AmeriGas Partners, L.P.
2010 Annual Report
AmeriGas Partners, L.P. is a publicly traded master limited
partnership that operates the nation’s largest retail propane distribution business. The common
units of AmeriGas Partners, L.P. are traded on the New York Stock Exchange under the symbol
“APU”. Through subsidiaries, UGI Corporation operates the partnership as its general partner
and owns an effective 44% interest, with more than 50,000 public unitholders owning the
remaining 56% of the partnership.
The portability and versatility of clean-burning propane make it useful for a wide variety of
applications. Residential and commercial customers use propane for space heating, water
heating, cooking and drying while industrial customers use it to fire furnaces, as a cutting gas
and in other process applications. Local gas utility customers use propane as a supplemental
fuel to meet peak load deliverability requirements. Propane is also used to power over-the-road
vehicles, forklifts and stationary engines. Agricultural applications include crop drying, tobacco
curing and chicken brooding.
AmeriGas distributes more than one billion gallons of propane annually to approximately
1.3 million residential, commercial/industrial, motor fuel, agricultural and wholesale customers
in all 50 states.
AmeriGas operates 1,200 distribution locations staffed with nearly 6,000 dedicated employees
focused on fulfilling AmeriGas’ commitment to be the most reliable, the safest and the most
responsive propane company in the nation.
For more information about AmeriGas, visit www.amerigas.com.
Retail Markets by Volume
Residential 41%
Financial Highlights
Motor fuel 13%
Transport 5%
Commercial/Industrial 36%
Agricultural 5%
Year Ended September 30,
2010
2009
2008
(Millions of dollars, except as noted)
Retail gallons sold (millions)
Retail Markets by Volume
Degree days – % (warmer) than normal (1)
Revenues
Residential 41%
Operating income
Commercial/Industrial 36%
Net income attributable to AmeriGas Partners, L.P.
Motor fuel 13%
Income tax expense
Transport 5%
Interest expense
Agricultural 5%
Depreciation and amortization
893.4
(2.2%)
$2,320.3
$ 235.9
$ 165.2
3.3
65.1
87.4
928.2
(3.1%)
$2,260.1
$ 300.5
$ 224.6
2.7
70.3
83.8
EBITDA (2)
Units outstanding – end of year (millions)
$ 321.0
$ 381.4
57.1
57.0
993.2
(3.0%)
$2,815.2
$ 234.9
$ 158.0
1.7
72.9
80.4
$ 313.0
57.0
Retail Sales by Volume
Residential 40%
Commercial/Industrial 37%
Motor fuel 13%
Transport 5%
Agricultural 5%
AmeriGas serves approximately
1.3 million customers in all
50 states from approximately
1,200 locations.
(1) Deviation from average heating degree days for the 30-year period 1971–2000 based upon national weather statistics provided by the National
Oceanic and Atmospheric Administration for 335 airports in the United States, excluding Alaska.
(2) Earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) should not be considered as an alternative to net
income attributable to AmeriGas Partners, L.P (as an indicator of operating performance) and is not a measure of performance or financial
condition under accounting principles generally accepted in the United States (“GAAP”). Management believes EBITDA is a meaningful non-GAAP
financial measure used by investors to (1) compare the Partnership’s operating performance with other companies within the propane industry
and (2) assess its ability to meet loan covenants. The Partnership’s definition of EBITDA may be different from that used by other companies.
Management uses EBITDA to compare year-over-year profitability of the business without regard to capital structure as well as to compare the
relative performance of the Partnership to that of other master limited partnerships without regard to their financing methods, capital structure,
income taxes or historical cost basis. In view of the omission of interest, income taxes, depreciation and amortization from EBITDA, management
also assesses the profitability of the business by comparing net income attributable to AmeriGas Partners, L.P for the relevant years.
Management also uses EBITDA to assess the Partnership’s profitability because its parent, UGI Corporation, uses the Partnership’s EBITDA to
assess the profitability of the Partnership. UGI Corporation discloses the Partnership’s EBITDA as the profitability measure to comply with the
GAAP requirement to provide profitability information about its domestic propane segment. EBITDA in the twelve months ended September 30,
2010 includes a $12.2 million pre-tax loss on discontinuance of hedge accounting for interest rate protection agreements and a $7 million pre-tax
loss associated with an increase in litigation reserves. EBITDA in the twelve months ended September 30, 2009 includes a $39.9 million pre-tax
gain from the sale of the Partnership’s California storage facility.
Dear Fellow Unitholder,
This year AmeriGas is celebrating its 15th
to a nationwide network of 1,200 locations
the industry. Through our 1,200 locations, we
year as a publicly held company. Our initial
serving 1.3 million customers in all 50 states.
can reach 95 percent of all propane consum-
public offering (IPO) on the New York Stock
The key to our success in growing through
ers in the United States. Our national foot-
Exchange took place on April 12, 1995. The
acquisitions has been our ability to success-
print is most relevant to national or regional
initial unit price on that first day of trading
fully integrate acquired businesses while
customers who would like to consolidate
was $21.25 and the annual partnership dis-
retaining the customers and the employ-
their purchases. For example, when UPS,
tribution was $2.20 per unit. As of November
ees of the acquired businesses. Since our
Home Depot, or Burlington Northern want
15, 2010, the closing price of the AmeriGas
IPO in 1995, we have completed over 100
one company that can service them border-
units was $47.67 and the annual partnership
acquisitions ranging in size from small, single
to-border and coast-to-coast, no company
distribution was $2.82 per unit. The average
location marketers to large regional busi-
can do that as well as AmeriGas. In addition
annual return on our units from the 1995 IPO
nesses like Columbia Propane and All-Star
to the best geographic coverage, we have
through September 30, 2010, was 14.6 per-
Gas. We continue to view acquisitions as
dedicated sales and support teams to work
cent – double the 7.3 percent average annual
a key part of our growth strategy due to
with these national customers.
return for the S&P 500 over the same period.
the fragmented nature of the retail propane
If you had invested $1,000 in AmeriGas units
market in the United States. AmeriGas is the
15 years ago, and reinvested all of those dis-
largest propane marketer, with an estimated
tributions to buy more units, your investment
ten percent share. The ten largest propane
would be worth $8,000 today. We delivered
companies (including AmeriGas) hold a
this superior return to our unitholders through
combined 41 percent share, with the bal-
the consistent execution of a strategy that
ance of the market held by approximately
leverages our two key competitive advantag-
3,500 independent marketers. As a result,
es: our ability to acquire and integrate quality
a consistent, disciplined acquisition strategy
propane businesses, and our unmatched
presents ample growth opportunities into the
geographic coverage.
foreseeable future.
We have leveraged this strength through
AmeriGas Cylinder Exchange (ACE) and
through our Strategic Accounts group. ACE
provides grill cylinders to consumers through
over 30,000 retail locations in all 50 states.
Last year, we sold or exchanged more than
11 million grill cylinders through these loca-
tions. At the time of our IPO in 1995, the
ACE business did not exist and Strategic
Accounts was a very small part of AmeriGas.
Today, ACE and Strategic Accounts contrib-
During our 51-year history, AmeriGas has
As a result of our legacy of successful
ute a significant portion of our earnings.
grown, principally through acquisitions, from
acquisitions, AmeriGas now benefits from a
a small Pennsylvania-based business in 1959
geographic coverage that is unmatched in
For our core base of residential and com-
mercial customers, our strategy is to grow
through superior customer service. Based on
our research, we know propane customers
care most about three attributes – reliability,
safety and responsiveness. We measure our
performance in each of these areas, and
aim to set the standard for customer service
in every market where we do business.
Ninety-five percent of our customers rated
our service as meeting or exceeding their
expectations in fiscal year 2010.
Lon R. Greenberg
John L. Walsh
Eugene V. N. Bissell
In fiscal year 2010, we continued to pursue
customer service, safety, and to AmeriGas.
income taxes, depreciation and amortization
our strategy of growth through acquisitions,
We would also like to acknowledge the guid-
by four percent per year and our distributions
ACE and Strategic Accounts. We added
ance we receive from the members of the
by five percent per year through effective ex-
14 million gallons on an annualized basis
AmeriGas Board of Directors. Their experi-
ecution of our strategies. We appreciate the
through 15 acquisitions. Despite the weak
ence has been particularly valuable as we
confidence our investors have shown in us
economy, we grew both ACE and Strategic
navigate through this challenging economic
over the last 15 years, and we are committed
Accounts volume by close to three percent
environment.
to continuing to deliver superior returns to
Looking forward, our objective is to continue
you over the long term.
to grow our earnings before interest expense,
Thank you for your investment in AmeriGas.
by adding new locations. Our financial results
for the year were in line with our expecta-
tions, and in April we increased our distribu-
tion by five percent, the sixth consecutive
annual increase in the distribution rate.
The successful execution of our operating
strategies would not have been possible
without the dedication of nearly 6,000 Ameri-
Lon R. Greenberg
Gas employees and their commitment to
Chairman
John L. Walsh
Vice Chairman
Eugene V. N. Bissell
President and
Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010
Commission file number 1-13692
AMERIGAS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
23-2787918
(I.R.S. Employer Identification No.)
460 North Gulph Road, King of Prussia, PA 19406
(Address of Principal Executive Offices) (Zip Code)
(610) 337-7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Units representing limited partner interests
Title of Each Class
Name of each Exchange on Which Registered
New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:59) No (cid:133)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes (cid:133) No (cid:59)
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 (cid:59) No (cid:133)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes (cid:59) No (cid:133)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (cid:59)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer (cid:59) Accelerated filer (cid:133)
Non-accelerated filer (cid:133)
Smaller reporting company (cid:133)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:133) No (cid:59)
The aggregate market value of AmeriGas Partners, L.P. Common Units held by non-affiliates of AmeriGas Partners,
L.P. on March 31, 2010 was approximately $1,291,747,698. At November 15, 2010, there were outstanding
57,091,659 Common Units representing limited partner interests.
TABLE OF CONTENTS
PART I:
Forward-Looking Information .......................................................................................................................
Item 1. Business .............................................................................................................................................
Item 1A. Risk Factors ....................................................................................................................................
Item 1B. Unresolved Staff Comments ...........................................................................................................
Item 2. Properties ...........................................................................................................................................
Item 3. Legal Proceedings .............................................................................................................................
Item 4. (Removed and Reserved)...................................................................................................................
PART II:
Item 5. Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases
of Equity Securities ......................................................................................................................................
Item 6. Selected Financial Data .....................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ............
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........................................................
Item 8. Financial Statements and Supplementary Data .................................................................................
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............
Item 9A. Controls and Procedures .................................................................................................................
Item 9B. Other Information ...........................................................................................................................
PART III:
Item 10. Directors, Executive Officers and Corporate Governance...............................................................
Item 11. Executive Compensation .................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Security
Holder Matters .............................................................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence.................................
Item 14. Principal Accounting Fees and Services..........................................................................................
PART IV:
Item 15. Exhibits and Financial Statement Schedules ...................................................................................
Signatures ..........................................................................................................................................................
Page
2
2
8
17
17
18
18
18
19
20
31
31
31
31
31
31
37
68
70
72
73
80
Index to Financial Statements and Financial Statement Schedules ...................................................................
F-2
1
FORWARD-LOOKING INFORMATION
Information contained in this Annual Report on Form 10-K may contain forward-looking statements. Such
statements use forward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,” “expect,”
“may,” “will,” or other similar words. These statements discuss plans, strategies, events or developments that we
expect or anticipate will or may occur in the future.
A forward-looking statement may include a statement of the assumptions or bases underlying the forward-
looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are
reasonable. However, we caution you that actual results almost always vary from assumed facts or bases, and the
differences between actual results and assumed facts or bases can be material, depending on the circumstances.
When considering forward-looking statements, you should keep in mind the following important factors which
could affect our future results and could cause those results to differ materially from those expressed in our forward-
looking statements: (1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability
of propane, and the capacity to transport propane to our customers; (3) the availability of, and our ability to
consummate, acquisition or combination opportunities; (4) successful integration and future performance of
acquired assets or businesses; (5) changes in laws and regulations, including safety, tax and accounting matters; (6)
competitive pressures from the same and alternative energy sources; (7) failure to acquire new customers thereby
reducing or limiting any increase in revenues; (8) liability for environmental claims; (9) increased customer
conservation measures due to high energy prices and improvements in energy efficiency and technology resulting in
reduced demand; (10) adverse labor relations; (11) large customer, counter-party or supplier defaults; (12) liability
in excess of insurance coverage for personal injury and property damage arising from explosions and other
catastrophic events, including acts of terrorism, resulting from operating hazards and risks incidental to transporting,
storing and distributing propane, butane and ammonia; (13) political, regulatory and economic conditions in the
United States and foreign countries; (14) capital market conditions, including reduced access to capital markets and
interest rate fluctuations; (15) changes in commodity market prices resulting in significantly higher cash collateral
requirements; (16) the impact of pending and future legal proceedings; and (17) the timing and success of our
acquisitions and investments to grow our business.
These factors are not necessarily all of the important factors that could cause actual results to differ materially
from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also
have material adverse effects on future results. We undertake no obligation to update publicly any forward-looking
statement whether as a result of new information or future events except as required by the federal securities laws.
PART I:
ITEM 1. BUSINESS
General
AmeriGas Partners, L.P. is a publicly traded limited partnership formed under Delaware law on November 2,
1994. We are the largest retail propane distributor in the United States based on the volume of propane gallons
distributed annually. The Partnership serves approximately 1.3 million residential, commercial, industrial,
agricultural and motor fuel customers in all 50 states from nearly 1,200 propane distribution locations.
We are a holding company and we conduct our business principally through our subsidiary, AmeriGas Propane,
L.P. (“AmeriGas OLP”) and its subsidiary, AmeriGas Eagle Propane, L.P. (“Eagle OLP” and together with
AmeriGas OLP, the “Operating Partnership”), both Delaware limited partnerships. Our common units (“Common
Units”), which represent limited partner interests, are traded on the New York Stock Exchange under the symbol
“APU.” Our executive offices are located at 460 North Gulph Road, King of Prussia, Pennsylvania 19406, and our
telephone number is (610) 337-7000. In this report, the terms “Partnership” and “AmeriGas Partners,” as well as the
terms “our,” “we,” and “its,” are used sometimes as abbreviated references to AmeriGas Partners, L.P. itself or
collectively, AmeriGas Partners, L.P. and its consolidated subsidiaries, including the Operating Partnership. The
terms “Fiscal 2010” and “Fiscal 2009” refer to the fiscal years ended September 30, 2010 and September 30, 2009,
respectively. Effective October 1, 2010, Eagle OLP merged with and into AmeriGas OLP.
2
AmeriGas Propane, Inc. is our general partner (the “General Partner,”) and is responsible for managing our
operations. The General Partner is a wholly owned subsidiary of UGI Corporation (“UGI”), a publicly traded
company listed on the New York Stock Exchange. The General Partner has an approximate 44% effective
ownership interest in the Partnership.
Business Strategy
Our strategy is to grow by (i) acquisitions and internal sales and marketing programs, (ii) leveraging our scale
and driving productivity, and (iii) achieving world class safety performance. We regularly consider and evaluate
opportunities for growth through the acquisition of local, regional and national propane distributors. We compete for
acquisitions with others engaged in the propane distribution business. During Fiscal 2010, we completed the
acquisition of 15 propane distribution businesses. We expect that internal growth will be provided in part from the
continued expansion of our AmeriGas Cylinder Exchange (“ACE”) program through which consumers can purchase
or exchange empty propane grill cylinders at various retail locations, and our Strategic Accounts program, through
which the Partnership encourages large, multi-location propane users to enter into a supply agreement with us rather
than with many small suppliers. In addition, we believe opportunities exist to grow our business internally through
other sales and marketing programs designed to attract and retain customers.
General Partner Information
The Partnership’s website can be found at www.amerigas.com. The Partnership makes available free of charge at
this website (under the tabs “Investor Relations,” “SEC FILINGS”) copies of its reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, including its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. The General Partner’s Principles of
Corporate Governance, Code of Ethics for the Chief Executive Officer and Senior Financial Officers, Code of
Business Conduct and Ethics for Directors, Officers and Employees, and charters of the Corporate Governance,
Audit and Compensation/Pension Committees of the Board of Directors of the General Partner are also available on
the Partnership’s website (under the tab “Investor Relations,” caption “Corporate Governance”). All of these
documents are also available free of charge by writing to Hugh J. Gallagher, Director, Treasury Services and
Investor Relations, UGI Corporation, P.O. Box 858, Valley Forge, PA 19482.
Products, Services and Marketing
The Partnership serves approximately 1.3 million customers in all 50 states from nearly 1,200 propane
distribution locations. In addition to distributing propane, the Partnership also sells, installs and services propane
appliances, including heating systems. In certain areas, the Partnership also installs and services propane fuel
systems for motor vehicles. Typically, district locations are found in suburban and rural areas where natural gas is
not readily available. Districts generally consist of an office, appliance showroom, warehouse, and service facilities,
with one or more 18,000 to 30,000 gallon storage tanks on the premises. As part of its overall transportation and
distribution infrastructure, the Partnership operates as an interstate carrier in 48 states throughout the continental
United States. It is also licensed as a carrier in the Canadian Provinces of Ontario and Quebec.
The Partnership sells propane primarily to residential, commercial/industrial, motor fuel, agricultural and
wholesale customers. The Partnership distributed over one billion gallons of propane in Fiscal 2010. Approximately
87% of the Partnership’s Fiscal 2010 sales (based on gallons sold) were to retail accounts and approximately 13%
were to wholesale customers. Sales to residential customers in Fiscal 2010 represented approximately 40% of retail
gallons sold; commercial/industrial customers 37%; motor fuel customers 13%; and agricultural customers 5%.
Transport gallons, which are large-scale deliveries to retail customers other than residential, accounted for 5% of
Fiscal 2010 retail gallons. No single customer represents, or is anticipated to represent, more than 5% of the
Partnership’s consolidated revenues.
The Partnership continues to expand its AmeriGas Cylinder Exchange (“ACE”) program. At September 30,
2010, ACE cylinders were available at approximately 30,000 retail locations throughout the United States. Sales of
our ACE grill cylinders to retailers are included in commercial/industrial sales. The ACE program enables
consumers to purchase or exchange their empty propane grill cylinders at various retail locations such as home
centers, gas stations, mass merchandisers and grocery and convenience stores. We also supply retailers with large
propane tanks to enable retailers to replenish customers’ propane grill cylinders directly at the retailer’s location.
3
Residential customers use propane primarily for home heating, water heating and cooking purposes. Commercial
users, which include motels, hotels, restaurants and retail stores, generally use propane for the same purposes as
residential customers. Industrial customers use propane to fire furnaces, as a cutting gas and in other process
applications. Other industrial customers are large-scale heating accounts and local gas utility customers who use
propane as a supplemental fuel to meet peak load deliverability requirements. As a motor fuel, propane is burned in
internal combustion engines that power over-the-road vehicles, forklifts and stationary engines. Agricultural uses
include tobacco curing, chicken brooding and crop drying. In its wholesale operations, the Partnership principally
sells propane to large industrial end-users and other propane distributors.
Retail deliveries of propane are usually made to customers by means of bobtail and rack trucks. Propane is
pumped from the bobtail truck, which generally holds 2,400 to 3,000 gallons of propane, into a stationary storage
tank on the customer’s premises. The Partnership owns most of these storage tanks and leases them to its customers.
The capacity of these tanks ranges from approximately 120 gallons to approximately 1,200 gallons. The Partnership
also delivers propane in portable cylinders, including ACE propane grill cylinders. Some of these deliveries are
made to the customer’s location, where empty cylinders are either picked up or replenished in place.
Propane Supply and Storage
The Partnership has over 250 domestic and international sources of supply, including the spot market. Supplies
of propane from the Partnership’s sources historically have been readily available. During the year ended September
30, 2010, approximately 90% of the Partnership’s propane supply was purchased under supply agreements with
terms of 1 to 3 years. The availability of propane supply is dependent upon, among other things, the severity of
winter weather, the price and availability of competing fuels such as natural gas and crude oil, and the amount and
availability of imported supply. Although no assurance can be given that supplies of propane will be readily
available in the future, management currently expects to be able to secure adequate supplies during fiscal year 2011.
If supply from major sources were interrupted, however, the cost of procuring replacement supplies and transporting
those supplies from alternative locations might be materially higher and, at least on a short-term basis, margins
could be affected. BP Products North America Inc. and BP Canada Energy Marketing Corp. (collectively),
Enterprise Products Operating LP and Targa Midstream Services LP, supplied approximately 43% of the
Partnership’s Fiscal 2010 propane supply. No other single supplier provided more than 10% of the Partnership’s
total propane supply in Fiscal 2010. In certain areas, however, a single supplier provides more than 50% of the
Partnership’s requirements. Disruptions in supply in these areas could also have an adverse impact on the
Partnership’s margins.
The Partnership’s supply contracts typically provide for pricing based upon (i) index formulas using the current
prices established at a major storage point such as Mont Belvieu, Texas, or Conway, Kansas, or (ii) posted prices at
the time of delivery. In addition, some agreements provide maximum and minimum seasonal purchase volume
guidelines. The percentage of contract purchases, and the amount of supply contracted for at fixed prices, will vary
from year to year as determined by the General Partner. The Partnership uses a number of interstate pipelines, as
well as railroad tank cars, delivery trucks and barges, to transport propane from suppliers to storage and distribution
facilities. The Partnership stores propane at various storage facilities and terminals located in strategic areas across
the United States.
Because the Partnership’s profitability is sensitive to changes in wholesale propane costs, the Partnership
generally seeks to pass on increases in the cost of propane to customers. There is no assurance, however, that the
Partnership will always be able to pass on product cost increases fully, particularly when product costs rise rapidly.
Product cost increases can be triggered by periods of severe cold weather, supply interruptions, increases in the
prices of base commodities such as crude oil and natural gas, or other unforeseen events. The General Partner has
adopted supply acquisition and product cost risk management practices to reduce the effect of volatility on selling
prices. These practices currently include the use of summer storage, forward purchases and derivative commodity
instruments, such as options and propane price swaps. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Market Risk Disclosures.”
4
The following graph shows the average prices of propane on the propane spot market during the last 5 fiscal
years at Mont Belvieu, Texas, a major storage area.
Average Propane Spot Market Prices
General Industry Information
Propane is separated from crude oil during the refining process and also extracted from natural gas or oil
wellhead gas at processing plants. Propane is normally transported and stored in a liquid state under moderate
pressure or refrigeration for economy and ease of handling in shipping and distribution. When the pressure is
released or the temperature is increased, it is usable as a flammable gas. Propane is colorless and odorless; an
odorant is added to allow for its detection. Propane is clean burning, producing negligible amounts of pollutants
when properly consumed.
Competition
Propane competes with other sources of energy, some of which are less costly for equivalent energy value.
Propane distributors compete for customers with suppliers of electricity, fuel oil and natural gas, principally on the
basis of price, service, availability and portability. Electricity is a major competitor of propane, but propane
generally enjoys a competitive price advantage over electricity for space heating, water heating, and cooking. In
some areas electricity may have a competitive price advantage or be relatively equivalent in price to propane due to
government regulated rate caps on electricity. Additionally, high efficiency electric heat pumps have led to a
decrease in the cost of electricity for heating. Fuel oil is also a major competitor of propane and is generally less
expensive than propane. Furnaces and appliances that burn propane will not operate on fuel oil, and vice versa, and,
therefore, a conversion from one fuel to the other requires the installation of new equipment. Propane serves as an
alternative to natural gas in rural and suburban areas where natural gas is unavailable or portability of product is
required. Natural gas is generally a less expensive source of energy than propane, although in areas where natural
gas is available, propane is used for certain industrial and commercial applications and as a standby fuel during
interruptions in natural gas service. The gradual expansion of the nation’s natural gas distribution systems has
resulted in the availability of natural gas in some areas that previously depended upon propane. However, natural
gas pipelines are not present in many regions of the country where propane is sold for heating and cooking purposes.
5
For motor fuel customers, propane competes with gasoline and diesel fuel as well as electric batteries and fuel
cells. Wholesale propane distribution is a highly competitive, low margin business. Propane sales to other retail
distributors and large-volume, direct-shipment industrial end-users are price sensitive and frequently involve a
competitive bidding process.
The retail propane industry is mature, with no growth in total demand foreseen in the next several years.
Therefore, the Partnership’s ability to grow within the industry is dependent on its ability to acquire other retail
distributors and to achieve internal growth, which includes expansion of the ACE program and the Strategic
Accounts program, as well as the success of its sales and marketing programs designed to attract and retain
customers. The failure of the Partnership to retain and grow its customer base would have an adverse effect on its
long-term results.
The domestic propane retail distribution business is highly competitive. The Partnership competes in this
business with other large propane marketers, including other full-service marketers, and thousands of small
independent operators. Some rural electric cooperatives and fuel oil distributors have expanded their businesses to
include propane distribution and the Partnership competes with them as well. The ability to compete effectively
depends on providing high quality customer service, maintaining competitive retail prices and controlling operating
expenses. The Partnership also offers customers various payment and service options, including fixed price and
guaranteed price programs.
In Fiscal 2010, the Partnership’s retail propane sales totaled approximately 893 million gallons. Based on the
most recent annual survey by the American Petroleum Institute, 2008 domestic retail propane sales (annual sales for
other than chemical uses) in the United States totaled approximately 9.3 billion gallons. Based on LP-GAS
magazine rankings, 2008 sales volume of the ten largest propane companies (including AmeriGas Partners)
represented approximately 41% of domestic retail sales.
Trade Names, Trade and Service Marks
The Partnership markets propane principally under the “AmeriGas®” and “America’s Propane Company®”
trade names and related service marks. UGI owns, directly or indirectly, all the right, title and interest in the
“AmeriGas” name and related trade and service marks. The General Partner owns all right, title and interest in the
“America’s Propane Company” trade name and related service marks. The Partnership has an exclusive (except for
use by UGI, AmeriGas, Inc. and the General Partner), royalty-free license to use these trade names and related
service marks. UGI and the General Partner each have the option to terminate its respective license agreement (on
12 months prior notice in the case of UGI), without penalty, if the General Partner is removed as general partner of
the Partnership other than for cause. If the General Partner ceases to serve as the general partner of the Partnership
for cause, the General Partner has the option to terminate its license agreement upon payment of a fee to UGI equal
to the fair market value of the licensed trade names. UGI has a similar termination option; however, UGI must
provide 12 months prior notice in addition to paying the fee to the General Partner.
Seasonality
Because many customers use propane for heating purposes, the Partnership’s retail sales volume is seasonal.
Approximately 65% to 70% of the Partnership’s retail sales volume occurs, and substantially all of the Partnership’s
operating income is earned, during the peak heating season from October through March. As a result of this
seasonality, sales are higher in the Partnership’s first and second fiscal quarters (October 1 through March 31). Cash
receipts are generally greatest during the second and third fiscal quarters when customers pay for propane purchased
during the winter heating season.
Sales volume for the Partnership traditionally fluctuates from year-to-year in response to variations in weather,
prices, competition, customer mix and other factors, such as conservation efforts and general economic conditions.
For historical information on national weather statistics, see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
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Government Regulation
The Partnership is subject to various federal, state and local environmental, safety and transportation laws and
regulations governing the storage, distribution and transportation of propane and the operation of bulk storage LPG
terminals. These laws include, among others, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), the Clean Air Act, the Occupational
Safety and Health Act, the Homeland Security Act of 2002, the Emergency Planning and Community Right to
Know Act, the Clean Water Act and comparable state statutes. CERCLA imposes joint and several liability on
certain classes of persons considered to have contributed to the release or threatened release of a “hazardous
substance” into the environment without regard to fault or the legality of the original conduct. Propane is not a
hazardous substance within the meaning of federal and most state environmental laws.
All states in which the Partnership operates have adopted fire safety codes that regulate the storage and
distribution of propane. In some states these laws are administered by state agencies, and in others they are
administered on a municipal level. The Partnership conducts training programs to help ensure that its operations are
in compliance with applicable governmental regulations. With respect to general operations, National Fire
Protection Association (“NFPA”) Pamphlets No. 54 and No. 58, which establish a set of rules and procedures
governing the safe handling of propane, or comparable regulations, have been adopted by all states in which the
Partnership operates. Management believes that the policies and procedures currently in effect at all of its facilities
for the handling, storage and distribution of propane are consistent with industry standards and are in compliance in
all material respects with applicable environmental, health and safety laws.
With respect to the transportation of propane by truck, the Partnership is subject to regulations promulgated
under federal legislation, including the Federal Motor Carrier Safety Act and the Homeland Security Act of 2002.
Regulations under these statutes cover the security and transportation of hazardous materials and are administered
by the United States Department of Transportation (“DOT”). The Natural Gas Safety Act of 1968 required the DOT
to develop and enforce minimum safety regulations for the transportation of gases by pipeline. The DOT’s pipeline
safety regulations apply to, among other things, a propane gas system which supplies 10 or more residential
customers or 2 or more commercial customers from a single source and a propane gas system any portion of which
is located in a public place. The code requires operators of all gas systems to provide training and written
instructions for employees, establish written procedures to minimize the hazards resulting from gas pipeline
emergencies, and to conduct and keep records of inspections and testing. Operators are subject to the Pipeline Safety
Improvement Act of 2002, which, among other things, protects employees who provide information to their
employers or to the federal government as to pipeline safety from adverse employment actions.
Employees
The Partnership does not directly employ any persons responsible for managing or operating the Partnership.
The General Partner provides these services and is reimbursed for its direct and indirect costs and expenses,
including all compensation and benefit costs. At September 30, 2010, the General Partner had approximately 5,800
employees, including approximately 400 part-time, seasonal and temporary employees, working on behalf of the
Partnership. UGI also performs certain financial and administrative services for the General Partner on behalf of the
Partnership and is reimbursed by the Partnership.
Global Climate Change
There continues to be concern, both nationally and internationally, about climate change and the contribution of
greenhouse gas (“GHG”) emissions, most notably carbon dioxide, to global warming. While some states have
adopted laws regulating the emission of GHGs for some industry sectors, there is currently no federal regulation
mandating the reduction of GHG emissions in the United States. In June 2009, the United States House of
Representatives passed the American Clean Energy and Security Act (“ACES Act”). The ACES Act would establish
an economy-wide GHG cap-and-trade system to reduce GHG emissions over time. The United States Senate has
been considering a number of related proposals, ranging from “energy only” bills to proposals that place an
economy-wide cap on greenhouse gas emissions. No legislation can be enacted until a final reconciled bill is
approved by both the House of Representatives and the Senate and signed by the President.
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Even if Congress does not pass legislation mandating GHG emissions reductions, there continue to be regulatory
developments under the Clean Air Act applicable to GHGs. In September 2009, the Environmental Protection
Agency (“EPA”) issued a final rule establishing a system for mandatory reporting of GHG emissions. In November
2010, the EPA expanded the reach of its GHG reporting requirements to include the petroleum and natural gas
industries. Petroleum and natural gas facilities subject to the rule, which include facilities of our natural gas
distribution and electricity generation businesses, are required to begin emissions monitoring in January 2011 and to
submit detailed annual reports beginning in March 2012. The rule does not require affected facilities to implement
GHG emission controls or reductions. In December 2009, the EPA published its findings that emissions of GHGs
constitute an endangerment to public health and the environment. These findings allow the EPA to adopt and
implement regulations that would restrict emissions of GHGs under existing provisions of the Clean Air Act.
Accordingly, the EPA has proposed two sets of regulations that would limit GHG emissions from new motor
vehicles and that would impose permit requirements for GHG emissions from certain stationary sources. Legal
challenges have been filed against many of EPA’s rulemakings, and we are unable to predict the results of those
challenges.
Because propane is considered a clean alternative fuel under the federal Clean Air Act Amendments of 1990, we
anticipate that this will provide us with a competitive advantage over other sources of energy, such as fuel oil and
coal, when new climate change regulations become effective. In addition, we are in the process of refining and
implementing our strategy to identify both our GHG emissions and our energy consumption in order to be in a
position to comply with new regulations and to take advantage of any opportunities that may arise from the
regulation of such emissions.
ITEM 1A. RISK FACTORS
There are many factors that may affect our business and results of operations. Additional discussion regarding
factors that may affect our businesses and operating results is included elsewhere in this Report.
Risks Related to Our Business
Decreases in the demand for propane because of warmer-than-normal heating season weather or unfavorable
weather may adversely affect our results of operations.
Because many of our customers rely on propane as a heating fuel, our results of operations are adversely affected
by warmer-than-normal heating season weather. Weather conditions have a significant impact on the demand for
propane for both heating and agricultural purposes. Accordingly, the volume of propane sold is at its highest during
the peak heating season of October through March and is directly affected by the severity of the winter weather. For
example, historically approximately 65% to 70% of our annual retail propane volumes are sold during these months.
There can be no assurance that normal winter weather in our service territories will occur in the future.
The agricultural demand for propane is also affected by weather, as dry or warm weather during the harvest
season may reduce the demand for propane. Our ACE operations experience higher volumes in the spring and
summer, mainly due to the grilling season. Sustained periods of unfavorable weather conditions can negatively
affect our ACE revenues. Unfavorable weather conditions may also cause a reduction in the purchase and use of
grills and other propane appliances which could reduce the demand for our portable propane grill cylinder exchange
services.
Our profitability is subject to propane pricing and inventory risk.
The retail propane business is a “margin-based” business in which gross profits are dependent upon the excess of
the sales price over the propane supply costs. Propane is a commodity, and, as such, its unit price is subject to
volatile fluctuations in response to changes in supply or other market conditions. We have no control over these
market conditions. Consequently, the unit price of the propane that we and other marketers purchase can change
rapidly over a short period of time. Most of our propane product supply contracts permit suppliers to charge posted
prices at the time of delivery or the current prices established at major storage points such as Mont Belvieu, Texas or
Conway, Kansas. Because our profitability is sensitive to changes in wholesale propane supply costs, it will be
adversely affected if we cannot pass on increases in the cost of propane to our customers. Due to competitive pricing
in the industry, we may not be able to pass on product cost increases to our customers when product costs rise
rapidly, or when our competitors do not raise their product prices. Finally, market volatility may cause us to sell
inventory at less than the price we purchased it, which would adversely affect our operating results.
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High propane prices can lead to customer conservation and attrition, resulting in reduced demand for our
product.
Prices for propane are subject to volatile fluctuations in response to changes in supply and other market
conditions. During periods of high propane costs our prices generally increase. High prices can lead to customer
conservation and attrition, resulting in reduced demand for our product.
Volatility in credit and capital markets may restrict our ability to grow, increase the likelihood of defaults by our
customers and counterparties and adversely affect our operating results.
The recent volatility in credit and capital markets may create additional risks to our business in the future. We
are exposed to financial market risk (including refinancing risk) resulting from, among other things, changes in
interest rates and conditions in the credit and capital markets. Recent developments in the credit markets increase
our possible exposure to the liquidity, default and credit risks of our suppliers, counterparties associated with
derivative financial instruments and our customers. Although we believe that recent financial market conditions, if
they were to continue for the foreseeable future, will not have a significant impact on our ability to fund our existing
operations, such market conditions could restrict our ability to grow through acquisitions, limit the scope of major
capital projects if access to credit and capital markets is limited or could adversely affect our operating results.
Supplier defaults may have a negative effect on our operating results.
When we enter into fixed-price sales contracts with customers, we typically enter into fixed-price purchase
contracts with suppliers. Depending on changes in the market prices of products compared to the prices secured in
our contracts with suppliers of propane, a default of one or more of our suppliers under such contracts could cause
us to purchase propane at higher prices which would have a negative impact on our operating results.
We are dependent on our principal propane suppliers, which increases the risks from an interruption in supply
and transportation.
During Fiscal 2010, AmeriGas Propane purchased approximately 82% of its propane needs from ten suppliers. If
supplies from these sources were interrupted, the cost of procuring replacement supplies and transporting those
supplies from alternative locations might be materially higher and, at least on a short-term basis, our earnings could
be affected. Additionally, in certain areas, a single supplier may provide more than 50% of our propane
requirements. Disruptions in supply in these areas could also have an adverse impact on our earnings.
Changes in commodity market prices may have a negative effect on our liquidity.
Depending on the terms of our contracts with suppliers as well as our use of financial instruments to reduce
volatility in the cost of propane, changes in the market price of propane can create margin payment obligations for
us and expose us to an increased liquidity risk.
Our operations may be adversely affected by competition from other energy sources.
Propane competes with other sources of energy, some of which are less costly on an equivalent energy basis. In
addition, we cannot predict the effect that the development of alternative energy sources might have on our
operations. We compete for customers against suppliers of electricity, fuel oil and natural gas.
Electricity is a major competitor of propane, but propane generally enjoys a competitive price advantage over
electricity for space heating, water heating and cooking. Fuel oil is also a major competitor of propane and is
generally less expensive than propane. Furnaces and appliances that burn propane will not operate on fuel oil and
vice versa, and, therefore, a conversion from one fuel to the other requires the installation of new equipment. Our
customers generally have an incentive to switch to fuel oil only if fuel oil becomes significantly less expensive than
propane. Except for certain industrial and commercial applications, propane is generally not competitive with
natural gas in areas where natural gas pipelines already exist because natural gas is generally a less expensive source
of energy than propane. As long as natural gas remains a less expensive energy source than propane, our business
will lose customers in each region into which natural gas distribution systems are expanded. The gradual expansion
of the nation’s natural gas distribution systems has resulted, and may continue to result, in the availability of natural
gas in some areas that previously depended upon propane.
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Our ability to increase revenues is adversely affected by the maturity of the retail propane industry.
The retail propane industry is mature, with no growth in total demand foreseen in the next several years.
Accordingly, we expect that year-to-year industry volumes will be principally affected by weather patterns.
Therefore, our ability to grow within the industry is dependent on our ability to acquire other retail distributors and
to achieve internal growth, which includes expansion of our ACE and Strategic Accounts programs, as well as the
success of our marketing programs designed to attract and retain customers. Any failure to retain and grow our
customer base would have an adverse effect on our results.
Our ability to grow will be adversely affected if we are not successful in making acquisitions or integrating the
acquisitions we have made.
We have historically expanded our propane business through acquisitions. We regularly consider and evaluate
opportunities for growth through the acquisition of local, regional and national propane distributors. We may choose
to finance future acquisitions with debt, equity, cash or a combination of the three. We can give no assurances that
we will find attractive acquisition candidates in the future, that we will be able to acquire such candidates on
economically acceptable terms, that we will be able to finance acquisitions on economically acceptable terms, that
any acquisitions will not be dilutive to earnings and distributions or that any additional debt incurred to finance an
acquisition will not affect our ability to make distributions.
To the extent we are successful in making acquisitions, such acquisitions involve a number of risks, including,
but not limited to, the assumption of material liabilities, the diversion of management’s attention from the
management of daily operations to the integration of operations, difficulties in the assimilation and retention of
employees and difficulties in the assimilation of different cultures and practices, as well as in the assimilation of
broad and geographically dispersed personnel and operations. The failure to successfully integrate acquisitions could
have an adverse affect on our business, financial condition and results of operations.
We are subject to operating and litigation risks that may not be covered by insurance.
Our operations are subject to all of the operating hazards and risks normally incidental to handling, storing,
transporting and otherwise providing combustible liquids such as propane for use by consumers. As a result, we are
often a defendant in legal proceedings and litigation arising in the ordinary course of business. There can be no
assurance that our insurance will be adequate to protect us from all material expenses related to pending and future
claims or that such levels of insurance will be available in the future at economical prices.
Our net income will decrease if we are required to incur additional costs to comply with new governmental safety,
health, transportation, tax and environmental regulations.
We are subject to various federal, state and local safety, health, transportation, tax and environmental laws and
regulations governing the storage, distribution and transportation of propane. We have implemented safety and
environmental programs and policies designed to avoid potential liability and costs under applicable laws. It is
possible, however, that we will incur increased costs as a result of complying with new safety, health, transportation
and environmental regulations and such costs will reduce our net income. It is also possible that material
environmental liabilities will be incurred, including those relating to claims for damages to property and persons.
Our operations, capital expenditures and financial results may be affected by regulatory changes and/or market
responses to global climate change.
There continues to be concern, both nationally and internationally, about climate change and the contribution of
greenhouse gas (“GHG”) emissions, most notably carbon dioxide, to global warming. In response to this concern,
the United States House of Representatives passed the American Clean Energy and Security Act (“ACES Act”) in
June of 2009 to establish an economy-wide GHG cap-and-trade system to reduce GHG emissions over time.
Subsequently, the United States Senate has been considering a number of related proposals, ranging from “energy
only” bills to proposals that place an economy-wide cap on greenhouse gas emissions. No legislation can be enacted
until a final reconciled bill is approved by both the House of Representatives and the Senate and signed by the
President.
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Even if Congress does not pass legislation mandating GHG emissions reductions, there continue to be regulatory
developments under the Clean Air Act applicable to GHGs. In September 2009, the Environmental Protection
Agency (“EPA”) issued a final rule establishing a system for mandatory reporting of GHG emissions. In November
2010, the EPA expanded the reach of its GHG reporting requirements to include the petroleum and natural gas
industries. Petroleum and natural gas facilities subject to the rule, which include facilities of our natural gas
distribution and electricity generation businesses, are required to begin emissions monitoring in January 2011 and to
submit detailed annual reports beginning in March 2012. The rule does not require affected facilities to implement
GHG emission controls or reductions. In December 2009, the EPA published its findings that emissions of GHGs
constitute an endangerment to public health and the environment. These findings allow the EPA to adopt and
implement regulations that would restrict emissions of GHGs under existing provisions of the Clean Air Act.
Accordingly, the EPA has proposed two sets of regulations that would limit GHG emissions from new motor
vehicles and that would impose permit requirements for GHG emissions from certain stationary sources. Legal
challenges have been filed against many of EPA’s rulemakings, and we are unable to predict the results of those
challenges.
It is expected that climate change legislation will continue to be part of the legislative and regulatory discussion
for the foreseeable future. Increased regulation of GHG emissions, especially in the transportation sector, could
impose significant additional costs on us and our customers. The impact of legislation and regulations on us will
depend on a number of factors, including (i) what industry sectors would be impacted, (ii) the timing of required
compliance, (iii) the overall GHG emissions cap level, (iv) the allocation of emission allowances to specific sources,
and (v) the costs and opportunities associated with compliance. At this time, we cannot predict the effect that
climate change regulation may have on our business, financial condition or results of operations in the future.
