996 reflecting the impact of higher average retail unit margins
and higher retail volumes. Although the Partnership's propane product costs
increased, such product cost increase was partially mitigated by favorable
fixed-price supply commitments and financial contracts entered into by the
Partnership as part of its overall propane supply strategy. In addition, the
higher 1996 average retail unit margin reflects the fact that retail unit
margins in the prior-year period were adversely impacted by certain sales and
marketing programs initiated by the Partnership.
The increase in operating income and EBITDA during the three months ended
December 31, 1996 reflects the impact of the higher total margin partially
offset by higher operating expenses and a decrease in miscellaneous income.
The increase in operating expenses includes higher customer equipment repairs
and maintenance expenses, higher distribution expenses due in large part to
higher fuel costs, and incremental costs associated with acquisitions and new
district locations. Miscellaneous income in the prior-year period was higher
than in 1996 principally due to $1.4 million of income from the early
settlement of propane supply contracts.
Interest expense was $16.7 million in the three months ended December 31, 1996
compared with $15.6 million in the prior-year period reflecting increased
interest expense on the Partnership's Revolving Credit and Acquisition
facilities principally as a result of higher amounts outstanding.
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AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY
FINANCIAL CONDITION
AmeriGas Partners' debt outstanding at December 31, 1996 totaled $768.2 million
compared with $707.5 million at September 30, 1996. The increase is
principally a result of a $55 million seasonal increase in borrowings under the
Operating Partnership's Revolving Credit Facility and $7 million of borrowings
under its Acquisition Facility.
Effective October 28, 1996, the Operating Partnership has a revolving credit
agreement with the General Partner under which it may borrow up to $20 million
to fund working capital, capital expenditures, and interest and distribution
payments. This agreement is coterminous with the Operating Partnership's
Revolving Credit Facility. Borrowings under the General Partner Facility will
be unsecured and subordinated to all senior debt of the Partnership. Interest
rates on borrowings and facility fees will be determined generally on the same
basis as the Revolving Credit Facility's interest rates and fees. UGI has
agreed to contribute on an as needed basis through its subsidiaries up to $20
million to the General Partner to fund such borrowings. Also effective October
28, 1996, the Operating Partnership's Bank Credit Agreement was amended to
include a revolving $15 million sublimit under its Special Purpose Facility
which can be used to fund working capital, capital expenditures, and interest
and distribution payments. This sublimit is scheduled to expire April 12,
1998. At December 31, 1996, there were no borrowings under the General Partner
Facility or the sublimit under the Special Purpose Facility.
During the three months ended December 31, 1996, the Partnership declared and
paid the MQD of 55 cents on all units for the quarter ended September 30, 1996.
The MQD for the quarter ended December 31, 1996 will be made on February 18,
1997 to holders of record on February 7, 1997 of all Common and Subordinated
units.
CASH FLOWS
Cash and cash equivalents totaled $23.7 million at December 31, 1996 compared
with $2.1 million at September 30, 1996. The higher balance at December 31,
1996 is a result of short-term borrowings made in anticipation of certain
working capital payments. Due to the seasonal nature of the propane business,
cash flows from operating activities are generally strongest during the second
and third fiscal quarters of the Partnership when customers pay for propane
purchased during the heating season and are typically at their lowest levels
during the first and fourth fiscal quarters. Accordingly, cash flows from
operations during the three months ended December 31, 1996 are not necessarily
indicative of cash flows to be expected for a full year.
OPERATING ACTIVITIES. Cash used by operating activities was $(9.6) million
during the three months ended December 31, 1996 compared with $(23.5) million
in the comparable prior-year period. Cash flows from operations before changes
in working capital were $57.0 million in the three months ended
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AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
December 31, 1996 compared with $33.7 million during the three months ended
December 31, 1995 reflecting a significant improvement in AmeriGas Partners'
operating performance. Changes in operating working capital during the three
months ended December 31, 1996 required $66.6 million of operating cash flow
principally from a $67.7 million seasonal increase in accounts receivable, a
$10.6 million increase in inventories, and a $23.3 million net use of cash from
changes in accruals for interest and employee benefits partially offset by a
$33.3 million increase in accounts payable. During the three months ended
December 31, 1995, changes in operating working capital required $57.2 million
of operating cash flow.
INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $6.6 million (including maintenance capital expenditures of $2.7
million) during the three months ended December 31, 1996 compared with $7.2
million (including maintenance capital expenditures of $1.9 million) in the
prior-year period. Maturing short-term investments increased cash flows from
investing activities by $9.0 million during the 1995 period.
FINANCING ACTIVITIES. During each of the three-month periods ended December
31, 1996 and 1995, AmeriGas Partners made distributions to its unitholders and
the General Partner of $23.2 million. These amounts represented the MQD on all
units for each of the quarters ended September 30, 1996 and 1995. In addition,
during each of the three-month periods ended December 31, 1996 and 1995, the
Operating Partnership distributed $.2 million to the General Partner in respect
of the General Partner's 1.0101% interest in the Operating Partnership. In
order to meet seasonal working capital needs, during the three months ended
December 31, 1996 the Operating Partnership borrowed $55 million under its
Revolving Credit Facility compared with $18 million during the same period in
the prior-year. Seasonal borrowing requirements in the prior-year period were
lower due to the existence of significant cash balances at the beginning of
such period. The Partnership also borrowed $7 million under its Acquisition
Facility during the three months ended December 31, 1996 relating to
acquisitions made prior to fiscal 1997. There were no borrowings under the
Acquisition Facility during the same period last year.
PARTNERSHIP FORMATION TRANSACTIONS. Cash paid for Partnership formation
transactions during the three months ended December 31, 1995 represents the
reimbursement by the Partnership of fees and expenses previously paid by
AmeriGas, Inc. relating to the formation of the Partnership.
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AMERIGAS PARTNERS, L.P.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Commercial Row Cases, Judicial Council of California, Coordination Proceeding
No. 3096. Beginning in June 1994, twenty-one complaints were filed against
AmeriGas Propane, Inc., a Delaware corporation ("API") and a predecessor of
AmeriGas Propane, L.P., in the Superior Court of California, arising from an
explosion which occurred in Truckee, California on November 30, 1993. The
explosion is alleged to have occurred as the result of the escape of propane
gas from a fractured fitting in an underground supply line. The complaints
sought relief for alleged personal injuries and/or property damage and named as
defendants the manufacturer and the distributor of the fitting, in addition to
API. The cases were consolidated by the Judicial Council of California as the
Commercial Row Cases, Judicial Council Coordination Proceeding No. 3096. All
of the complaints requested damages in unspecified amounts; some of the
complaints sought punitive damages as well as compensatory damages. All but
three of the claims have been settled; all such settlements were fully insured,
subject to a $500,000 self-insured retention. Although trial of the remaining
claims is scheduled to begin on February 24, 1997, the remaining claimants'
demands, in the aggregate, are immaterial to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
10.1 AmeriGas Propane, Inc. Executive Employee Severance Plan.
10.2 Form of Change of Control Agreement between AmeriGas Propane,
Inc. and Ms. D. L. Carter, and each of Messrs. E. V. N.
Bissell, R. P. Grady, W. D. Katz, R. H. Knauss, G. E. Regan
and D. C. Riggan.
27 Financial Data Schedule
(b) AmeriGas Partners, L.P. filed a Current Report on Form 8-K dated
November 19, 1996, reporting factors affecting forward-looking
statements under Item 5.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.
AmeriGas Partners, L.P.
--------------------------------------
(Registrant)
By: AmeriGas Propane, Inc.,
as General Partner
Date: February 13, 1997 By: D. C. Riggan
- ------------------------ ----------------------------------------------
D. C. Riggan
Vice President - Finance & Accounting
AmeriGas Finance Corp.
-------------------------------------
(Registrant)
Date: February 13, 1997 By: D. C. Riggan
- ------------------------ ----------------------------------------------
D. C. Riggan
Vice President - Finance & Accounting
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18
AMERIGAS PARTNERS, L.P.
EXHIBIT INDEX
10.1 AmeriGas Propane, Inc. Executive Employee Severance Plan
10.2 Form of Change of Control Agreement between AmeriGas Propane, Inc.,
and Ms. D. L. Carter and each of Messrs. E. V. N. Bissell,
R. P. Grady, W. D. Katz, R. H. Knauss, G. E. Regan and D. C. Riggan.
27 Financial Data Schedule