2015 Annual Report
Customer Photo
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Enhancing the Customer Experience
Enhancing the Customer Experience
We are committed to providing an outstanding customer experience
and have made significant investments to ensure our employees
have the tools and training to “delight the customer” every day. These
investments help our drivers to be more efficient and our frontline
employees to be more responsive. They help us to protect our
customers’ payment information, receive customer feedback, train our
employees and, ultimately, deliver an outstanding customer experience.
District Dashboard
A consolidated view of key daily performance
measures allows managers to quickly review
performance, productivity and customer service
results on a daily basis.
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AmeriMobile
Enables our drivers to stay connected to the local
office while on the road. The technology helps
drivers complete more efficient routes, prioritize
deliveries, and automatically uploads daily
deliveries to our sales and revenue system.
Route Monitoring
Real time route monitoring enables our local
offices to easily add stops and re-route our
delivery drivers’ to maximize efficiency and
improve customer service.
AccuGas
Remote tank monitoring enables us to monitor
our customers’ tank levels to ensure efficient
deliveries and drive customer service excellence.
Call Technology
Our call recording system allows quality control
review of phone transactions and timely coaching
for our customer service representatives to ensure
an excellent customer experience on the phone.
PanPad
Our payment system encrypts our customers’
credit card information to protect them from
cyber threats and identity theft.
Learning Management System
Enables us to deliver and track online training
for our employees to ensure they receive
the necessary training to improve their
job performance and ultimately serve our
customers’ needs.
AmeriGas.com
Enables our customers to pay bills, review
their account, and monitor their tanks on
their schedule and at their convenience.
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.”
UGI Corporation, through subsidiaries, is
the sole General Partner and owns 26% of
the Partnership and the public owns the
remaining 74%.
As a clean, versatile energy source, propane
is used for a wide variety of applications.
Residential and commercial customers use
propane for home and space heating, water
heating, cooking and drying while industrial
customers use it to fire furnaces, as a cutting
gas and in other process applications. Propane
is also used to power over-the-road vehicles,
forklifts, commercial lawnmowers and
stationary engines. Agricultural applications
include tobacco curing, crop drying, orchard
heating and chicken brooding. Propane shows
promise as an environmentally friendly fuel
source for school bus fleets, energy efficient
combined heat and power generation, and
liquid injection systems designed to enhance
mileage on diesel-powered vehicles.
AmeriGas distributes over 1.2 billion gallons
of propane annually to approximately 2 million
residential, commercial/industrial, motor fuel,
agricultural and wholesale customers in all
50 states. Through the Partnership’s AmeriGas
Cylinder Exchange program, cylinders are
available at nearly 48,500 retail locations
throughout the United States.
AmeriGas serves its customers from
approximately 2,000 propane distribution
locations and has nearly 8,500 dedicated
employees focused on fulfilling AmeriGas’s
commitment to be the most reliable, safest
and most responsive propane company
in the nation.
AmeriMobile and Route Monitoring
AmeriMobile and real-time Route Monitoring help keep our regional offices and
drivers connected throughout the day so that deliveries can be managed to improve
efficiency and attend to customers’ needs. The local office can track route progress
and the drivers are kept aware of any changes to their routes.
Financial Highlights
Year Ended September 30,
2015
2014
2013
(Millions of dollars, except as noted)
Retail gallons sold (millions)
Degree days – % (warmer) colder than normal (1)
Revenues
Operating income
Net income attributable to AmeriGas Partners, L.P.