Unforeseen difficulties with the implementation or operation of our information systems could adversely affect
our internal controls and our business.
We contracted with third-party consultants to assist us with the design and implementation of an information
system that supports our Order-to-Cash business processes. The efficient execution of our business is dependent
upon the proper functioning of our internal systems. Any significant failure or malfunction of our information
system may result in disruptions of our operations. Our results of operations could be adversely affected if we
encounter unforeseen problems with respect to the operation of this system.
Risks Inherent in an Investment in Our Common Units
Cash distributions are not guaranteed and may fluctuate with our performance.
Although we distribute all of our available cash each quarter, the amount of cash that we generate each quarter
fluctuates. As a result, we cannot guarantee that we will pay the current regular quarterly distribution each quarter.
Available cash generally means, with respect to any fiscal quarter, all cash on hand at the end of each quarter, plus
all additional cash on hand as of the date of the determination of available cash resulting from borrowings after the
end of the quarter, less the amount of reserves established to provide for the proper conduct of our business, to
comply with applicable law or agreements, or to provide funds for future distributions to partners. The actual
amount of cash that is available to be distributed each quarter will depend upon numerous factors, including:
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our cash flow generated by operations;
the weather in our areas of operation;
our borrowing capacity under our bank credit facilities;
required principal and interest payments on our debt;
fluctuations in our working capital;
our cost of acquisitions (including related debt service payments);
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restrictions contained in our debt instruments;
our capital expenditures;
our issuances of debt and equity securities;
reserves made by our General Partner in its discretion;
prevailing economic and industry conditions; and
financial, business and other factors, a number of which are beyond our control.
Our General Partner has broad discretion to determine the amount of “available cash” for distribution to holders
of our equity securities through the establishment and maintenance of cash reserves, thereby potentially
lessening and limiting the amount of “available cash” eligible for distribution.
Our General Partner determines the timing and amount of our distributions and has broad discretion in
determining the amount of funds that will be recognized as “available cash.” Part of this discretion comes from the
ability of our General Partner to establish reserves. Decisions as to amounts to be reserved have a direct impact on
the amount of available cash for distributions because reserves are taken into account in computing available cash.
Each fiscal quarter, our General Partner may, in its reasonable discretion, determine the amounts to be reserved,
subject to restrictions on the purposes of the reserves. Reserves may be made, increased or decreased for any proper
purpose, including, but not limited to, reserves:
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to comply with terms of any of our agreements or obligations, including the establishment of reserves to
fund the future payment of interest and principal on our debt securities;
to provide for level distributions of cash notwithstanding the seasonality of our business; and
to provide for future capital expenditures and other payments deemed by our General Partner to be
necessary or advisable.
The decision by our General Partner to establish reserves may limit the amount of cash available for distribution
to holders of our equity securities. Holders of our equity securities will not receive payments unless we are able to
first satisfy our own obligations and the establishment of any reserves.
Holders of Common Units may experience dilution of their interests.
We may issue an unlimited number of additional limited partner interests and other equity securities, including
senior equity securities, for such consideration and on such terms and conditions as shall be established by our
General Partner in its sole discretion, without the approval of any unitholders. We also may issue an unlimited
number of partnership interests junior to the Common Units without a unitholder vote. When we issue additional
equity securities, a unitholder’s proportionate partnership interest will decrease and the amount of cash distributed
on each unit and the market price of the Common Units could decrease. Issuance of additional Common Units will
also diminish the relative limited voting power of each previously outstanding unit. Please read “Holders of
Common Units have limited voting rights, management and control of us” below. The ultimate effect of any such
issuance may be to dilute the interests of holders of units in AmeriGas Partners and to make it more difficult for a
person or group to remove our General Partner or otherwise change our management.
The market price of the Common Units may be adversely affected by various change of management provisions.
Our Partnership Agreement contains certain provisions that are intended to discourage a person or group from
attempting to remove our General Partner as general partner or otherwise change the management of AmeriGas
Partners. If any person or group other than the General Partner or its affiliates acquires beneficial ownership of 20%
or more of the Common Units, such person or group will lose its voting rights with respect to all of its Common
Units. The effect of these provisions and the change of control provisions in our debt instruments may be to
diminish the price at which the Common Units will trade under certain circumstances.
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Restrictive covenants in the agreements governing our indebtedness and other financial obligations may reduce
our operating flexibility.
The various agreements governing our and the Operating Partnership’s indebtedness and other financing
transactions restrict quarterly distributions. These agreements contain various negative and affirmative covenants
applicable to us and the Operating Partnership and some of these agreements require us and the Operating
Partnership to maintain specified financial ratios. If we or the Operating Partnership violate any of these covenants
or requirements, a default may result and distributions would be limited. These covenants limit our and the
Operating Partnership’s ability to, among other things:
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incur additional indebtedness;
engage in transactions with affiliates;
create or incur liens;
sell assets;
make restricted payments, loans and investments;
enter into business combinations and asset sale transactions; and
engage in other lines of business.
Holders of Common Units have limited voting rights, management and control of us.
Our General Partner manages and operates AmeriGas Partners. Unlike the holders of common stock in a
corporation, holders of outstanding Common Units have only limited voting rights on matters affecting our business.
Holders of Common Units have no right to elect the general partner or its directors, and our General Partner
generally may not be removed except pursuant to the vote of the holders of not less than two-thirds of the
outstanding units. In addition, removal of the general partner may result in a default under our debt instruments and
loan agreements. As a result, holders of Common Units have limited say in matters affecting our operations and
others may find it difficult to attempt to gain control or influence our activities.
Holders of Common Units may be required to sell their Common Units against their will.
If at any time our General Partner and its affiliates hold 80% or more of the issued and outstanding Common
Units, our General Partner will have the right (but not the obligation) to purchase all, but not less than all, of the
remaining Common Units held by nonaffiliates at certain specified prices pursuant to the Partnership Agreement.
Accordingly, under certain circumstances holders of Common Units may be required to sell their Common Units
against their will and the price that they receive for those securities may be less than they would like to receive.
They may also incur a tax liability upon a sale of their Common Units.
Holders of Common Units may not have limited liability in certain circumstances and may be liable for the return
of distributions that cause our liabilities to exceed our assets.
The limitations on the liability of holders of Common Units for the obligations of a limited partnership have not
been clearly established in some states. If it were determined that AmeriGas Partners had been conducting business
in any state without compliance with the applicable limited partnership statute, or that the right or the exercise of the
right by the holders of Common Units as a group to remove or replace our General Partner, to make certain
amendments to our Partnership Agreement or to take other action pursuant to that Partnership Agreement constituted
participation in the “control” of the business of AmeriGas Partners, then a holder of Common Units could be held
liable under certain circumstances for our obligations to the same extent as our General Partner. We are not
obligated to inform holders of Common Units about whether we are in compliance with the limited partnership
statutes of any states.
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Holders of Common Units may also have to repay AmeriGas Partners amounts wrongfully returned or
distributed to them. Under Delaware law, we may not make a distribution to holders of Common Units if the
distribution causes our liabilities to exceed the fair value of our assets. Liabilities to partners on account of their
partnership interests and nonrecourse liabilities are not counted for purposes of determining whether a distribution is
permitted. Delaware law provides that a limited partner who receives such a distribution and knew at the time of the
distribution that the distribution violated Delaware law will be liable to the limited partnership for the distribution
amount for three years from the distribution date.
Our General Partner has conflicts of interest and limited fiduciary responsibilities, which may permit our
General Partner to favor its own interest to the detriment of holders of Common Units.
Conflicts of interest can arise as a result of the relationships between AmeriGas Partners, on the one hand, and
the General Partner and its affiliates, on the other. The directors and officers of the General Partner have fiduciary
duties to manage the General Partner in a manner beneficial to the General Partner’s sole shareholder, AmeriGas,
Inc., a wholly owned subsidiary of UGI Corporation. At the same time, the General Partner has fiduciary duties to
manage AmeriGas Partners in a manner beneficial to both it and the unitholders. The duties of our General Partner
to AmeriGas Partners and the unitholders, therefore, may come into conflict with the duties of the directors and
officers of our General Partner to its sole shareholder, AmeriGas, Inc.
Such conflicts of interest might arise in the following situations, among others:
• Decisions of our General Partner with respect to the amount and timing of cash expenditures, borrowings,
issuances of additional units and reserves in any quarter affect whether and the extent to which there is
sufficient available cash from operating surplus to make quarterly distributions in a given quarter. In
addition, actions by our General Partner may have the effect of enabling the General Partner to receive
distributions that exceed 2% of total distributions.
• AmeriGas Partners does not have any employees and relies solely on employees of the General Partner and
its affiliates.
• Under the terms of the Partnership Agreement, we reimburse our General Partner and its affiliates for costs
incurred in managing and operating AmeriGas Partners, including costs incurred in rendering corporate staff
and support services to us.
• Any agreements between us and our General Partner and its affiliates do not grant to the holders of Common
Units, separate and apart from AmeriGas Partners, the right to enforce the obligations of our General Partner
and such affiliates in our favor. Therefore, the General Partner, in its capacity as the general partner of
AmeriGas Partners, is primarily responsible for enforcing such obligations.
• Under the terms of the Partnership Agreement, our General Partner is not restricted from causing us to pay
the General Partner or its affiliates for any services rendered on terms that are fair and reasonable to us or
entering into additional contractual arrangements with any of such entities on behalf of AmeriGas Partners.
Neither the Partnership Agreement nor any of the other agreements, contracts and arrangements between us,
on the one hand, and the General Partner and its affiliates, on the other, are or will be the result of arm’s-
length negotiations.
• Our General Partner may exercise its right to call for and purchase units as provided in the Partnership
Agreement or assign such right to one of its affiliates or to us.
Our Partnership Agreement expressly permits our General Partner to resolve conflicts of interest between itself
or its affiliates, on the one hand, and us or the unitholders, on the other, and to consider, in resolving such conflicts
of interest, the interests of other parties in addition to the interests of the unitholders. In addition, the Partnership
Agreement provides that a purchaser of Common Units is deemed to have consented to certain conflicts of interest
and actions of our General Partner and its affiliates that might otherwise be prohibited and to have agreed that such
conflicts of interest and actions do not constitute a breach by the General Partner of any duty stated or implied by
law or equity. The General Partner is not in breach of its obligations under the Partnership Agreement or its duties to
us or the unitholders if the resolution of such conflict is fair and reasonable to us. The latitude given in the
Partnership Agreement to the General Partner in resolving conflicts of interest may significantly limit the ability of a
unitholder to challenge what might otherwise be a breach of fiduciary duty.
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Our Partnership Agreement expressly limits the liability of our General Partner by providing that the General
Partner, its affiliates and its officers and directors are not liable for monetary damages to us, the limited partners or
assignees for errors of judgment or for any actual omissions if the General Partner and other persons acted in good
faith. In addition, we are required to indemnify our General Partner, its affiliates and their respective officers,
directors, employees and agents to the fullest extent permitted by law, against liabilities, costs and expenses incurred
by our General Partner or such other persons, if the General Partner or such persons acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, our best interests and, with respect to any criminal
proceedings, had no reasonable cause to believe the conduct was unlawful.
Our General Partner may voluntarily withdraw or sell its general partner interest.
Our General Partner may withdraw as the general partner of AmeriGas Partners and the Operating Partnership
without the approval of our unitholders. Our General Partner may also sell its general partner interest in AmeriGas
Partners and the Operating Partnership without the approval of our unitholders. Any such withdrawal or sale could
have a material adverse effect on us and could substantially change the management and resolutions of conflicts of
interest, as described above.
Tax Risks
The IRS could treat us as a corporation for tax purposes or changes in federal or state laws could subject us to
entity-level taxation, which would substantially reduce the cash available for distribution to holders of Common
Units.
The availability to a common unitholder of the federal income tax benefits of an investment in the Common
Units depends, in large part, on our classification as a partnership for federal income tax purposes. No ruling from
the IRS as to this status has been or is expected to be requested.
If we were classified as a corporation for federal income tax purposes, we would be required to pay tax on our
income at corporate tax rates (currently a 35% federal rate), and distributions received by the Common Unitholders
would generally be taxed a second time as corporate distributions. Because a tax would be imposed upon us as an
entity, the cash available for distribution to the Common Unitholders would be substantially reduced. Treatment of
us as a corporation would cause a material reduction in the anticipated cash flow and after-tax return to the Common
Unitholders, likely causing a substantial reduction in the value of the Common Units.
The law could be changed so as to cause us to be treated as a corporation for federal income tax purposes or
otherwise to be subject to entity-level taxation. If we become subject to widespread entity-level taxation for state tax
purposes, it could substantially reduce distributions to our unitholders. Our Partnership Agreement provides that if a
law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or
otherwise subjects us to entity-level taxation for federal, state or local income tax purposes, certain provisions of our
Partnership Agreement will be subject to change. These changes would include a decrease in the current regular
quarterly distribution and the target distribution levels to reflect the impact of this law on us. Any such reductions
could increase our General Partner’s percentage of cash distributions and decrease our limited partners’ percentage
of cash distributions.
States may subject partnerships to entity-level taxation in the future; thereby decreasing the amount of cash
available to us for distributions and potentially causing a decrease in our distribution levels.
Several states have enacted or are evaluating ways to subject partnerships to entity-level taxation through the
imposition of state income, franchise or other forms of taxation. If additional states were to impose a tax upon us as
an entity, the cash available for distribution to unitholders would be reduced.
15
Holders of Common Units will likely be subject to state, local and other taxes in states where holders of Common
Units live or as a result of an investment in the Common Units.
In addition to United States federal income taxes, unitholders will likely be subject to other taxes, such as state
and local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the
various jurisdictions in which the unitholder resides or in which we do business or own property. A unitholder will
likely be required to file state and local income tax returns and pay state and local income taxes in some or all of the
various jurisdictions in which we do business or own property and may be subject to penalties for failure to comply
with those requirements. It is the responsibility of each unitholder to file all applicable United States federal, state
and local tax returns.
A successful IRS contest of the federal income tax positions that we take may adversely affect the market for
Common Units and the costs of any contest will be borne directly or indirectly by the unitholders and our General
Partner.
We have not requested a ruling from the IRS with respect to our classification as a partnership for federal income
tax purposes, the classification of any of the revenue from our propane operations as “qualifying income” under
Section 7704 of the Internal Revenue Code, or any other matter affecting us. Accordingly, the IRS may adopt
positions that differ from the conclusions expressed herein or the positions taken by us. It may be necessary to resort
to administrative or court proceedings in an effort to sustain some or all of such conclusions or the positions taken
by us. A court may not concur with some or all of our positions. Any contest with the IRS may materially and
adversely impact the market for the Common Units and the prices at which they trade. In addition, the costs of any
contest with the IRS will be borne directly or indirectly by the unitholders and our General Partner.
Holders of Common Units may be required to pay taxes even if they do not receive any cash distributions.
A unitholder will be required to pay federal income taxes and, in some cases, state and local income taxes on the
unitholder’s allocable share of our income, even if the unitholder receives no cash distributions from us. We cannot
guarantee that a unitholder will receive cash distributions equal to the unitholder’s allocable share of our taxable
income or even the tax liability to the unitholder resulting from that income.
Ownership of Common Units may have adverse tax consequences for tax-exempt organizations and certain other
investors.
Investment in Common Units by certain tax-exempt entities, regulated investment companies and foreign
persons raises issues unique to them. For example, virtually all of our taxable income allocated to organizations
exempt from federal income tax, including individual retirement accounts and other retirement plans, will be
unrelated business taxable income and thus will be taxable to the unitholder. Distributions to foreign persons will be
reduced by withholding taxes.
There are limits on the deductibility of losses that may adversely affect holders of Common Units.
In the case of taxpayers subject to the passive loss rules (generally, individuals, closely-held corporations and
regulated investment companies), any losses generated by us will only be available to offset our future income and
cannot be used to offset income from other activities, including other passive activities or investments. Unused
losses may be deducted when the unitholder disposes of the unitholder’s entire investment in us in a fully taxable
transaction with an unrelated party. A unitholder’s share of our net passive income may be offset by unused losses
from us carried over from prior years, but not by losses from other passive activities, including losses from other
publicly traded partnerships.
Tax gain or loss on disposition of Common Units could be different than expected.
A unitholder who sells Common Units will recognize the gain or loss equal to the difference between the amount
realized, including the unitholder’s share of our nonrecourse liabilities, and the unitholder’s adjusted tax basis in the
Common Units. Prior distributions in excess of cumulative net taxable income allocated for a Common Unit which
decreased a unitholder’s tax basis in that unit will, in effect, become taxable income if the Common Unit is sold at a
price greater than the unitholder’s tax basis in that Common Unit, even if the price is less than the unit’s original
cost. A portion of the amount realized, whether or not representing gain, may be ordinary income. Furthermore,
should the IRS successfully contest some conventions used by us, a unitholder could recognize more gain on the sale
of Common Units than would be the case under those conventions, without the benefit of decreased income in prior
years.
16
The reporting of partnership tax information is complicated and subject to audits.
We will furnish each unitholder with a Schedule K-1 that sets forth the unitholder’s share of our income, gains,
losses and deductions. In preparing these schedules, we will use various accounting and reporting conventions and
adopt various depreciation and amortization methods. We cannot guarantee that these schedules will yield a result
that conforms to statutory or regulatory requirements or to administrative pronouncements of the IRS. Further, our
tax return may be audited, which could result in an audit of a unitholder’s individual tax return and increased
liabilities for taxes because of adjustments resulting from the audit. The rights of a unitholder owning less than a 1%
profits interest in us to participate in the income tax audit process are very limited. Further, any adjustments in our
tax returns will lead to adjustments in the unitholders’ tax returns and may lead to audits of unitholders’ tax returns
and adjustments of items unrelated to us. Each unitholder would bear the cost of any expenses incurred in
connection with an examination of the unitholder’s personal tax return.
There is a possibility of loss of tax benefits relating to nonconformity of Common Units and nonconforming
depreciation conventions.
Because we cannot match transferors and transferees of Common Units, uniformity of the tax characteristics of
the Common Units to a purchaser of Common Units of the same class must be maintained. To maintain uniformity
and for other reasons, we have adopted certain depreciation and amortization conventions which we believe conform
to Treasury Regulations under Section 743(b) of the Internal Revenue Code. A successful challenge to those
conventions by the IRS could adversely affect the amount of tax benefits available to a purchaser of Common Units
and could have a negative impact on the value of the Common Units.
Holders of Common Units may have negative tax consequences if we default on our debt or sell assets.
If we default on any of our debt, the lenders will have the right to sue us for non-payment. This could cause an
investment loss and negative tax consequences for unitholders through the realization of taxable income by
unitholders without a corresponding cash distribution. Likewise, if we were to dispose of assets and realize a taxable
gain while there is substantial debt outstanding and proceeds of the sale were applied to the debt, our unitholders
could have increased taxable income without a corresponding cash distribution.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of September 30, 2010, the Partnership owned approximately 86% of its district locations. The transportation
of propane requires specialized equipment. The trucks and railroad tank cars utilized for this purpose carry
specialized steel tanks that maintain the propane in a liquefied state. As of September 30, 2010, the Partnership
operated a transportation fleet with the following assets:
Approximate Quantity & Equipment Type
1,400
300
188
2,460
267
2,125
Trailers
Tractors
Railroad tank cars
Bobtail trucks
Rack trucks
Service and delivery trucks
% Owned
89%
13%
0%
14%
1%
15%
% Leased
11%
87%
100%
86%
99%
85%
Other assets owned at September 30, 2010 included approximately 837,000 stationary storage tanks with typical
capacities ranging from 121 to 2,000 gallons and approximately 3.3 million portable propane cylinders with typical
capacities of 1 to 120 gallons. The Partnership also owned approximately 5,700 large volume tanks with typical
capacities of more than 2,000 gallons which are used for its own storage requirements.
17
ITEM 3. LEGAL PROCEEDINGS
With the exception of the matters set forth in Note 13 to Consolidated Financial Statements included in Item 8 of
this Report, no material legal proceedings are pending involving the Partnership, any of its subsidiaries, or any of
their properties, and no such proceedings are known to be contemplated by governmental authorities other than
claims arising in the ordinary course of the Partnership’s business.
ITEM 4. (REMOVED AND RESERVED)
PART II:
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SECURITY HOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Each Common Unit represents a limited partner interest in the Partnership. Common Units are listed on the New
York Stock Exchange, which is the principal trading market for such securities, under the symbol “APU.” The
following table sets forth, for the periods indicated, the high and low sale prices per Common Unit, as reported on
the New York Stock Exchange (“NYSE”) Composite Transactions tape, and the amount of cash distributions paid
per Common Unit.
2010 Fiscal Year
Fourth Quarter .........................................................................................
Third Quarter ...........................................................................................
Second Quarter ........................................................................................
First Quarter .............................................................................................
High
$ 46.42
43.30
42.94
40.00
Low
$ 40.38
35.00
38.14
34.61
Price Range
Cash
Distribution
$ 0.705
0.705
0.670
0.670
2009 Fiscal Year
Fourth Quarter .......................................................................................
Third Quarter .........................................................................................
Second Quarter ......................................................................................
First Quarter ...........................................................................................
High
$ 38.00
34.75
32.60
31.98
Price Range
Low
$ 32.95
28.10
23.37
17.98
Cash
Distribution
$ 0.840(1)
0.670
0.640
0.640
(1) Includes a one-time distribution of $0.17 from the proceeds of the Partnership’s November 13, 2008 sale of its
storage facility in California.
As of November 15, 2010, there were 1,094 record holders of the Partnership’s Common Units.
The Partnership makes quarterly distributions to its partners in an aggregate amount equal to its Available Cash,
as defined in the Fourth Amended and Restated Agreement of Limited Partnership of AmeriGas Partners, L.P. (the
“Partnership Agreement”). Available Cash generally means, with respect to any fiscal quarter of the Partnership, all
cash on hand at the end of such quarter, plus all additional cash on hand as of the date of determination resulting
from borrowings subsequent to the end of such quarter, less the amount of cash reserves established by the General
Partner in its reasonable discretion for future cash requirements. Certain reserves are maintained to provide for the
payment of principal and interest under the terms of the Partnership’s debt agreements and other reserves may be
maintained to provide for the proper conduct of the Partnership’s business, and to provide funds for distribution
during the next four fiscal quarters. The information concerning restrictions on distributions required by Item 5 of
this Report is incorporated herein by reference to Notes 6 and 7 to Consolidated Financial Statements which are
incorporated herein by reference.
18
ITEM 6. SELECTED FINANCIAL DATA
(Thousands of dollars, except per share amounts)
FOR THE PERIOD:
Income statement data:
2010
2009
2008
2007
2006
Year Ended September 30,
Revenues.........................................................................
$2,320,342
$2,260,095
$ 2,815,189
$ 2,277,375
$ 2,119,266
Net income .....................................................................
Less: net income attributable to noncontrolling interests
......................................................................................
Net income attributable to AmeriGas Partners, L.P. .....
$ 167,494
$ 227,610(a) $
160,306(a) $
193,397(a)
$
92,698(a)
(2,281)
$ 165,213
(2,967)(a)
$ 224,643(a) $
(2,287)(a)
158,019(a) $
(2,613)(a)
190,784(a)
Limited partners’ interest in net income attributable to
AmeriGas Partners, L.P. ..............................................
$ 160,522
$ 217,906
Income per limited partner unit — basic and
diluted (b) .....................................................................
Cash distributions declared per limited partner unit ......
$
$
2.80
2.75
$
$
3.59
2.79
AT PERIOD END:
Balance sheet data:
Current assets .................................................................
$ 325,858
$ 316,507
$
$
$
$
155,741
$
185,184
2.70
2.50
$
$
3.15
2.63
(1,540)(a)
91,158(a)
90,246
1.59
2.28
$
$
$
$
425,096
$
375,020
$ 368,209
Total assets ......................................................................
1,696,219
1,657,564
1,725,073
1,696,784
1,611,767
Current liabilities (excluding debt) ................................
349,139
338,380
Total debt ........................................................................
882,402
865,644
Partners’ capital:
AmeriGas Partners, L.P. partners’ capital .................
Noncontrolling interests ............................................
Total partners’ capital ...........................................
380,848
12,038
392,886
364,459
11,866
376,325
461,095
933,390
247,375
10,723
258,098
376,668
378,331
933,042
933,746
311,228
11,386
322,614
221,503
10,448
231,951
OTHER DATA:
Capital expenditure (including capital leases) ...............
Retail propane gallons sold (millions) ...........................
Degree days — % (warmer) than normal (c) .................
70,915
975.2
(10.2)%
(a) As adjusted in accordance with transition provisions for accounting for and presentation of noncontrolling
73,764
1,006.7
78,739
928.2
62,756
993.2
83,170
893.4
(6.5)%
(2.2)%
(3.1)%
(3.0)%
$
$
$
$
$
interests in consolidated subsidiaries (see Note 3 to Consolidated Financial Statements).
(b) Calculated in accordance with accounting guidance regarding the application of the two-class method for
determining earnings per share as it relates to master limited partnerships (see Note 3 to Consolidated Financial
Statements).
(c) Deviation from average heating degree days for the 30-year period of 1971-2000 based upon national weather
statistics provided by the National Oceanic and Atmospheric Administration (“NOAA”) for 335 airports in the
United States, excluding Alaska.
19
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) discusses
our results of operations and our financial condition. MD&A should be read in conjunction with our Items 1
“Business,” 1A “Risk Factors,” and 2 “Properties” and our Consolidated Financial Statements in Item 8 below.
Executive Overview
Net income attributable to AmeriGas Partners for Fiscal 2010 was $165.2 million compared with net income
attributable to AmeriGas Partners for Fiscal 2009 of $224.6 million. Net income attributable to AmeriGas Partners
in Fiscal 2010 reflects the negative impact of a $12.2 million loss on the discontinuance of interest rate hedges
recorded in March 2010 while net income attributable to AmeriGas Partners in Fiscal 2009 reflects the benefit of a
$39.9 million gain on the sale of the Partnership’s California LPG storage terminal. Average temperatures in the
Partnership’s service territories were slightly warmer than normal in both Fiscal 2010 and Fiscal 2009. Retail
volumes sold were approximately 3.7% lower in Fiscal 2010 reflecting the lingering effects of the economic
recession, customer conservation and customer attrition partially offset by volumes acquired through acquisitions.
Total margin was 1.9% lower in Fiscal 2010 primarily due to the lower retail volumes sold. Fiscal 2010 operating
and administrative expenses were slightly lower notwithstanding a $7.0 million increase in a litigation accrual
recorded in the fourth quarter of Fiscal 2010.
As further described in Note 3 to Consolidated Financial Statements, effective October 1, 2009, we adopted
guidance regarding the accounting for and presentation of noncontrolling interests in consolidated financial
statements. The new guidance changed the accounting and reporting relating to noncontrolling interests in a
consolidated subsidiary. In accordance with the new guidance, prior-year periods have been adjusted. The new
guidance on accounting for and presentation of noncontrolling interests had no effect on basic or diluted earnings
per unit. Also as described in Note 3 to Consolidated Financial Statements, effective October 1, 2009 we adopted
new guidance regarding the application of the two-class method for determining income per unit as it relates to
MLPs. The new guidance requires retrospective application to all periods presented. The new guidance on the
application of the two-class method for determining income per unit had no effect on the full-year calculation of
earnings per limited partner unit for Fiscal 2009 and Fiscal 2008.
We believe that the Partnership has sufficient liquidity in the form of revolving credit agreements. Additionally,
AmeriGas OLP expects to renew its credit agreements, which are scheduled to expire in June 2011 and October
2011, during the second-half of Fiscal 2011.
Analysis of Results of Operations
The following analyses compares the Partnership’s results of operations for (1) Fiscal 2010 with Fiscal 2009 and
(2) Fiscal 2009 with the year ended September 30, 2008 (“Fiscal 2008”). As previously mentioned, our consolidated
results of operations for Fiscal 2009 and Fiscal 2008 reflect the retroactive effects of the Financial Accounting
Standards Board’s accounting guidance for the presentation of noncontrolling interests in consolidated financial
statements.
20
Fiscal 2010 Compared with Fiscal 2009
(millions of dollars)
Gallons sold (millions):
2010
2009
Increase
(Decrease)
Retail ..........................................................................................
Wholesale ...................................................................................
893.4
129.2
1,022.6
928.2
119.7
1,047.9
(34.8)
9.5
(25.3)
(3.7)%
7.9%
(2.4)%
Revenues:
Retail propane ............................................................................
Wholesale propane .....................................................................
Other ..........................................................................................
Total margin (a) .............................................................................
EBITDA (b) ...................................................................................
Operating income ..........................................................................
Net income attributable to AmeriGas Partners ..............................
Heating degree days — % (warmer) than normal (c).....................
$ 1,996.2
162.6
161.5
$ 2,320.3
$
$
$
$
925.3
321.0
235.9
165.2
(2.2)%
$ 1,976.0
115.9
168.2
$ 2,260.1
$ 20.2
46.7
(6.7)
$ 60.2
$
$
$
$
943.6
381.4
300.5
224.6
$ (18.3)
$ (60.4)
$ (64.6)
$ (59.4)
(3.1)% —
1.0%
40.3%
(4.0)%
2.7%
(1.9)%
(15.8)%
(21.5)%
(26.4)%
—
(a) Total margin represents total revenues less cost of sales — propane and cost of sales — other.
(b) Earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) should not be
considered as an alternative to net income attributable to AmeriGas Partners (as an indicator of operating
performance) and is not a measure of performance or financial condition under accounting principles generally
accepted in the United States of America (“GAAP”). Management believes EBITDA is a meaningful non-
GAAP financial measure used by investors to (1) compare the Partnership’s operating performance with other
companies within the propane industry and (2) assess its ability to meet loan covenants. The Partnership’s
definition of EBITDA may be different from that used by other companies. Management uses EBITDA to
compare year-over-year profitability of the business without regard to capital structure as well as to compare the
relative performance of the Partnership to that of other master limited partnerships without regard to their
financing methods, capital structure, income taxes or historical cost basis. In view of the omission of interest,
income taxes, depreciation and amortization from EBITDA, management also assesses the profitability of the
business by comparing net income attributable to AmeriGas Partners for the relevant years. Management also
uses EBITDA to assess the Partnership’s profitability because its parent, UGI Corporation, uses the
Partnership’s EBITDA to assess the profitability of the Partnership. UGI Corporation discloses the Partnership’s
EBITDA as the profitability measure to comply with the GAAP requirement to provide profitability information
about its domestic propane segment. EBITDA in Fiscal 2010 includes a pre-tax loss of $12.2 million associated
with the discontinuance of interest rate hedges and a pre-tax loss of $7 million associated with an increase in a
litigation accrual. EBITDA in Fiscal 2009 includes a pre-tax gain of $39.9 million from the sale of a California
LPG storage facility.
21
The following table includes reconciliations of net income attributable to AmeriGas Partners to EBITDA for the
periods presented:
Fiscal
2010
2009
Net income attributable to AmeriGas Partners ............................................................................... $ 165.2 $ 224.6
2.7
Income tax expense ........................................................................................................................
Interest expense ..............................................................................................................................
70.3
78.5
Depreciation ...................................................................................................................................
5.3
Amortization ...................................................................................................................................
EBITDA ......................................................................................................................................... $ 321.0 $ 381.4
3.3
65.1
79.7
7.7
(c) Deviation from average heating degree days for the 30-year period 1971-2000 based upon national weather
statistics provided by the National Oceanic and Atmospheric Administration (“NOAA”) for 335 airports in the
United States, excluding Alaska. Fiscal 2009 data has been adjusted to correct a NOAA error.
Based upon heating degree-day data, average temperatures in our service territories were 2.2% warmer than
normal during Fiscal 2010 compared with temperatures in the prior year that were 3.1% warmer than normal. Fiscal
2010 retail gallons sold were lower reflecting, among other things, the lingering effects of the economic recession,
customer conservation and customer attrition partially offset by volumes acquired through business acquisitions.
Retail propane revenues increased $20.2 million during Fiscal 2010 reflecting an increase as a result of higher
average retail sales prices ($94.3 million) partially offset by lower retail volumes sold ($74.1 million). Wholesale
propane revenues increased $46.7 million principally reflecting higher year-over-year wholesale selling prices
($37.5 million) and, to a lesser extent, higher wholesale volumes sold ($9.2 million). Average wholesale propane
prices at Mont Belvieu, Texas, were approximately 47% higher during Fiscal 2010 compared with average
wholesale propane prices during Fiscal 2009. The lower average wholesale propane prices in Fiscal 2009 principally
resulted from a precipitous decline in prices that occurred during the first quarter of Fiscal 2009. Other revenues
decreased $6.7 million in Fiscal 2010 compared with Fiscal 2009. Total cost of sales increased $78.6 million, to
$1,395.1 million, principally reflecting the higher 2010 wholesale propane product costs.
Total margin was $18.3 million lower in Fiscal 2010 primarily due to lower total retail margin ($21.9 million).
The lower total retail margin reflects the effects of the lower retail volumes sold ($31.4 million) partially offset by
the effects of slightly higher average retail unit margins ($9.5 million) including higher unit margins in our
AmeriGas Cylinder Exchange program.
The $60.4 million decrease in Partnership EBITDA during Fiscal 2010 reflects (1) the absence of a pre-tax gain
recorded in Fiscal 2009 associated with the November 2008 sale of the Partnership’s California LPG storage facility
($39.9 million); (2) the previously mentioned decline in Fiscal 2010 total margin ($18.3 million); and (3) a loss from
the discontinuance of interest rate hedges ($12.2 million). During the three months ended March 31, 2010, the
Partnership’s management determined that it was likely that it would not issue a previously anticipated $150 million
of long-term debt during the summer of 2010. As a result, the Partnership discontinued cash flow hedge accounting
treatment for interest rate protection agreements associated with this previously anticipated debt issuance and
recorded a $12.2 million loss which is reflected in other (income) expense, net on the Fiscal 2010 Consolidated
Statement of Income. These previously mentioned declines in EBITDA were partially offset by a decrease in
operating and administrative expenses ($5.4 million) largely due to lower self-insured liability and casualty expenses
($9.2 million) and lower compensation and benefits expense ($4.7 million) partially offset by an increase in a
litigation accrual recorded during the fourth quarter of Fiscal 2010 ($7.0 million).
Operating income in Fiscal 2010 decreased $64.6 million reflecting the previously mentioned decrease in
EBITDA ($60.4 million) and slightly higher depreciation and amortization expense associated with fixed assets
acquired during the past year ($3.6 million). Partnership interest expense was $5.2 million lower in Fiscal 2010
principally reflecting lower interest expense on lower long-term debt outstanding.
22
Fiscal 2009 Compared with Fiscal 2008
(millions of dollars)
Gallons sold (millions):
2009
2008
Increase
(Decrease)
Retail ........................................................................................
Wholesale .................................................................................
928.2
119.7
1,047.9
993.2
111.2
1,104.4
(65.0)
8.5
(56.5)
(6.5)%
7.6%
(5.1)%
Revenues:
Retail propane ..........................................................................
Wholesale propane ...................................................................
Other ........................................................................................
Total margin (a) ...........................................................................
EBITDA (b) .................................................................................
Operating income ........................................................................
Net income attributable to AmeriGas Partners ............................
Heating degree days — % (warmer) than normal (c)...................
$ 1,976.0
115.9
168.2
$ 2,260.1
$
$
$
$
943.6
381.4
300.5
224.6
(3.1)%
$ 2,439.2
185.4
190.6
$ 2,815.2
$ (463.2)
(69.5)
(22.4)
$ (555.1)
(19.0)%
(37.5)%
(11.8)%
(19.7)%
$
$
$
$
906.9
313.0
234.9
158.0
$
$
$
$
(3.0)%
36.7
68.4
65.6
66.6
—
4.0%
21.9%
27.9%
42.2%
—
(a) Total margin represents total revenues less cost of sales — propane and cost of sales — other.
(b) Earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) should not be
considered as an alternative to net income attributable to AmeriGas Partners (as an indicator of operating
performance) and is not a measure of performance or financial condition under accounting principles generally
accepted in the United States of America (“GAAP”). Management believes EBITDA is a meaningful non-
GAAP financial measure used by investors to (1) compare the Partnership’s operating performance with other
companies within the propane industry and (2) assess its ability to meet loan covenants. The Partnership’s
definition of EBITDA may be different from that used by other companies. Management uses EBITDA to
compare year-over-year profitability of the business without regard to capital structure as well as to compare the
relative performance of the Partnership to that of other master limited partnerships without regard to their
financing methods, capital structure, income taxes or historical cost basis. In view of the omission of interest,
income taxes, depreciation and amortization from EBITDA, management also assesses the profitability of the
business by comparing net income attributable to AmeriGas Partners for the relevant years. Management also
uses EBITDA to assess the Partnership’s profitability because its parent, UGI Corporation, uses the
Partnership’s EBITDA to assess the profitability of the Partnership. UGI Corporation discloses the Partnership’s
EBITDA as the profitability measure to comply with the GAAP requirement to provide profitability information
about its domestic propane segment. EBITDA in Fiscal 2009 includes a pre-tax gain of $39.9 million from the
sale of a California LPG storage facility.
The following table includes reconciliations of net income attributable to AmeriGas Partners to EBITDA for the
periods presented:
Fiscal
2009
2008
Net income attributable to AmeriGas Partners ............................................................................... $ 224.6 $ 158.0
1.7
Income tax expense ........................................................................................................................
72.9
Interest expense ..............................................................................................................................
75.7
Depreciation ...................................................................................................................................
Amortization ...................................................................................................................................
4.7
EBITDA ......................................................................................................................................... $ 381.4 $ 313.0
2.7
70.3
78.5
5.3
(c) Deviation from average heating degree days for the 30-year period 1971-2000 based upon national weather
statistics provided by the National Oceanic and Atmospheric Administration (“NOAA”) for 335 airports in the
United States, excluding Alaska. Fiscal 2009 data has been adjusted to correct a NOAA error.
23
Based upon heating degree-day data, average temperatures in our service territories during Fiscal 2009 were
3.1% warmer than normal compared with temperatures in the prior year that were 3.0% warmer than normal. Fiscal
2009 retail gallons sold were 6.5% lower than Fiscal 2008 reflecting, among other things, the adverse effects of the
significant deterioration in general economic activity which occurred over the last year and continued customer
conservation. During Fiscal 2009, average wholesale propane commodity prices at Mont Belvieu, Texas, one of the
major supply points in the U.S., were more than 50% lower than such prices in Fiscal 2008. The decrease in the
average wholesale commodity prices in Fiscal 2009 reflects the effects of a precipitous decline in commodity
propane prices principally during the first quarter of Fiscal 2009 following a substantial increase in prices during
most of the second half of Fiscal 2008. Although wholesale propane prices in Fiscal 2009 rebounded modestly from
prices experienced earlier in the year, at September 30, 2009 such prices remained approximately 35% lower than at
September 30, 2008.
Retail propane revenues declined $463.2 million in Fiscal 2009 reflecting a decrease as a result of the lower
retail volumes sold ($303.6 million) and a decrease due to lower average selling prices ($159.6 million). Wholesale
propane revenues declined $69.5 million reflecting a decrease from lower wholesale selling prices ($83.7 million)
partially offset by an increase from higher wholesale volumes sold ($14.2 million). Total cost of sales decreased
$591.8 million to $1,316.5 million principally reflecting the effects of the previously mentioned lower propane
commodity prices.
Total margin was $36.7 million greater in Fiscal 2009 reflecting the beneficial impact of higher than normal
retail unit margins resulting from the previously mentioned rapid decline in propane commodity costs that occurred
primarily as we entered the critical winter heating season in the first quarter of Fiscal 2009.
The $68.4 million increase in Fiscal 2009 Partnership EBITDA reflects the effects of a pre-tax gain from the
November 2008 sale of the Partnership’s California LPG storage facility ($39.9 million) and the previously
mentioned increase in total margin ($36.7 million). These increases were partially offset by slightly higher operating
and administrative expenses ($4.7 million) and slightly lower other income ($2.8 million). The slightly higher
operating and administrative expenses reflects, in large part, an increase in compensation and benefit expenses ($9.1
million) and higher costs associated with facility maintenance projects ($6.4 million) offset principally by lower
vehicle fuel expenses ($14.2 million) due to lower propane, diesel and gasoline prices.
Operating income increased $65.6 million in Fiscal 2009 reflecting the previously mentioned increase in
EBITDA ($68.4 million) partially offset by slightly higher depreciation and amortization expense ($3.4 million)
reflecting acquisitions and plant and equipment expenditures made since the prior year.
Financial Condition and Liquidity
Capitalization and Liquidity
The Partnership’s debt outstanding at September 30, 2010 totaled $882.4 million (including current maturities of
long-term debt of $20.1 million and bank loans of $91 million). The Partnership’s debt outstanding at September 30,
2009 totaled $865.6 million (including current maturities of long-term debt of $82.2 million and no bank loans
outstanding). Total debt outstanding at September 30, 2010 includes long-term debt comprising $779.7 million of
AmeriGas Partners’ Senior Notes and $11.7 million of other long-term debt. In July 2010, AmeriGas OLP repaid
$80 million of maturing First Mortgage Notes with borrowings under its Revolving Credit Facility and cash from
operations (as described below).
AmeriGas OLP’s short-term borrowing needs are seasonal and are typically greatest during the fall and winter
heating-season months due to the need to fund higher levels of working capital. In order to meet its short-term cash
needs, AmeriGas OLP has a $200 million unsecured credit agreement (“Credit Agreement”) which expires on
October 15, 2011. AmeriGas OLP also has a $75 million unsecured revolving credit facility (“2009 Supplemental
Credit Agreement”) which expires on June 30, 2011. AmeriGas OLP expects to renew these credit agreements prior
to their expiration. AmeriGas OLP’s Credit Agreement consists of (1) a $125 million Revolving Credit Facility and
(2) a $75 million Acquisition Facility. The Revolving Credit Facility may be used for working capital and general
purposes of AmeriGas OLP. The Acquisition Facility provides AmeriGas OLP with the ability to borrow up to $75
million to finance the purchase of propane businesses or propane business assets or, to the extent it is not so used,
for working capital and general purposes. The 2009 Supplemental Credit Agreement permits AmeriGas OLP to
borrow up to $75 million for working capital and general purposes.
24
At September 30, 2010, there were $91 million of borrowings outstanding under the Credit Agreement and no
amounts outstanding under the 2009 Supplemental Credit Agreement. The average interest rate on Credit Agreement
borrowings outstanding at September 30, 2010 was 1.31%. There were no borrowings under the AmeriGas OLP’s
credit agreements at September 30, 2009. Borrowings under our credit agreements are classified as bank loans on
the Consolidated Balance Sheets. Issued and outstanding letters of credit under the Revolving Credit Facility, which
reduce the amount available for borrowings, totaled $35.7 million at September 30, 2010 and $37.0 million at
September 30, 2009. The average daily and peak bank loan borrowings outstanding under the credit agreements
during Fiscal 2010 were $43.9 million and $135 million, respectively. The average daily and peak bank loan
borrowings outstanding under the credit agreements during Fiscal 2009 were $43.8 million and $184.5 million,
respectively. The higher peak bank loan borrowings in Fiscal 2009 resulted from amounts borrowed to fund
counterparty cash collateral obligations associated with derivative financial instruments used by the Partnership to
manage price risk associated with fixed sales price commitments to customers. These collateral obligations resulted
from the precipitous decline in propane commodity prices that occurred early in Fiscal 2009. At September 30,
2010, the Partnership’s available borrowing capacity under the credit agreements was $148.3 million.
Based on existing cash balances, cash expected to be generated from operations, and borrowings available under
AmeriGas OLP’s Credit Agreement and the 2009 Supplemental Credit Agreement, the Partnership’s management
believes that the Partnership will be able to meet its anticipated contractual commitments and projected cash needs
during Fiscal 2011. For a more detailed discussion of the Partnership’s credit facilities, see Note 7 to Consolidated
Financial Statements.
Partnership Distributions
The Partnership makes distributions to its partners approximately 45 days after the end of each fiscal quarter in a
total amount equal to its Available Cash as defined in the Fourth Amended and Restated Agreement of Limited
Partnership (the “Partnership Agreement”) for such quarter. Available Cash generally means:
1. cash on hand at the end of such quarter,
2. plus all additional cash on hand as of the date of determination resulting from borrowings after the end of such
quarter,
3. less the amount of cash reserves established by the General Partner in its reasonable discretion.
The General Partner may establish reserves for the proper conduct of the Partnership’s business and for
distributions during the next four quarters. In addition, certain of the Partnership’s debt agreements require reserves
be established for the payment of debt principal and interest.
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner (giving effect to
the 1.01% interest of the General Partner in distributions of Available Cash from AmeriGas OLP to AmeriGas
Partners) until Available Cash exceeds the Minimum Quarterly Distribution of $0.55 and the First Target
Distribution of $0.055 per Common Unit (or a total of $0.605 per Common Unit). When Available Cash exceeds
$0.605 per Common Unit in any quarter, the General Partner will receive a greater percentage of the total
Partnership distribution but only with respect to the amount by which the distribution per Common Unit to limited
partners exceeds $0.605.
Quarterly distributions of Available Cash per limited partner unit paid during Fiscal 2010, Fiscal 2009 and Fiscal
2008 were as follows:
1st Quarter ..........................................................................................................................
2nd Quarter .........................................................................................................................
3rd Quarter ..........................................................................................................................
4th Quarter ..........................................................................................................................
Fiscal
2010 2009
$0.64
$ 0.670
0.64
0.670
0.67
0.705
0.84
0.705
2008
$ 0.61
0.61
0.64
0.64
25
The Partnership has made quarterly distributions to Common Unitholders in excess of $0.605 per limited partner
unit since the quarterly distribution paid May 18, 2007. As a result, beginning with the quarterly distribution paid
May 18, 2007 and every quarter thereafter, the General Partner has received a greater percentage of the total
Partnership distributions than its aggregate 2% general partner interests in AmeriGas OLP and AmeriGas Partners.
The General Partner distribution based on its aggregate 2% general partner ownership interests totaled $6.9 million
in Fiscal 2010, $8.5 million in Fiscal 2009 and $4.3 million in Fiscal 2008. Included in these amounts are incentive
distributions received by the General Partner during Fiscal 2010, Fiscal 2009 and Fiscal 2008 of $3.0 million, $4.5
million and $0.7 million, respectively.
On July 27, 2009, the General Partner’s Board of Directors approved a distribution of $0.84 per Common Unit
payable on August 18, 2009 to unitholders of record on August 10, 2009. This distribution included the regular
quarterly distribution of $0.67 per Common Unit and $0.17 per Common Unit reflecting a one-time distribution of a
portion of the proceeds from the Partnership’s sale of its California storage facility in November 2008.
Cash Flows
Operating activities. Due to the seasonal nature of the Partnership’s business, cash flows from operating activities
are generally strongest during the second and third fiscal quarters when customers pay for propane consumed during
the heating season months. Conversely, operating cash flows are generally at their lowest levels during the first and
fourth fiscal quarters when the Partnership’s investment in working capital, principally accounts receivable and
inventories, is generally greatest. The Partnership may use its credit agreements to satisfy its seasonal operating cash
flow needs. Due in large part to declining propane commodity prices, Fiscal 2009 cash flows from operations were
significantly greater than in Fiscal 2010 or Fiscal 2008 primarily the result of lower cash required to fund changes in
working capital as further described below.
Cash flow from operating activities was $218.8 million in Fiscal 2010, $367.5 million in Fiscal 2009 and $180.2
million in Fiscal 2008. Cash flow from operating activities before changes in operating working capital was $269.5
million in Fiscal 2010, $281.2 million in Fiscal 2009 and $255.1 million in Fiscal 2008. Cash provided (used) to
fund changes in operating working capital totaled ($50.7) million in Fiscal 2010, $86.3 million in Fiscal 2009 and
($74.9) million in Fiscal 2008. The higher cash needed to fund changes in working capital in Fiscal 2010 resulted
from the greater cash needed to fund changes in operating working capital, principally accounts receivable and
inventories, due to the year-over-year increase in wholesale propane product prices. The greater cash provided by
changes in operating working capital in Fiscal 2009 compared to Fiscal 2008 reflects lower net cash required to fund
changes in accounts receivable and inventories due in large part to the effects of declining wholesale propane
product costs during the year. Cash flow from changes in operating working capital in Fiscal 2009 also reflects
reimbursements of $17.8 million of counterparty collateral deposits paid in Fiscal 2008.
Investing activities. Investing activity cash flow is principally affected by expenditures for property, plant and
equipment, cash paid for acquisitions of businesses and proceeds from sales of assets. Cash flow used in investing
activities was $114.9 million in Fiscal 2010, $79.5 million in Fiscal 2009 and $55.6 million in Fiscal 2008. We spent
$83.2 million for property, plant and equipment (comprising $41.1 million of maintenance capital expenditures and
$42.1 million of growth capital expenditures) in Fiscal 2010; $78.7 million for property, plant and equipment
(comprising $37.5 million of maintenance capital expenditures and $41.2 million of growth capital expenditures) in
Fiscal 2009; and $62.8 million for property, plant and equipment (comprising $29.1 million of maintenance capital
expenditures and $33.7 million of growth capital expenditures) in Fiscal 2008. The greater capital expenditures in
Fiscal 2010 and 2009 include expenditures associated with an ongoing system software replacement. In November
2008, the Partnership sold its California 600,000 barrel LPG storage facility for net cash proceeds of $42.4 million.
Financing activities. Changes in cash flow from financing activities are primarily due to distributions on AmeriGas
Partners Common Units, issuances and repayments of long-term debt, borrowings under credit agreements, and
issuances of AmeriGas Partners Common Units. Cash flow used by financing activities was $155.4 million in Fiscal
2010, $239.7 million in Fiscal 2009 and $147.7 million in Fiscal 2008. Distributions in Fiscal 2009 include an
additional $0.17 per Common Unit to distribute a portion of the proceeds from the Partnership’s November 2008
sales of its California storage facility. During Fiscal 2010, AmeriGas OLP repaid $80 million of maturing First
Mortgage Notes using borrowings under its Revolving Credit Facility and cash from operations. During Fiscal 2009,
AmeriGas OLP repaid $70 million of maturing First Mortgage Notes using cash generated from operations.
26
Capital Expenditures
In the following table, we present capital expenditures (which exclude acquisitions) for Fiscal 2010, Fiscal 2009
and Fiscal 2008. We also provide amounts we expect to spend in Fiscal 2011. We expect to finance Fiscal 2011
capital expenditures principally from cash generated by operations and borrowings under our credit agreements.
Year Ended September 30,
(millions of dollars)
Property, plant and equipment .........................................................................
2011
(estimate)
2010 2009
2008
$
79.9 $ 83.2 $ 78.7 $ 62.8
Fiscal 2010 and Fiscal 2009 capital expenditures include expenditures associated with a Partnership system
software replacement.
Contractual Cash Obligations and Commitments
The Partnership has certain contractual cash obligations that extend beyond Fiscal 2010 including obligations
associated with long-term debt, interest on long-term fixed-rate debt, lease obligations, capital expenditures and
propane supply contracts. The following table presents significant contractual cash obligations as of September 30,
2010:
Total
Payments Due by Period
Fiscal
Fiscal
2012-
2014-
2015
4.0 $ 417.3 $
2013
Fiscal
2011
Fiscal 2016
and
therafter
$
791.4 $
302.5
181.7
50.5
12.6
110.0 110.1
38.3
—
—
$ 1,338.7 $ 187.2 $ 181.2 $ 565.7 $
67.2
—
—
20.1 $
57.5
46.5
50.5
12.6
350.0
24.9
29.7
—
—
404.6
(millions of dollars)
Long-term debt (a) ...............................................................
Interest on long-term fixed-rate debt (b) ..............................
Operating leases ...................................................................
Propane supply contracts .....................................................
Other purchase obligations (c) .............................................
Total .....................................................................................
(a) Based upon stated maturity dates.
(b) Based upon stated interest rates.
(c) Includes material capital expenditure obligations.
The components of other noncurrent liabilities included in our Consolidated Balance Sheet at September 30,
2010 principally consist of property and casualty liabilities and, to a much lesser extent, liabilities associated with
executive compensation plans and employee post-employment benefit programs. These liabilities are not included in
the table of Contractual Cash Obligations and Commitments because they are estimates of future payments and not
contractually fixed as to timing or amount.
Partnership Sale of California Storage Facility
On November 13, 2008, AmeriGas OLP sold its 600,000 barrel refrigerated, above-ground storage facility
located on leased property in California. We recorded a pre-tax gain of $39.9 million associated with this
transaction, which increased net income attributable to AmeriGas Partners for the year ended September 30, 2009 by
$39.5 million.
Related Party Transactions
Pursuant to the Partnership Agreement and a Management Services Agreement among AEH, the general partner
of Eagle OLP, and the General Partner, the General Partner is entitled to reimbursement for all direct and indirect
expenses incurred or payments it makes on behalf of the Partnership. These costs, which totaled $350.2 million in
Fiscal 2010, $355.0 million in Fiscal 2009 and $345.5 million in Fiscal 2008 include employee compensation and
benefit expenses of employees of the General Partner and general and administrative expenses.
27
UGI provides certain financial and administrative services to the General Partner. UGI bills the General Partner
monthly for all direct and indirect corporate expenses incurred in connection with providing these services and the
General Partner is reimbursed by the Partnership for these expenses. The allocation of indirect UGI corporate
expenses to the Partnership utilizes a weighted, three-component formula based on the relative percentage of the
Partnership’s revenues, operating expenses and net assets employed to the total of such items for all UGI operating
subsidiaries for which general and administrative services are provided. The General Partner believes that this
allocation method is reasonable and equitable to the Partnership. Such corporate expenses totaled $10.8 million in
Fiscal 2010, $12.2 million in Fiscal 2009 and $11.2 million in Fiscal 2008. In addition, UGI and certain of its
subsidiaries provide office space, stop loss medical coverage and automobile liability insurance to the Partnership.
The costs related to these items totaled $2.3 million in Fiscal 2010, $3.3 million in Fiscal 2009 and $2.7 million in
Fiscal 2008.
AmeriGas OLP purchases propane from Atlantic Energy, Inc. (“Atlantic Energy”) a former subsidiary of UGI
Energy Services, Inc. (“Energy Services”) and a second-tier subsidiary of UGI, pursuant to a propane sales
agreement (“Product Sales Agreement”) whereby Atlantic Energy has agreed to sell and AmeriGas OLP has agreed
to purchase a specified amount of propane annually at a terminal located in Chesapeake, Virginia. The Product Sales
Agreement, which was originally scheduled to terminate on April 30, 2010, was amended to extend the initial
termination date to April 30, 2015 and to provide for an option to extend beyond that date for an additional five
years. The price to be paid for product purchased under the agreement is determined annually using a contractual
formula that takes into account published index prices and the locational value of deliveries at the terminal. On July
30, 2010, Energy Services sold its interest in Atlantic Energy. In addition, from time to time, AmeriGas OLP
purchases propane on an as needed basis from Energy Services. The price of the purchases are generally based on
market price at the time of purchase. Purchases of propane by AmeriGas OLP from Energy Services and Atlantic
Energy (through the date of its sale) totaled $39.8 million, $24.3 million and $47.3 million during Fiscal 2010,
Fiscal 2009 and Fiscal 2008, respectively. The sale of the terminal did not effect the terms of the Product Sales
Agreement.
On October 1, 2008, AmeriGas OLP acquired all of the assets of Penn Fuel Propane, LLC (now named UGI
Central Penn Propane, LLC, (“CPP”) from CPP, a second-tier subsidiary of UGI Utilities, Inc., for $32.0 million
cash plus estimated working capital of $1.6 million. UGI Utilities, Inc. is a wholly owned subsidiary of UGI. CPP
sold propane to customers primarily in eastern Pennsylvania. AmeriGas OLP funded the acquisition of the assets of
CPP principally from borrowings under its Credit Agreement. Pursuant to the acquisition agreement, in February
2009, AmeriGas OLP reached an agreement with UGI Utilities on the working capital adjustment pursuant to which
UGI Utilities reimbursed AmeriGas OLP $1.4 million plus interest.
The Partnership also sells propane to other affiliates of UGI. Such amounts were not material in Fiscal 2010,
Fiscal 2009 or Fiscal 2008.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are expected to have an effect on the Partnership’s
financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
28
Market Risk Disclosures
Our primary financial market risks include commodity prices for propane and interest rates on borrowings.
Commodity Price Risk
The risk associated with fluctuations in the prices the Partnership pays for propane is principally a result of
market forces reflecting changes in supply and demand for propane and other energy commodities. The
Partnership’s profitability is sensitive to changes in propane supply costs and the Partnership generally passes on
increases in such costs to customers. The Partnership may not, however, always be able to pass through product cost
increases fully or on a timely basis, particularly when product costs rise rapidly. In order to reduce the volatility of
the Partnership’s propane market price risk, we use contracts for the forward purchase or sale of propane, propane
fixed-price supply agreements, and over-the-counter derivative commodity instruments including price swap and
option contracts. Over-the-counter derivative commodity instruments utilized by the Partnership to hedge forecasted
purchases of propane are generally settled at expiration of the contract. These derivative financial instruments
contain collateral provisions. Although we use derivative financial and commodity instruments to reduce market
price risk associated with forecasted transactions, we do not use derivative financial and commodity instruments for
speculative or trading purposes. The fair value of unsettled commodity price risk sensitive instruments at September
30, 2010 and 2009 were gains of $8.0 million and $11.8 million, respectively. A hypothetical 10% adverse change in
the market price of propane would result in a decrease in fair value of $18.7 million and $14.0 million, respectively.
Because the Partnership’s propane derivative instruments generally qualify as hedges under GAAP, we expect
that changes in the fair value of derivative instruments used to manage propane market price risk would be
substantially offset by gains or losses on the associated anticipated transactions.
Interest Rate Risk
The Partnership has both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of
variable-rate debt but generally do not impact their fair value. Conversely, changes in interest rates impact the fair
value of fixed-rate debt but do not impact their cash flows.
Our variable-rate debt includes borrowings under AmeriGas OLP’s credit agreements. These agreements have
interest rates that are generally indexed to short-term market interest rates. At September 30, 2010, there was $91
million of borrowings outstanding under the credit agreements. Based upon the average level of borrowings
outstanding under the credit agreements in Fiscal 2010, an increase in short-term interest rates of 100 basis points
(1%) would have increased annual interest expense by $0.4 million.
The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point increase in market
interest rates would result in decreases in the fair value of this fixed-rate debt of $42.9 million and $38.2 million at
September 30, 2010 and 2009, respectively. A 100 basis point decrease in market interest rates would result in
increases in the fair market value of this debt of $46.0 million and $40.7 million at September 30, 2010 and 2009,
respectively.
Our long-term debt is typically issued at fixed rates of interest based upon market rates for debt having similar
terms and credit ratings. As these long-term debt issues mature, we may refinance such debt with new debt having
interest rates reflecting then-current market conditions. This debt may have an interest rate that is more or less than
the refinanced debt. In order to reduce interest rate risk associated with forecasted issuances of fixed-rate debt, from
time to time we enter into interest rate protection agreements. As previously mentioned, during the three months
ended March 31, 2010, the Partnership’s management determined that it was likely that it would not issue $150
million of long-term debt during the summer of 2010 due to the Partnership’s strong cash flow and anticipated
extension of all or a portion of the 2009 Supplemental Credit Agreement. As a result, the Partnership discontinued
cash flow hedge accounting treatment for interest rate protection agreements associated with this previously
anticipated $150 million long-term debt issuance and recorded a $12.2 million loss which is reflected in other
income, net, on the Fiscal 2010 Consolidated Statements of Operations. There were no unsettled interest rate
protection agreements outstanding at September 30, 2010. The fair value of unsettled interest rate protection
agreements at September 30, 2009 was a loss of $15.9 million.
29
Derivative Financial Instruments Credit Risk
The Partnership is exposed to credit loss in the event of nonperformance by counterparties to derivative financial
and commodity instruments. Our counterparties principally consist of major energy companies and major U.S.
financial institutions. We maintain credit policies with regard to our counterparties that we believe reduce overall
credit risk. These policies include evaluating and monitoring our counterparties’ financial condition, including their
credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements
call for the posting of collateral by the counterparty or by the Partnership in the form of letters of credit, parental
guarantees or cash.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in compliance with GAAP requires the selection
and application of appropriate accounting principles to the relevant facts and circumstances of the Partnership’s
operations and the use of estimates made by management. The Partnership has identified the following critical
accounting policies that are most important to the portrayal of the Partnership’s financial condition and results of
operations. Changes in these policies could have a material effect on the financial statements. The application of
these accounting policies necessarily requires management’s most subjective or complex judgments regarding
estimates and projected outcomes of future events which could have a material impact on the financial statements.
Management has reviewed these critical accounting policies, and the estimates and assumptions associated with
them, with its Audit Committee. In addition, management has reviewed the following disclosures regarding the
application of these critical accounting policies with the Audit Committee.
Litigation accruals and environmental liabilities. The Partnership is involved in litigation regarding pending
claims and legal actions that arise in the normal course of its business and may own sites at which hazardous
substances may be present. In accordance with GAAP, the Partnership establishes reserves for pending claims and
legal actions or environmental remediation liabilities when it is probable that a liability exists and the amount or
range of amounts can be reasonably estimated. Reasonable estimates involve management judgments based on a
broad range of information and prior experience. These judgments are reviewed quarterly as more information is
received and the amounts reserved are updated as necessary. Such estimated reserves may differ materially from the
actual liability and such reserves may change materially as more information becomes available and estimated
reserves are adjusted.
Depreciation and amortization of long-lived assets. We compute depreciation on property, plant and equipment
on a straight-line basis over estimated useful lives generally ranging from 2 to 40 years. We also use amortization
methods and determine asset values of intangible assets other than goodwill using reasonable assumptions and
projections. Changes in the estimated useful lives of property, plant and equipment and changes in intangible asset
amortization methods or values could have a material effect on our results of operations. As of September 30, 2010,
our net property, plant and equipment totaled $642.8 million. Depreciation expense of $79.7 million was recorded
during Fiscal 2010.
Purchase price allocation. From time to time, we enter into material business combinations. In accordance with
accounting guidance associated with business combinations, the purchase price is allocated to the various assets
acquired and liabilities assumed at their estimated fair value. Fair values of assets acquired and liabilities assumed
are based upon available information and may involve us engaging an independent third party to perform an
appraisal. Estimating fair values can be complex and subject to significant business judgment. Estimates most
commonly impact property, plant and equipment and intangible assets, including those with indefinite lives.
Generally, we have, if necessary, up to one year from the acquisition date to finalize the purchase price allocation.
Newly Adopted and Recently Issued Accounting Pronouncements
See Note 3 to Consolidated Financial Statements for a discussion of the effects of accounting guidance we
adopted in Fiscal 2010.
30
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
“Quantitative and Qualitative Disclosures About Market Risk” are contained in Management’s Discussion and
Analysis of Financial Condition and Results of Operations under the caption “Market Risk Disclosures” and are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s Annual Report on Internal Control Over Financial Reporting and the financial statements and
financial statement schedules referred to in the Index contained on page F-2 of this Report are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) The General Partner’s disclosure controls and procedures are designed to provide reasonable assurance that the
information required to be disclosed by the Partnership in reports filed under the Securities Exchange Act of
1934, as amended, is (i) recorded, processed, summarized, and reported within the time periods specified in the
SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. The General Partner’s management, with the participation of the General Partner’s Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the Partnership’s disclosure controls and
procedures as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Partnership’s disclosure controls and procedures, as of
the end of the period covered by this Report, were effective at the reasonable assurance level.
(b) For “Management’s Annual Report on Internal Control Over Financial Reporting” see Item 8 of this Report
(which information is incorporated herein by reference).
(c) No change in the Partnership’s internal control over financial reporting occurred during the Partnership’s most
recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership’s
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III:
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We do not directly employ any persons responsible for managing or operating the Partnership. The General
Partner and UGI provide such services and are reimbursed for direct and indirect costs and expenses including all
compensation and benefit costs. See “Certain Relationships and Related Transactions, and Director Independence —
Related Person Transactions” and Note 14 to Consolidated Financial Statements.
The Board of Directors of the General Partner has an Audit Committee, Compensation/Pension Committee,
Corporate Governance Committee and an Executive Committee. The functions of and other information about these
committees is summarized below.
31
The Audit Committee has the authority to (i) make determinations or review determinations made by
management in transactions that require special approval by the Committee under the terms of the Partnership
Agreement and (ii) at the request of the General Partner, review specific matters as to which the General Partner
believes there may be a conflict of interest, in order to determine if the resolution of such conflict is fair and
reasonable to the Partnership. In addition, the Audit Committee acts on behalf of the Board of Directors in fulfilling
its responsibility to:
• oversee the accounting and financial reporting processes and audits of the financial statements of the
Partnership;
• monitor the independence of the Partnership’s independent registered public accounting firm and the
performance of the independent registered public accountants and internal audit staff;
• oversee the adequacy of the Partnership’s controls relative to financial and business risk;
• provide a means for open communication among the independent registered public accountants,
management, internal audit staff and the Board of Directors; and
• oversee compliance with applicable legal and regulatory requirements.
The Audit Committee has sole authority to appoint, retain, fix the compensation of and oversee the work of the
Partnership’s independent registered public accounting firm. A copy of the current charter of the Audit Committee is
posted on the Partnership’s website, www.amerigas.com; see “Investor Relations — Corporate Governance.”
The Audit Committee members are Messrs. Pratt (Chairman), Marrazzo and Stoeckel. Each member of the Audit
Committee is “independent” as defined by the New York Stock Exchange listing standards. In addition, the Board of
Directors of the General Partner has determined that all members of the Audit Committee qualify as “audit
committee financial experts” within the meaning of the Securities and Exchange Commission regulations.
The Compensation/Pension Committee members are Messrs. Schlanger (Chairman) and Marrazzo and Dr. Ban.
The Committee establishes executive compensation policies and programs, confirms that executive compensation
plans do not encourage unnecessary risk-taking; recommends to the independent members of the Board of Directors
base salary, annual bonus target levels and long-term compensation awards for executives, approves corporate goals
and objectives relating to the Chief Executive Officer’s compensation, assists the Board in establishing a succession
plan for the Chief Executive Officer, and reviews the General Partner’s plans for senior management succession and
management development. Each member of the Compensation/Pension Committee is independent as defined by the
New York Stock Exchange listing standards.
The Executive Committee members are Messrs. Gozon (Chairman), Greenberg and Schlanger. The Committee
has the full authority of the Board to act on matters between meetings of the Board, with specified limitations
relating to major transactions.
The Corporate Governance Committee members are Messrs. Gozon (Chairman), Pratt and Stoeckel. The
Committee identifies nominees and reviews qualifications of persons eligible to stand for election as Directors and
makes recommendations to the Board on these matters, advises the Board with respect to significant developments
in corporate governance matters, reviews and assesses the performance of the Board and each Committee, and
reviews and makes recommendations to the Board of Directors regarding director compensation. Each member of
the Corporate Governance Committee is independent as defined by the New York Stock Exchange listing standards.
32
When considering whether the Board’s Directors and nominees have the experience, qualifications, attributes
and skills, taken as a whole, to satisfy the oversight responsibilities of the Board, the Corporate Governance
Committee and the Board considered primarily the information about the backgrounds and experiences of the
Directors contained under the section of this Report entitled “Directors, Executive Officers and Corporate
Governance — Directors and Executive Officers of the General Partner.” In particular, with regard to Mr.
Greenberg, the Board considered his executive leadership and vision demonstrated in leading the Partnership’s
successful growth for more than 15 years, and his extensive industry knowledge and experience. With regard to Mr.
Bissell, the Board considered his senior management experience as the General Partner’s Chief Executive Officer
and his extensive industry knowledge. With regard to Mr. Walsh, the Board considered his experience serving as
Vice Chairman of the General Partner, his senior management experience with UGI Corporation and another global
public company, and his broad industry knowledge and insight. With regard to Dr. Ban, the Board considered his
extensive energy industry and emerging energy technologies knowledge and experience, including his experience as
Chief Executive Officer of the Gas Research Institute, and his public company directorship and committee
experience. With regard to Mr. Gozon, the Board considered his extensive senior executive experience with
publicly-traded global business organizations, and his significant public and private company directorship and
committee experience, including experience as chairman of the board. With regard to Mr. Marrazzo, the Board
considered his extensive experience as Chief Executive Officer of both non-profit and public companies, his city
government leadership experience, and his public and private company directorship and committee experience. With
regard to Mr. Pratt, the Board considered his extensive executive and financial management experience, his
knowledge of the information technology field, and his public and private company directorship and committee
experience. With regard to Mr. Schlanger, the Board considered his senior management experience as Chief
Executive Officer, Chief Operating Officer, and Chief Financial Officer of Arco Chemical Company, a large public
company, and his experience serving as chairman, director and committee member of the boards of directors of large
public and private international companies, including his experience representing a major private equity firm’s
shareholder interest. With regard to Mr. Stoeckel, the Board considered his management experience as Chief
Executive Officer of a large private company sharing similarities with the Partnership, such as a similar workforce
and a large number of geographically dispersed retail locations, and his private company directorship experience.
The General Partner has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers
that applies to the General Partner’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer.
The Code of Ethics is included as an exhibit to this Report and is posted on the Partnership’s website,
www.amerigas.com; see “Investor Relations — Corporate Governance.” Copies of all corporate governance
documents posted on the Partnership’s website are available free of charge by writing to Hugh J. Gallagher,
Director, Treasury Services and Investor Relations, UGI Corporation, P. O. Box 858, Valley Forge, PA 19482.
Directors and Executive Officers of the General Partner
The following table sets forth certain information with respect to the directors and executive officers of the
General Partner. AmeriGas, Inc., as the sole shareholder of the General Partner, elects directors annually. AmeriGas,
Inc. is a wholly owned subsidiary of UGI. Executive officers are elected for one-year terms. There are no family
relationships between any of the directors or any of the executive officers or between any of the executive officers
and any of the directors.
Name
Lon R. Greenberg ................................................
Eugene V. N. Bissell ............................................
John L. Walsh ......................................................
Stephen D. Ban ....................................................
Richard C. Gozon ................................................
William J. Marrazzo ............................................
Gregory A. Pratt ..................................................
Marvin O. Schlanger ............................................
Howard B. Stoeckel .............................................
Randy A. Hannigan .............................................
John S. Iannarelli .................................................
William D. Katz ...................................................
Robert H. Knauss .................................................
David L. Lugar ....................................................
Andrew J. Peyton .................................................
Kevin Rumbelow .................................................
Jerry E. Sheridan..................................................
William J. Stanczak .............................................
Age
Position with the General Partner
60 Chairman and Director
57 President, Chief Executive Officer and Director
55 Vice Chairman and Director
69 Director
72 Director
61 Director
62 Director
62 Director
65 Director
59 Vice President — Field Operations, South
46 Vice President — Field Operations, North
57 Vice President — Human Resources
57 Vice President, General Counsel and Corporate Secretary
53 Vice President — Supply and Logistics
42 Vice President — Sales and Marketing
50 Vice President — Operations Support
45 Vice President — Finance and Chief Financial Officer
55 Controller and Chief Accounting Officer
33
Mr. Greenberg is a director (since 1994) and Chairman of the Board of Directors of the General Partner. He
previously served as President and Chief Executive Officer of the General Partner from 1996 until July 2000. He is
also a director (since 1994), Chairman (since 1996) and Chief Executive Officer (since 1995) of UGI Corporation,
having previously been President (1994 to 2005) and Senior Vice President — Legal and Corporate Development of
UGI (1989 to 1994). Mr. Greenberg previously served as Vice President and General Counsel of AmeriGas, Inc.
(1984 to 1994). He also serves as a director of UGI Utilities, Inc. and Aqua America, Inc.
Mr. Bissell is President, Chief Executive Officer and a director of the General Partner (since July 2000), having
served as Senior Vice President — Sales and Marketing of the General Partner (1999 to 2000) and Vice President —
Sales and Operations (1995 to 1999). Previously, he was Vice President — Distributors and Fabrication, BOC Gases
(1995), having been Vice President — National Sales (1993 to 1995) and Regional Vice President (Southern
Region) for Distributor and Cylinder Gases Division, BOC Gases (1989 to 1993). From 1981 to 1987, Mr. Bissell
held various positions with UGI Corporation and its subsidiaries, including Director, Corporate Development. Mr.
Bissell is a member of the Board of Directors of the National Propane Gas Association and a member of the
Kalamazoo College Board of Trustees.
Mr. Walsh is a director and Vice Chairman of the General Partner (since April 2005). He also serves as a
director and President and Chief Operating Officer of UGI Corporation (since April 2005). In addition, Mr. Walsh is
a director (since April 2005) and President and Chief Executive Officer (since July 2009) of UGI Utilities, Inc.
Previously, Mr. Walsh was the Chief Executive of the Industrial and Special Products division of the BOC Group
plc, an industrial gases company, a position he assumed in 2001. He was also an Executive Director of BOC (2001
to 2005). He joined BOC in 1986 as Vice President-Special Gases and held various senior management positions in
BOC, including President of Process Gas Solutions, North America (2000 to 2001) and President of BOC Process
Plants (1996 to 2000).
Dr. Ban was elected a director of the General Partner on February 22, 2006. He is currently working as a
consultant in private industry. Dr. Ban recently retired as Director of the Technology Transfer Division of the
Argonne National Laboratory, a science-based Department of Energy laboratory dedicated to advancing the frontiers
of science in energy, environment, biosciences and materials (2001 to 2010). He previously served as President and
Chief Executive Officer of the Gas Research Institute, a gas industry research and development company funded by
distributors, transporters, and producers of natural gas (1987 to 1999). He also served as Executive Vice President of
Gas Research Institute. Prior to joining Gas Research Institute in 1981, he was Vice President, Research and
Development and Quality Control of Bituminous Materials, Inc. Dr. Ban also serves as a director of UGI
Corporation, UGI Utilities, Inc. and Energen Corporation.
Mr. Gozon was elected a director of the General Partner on February 24, 1998. He retired as Executive Vice
President of Weyerhaeuser Company in 2002, an integrated forest products company, and Chairman of Norpac, a
North Pacific Paper Company, a joint venture with Nippon Paper Industries, positions he had held since 1994. Mr.
Gozon was formerly a director (1984 to 1993), President and Chief Operating Officer of Alco Standard Corporation,
a provider of paper and office products (1988 to 1993); Executive Vice President and Chief Operating Officer
(1988), President (1985 to 1987) of Paper Corporation of America. He also serves as a director of UGI Corporation,
UGI Utilities, Inc., AmerisourceBergen Corp., and Triumph Group, Inc.
Mr. Marrazzo was elected a director of the General Partner on April 23, 2001. He is Chief Executive Officer and
President of WHYY, Inc., a public television and radio company in the nation’s fourth largest market (since 1997).
Previously, he was Chief Executive Officer and President of Roy F. Weston, Inc. (1988 to 1997); Water
Commissioner for the Philadelphia Water Department (1971 to 1988) and Managing Director for the City of
Philadelphia (1983 to 1984). He also serves as a director of American Water Works Company, Inc. and Woodard &
Curran Engineers.
Mr. Pratt was elected a director of the General Partner on May 24, 2005. He is Chairman of the Board of
Carpenter Technology Corporation, a manufacturer and distributor of stainless steel and specialty alloys (since
October 2009). Mr. Pratt also served as interim Chief Executive Officer and President of Carpenter Technology
Corporation until July 1, 2010. He is the former Vice Chairman and a director of OAO Technology Solutions, Inc.
(OAOT), an information technology professional services company (2002 to 2010). He joined OAOT in 1998 as
President and Chief Executive Officer after OAOT acquired Enterprise Technology Group, Inc., a software
engineering firm founded by Mr. Pratt. Mr. Pratt also serves as President and a director of the Capital Area Chapter
of the National Association of Corporate Directors, a non-profit organization. He previously served as a director,
President and Chief Operating Officer of Intelligent Electronics, Inc. (1991 to 1996), and was co-founder, and
served as Chief Financial Officer of Atari Corp. and President of Atari (US) Corp. (1984 to 1991).
34
Mr. Schlanger was elected a director of the General Partner on January 26, 2009. Mr. Schlanger is a Principal in
the firm of Cherry Hill Chemical Investments, L.L.C., a company that provides management services and capital to
the chemical and allied industries (since October 1998). Mr. Schlanger also serves as Chairman of the Board of
LyondellBassell Industries N.V. (since June 2010), Chairman of the Board of CEVA Group, Plc (since February
2009), and Vice Chairman of Hexion Specialty Chemicals, Inc. (since June 2005). He was previously Chairman and
Chief Executive Officer of Resolution Performance Products, Inc., a manufacturer of specialty and intermediate
chemicals (2000 to 2005), Chairman of Covalence Specialty Materials Corp. (2006 to 2007), and Chairman of
Resolution Specialty Materials, LLC (2004 to 2005). Mr. Schlanger also serves as a Director of UGI Corporation,
UGI Utilities, Inc., and Momentive Performance Materials Inc.
Mr. Stoeckel was elected a director of the General Partner on September 30, 2006. Mr. Stoeckel is President and
Chief Executive Officer of Wawa, Inc. and also serves as Vice Chairman of the Board of Directors of Wawa, Inc.
Wawa, Inc. is a multi-state retailer of food products and gasoline. He joined Wawa, Inc. in 1987 as Vice President
— Human Resources and was promoted to various positions, including Chief Operating Officer, Executive Vice
President, Chief Retail Officer, and Vice President — Marketing. He also serves as a trustee for Rider University.
Mr. Hannigan is Vice President — Field Operations, South of the General Partner (since March 2010), having
served previously as Vice President — Field Operations of the General Partner (2007 to 2010). He joined the
General Partner as a District Manager in 1978 and has spent over 25 years in positions of increasing responsibility
including Region Vice President and General Manager (1997 to 2006). Mr. Hannigan retired effective October 15,
2010.
Mr. Iannarelli is Vice President — Field Operations, North of the General Partner (since March 2010), having
served previously as Vice President — Midwest Operations of the General Partner (January 2009 to March 2010)
and Vice President — Business Reengineering (2005 to 2009). Prior to 2005, he held various positions of increasing
responsibility with the General Partner including Region Vice President (2004 to 2005), Director of Region
Operations (2001 to 2004), and Director of Corporate Development (2000 to 2001). He joined the General Partner in
December 1987.
Mr. Katz is Vice President — Human Resources of the General Partner (since December 1999), having served as
Vice President — Corporate Development (1996 to 1999). Previously, he was Vice President — Corporate
Development of UGI Corporation (1995 to 1996). Prior to joining UGI Corporation, Mr. Katz was Director of
Corporate Development with Campbell Soup Company for over five years. He also practiced law for approximately
10 years, first with the firm of Jones, Day, Reavis & Pogue, and later in the Legal Department at Campbell Soup
Company.
Mr. Knauss is Vice President and General Counsel of the General Partner (since October 2003) and UGI
Corporation (since September 2003). He is also Corporate Secretary of the General Partner (since 1994). Prior to
October 2003, Mr. Knauss served as Vice President — Law and Associate General Counsel of the General Partner
(1996 to 2003). Previously he was Group Counsel — Propane (1989 to 1996) of UGI Corporation. He joined UGI
Corporation as Associate Counsel in 1985. Before joining UGI Corporation, Mr. Knauss was an associate at the firm
of Ballard, Spahr, Andrews & Ingersoll in Philadelphia, Pennsylvania.
Mr. Lugar is Vice President — Supply and Logistics of the General Partner (since September 2000). Previously,
he served as Director — NGL Marketing for Conoco, Inc., where he spent 20 years in increasingly responsible
positions in propane marketing, operations, and supply.
Mr. Peyton is Vice President — Sales and Marketing of the General Partner (since March 2010). Previously, he
served as General Manager, Southern Region and Northeast Region of the General Partner (2009 to 2010) and as
General Manager, Southern Region (2006 to 2009). Prior to joining the General Partner, Mr. Peyton served in a
variety of positions, including national accounts and product management, during his more than ten year tenure at
Ryerson, Inc.
35
Mr. Rumbelow is Vice President — Operations Support of the General Partner (since May 2006). Previously,
Mr. Rumbelow spent over 20 years at Rohm and Haas Company in Philadelphia, Pennsylvania, and the United
Kingdom, in positions of increasing responsibility including Corporate Logistics/Supply Chain Director (2000 to
2006), North American Region Logistics Manager (1998 to 2000), and Inter Regional Logistics Manager (1996 to
1998).
Mr. Sheridan is Vice President — Finance and Chief Financial Officer of the General Partner (since August
2005). From 2003 to 2005, he served as President and Chief Executive Officer of Potters Industries, Inc., a global
manufacturer of engineered glass materials and a wholly—owned subsidiary of PQ Corporation. In addition, Mr.
Sheridan served as Executive Vice President (2003 to 2005) and as Vice President and Chief Financial Officer (1999
to 2003) of PQ Corporation, a global producer of inorganic specialty chemicals.
Mr. Stanczak is Controller and Chief Accounting Officer of the General Partner (since September 2004).
Previously he held the position of Director — Corporate Accounting and Reporting of UGI Corporation (2003 to
2004). Mr. Stanczak also served as Controller of the Gas Utility Division of UGI Utilities, Inc., a subsidiary of UGI
Corporation, from 1991 to 2003.
Director Independence
The Board of Directors of the General Partner has determined that, other than Messrs. Bissell, Greenberg and
Walsh, no director has a material relationship with the Partnership and each is an “independent director” as defined
under the rules of the New York Stock Exchange. The Board of Directors has established the following guidelines to
assist it in determining director independence:
(i) service by a director on the Board of Directors of UGI Corporation and its subsidiaries in and of itself will
not be considered to result in a material relationship between such director and the Partnership;
(ii) if a director serves as an officer, director or trustee of a non-profit organization, charitable contributions to
that organization by the Partnership and its affiliates in an amount up to $250,000 per year will not be
considered to result in a material relationship between such director and the Partnership;
(iii) service by a director or his immediate family member as a non-management director of a company that does
business with the Partnership or an affiliate of the Partnership will not be considered to result in a material
relationship between such director and the Partnership where the business is done in the ordinary course of
the Partnership’s or affiliate’s business and on substantially the same terms and conditions as would be
available to similarly situated customers; and
(iv) service by a director or his immediate family member as an executive officer or employee of a company that
makes payments to, or receives payments from, the Partnership or its affiliates for property or services in an
amount which, in any of the last three fiscal years, does not exceed the greater of $1 million or 2% of such
other company’s consolidated gross revenues, will not be considered to result in a material relationship
between such director and the Partnership.
In making its determination of independence, the Board of Directors considered charitable contributions and
underwriting support given by the Partnership and its affiliates in prior years to WHYY, of which Mr. Marrazzo is
the Chief Executive Officer, as well as ordinary course business transactions between the Partnership and its
affiliates and Carpenter Technology Corporation, where Mr. Pratt serves as Chairman of the Board and formerly
served as interim President and Chief Executive Officer during a portion of 2010. All such transactions were in
compliance with the categorical standards set by the Board of Directors for determining director independence.
Non-management Directors
Non-management directors meet at regularly scheduled executive sessions without management present. These
sessions are led by Mr. Gozon, who currently holds the position of Presiding Director.
36
Communications with the Board of Directors and Non-management Directors
Interested persons wishing to communicate directly with the Board of Directors or the non-management
directors as a group may do so by sending written communications addressed to them c/o AmeriGas Propane, Inc.,
P.O. Box 965, Valley Forge, PA 19482. Any communications directed to the Board of Directors or the non-
management directors as a group from employees or others that concern complaints regarding accounting, internal
controls or auditing matters will be handled in accordance with procedures adopted by the Audit Committee of the
Board.
All other communications directed to the Board of Directors or the non-management directors as a group are
initially reviewed by the General Counsel. The Chairman of the Corporate Governance Committee is advised
promptly of any such communication that alleges misconduct on the part of management or raises legal, ethical or
compliance concerns about the policies or practices of the General Partner.
On a periodic basis, the Chairman of the Corporate Governance Committee receives updates on other
communications that raise issues related to the affairs of the Partnership but do not fall into the two prior categories.
The Chairman of the Corporate Governance Committee determines which of these communications he would like to
review. The Corporate Secretary maintains a log of all such communications that is available for review for one year
upon request of any member of the Board.
Typically, the General Partner does not forward to the Board of Directors communications from Unitholders or
other parties which are of a personal nature or are not related to the duties and responsibilities of the Board,
including customer complaints, job inquiries, surveys and polls and business solicitations.
These procedures have been posted on the Partnership’s website at www.amerigas.com (click the “Investor
Relations and Corporate Governance” caption, then click on “Contact AmeriGas Propane, Inc. Board of Directors”).
Section 16(a) — Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the directors and certain officers of the General
Partner and any 10% beneficial owners of the Partnership to send reports of their beneficial ownership of Common
Units and changes in beneficial ownership to the Securities and Exchange Commission. Based on our records, we
believe that during Fiscal 2010 all of such reporting persons complied with all Section 16(a) filing requirements
applicable to them.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation/Pension Committee of the General Partner are Messrs. Schlanger (Chairman)
and Marrazzo and Dr. Ban. None of the members is a former or current officer or employee of the General Partner
or any of its subsidiaries. None of the members has any relationship required to be disclosed under this caption
under the rules of the Securities and Exchange Commission.
REPORT OF THE COMPENSATION/PENSION COMMITTEE
The Compensation/Pension Committee has reviewed and discussed the Compensation Discussion and Analysis
with management. Based on this review and discussion, the Committee recommended to the General Partner’s
Board of Directors, and the Board of Directors approved, the inclusion of the Compensation Discussion and
Analysis in the Partnership’s Annual Report on Form 10-K for the year ended September 30, 2010.
Compensation/Pension Committee
Marvin O. Schlanger, Chairman
Stephen D. Ban
William J. Marrazzo
37
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
In this Compensation Discussion and Analysis, we address the compensation paid or awarded to Messrs. Bissell,
Sheridan, Greenberg, Walsh and Knauss. We refer to these executive officers as our “named executive officers.”
Compensation decisions for Messrs. Bissell and Sheridan were made by the independent members of the Board
of Directors of the General Partner after receiving the recommendation of its Compensation/Pension Committee.
Compensation decisions for Messrs. Greenberg, Walsh and Knauss were made by the independent members of the
Board of Directors of UGI, after receiving the recommendations of its Compensation and Management
Development Committee. For ease of understanding, we will use the term “we” to refer to AmeriGas Propane, Inc.
and/or UGI Corporation and the term “Committee” or “Committees” to refer to the AmeriGas Propane, Inc.
Compensation/Pension Committee and/or the UGI Corporation Compensation and Management Development
Committee as appropriate in the relevant compensation decisions, unless the context indicates otherwise.
Compensation Philosophy and Objectives
We believe that our compensation program for our named executive officers is designed to provide a competitive
level of total compensation necessary to attract and retain talented and experienced executives. Additionally, our
compensation program is intended to motivate and encourage our executives to contribute to our success and reward
our executives for leadership excellence and performance that promotes sustainable growth in unitholder and
shareholder value.
In Fiscal 2010, the components of our compensation program included salary, annual bonus awards, a
discretionary cash bonus, long-term incentive compensation (performance unit awards and UGI Corporation stock
option grants), perquisites, retirement benefits, and other benefits, all as described in greater detail in this
Compensation Discussion and Analysis. We also consider granting discretionary special equity awards from time to
time, although no such awards were made to the named executive officers during Fiscal 2010. We believe that the
elements of our compensation program are essential components of a balanced and competitive compensation
program to support our annual and long-term goals.
Determination of Competitive Compensation
In determining Fiscal 2010 compensation, the Committees engaged Towers Perrin as their compensation
consultant. In early 2010, Towers Perrin merged with Watson Wyatt, another human resources consulting firm, and
is now called Towers Watson. Towers Watson supported the Committees in performing their responsibilities with
respect to our executive compensation program. The primary duties of Towers Watson were to:
• provide the Committees with independent and objective market data;
• conduct compensation analysis;
•
•
review and advise on pay programs and salary, target bonus and long-term incentive levels applicable to our
executives; and
review components of our compensation program as requested from time to time by the Committees and
recommend plan design changes as appropriate.
38
Towers Watson also performs other services for us and our affiliates under separate agreements. These services
include providing (i) actuarial services for UGI’s pension plans, (ii) consulting services with respect to benefits
programs, (iii) non-discrimination testing for qualified benefit plans, and (iv) assistance in determining the
accounting fair value of our equity awards. Towers Watson was selected by the Committees as their compensation
consultant independent of any consideration of the services that Towers Watson provides for us and our affiliates.
None of the Towers Watson consultants that provided services to the Committees and none of the Towers Watson
executive compensation consultants were involved in any of the actuarial and benefits consulting services provided
to us and our affiliates. Towers Watson has served as the actuary for UGI’s qualified pension plans for many years,
and its knowledge and experience with our retirement and benefit plans are considered valuable. In Fiscal 2010, we
and our affiliates paid Towers Watson $736,605 for these services. We and our affiliates paid Towers Watson
$83,234 in Fiscal 2010 for executive compensation-related services, and the Committees approved Towers Watson’s
fee structure for those services. Management engaged Towers Watson for all other services provided by that firm,
and management reviewed and approved all Towers Watson fees.
In July of Fiscal 2010, based on their review of the Towers Watson relationship, and to avoid any appearance of
a conflict, the Committees decided to retain Pay Governance LLC as their compensation consultant for Fiscal 2011.
Because Pay Governance LLC currently employs the consultant who formerly served the Committees as our lead
compensation consultant when he was employed by Towers Perrin, the Committees did not lose the benefit of their
lead consultant’s knowledge of our compensation policies and programs. We will not engage Pay Governance LLC
to provide any additional consulting services.
In assessing competitive compensation, we referenced market data provided to us in Fiscal 2009 by Towers
Watson. For Messrs. Bissell and Sheridan, Towers Watson provided us with two reports: the “2009 Executive Cash
Compensation Review” and the “2009 Executive Long-Term Incentive Review.” Each of these reports includes an
executive compensation analysis. We utilize similar but separate Towers Watson market data for UGI, including an
executive compensation analysis, in determining compensation for Messrs. Greenberg, Walsh and Knauss. We do
not benchmark against specific companies in the Towers Watson reports. Our Committees do benchmark, however,
by using (through Towers Watson) compensation databases that include numerous companies as a reference point to
provide a framework for compensation decisions. Our Committees exercise discretion and also review other factors,
such as internal equity and sustained individual and company performance, when setting our executives’
compensation.
For Messrs. Bissell and Sheridan, the executive compensation analysis is based on general industry data in
Towers Watson’s General Industry Executive Compensation Database, which includes approximately 430
companies. For Messrs. Greenberg, Walsh and Knauss, the analysis was weighted 75 percent based on the General
Industry Executive Compensation Database and 25 percent based on Towers Watson’s Energy Services Executive
Compensation Database. This weighting is designed to approximate the relative sizes of UGI’s non-utility and utility
businesses. Towers Watson’s General Industry Executive Compensation Database is comprised of companies from a
broad range of industries, including oil and gas, aerospace, automotive and transportation, chemicals, computer,
consumer products, electronics, food and beverages, metals and mining, pharmaceutical and telecommunications.
The Towers Watson Energy Services database is comprised of approximately 100 companies, primarily utilities.
We generally seek to position a named executive officer’s salary grade so that the midpoint of the salary range
for his salary grade approximates the 50th percentile of salaries for comparable executives included in the executive
compensation database material referenced by Towers Watson. By comparable executive, we mean an executive
having a similar range of responsibilities and the experience to fully perform those responsibilities. Towers Watson
uses regression analysis on compensation data for the applicable positions in its databases to provide us with
information on market rates of compensation. Regression analysis is an objective calculation that identifies a
relationship between one variable (in this case, compensation) and another variable that is closely related to it. For
utilities and broader general industry companies, revenue provides the firmest relationship to compensation. In other
words, a larger company would be more likely to pay a higher amount of compensation for the same position than a
smaller company. Using this relationship, market rates are developed for positions comparable to those of our
executives, as if the companies in the Executive Compensation and Energy Services databases had revenues similar
to ours. We believe that Towers Watson’s regression analysis on the applicable positions in these databases is an
appropriate method for establishing market rates. After consultation with Towers Watson, we considered salaries
that were within 15 percent of market median salary levels developed by Towers Watson to be competitive.
39
Elements of Compensation
Salary
Salary is designed to compensate executives for their level of responsibility and sustained individual
performance. We pay our executive officers a salary that is competitive with that of other executive officers
providing comparable services, taking into account the size and nature of the business of AmeriGas Partners or UGI,
as the case may be.
As noted above, we seek to establish the midpoint of the salary grade for the positions held by our named
executive officers to approximate the 50th percentile of salaries for executives in comparable positions as
determined in the applicable Towers Watson executive compensation databases. Based on the data provided by
Towers Watson, we increased the range of salary in each salary grade for each named executive officer, other than
Mr. Greenberg, by 1.5 percent. The Committee established Mr. Greenberg’s Fiscal 2010 salary grade midpoint at the
market median of comparable executives as identified by Towers Watson’s executive compensation databases. For
Mr. Greenberg, this resulted in a slight reduction of the midpoint from the prior year.
Historically, individual salaries have been adjusted to reflect merit increases based on subjective performance
evaluations and the individual’s position within the salary range for his salary grade. For Fiscal 2010, however, in
response to the challenging economy and period of evolving market dynamics, our named executive officers did not
receive base salary increases. All named executive officers received a salary in Fiscal 2010 that was within 86
percent to 106 percent of the midpoint for his salary range.
The following table sets forth each named executive officer’s Fiscal 2010 salary. As previously discussed, our
named executive officers did not receive a base salary increase in Fiscal 2010.
Name
Percentage Increase
over Fiscal 2009
Salary
Salary
E. V. N. Bissell ...........................................................................................
J. E. Sheridan ..............................................................................................
L. R. Greenberg ..........................................................................................
J. L. Walsh ..................................................................................................
R. H. Knauss ...............................................................................................
490,000
$
302,356
$
$ 1,067,500
648,440
$
340,340
$
0%
0%
0%
0%
0%
Annual Bonus Awards
Either our General Partner or UGI annual bonus plans provide our named executive officers with the opportunity
to earn annual cash incentives provided that certain performance goals are satisfied. Our annual cash incentives are
intended to motivate our executives to focus on the achievement of our annual business objectives by providing
competitive incentive opportunities to those executives who have the ability to significantly impact our financial
performance. We believe that basing a meaningful portion of an executive’s compensation on financial performance
emphasizes our pay for performance philosophy and will result in the enhancement of partnership unitholder or
shareholder value.
In determining each executive position’s target award level under our annual bonus plans, we considered
information in the Towers Watson executive compensation databases regarding the percentage of salary payable
upon achievement of target goals for executives in similar positions at other companies as described above. In
establishing the target award level, we position the amount within the 50th to 75th percentiles for comparable
positions. We determined that the 50th to 75th percentile range was appropriate because we believe that the annual
bonus opportunities should have a significant reward potential to recognize the difficulty of achieving the annual
goals and the significant beneficial impact to the Partnership of such achievement. For Fiscal 2010, Mr. Bissell’s
opportunity was set at approximately the 56th percentile and the other named executive officers’ opportunities were
set between the 50th and 63rd percentiles.
40
Messrs. Bissell and Sheridan participate in the AmeriGas Propane, Inc. Executive Annual Bonus Plan. For
Messrs. Bissell and Sheridan, the entire target award opportunity was based on earnings per Common Unit (“EPU”)
of AmeriGas Partners, with the bonus achieved based on EPU subject to adjustment based on achievement of our
customer growth goal, as described below. We believe that annual bonus payments to our most senior executives
should reflect our overall financial results for the fiscal year and EPU provides a straightforward, “bottom line”
measure of the performance of an executive in a large, well-established business. In addition, we believe that
customer growth for AmeriGas Partners is an important corollary to EPU because we foresee no growth in total
demand for propane in the next several years, and, therefore, customer growth is an important factor in our ability to
improve the Partnership’s long-term financial performance. Additionally, the customer growth adjustment serves to
balance the risk of achieving our short-term annual financial goals at the expense of our long-term goal to grow our
customer base.
Messrs. Greenberg, Walsh and Knauss participate in the UGI Corporation Executive Annual Bonus Plan. For
reasons similar to those underlying our use of EPU as a goal for Messrs. Bissell and Sheridan, the entire target
award for Messrs. Greenberg, Walsh and Knauss was based on UGI’s earnings per share (“EPS”). We also believe
that EPS is an appropriate measure for Messrs. Greenberg, Walsh and Knauss, whose duties encompass UGI and its
affiliated enterprises, including the General Partner and the Partnership. The EPS measure is not subject to
adjustment based on customer growth or any other metric.
As noted above, each of Messrs. Bissell’s and Sheridan’s target award opportunity was based on EPU of the
Partnership, subject to modification based on customer growth. The EPU target for bonus purposes during Fiscal
2010 was established to be in the range of $2.97 to $3.14 per Common Unit. Under the target bonus criteria
applicable to Mr. Bissell, no bonus would be paid if the EPU amount was less than approximately 80 percent of the
EPU target, while 200 percent of the target bonus might be payable if EPU was approximately 120 percent or more
of the target. The percentage of target bonus payable based on various levels of EPU is referred to as the “EPU
Leverage Factor.” The amount of the award determined by applying the EPU Leverage Factor is then adjusted to
reflect the degree of achievement of a predetermined customer growth objective (“Customer Growth Leverage
Factor”). For Fiscal 2010, the adjustment ranged from 90 percent if the growth objective was not achieved, to 110
percent if the growth objective exceeded approximately 150 percent of the growth target. The customer growth
adjustment for Fiscal 2010 was modified to reflect our assessment of growth prospects after considering current and
projected economic and housing market conditions. We believe the Customer Growth Leverage Factor for Fiscal
2010 represented an aggressive but achievable growth target. Once the EPU Leverage Factor and Customer Growth
Leverage Factor are determined, the EPU Leverage Factor is multiplied by the Customer Growth Leverage Factor to
obtain an adjusted leverage factor. This adjusted leverage factor is then multiplied by the target bonus opportunity to
arrive at the bonus award payable for the fiscal year.
Each Committee has discretion to adjust performance results for extraordinary items or other events as the
Committee deems appropriate. For Fiscal 2010, the Committee deemed it appropriate to adjust EPU to exclude the
loss associated with the discontinuance of the Partnership’s interest rate hedges. This adjustment resulted in EPU
slightly less than the EPU target. During Fiscal 2010, the Partnership’s management decided not to issue $150
million of long-term debt as previously planned due to the Partnership’s strong cash flows and the adequate level of
funds available under its revolving loan agreements. Accordingly, the Partnership discontinued cash flow accounting
treatment for interest rate protection agreements associated with the anticipated debt issuance which resulted in a
loss in Fiscal 2010. The discretionary exclusion of this loss from EPU resulted in a 13.8 percentage point increase to
the EPU Leverage Factor, which was then modified because the customer growth target was not achieved.
Accordingly, each of Messrs. Bissell and Sheridan received a bonus payout equal to 89.2 percent of his target award.
The bonus award opportunity for each of Messrs. Greenberg, Walsh and Knauss was structured so that no
amounts would be paid unless UGI’s EPS was at least 80 percent of the target amount, with the target bonus award
being paid out if UGI’s EPS was 100 percent of the targeted EPS. The maximum bonus, equal to 200 percent of the
target bonus, would be payable if the EPS equaled or exceeded 120 percent of the EPS target. The targeted EPS for
bonus purposes for Fiscal 2010 was established to be in the range of $2.20 to $2.30 per share. For Fiscal 2010, the
Committee excluded from the calculation of the EPS Leverage Factor all of the gain associated with the divestiture
of UGI’s indirect subsidiary, Atlantic Energy, due to its unusual nature. The Committee also excluded the loss
associated with the discontinuance of the Partnership’s interest rate hedges for the reasons previously discussed. The
exclusion of the gain associated with the divestiture of Atlantic Energy resulted in a 27.3 percentage point reduction
to the EPS Leverage Factor. The exclusion of the loss associated with the discontinuance of the Partnership’s
interest rate hedges resulted in a 5.5 percentage point increase to the EPS Leverage Factor. Accordingly, for Fiscal
2010 Messrs. Greenberg, Walsh and Knauss each received a bonus payout equal to 107.3 percent of his target
bonus.
41
The following annual bonus payments were made for Fiscal 2010:
Name
E. V. N. Bissell .............................................................................................................
J. E. Sheridan ................................................................................................................
L. R. Greenberg ............................................................................................................
J. L. Walsh ....................................................................................................................
R. H. Knauss .................................................................................................................
Discretionary Bonus
Percent of
Target
Bonus Paid
89.2%
89.2%
107.3%
107.3%
107.3%
Amount
of Bonus
$ 349,664
$ 134,851
$1,145,428
$ 591,410
$ 237,370
On November 19, 2010, the Committee and the independent members of the UGI Board of Directors approved a
discretionary bonus of $45,000 to Mr. Knauss. This bonus was in recognition of Mr. Knauss’ extraordinary
leadership efforts relating to the restoration of our corporate headquarters building following a fire in December of
2009.
Long-Term Compensation — Fiscal 2010 Equity Awards
Our long-term incentive compensation is intended to create a strong financial incentive for achieving or
exceeding long-term performance goals and to encourage executives to hold a significant equity stake in our
company in order to align the executives’ interests with unitholder interests. Additionally, we believe our long-term
incentives provide us the ability to attract and retain talented executives in a competitive market. We awarded our
long-term compensation effective December 31, 2009 for Messrs. Bissell and Sheridan under the 2000 AmeriGas
Propane, Inc. Long-Term Incentive Plan, and effective January 1, 2010 under the 2004 Plan. Messrs. Greenberg,
Walsh and Knauss received long-term compensation awards under the 2004 Plan.
Our long-term compensation for Fiscal 2010 included UGI stock option grants and either AmeriGas Partners
performance unit awards or UGI performance unit awards. Messrs. Bissell and Sheridan were each awarded
AmeriGas Partners performance unit awards tied to the three-year total return performance of AmeriGas Partners
Common Units relative to that of the limited partnerships in the Alerian MLP Index. Messrs. Greenberg, Walsh and
Knauss were each awarded UGI Corporation performance units tied to the three-year total return performance of
UGI’s common stock relative to that of the companies in the S&P Utilities Index. Each performance unit represents
the right of the recipient to receive a Common Unit or a share of common stock if specified performance goals and
other conditions are met.
As is the case with cash compensation and annual bonus awards, we referenced Towers Watson’s executive
compensation databases in establishing equity compensation. In determining the total dollar value of the long-term
compensation opportunity to be provided in Fiscal 2010, we initially referenced (i) market median salary
information and (ii) the percentage of the market median base salary for each position to be delivered as a long-term
compensation opportunity, both as calculated by Towers Watson. The aforementioned percentage was developed
using the applicable executive compensation databases and was targeted to produce long-term compensation
opportunity at the 50th percentile level.
We initially applied approximately 50 percent of the amount of the long-term incentive opportunity to stock
options and approximately 50 percent to performance units. We have bifurcated long-term compensation in this
manner since 2000 and believe it provides a good balance between two related, but discrete goals. Stock options are
designed to align the executive’s interests with shareholder interests, because the value of stock options is a function
of the appreciation or depreciation of UGI’s stock price. As explained in more detail below, the performance units
are designed to encourage total unitholder or shareholder return that compares favorably relative to a competitive
peer group.
42
In providing award calculations, Towers Watson valued UGI stock options by applying a binomial model. The
stock price used in the model for January 1, 2010 awards was $25.11 which was the three month average UGI stock
price from May 10, 2009 through August 10, 2009. The model also assumes 5 percent turnover annually over the
vesting period to account for options forfeited by terminating participants. As a result of this analysis, Towers
Watson valued the stock options at $2.27 per underlying share. Based on its valuation, Towers Watson calculated
the number of options to be granted to the named executive officers covering a specified number of underlying
shares.
The remaining approximately 50 percent of the long-term compensation opportunity is awarded as performance
units. In calculating the number of AmeriGas Partners performance units to be awarded to each of Messrs. Bissell
and Sheridan, Towers Watson placed a value of $25.92 per unit. The value was computed by taking an average price
for AmeriGas Partners common units from May 10, 2009 through August 10, 2009, and adjusting the price based on
Towers Watson’s standard assumptions, including the same 5 percent turnover assumption used in valuing stock
options. The number of UGI performance units awarded was computed in a similar fashion, subject to the same 5
percent turnover assumption. In calculating the number of UGI performance units to be awarded to Messrs.
Greenberg, Walsh and Knauss, Towers Watson placed a value of $19.45 per share underlying a UGI performance
unit, based on the average price of UGI common stock over the three month period from May 10, 2009 through
August 10, 2009.
While management used the Towers Watson calculations as a starting point, in accordance with past practice,
management recommended adjustments to the aggregate number of UGI stock options and AmeriGas Partners and
UGI performance units calculated by Towers Watson. The adjustments were designed to address historic grant
practices, internal pay equity and the policy of UGI that the three year average of the annual number of UGI equity
awards, expressed as a percentage of UGI common shares outstanding at fiscal year-end, made under the 2004 Plan
for the fiscal years 2008 through 2010 will not exceed 2 percent. Despite the significant decrease in the UGI
Corporation stock option value between Fiscal 2009 and Fiscal 2010 as calculated by Towers Watson for the
purpose of valuing UGI stock options, management, in response to challenging economic conditions, did not
increase the number of stock options granted to Messrs. Greenberg and Walsh in Fiscal 2010. In addition,
management only modestly increased the number of stock options granted to the other named executive officers in
Fiscal 2010. For purposes of calculating the annual number of equity awards used in this calculation: (i) each stock
option granted is deemed to equal one share and (ii) each performance unit earned and paid in shares of stock and
each stock unit granted and expected to be paid in shares of stock is deemed to equal four shares.
As a result of the Committee’s acceptance of management’s recommendations, the named executives received
between approximately 82 percent and 95 percent of the total dollar value of long-term compensation opportunity
recommended by Towers Watson. The total dollar value of the long-term compensation received by the named
executive officers in Fiscal 2010 was approximately 25 percent to 39 percent less than the dollar value of long-term
compensation awarded in Fiscal 2009. The actual grant amounts are set forth below:
Name
E. V. N. Bissell ............................................................................
J. E. Sheridan ...............................................................................
L. R. Greenberg ...........................................................................
J. L. Walsh ...................................................................................
R. H. Knauss ................................................................................
(1) Constitutes UGI performance units.
Shares Underlying
Stock Options
# Granted
80,000
22,000
300,000
125,000
57,000
Performance Units
# Granted
17,000
3,800
70,000(1)
28,000(1)
11,000(1)
43
While the number of performance units awarded to the named executive officers was determined as described
above, the actual number of shares or Common Units underlying performance units that are paid out at the
expiration of the three-year performance period will be based upon comparative AmeriGas Partners total unitholder
return (“TUR”) or UGI total shareholder return (“TSR”) over the period from January 1, 2010 to December 31,
2012. In computing TUR, we use the average of the daily closing prices for our Common Units and those of each of
the limited partnerships in the Alerian MLP Index for the ninety calendar days prior to January 1 of the beginning
and end of a given three-year performance period. In addition, TUR gives effect to all distributions throughout the
three-year performance period as if they had been reinvested. For the AmeriGas Partners performance units awarded
to Messrs. Bissell and Sheridan, we compare the TUR of AmeriGas Partners’ Common Units to the TUR
performance of each of the 50 limited partnerships in the Alerian MLP Index. If a partnership is added to the Alerian
MLP Index during a three-year performance period, we do not include that partnership in our TUR analysis. We will
only remove a partnership that was included in the Alerian MLP Index at the beginning of a performance period if
such partnership ceases to exist during the applicable performance period. Prior to Fiscal 2010, we compared the
TUR performance of AmeriGas Partners Common Units to the TUR performance of a peer group consisting of
selected publicly traded limited partnerships engaged in the propane, pipeline and coal industries. We believe using
a published index maintained by an independent third party is preferable to using a selected group of partnerships
because it lends greater impartiality to the AmeriGas Propane long-term incentive compensation program. The
limited partnerships comprising the Alerian MLP Index as of December 31, 2009 were as follows:
Alliance Holdings GP, L.P.
Enterprise GP Holdings LP
Penn Virginia GP Holdings, L.P.
Alliance Resource Partners, L.P.
EV Energy Partners, L.P.
Penn Virginia Resource Partners, L.P.
Boardwalk Pipeline Partners, LP
Ferrellgas Partners, L.P.
Pioneer Southwest Energy Partners L.P.
Buckeye GP Holdings L.P.
Genesis Energy, L.P.
Plains All American Pipeline, L.P.
Buckeye Partners, L.P.
Holly Energy Partners, L.P.
Regency Energy Partners LP
Calumet Specialty Products Partners, L.P.
Inergy, L.P.
Spectra Energy Partners, LP
Copano Energy, L.L.C.
Kinder Morgan Energy Partners, L.P.
Star Gas Partners, L.P.
DCP Midstream Partners, LP
Kinder Morgan Management, LLC
Suburban Propane Partners, L.P.
Dorchester Minerals, L.P.
Legacy Reserves LP
Sunoco Logistics Partners L.P.
Duncan Energy Partners L.P.
Linn Energy, LLC
TC PipeLines, LP
El Paso Pipeline Partners, L.P.
Magellan Midstream Partners, L.P.
Targa Resources Partners LP
Enbridge Energy Management, L.L.C.
Markwest Energy Partners, L.P.
Teekay LNG Partners L.P.
Enbridge Energy Partners, L.P.
Natural Resource Partners L.P.
Teekay Offshore Partners L.P.
Encore Energy Partners LP
Navios Maritime Partners L.P.
Western Gas Partners, LP
Energy Transfer Equity, L.P.
NuStar Energy L.P.
Williams Partners L.P.
Energy Transfer Partners, L.P.
NuStar GP Holdings, LLC
Williams Pipeline Partners L.P.
Enterprise Products Partners L.P.
ONEOK Partners, L.P.
44
In determining the number of UGI performance units to be paid out, UGI will compare the TSR of UGI common
stock relative to the TSR performance of those companies comprising the Standard and Poors 500 Utilities Index
(S&P Utilities Index) as of the beginning of a performance period. In computing TSR, UGI uses the average of the
daily closing prices for its common stock and the common stock of each company in the S&P Utilities Index for the
ninety calendar days prior to January 1 of the beginning and end of a given three-year performance period. In
addition, TSR gives effect to all dividends throughout the three-year performance period as if they had been
reinvested. If a company is added to the S&P Utilities Index during a three-year performance period, UGI does not
include that company in its TSR analysis. UGI will only remove a company that was included in the S&P Utilities
Index at the beginning of a performance period if such company ceases to exist during the applicable performance
period. Those companies in the S&P Utilities Index as of December 31, 2009 were as follows:
Allegheny Energy, Inc.
EQT Corporation
PPL Corporation
Ameren Corporation
Exelon Corporation
Progress Energy, Inc.
American Electric Power Company, Inc. FirstEnergy Corp.
Public Service Enterprise Group Inc.
Centerpoint Energy, Inc.
FPL Group, Inc.
Questar Corporation
CMS Energy Corporation
Integrys Energy Group, Inc.
SCANA Corporation
Consolidated Edison, Inc.
Nicor Inc.
Sempra Energy
Constellation Energy Group, Inc.
NiSource Inc.
TECO Energy, Inc.
Dominion Resources, Inc.
Northeast Utilities
The AES Corporation
DTE Energy Company
PG&E Corporation
The Southern Company
Duke Energy Corporation
Pepco Holdings, Inc.
Wisconsin Energy Corporation
Edison International
Pinnacle West Capital Corp.
Xcel Energy Inc.
Entergy Corporation
Each award payable to the named executive officers provides a number of AmeriGas Partners Common Units or
UGI shares equal to the number of performance units earned. After the Committee has determined that the
conditions for payment have been satisfied, management of the General Partner or UGI, as the case may be, has the
authority to provide for a cash payment to the named executives in lieu of the Common Units or shares payable. The
cash payment is based on the value of the securities at the end of the performance period and is designed to meet
minimum statutory tax withholding requirements. In the event that UGI executives earn shares in excess of the
target award, the value of the above target shares is paid entirely in cash.
The minimum award, equivalent to 50 percent of the number of performance units, will be payable if the TUR or
TSR rank is at the 40th percentile of the Alerian MLP Index or S&P Utilities Index companies, as applicable. The
target award, equivalent to 100 percent of the number of performance units, will be payable if the TUR or TSR rank
is at the 50th percentile. The maximum award, equivalent to 200 percent of the number of performance units, will be
payable if the TUR or TSR rank is the highest of all Alerian MLP Index limited partnerships or S&P Utilities Index
companies, as applicable.
All performance units have partnership distribution or dividend equivalent rights, as applicable. A distribution
equivalent is an amount determined by multiplying the number of performance units credited to a recipient’s
account by the per-unit cash distribution, or the per-unit fair market value of any non-cash distribution, paid by
AmeriGas Partners during the performance period on its Common Units on a distribution payment date. Accrued
distribution and dividend (in the case of UGI performance units) equivalents are payable on the number of Common
Units or common shares payable, if any, at the end of the performance period and are paid in cash.
45
Long-Term Compensation — Payout of Performance Units for 2007-2009 Period
During Fiscal 2010, we paid out awards to those executives who received performance units in fiscal year 2007
for the period from January 1, 2007 to December 31, 2009. For that period, the Partnership’s TUR ranked 6th
relative to its peer group of 18 other partnerships, placing the Partnership at just above the 72nd percentile ranking,
resulting in a 145.4 percent payout of the target award. UGI’s TSR ranked 13th relative to the 29 other companies in
the S&P 500 Utilities Index, placing UGI just above the 58th percentile ranking, resulting in a 121.6 percent payout
of the target award. The performance criteria for AmeriGas Partners’ and UGI’s performance unit awards during
that period was the same as those for the performance units granted for 2009-2011, described above, except that the
Partnership’s TUR was compared to that of each member of a peer group of publicly-traded master limited
partnerships in the propane, pipeline and coal industries as of the January 1, 2007 award date. As a result of the
foregoing, the payouts on performance unit awards were as follows:
Name
E. V. N. Bissell ....................................................
J. E. Sheridan .......................................................
L. R. Greenberg ...................................................
J. L. Walsh ...........................................................
R. H. Knauss ........................................................
Performance Unit Payout (#)
20,356
3,926
72,960
31,616
10,944
(1) Includes distribution equivalent or dividend equivalent payout.
Perquisites
Performance Unit
Payout Value(1) ($)
969,149
186,907
1,931,707
837,073
289,756
We provide limited perquisite opportunities to our executive officers. We provide reimbursement for tax
preparation services, certain health maintenance services and limited spousal travel. The aggregate cost of
perquisites for all named executive officers in Fiscal 2010 was less than $20,000.
Other Benefits
Our named executive officers participate in various retirement, deferred compensation and severance plans
which are described in greater detail in the “Ongoing Plans and Post-Employment Agreements” section of this
Compensation Discussion and Analysis. We also provide employees, including the named executive officers, with a
variety of other benefits, including medical and dental benefits, disability benefits, life insurance, and paid holidays
and vacations. These benefits generally are available to all of our full-time employees.
Ongoing Plans and Post-Employment Agreements
We have several plans and agreements (described below) that enable our named executive officers to accrue
retirement benefits as the executives continue to work for us, provide severance benefits upon certain types of
termination of employment events or provide other forms of deferred compensation.
AmeriGas Propane, Inc. Savings Plan (the “AmeriGas Propane Savings Plan”)
This plan is a tax-qualified defined contribution plan for General Partner employees. Under the plan, an
employee may contribute, subject to Code limitations (which, among other things, limited annual contributions in
2010 to $16,500), up to 50 percent of his or her eligible compensation on a pre-tax basis, and the General Partner
provides a matching contribution equal to 100 percent of the first 5 percent of eligible compensation contributed in
any pay period. Amounts credited to an employee’s account in the plan may be invested among a number of funds,
including a UGI stock fund. Messrs. Bissell and Sheridan are eligible to participate in the AmeriGas Propane
Savings Plan.
46
UGI Utilities, Inc. Savings Plan (the “UGI Savings Plan”)
This plan is a tax-qualified defined contribution plan available to, among others, employees of UGI. Under the
plan, an employee may contribute, subject to Code limitations (which, among other things, limited annual
contributions in 2010 to $16,500), up to a maximum of 50 percent of his or her eligible compensation on a pre-tax
basis and up to 20 percent of his or her eligible compensation on an after-tax basis. The combined maximum of pre-
tax and after-tax contributions is 50 percent of his or her eligible compensation. UGI provides matching
contributions targeted at 50 percent of the first 3 percent of eligible compensation contributed by the employee in
any pay period, and 25 percent of the next 3 percent. For participants entering the UGI Savings Plan on or after
January 1, 2009, who are not eligible to participate in the UGI Pension Plan, the Company provides matching
contributions targeted at 100 percent of the first 5 percent of eligible compensation contributed by the employee in
any pay period. Like the AmeriGas Propane Savings Plan, participants in the UGI Savings Plan may invest amounts
credited to their account among a number of funds, including a UGI stock fund. Messrs. Greenberg, Walsh and
Knauss are eligible to participate in the UGI Savings Plan.
Retirement Income Plan for Employees of UGI Utilities, Inc. (the “UGI Pension Plan”)
This plan is a tax-qualified defined benefit plan available to, among others, employees of UGI and certain of its
subsidiaries, but not including the General Partner. The UGI Pension Plan was closed to new participants as of
January 1, 2009. The UGI Pension Plan provides an annual retirement benefit based on an employee’s earnings and
years of service, subject to maximum benefit limitations. Messrs. Greenberg, Walsh and Knauss are eligible to
participate in the UGI Pension Plan. Mr. Bissell has a vested benefit in the UGI Pension Plan, but he no longer
participates. See the “Pension Benefits Table — Fiscal 2010” and accompanying narrative for additional
information.
UGI Corporation Supplemental Executive Retirement Plan and Supplemental Savings Plan
UGI Corporation Supplemental Executive Retirement Plan
This plan is a nonqualified defined benefit plan that provides retirement benefits that would otherwise be
provided under the UGI Pension Plan, but are restricted from being paid from the UGI Pension Plan by Code limits.
The plan also provides additional benefits in the event of certain terminations of employment covered by a change in
control agreement. Messrs. Greenberg, Walsh and Knauss participate in the UGI Corporation Supplemental
Executive Retirement Plan. See the “Pension Benefits Table — Fiscal 2010” and accompanying narrative for
additional information.
UGI Corporation Supplemental Savings Plan
This plan is a nonqualified deferred compensation plan that provides benefits that would be provided under the
qualified UGI Savings Plan in the absence of Code limitations. The Supplemental Savings Plan is intended to pay an
amount substantially equal to the difference between the Company matching contribution to the qualified UGI
Savings Plan and the matching contribution that would have been made under the qualified UGI Savings Plan if the
Code limitations were not in effect. At the end of each plan year, a participant’s account is credited with earnings
equal to the weighted average return on two indices: 60 percent on the total return of the Standard and Poor’s 500
Index and 40 percent on the total return of the Barclays Capital U.S. Aggregate Bond Index. The plan also provides
additional benefits in the event of certain terminations of employment covered by a change in control agreement.
Messrs. Greenberg, Walsh and Knauss are each eligible to participate in the UGI Corporation Supplemental Savings
Plan and each will receive a benefit if his contribution to the UGI Savings Plan satisfies the requirements under the
UGI Corporation Supplemental Savings Plan. See the “Nonqualified Deferred Compensation Table — Fiscal 2010”
and accompanying narrative for additional information.
47
AmeriGas Propane, Inc. Supplemental Executive Retirement Plan
The General Partner maintains a supplemental executive retirement plan, which is a nonqualified deferred
compensation plan for highly compensated employees of the General Partner. Under the plan, the General Partner
credits to each participant’s account 5 percent of the compensation below the Code compensation limits and 10
percent of excess compensation. In addition, if any portion of the General Partner’s matching contribution under the
AmeriGas Propane, Inc. Savings Plan is forfeited due to nondiscrimination requirements under the Code, the
forfeited amount, adjusted for earnings and losses on the amount, will be credited to a participant’s account.
Participants direct the investment of the amounts in their accounts among a number of mutual funds. Messrs. Bissell
and Sheridan participate in the AmeriGas Propane, Inc. Supplemental Executive Retirement Plan. See the
“Nonqualified Deferred Compensation Table — Fiscal 2010” and accompanying narrative for additional
information.
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan On Behalf of AmeriGas Partners, L.P.
Effective July 30, 2010, this plan succeeded the AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan On
Behalf of AmeriGas Partners, L.P., which expired on December 31, 2009. The plan provides (i) designated
employees of the General Partner and its affiliates and (ii) non-employee members of the Board of Directors of the
General Partner with the opportunity to receive grants of options, phantom units, performance units, unit awards,
unit appreciation rights, distribution equivalents and other unit-based awards. The plan also provides that if there is a
change of control of AmeriGas Partners or UGI Corporation, then the following will generally occur: (i) AmeriGas
Partners will provide the participant with written notification of the change of control, (ii) all outstanding options
and unit appreciation rights will automatically vest and become exercisable, (iii) the restrictions and conditions on
outstanding unit awards will lapse, (iv) phantom units and performance units will become payable in cash in an
amount not less than their target amount or in a larger amount, up to the maximum grant value, as determined by the
Compensation/Pension Committee, and (v) distribution equivalents and other unit-based awards will become
payable in full in cash, in amounts determined by the Compensation/Pension Committee. Messrs. Bissell and
Sheridan are eligible to participate in the AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan On Behalf of
AmeriGas Partners, L.P.
AmeriGas Propane, Inc. Nonqualified Deferred Compensation Plan
The General Partner maintains a nonqualified deferred compensation plan under which participants may defer up
to $10,000 of their annual compensation. Deferral elections are made annually by eligible participants in respect of
compensation to be earned for the following year. Participants may direct the investment of deferred amounts into a
number of mutual funds. Payment of amounts accrued for the account of a participant generally is made following
the participant’s termination of employment. Messrs. Bissell and Sheridan are eligible to participate in the AmeriGas
Propane, Inc. Nonqualified Deferred Compensation Plan. See the “Nonqualified Deferred Compensation Table —
Fiscal 2010” and accompanying narrative for additional information.
UGI Corporation 2009 Deferral Plan, As Amended and Restated Effective June 1, 2010
This plan provides deferral options that comply with the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended, related to (i) all phantom units and stock units granted to the General Partner’s and
UGI’s non-employee Directors, (ii) benefits payable under the UGI Corporation Supplemental Executive Retirement
Plan, and (iii) benefits payable under the AmeriGas Propane, Inc. Supplemental Executive Retirement Plan. If an
eligible participant elects to defer payment under the plan, the participant may receive future benefits after
separation from service as (i) a lump sum payment, (ii) annual installment payments over a period between two and
ten years, or (iii) one to five retirement distribution accounts to be paid in a lump sum in the year specified by the
individual. Deferred benefits, other than phantom units and stock units, will be deemed to be invested in investment
funds selected by the participant from among a list of available funds. Messrs. Bissell, Sheridan, Greenberg, Walsh
and Knauss elected to defer benefits under this plan. The plan also provides newly eligible participants with a
deferral election that must be acted upon promptly.
48
Severance Pay Plans for Senior Executive Employees
The General Partner and UGI each maintain a severance pay plan that provides severance compensation to
certain senior level employees. The plans are designed to alleviate the financial hardships that may be experienced
by executive employee participants whose employment is terminated without just cause, other than in the event of
death or disability. The General Partner plan covers Messrs. Bissell and Sheridan and the UGI plan covers Messrs.
Greenberg, Walsh and Knauss. See “Potential Payments Upon Termination of Employment or Change in Control”
below for further information regarding the severance plans.
Change in Control Agreements
The General Partner has change in control agreements with Messrs. Bissell and Sheridan, and UGI has change in
control agreements with Messrs. Greenberg, Walsh and Knauss. The change in control agreements are designed to
reinforce and encourage the continued attention and dedication of the executives without distraction in the face of
potentially disturbing circumstances arising from the possibility of a change in control and to serve as an incentive
to their continued employment with us. The agreements provide for payments and other benefits if we terminate an
executive’s employment without cause or if the executive terminates employment for “good reason” within two
years following a change in control of UGI (and, in the case of Messrs. Bissell and Sheridan, the General Partner or
AmeriGas Partners). The agreements also provide that if change in control payments exceed certain threshold
amounts, we or UGI, as the case may be, will make additional payments to reimburse the executives for excise and
related taxes imposed under the Code. See “Potential Payments Upon Termination of Employment or Change in
Control” for further information regarding the change in control agreements.
Equity Ownership Guidelines
We seek to align executives’ interests with unitholder and shareholder interests through our equity ownership
guidelines. We believe that by encouraging our executives to maintain a meaningful equity interest in AmeriGas
Partners or, if applicable, UGI, we will enhance the link between our executives and unitholders or shareholders.
Under our guidelines, an executive must meet 10 percent of the ownership requirement within one year from the
date of employment or promotion and must use 10 percent of his gross annual bonus award to purchase Common
Units or UGI stock (or, in the case of Messrs. Greenberg and Walsh, UGI stock) until his equity ownership
requirement is met. In addition, the guidelines require that 50 percent of the net proceeds from a “cashless exercise”
of UGI stock options be used to purchase equity until the ownership requirement is met. Up to 20 percent of the
ownership requirement may be satisfied through holdings of UGI common stock in the executive’s account in the
relevant savings plan.
Messrs. Bissell, Sheridan and Knauss are each permitted to satisfy their requirements through ownership of
Common Units, UGI common stock, or a combination of Common Units and UGI common stock, with each
Common Unit equivalent to 1.5 shares of UGI common stock. The stock ownership guidelines further permit any
UGI executive, who was formerly employed by the General Partner, to satisfy up to 50 percent of his or her stock
ownership requirement with Common Units. The following table provides information regarding our equity
ownership guidelines for, and the number of common units and shares held at September 30, 2010, by our named
executive officers:
Required Ownership
of AmeriGas
Name
E. V. N. Bissell .....................
J. E. Sheridan ........................
L. R. Greenberg ....................
J. L. Walsh ............................
R. H. Knauss .........................
Partners Common
Units1 or UGI
Corporation
Common Stock2
40,0001
5,3331
250,0002
100,0002
20,0002
Number of AmeriGas
Partners Common
Units Held at
9/30/20103
64,600
16,703
11,000
7,000
14,108
Number of Shares
of UGI Corporation
Stock Held at
9/30/20103
68,197
1,036
406,305
110,249
21,908
1. Common Units of AmeriGas Partners.
2. Shares of Common Stock of UGI Corporation.
3. All officers are in compliance with the ownership guidelines, which require the accumulation of equity over time.
49
Stock Option Grant Practices
The Committees approve annual stock option grants to executive officers in the last calendar quarter of each
year, effective the following January 1. The exercise price per share of the options is equal to the closing share price
of UGI common stock on the last trading day of December. A grant to a new employee is generally effective on the
later of the date the employee commences employment with us or the date the Committee authorizes the grant. In
either case the exercise price is equal to the closing price per share of UGI common stock on the effective date of
grant. From time to time, management recommends stock option grants for non-executive employees, and the
grants, if approved by the Committee, are effective on the date of Committee action and have an exercise price equal
to the closing price per share of UGI common stock on the date of grant. We believe that our stock option grant
practices are appropriate and effectively eliminate any question regarding “timing” of grants in anticipation of
material events.
Role of Executive Officers in Determining Executive Compensation
In connection with Fiscal 2010 compensation, Messrs. Bissell, Greenberg and Walsh, aided by our human
resources personnel, provided statistical data and recommendations to the Compensation/Pension Committee (and
Mr. Greenberg to UGI’s Compensation and Management Development Committee) to assist each Committee in
determining compensation levels. Messrs. Bissell, Greenberg and Walsh did not make recommendations as to their
own respective compensation and each was excused from the Committee meeting when his compensation was
discussed by the Committee. While the Committees utilized this information, and valued the observations of Messrs.
Bissell, Greenberg and Walsh with regard to other executive officers, the ultimate decisions regarding executive
compensation were made by the independent members of the appropriate Board of Directors following Committee
recommendations.
RISKS RELATED TO COMPENSATION POLICIES AND PRACTICES
Management conducted a risk assessment of our compensation policies and practices for Fiscal 2010. Based on
its evaluation, management does not believe that any such policies or practices create risks that are reasonably likely
to have a material adverse effect on the Partnership.
SUMMARY COMPENSATION TABLE
The following tables, narrative and footnotes provide information regarding the compensation of our Chief
Executive Officer, Chief Financial Officer and our 3 other most highly compensated executive officers in fiscal year
2010.
Summary Compensation Table — Fiscal 2010
Name and
Principal
Position
(a)
E. V.N. Bissell
President and Chief
Executive Officer ...................
J. E. Sheridan
Vice President Finance and
Chief Financial Officer ...........
L. R. Greenberg
Chairman ................................
J. L. Walsh
Vice Chairman ........................
R. H. Knauss
Vice President and
General Counsel .....................
Fiscal
Year
(b)
Salary
($)
(c)
Bonus
($)
(d)
2010
2009
2008
490,006
487,820
442,000
2010
2009
2008
302,349
301,369
280,646
2010
2009
2008
1,067,500
1,067,975
1,026,300
2010
2009
2008
648,440
648,202
616,933
0
0
0
0
0
0
0
0
0
0
0
0
Non-Equity
Incentive
Plan
Compensation
($)
(2)
(g)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(3)
(h)
All Other
Compensation
($)
(4)
(i)
Total
($)
(5)
(j)
349,664
450,800
252,960
134,851
173,855
96,393
3,778
5,943
376
0
0
0
85,475
97,151
70,200
2,003,823
1,989,614
1,563,256
43,720
50,548
40,396
739,680
755,797
601,195
Stock
Awards
($)
(1)
(e)
Option
Awards
($)
(1)
(f)
715,700
643,400
467,520
359,200
304,500
330,200
159,980
144,765
97,400
98,780
85,260
86,360
1,590,400
1,957,200
2,123,800
1,347,000
1,218,000
1,524,000
1,145,428
1,591,643
964,722
1,971,422
2,640,022
945,498
69,853
65,416
81,405
7,191,603
8,540,256
6,665,725
636,160
782,880
819,180
561,250
507,500
609,600
591,410
821,800
493,383
237,370
329,841
177,698
377,873
330,768
147,550
389,944
455,185
262,102
33,081
25,979
24,494
2,848,214
3,117,129
2,711,140
14,872
13,594
10,521
1,533,376
1,943,806
1,266,600
2010
2009
2008
340,340
340,146
314,619
45,000(6)
0
0
249,920
602,040
273,060
255,930
203,000
228,600
50
____________
(1) The amounts shown in columns (e) and (f) above represent the aggregate fair value of awards of performance
units, stock units and stock options, as the case may be, on the grant date. The assumptions used in the
calculation of the amounts shown are included in Note 2 and Note 12 to our Consolidated Financial Statements
for Fiscal 2010 and in Exhibit No. 99 to this Report.
(2) The amounts shown in this column represent payments made under the applicable performance-based annual
bonus plan.
(3) The amounts shown in column (h) of the Summary Compensation Table — Fiscal 2010 reflect (i) for Messrs.
Bissell, Greenberg, Walsh and Knauss, the change from September 30, 2009 to September 30, 2010 in the
actuarial present value of the named executive officer’s accumulated benefit under UGI’s defined benefit and
actuarial pension plans, including the UGI Corporation Supplemental Executive Retirement Plan, and (ii) the
above-market portion of earnings, if any, on nonqualified deferred compensation accounts. The change in
pension value from year to year as reported in this column is subject to market volatility and may not represent
the value that a named executive officer will actually accrue under the UGI pension plans during any given year.
Mr. Bissell has a vested annual benefit of approximately $3,300 under UGI’s defined benefit pension plan,
based on prior credited service. Mr. Bissell is not a current participant in that plan or in the UGI Corporation
Supplemental Executive Retirement Plan. Mr. Sheridan is not eligible to participate in the UGI pension plan.
The material terms of the pension plans and deferred compensation plans are described in the Pension Benefits
Table — Fiscal 2010 and the Nonqualified Deferred Compensation Table — Fiscal 2010, and the related
narratives to each. Earnings on deferred compensation are considered above-market to the extent that the rate of
interest exceeds 120 percent of the applicable federal long-term rate. For purposes of the Summary
Compensation Table — Fiscal 2010, the market rate on deferred compensation most analogous to the rate at the
time the interest rate is set under the UGI plan for Fiscal 2010 was 5.02 percent, which is 120 percent of the
federal long-term rate for December 2009. Messrs. Bissell’s and Sheridan’s earnings on deferred compensation
are market-based, calculated by reference to externally managed mutual funds. The amounts included in column
(h) of the Summary Compensation Table — Fiscal 2010 are itemized below.
Name
E. V.N. Bissell ....................................................................................
J. E. Sheridan ......................................................................................
L. R. Greenberg ..................................................................................
J. L. Walsh ..........................................................................................
R. H. Knauss .......................................................................................
Change in
Pension
Value
$
3,778 $
0 $
$
$ 1,903,027 $
369,494 $
$
386,862 $
$
Above-Market
Earnings on
Deferred Compensation
0
0
68,395
8,379
3,082
(4) The table below shows the components of the amounts included for each named executive officer under the “All
Other Compensation” column in the Summary Compensation Table — Fiscal 2010. Other than as set forth
below, the named executive officers did not receive perquisites with an aggregate value of $10,000 or more.
51
Employer
Contribution
to AmeriGas
Supplemental
Executive
Retirement Plan/UGI
Supplemental Savings
Plan
71,717
31,470
54,318
27,568
9,567
Employer
Contribution to
401(k)
Savings
Plan
13,758
12,250
5,513
5,513
5,305
Name
E. V.N. Bissell ............. $
J. E. Sheridan ............... $
L. R. Greenberg (a) ...... $
J. L. Walsh ................... $
R. H. Knauss ................ $
____________
(a) The perquisites shown for Mr. Greenberg include spousal travel expenses when attending industry-related events
where it is customary that officers attend with their spouses, tax preparation fees and occasional use of UGI’s
tickets for sporting events for personal rather than business purposes. The incremental cost to UGI for these
benefits are based on the actual costs or charges incurred by UGI for the benefits and are included in the totals
above.
Perquisites
0
$
0
$
$ 10,022
0
$
0
$
Total
$ 85,475
$ 43,720
$ 69,853
$ 33,081
$ 14,872
Tax
Reimbursement
0
$
0
$
0
$
0
$
0
$
$
$
$
$
$
(5) The compensation reported for Messrs. Greenberg, Walsh and Knauss is paid by UGI. For Fiscal 2010, UGI
charged the Partnership 36 percent of the total compensation expense, other than the change in pension value,
for Messrs. Greenberg, Walsh and Knauss.
(6) Discretionary bonus awarded in recognition of Mr. Knauss’ extraordinary leadership efforts relating to the
restoration of our corporate headquarters building following a fire in December of 2009.
52
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5
Option Exercises and Stock Vested Table — Fiscal 2010
The following table sets forth (1) the number of shares of UGI common stock acquired by the named executive
officers in Fiscal 2010 from the exercise of stock options, (2) the value realized by those officers upon the exercise
of stock options based on the difference between the market price for UGI’s common stock on the date of exercise
and the exercise price for the options, (3) for Messrs. Greenberg, Walsh and Knauss, the number of UGI
performance units previously granted that vested in Fiscal 2010, (4) for Messrs. Bissell and Sheridan, the number of
AmeriGas performance units previously granted that vested in Fiscal 2010, and (5) the value realized by those
officers upon the vesting of such units based on the average of the high and low sales prices for AmeriGas Partners
common units on the New York Stock Exchange (“NYSE”), or, for Messrs. Greenberg, Walsh and Knauss, the
closing price on the NYSE for shares of UGI common stock, on the vesting date.
Option Awards
Stock/Unit Awards
Number of Shares
Acquired on
Exercise
(#)
(b)
0
0
150,000
65,000
80,000
Value Realized
on Exercise
($)
(c)
0
0
1,522,500
428,724
656,400
Number of Shares/Units
Acquired on
Vesting
(#)
(d)
20,356
3,926
72,960
31,616
10,944
Value Realized
on Vesting
($)
(e)
806,098
155,461
1,764,902
764,791
264,735
Name
(a)
E. V.N. Bissell ........
J. E. Sheridan ..........
L. R. Greenberg ......
J. L. Walsh ..............
R. H. Knauss ...........
Retirement Benefits
The following table shows the number of years of credited service for the named executive officers under the
UGI Utilities, Inc. Retirement Income Plan (which we refer to below as the “UGI Utilities Retirement Plan”) and the
UGI Corporation Supplemental Executive Retirement Plan (which we refer to below as the “UGI SERP”) and the
actuarial present value of accumulated benefits under those plans as of September 30, 2010 and any payments made
to the named executive officers in Fiscal 2010 under those plans.
Pension Benefits Table — Fiscal 2010
Name(1)
(a)
E. V.N. Bissell (2) .... UGI Utilities Retirement Plan
Plan Name
(b)
L. R. Greenberg ......
UGI SERP
UGI Utilities Retirement Plan
J. L. Walsh ..............
UGI SERP
UGI Utilities Retirement Plan
R. H. Knauss ...........
UGI SERP
UGI Utilities Retirement Plan
Number of
Years Credited
Service
(#)
(c)
Present Value of
Accumulated Benefit
($)
(d)
Payments
During Last
Fiscal Year
($)
(e)
6
30
30
5
5
23
23
32,835
14,360,305
1,453,430
1,011,343
195,653
1,202,014
734,823
0
0
0
0
0
0
0
____________
(1) Mr. Sheridan does not participate in any defined benefit pension plan.
(2) Mr. Bissell has a vested annual benefit of approximately $3,300 under the UGI Utilities Retirement Plan based
on prior credited service. He is not a current participant in that Plan.
58
UGI participates in the UGI Utilities Retirement Plan, a qualified defined benefit retirement plan (“Pension
Plan”) to provide retirement income to its employees. The Pension Plan pays benefits based upon final average
earnings, consisting of base salary or wages and annual bonuses, and years of credited service. Benefits vest after the
participant completes 5 years of vesting service.
The Pension Plan provides normal annual retirement benefits at age 65, unreduced early retirement benefits at
age 62 with 10 years of service, and reduced, but subsidized, early retirement benefits at age 55 with 10 years of
service. Employees terminating employment prior to early retirement eligibility are eligible to receive a benefit
under the plan formula commencing at age 65 or an unsubsidized benefit as early as age 55, provided they had 10
years of service at termination. Employees who have attained age 50 with 15 years of service and are involuntarily
terminated by UGI prior to age 55 are also eligible for subsidized early retirement benefits, beginning at age 55.
The Pension Plan’s normal retirement benefit formula is (A) — (B) and is shown below:
(A)(1) = (1.9% of final five-year average earnings) multiplied by (years of credited service)
minus
(B) = (1% of the estimated primary Social Security benefit) multiplied by (years of credited service at
termination date up to 35 years).
____________
(1) (A) may not exceed 60% of the average monthly earnings for the highest consecutive 12-month period during an
employee’s last 120 consecutive months of employment.
The amount of the benefit produced by the formula will be reduced by an early retirement factor based on the
employee’s actual age in years and months as of his early retirement date. The reduction factors range from 65
percent at age 55 to 100 percent (no reduction) at age 62.
The normal form of benefit under the Pension Plan for a married employee is a 50 percent joint and survivor
lifetime annuity. Regardless of marital status, a participant may choose from a number of lifetime annuity payments.
Lump sum payments are not permitted unless the present value of the lump sum benefit is $5,000 or less.
The Pension Plan is subject to qualified-plan Code limits on the amount of annual benefit that may be paid, and
on the amount of compensation that may be taken into account in calculating retirement benefits under the plan. For
2010, the limit on the compensation that may be used is $245,000 and the limit on annual benefits payable for an
employee retiring at age 65 in 2010 is $195,000. Benefits in excess of those permitted under the statutory limits are
paid to certain employees under the UGI Corporation Supplemental Executive Retirement Plan, described below.
Messrs. Bissell, Greenberg and Knauss are eligible for early retirement benefits under the Pension Plan.
UGI Corporation Supplemental Executive Retirement Plan
The UGI Corporation Supplemental Executive Retirement Plan (“UGI SERP”) is a non-qualified defined benefit
plan that provides retirement benefits that would otherwise be provided under the Pension Plan for Pension Plan
participants, but are prohibited from being paid from the Pension Plan by Code limits. The benefit paid by the UGI
SERP is approximately equal to the difference between the benefits provided under the Pension Plan and benefits
that would have been provided by the Pension Plan if not for the limitations of the Employee Retirement Income
Security Act of 1974, as amended, and the Code. Benefits vest after the participant completes 5 years of vesting
service. The benefits earned under the UGI SERP are payable in the form of a lump sum payment. For participants
who attained age 50 prior to January 1, 2004, the lump sum payment is calculated using two interest rates. One rate
is for the service prior to January 1, 2004 and the other is for service after January 1, 2004. The rate for pre-January
1, 2004 service is the daily average of Moody’s Aaa bond yields for the month in which the participant’s termination
date occurs, plus 50 basis points, and tax-adjusted using the highest marginal federal tax rate. The interest rate for
post-January 1, 2004 service is the daily average of ten-year Treasury Bond yields in effect for the month in which
the participant’s termination date occurs. The latter rate is used for calculating the lump sum payment for
participants attaining age 50 on or after January 1, 2004. Payment is due within 60 days after termination of
employment, except as required by Section 409A of the Code. If payment is required to be delayed by Section 409A
of the Code, payment is made within 15 days after expiration of a six-month postponement period following
“separation from service” as defined in the Code. Amounts due under the UGI SERP may be deferred in accordance
with the UGI Corporation 2009 Deferral Plan. See “Compensation Discussion and Analysis-UGI Corporation 2009
Deferral Plan.”
59
Actuarial Assumptions Used to Determine Values in the Pension Benefits Table
The amounts shown in the Pension Benefits table are actuarial present values of the benefits accumulated
through September 30, 2010. An actuarial present value is calculated by estimating expected future payments
starting at an assumed retirement age, weighting the estimated payments by the estimated probability of surviving to
each post-retirement age, and discounting the weighted payments at an assumed discount rate to reflect the time
value of money. The actuarial present value represents an estimate of the amount which, if invested today at the
discount rate, would be sufficient on an average basis to provide estimated future payments based on the current
accumulated benefit. The assumed retirement age for each named executive officer is age 62, which is the earliest
age at which the executive could retire without any benefit reduction due to age. Actual benefit present values will
vary from these estimates depending on many factors, including an executive’s actual retirement age. The key
assumptions included in the calculations are as follows:
Discount rate for Pension Plan for all purposes and
September 30, 2010
September 30, 2009
for UGI SERP, for pre-commencement
calculations ................................................................
UGI SERP lump sum rate ............................................
Retirement age .............................................................
Post-retirement mortality for Pension Plan .................. RP-2000, combined, healthy
table projected to 2017 using
Scale AA without collar
adjustments
1994 GAR unisex
None
None
Single life annuity
Lump sum
Post-retirement mortality for UGI SERP .....................
Pre-retirement mortality ..............................................
Termination and disability rates ..................................
Form of payment for Pension Plan ..............................
Form of payment for UGI SERP .................................
5.00%
3.30%
62
5.50%
3.60%
62
RP-2000, combined, healthy
table projected to 2015 using
Scale AA without collar
adjustments
1994 GAR unisex
None
None
Single life annuity
Lump sum
Nonqualified Deferred Compensation
The following table shows the contributions, earnings, withdrawals and account balances for each of the named
executive officers in the AmeriGas Propane, Inc. Supplemental Executive Retirement Plan (“AmeriGas SERP”), the
AmeriGas Nonqualified Deferred Compensation Plan and the UGI Corporation Supplemental Savings Plan.
Nonqualified Deferred Compensation Table — Fiscal 2010
Name
(a)
E. V.N. Bissell ..... AmeriGas SERP
Plan Name
AmeriGas Non-Qualified
Deferred Compensation Plan
J. E. Sheridan ....... AmeriGas SERP
L. R. Greenberg ... UGI Supplemental Savings Plan
J. L. Walsh ........... UGI Supplemental Savings Plan
R. H. Knauss (4) .... UGI Supplemental Savings Plan
AmeriGas SERP
Executive
Contributions
in Last Fiscal Year
($)
(b)
Employer
Contributions
in Last Fiscal
Year
($)
(c)
Aggregate
Earnings in Last
Fiscal Year
($)
(d)
Aggregate
Withdrawals/
Distributions
($)
(e)
Aggregate
Balance at Last
Fiscal Year
($)(2)
(f)
0
0(3)
0
0
0
0
0
71,717(1)
0
31,470(1)
54,318(3)
27,568(3)
9,567(3)
0
66,265
2,607
12,789
0
0
0
14,439
0
0
0
0
0
0
836,115
33,107
165,002
665,635
102,457
37,110
160,033
____________
(1) This amount represents the employer contribution to the named executive officer under the AmeriGas SERP,
which is also reported in the Summary Compensation Table — Fiscal 2010 in the “All Other Compensation”
column.
(2) The aggregate balances include the following aggregate amounts previously reported in the Summary
Compensation Table as compensation in prior years: Mr. Bissell, $635,662; Mr. Sheridan, $125,430; Mr.
Greenberg, $592,820; Mr. Walsh, $87,584; and Mr. Knauss, $181,536.
(3) This amount represents the employer contribution to the named executive officer under the UGI Supplemental
Savings Plan which is also reported in the Summary Compensation Table — Fiscal 2010 in the “All Other
Compensation” column.
(4) Mr. Knauss participated in the AmeriGas SERP prior to transferring to UGI in 2003.
60
The AmeriGas Propane, Inc. Supplemental Executive Retirement Plan is a nonqualified deferred compensation
plan that is intended to provide retirement benefits to certain AmeriGas executive officers. Under the plan,
AmeriGas credits to each participant’s account annually an amount equal to 5 percent of the participant’s
compensation (salary and annual bonus) up to the Code compensation limit ($245,000 in 2010) and 10 percent of
compensation in excess of such limit. In addition, if any portion of the General Partner’s matching contribution
under the AmeriGas Propane, Inc. qualified 401(k) Savings Plan is forfeited due to nondiscrimination requirements
under the Code, the forfeited amount, adjusted for earnings and losses on the amount, will be credited to a
participant’s account. Benefits vest on the fifth anniversary of a participant’s employment commencement date.
Participants direct the investment of their account balances among a number of mutual funds, which are generally
the same funds available to participants in the AmeriGas 401(k) Savings Plan, other than the UGI stock fund.
Account balances are payable in a lump sum within 60 days after termination of employment, except as required by
Section 409A of the Code. If payment is required to be delayed by Section 409A of the Code, payment is made
within 15 days after expiration of a six-month postponement period following “separation from service” as defined
in the Code. Amounts payable under the AmeriGas SERP may be deferred in accordance with the UGI Corporation
2009 Deferral Plan. See “Compensation Discussion and Analysis-UGI Corporation 2009 Deferral Plan.”
The AmeriGas Propane, Inc. Nonqualified Deferred Compensation Plan is a nonqualified deferred compensation
plan that provides benefits to certain named executive officers that would otherwise be provided under the
AmeriGas 401(k) Savings Plan. The plan is intended to permit participants to defer up to $10,000 of annual
compensation that would generally not be eligible for contribution to the AmeriGas 401(k) Savings Plan due to
Code limitations and nondiscrimination requirements. Participants may direct the investment of deferred amounts
into a number of funds. The funds available are the same funds available under the AmeriGas 401(k) Savings Plan,
other than the UGI stock fund. Account balances are payable in a lump sum within 60 days after termination of
employment, except as required by Section 409A of the Code. If payment is required to be delayed by Section 409A
of the Code, payment is made within 15 days after expiration of a six-month postponement period following
“separation from service” as defined in the Code.
The UGI Corporation Supplemental Savings Plan (“SSP”) is a nonqualified deferred compensation plan that
provides benefits to certain named executive officers that would otherwise be provided under UGI’s qualified 401(k)
Savings Plan in the absence of Code limitations. Benefits vest after the participant completes 5 years of service. The
SSP is intended to pay an amount substantially equal to the difference between the UGI matching contribution that
would have been made under the 401(k) Savings Plan if the Code limitations were not in effect, and the UGI match
actually made under the 401(k) Savings Plan. The Code compensation limits for 2008, 2009 and 2010 were
$230,000, $245,000 and $245,000, respectively. The Code contribution limit for 2009 and 2010 was $49,000. Under
the SSP, the participant is credited with a UGI match on compensation in excess of Code limits using the same
formula applicable to contributions to the UGI Corporation 401(k) Savings Plan, which is a match of 50 percent of
the first 3 percent of eligible compensation, and a match of 25 percent on the next 3 percent, assuming that the
employee contributed to the 401(k) Savings Plan the lesser of 6 percent of eligible compensation or the maximum
amount permissible under the Code. Amounts credited to the participant’s account are credited with interest. The
rate of interest currently in effect is the rate produced by blending the annual return on the S&P 500 Index (60
percent weighting) and the annual return on the Lehman Brothers Bond Index (40 percent weighting). Account
balances are payable in a lump sum within 60 days after termination of employment, except as required by Section
409A of the Code. If payment is required to be delayed by Section 409A of the Code, payment is made within 15
days after expiration of a six-month postponement period following “separation from service” as defined in the
Code.
Potential Payments Upon Termination of Employment or Change in Control
Severance Pay Plan for Senior Executive Employees
Named Executive Officers Employed by the General Partner. The AmeriGas Propane, Inc. Senior Executive
Employee Severance Plan (the “AmeriGas Severance Plan”) provides for payment to certain senior level employees
of the General Partner, including Messrs. Bissell and Sheridan, in the event their employment is terminated without
fault on their part. Specified benefits are payable to a senior executive covered by the AmeriGas Severance Plan if
the senior executive’s employment is involuntarily terminated for any reason other than for just cause or as a result
61
of the senior executive’s death or disability. Under the AmeriGas Severance Plan, “just cause” generally means (i)
dismissal of an executive due to misappropriation of funds, (ii) substance abuse or habitual insobriety that adversely
affects the executive’s ability to perform his or her job, (iii) conviction of a crime involving moral turpitude, or (iv)
gross negligence in the performance of duties.
Except as provided herein, the AmeriGas Severance Plan provides for cash payments equal to a participant’s
compensation for a period of time ranging from 6 months to 18 months, depending on length of service (the
“Continuation Period”). In the case of Mr. Bissell, the Continuation Period ranges from 12 months to 24 months,
depending on length of service. In addition, a participant receives the cash equivalent of his target bonus under the
Annual Bonus Plan, pro-rated for the number of months served in the fiscal year. However, if the termination occurs
in the last 2 months of the fiscal year, we have discretion to determine whether the participant will receive a pro-
rated target bonus, or the actual annual bonus which would have been paid after the end of the fiscal year, provided
that the weighting to be applied to the participant’s business/financial goals under the Annual Bonus Plan will be
deemed to be 100 percent, pro-rated for the number of months served. The levels of severance payments were
established by the Compensation/Pension Committee based on competitive practice and are reviewed by
management and the Compensation/Pension Committee from time to time.
Under the AmeriGas Severance Plan, the participant also receives a payment equal to the cost he would have
incurred to continue medical and dental coverage under the General Partner’s plans for the Continuation Period (less
the amount the participant would be required to contribute for such coverage if he were an active employee). This
amount includes a tax gross-up payment equal to 75 percent of the payment relating to medical and dental coverage.
The AmeriGas Severance Plan also provides for outplacement services for a period of 12 months following a
participant’s termination of employment. Participants are entitled to receive reimbursement for tax preparation
services for the final year of employment. Provided that the participant is eligible to retire, all payments under the
AmeriGas Severance Plan may be reduced by an amount equal to the fair market value of certain equity-based
awards, other than stock options, payable to the participant after the termination of employment.
In order to receive benefits under the AmeriGas Severance Plan, a participant is required to execute a release
which discharges the General Partner and its affiliates from liability for any claims the senior executive may have
against any of them, other than claims for amounts or benefits due to the executive under any plan, program or
contract provided by or entered into with the General Partner or its affiliates. Each senior executive is also required
to ratify any existing post-employment activities agreement (which restricts the senior executive from competing
with the Partnership and its affiliates following termination of employment) and to cooperate in attending to matters
pending at the time of termination of employment.
Named Executive Officers Employed by UGI Corporation. The UGI Corporation Senior Executive Employee
Severance Plan (the “UGI Severance Plan”) provides for payment to certain senior level employees of UGI,
including Messrs. Greenberg, Walsh and Knauss, in the event their employment is terminated without fault on their
part. Benefits are payable to a senior executive covered by the UGI Severance Plan if the senior executive’s
employment is involuntarily terminated for any reason other than for just cause or as a result of the senior
executive’s death or disability. Under the UGI Severance Plan, “just cause” generally means (i) dismissal of an
executive due to misappropriation of funds, (ii) substance abuse or habitual insobriety that adversely affects the
executive’s ability to perform his or her job, (iii) conviction of a crime involving moral turpitude, or (iv) gross
negligence in the performance of duties.
Except as provided herein, the UGI Severance Plan provides for cash payments equal to a participant’s
compensation for a period of time ranging from 6 months to 18 months, depending on length of service (the
“Continuation Period”). In the case of Mr. Greenberg, the Continuation Period is 30 months; for Mr. Walsh, the
Continuation Period ranges from 12 months to 24 months, depending on the length of service. In addition, a
participant receives the cash equivalent of his target bonus under the Annual Bonus Plan, pro-rated for the number
of months served in the fiscal year prior to termination. However, if the termination occurs in the last 2 months of
the fiscal year, UGI has the discretion to determine whether the participant will receive a pro-rated target bonus, or
the actual annual bonus which would have been paid after the end of the fiscal year, assuming that the participant’s
entire bonus was contingent on meeting the applicable financial performance goal, pro-rated for the number of
months served. The levels of severance payment were established by the Compensation and Management
Development Committee based on competitive practice and are reviewed by management and the Compensation
and Management Development Committee from time to time.
62
Under the UGI Severance Plan, the participant also receives a payment equal to the cost he would have incurred
to continue medical and dental coverage under UGI’s plans for the Continuation Period (less the amount the
participant would be required to contribute for such coverage if the participant were an active employee). This
amount includes a tax gross-up payment equal to 75 percent of the payment relating to medical and dental coverage.
The UGI Severance Plan also provides for outplacement services for a period of 12 months following a participant’s
termination of employment. Participants are entitled to receive reimbursement for tax preparation services for their
final year of employment under the UGI Severance Plan. Provided that the participant is eligible to retire, all
payments under the Severance Plan may be reduced by an amount equal to the fair market value of certain equity-
based awards, other than stock options, payable to the participant after the termination of employment.
In order to receive benefits under the UGI Severance Plan, a participant is required to execute a release which
discharges UGI and its subsidiaries from liability for any claims the senior executive may have against any of them,
other than claims for amounts or benefits due to the executive under any plan, program or contract provided by or
entered into with UGI or its subsidiaries. Each senior executive is also required to ratify any existing post-
employment activities agreement (which restricts the senior executive from competing with UGI and its affiliates
following termination of employment) and to cooperate in attending to matters pending at the time of termination of
employment.
Change in Control Arrangements
Named Executive Officers Employed by the General Partner. Messrs. Bissell and Sheridan each have an
agreement with the General Partner that provides benefits in the event of a change in control. The agreements have a
term of 3 years with automatic one-year extensions beginning May 2011 unless in each case, prior to a change in
control, the General Partner terminates an agreement. In the absence of a change in control or termination by the
General Partner, each agreement will terminate when, for any reason, the executive terminates his or her
employment with the General Partner. A change in control is generally deemed to occur in the following instances:
• any person (other than certain persons or entities affiliated with UGI), together with all affiliates and
associates of such person, acquires securities representing 20 percent or more of either (i) the then
outstanding shares of common stock, or (ii) the combined voting power of UGI’s then outstanding voting
securities;
•
individuals, who at the beginning of any 24-month period constitute the UGI Board of Directors (the
“Incumbent Board”) and any new Director whose election by the Board of Directors, or nomination for
election by UGI’s shareholders, was approved by a vote of at least a majority of the Incumbent Board, cease
for any reason to constitute a majority;
• UGI is reorganized, merged or consolidated with or into, or sells all or substantially all of its assets to,
another corporation in a transaction in which former shareholders of UGI do not own more than 50 percent
of, respectively, the outstanding common stock and the combined voting power of the then outstanding
voting securities of the surviving or acquiring corporation;
•
the General Partner, Partnership or Operating Partnership is reorganized, merged or consolidated with or into,
or sells all or substantially all of its assets to, another entity in a transaction with respect to which all of the
individuals and entities who were owners of the General Partner’s voting securities or of the outstanding
units of the Partnership immediately prior to such transaction do not, following such transaction, own more
than 50 percent of, respectively, the outstanding common stock and the combined voting power of the then
outstanding voting securities of the surviving or acquiring corporation, or if the resulting entity is a
partnership, the former unitholders do not own more than 50 percent of the outstanding common units in
substantially the same proportion as their ownership immediately prior to the transaction;
• UGI, the General Partner, the Partnership or the Operating Partnership is liquidated or dissolved;
• UGI fails to own more than 50 percent of the general partnership interests of the Partnership or the Operating
Partnership;
63
• UGI fails to own more than 50 percent of the outstanding shares of common stock of the General Partner; or
• AmeriGas Propane, Inc. is removed as the general partner of the Partnership or the Operating Partnership.
The General Partner will provide Messrs. Bissell and Sheridan with cash benefits (“Benefits”) if we terminate
the executive’s employment without “cause” or if the executive terminates employment for “good reason” at any
time within 2 years following a change in control of the General Partner, AmeriGas Partners or UGI. “Cause”
generally includes (i) misappropriation of funds, (ii) habitual insobriety or substance abuse, (iii) conviction of a
crime involving moral turpitude, or (iv) gross negligence in the performance of duties, which gross negligence has
had a material adverse effect on the business, operations, assets, properties or financial condition of the General
Partner. “Good reason” generally includes a material diminution in authority, duties, responsibilities or base
compensation; a material breach by the General Partner of the terms of the agreement; and substantial relocation
requirements. If the events trigger a payment following a change in control, the benefits payable to Messrs. Bissell
and Sheridan will be as specified under his change in control agreement unless payments under the AmeriGas
Severance Plan described above would be greater, in which case Benefits would be provided under the AmeriGas
Severance Plan.
Benefits under this arrangement would be equal to 3 times Mr. Bissell’s base salary and annual bonus and 2
times Mr. Sheridan’s base salary and annual bonus. Each named executive officer would also receive the cash
equivalent of his target bonus, prorated for the number of months served in the fiscal year. In addition, Messrs.
Bissell and Sheridan are each entitled to receive a payment equal to the cost he would incur if he enrolled in the
General Partner’s medical and dental plans for 3 years in the case of Mr. Bissell and 2 years in the case of Mr.
Sheridan (in each case less the amount he would be required to contribute for such coverage if he were an active
employee). This payment would include a tax gross-up payment equal to 75 percent of the total amount payable.
Messrs. Bissell and Sheridan would also receive their benefits under the AmeriGas Supplemental Executive
Retirement Plan calculated as if he had continued in employment for 3 years or 2 years, respectively. In addition,
outstanding performance units and distribution equivalents will be paid in cash based on the fair market value of
Common Units in an amount equal to the greater of (i) the target award or (ii) the award amount that would have
been paid if the measurement period ended on the date of the change in control, as determined by the
Compensation/Pension Committee. For treatment of stock options, see “Grants of Plan-Based Awards Table —
Fiscal 2010.”
The Benefits are subject to a “conditional gross up” for excise and related taxes in the event they would
constitute “excess parachute payments,” as defined in Section 280G of the Code. The General Partner will provide
the tax gross-up if the aggregate parachute value of Benefits is greater than 110 percent of the maximum amount that
may be paid under Section 280G of the Code without imposition of an excise tax. If the parachute value does not
exceed the 110 percent threshold, the Benefits for each of Messrs. Bissell and Sheridan will be reduced to the extent
necessary to avoid imposition of the excise tax on “excess parachute payments.”
In order to receive benefits under his change in control agreement, each named executive is required to execute a
release which discharges the General Partner and its affiliates from liability for any claims he may have against any
of them, other than claims for amounts or benefits due to the executive under any plan, program or contract provided
by or entered into with the General Partner or its affiliates.
Named Executive Officers Employed By UGI Corporation. Messrs. Greenberg, Walsh and Knauss each have an
agreement with UGI which provides benefits in the event of a change in control. The agreements have a term of 3
years with automatic one-year extensions beginning May 2011, unless in each case, prior to a change in control,
UGI terminates an agreement. In the absence of a change in control or termination by UGI, each agreement will
terminate when, for any reason, the executive terminates his or her employment with UGI. A change in control is
generally deemed to occur in the following instances:
• any person (other than certain persons or entities affiliated with UGI), together with all affiliates and
associates of such person, acquires securities representing 20 percent or more of either (i) the then
outstanding shares of common stock, or (ii) the combined voting power of UGI’s then outstanding voting
securities;
64
•
individuals, who at the beginning of any 24-month period constitute the UGI Board of Directors (the
“Incumbent Board”) and any new Director whose election by the Board of Directors, or nomination for
election by UGI’s shareholders, was approved by a vote of at least a majority of the Incumbent Board, cease
for any reason to constitute a majority;
• UGI is reorganized, merged or consolidated with or into, or sells all or substantially all of its assets to,
another corporation in a transaction in which former shareholders of UGI do not own more than 50 percent
of, respectively, the outstanding common stock and the combined voting power of the then outstanding
voting securities of the surviving or acquiring corporation; or
• UGI Corporation is liquidated or dissolved.
UGI will provide Messrs. Greenberg, Walsh and Knauss with cash benefits (“Benefits”) if UGI terminates the
executive’s employment without “cause” or if the executive terminates employment for “good reason” at any time
within 2 years following a change in control of UGI. “Cause” generally includes (i) misappropriation of funds, (ii)
habitual insobriety or substance abuse, (iii) conviction of a crime involving moral turpitude, or (iv) gross negligence
in the performance of duties, which gross negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of UGI. “Good reason” generally includes material diminution in authority,
duties, responsibilities or base compensation; a material breach by UGI of the terms of the agreement; and
substantial relocation requirements. If the events trigger a payment following a change in control, the Benefits
payable to each of Messrs. Greenberg, Walsh and Knauss will be as specified under his change in control agreement
unless payments under the UGI Severance Plan described above would be greater, in which case Benefits would be
provided under the UGI Severance Plan.
Benefits under this arrangement would be equal to 3 times the executive officer’s base salary and annual bonus.
Each would also receive the cash equivalent of his target bonus, prorated for the number of months served in the
fiscal year. In addition, Messrs. Greenberg, Walsh and Knauss are each entitled to receive a payment equal to the
cost he would incur if he enrolled in UGI’s medical and dental plans for 3 years (less the amount he would be
required to contribute for such coverage if he were an active employee). This payment would include a tax gross-up
payment equal to 75 percent of the total amount payable. Messrs. Greenberg, Walsh and Knauss would also have
benefits under UGI’s Supplemental Executive Retirement Plan calculated as if he had continued in employment for
3 years. In addition, outstanding performance units, stock units and dividend equivalents will be paid in cash based
on the fair market value of UGI’s common stock in an amount equal to the greater of (i) the target award or (ii) the
award amount that would have been paid if the performance unit measurement period ended on the date of the
change in control, as determined by UGI’s Compensation and Management Development Committee. For treatment
of stock options, see “Grants of Plan-Based Awards Table — Fiscal 2010.”
The Benefits are subject to a “conditional gross up” for excise and related taxes in the event they would
constitute “excess parachute payments,” as defined in Section 280G of the Code. UGI will provide the tax gross-up
if the aggregate parachute value of Benefits is greater than 110 percent of the maximum amount that may be paid
under Section 280G of the Code without imposition of an excise tax. If the parachute value does not exceed the 110
percent threshold, the Benefits for each of Messrs. Greenberg, Walsh and Knauss will be reduced to the extent
necessary to avoid imposition of the excise tax on “excess parachute payments.”
In order to receive benefits under his change in control agreement, each of Messrs. Greenberg, Walsh and
Knauss is required to execute a release which discharges UGI and its subsidiaries from liability for any claims the
senior executive may have against any of them, other than claims for amounts or benefits due to the executive under
any plan, program or contract provided by or entered into with UGI or its subsidiaries.
65
Potential Payments Upon Termination or Change in Control Table — Fiscal 2010
The amounts shown in the table below assume that each named executive officer’s termination was effective as
of September 30, 2010 and are merely estimates of the incremental amounts that would be paid out to the named
executive officers upon their termination. The actual amounts to be paid out can only be determined at the time of
such named executive officer’s termination of employment. The amounts set forth in the table below do not include
compensation to which each named executive officer would be entitled without regard to his termination of
employment, including (i) base salary and short-term incentives that have been earned but not yet paid or (ii)
amounts that have been earned, but not yet paid, under the terms of the plans listed under the “Pension Benefits
Table — Fiscal 2010” and the “Nonqualified Deferred Compensation Table — Fiscal 2010.” There are no
incremental payments in the event of voluntary resignation, termination for cause, disability or upon retirement.
Name & Triggering Event
Severance
Pay
Equity
Awards
with
Accelerated
Vesting(3)
Nonqualified
Retirement
Benefits(4)
Welfare &
Other
Benefits(5)
Total
E. V.N. Bissell
Death ..................................... $
Involuntary Termination
0
$
2,144,606 $
Without Cause .................... $ 1,874,438(1) $
0 $
Termination Following
0
0
$
$
0 $
2,144,606
45,996 $
1,920,434
Change in Control ............... $ 3,038,000(2) $
2,951,186 $
227,850
$ 2,151,443 $
8,368,479
J. E. Sheridan
Death ..................................... $
Involuntary Termination
0
$
500,787 $
Without Cause .................... $
486,095(1) $
0 $
Termination Following
0
0
Change in Control ............... $ 1,058,246(2) $
681,521 $
99,310
L. R. Greenberg
Death ..................................... $
Involuntary Termination
0
$
8,206,630 $
Without Cause .................... $ 6,405,000(1) $
0 $
Termination Following
0
0
Change in Control ............... $ 7,771,113(2) $ 10,827,497 $
6,423,775
J. L. Walsh
Death ..................................... $
Involuntary Termination
0
$
3,268,423 $
Without Cause .................... $ 2,055,305(1) $
0 $
Termination Following
0
0
$
$
$
$
$
$
$
$
0 $
500,787
41,566 $
527,661
706,137 $
2,545,214
0 $
8,206,630
57,285 $
6,462,285
41,142 $ 25,063,527
0 $
3,268,423
39,571 $
2,094,876
Change in Control ............... $ 4,300,495(2) $
4,316,769 $
1,422,597
$ 3,678,869 $ 13,718,730
R. H. Knauss
Death ..................................... $
Involuntary Termination
0
$
1,562,434 $
Without Cause .................... $ 1,063,563(1) $
0 $
Termination Following
0
0
$
$
0 $
1,562,434
34,488 $
1,098,051
Change in Control ............... $ 1,920,961(2) $
1,964,042 $
1,160,543
$ 1,732,867 $
6,778,413
____________
(1) Amounts shown under “Severance Pay” in the case of involuntary termination without cause are calculated
under the terms of the UGI Severance Plan for Messrs. Greenberg, Walsh and Knauss, and the AmeriGas
Severance Plan for Messrs. Bissell and Sheridan. We assumed that 100 percent of the target annual bonus was
paid.
(2) Amounts shown under “Severance Pay” in the case of termination following a change in control are calculated
under the officer’s change in control agreement.
66
(3) In calculating the amounts shown under “Equity Awards with Accelerated Vesting,” we assumed (i) the
continuation of AmeriGas Partner’s distribution (and UGI’s dividend, as applicable) at the rate in effect on
September 30, 2010; and (ii) performance at the greater of actual through September 30, 2010 or target levels
with respect to performance units.
(4) Amounts shown under “Nonqualified Retirement Benefits” are in addition to amounts shown in the “Pension
Benefits Table — Fiscal 2010” and “Non-Qualified Deferred Compensation Table — Fiscal 2010.”
(5) Amounts shown under “Welfare and Other Benefits” include estimated payments for (i) medical and dental and
life insurance premiums, (ii) outplacement services, (iii) tax preparation services, and (iv) an estimated Code
Section 280G tax gross up payments of $2,109,205 for Mr. Bissell, $1,709,892 for Mr. Knauss, $652,451 for
Mr. Sheridan, and $3,637,727 for Mr. Walsh in the event of a change in control.
COMPENSATION OF DIRECTORS
The table below shows the components of director compensation for Fiscal 2010. A Director who is an officer or
employee of the General Partner or its subsidiaries is not compensated for service on the Board of Directors or on
any Committee of the Board.
Director Compensation Table — Fiscal 2010
Fees Earned
or Paid
in Cash
($)(2)
(b)
Stock
Awards
($)(3)
(c)
Option
Awards
($)
(d)
Non-Equity
Incentive
Plan
Compensation
($)
(e)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(f)
All
Other
Compensation
($)
(g)
Name
(a)
S. D. Ban ..........................
65,000
21,390
R. C. Gozon ......................
65,000
21,390
W. J. Marrazzo (1)............
75,000
21,390
G. A. Pratt (1) ...................
80,000
21,390
M. O. Schlanger ...............
65,000
21,390
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Total
($)
(h)
86,390
86,390
96,390
101,390
86,390
75,000
H. B. Stoeckel (1) .............
____________
(1) The Partnership pays its non-management directors an annual retainer of $65,000 for Board service. It pays an
additional annual retainer of $10,000 to members of the Audit Committee, other than the chairperson. The
chairperson of the Audit Committee is paid an additional annual retainer of $15,000.
21,390
96,390
0
0
0
0
(2) The Partnership pays no meeting attendance fees to its directors.
(3) All Directors named above received 500 Phantom Units in Fiscal 2010 as part of their annual compensation. The
Phantom Units were awarded under the AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on behalf of
AmeriGas Partners, L.P. (the “2010 Plan”) approved by the Partnership’s Common Unitholders on July 30,
2010. Each Phantom Unit represents the right to receive an AmeriGas Partners, L.P. Common Unit and
distribution equivalents when the Director ends his service on the Board. Phantom Units earn distribution
equivalents on each record date for the payment of a distribution by the Partnership on its Common Units.
Accrued distribution equivalents are converted to additional Phantom Units annually, on the last date of the
calendar year, based on the closing price for the Partnership’s Common Units on the last trading day of the year.
All Phantom Units and distribution equivalents are fully vested when credited to the Director’s account.
Account balances become payable 65 percent in AmeriGas Partners, L.P. Common Units and 35 percent in cash,
based on the value of a Common Unit, upon retirement or termination of service. In the case of a change in
control of the Partnership, the Phantom Units and distribution equivalents will be paid in cash based on the fair
market value of the Partnership’s Common Units on the date of the change in control. The amounts shown in
column (c) above represent the grant date fair value of the awards of Phantom Units. The assumptions used in
the calculation of the amounts shown are included in Note 2 and Note 12 to our audited consolidated financial
statements for Fiscal 2010. For the number of Phantom Units credited to each Director’s account as of
September 30, 2010, see SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SECURITY HOLDER MATTERS — Beneficial Ownership of Partnership Common Units by the Directors
and Named Executive Officers of the General Partner.
67
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SECURITY HOLDER MATTERS
Ownership of Limited Partnership Units by Certain Beneficial Owners
The following table sets forth certain information regarding each person known by the General Partner to have
been the beneficial owner of more than 5 percent of the Partnership’s voting securities representing limited partner
interests as of November 1, 2010. AmeriGas Propane, Inc. is the sole general partner of the Partnership.
Title of Class
Common Units .................................................
Amount and
Nature of
Beneficial
Name and Address (1)
of Beneficial Owner
UGI Corporation
AmeriGas, Inc.
AmeriGas Propane, Inc.
Petrolane Incorporated
Ownership of
Partnership Units
Percent
of Class
24,691,209(2)
24,691,209(3)
24,691,209(4)
7,839,911(4)
43%
43%
43%
14%
(1) The address of each of UGI and the General Partner is 460 North Gulph Road, King of Prussia, PA 19406. The
address of each of AmeriGas, Inc. and Petrolane Incorporated (“Petrolane”) is 2525 N. 12th Street, Suite 360,
Reading, PA 19612.
(2) Based on the number of units held by its indirect, wholly-owned subsidiaries, Petrolane and AmeriGas Propane,
Inc.
(3) Based on the number of units held by its direct and indirect, wholly-owned subsidiaries, AmeriGas Propane, Inc.
and Petrolane.
(4) AmeriGas Propane, Inc.’s beneficial ownership includes 7,839,911 Common Units held by its subsidiary,
Petrolane. Beneficial ownership of those Common Units is shared with UGI and AmeriGas, Inc.
Ownership of Partnership Common Units by the Directors and Named Executive Officers of the General Partner
The table below sets forth as of October 1, 2010 the beneficial ownership of Partnership Common Units by each
director and each of the named executive officers, as well as by the directors and all of the executive officers of the
General Partner as a group. No director, named executive officer or executive officer beneficially owns 1 percent or
more of the Partnership’s Common Units. The total number of Common Units beneficially owned by the directors
and executive officers of the General Partner as a group represents less than 1 percent of the Partnership’s
outstanding Common Units.
Name of Beneficial Owner
L. R. Greenberg ...................................
J. L. Walsh ...........................................
S. D. Ban..............................................
R. C. Gozon .........................................
M. O. Schlanger ...................................
G. A. Pratt ............................................
W. J. Marrazzo ....................................
E. V. N. Bissell ....................................
R. H. Knauss ........................................
J. E. Sheridan .......................................
H. B. Stoeckel ......................................
Directors and executive officers as a
group (19 persons) .............................
Amount and Nature of
Beneficial Ownership of
Partnership Common Units (1)
11,000
7,000(2)
0
5,000
1,000(3)
0
1,000(4)
64,600(5)
14,108
16,703(6)
0
168,066
____________
(1) Sole voting and investment power unless otherwise specified.
(2) Mr. Walsh’s Units are held jointly with his spouse.
Number of AmeriGas Partners
Phantom Units (7)
0
0
500
500
500
500
500
0
0
0
500
3,000
68
(3) The Units shown are owned by Mr. Schlanger’s spouse. Mr. Schlanger disclaims beneficial ownership of his
spouse’s Units.
(4) Mr. Marrazzo’s Units are held jointly with his spouse.
(5) Mr. Bissell’s Units are held jointly with his spouse.
(6) Mr. Sheridan’s Units are held jointly with his spouse.
(7) The 2010 Plan provides that Phantom Units will be converted to AmeriGas Partners Common Units and paid out
to Directors upon their termination of service.
The General Partner is a wholly owned subsidiary of AmeriGas, Inc. which is a wholly owned subsidiary of
UGI. The table below sets forth, as of October 1, 2010, the beneficial ownership of UGI Common Stock by each
director and each of the named executive officers, as well as by the directors and the executive officers of the
General Partner as a group. Including the number of shares of stock underlying exercisable options, Mr. Greenberg
is the beneficial owner of approximately 1.6 percent of UGI’s Common Stock. All other directors and executive
officers own less than 1 percent of UGI’s outstanding shares. The total number of shares beneficially owned by the
directors and executive officers as a group (including 2,633,329 shares subject to exercisable options and stock units
held by directors under the 2004 plan) represents approximately 3 percent of UGI’s outstanding shares.
Name of Beneficial Owner
L. R. Greenberg .....................................
J. L. Walsh .............................................
S. D. Ban................................................
R. C. Gozon ...........................................
M. O. Schlanger .....................................
H. B. Stoeckel ........................................
G. A. Pratt ..............................................
W. J. Marrazzo ......................................
E. V.N. Bissell .......................................
R. H. Knauss ..........................................
J. E. Sheridan .........................................
Directors and executive officers as a
group (19 persons) ...............................
Number of UGI Shares
and Stock Units and Nature
of Beneficial Ownership
Excluding
UGI Stock Options(1)(4)
406,305(2)
110,249(3)
75,606
127,210
58,942(5)
0
0
0
68,197(6)
21,908
1,036(7)
Number of
Exercisable UGI
Stock Options
1,315,000
511,666
71,500
71,500
83,500
0
0
0
160,000
131,666
69,333
Total
1,721,305
621,915
147,106
198,710
142,442
0
0
0
228,197
153,574
70,369
917,364
2,633,329
3,550,693
____________
(1) Sole voting and investment power unless otherwise specified.
(2) Mr. Greenberg holds 249,848 shares jointly with his spouse.
(3) Mr. Walsh holds these shares jointly with his spouse.
(4) Included in the number of shares shown are Stock Units (“Units”) under the 2004 Plan. Each Unit will be paid
out to the director upon retirement or termination of service from the UGI Board of Directors in the form of
shares of UGI Common Stock (65 percent) and cash (35 percent). The number of Units included for the
directors is as follows: Dr. Ban 59,110, Mr. Gozon 94,602 and Mr. Schlanger 49,218.
(5) Includes 2,000 shares owned by Mr. Schlanger’s spouse. Mr. Schlanger disclaims beneficial ownership of his
spouse’s shares.
(6) Mr. Bissell holds these shares jointly with his spouse.
(7) Mr. Sheridan holds these shares in his 401(k) Savings Plan.
69
Equity Compensation Plan Information
The following table sets forth information as of the end of Fiscal 2010 with respect to compensation plans under
which equity securities of the Partnership are authorized for issuance.
(a)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(b)
Weighted average
exercise price of
outstanding options,
warrants and rights
(c)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
146,600
0
146,600
0
0
2,796,550(2)
0
2,796,550
Plan category
Equity compensation plans
approved by security
holders (1)(2) ...................
Equity compensation plans
not approved by security
holders .............................
Total ..................................
(1) The AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan and the AmeriGas Propane, Inc. Discretionary
Long-Term Incentive Plan for Non-Executive Key Employees were approved pursuant to Section 6.4 of the
Partnership Agreement.
(2) The sole plan with securities remaining for future issuance is the AmeriGas Propane, Inc. 2010 Long-Term
Incentive Plan on behalf of AmeriGas Partners, L.P. (“2010 Plan”). The 2010 Plan was approved by security
holders on July 30, 2010.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
We do not have any employees. We are managed by our General Partner. Pursuant to the Partnership Agreement
and a Management Services Agreement among AmeriGas Eagle Holdings, Inc. and the General Partner, the General
Partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of
the Partnership. For information regarding our related person transactions in general, please read Note 14 to
Consolidated Financial Statements included under Item 8 of this Report. The information summarizes our business
relationships and related transactions with our General Partner and its affiliates, including UGI, during Fiscal 2010.
Interests of the General Partner in the Partnership
We make quarterly cash distributions of all of our Available Cash, generally defined as all cash on hand at the
end of such quarter, plus all additional cash on hand as of the date of determination resulting from borrowings
subsequent to the end of such quarter, less the amount of cash reserves established by the General Partner in its
reasonable discretion for future cash requirements. According to the Partnership Agreement, the General Partner
receives cash distributions as follows:
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner (giving effect to
the 1.01% interest of the General Partner in distributions of Available Cash from AmeriGas OLP to the Partnership)
until Available Cash exceeds the Minimum Quarterly Distribution of $0.55 and the First Target Distribution of
$0.055 per Common Unit (or a total of $0.605 per Common Unit). When Available Cash exceeds $0.605 per
Common Unit in any quarter, the General Partner will receive a greater percentage of the total Partnership
distribution but only with respect to the amount by which the distribution per Common Unit to limited partners
exceeds $0.605.
70
Related Person Transactions
The General Partner employs persons responsible for managing and operating the Partnership. The Partnership
reimburses the General Partner for the direct and indirect costs of providing these services, including all
compensation and benefit costs. For Fiscal 2010, these costs totaled approximately $350 million.
The Partnership and the General Partner also have extensive, ongoing relationships with UGI and its affiliates.
UGI performs certain financial and administrative services for the General Partner on behalf of the Partnership. UGI
does not receive a fee for such services, but is reimbursed for all direct and indirect expenses incurred in connection
with providing these services, including all compensation and benefit costs in accordance with an allocation
formula. A wholly owned subsidiary of UGI provides the Partnership with automobile liability insurance with limits
of $0.5 million per occurrence and, in the aggregate, $0.5 million in excess of the deductible, and stop loss medical
coverage per occurrence in excess of $0.3 million per employee per year. Another wholly owned subsidiary of UGI
leases office space to the General Partner for its headquarters staff. The Partnership is also covered by UGI master
policies. These UGI master policies generally include excess liability, property and other standard insurance
coverages. In general, the coverage afforded by the UGI master policies is shared with other UGI domestic operating
subsidiaries. As discussed under “Business-Trade Names, Trade and Service Marks,” UGI and the General Partner
have licensed the trade names “AmeriGas” and “America’s Propane Company” and the related service marks and
trademark to the Partnership on a royalty-free basis in the U.S. The Partnership obtains management information
services from the General Partner, and reimburses the General Partner for its direct and indirect expenses related to
those services. For Fiscal 2010, the Partnership paid approximately $13.1 million for the services referred to in this
paragraph.
AmeriGas OLP purchases propane from UGI Energy Services, Inc. and its subsidiaries (“Energy Services”),
which are affiliates of UGI. Purchases of propane by AmeriGas OLP from Energy Services totaled $39.8 million
during Fiscal 2010. Of this amount, $37.2 million was pursuant to a 2005 Product Sales Agreement between
Atlantic Energy, Inc., a subsidiary of Energy Services (“AEI”), and AmeriGas OLP. This contract was amended
during Fiscal 2010 to extend the initial termination date to April 30, 2015. On July 30, 2010, Energy Services sold
its interest in AEI. Amounts due to Energy Services at September 30, 2010 were immaterial.
The Partnership sold propane to certain affiliates of UGI which totaled approximately $2.0 million in Fiscal
2010. The highest amounts due from affiliates of the Partnership during Fiscal 2010 and at November 1, 2010 were
$8.0 million and $7.0 million, respectively.
Policies Regarding Transactions with Related Persons
The Partnership Agreement, the Audit Committee Charter and the Codes of Conduct set forth policies and
procedures for the review and approval of certain transactions with persons affiliated with the Partnership.
Pursuant to the Audit Committee Charter, the Audit Committee has responsibility to review, and if acceptable,
approve any transactions involving the Partnership or the General Partner in which a director or executive officer
has a material interest. The Audit Committee also has authority to review and approve any transaction involving a
potential conflict of interest between the General Partner and any of its affiliates, on the one hand, or the Partnership
or any partner or assignee, on the other hand, based on the provisions of the Partnership Agreement for determining
that a transaction is fair and reasonable to the Partnership. Such determinations are made at the request of the
General Partner. In addition, the Audit Committee conducts an annual review of all “related person transactions,” as
defined by applicable rules of the SEC.
Director Independence
For a discussion of director independence, see Item 10 “Directors, Executive Officers and Corporate Governance
— Director Independence.”
71
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed by PricewaterhouseCoopers LLP, the Partnership’s independent registered public
accountants, in Fiscal 2010 and Fiscal 2009 were as follows:
2010
2009
Audit Fees(1) .................................................................................................................
Audit-Related Fees ........................................................................................................
Tax Fees(2) ....................................................................................................................
All Other Fees(3) ...........................................................................................................
Total Fees for Services Provided ...................................................................................
____________
(1) Audit Fees were for audit services, including (i) the annual audit of the consolidated financial statements and
internal control over financial reporting of the Partnership, (ii) subsidiary audits, (iii) review of the interim
financial statements included in the Quarterly Reports on Form 10-Q of the Partnership, and (iv) services that
only the independent registered public accounting firm can reasonably be expected to provide, such as services
associated with SEC registration statements, and documents issued in connection with securities offerings.
849,000
-0-
636,345
161,363
$ 1,541,150 $ 1,646,708
-0-
600,000
136,000
805,150 $
$
(2) Tax Fees were for the preparation of Substitute Schedule K-1 forms for unitholders of the Partnership.
(3) Fees related to evaluation of the design and operational effectiveness of the information system that supports our
Order-to-Cash business process.
In the course of its meetings, the Audit Committee considered whether the provision by PricewaterhouseCoopers
LLP of the professional services described under “Tax Fees” was compatible with PricewaterhouseCoopers LLP’s
independence. The Committee concluded that the independent auditor is independent from the Partnership and its
management.
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for
appointing, setting compensation and overseeing the work of the Partnership’s independent accountants. In
recognition of this responsibility, the Audit Committee has a policy of pre-approving all audit and permissible non-
audit services provided by the independent accountants.
Prior to engagement of the Partnership’s independent accountants for the next year’s audit, management submits
to the Audit Committee for approval a list of services expected to be rendered during that year and fees related
thereto for approval.
72
PART IV:
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1) Financial Statements:
Included under Item 8 are the following financial statements and supplementary data:
Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of September 30, 2010 and 2009
Consolidated Statements of Operations for the years ended September 30, 2010, 2009 and 2008
Consolidated Statements of Cash Flows for the years ended September 30, 2010, 2009 and 2008
Consolidated Statements of Partners’ Capital for the years ended September 30, 2010, 2009 and 2008
Notes to Consolidated Financial Statements
Quarterly Data for the years ended September 30, 2010 and 2009
(2) Financial Statement Schedules:
I — Condensed Financial Information of Registrant (Parent Company)
II — Valuation and Qualifying Accounts for the years ended September 30, 2010, 2009 and 2008
We have omitted all other financial statement schedules because the required information is (1) not
present; (2) not present in amounts sufficient to require submission of the schedule; or (3) included
elsewhere in the financial statements or notes thereto contained in this report.
73
(3) List of Exhibits:
The exhibits filed as part of this report are as follows (exhibits incorporated by reference are set forth
with the name of the registrant, the type of report and registration number or last date of the period for
which it was filed, and the exhibit number in such filing):
Exhibit No.
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
2.1
2.2
3.1
3.2
3.3
4
4.1
4.2
4.3
4.4
Merger and Contribution Agreement among
AmeriGas Partners, L.P., AmeriGas Propane,
L.P., New AmeriGas Propane, Inc.,
AmeriGas Propane, Inc., AmeriGas Propane-
2, Inc., Cal Gas Corporation of America,
Propane Transport, Inc. and NORCO
Transportation Company
AmeriGas
Partners, L.P.
10.21
Registration
Statement on
Form S-4
(No. 33-92734)
Conveyance and Contribution Agreement
among AmeriGas Partners, L.P., AmeriGas
Propane, L.P. and Petrolane Incorporated
AmeriGas
Partners, L.P.
10.22
Registration
Statement on
Form S-4
(No. 33-92734)
Fourth Amended and Restated Agreement of
Limited Partnership of AmeriGas Partners,
L.P. dated as of July 27, 2009
Second Amended and Restated Agreement of
Limited Partnership of AmeriGas Propane,
L.P. dated as of December 1, 2004
Amended and Restated Agreement of Limited
Partnership of AmeriGas Eagle Propane, L.P.
dated July 19, 1999
Instruments defining the rights of security
holders, including indentures. (The
Partnership agrees to furnish to the
Commission upon request a copy of any
instrument defining the rights of holders of
long-term debt not required to be filed
pursuant to Item 601(b)(4) of Regulation S-K)
Fourth Amended and Restated Agreement of
Limited Partnership of AmeriGas Partners,
L.P. dated as of July 27, 2009
Second Amended and Restated Agreement of
Limited Partnership of AmeriGas Propane,
L.P. dated as of December 1, 2004
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/09)
3.1
AmeriGas
Partners, L.P.
Form 10-K
(9/30/04)
3.1(a)
AmeriGas
Partners, L.P.
Form 10-K
(9/30/01)
3.8
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/09)
3.1
AmeriGas
Partners, L.P.
Form 10-K
(9/30/04)
3.1(a)
Amended and Restated Agreement of Limited
Partnership of AmeriGas Eagle Propane, L.P.
dated as of July 19, 1999
AmeriGas
Partners, L.P.
Form 10-K
(9/30/01)
Indenture, dated May 3, 2005, by and among
AmeriGas Partners, L.P., a Delaware limited
partnership, AmeriGas Finance Corp., a
Delaware corporation, and Wachovia Bank,
National Association, as trustee
AmeriGas
Partners, L.P.
Form 8-K
(5/3/05)
3.8
4.1
74
Exhibit No.
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
AmeriGas
Partners, L.P.
Form 8-K
(1/26/06)
4.1
4.5
10.1**
10.2**
Indenture, dated January 26, 2006, by and
among AmeriGas Partners, L.P., a Delaware
limited partnership, AP Eagle Finance Corp.,
a Delaware corporation, and U.S. Bank
National Association, as trustee
UGI Corporation 2004 Omnibus Equity
Compensation Plan Amended and Restated as
of December 5, 2006
UGI Corporation 2004 Omnibus Equity
Compensation Plan Amended and Restated as
of December 5, 2006 — Terms and
Conditions as amended and restated effective
January 1, 2009
10.3**
UGI Corporation 1997 Stock Option and
Dividend Equivalent Plan Amended and
Restated as of May 24, 2005
10.4**
UGI Corporation 2000 Stock Incentive Plan
Amended and Restated as of May 24, 2005
10.5**
UGI Corporation 2009 Deferral Plan As
Amended and Restated Effective June 1, 2010
10.6**
UGI Corporation Senior Executive Employee
Severance Plan as in effect as of January 1,
2008
10.7a** UGI Corporation Supplemental Executive
Retirement Plan and Supplemental Savings
Plan, as Amended and Restated effective
January 1, 2009
10.7b*
Amendment 2009-1 to the UGI Corporation
Supplemental Executive Retirement Plan and
Supplemental Savings Plan as Amended and
Restated effective January 1, 2009
10.7c** UGI Corporation 2009 Supplemental
Executive Retirement Plan For New
Employees
10.8**
UGI Corporation Executive Annual Bonus
Plan effective as of October 1, 2006
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
10.9a** AmeriGas Propane, Inc. 2000 Long-Term
Incentive Plan on Behalf of AmeriGas
Partners, L.P., as amended and restated
effective January 1, 2005
AmeriGas
Partners, L.P.
10.9b** AmeriGas Propane, Inc. 2010 Long-Term
Incentive Plan on Behalf of AmeriGas
Partners, L.P., Effective July 30, 2010
AmeriGas
Partners, L.P.
Form 8-K
(7/30/10)
75
Form 8-K
(3/27/07)
Form 10-K
(9/30/09)
10.1
10.2
Form 10-K
(9/30/10)
10.7
Form 10-K
(9/30/06)
Form 10-Q
(6/30/10)
Form 10-Q
(3/31/08)
10.14
10.1
10.1
Form 10-K
(9/30/09)
10.11
Form 10-Q
(12/31/09)
Form 10-Q
(12/31/09)
Form 10-K
(9/30/07)
Form 10-K
(9/30/08)
10.1
10.2
10.8
10.7
10.2
Exhibit No.
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
*10.10** AmeriGas Propane, Inc. 2010 Long-Term
Incentive Plan on Behalf of AmeriGas
Partners, L.P. — Terms and Conditions
10.11** AmeriGas Propane, Inc. Non-Qualified
Deferred Compensation Plan, as amended and
restated effective January 1, 2009
AmeriGas
Partners, L.P.
Form 10-K
(9/30/08)
10.44
10.12** AmeriGas Propane, Inc. Senior Executive
Employee Severance Plan, as in effect
January 1, 2008
AmeriGas
Partners, L.P.
Form 10-K
(9/30/09)
10.12
10.13** AmeriGas Propane, Inc. Executive Employee
Severance Plan, as in effect January 1, 2008
10.14** AmeriGas Propane, Inc. Supplemental
Executive Retirement Plan, as Amended and
Restated Effective January 1, 2009
AmeriGas
Partners, L.P.
AmeriGas
Partners, L.P.
10.15** AmeriGas Propane, Inc. Executive Annual
Bonus Plan, effective as of October 1, 2006
AmeriGas
Partners, L.P.
10.16** UGI Corporation 2004 Omnibus Equity
UGI
Compensation Plan Stock Unit Grant Letter
for UGI Employees, dated January 1, 2009
10.17** UGI Corporation 2004 Omnibus Equity
Compensation Plan Nonqualified Stock
Option Grant Letter for UGI Employees,
dated January 1, 2010
10.18** UGI Corporation 2004 Omnibus Equity
Compensation Plan Nonqualified Stock
Option Grant Letter for AmeriGas
Employees, dated January 1, 2010
UGI
UGI
10.19** UGI Corporation 2004 Omnibus Equity
UGI
Compensation Plan Performance Unit Grant
Letter for UGI Employees, dated January 1,
2010
Form 10-K
(9/30/08)
Form 10-Q
(12/31/09)
Form 10-K
(9/30/07)
Form 10-Q
(3/31/09)
Form 10-Q
(3/31/10)
Form 10-Q
(3/31/10)
Form 10-Q
(3/31/10)
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/10)
10.20** AmeriGas Propane, Inc. 2000 Long-Term
Incentive Plan on Behalf of AmeriGas
Partners, L.P., as amended and restated
effective January 1, 2005, Restricted Unit
Grant Letter dated as of December 31, 2009
*10.21** AmeriGas Propane, Inc. 2010 Long-Term
Incentive Plan on Behalf of AmeriGas
Partners, L.P Phantom Unit Grant Letter
dated as of July 30, 2010
10.4
10.1
10.19
10.8
10.5
10.3
10.1
10.2
10.22a** Description of oral compensation
UGI
arrangements for Messrs. Greenberg and
Walsh
Form 10-K
(9/30/10)
10.32a
76
Exhibit No.
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
*10.22b** Description of oral compensation
arrangements for Messrs. Bissell, Knauss and
Sheridan
*10.23**
Summary of Director Compensation of
AmeriGas Propane, Inc. dated October 1,
2010
10.24**
10.25**
10.26**
10.27**
10.28**
Form of Change in Control Agreement
Amended and Restated as of May 12, 2008
for Messrs. Greenberg, Knauss and Walsh
Form of Change in Control Agreement
Amended and Restated as of May 12, 2008
for Mr. Bissell
Form of Change in Control Agreement
Amended and Restated as of May 12, 2008
for Mr. Sheridan
Form of Confidentiality and Post-
Employment Activities Agreement with
AmeriGas Propane, Inc. for Mr. Bissell
Form of Confidentiality and Post-
Employment Activities Agreement with
AmeriGas Propane, Inc. for Mr. Sheridan
UGI
Form 10-Q
(6/30/08)
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/08)
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/08)
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/05)
AmeriGas
Partners, L.P.
Form 8-K
(8/15/05)
10.3
10.1
10.2
10.3
10.1
10.29**
Form of Confidentiality and Post-
Employment Activities Agreement with
AmeriGas Propane, Inc. for Mr. Knauss
AmeriGas
Partners, L.P.
Form 10-K
(9/30/09)
10.29
10.30
10.31
10.32a
Trademark License Agreement dated April
19, 1995 among UGI Corporation, AmeriGas,
Inc., AmeriGas Propane, Inc., AmeriGas
Partners, L.P. and AmeriGas Propane, L.P.
Trademark License Agreement, dated April
19, 1995 among AmeriGas Propane, Inc.,
AmeriGas Partners, L.P. and AmeriGas
Propane, L.P.
Credit Agreement, dated as of April 17, 2009,
among AmeriGas Propane, L.P., as Borrower,
AmeriGas Propane, Inc., as Guarantor,
Petrolane Incorporated, as Guarantor, Citizens
Bank of Pennsylvania, as Syndication Agent,
JPMorgan Chase, N.A., as Documentation
Agent and Wachovia Bank, National
Association, as Administrative Agent
UGI
Form 10-K
(9/30/10)
10.37
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/95)
10.7
UGI
Form 10-K
(9/30/10)
10.39
77
Exhibit No.
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
10.32b
10.33
10.34
10.35
10.36
14
*21
*23
*31.1
AmeriGas
Partners, L.P.
Form 8-K
(7/1/10)
10.1
AmeriGas
Partners, L.P.
Form 8-K
(7/20/09)
10.3
UGI
Form 10-K
(9/30/10)
10.42
AmeriGas
Partners, L.P.
Form 10-K
(9/30/06)
10.2
AmeriGas
Partners, L.P.
Form 10-K
(9/30/06)
10.3
Amendment No. 1 to Credit Agreement, dated
as of July 1, 2010, among the Partnership, as
Borrower, AmeriGas Propane, Inc., as
Guarantor, Petrolane Incorporated, as
Guarantor, Citizens Bank of Pennsylvania, as
Syndication Agent, JPMorgan Chase Bank,
N.A., as Documentation Agent and Wells
Fargo Bank, N.A., as Administrative Agent.
Restricted Subsidiary Guarantee by the
Restricted Subsidiaries of AmeriGas Propane,
L.P., as Guarantors, for the benefit of
Wachovia Bank, National Association and the
Banks, dated as of April 17, 2009
Credit Agreement dated as of November 6,
2006 among AmeriGas Propane, L.P., as
Borrower, AmeriGas Propane, Inc., as
Guarantor, Petrolane Incorporated, as
Guarantor, Citigroup Global Markets Inc., as
Syndication Agent, J.P. Morgan Securities
Inc. and Credit Suisse Securities (USA) LLC,
as Co-Documentation Agents, Wachovia
Bank, National Association, as Agent, Issuing
Bank and Swing Line Bank, and the other
financial institutions party thereto
Restricted Subsidiary Guarantee by the
Restricted Subsidiaries of AmeriGas Propane,
L.P., as Guarantors, for the benefit of
Wachovia Bank, National Association and the
Banks dated as of November 6, 2006
Release of Liens and Termination of Security
Documents dated as of November 6, 2006 by
and among AmeriGas Propane, Inc.,
Petrolane Incorporated, AmeriGas Propane,
L.P., AmeriGas Propane Parts & Service, Inc.
and Wachovia Bank, National Association, as
Collateral Agent for the Secured Creditors,
pursuant to the Intercreditor and Agency
Agreement dated as of April 19, 1995
Code of Ethics for principal executive,
financial and accounting officers
UGI
Form 10-K
(9/30/03)
14
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP
Certification by the Chief Executive Officer
relating to the Registrant’s Report on Form
10-K for the fiscal year ended September 30,
2010 pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
78
Exhibit No.
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
*31.2
*32
*99
*101
Certification by the Chief Financial Officer
relating to the Registrant’s Report on Form
10-K for the fiscal year ended September 30,
2010 pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Certification by the Chief Executive Officer
and the Chief Financial Officer relating to the
Registrant’s Report on Form 10-K for the
fiscal year ended September 30, 2010,
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
UGI Corporation Equity-Based
Compensaiton Information
The following materials from AmeriGas
Partners, L.P.’s Annual Report on Form 10-K
for the year ended September 30, 2010,
formatted in XBRL (Extensible Business
Reporting Language): (i) the Consolidated
Balance Sheets; (ii) the Consolidated
Statements of Operations; (iii) the
Consolidated Statements of Cash Flows; (iv)
the Consolidated Statements of Partners’
Capital; and (v) Notes to Consolidated
Financial Statements, tagged as blocks of text.
This Exhibit 101 is deemed not filed for
purposes of Section 11 or 12 of the Securities
Act of 1933 and Section 18 of the Securities
Exchange Act of 1934, and otherwise is not
subject to liability under these sections.
* Filed herewith.
** As required by Item 14(a)(3), this exhibit is identified as a compensatory plan or arrangement.
79
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
AMERIGAS PARTNERS, L.P.
By: AmeriGas Propane, Inc.,
Its General Partner
Date: November 19, 2010
By: /s/ Jerry E. Sheridan
Jerry E. Sheridan
Vice President — Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on
November 19, 2010, by the following persons on behalf of the Registrant in the capacities indicated.
Signature
/s/ Eugene V. N. Bissell
Eugene V. N. Bissell
/s/ Lon R. Greenberg
Lon R. Greenberg
/s/ John L. Walsh
John L. Walsh
/s/ Jerry E. Sheridan
Jerry E. Sheridan
/s/ William J. Stanczak
William J. Stanczak
/s/ Stephen D. Ban
Stephen D. Ban
/s/ Richard C. Gozon
Richard C. Gozon
/s/ William J. Marrazzo
William J. Marrazzo
/s/ Gregory A. Pratt
Gregory A. Pratt
/s/ Marvin O. Schlanger
Marvin O. Schlanger
/s/ Howard B. Stoeckel
Howard B. Stoeckel
Title
President and Chief Executive Officer
(Principal Executive Officer) and Director
Chairman and Director
Vice Chairman and Director
Vice President — Finance and Chief Financial Officer
(Principal Financial Officer)
Controller and Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
80
EXHIBIT INDEX
Exhibit No. Description
10.10
10.21
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P. —
Terms and Conditions
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P
Phantom Unit Grant Letter dated as of July 30, 2010
10.22b
Description of oral compensation arrangements for Messrs. Bissell, Knauss and Sheridan
10.23
Summary of Director Compensation of AmeriGas Propane, Inc. dated October 1, 2010
21
23
31.1
31.2
32
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP
Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act
99
UGI Corporation Equity-Based Compensation Information
101
The following materials from AmeriGas Partners, L.P.’s Annual Report on Form 10-K for the year
ended September 30, 2010, formatted in XBRL (Extensible Business Reporting Language): (i) the
Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated
Statements of Cash Flows; (iv) the Consolidated Statements of Partners’ Capital; and (v) Notes to
Consolidated Financial Statements, tagged as blocks of text. This Exhibit 101 is deemed not filed
for purposes of Section 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities
Exchange Act of 1934, and otherwise is not subject to liability under these sections.
81
AMERIGAS PARTNERS, L.P.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 2010
F-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Management’s Report on Internal Control over Financial Reporting...................................................
Financial Statements:
Report of Independent Registered Public Accounting Firm .................................................................
Consolidated Balance Sheets as of September 30, 2010 and 2009.......................................................
Consolidated Statements of Operations for the years ended September 30, 2010, 2009 and 2008 ......
Consolidated Statements of Cash Flows for the years ended September 30, 2010, 2009 and 2008 .....
Consolidated Statements of Partners’ Capital for the years ended September 30, 2010, 2009 and
2008 ....................................................................................................................................................
Pages
F-4
F-3
F-5
F-6
F-7
F-8
Notes to Consolidated Financial Statements.........................................................................................
F-9 to F-29
Financial Statements Schedules:
For the years ended September 30, 2010, 2009 and 2008:
I — Condensed Financial Information of Registrant (Parent Company)......................................
S-1 to S-3
II — Valuation and Qualifying Accounts .....................................................................................
S-4 to S-5
We have omitted all other financial statement schedules because the required information is either (1) not present;
(2) not present in amounts sufficient to require submission of the schedule; or (3) included elsewhere in the financial
statements or related notes.
F-2
Report of Independent Registered Public Accounting Firm
To the Partners of AmeriGas Partners, L.P. and the Board of Directors of AmeriGas Propane, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of
operations, of partners’ capital and of cash flows present fairly, in all material respects, the financial position of
AmeriGas Partners, L.P. and its subsidiaries at September 30, 2010 and 2009, and the results of their operations and
their cash flows for each of the three years in the period ended September 30, 2010 in conformity with accounting
principles generally accepted in the United States of America. In addition, in our opinion, the financial statement
schedules listed in the index appearing under Item 15 (a)(2) present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the
Partnership maintained, in all material respects, effective internal control over financial reporting as of September
30, 2010 based on criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Partnership’s management is responsible for
these financial statements and financial statement schedules, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting included in
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on
these financial statements, on the financial statement schedules and the Partnership’s internal control over financial
reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether
effective internal control over financial reporting was maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
As discussed in Note 3 to the consolidated financial statements, the Company adopted new accounting guidance
regarding the accounting for and presentation of noncontrolling interests and the application of the two-class method
for determining income per unit effective October 1, 2009.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers
Philadelphia, Pennsylvania
November 19, 2010
F-3
General Partner’s Report
Financial Statements
The Partnership’s consolidated financial statements and other financial information contained in this Annual
Report are prepared by the management of the General Partner, AmeriGas Propane, Inc., which is responsible for
their fairness, integrity and objectivity. The consolidated financial statements and related information were prepared
in accordance with accounting principles generally accepted in the United States of America and include amounts
that are based on management’s best judgments and estimates.
The Audit Committee of the Board of Directors of the General Partner is composed of three members, none of
whom is an employee of the General Partner. This Committee is responsible for overseeing the financial reporting
process and the adequacy of controls, and for monitoring the independence and performance of the Partnership’s
independent registered public accounting firm and internal auditors. The Committee is also responsible for
maintaining direct channels of communication among the Board of Directors, management and both the independent
registered public accounting firm and internal auditors.
PricewaterhouseCoopers LLP, our independent registered public accounting firm, is engaged to perform audits
of our consolidated financial statements. These audits are performed in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Our independent registered public accounting firm was
given unrestricted access to all financial records and related data, including minutes of all meetings of the Board of
Directors and committees of the Board. The Partnership believes that all representations made to the independent
registered public accounting firm during their audits were valid and appropriate.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting
for the Partnership. In order to evaluate the effectiveness of internal control over financial reporting, as required by
Section 404 of the Sarbanes-Oxley Act of 2002, management has conducted an assessment, including testing, of the
Partnership’s internal control over financial reporting using the criteria in Internal Control — Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO
Framework”).
Internal control over financial reporting refers to the process designed under the supervision and participation of
management including our Chief Executive Officer and Chief Financial Officer, to provide reasonable, but not
absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with accounting principles generally accepted in the United States and includes
policies and procedures that, among other things, provide reasonable assurance that assets are safeguarded and that
transactions are executed in accordance with management’s authorization and are properly recorded to permit the
preparation of reliable financial information. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate due to changing conditions, or the degree of
compliance with the policies or procedures may deteriorate.
Based on its assessment, management has concluded that the Partnership’s internal control over financial
reporting was effective as of September 30, 2010, based on the COSO Framework. PricewaterhouseCoopers LLP,
our independent registered public accounting firm, audited the effectiveness of the Partnership’s internal control
over financial reporting as of September 30, 2010, as stated in their report, which appears herein.
/s/ Eugene V. N. Bissell
Chief Executive Officer
/s/ Jerry E. Sheridan
Chief Financial Officer
/s/ William J. Stanczak
Chief Accounting Officer
F-4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
September 30,
2010
2009
ASSETS
Current assets:
Cash and cash equivalents ..............................................................................
Accounts receivable (less allowances for doubtful accounts of $15,290 and
$13,239, respectively) ...................................................................................
Accounts receivable — related parties ............................................................
Inventories ......................................................................................................
Derivative financial instruments .....................................................................
Prepaid expenses and other current assets ......................................................
Total current assets .....................................................................................
$
7,726 $
59,213
172,708
7,039
114,122
7,478
16,785
325,858
136,147
5,851
87,940
14,970
12,386
316,507
Property, plant and equipment (less accumulated depreciation and
amortization of $867,250 and $804,239, respectively).....................................
Goodwill .............................................................................................................
Intangible assets ..................................................................................................
Other assets .........................................................................................................
Total assets .................................................................................................
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current maturities of long-term debt ..............................................................
Bank loans ......................................................................................................
Accounts payable — trade ..............................................................................
Accounts payable — related parties ................................................................
Employee compensation and benefits accrued ...............................................
Interest accrued ...............................................................................................
Customer deposits and advances ....................................................................
Derivative financial instruments .....................................................................
Other current liabilities ...................................................................................
Total current liabilities................................................................................
$
$
642,778
678,721
37,590
11,272
1,696,219 $
628,899
665,663
32,611
13,884
1,657,564
20,123 $
91,000
130,575
2,352
37,550
20,533
86,154
—
71,975
460,262
82,225
—
115,041
2,252
36,055
22,203
87,760
19,284
55,785
420,605
Long-term debt ...................................................................................................
Other noncurrent liabilities .................................................................................
Total liabilities ............................................................................................
771,279
71,792
1,303,333
783,419
77,215
1,281,239
Commitments and contingencies (note 13)
Partners’ capital:
AmeriGas Partners, L.P. partners’ capital:
Common unitholders (units issued — 57,088,509 and 57,046,388,
respectively) ..............................................................................................
General partner ...........................................................................................
Accumulated other comprehensive income (loss) ......................................
Total AmeriGas Partners, L. P. partners’ capital ....................................
Noncontrolling interests ..................................................................................
Total partners’ capital .................................................................................
Total liabilities and partners’ capital ...........................................................
372,220
3,751
4,877
380,848
12,038
392,886
1,696,219 $
$
367,708
3,698
(6,947)
364,459
11,866(1)
376,325(1)
1,657,564
(1) As adjusted in accordance with the transition provisions for accounting for noncontrolling interests in
consolidated subsidiaries (Note 3).
See accompanying notes to consolidated financial statements.
F-5
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per unit)
Revenues:
Propane ......................................................................
Other ..........................................................................
$
Costs and expenses:
Cost of sales — propane (excluding depreciation
Year Ended
September 30,
2009
2008
2010
2,158,800 $
161,542
2,320,342
2,091,890
168,205
2,260,095
$
2,624,672
190,517
2,815,189
shown below) ...........................................................
1,340,615
1,254,332
1,836,917
Cost of sales — other (excluding depreciation
shown below) ...........................................................
Operating and administrative expenses ......................
Depreciation ...............................................................
Amortization ..............................................................
Gain on sale of California LPG storage facility.........
Other income, net .......................................................
Operating income ..........................................................
Interest expense .............................................................
Income before income taxes ..........................................
Income tax expense .......................................................
Net income .....................................................................
Less: net income attributable to noncontrolling
interests ........................................................................
Net income attributable to AmeriGas Partners, L. P......
General partner’s interest in net income attributable to
AmeriGas Partners, L.P. ..............................................
Limited partners’ interest in net income attributable to
AmeriGas Partners, L.P. ..............................................
Income per limited partner unit — basic (Note 2) .........
Income per limited partner unit — diluted (Note 2) ......
Average limited partner units outstanding (thousands):
Basic ..........................................................................
Diluted .......................................................................
$
$
$
$
$
54,456
609,710
79,679
7,721
—
(7,704)
2,084,477
235,865
(65,106)
170,759
(3,265)
167,494
62,172
615,152
78,528
5,260
(39,887)
(16,005)
1,959,552
300,543
(70,340)
230,203
(2,593)
227,610(1)
71,396
610,465
75,679
4,723
—
(18,855)
2,580,325
234,864
(72,886)
161,978
(1,672)
160,306 (1)
(2,281)
165,213 $
(2,967)(1)
224,643(1) $
(2,287)(1)
158,019(1)
$
$
$
$
4,691 $
6,737
160,522 $
217,906
2.80 $
2.80 $
57,076
57,123
3.59
3.59
57,038
57,082
2,278
155,741
2.70
2.70
57,005
57,044
(1) As adjusted in accordance with the transition provisions for accounting for noncontrolling interests in
consolidated subsidiaries (Note 3).
See accompanying notes to consolidated financial statements.
F-6
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................................................
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ..............................
Gain on sale of California LPG storage facility....
Provision for uncollectible accounts .....................
Other, net ..............................................................
Net change in:
Accounts receivable ..........................................
Inventories ........................................................
Accounts payable..............................................
Collateral deposits .............................................
Other current assets ...........................................
Other current liabilities .....................................
Net cash provided by operating activities .................
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment...........
Proceeds from disposals of assets .................................
Net proceeds from sale of California LPG storage
facility .........................................................................
Acquisitions of businesses, net of cash acquired ..........
Net cash used by investing activities ........................
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions .................................................................
Noncontrolling interest activity ....................................
Increase in bank loans ...................................................
Repayment of long-term debt .......................................
Proceeds associated with equity based compensation
plans, net of tax withheld ............................................
Capital contributions from General Partner ..................
Net cash used by financing activities ........................
2010
Year Ended
September 30,
2009
2008
$
167,494
$
227,610(1) $
160,306(1)
87,400
—
12,459
2,146
(47,865)
(24,600)
15,637
—
(4,378)
10,523
218,816
(83,170)
2,586
—
(34,345)
(114,929)
(161,626)
(2,224)
91,000
(83,107)
566
17
(155,374)
83,788
(39,887)
9,345
320
74,134
57,847
(58,124)
17,830
16,210
(21,575)
367,498
(78,739)
6,880
42,426
(50,092)
(79,525)
(165,282)
(2,400)
—
(71,659)
(338)
10
(239,669)
80,402
—
15,852
(1,448)
(51,270)
(19,032)
8,136
(17,830)
(5,348)
10,446
180,214
(62,756)
8,442
—
(1,322)
(55,636)
(144,659)
(2,138)
—
(1,680)
766
8
(147,703)
Cash and cash equivalents (decrease) increase .................
$
(51,487)
CASH AND CASH EQUIVALENTS:
End of year ....................................................................
Beginning of year .........................................................
(Decrease) increase ..................................................
$
$
7,726
59,213
(51,487)
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest ....................................................
$
65,147
$
$
$
$
48,304
$
(23,125)
59,213
10,909
48,304
$
$
10,909
34,034
(23,125)
69,745
$
70,801
(1) As adjusted in accordance with the transition provisions for accounting for noncontrolling interests in
consolidated subsidiaries (Note 3).
See accompanying notes to consolidated financial statements.
F-7
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(Thousands of dollars, except unit data)
Balance September 30, 2007 ........
Net income ...............................
Net losses on derivative
instruments .............................
Reclassification of net gains on
derivative instruments ............
Comprehensive income ............
Distributions .............................
Unit-based compensation
expense ...................................
Common Units issued in
connection with incentive
compensation plans, net of tax
withheld ..................................
Balance September 30, 2008 ........
Net income ...............................
Net losses on derivative
instruments .............................
Reclassification of net losses
on derivative instruments .......
Comprehensive income ............
Distributions .............................
Unit-based compensation
expense ...................................
Common Units issued in
connection with incentive
compensation plans, net of tax
withheld ..................................
Balance September 30, 2009 ........
Net income ...............................
Net gains on derivative
instruments .............................
Reclassification of net gains on
derivative instruments ............
Comprehensive income ............
Distributions .............................
Unit-based compensation
expense ...................................
Common Units issued in
connection with incentive
compensation plans, net of tax
withheld ..................................
Balance September 30, 2010 ........
Number of
Common Units
Common
General
partner
Accumulated
other
comprehensive
income (loss)
56,988,702 $
293,245
155,741
$
2,952 $
2,278
155,741
(142,515)
2,278
(2,144)
949
21,249
57,009,951
766
308,186
217,906
8
3,094
6,737
217,906
(159,139)
6,737
(6,143)
1,093
36,437
57,046,388
(338)
367,708
160,522
10
3,698
4,691
160,522
(156,971)
4,691
(4,655)
1,312
15,031
(25,925)
(53,011)
(78,936)
(63,905)
(136,786)
193,744
56,958
(6,947)
37,189
(25,365)
11,824
Total
AmeriGas
Partners, L.P.
partners’ capital
311,228
$
158,019
Noncontrolling
Interests
Total
partners’
capital
$
11,386(1) $
2,287(1)
322,614(1)
160,306(1)
(25,925)
(53,011)
79,083
(144,659)
949
774
247,375
224,643
(136,786)
193,744
281,601
(165,282)
1,093
(328)
364,459
165,213
37,189
(25,365)
177,037
(161,626)
1,312
(267)(1)
(26,192)(1)
(545)(1)
1,475(1)
(2,138)(1)
(53,556)(1)
80,558(1)
(146,797)(1)
949(1)
10,723(1)
2,967(1)
774(1)
258,098(1)
227,610(1)
(1,531)(1)
(138,317)(1)
2,107(1)
3,543(1)
(2,400)(1)
11,866(1)
2,281
379
(264)
2,396
(2,224)
195,851(1)
285,144(1)
(167,682)(1)
1,093(1)
(328)(1)
376,325(1)
167,494
37,568
(25,629)
179,433
(163,850)
1,312
42,121
57,088,509 $
(351)
372,220
$
17
3,751 $
4,877
$
(334)
380,848
$
12,038
(334)
$392,886
(1) As adjusted in accordance with the transition provisions for accounting for noncontrolling interests in
consolidated subsidiaries (Note 3).
See accompanying notes to consolidated financial statements.
F-8
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Index to Notes:
Note 1 — Nature of Operations ..........................................................................................................................
Note 2 — Significant Accounting Policies ..........................................................................................................
Note 3 — Accounting Changes ...........................................................................................................................
Note 4 — Acquisitions .........................................................................................................................................
Note 5 — Sale of California LPG Storage Facility ...........................................................................................
Note 6 — Quarterly Distributions of Available Cash .......................................................................................
Note 7 — Debt ......................................................................................................................................................
Note 8 — Employee Retirement Plans ...............................................................................................................
Note 9 — Inventories ...........................................................................................................................................
Note 10 — Property, Plant and Equipment .......................................................................................................
Note 11 — Goodwill and Intangible Assets .......................................................................................................
Note 12 — Partners’ Capital and Incentive Compensation Plans ...................................................................
Note 13 — Commitments and Contingencies ....................................................................................................
Note 14 — Related Party Transactions ..............................................................................................................
Note 15 — Other Current Liabilities .................................................................................................................
Note 16 — Fair Value Measurements ................................................................................................................
Note 17 — Disclosures About Derivative Instruments and Hedging Activities .............................................
Note 18 — Other Income, Net ............................................................................................................................
Note 19 — Quarterly Data (Unaudited) ............................................................................................................
Note 1 — Nature of Operations
AmeriGas Partners, L.P. (“AmeriGas Partners”) is a publicly traded limited partnership that conducts a national
propane distribution business through its principal operating subsidiaries AmeriGas Propane, L.P. (“AmeriGas
OLP”) and AmeriGas OLP’s subsidiary, AmeriGas Eagle Propane, L.P. (“Eagle OLP”). AmeriGas Partners,
AmeriGas OLP and Eagle OLP are Delaware limited partnerships. AmeriGas OLP and Eagle OLP are collectively
referred to herein as “the Operating Partnerships,” and AmeriGas Partners, the Operating Partnerships and all of
their subsidiaries are collectively referred to herein as “the Partnership” or “we.”
The Operating Partnerships are engaged in the distribution of propane and related equipment and supplies. The
Operating Partnerships comprise the largest retail propane distribution business in the United States serving
residential, commercial, industrial, motor fuel and agricultural customers in all 50 states.
At September 30, 2010, AmeriGas Propane, Inc. (the “General Partner”), an indirect wholly owned subsidiary of
UGI Corporation (“UGI”), held a 1% general partner interest in AmeriGas Partners and a 1.01% general partner
interest in AmeriGas OLP. The General Partner and its wholly owned subsidiary Petrolane Incorporated
(“Petrolane,” a predecessor company of the Partnership) also owned 24,691,209 AmeriGas Partners Common Units
(“Common Units”). The remaining 32,397,300 Common Units are publicly held. The Common Units represent
limited partner interests in AmeriGas Partners.
AmeriGas Partners holds a 99% limited partner interest in AmeriGas OLP. AmeriGas OLP, indirectly through
subsidiaries, owns an effective 0.1% general partner interest and a direct approximate 99.9% limited partner interest
in Eagle OLP.
AmeriGas Partners and the Operating Partnerships have no employees. Employees of the General Partner
conduct, direct and manage our operations. The General Partner provides management and administrative services
to AmeriGas Eagle Holdings, Inc. (“AEH”), the general partner of Eagle OLP, under a management services
agreement. The General Partner is reimbursed monthly for all direct and indirect expenses it incurs on our behalf
(see Note 14).
Effective October 1, 2010, Eagle OLP merged with and into AmeriGas OLP.
F-9
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 2 — Significant Accounting Policies
Basis of Presentation. Our financial statements are prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”).
The preparation of financial statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and costs. These estimates are
based on management’s knowledge of current events, historical experience and various other assumptions that are
believed to be reasonable under the circumstances. Accordingly, actual results may be different from these estimates
and assumptions.
The consolidated financial statements have been adjusted in accordance with the Financial Accounting Standards
Board’s (“FASB’s”) accounting guidance regarding the presentation of noncontrolling interests in consolidated
financial statements and the application of the two-class method for determining income per unit (see Note 3).
Principles of Consolidation. The consolidated financial statements include the accounts of AmeriGas Partners and
its majority-owned subsidiaries. We eliminate all significant intercompany accounts and transactions when we
consolidate. We account for the General Partner’s 1.01% interest in AmeriGas OLP and a minority partner’s 0.1%
limited partner interest in Eagle OLP (prior to its redemption in July 2009) as noncontrolling interests in the
consolidated financial statements.
Finance Corps. AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp. are wholly-
owned finance subsidiaries of AmeriGas Partners. Their sole purpose is to serve as co-obligors for debt securities
issued by AmeriGas Partners.
Fair Value Measurements. We apply fair value measurements to certain assets and liabilities, principally our
commodity and interest rate derivative instruments. We adopted new guidance with respect to determining fair value
measurements effective October 1, 2008. The new guidance defines fair value as the price that would be received to
sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the
measurement date. The new guidance clarifies that fair value should be based upon assumptions that market
participants would use when pricing an asset or liability, including assumptions about risk and risks inherent in
valuation techniques and inputs to valuations. This includes not only the credit standing of counterparties and credit
enhancements but also the impact of our own nonperformance risk on our liabilities. The new guidance requires fair
value measurements to assume that the transaction occurs in the principal market for the asset or liability or in the
absence of a principal market, the most advantageous market for the asset or liability (the market for which the
reporting entity would be able to maximize the amount received or minimize the amount paid). We evaluate the
need for credit adjustments to our derivative instrument fair values in accordance with the requirements noted above.
Such adjustments were not material to the fair values of our derivative instruments.
We use the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels:
• Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the
ability to access at the measurement date. We did not have any derivative financial instruments categorized as
Level 1 at September 30, 2010 or 2009.
• Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly
observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets,
quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that
are observable for the asset or liability, and inputs that are derived from observable market data by correlation or
other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-
counter commodity price swap and option contracts and interest rate protection agreements.
• Level 3 — Unobservable inputs for the asset or liability including situations where there is little, if any, market
activity for the asset or liability. We did not have any derivative financial instruments categorized as Level 3 at
September 30, 2010 or 2009.
F-10
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest
priority to unobservable data (Level 3). In some cases, the inputs to measure fair value might fall into different
levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety
determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair
value measurement in its entirety requires judgment, considering factors specific to the asset or liability. The
adoption of the new fair value guidance effective October 1, 2008 did not have a material impact on our financial
statements. See Note 16 for additional information on fair value measurements.
Derivative Instruments. We account for derivative instruments and hedging activities in accordance with guidance
provided by the FASB which requires that all derivative instruments be recognized as either assets or liabilities and
measured at fair value. The accounting for changes in fair value depends upon the purpose of the derivative
instrument and whether it is designated and qualifies for hedge accounting.
Substantially all of our derivative financial instruments are designated and qualify as cash flow hedges. For cash
flow hedges, changes in the fair value of the derivative financial instruments are recorded in accumulated other
comprehensive income (“AOCI”) or noncontrolling interests, to the extent effective at offsetting changes in the
hedged item, until earnings are affected by the hedged item. We discontinue cash flow hedge accounting if the
occurrence of the forecasted transaction is determined to be no longer probable. Cash flows from derivative financial
instruments are included in cash flows from operating activities.
For a more detailed description of the derivative instruments we use, our accounting for derivatives, our
objectives for using them and related supplemental information required by GAAP, see Note 17.
Revenue Recognition. Revenues from the sale of propane are recognized principally upon delivery. Revenues from
the sale of appliances and equipment are recognized at the later of sale or installation. Revenues from repair or
maintenance services are recognized upon completion of services. Revenues from annually billed nonrefundable
tank fees are recorded on a straight-line basis over one year. We present revenue-related taxes collected from
customers and remitted to taxing authorities, principally sales and use taxes, on a net basis.
Delivery Expenses. Expenses associated with the delivery of propane to customers (including vehicle expenses,
expenses of delivery personnel, vehicle repair and maintenance and general liability expenses) are classified as
operating and administrative expenses on the Consolidated Statements of Operations. Depreciation expense
associated with delivery vehicles is classified in depreciation on the Consolidated Statements of Operations.
Income Taxes. AmeriGas Partners and the Operating Partnerships are not directly subject to federal income taxes.
Instead, their taxable income or loss is allocated to their individual partners. The Operating Partnerships have
corporate subsidiaries which are directly subject to federal and state income taxes. Accordingly, our consolidated
financial statements reflect income taxes related to these corporate subsidiaries. Legislation in certain states allows
for taxation of partnerships’ income and the accompanying financial statements reflect state income taxes resulting
from such legislation. Net income for financial statement purposes may differ significantly from taxable income
reportable to unitholders. This is a result of (1) differences between the tax basis and financial reporting basis of
assets and liabilities and (2) the taxable income allocation requirements of the Fourth Amended and Restated
Agreement of Limited Partnership of AmeriGas Partners, L.P., (“Partnership Agreement”) and the Internal Revenue
Code. At September 30, 2010, the financial reporting basis of the Partnership’s assets and liabilities exceeded the tax
basis by approximately $248,000.
Comprehensive Income. Comprehensive income comprises net income and other comprehensive income (loss).
Other comprehensive income (loss) results from gains and losses on derivative instruments qualifying as cash flow
hedges.
Cash and Cash Equivalents. All highly liquid investments with maturities of three months or less when purchased
are classified as cash equivalents.
Inventories. Our inventories are stated at the lower of cost or market. We determine cost using an average cost
method for propane, specific identification for appliances and the first-in, first-out (“FIFO”) method for all other
inventories.
F-11
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Property, Plant and Equipment and Related Depreciation. We record property, plant and equipment at cost. The
amounts we assign to property, plant and equipment of acquired businesses are based upon estimated fair value at
date of acquisition.
We compute depreciation expense on plant and equipment using the straight-line method over estimated service
lives generally ranging from 15 to 40 years for buildings and improvements; 7 to 30 years for storage and customer
tanks and cylinders; and 2 to 10 years for vehicles, equipment and office furniture and fixtures. Costs to install
Partnership-owned tanks at customer locations, net of amounts billed to customers, are capitalized and depreciated
over the estimated period of benefit not exceeding ten years.
We include in property, plant and equipment costs associated with computer software we develop or obtain for
use in our business. We amortize computer software costs on a straight-line basis over expected periods of benefit
not exceeding ten years once the installed software is ready for its intended use.
No depreciation expense is included in cost of sales on the Consolidated Statements of Operations.
Goodwill and Intangible Assets. In accordance with GAAP relating to goodwill and other intangibles, we amortize
intangible assets over their estimated useful lives unless we determine their lives to be indefinite. We amortize
customer relationship and noncompete agreement intangibles over their estimated periods of benefit, which do not
exceed 15 years. Goodwill is not amortized but is subject to tests for impairment at least annually. We perform
impairment tests more frequently than annually if events or circumstances indicate that the value of goodwill might
be impaired. For purposes of the goodwill impairment test, the Partnership has determined it has one reporting unit.
Fair value of the reporting unit is estimated using a market value approach taking into account the market price of
AmeriGas Partners Common Units. No provisions for goodwill or other intangible asset impairments were recorded
during Fiscal 2010, Fiscal 2009 or Fiscal 2008.
No amortization expense is included in cost of sales on the Consolidated Statements of Operations. For further
information, see Note 11.
Impairment of Long-Lived Assets. We evaluate the impairment of long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. We evaluate recoverability
based upon undiscounted future cash flows expected to be generated by such assets. No provisions for impairments
were recorded during Fiscal 2010, Fiscal 2009 or Fiscal 2008.
Customer Deposits. We offer certain of our customers prepayment programs which require customers to pay a
fixed periodic amount, or to otherwise prepay a portion of their anticipated propane purchases. Customer
prepayments, in excess of associated billings, are classified as customer deposits and advances on the Consolidated
Balance Sheets.
Equity-Based Compensation. The General Partner may grant Common Unit awards (as further described in Note
12) to employees and non-employee Directors under its Common Unit plans, and employees of the General Partner
may be granted stock options for UGI Common Stock. All of our equity-based compensation is measured at fair
value on the grant date, date of modification or end of the period, as applicable, and recognized in earnings over the
requisite service period. Depending upon the settlement terms of the awards, all or a portion of the fair value of
equity-based awards may be presented as a liability or as equity in our Consolidated Balance Sheets. Equity-based
compensation costs associated with the portion of Common Unit awards classified as equity are measured based
upon their estimated fair value on the date of grant or modification. Equity-based compensation costs associated
with the portion of Common Unit awards classified as liabilities are measured based upon their estimated fair value
at the grant date and remeasured as of the end of each period. For a further description of our equity-based
compensation plans and related disclosures, see Note 12.
Environmental Matters. We are subject to environmental laws and regulations intended to mitigate or remove the
effect of past operations and improve or maintain the quality of the environment. These laws and regulations require
the removal or remedy of the effect on the environment of the disposal or release of certain specified hazardous
substances at current or former operating sites.
F-12
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Environmental reserves are accrued when assessments indicate that it is probable that a liability has been
incurred and an amount can reasonably be estimated. Amounts recorded as environmental liabilities on the balance
sheets represent our best estimate of costs expected to be incurred or, if no best estimate can be made, the minimum
liability associated with a range of expected environmental investigation and remediation costs. Our estimated
liability for environmental contamination is reduced to reflect anticipated participation of other responsible parties
but is not reduced for possible recovery from insurance carriers. We do not discount to present value the costs of
future expenditures for environmental liabilities. At September 30, 2010, the Partnership’s accrued liability for
environmental investigation and cleanup costs was not material.
Allocation of Net Income. Net income attributable to AmeriGas Partners, L.P. for partners’ capital and statement of
operations presentation purposes is allocated to the General Partner and the limited partners in accordance with their
respective ownership percentages after giving effect to amounts distributed to the General Partner in excess of its
1% general partner interest in AmeriGas Partners based on its incentive distribution rights (“IDRs”) under the
Partnership Agreement (see Note 6).
Net Income Per Unit. Effective October 1, 2009, we adopted new accounting guidance regarding the application of
the two-class method for determining income per unit. This new guidance addresses the application of the two-class
method for master limited partnerships (“MLPs”) when IDRs are present and entitle the holder of such rights to a
portion of distributions from the MLP. The new guidance addresses how current period earnings of the MLP should
be allocated to the general partner, limited partners and, when applicable, holders of IDRs for income per unit
purposes.
The new guidance regarding the two-class method requires that income per limited partner unit be calculated as
if all earnings for the period were distributed and requires a separate calculation for each quarter and year-to-date
period. In periods when our net income attributable to AmeriGas Partners exceeds our Available Cash, as defined in
the Partnership Agreement, and is above certain levels, the calculation according to the two-class method results in
an increased allocation of undistributed earnings to the General Partner. Generally, in periods when our Available
Cash in respect of the quarter or year-to-date periods exceeds our net income (loss) attributable to AmeriGas
Partners, the calculation according to the two-class method results in an allocation of earnings to the General Partner
greater than its relative ownership interest in the Partnership (or in the case of a net loss attributable to AmeriGas
Partners, an allocation of such net loss to the Common Unitholders greater than their relative ownership interest in
the Partnership). The new guidance requires retrospective application of the guidance to all periods presented.
The following table sets forth the numerators and denominators of the basic and diluted (loss) income per limited
partner unit computations:
Common Unitholders’ interest in net income attributable to AmeriGas
Partners under the two-class method for MLPs................................................
$ 160,037 $ 205,039 $ 153,987
2010
2009
2008
Weighted average Common Units outstanding — basic (thousands).................
Potentially dilutive Common Units (thousands).................................................
Weighted average Common Units outstanding — diluted (thousands)..............
57,076
47
57,123
57,038
44
57,082
57,005
39
57,044
Theoretical distributions of net income attributable to AmeriGas Partners, L.P. in accordance with the two-class
method for Fiscal 2010, Fiscal 2009 and Fiscal 2008 resulted in an increased allocation of net income attributable to
AmeriGas Partners, L.P. to the General Partner in the computation of income per limited partner unit which had the
effect of decreasing earnings per limited partner unit by $0.01, $0.23 and $0.03, respectively. The retrospective
application of the new guidance described above did not impact the calculation of net income per limited partner
unit for the years ended September 30, 2009 or 2008 but did impact the calculations for the three-month periods
ended June 30, 2009 and September 30, 2009 (see Note 19).
F-13
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Segment Information. We have determined that we have a single reportable operating segment that engages in the
distribution of propane and related equipment and supplies. No single customer represents ten percent or more of
consolidated revenues on an accrual basis. In addition, substantially all of our revenues are derived from sources
within the United States and substantially all of our long-lived assets are located in the United States.
Note 3 — Accounting Changes
Adoption of New Accounting Standards
Noncontrolling Interests. Effective October 1, 2009, we adopted new guidance regarding the accounting for and
presentation of noncontrolling interests in consolidated financial statements. The new guidance changed the
accounting and reporting relating to noncontrolling interests in a consolidated subsidiary. Noncontrolling interests
are now classified within partners’ capital on the Consolidated Balance Sheets, a change from their prior
classification between liabilities and partners’ capital. Earnings (losses) attributable to noncontrolling interests are
now included in net income (loss) and deducted from net income (loss) to determine net income (loss) attributable to
AmeriGas Partners, L.P. In addition, changes in a parent’s ownership interest while retaining control are accounted
for as equity transactions and any retained noncontrolling equity investments in a former subsidiary are initially
measured at fair value. In accordance with the new guidance, previous periods have been adjusted to conform to the
new presentation.
Earnings Per Unit. As previously mentioned, effective October 1, 2009, we adopted new accounting guidance
regarding the application of the two-class method for determining income per unit as it relates to MLPs. This new
guidance addresses the application of the two-class method for MLPs when incentive distribution rights are present
and entitle the holder of such rights to a portion of the distributions. See Net Income Per Unit in Note 2 above for
additional information.
Business Combinations. Effective October 1, 2009, we adopted new guidance on accounting for business
combinations. The new guidance applies to all transactions or other events in which an entity obtains control of one
or more businesses. The new guidance establishes, among other things, principles and requirements for how the
acquirer (1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree; (2) recognizes and measures the goodwill acquired in a
business combination or gain from a bargain purchase; and (3) determines what information with respect to a
business combination should be disclosed. The new guidance applies prospectively to business combinations for
which the acquisition date is on or after October 1, 2009. Among the more significant changes in accounting for
acquisitions are (1) transaction costs are generally expensed (rather than being included as costs of the acquisition);
(2) contingencies, including contingent consideration, are generally recorded at fair value with subsequent
adjustments recognized in operations (rather than as adjustments to the purchase price); and (3) decreases in
valuation allowances on acquired deferred tax assets are recognized in operations (rather than as decreases in
goodwill). The new guidance did not have a material impact on our Fiscal 2010 financial statements.
Intangible Asset Useful Lives. Effective October 1, 2009, we adopted new accounting guidance which amends the
factors that should be considered in developing renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under GAAP. The intent of the new guidance is to improve the consistency between
the useful life of a recognized intangible asset under GAAP relating to intangible asset accounting and the period of
expected cash flows used to measure the fair value of the asset under GAAP relating to business combinations and
other applicable accounting literature. The new guidance must be applied prospectively to intangible assets acquired
after the effective date. The adoption of the new guidance did not impact our financial statements.
Fair Value Measurements. In January 2010, the FASB issued new guidance with respect to fair value
measurements disclosures. The new guidance requires additional disclosure related to transfers between Levels 1
and 2 and separate disclosures about purchases, sales, issuances, and settlements related to Level 3. The new
guidance clarifies existing disclosure guidance about inputs and valuation techniques for fair value measurements
and levels of disaggregation. We apply fair value measurements to certain assets and liabilities, principally
commodity and interest rate derivative instruments. The new disclosures and clarifications of existing disclosures
are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures
about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements.
Those disclosures are effective for fiscal years beginning after December 15, 2009 (Fiscal 2011) and interim periods
thereafter. The adoption of the new guidance that became effective during Fiscal 2010 did not have a material effect
on our disclosures. See Notes 2 and 16 for further information on fair value measurements.
F-14
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 4 — Acquisitions
During Fiscal 2010, the Partnership acquired a number of retail propane distribution businesses for total net cash
consideration of $34,345. During Fiscal 2009, the Partnership acquired several retail propane distribution
businesses, including all of the assets of the retail propane business of Penn Fuel Propane, LLC (see Note 14), for
total net cash consideration of $50,092. During Fiscal 2008, the Partnership acquired several retail propane
distribution businesses for total net cash consideration of $2,478 and received a working capital payment refund of
$1,157 associated with a Fiscal 2007 acquisition. In conjunction with these acquisitions, liabilities of $8,956 in
Fiscal 2010, $3,786 in Fiscal 2009 and $2,445 in Fiscal 2008 were incurred. The operating results of these
businesses have been included in our operating results from their respective dates of acquisition.
The total purchase price of these acquisitions has been allocated to the assets acquired and liabilities assumed as
follows:
Net current assets (liabilities) .............................................................................. $
Property, plant and equipment .............................................................................
Goodwill ..............................................................................................................
Customer relationships and noncompete agreements (estimated useful life of
2010
3,578
15,812
12,930
2009
$ 1,916
17,646
24,048
2008
$ (1,010)
2,731
751
10 and 5 years, respectively) .............................................................................
10,981
Total ..................................................................................................................... $ 43,301
10,268
$ 53,878
2,451
$ 4,923
The goodwill above is primarily the result of synergies between the acquired businesses and our existing propane
businesses. The pro forma effects of these transactions were not material.
Note 5 — Sale of California LPG Storage Facility
On November 13, 2008, AmeriGas OLP sold its 600,000 barrel refrigerated, above-ground liquefied petroleum
gas (“LPG”) storage facility located on leased property in California. The Partnership recorded a pre-tax gain of
$39,887 associated with this transaction. The gain from this transaction is included in “Gain on sale of California
storage facility” on our Fiscal 2009 Consolidated Statement of Operations.
Note 6 — Quarterly Distributions of Available Cash
The Partnership makes distributions to its partners approximately 45 days after the end of each fiscal quarter in a
total amount equal to its Available Cash (as defined in the Partnership Agreement) for such quarter. Available Cash
generally means:
1. all cash on hand at the end of such quarter,
2. plus all additional cash on hand as of the date of determination resulting from borrowings after the end of such
quarter,
3. less the amount of cash reserves established by the General Partner in its reasonable discretion.
The General Partner may establish reserves for the proper conduct of the Partnership’s business and for
distributions during the next four quarters. In addition, certain of the Partnership’s debt agreements require reserves
be established for the payment of debt principal and interest.
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner (giving effect to
the 1.01% interest of the General Partner in distributions of Available Cash from AmeriGas OLP to AmeriGas
Partners) until Available Cash exceeds the Minimum Quarterly Distribution of $0.55 and the First Target
Distribution of $0.055 per Common Unit (or a total of $0.605 per Common Unit). When Available Cash exceeds
$0.605 per Common Unit in any quarter, the General Partner will receive a greater percentage of the total
Partnership distribution (the “incentive distribution”) but only with respect to the amount by which the distribution
per Common Unit to limited partners exceeds $0.605.
F-15
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Quarterly distributions of Available Cash per limited partner unit during Fiscal 2010, Fiscal 2009 and Fiscal
2008 were as follows:
2010
1st Quarter .................................................................................................................. $ 0.670
2nd Quarter .................................................................................................................
0.670
3rd Quarter ..................................................................................................................
0.705
0.705
4th Quarter ..................................................................................................................
2009
$ 0.64
0.64
0.67
0.84
2008
$ 0.61
0.61
0.64
0.64
The Partnership has made quarterly distributions to Common Unitholders in excess of $0.605 per limited partner
unit beginning with the quarterly distribution paid May 18, 2007. As a result, beginning with the quarterly
distribution paid May 18, 2007 the General Partner has received a greater percentage of the total Partnership
distribution than its aggregate 2% general partner interest in AmeriGas OLP and AmeriGas Partners. The total
amount of distributions received by the General Partner with respect to its aggregate 2% general partner ownership
interests totaled $6,879 in Fiscal 2010, $8,543 in Fiscal 2009 and $4,282 in Fiscal 2008. Included in these amounts
are incentive distributions received by the General Partner during Fiscal 2010, Fiscal 2009 and Fiscal 2008 of
$3,038, $4,491 and $698, respectively.
On July 27, 2009, the General Partner’s Board of Directors approved a distribution of $0.84 per Common Unit
payable on August 18, 2009 to unitholders of record on August 10, 2009. This distribution included the regular
quarterly distribution of $0.67 per Common Unit and $0.17 per Common Unit reflecting a one-time distribution of a
portion of the proceeds from the Partnership’s November 2008 sale of its California LPG storage facility.
Note 7 — Debt
Long-term debt comprises the following at September 30:
2010
2009
AmeriGas Partners Senior Notes:
8.875% Note, due May 2011 ....................................................................................... $ 14,672
7.25% Note, due May 2015 .........................................................................................
415,000
7.125% Note, due May 2016 .......................................................................................
350,000
—
Series E, 8.50%, due July 2010 .......................................................................................
Other ................................................................................................................................
11,730
791,402
Total long-term debt ........................................................................................................
Less: current maturities ...................................................................................................
(20,123)
Total long-term debt due after one year ........................................................................... $ 771,279
$
14,720
415,000
350,000
80,018
5,906
865,644
(82,225)
$ 783,419
Scheduled principal repayments of long-term debt for each of the next five fiscal years ending September 30 are
as follows: Fiscal 2011 — $20,091; Fiscal 2012 — $2,247; Fiscal 2013 — $1,754; Fiscal 2014 — $1,384; Fiscal
2015 — $415,894.
AmeriGas Partners Senior Notes. The 8.875% and 7.25% Senior Notes may be redeemed at our option. The
7.125% Senior Notes generally cannot be redeemed at our option prior to May 20, 2011. AmeriGas Partners may,
under certain circumstances involving excess sales proceeds from the disposition of assets not reinvested in the
business or a change of control, be required to offer to prepay its 7.25% and 7.125% Senior Notes.
AmeriGas OLP Credit Agreements. AmeriGas OLP has an unsecured credit agreement (“Credit Agreement”)
consisting of (1) a Revolving Credit Facility and (2) an Acquisition Facility. AmeriGas OLP also has a $75,000
unsecured revolving credit facility (“2009 Supplemental Credit Agreement”). The General Partner and Petrolane
Incorporated, a wholly owned subsidiary of the General Partner, are guarantors of amounts outstanding under the
Credit Agreement and the 2009 Supplemental Credit Agreement.
F-16
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Under the Credit Agreement Revolving Credit Facility, AmeriGas OLP may borrow up to $125,000 (including a
$100,000 sublimit for letters of credit) which is subject to restrictions in the Senior Notes indentures (see
“Restrictive Covenants” below). The Credit Agreement Revolving Credit Facility may be used for working capital
and general purposes of AmeriGas OLP. The Credit Agreement Revolving Credit Facility expires on October 15,
2011, but may be extended for additional one-year periods with the consent of the participating banks representing
at least 80% of the commitments thereunder. The Credit Agreement Acquisition Facility provides AmeriGas OLP
with the ability to borrow up to $75,000 to finance the purchase of propane businesses or propane business assets or,
to the extent it is not so used, for working capital and general purposes, subject to restrictions in the Senior Notes
indentures. The Credit Agreement Acquisition Facility operates as a revolving facility through October 15, 2011, at
which time amounts then outstanding will be immediately due and payable. At September 30, 2010, there was
$56,000 of borrowings outstanding under the Credit Agreement Revolving Credit Facility and $35,000 outstanding
under the Credit Agreement Acquisition Facility which amounts are reflected as “Bank loans” on the Consolidated
Balance Sheet. There were no such borrowings at September 30, 2009. The weighted-average interest rate on Credit
Agreement borrowings at September 30, 2010 was 1.31%. Issued and outstanding letters of credit, which reduce
available borrowings under the Credit Agreement Revolving Credit Facility, totaled $35,678 and $37,022 at
September 30, 2010 and 2009, respectively.
The Credit Agreement permits AmeriGas OLP to borrow at prevailing interest rates, including the base rate,
defined as the higher of the Federal Funds rate plus 0.50% or the agent bank’s prime rate (3.25% at September 30,
2010), or at a two-week, one-, two-, three-, or six-month Eurodollar Rate, as defined in the Credit Agreement, plus a
margin. The margin on Eurodollar Rate borrowings (which ranges from 1.00% to 1.75%) and the Credit Agreement
facility fee rate (which ranges from 0.25% to 0.375%) are dependent upon AmeriGas OLP’s ratio of funded debt to
earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”), each as defined in the
Credit Agreement.
The 2009 Supplemental Credit Agreement expires on June 30, 2011 and permits AmeriGas OLP to borrow up to
$75,000 for working capital and general purposes subject to restrictive covenants in the Senior Notes indentures.
The 2009 Supplemental Credit Agreement permits AmeriGas OLP to borrow at prevailing interest rates, including
the base rate equal to the higher of the Federal Funds rate plus 0.50%, the agent bank’s prime rate (3.25% at
September 30, 2010), or a libor market index rate (0.26% at September 30, 2010) plus 1%, or at a one-week, two-
week or one-month Eurodollar rate, as defined in the 2009 Supplemental Credit Agreement, plus a margin. The
margin on base rate loans is 2.00% and the margin on Eurodollar loans is 3.00%. There were no amounts
outstanding under the 2009 Supplemental Credit Agreement at September 30, 2010 and 2009.
Restrictive Covenants. The 7.25% and 7.125% Senior Notes of AmeriGas Partners restrict the ability of the
Partnership and AmeriGas OLP to, among other things, incur additional indebtedness, make investments, incur
liens, issue preferred interests, prepay subordinated indebtedness, and effect mergers, consolidations and sales of
assets. Under the 7.25% and 7.125% Senior Notes indentures, AmeriGas Partners is generally permitted to make
cash distributions equal to available cash, as defined, as of the end of the immediately preceding quarter, if certain
conditions are met. These conditions include:
1. no event of default exists or would exist upon making such distributions and
2. the Partnership’s consolidated fixed charge coverage ratio, as defined, is greater than 1.75-to-1.
If the ratio in item 2 above is less than or equal to 1.75-to-1, the Partnership may make cash distributions in a
total amount not to exceed $24,000 less the total amount of distributions made during the immediately preceding 16
Fiscal quarters. At September 30, 2010, the Partnership was not restricted by the consolidated fixed charge coverage
ratio from making cash distributions. See the provisions of the Partnership Agreement relating to distributions of
Available Cash in Note 6.
F-17
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The AmeriGas OLP credit agreements restrict the incurrence of additional indebtedness and also restrict certain
liens, guarantees, investments, loans and advances, payments, mergers, consolidations, asset transfers, transactions
with affiliates, sales of assets, acquisitions and other transactions. The AmeriGas OLP credit agreements require that
AmeriGas OLP not exceed a ratio of total indebtedness, as defined, to EBITDA, as defined (calculated on a rolling
four-quarter basis or eight-quarter basis divided by two), of 4.0-to-1. In addition, the credit agreements require that
AmeriGas OLP maintain a ratio of EBITDA to interest expense, as defined, of at least 3.0-to-1 on a rolling four-
quarter basis, and a minimum EBITDA. Generally, as long as no default exists or would result, AmeriGas OLP is
permitted to make cash distributions not more frequently than quarterly in an amount not to exceed available cash,
as defined, for the immediately preceding calendar quarter.
At September 30, 2010, the amount of net assets of the Partnership’s subsidiaries that was restricted from
transfer as a result of the amount of Available Cash, computed in accordance with the Partnership Agreement,
applicable debt agreements and the partnership agreements of the Partnership’s subsidiaries, totaled approximately
$1,000,000.
Note 8 — Employee Retirement Plans
The General Partner sponsors a 401(k) savings plan for eligible employees. Participants in the savings plan may
contribute a portion of their compensation on a before-tax basis. Generally, employee contributions are matched on
a dollar-for-dollar (100%) basis up to 5% of eligible compensation. The cost of benefits under our savings plan was
$7,346 in Fiscal 2010, $7,365 in Fiscal 2009 and $7,089 in Fiscal 2008.
The General Partner sponsors a nonqualified deferred compensation plan and a nonqualified supplemental
executive retirement plan. These plans provide benefits to executives that would otherwise be provided under the
Partnership’s retirement plans but are prohibited due to limitations imposed by the Internal Revenue Service. Costs
associated with these plans were not material in Fiscal 2010, Fiscal 2009 and Fiscal 2008.
Note 9 — Inventories
Inventories comprise the following at September 30:
Propane gas .................................................................................................................. $
Materials, supplies and other .......................................................................................
Appliances for sale ......................................................................................................
Total inventories .......................................................................................................... $
2010
94,561
16,840
2,721
114,122
2009
67,945
16,489
3,506
87,940
$
$
In addition to inventories on hand, we also enter into contracts to purchase propane to meet a portion of our
supply requirements. Generally, these contracts are one- to three-year agreements subject to annual price and
quantity adjustments.
Note 10 — Property, Plant and Equipment
Property, plant and equipment comprise the following at September 30:
Land ............................................................................................................................ $
Buildings and improvements ......................................................................................
Transportation equipment ...........................................................................................
Storage facilities .........................................................................................................
Equipment, primarily cylinders and tanks ..................................................................
Other, including construction in process ....................................................................
Gross property, plant and equipment ..........................................................................
Less accumulated depreciation and amortization .......................................................
Net property, plant and equipment ............................................................................. $
2010
67,516
101,490
76,061
128,801
1,093,894
42,266
1,510,028
(867,250)
642,778
F-18
2009
$
66,880
96,873
73,000
121,857
1,035,402
39,126
1,433,138
(804,239)
628,899
$
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Note 11 — Goodwill and Intangible Assets
The Partnership’s goodwill and intangible assets comprise the following at September 30:
Subject to amortization:
Customer relationships and noncompete agreements ..................................................
Accumulated amortization ...........................................................................................
2010
2009
$ 65,203
(27,613)
37,590
$
56,581
(23,970)
32,611
Not subject to amortization:
Goodwill ......................................................................................................................
$ 678,721
$ 665,663
Changes in the carrying amount of goodwill are as follows:
Balance September 30, 2008 ..................................................................................................................... $ 640,843
24,709
Goodwill acquired (a) ................................................................................................................................
111
Purchase accounting adjustments ..............................................................................................................
665,663
Balance September 30, 2009 .....................................................................................................................
Goodwill acquired .....................................................................................................................................
12,930
Purchase accounting adjustments ..............................................................................................................
128
Balance September 30, 2010 ..................................................................................................................... $ 678,721
(a) Amount includes $661 related to the July 2009 redemption of a minority partner’s 0.1% limited partner interest
in Eagle OLP.
Amortization expense of intangible assets was $6,016 in Fiscal 2010, $5,237 in Fiscal 2009 and $4,712 in Fiscal
2008. Estimated amortization expense of intangible assets during the next five fiscal years is as follows: Fiscal 2011
— $6,928; Fiscal 2012 — $6,853; Fiscal 2013 — $6,269; Fiscal 2014 — $5,321; Fiscal 2015 — $3,989. There were
no accumulated impairment losses at September 30, 2010.
Note 12 — Partners’ Capital and Incentive Compensation Plans
In accordance with the Partnership Agreement, the General Partner may, in its sole discretion, cause the
Partnership to issue an unlimited number of additional Common Units and other equity securities of the Partnership
ranking on a parity with the Common Units.
The General Partner grants equity-based awards to employees and non-employee directors comprising grants of
AmeriGas Partners equity instruments as further described below. We recognized total pre-tax equity-based
compensation expense of $3,127, $3,035 and $3,162 in Fiscal 2010, Fiscal 2009 and Fiscal 2008, respectively.
On July 30, 2010, holders of AmeriGas Partners Common Units approved the AmeriGas Propane, Inc. 2010
Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P. (“2010 Propane Plan”). Under the 2010 Propane
Plan, the General Partner may award to employees and non-employee directors grants of Common Units,
performance units, options, phantom units, unit appreciation rights and other Common Unit-based awards. The total
aggregate number of Common Units that may be issued under the Plan is 2,800,000. The exercise price for options
may not be less than the fair market value on the date of grant. Awards granted under the 2010 Propane Plan may
vest immediately or ratably over a period of years, and options can be exercised no later than ten years from the
grant date. In addition, the 2010 Propane Plan provides that Common Unit-based awards may also provide for the
crediting of Common Unit distribution equivalents to participants’ accounts.
The 2010 Propane Plan succeeds the AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan (“2000 Propane
Plan”) which expired on December 31, 2009, and replaces the AmeriGas Propane, Inc. Discretionary Long-Term
Incentive Plan for Non-Executive Key Employees (“Nonexecutive Propane Plan”). Under the 2000 Propane Plan,
the General Partner could award to key employees the right to receive Common Units (comprising performance
units), or cash equivalent to the fair market value of such Common Units. In addition, the 2000 Propane Plan
authorizes the crediting of Common Unit distribution equivalents to participants’ accounts. Under the Nonexecutive
Propane Plan, the General Partner could grant awards to key employees who did not participate in the 2000 Propane
Plan. Generally, awards under the Nonexecutive Propane Plan vest at the end of a three-year period and are paid in
Common Units and cash. Effective January 1, 2010, no additional grants will be made under the 2000 Propane Plan.
Effective July 30, 2010, no additional grants will be made under the Nonexecutive Propane Plan.
F-19
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Recipients of performance unit awards under the 2010 Propane Plan and, prior to its expiration, the 2000
Propane Plan (“AmeriGas Performance Units”) are awarded a target number of AmeriGas Performance Units. The
number of AmeriGas Performance Units ultimately paid at the end of the performance period (generally three years)
may be higher or lower than the target amount based upon AmeriGas Partners’ Total Unitholder Return (“TUR”)
percentile rank relative to entities in a peer group. Grantees of AmeriGas Performance Units will not be paid if
AmeriGas Partners’ TUR is below the 40th percentile of the peer group. At the 40th percentile, the grantee will be
paid an award equal to 50% of the target award; at the 50th percentile, 100%; and at the 100th percentile, 200%. The
actual amount of the award is interpolated between these percentile rankings. Any Common Unit distribution
equivalents earned are paid in cash. Generally, except in the event of retirement, death or disability, each grant,
unless paid, will terminate when the participant ceases to be employed by the General Partner. There are certain
change of control and retirement eligibility conditions that, if met, generally result in accelerated vesting or
elimination of further service requirements.
Under GAAP relating to equity-based compensation plans, AmeriGas Performance Units are equity awards with
a market-based condition, which, if settled in Common Units, results in the recognition of compensation cost over
the requisite employee service period regardless of whether the market-based condition is satisfied. The fair values
of AmeriGas Performance Units are estimated using a Monte Carlo valuation model. The fair value associated with
the target award and the award above the target, if any, which will be paid in Common Units, is accounted for as
equity and the fair value of all Common Unit distribution equivalents, which will be paid in cash, is accounted for as
a liability. The expected term of the AmeriGas Performance Unit awards is three years based on the performance
period. Expected volatility is based on the historical volatility of Common Units over a three-year period. The risk-
free interest rate is based on rates on U.S. Treasury bonds at the time of grant. Volatility for all entities in the peer
group is based on historical volatility.
The following table summarizes the weighted-average assumptions used to determine the fair value of AmeriGas
Performance Unit awards and related compensation costs:
Risk-free rate .............................................................................................
Expected life .............................................................................................
Expected volatility .....................................................................................
Dividend Yield ..........................................................................................
Grants Awarded in Fiscal Year
2010
2009
2008
1.7%
3 years
35.0%
6.8%
1.0%
3.1%
3 years
3 years
32.0%
9.1%
17.7%
6.8%
The General Partner granted awards under the 2010 Propane Plan, the 2000 Propane Plan and the Nonexecutive
Propane Plan (collectively, “Awards”) representing 57,750, 60,200 and 40,050 Common Units in Fiscal 2010, Fiscal
2009 and Fiscal 2008, respectively, having weighted-average grant date fair values per Common Unit subject to
award of $41.39, $31.94 and $37.91, respectively. At September 30, 2010, 2,796,550 Common Units were available
for future award grants under the 2010 Propane Plan.
The following table summarizes AmeriGas Common Unit-based award activity for Fiscal 2010:
September 30, 2009 .................
Granted ....................................
Forfeited ..................................
Vested ......................................
Awards paid .............................
September 30, 2010 .................
Vested
Non-Vested
Number of
Common
Units
Subject
to Award
Weighted
Average
Grant Date
Fair Value
(per Unit)
Number of
Common
Units
Subject
to Award
Weighted
Average
Grant Date
Fair Value
(per Unit)
51,584 $
— $
— $
49,617 $
(47,350) $
53,851 $
33.49
—
—
36.24
32.23
37.14
96,016 $
57,750 $
(11,400) $
(49,617) $
— $
92,749 $
34.02
41.39
37.39
36.24
—
37.00
Weighted
Average
Grant Date
Fair Value
(per Unit)
Total
Number of
Common
Units
Subject
to Award
147,600 $
57,750 $
(11,400) $
— $
(47,350) $
146,600 $
33.83
41.39
37.39
—
32.23
37.05
F-20
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
During Fiscal 2010, Fiscal 2009 and Fiscal 2008, the Partnership paid AmeriGas Common Unit-based awards in
Common Units and cash as follows:
Number of Common Units subject to original Awards granted .........................
Fiscal year granted ..............................................................................................
Payment of Awards:
2010
49,650
2007
2009
38,350
2006
2008
39,767
2005
AmeriGas Partners Common Units issued .....................................................
Cash paid ........................................................................................................ $
42,121
1,219
36,437
879
$
21,249
809
$
As of September 30, 2010, there was $633 of unrecognized equity-based compensation expense related to non-
vested UGI stock options that is expected to be recognized over a weighted-average period of 1.8 years. As of
September 30, 2010, there was a total of approximately $2,331 of unrecognized compensation cost associated with
146,600 Common Units subject to award that is expected to be recognized over a weighted average period of 1.7
years. The total fair value of Common Unit-based awards that vested during Fiscal 2010, Fiscal 2009 and Fiscal
2008 was $1,978, $1,645 and $2,087, respectively. As of September 30, 2010 and 2009, total liabilities of $1,266
and $1,417 associated with Common Unit-based awards are reflected in “Employee compensation and benefits
accrued” and “Other noncurrent liabilities” in the Consolidated Balance Sheets. It is the Partnership’s practice to
issue new AmeriGas Partners Common Units for the portion of any Common Unit-based awards paid out in
AmeriGas Partners Common Units.
Note 13 — Commitments and Contingencies
Commitments
We lease various buildings and other facilities and vehicles, computer and office equipment under operating
leases. Certain of the leases contain renewal and purchase options and also contain step-rent provisions. Our
aggregate rental expense for such leases was $54,513 in Fiscal 2010, $54,277 in Fiscal 2009 and $55,825 in Fiscal
2008.
Minimum future payments under noncancelable operating leases are as follows:
Year Ending September 30,
2011 ....................................................................................................................................................... $
2012 .......................................................................................................................................................
2013 .......................................................................................................................................................
2014 .......................................................................................................................................................
2015 .......................................................................................................................................................
Thereafter ...............................................................................................................................................
46,537
36,953
30,186
22,760
15,546
29,718
Total minimum operating lease payments ................................................................................................. $ 181,700
The Partnership enters into fixed-price contracts with suppliers to purchase a portion of its propane supply
requirements. These contracts generally have terms of less than one year. As of September 30, 2010, obligations
under these contracts totaled $50,531.
The Partnership also enters into contracts to purchase propane to meet additional supply requirements.
Generally, these contracts are one- to three-year agreements subject to annual price and quantity adjustments.
Contingencies
Environmental Matters
By letter dated March 6, 2008, the New York State Department of Environmental Conservation (“DEC”)
notified AmeriGas OLP that DEC had placed property owned by the Partnership in Saranac Lake, New York on its
Registry of Inactive Hazardous Waste Disposal Sites. A site characterization study performed by DEC disclosed
contamination related to former manufactured gas plant (“MGP”) operations on the site. DEC has classified the site
as a significant threat to public health or environment with further action required. The Partnership has researched
the history of the site and its ownership interest in the site. The Partnership has reviewed the preliminary site
characterization study prepared by the DEC, the extent of the contamination, and the possible existence of other
potentially responsible parties. The Partnership has communicated the results of its research to DEC and is awaiting
a response before doing any additional investigation. Because of the preliminary nature of available environmental
information, the ultimate amount of expected clean up costs cannot be reasonably estimated.
F-21
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Other Matters
On May 27, 2009, the General Partner was named as a defendant in a purported class action lawsuit in the
Superior Court of the State of California in which plaintiffs are challenging AmeriGas OLP’s weight disclosure with
regard to its portable propane grill cylinders. The complaint purports to be brought on behalf of a class of all
consumers in the state of California during the four years prior to the date of the California complaint, who
exchanged an empty cylinder and were provided with what is alleged to be only a partially filled cylinder. The
plaintiffs seek restitution, injunctive relief, interest, costs, attorneys’ fees and other appropriate relief.
Since that initial suit, various AmeriGas entities have been named in more than a dozen similar suits that have
been filed in various courts throughout the United States. These complaints purport to be brought on behalf of
nationwide classes, which are loosely defined as including all purchasers of liquefied propane gas cylinders
marketed or sold by AmeriGas OLP and another unaffiliated entity nationwide. The complaints claim that
defendants’ conduct constituted unfair and deceptive practices that injured consumers and violated the consumer
protection statutes of at least thirty-seven states and the District of Columbia, thereby entitling the class to damages,
restitution, disgorgement, injunctive relief, costs and attorneys fees. Some of the complaints also allege violation of
state “slack filling” laws. Additionally, the complaints allege that defendants were unjustly enriched by their conduct
and they seek restitution of any unjust benefits received, punitive or treble damages, and pre-judgment and post-
judgment interest. A motion to consolidate the purported class action lawsuits was heard by the Multidistrict
Litigation Panel (“MDL Panel”) on September 24, 2009 in the United States District Court for the District of
Kansas. By Order, dated October 6, 2009, the MDL Panel transferred the pending cases to the United States District
Court for the Western District of Missouri. The AmeriGas entities named in the consolidated class action lawsuits
have entered into a settlement agreement with the class. On May 19, 2010, the United States District Court for the
District of Kansas granted the class’s motion seeking preliminary approval of the settlement. On October 4, 2010,
the District Court ruled that the settlement was fair, reasonable and adequate to the class and granted final approval
of the settlement.
On or about October 21, 2009, the General Partner received a notice that the Offices of the District Attorneys of
Santa Clara, Sonoma, Ventura, San Joaquin and Fresno Counties and the City Attorney of San Diego have
commenced an investigation into AmeriGas OLP’s cylinder labeling and filling practices in California and issued an
administrative subpoena seeking documents and information relating to those practices. We are cooperating with
these California governmental investigations.
Samuel and Brenda Swiger and their son (the “Swigers”) sustained personal injuries and property damage as a
result of a fire that occurred when propane that leaked from an underground line ignited. In July 1998, the Swigers
filed a class action lawsuit against AmeriGas Propane, L.P. (named incorrectly as “UGI/AmeriGas, Inc.”), in the
Circuit Court of Monongalia County, West Virginia, in which they sought to recover an unspecified amount of
compensatory and punitive damages and attorney’s fees, for themselves and on behalf of persons in West Virginia
for whom the defendants had installed propane gas lines, resulting from the defendants’ alleged failure to install
underground propane lines at depths required by applicable safety standards. In 2003, AmeriGas OLP settled the
individual personal injury and property damage claims of the Swigers. In 2004, the court granted the plaintiffs’
motion to include customers acquired from Columbia Propane Corporation in August 2001 as additional potential
class members and the plaintiffs amended their complaint to name additional parties pursuant to such ruling.
Subsequently, in March 2005, AmeriGas OLP filed a crossclaim against Columbia Energy Group, former owner of
Columbia Propane Corporation, seeking indemnification for conduct undertaken by Columbia Propane Corporation
prior to AmeriGas OLP’s acquisition. In June 2010, Columbia Energy Group filed a complaint in the Delaware
Court of Chancery seeking to enjoin AmeriGas OLP from pursuing its cross-claims in the West Virginia litigation
and asking the court to find that AmeriGas OLP’s cross-claims are without merit and barred. Class counsel has
indicated that the class is seeking compensatory damages in excess of $12,000 plus punitive damages, civil penalties
and attorneys’ fees. The Circuit Court of Monongalia County has tentatively scheduled a trial for the class action for
the Spring of 2011.
F-22
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
In 2005, the Swigers also filed what purports to be a class action in the Circuit Court of Harrison County, West
Virginia against UGI, an insurance subsidiary of UGI, certain officers of UGI and the General Partner, and their
insurance carriers and insurance adjusters. In the Harrison County lawsuit, the Swigers are seeking compensatory
and punitive damages on behalf of the putative class for violations of the West Virginia Insurance Unfair Trade
Practice Act, negligence, intentional misconduct and civil conspiracy. The Swigers have also requested that the
Court rule that insurance coverage exists under the policies issued by the defendant insurance companies for
damages sustained by the members of the class in the Monongalia County lawsuit. The Circuit Court of Harrison
County has not certified the class in the Harrison County lawsuit at this time and, in October 2008, stayed that
lawsuit pending resolution of the class action lawsuit in Monongalia County. We believe we have good defenses to
the claims in these actions.
We cannot predict with certainty the final results of any of the environmental or other pending claims or legal
actions described above. However, it is reasonably possible that some of them could be resolved unfavorably to us
and result in losses in excess of recorded amounts. We are unable to estimate any possible losses in excess of
recorded amounts. Although we currently believe, after consultation with counsel, that damages or settlements, if
any, recovered by the plaintiffs in such claims or actions will not have a material adverse effect on our financial
position, damages or settlements could be material to our operating results or cash flows in future periods depending
on the nature and timing of future developments with respect to these matters and the amounts of future operating
results and cash flows. In addition to the matters described above, there are other pending claims and legal actions
arising in the normal course of our businesses. While the results of these other pending claims and legal actions
cannot be predicted with certainty, we believe, after consultation with counsel, the final outcome of such other
matters will not have a significant effect on our consolidated financial position, results of operations or cash flows.
Note 14 — Related Party Transactions
Pursuant to the Partnership Agreement and a Management Services Agreement among AEH, the general partner
of Eagle OLP, and the General Partner, the General Partner is entitled to reimbursement for all direct and indirect
expenses incurred or payments it makes on behalf of the Partnership. These costs, which totaled $350,246 in Fiscal
2010, $355,043 in Fiscal 2009 and $345,460 in Fiscal 2008 include employee compensation and benefit expenses of
employees of the General Partner and general and administrative expenses.
UGI provides certain financial and administrative services to the General Partner. UGI bills the General Partner
monthly for all direct and indirect corporate expenses incurred in connection with providing these services and the
General Partner is reimbursed by the Partnership for these expenses. The allocation of indirect UGI corporate
expenses to the Partnership utilizes a weighted, three-component formula based on the relative percentage of the
Partnership’s revenues, operating expenses and net assets employed to the total of such items for all UGI operating
subsidiaries for which general and administrative services are provided. The General Partner believes that this
allocation method is reasonable and equitable to the Partnership. Such corporate expenses totaled $10,757 in Fiscal
2010, $12,183 in Fiscal 2009 and $11,197 in Fiscal 2008. In addition, UGI and certain of its subsidiaries provide
office space, stop loss medical coverage and automobile liability insurance to the Partnership. The costs related to
these items totaled $2,296 in Fiscal 2010, $3,344 in Fiscal 2009 and $2,732 in Fiscal 2008.
AmeriGas OLP purchases propane from Atlantic Energy, Inc. (“Atlantic Energy”) a former subsidiary of UGI
Energy Services, Inc. (“Energy Services”) and a second-tier subsidiary of UGI, pursuant to a propane sales
agreement (“Product Sales Agreement”) whereby Atlantic Energy has agreed to sell and AmeriGas OLP has agreed
to purchase a specified amount of propane annually at a terminal located in Chesapeake, Virginia. The Product Sales
Agreement, which was originally scheduled to terminate on April 30, 2010, was amended to extend the initial
termination date to April 30, 2015 and to provide for an option to extend beyond that date for an additional five
years. The price to be paid for product purchased under the agreement is determined annually using a contractual
formula that takes into account published index prices and the locational value of deliveries at the terminal. On July
30, 2010, Energy Services sold its interest in Atlantic Energy. In addition, from time to time, AmeriGas OLP
purchases propane on an as needed basis from Energy Services. The price of the purchases are generally based on
market price at the time of purchase. Purchases of propane by AmeriGas OLP from Energy Services and Atlantic
Energy (through the date of its sale) totaled $39,807, $24,302 and $47,307 during Fiscal 2010, Fiscal 2009 and
Fiscal 2008, respectively. The sale of the terminal did not effect the terms of the Product Sales Agreement.
F-23
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
On October 1, 2008, AmeriGas OLP acquired all of the assets of Penn Fuel Propane, LLC (now named UGI
Central Penn Propane, LLC, “CPP”) from CPP, a second-tier subsidiary of UGI Utilities, Inc., for $32,000 cash plus
estimated working capital of $1,621. UGI Utilities, Inc. is a wholly owned subsidiary of UGI. CPP sold propane to
customers primarily in eastern Pennsylvania. AmeriGas OLP funded the acquisition of the assets of CPP principally
from borrowings under its Credit Agreement. Pursuant to the acquisition agreement, in February 2009, AmeriGas
OLP reached an agreement with UGI Utilities on the working capital adjustment pursuant to which UGI Utilities
reimbursed AmeriGas OLP $1,352 plus interest.
The Partnership also sells propane to other affiliates of UGI. Such amounts were not material in Fiscal 2010,
Fiscal 2009 or Fiscal 2008.
Note 15 — Other Current Liabilities
Other current liabilities comprise the following at September 30:
Litigation, property and casualty liabilities ........................................................................... $ 23,189
Taxes other than income taxes ...............................................................................................
6,839
18,893
Propane exchange liabilities ..................................................................................................
Deferred tank fee revenue ......................................................................................................
12,642
Other ......................................................................................................................................
10,412
Total other current liabilities ................................................................................................. $ 71,975
2010
2009
$ 17,972
5,537
9,795
12,225
10,256
$ 55,785
Note 16 — Fair Value Measurements
Derivative Financial Instruments
The following table presents our financial assets and financial liabilities that are measured at fair value on a
recurring basis for each of the fair value hierarchy levels, including both current and noncurrent portions, as of
September 30, 2010 and 2009:
Asset (Liability)
Quoted Prices
in Active
Markets for
Identical
Assets and
Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Total
September 30, 2010:
Assets:
Derivative financial instruments:
Propane contracts .....................................................
$
— $
8,025 $
— $
8,025
September 30, 2009:
Assets:
Derivative financial instruments:
Propane contracts .....................................................
Interest rate contracts ...............................................
Liabilities:
Derivative financial instruments:
Propane contracts .....................................................
Interest rate contracts ...............................................
$
$
$
$
— $
— $
13,001 $
2,249 $
— $
— $
13,001
2,249
— $
— $
(1,153) $
(18,131) $
— $
(1,153)
— $ (18,131)
F-24
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
The fair values of our non-exchange traded commodity derivative contracts are based upon indicative price
quotations available through brokers, industry price publications or recent market transactions and related market
indicators. For commodity option contracts we use a Black Scholes option pricing model that considers time value
and volatility of the underlying commodity. The fair values of interest rate contracts are based upon third-party
quotes or indicative values based on recent market transactions.
Other Financial Instruments
The carrying amounts of financial instruments included in current assets and current liabilities (excluding
unsettled derivative instruments and current maturities of long-term debt) approximate their fair values because of
their short-term nature. The carrying amount and estimated fair value of our long-term debt at September 30, 2010
were $791,402 and $819,949, respectively. The carrying amount and estimated fair value of our long-term debt at
September 30, 2009 were $865,644 and $836,561, respectively. We estimate the fair value of long-term debt by
using current market prices and by discounting future cash flows using rates available for similar type debt.
We have financial instruments such as short-term investments and trade accounts receivable which could expose
us to concentrations of credit risk. We limit our credit risk from short-term investments by investing only in
investment-grade commercial paper and U.S. Government securities. The credit risk from trade accounts receivable
is limited because we have a large customer base which extends across many different U.S. markets.
Note 17 — Disclosures About Derivative Instruments and Hedging Activities
The Partnership is exposed to certain market risks related to its ongoing business operations. Management uses
derivative financial and commodity instruments, among other things, to manage these risks. The primary risks
managed by derivative instruments are commodity price risk and interest rate risk. Although we use derivative
financial and commodity instruments to reduce market risk associated with forecasted transactions, we do not use
derivative financial and commodity instruments for speculative or trading purposes. The use of derivative
instruments is controlled by our risk management and credit policies which govern, among other things, the
derivative instruments the Partnership can use, counterparty credit limits and contract authorization limits. Because
our derivative instruments generally qualify as hedges under GAAP, we expect that changes in the fair value of
derivative instruments used to manage commodity or interest rate market risk would be substantially offset by gains
or losses on the associated anticipated transactions.
Commodity Price Risk
In order to manage market risk associated with the Partnership’s fixed-price programs which permit customers to
lock in the prices they pay for propane principally during the months of October through March, the Partnership uses
over-the-counter derivative commodity instruments, principally price swap contracts. At September 30, 2010, there
were 158.7 million gallons of propane hedged with over-the-counter price swap and option contracts. The maximum
period over which we are currently hedging propane market price risk is 24 months with a weighted average of 5
months. In addition, the Partnership enters into price swap agreements to provide market price risk support to a
limited number of its wholesale customers. These agreements are not designated as hedges for accounting purposes.
The volume of propane subject to these wholesale customer agreements were not material.
We account for substantially all of our commodity price risk contracts as cash flow hedges. Changes in the fair
values of contracts qualifying for cash flow hedge accounting are recorded in AOCI and noncontrolling interests, to
the extent effective in offsetting changes in the underlying commodity price risk, until earnings are affected by the
hedged item. At September 30, 2010, the amount of net gains associated with commodity price risk hedges expected
to be reclassified into earnings during the next twelve months based upon current fair values is $7,254.
F-25
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
Interest Rate Risk
Our long-term debt is typically issued at fixed rates of interest. As these long-term debt issues mature, we
typically refinance such debt with new debt having interest rates reflecting then-current market conditions. In order
to reduce market rate risk on the underlying benchmark rate of interest associated with near- to medium-term
forecasted issuances of fixed-rate debt, from time to time we enter into interest rate protection agreements
(“IRPAs”). There are no unsettled IRPAs outstanding at September 30, 2010. At September 30, 2010, the amount of
net losses associated with settled IRPAs expected to be reclassified into earnings during the next twelve months is
$538.
Derivative Financial Instruments Credit Risk
The Partnership is exposed to credit loss in the event of nonperformance by counterparties to derivative financial
and commodity instruments. Our counterparties principally consist of major energy companies and major U.S.
financial institutions. We maintain credit policies with regard to our counterparties that we believe reduce overall
credit risk. These policies include evaluating and monitoring our counterparties’ financial condition, including their
credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements
call for the posting of collateral by the counterparty or by the Partnership in the forms of letters of credit, parental
guarantees or cash. Although we have concentrations of credit risk associated with derivative financial instruments
held by certain derivative financial instrument counterparties, the maximum amount of loss due to credit risk that,
based upon the gross fair values of the derivative financial instruments, we would incur if these counterparties that
make up the concentration failed to perform according to the terms of their contracts was not material at September
30, 2010. We generally do not have credit-risk-related contingent features in our derivative contracts.
The following table provides information regarding the balance sheet location and fair value of derivative assets
and liabilities existing as of September 30, 2010 and 2009:
As of September 30, 2010:
Derivatives Designated as Hedging
Derivative Assets
Balance Sheet
Location
Fair
Value
Derivative (Liabilities)
Fair
Value
Balance Sheet
Location
Instruments:
Propane contracts .............................................. Derivative financial
instruments and
Other assets
$
8,016
Derivatives Not Designated as Hedging
Instruments:
Propane contracts .............................................. Derivative financial
instruments
9
Total Derivatives ..................................................
$
8,025
$
—
F-26
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
As of September 30, 2009:
Derivatives Designated as Hedging
Derivative Assets
Derivative (Liabilities)
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
Instruments:
Propane contracts .................................. Derivative financial
instruments and
Other assets
$
11,730
Interest rate contracts ............................ Derivative financial
instruments
Derivative financial
instruments
2,249
$
(18,131)
Total Derivatives Designated as Hedging
Instruments .............................................
$
13,979
$
(18,131)
Derivatives Not Designated as
Hedging Instruments:
Propane contracts .................................. Derivative financial
Total Derivatives ......................................
instruments
$
$
1,271
15,250
Derivative financial
instruments
$
(1,153)
$
(19,284)
The following table provides information on the effects of derivative instruments on the Consolidated Statements
of Operations and changes in AOCI and noncontrolling interests for Fiscal 2010 and Fiscal 2009:
Gain (Loss)
Recognized in
Location of
Gain (Loss)
Reclassified from
AOCI and Noncontrolling
Interests
AOCI and Noncontrolling
Interests into Income
Gain (Loss)
Reclassified from
AOCI and Noncontrolling
Interests into Income
Fiscal 2010:
Cash Flow
Hedges:
Propane contracts ........... $
Interest rate contracts .....
Total ........................................ $
35,829
1,739
37,568
Cost of sales
Interest expense/other income
Fiscal 2009:
Cash Flow
Hedges:
Propane contracts ........... $
Interest rate contracts .....
Total ........................................ $
(128,214) Cost of sales
(10,104)
(138,318)
Interest expense/other income
$
$
$
$
38,360
(12,731)
25,629
(193,364)
(2,487)
(195,851)
The amounts of derivative gains or losses representing ineffectiveness, and the amounts of gains or losses
recognized in income as a result of excluding from ineffectiveness testing, were not material for Fiscal 2010, Fiscal
2009 or Fiscal 2008. During the three months ended March 31, 2010, the Partnership’s management determined that
it was likely that the Partnership would not issue $150,000 of long-term debt during the summer of 2010 due to the
Partnership’s strong cash flow and anticipated extension of all or a portion of the 2009 Supplemental Credit
Agreement. As a result, the Partnership discontinued cash flow hedge accounting treatment for IRPAs associated
with this previously anticipated Fiscal 2010 $150,000 long-term debt issuance and recorded a $12,193 loss which is
reflected in other income, net, on the Fiscal 2010 Consolidated Statement of Operations. In March 2009, The
Partnership recorded losses of $1,659 as a result of the discontinuance of cash flow hedge accounting associated
with IRPAs. The amount of net gains or losses associated with propane contracts that are not designated as hedging
instruments was not material during Fiscal 2010, Fiscal 2009 and Fiscal 2008.
F-27
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
We are also a party to a number of contracts that have elements of a derivative instrument. These contracts
include, among others, binding purchase orders, contracts which provide for the purchase and delivery of propane
and service contracts that require the counterparty to provide commodity storage or transportation service to meet
our normal sales commitments. Although many of these contracts have the requisite elements of a derivative
instrument, these contracts qualify for normal purchase and normal sale exception accounting under GAAP because
they provide for the delivery of products or services in quantities that are expected to be used in the normal course of
operating our business and the price in the contract is based on an underlying that is directly associated with the
price of the product or service being purchased or sold.
18 — Other Income, Net
Other income, net, comprises the following:
Gains on sales of fixed assets (a) ..................................................................
Finance charges ............................................................................................
Losses on IRPAs ...........................................................................................
Other .............................................................................................................
Total other income, net .................................................................................
2010
1,470
11,346
(12,193)
7,081
7,704
$
$
2009
$ 2,795
11,717
(1,659)
3,152
$ 16,005
2008
$
1,698
11,822
—
5,335
$ 18,855
(a) Excludes gain on sale of California LPG storage facility in Fiscal 2009 of $39,887 (see Note 5).
Note 19 — Quarterly Data (Unaudited)
The following unaudited quarterly data includes all adjustments (consisting only of normal recurring adjustments
with the exception of those indicated below) which we consider necessary for a fair presentation. Our quarterly
results fluctuate because of the seasonal nature of our propane business.
December 31,
March 31,
June 30,
2009
2008 (a)
2010 (b)
2009
2010
Revenues .................................... $ 656,595 $ 727,064 $
Operating income (loss) ............. $ 102,614 $ 144,766 $
Net income (loss) ....................... $
84,954 $ 125,404 $
Net income (loss) attributable to
886,101 $ 823,377 $ 396,613 $
5,320 $
153,248 $ 168,115 $
135,989 $ 149,546 $ (12,323) $
2009
372,677
4,329
(13,522)
September 30,
2009
2010 (c)
$ 381,033 $ 336,977
$ (25,317) $ (16,667)
$ (41,126) $ (33,818)
AmeriGas Partners, L.P. .......... $
83,959 $ 123,963 $
134,483 $ 147,835 $ (12,372) $
(13,525)
$ (40,857) $ (33,630)
Income (loss) per limited
partner unit — basic and
diluted (d) ................................. $
1.15 $
1.50 $
1.59 $
1.71 $
(0.23) $
(0.29) (e) $
(0.73) $
(0.59) (e)
(a)
Includes gain on sale of the Partnership’s California storage facility which increased operating income by
$39,887 and net income attributable to AmeriGas Partners, L.P. by $39,484 (see Note 5).
(b) Includes loss from discontinuance of cash flow hedge treatment for IRPAs which decreased operating income
(c)
by $12,193 and net income attributable to AmeriGas Partners, L.P. by $12,070 (see Note 17).
Includes increase in litigation accrual which increased operating loss by $7,000 and net loss attributable to
AmeriGas Partners, L.P. by $6,930.
F-28
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES ~ Notes to Consolidated Financial Statements
(Thousands of dollars, except per unit amounts)
(d) Theoretical distributions of net income (loss) attributable to AmeriGas Partners, L.P. in accordance with
accounting guidance regarding the application of the two-class method for determining earnings per share
resulted in a different allocation of net income attributable to AmeriGas Partners, L.P. to the General Partner
and the limited partners in the computation of income per limited partner unit which had the effect of
decreasing quarterly earnings per limited partner unit for the quarters ended December 31 and March 31 and
(increasing) decreasing quarterly loss per limited partner unit for the quarters ended June 30, 2009 and
September 30, 2009, respectively, as follows:
Quarter ended:
Decrease in income per limited partner
December 31,
2008
2009
March 31,
June 30, September 30,
2010
2009
2009
2009
unit .......................................................... $ (0.30) $ (0.65) $ (0.73) $ (0.85)
(Increase) decrease in loss per limited
partner unit ..............................................
$
(0.05) $
0.05
(e) The retrospective application of the new guidance regarding the application of the two-class method for
determining income per unit resulted in an increase in the net loss per limited partner unit for the three months
ended June 30, 2009 to $0.29 per limited partner unit from a loss of $0.24 reported previously and a decrease in
the net loss per limited partner unit for the three months ended September 30, 2009 to $0.59 per limited partner
unit from a loss of $0.64 reported previously (see Note 2).
F-29
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(Thousands of dollars)
September 30,
2010
2009
ASSETS
Current assets:
Cash ............................................................................................................................
Prepaids ......................................................................................................................
Total current assets .................................................................................................
$
302 $
24
326
965
—
965
Investment in AmeriGas Propane, L.P. ..........................................................................
Other assets .....................................................................................................................
Total assets .............................................................................................................
1,177,953 1,161,091
7,010
$ 1,184,100 $ 1,169,066
5,821
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current maturities of long-term debt ..........................................................................
Accounts payable and other liabilities ........................................................................
Accrued interest ..........................................................................................................
Total current liabilities............................................................................................
$
14,672 $
3,084
20,496
38,252
—
4,391
20,496
24,887
Long-term debt ...............................................................................................................
765,000
779,720
Commitments and contingencies
Partners’ capital:
Common unitholders...................................................................................................
General partner ...........................................................................................................
Accumulated other comprehensive income (loss) ......................................................
Total partners’ capital .............................................................................................
Total liabilities and partners’ capital .......................................................................
372,220
3,751
4,877
380,848
367,708
3,698
(6,947)
364,459
$ 1,184,100 $ 1,169,066
Commitments and Contingencies:
Scheduled principal repayments of long-term debt during the next five fiscal years ending September 30 are $14,640
due May 2011 and $415,000 due May 2015.
S-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(Thousands of dollars)
Year Ended
September 30,
2009
2008
2010
Operating expenses, net .................................................................................
Interest expense .............................................................................................
Loss before income taxes...............................................................................
Income tax expense .......................................................................................
Loss before equity in income of AmeriGas Propane, L.P. ............................
Equity in income of AmeriGas Propane, L.P. ...............................................
Net income .....................................................................................................
General partner’s interest in net income ........................................................
Limited partners’ interest in net income ........................................................
$
(337) $
(280) $
(58,003)
(58,003)
(58,340)
(58,283)
30
—
(58,313)
(58,340)
223,526 282,983
(49)
(58,003)
(58,052)
3
(58,055)
216,074
$ 165,213 $ 224,643 $ 158,019
4,691 $
$
2,278
$ 160,522 $ 217,906 $ 155,741
6,737 $
Income per limited partner unit — basic and diluted: ...................................
$
2.80 $
3.59 $
2.70
Average limited partner units outstanding — basic (thousands) ...................
Average limited partner units outstanding — diluted (thousands) ................
57,076
57,123
57,038
57,082
57,005
57,044
S-2
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(Thousands of dollars)
Year
Ended
September 30,
2009
2008
2010
NET CASH PROVIDED BY OPERATING ACTIVITIES (a) ............
$
160,380 $ 165,616 $
144,664
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions ...........................................................................................
Proceeds from issuance of Common Units, net of tax withheld .............
Capital contribution from General Partner..............................................
Net cash used by financing activities ..................................................
(161,626)
566
17
(161,043)
(165,282)
(338)
10
(165,610)
(144,659)
766
8
(143,885)
(Decrease) increase in cash and cash equivalents.......................................
$
(663) $
6 $
779
CASH AND CASH EQUIVALENTS:
End of year ..............................................................................................
Beginning of year ...................................................................................
(Decrease) increase .............................................................................
$
$
302 $
965
(663) $
965 $
959
6 $
959
180
779
(a)
Includes distributions received from AmeriGas Propane, L.P. of $217,950, $221,607 and $200,983 for the
years ended September 30, 2010, 2009 and 2008, respectively.
S-3
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)
Balance at
beginning
of year
Charged
(credited)
to costs and
expenses
Balance at
end of
year
Other
Year Ended September 30, 2010
Reserves deducted from assets in the
consolidated balance sheet:
Allowance for doubtful accounts ...................
$
13,239 $
12,459 $
(10,408)(1) $
15,290
Other reserves:
Property and casualty liability .......................
$
62,658 $
12,308 $
Environmental, litigation and other ...............
$
21,660 $
6,213 $
(22,866)(2) $
5,608(3)
57,708(4)
(1,183)(2) $
(93)(3)
26,597
Year Ended September 30, 2009
Reserves deducted from assets in the
consolidated balance sheet:
Allowance for doubtful accounts ...................
$
20,215 $
9,345 $
(16,321)(1) $
13,239
Other reserves:
Property and casualty liability .......................
$
71,172 $
20,482 $
Environmental, litigation and other ...............
$
14,481 $
7,867 $
(29,398)(2) $
402(3)
62,658(4)
(968)(2) $
280(3)
21,660
S-4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS (continued)
(Thousands of dollars)
Balance at
beginning
of year
Charged
(credited)
to costs and
expenses
Balance at
end of
year
Other
Year Ended September 30, 2008
Reserves deducted from assets in the
consolidated balance sheet:
Allowance for doubtful accounts ...................
Other reserves:
Property and casualty liability .......................
Environmental, litigation and other ...............
$
$
$
15,149 $
15,852 $
(10,786)(1) $
20,215
57,714 $
12,056 $
31,498 $
4,559 $
(18,040)(2) $
(2,280)(2) $
146(3)
71,172(4)
14,481
(1) Uncollectible accounts written off, net of recoveries.
(2) Payments, net of any refunds
(3) Other adjustments, primarily reclassifications and refunds
(4) At September 30, 2010, 2009, and 2008, the Partnership had insurance indemnification receivables associated
with its property and casualty liabilities totaling $6,329, $241, and $17,926, respectively.
S-5
EXHIBIT 31.1
CERTIFICATION
I, Eugene V. N. Bissell, certify that:
1. I have reviewed this annual report on Form 10-K of AmeriGas Partners, L.P.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: November 19, 2010
/s/ Eugene V. N. Bissell
Eugene V. N. Bissell
President and Chief Executive Officer of
AmeriGas Propane, Inc.
EXHIBIT 31.2
CERTIFICATION
I, Jerry E. Sheridan, certify that:
1. I have reviewed this annual report on Form 10-K of AmeriGas Partners, L.P.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: November 19, 2010
/s/ Jerry E. Sheridan
Jerry E. Sheridan
Vice President — Finance and Chief Financial Officer
of AmeriGas Propane, Inc.
EXHIBIT 32
Certification by the Chief Executive Officer and Chief Financial Officer
Relating to a Periodic Report Containing Financial Statements
I, Eugene V. N. Bissell, Chief Executive Officer, and I, Jerry E. Sheridan, Chief Financial Officer, of AmeriGas
Propane, Inc., a Pennsylvania corporation, the General Partner of AmeriGas Partners, L.P. (the “Company”), hereby
certify that to our knowledge:
(1) The Company’s annual report on Form 10-K for the period ended September 30, 2010 (the “Form 10-K”)
fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended;
and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition
and results of operations of the Company.
* * *
CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICER
/s/ Eugene V.N. Bissell
Eugene V.N. Bissell
Date: November 19, 2010
/s/ Jerry E. Sheridan
Jerry E. Sheridan
Date: November 19, 2010
(This page intentionally left blank)
Partnership Information
Investor Services
Transfer Agent and Registrar
Unitholder communications regarding transfer of units, lost certificates,
lost distribution checks or changes of address should be directed to:
By Mail:
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-3078
By Overnight Delivery:
Computershare Investor Services
250 Royall Street
Canton, MA 02021
1-800-254-5196 (U.S. and Canada)
1-312-360-5100 (other countries)
Unitholders can also view real-time account information and request transfer agent services
online at the Computershare Investor Services website: www.computershare.com/investor.
Computershare Investor Services can be accessed through telecommunications devices for
the hearing impaired by calling:
1-800-822-2794 (U.S. and Canada)
1-312-588-4110 (other countries)
Investor Relations
Securities analysts, portfolio managers and other members of the professional investment
community should direct inquiries about the Partnership to:
Hugh J. Gallagher
Director, Treasury Services and Investor Relations
UGI Corporation
P.O. Box 858
Valley Forge, PA 19482
1-610-337-1000
News, Earnings, Financial Reports and Governance Documents
AmeriGas Partners, L.P. has a toll-free, 24-hour news and investor information service. By
calling 1-800-844-9453, you can hear Partnership news on distributions, earnings and other
matters and access other unitholder services. You can also request copies of news releases,
Annual Reports, Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q – all
without charge.
Board of Directors
Lon R. Greenberg 2
Chairman
John L. Walsh
Vice Chairman
Eugene V. N. Bissell
President and Chief Executive Officer
Stephen D. Ban 3
Retired, former Director, Technology Transfer Division of the
Argonne National Laboratory (research and development)
Richard C. Gozon 2,4
Retired, former Executive Vice President, Weyerhaeuser Company
(integrated forest products)
William J. Marrazzo 1,3
Chief Executive Officer and President, WHYY, Inc.
(public television and radio)
Gregory A. Pratt 1,4
Chairman of the Board, Carpenter Technology Corporation
(manufacturer of specialty metals)
Marvin O. Schlanger 2,3
Principal, Cherry Hill Chemical Investments, LLC
(management and capital services)
Howard B. Stoeckel 1,4
Vice Chairman, President and Chief Executive Officer, Wawa, Inc.
(retailer of food products and gasoline)
1 Audit Committee
2 Executive Committee
3 Compensation/Pension Committee
4 Corporate Governance Committee
Officers
Comprehensive news, webcast events and other information about AmeriGas Partners, L.P.
Lon R. Greenberg, Chairman
and UGI Corporation are available via the Internet at: www.amerigas.com.
You can also request all reports and governance documents, including the General Partner’s
Codes of Ethics and Principles of Corporate Governance free of charge, by writing to Hugh J.
Gallagher, Director, Treasury Services and Investor Relations at the address above.
Tax Information
AmeriGas Partners, L.P. is a publicly traded master limited partnership. All unitholders are limited
partners eligible to receive cash distributions.
A partnership has different tax implications for its owners than a corporation has for its
shareholders. The annual income, gains, losses, deductions or credits of a partnership flow
through to its unitholders, or limited partners, who are required to report their allocated share
of these amounts on their own income tax returns.
By March 15, 2011, tax information in the form of a Schedule K-1, which will summarize
each unitholder’s allocated share of the Partnership’s reportable tax items for the calendar year
ended December 31, 2010, will be mailed to each unitholder of AmeriGas Partners, L.P.
The Schedule K-1 will also be available via the internet by accessing the Investor Relations
section at www.amerigas.com.
For additional information regarding taxes, unitholders should consult with their personal
tax adviser. AmeriGas Tax Information Services, at 1-800-310-9145, is available for questions
regarding the Schedule K-1.
John L. Walsh, Vice Chairman
Eugene V. N. Bissell, President and Chief Executive Officer
Richard W. Fabrizio, Vice President and Chief Information Officer
John S. Iannarelli, Vice President – Field Operations, North
William D. Katz, Vice President – Human Resources
Robert H. Knauss, Vice President, General Counsel and Secretary
Robert W. Krick, Vice President and Treasurer
David L. Lugar, Vice President – Supply and Logistics
Andrew J. Peyton, Vice President – Sales and Marketing
Joseph B. Powers, Vice President – AmeriGas Cylinder Exchange
Kevin Rumbelow, Vice President – Operations Support
Steven A. Samuel, Vice President – Law, Associate General Counsel
Jerry E. Sheridan, Vice President – Finance and Chief Financial Officer
William J. Stanczak, Controller and Chief Accounting Officer
AmeriGas Partners, L.P.
P.O. Box 965
Valley Forge, PA 19482
You can obtain news and other information about AmeriGas Partners, L.P.
24 hours a day at 1-800-844-9453 or www.amerigas.com
Cert no. XXX-XXX-000