Income tax expense
Interest expense
Depreciation and amortization
EBITDA (2)
Adjusted EBITDA (2)
Units outstanding – end of year (millions)
1,184.3
(5.8%)
$ 2,885.3
$ 380.7
$ 211.2
2.9
162.8
194.9
$ 571.8
$ 619.2
92.9
1,275.6
3.4%
$ 3,712.9
$ 462.6
$ 289.9
2.6
165.6
197.2
$ 655.3
$ 664.7
92.9
1,245.2
(4.9%)
$ 3,166.5
$ 392.2
$ 221.2
1.7
165.4
202.9
$ 591.2
$ 617.4
92.8
National Retail Sales
by Volume (3)
• 39% Residential
• 36% Commercial
• 15% Motor fuel
• 10% Agriculture
and transport
AmeriGas serves nearly 2 million
customers in all 50 states from
approximately 2,000 distribution
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, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA are not measures of performance or financial condition under
accounting principles generally accepted in the United States of America (“GAAP”). For a more complete description of these non-GAAP measures, why
management believes these non-GAAP measures are meaningful to investors, and reconciliations of these measures to net income attributable to AmeriGas
Partners, L.P. see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in AmeriGas Partners, L.P.’s Annual Report
on Form 10-K for the fiscal year ended September 30, 2015.
(3) Based upon retail gallons sold for the 12-month period ended September 30, 2015.
AccuGas
Telemetry units on our customers’ tanks allow us to monitor
fill levels with more precision. This technology helps
us ensure we keep our customers’ tanks filled and reduces
unnecessary stops.
Dear Fellow Unitholder,
Fiscal 2015 was a year of significant progress in pursuing
Our new phone technology gives us real time feedback
our core strategies as well as a challenging year due to
on the answer speed and wait times at our retail locations.
significant changes in propane costs. The theme of this
In cold weather, we typically experience spikes in call
year’s report is “Enhancing the Customer Experience,”
order activity. When we see answer times lengthening, we
which has been a strategic focus for both our workforce
are able to divert calls to locations that are experiencing
development and our technology investments. When
lower call volume to balance the activity and improve our
it comes to customer service, AmeriGas has unequaled
response time.
resources and assets available to deliver exceptional
service and reliability to our nearly two million customers.
We have:
Finally, our completely revitalized on-line experience
allows customers to easily review and pay bills, look back
at past payments and see an estimate of their current
• Approximately 2,000 propane distribution locations
fill percentage. This capability allows customers to easily
• Over 700 local offices serving all 50 states
“self-serve” any time of day.
• Nearly 8,500 dedicated employees focused on safety
Challenges in 2015
and delighting our customers
• Approximately 7,700 bobtail delivery and service trucks
• Approximately 500 railroad tank cars, 1,000 trailers
and 20 terminals to ensure supply
• A dedicated 24/7 national call center to handle after
hours customer needs
The U.S. propane market experienced unprecedented
volatility over the last two years. Following the spike in
propane costs and the industry-wide propane shortage
that we saw last year, we increased inventory levels prior
to the start of this year’s heating season in order to ensure
continuity of supply for our customers. However, the cost
of propane subsequently decreased by approximately
Our capabilities are best in the industry and now we are
50% during the first half of the heating season and was
moving to further enhance the customer experience with
combined with some unusually warm weather. As a result,
key investments.
Our AmeriMobile platform provides our associates with the
ability to optimize delivery routes and enables our delivery
representatives to accept additional deliveries in real time
we were left with relatively high cost inventory which we
worked off at the end of the heating season. We were
clearly at a competitive disadvantage during this time,
resulting in a lost opportunity for significant profitability
and record safety checks performed at customer locations.
this year.
Our store managers can also monitor truck locations and
determine if our distribution performance is both safe
and efficient.
PanPad
PanPad is a tool that we use to protect our customers
from identity theft and cyber threats. It encrypts credit
card information before it enters our system, thereby
making our system more secure and less vulnerable to
cyber-attack.
John L. Walsh,
Lon R. Greenberg,
Jerry E. Sheridan
Propane costs have stabilized at historically low levels, and
Shareholder Value
we enter fiscal 2016 with significantly lower inventory costs,
Delivering shareholder value is always a top priority. We
which will result in lower customer pricing.
are proud that we increased our annual distribution by
Progress
In addition to our progress in using technology to improve
our customer service experience, we also continued to
expand our three growth initiatives, as follows:
• AmeriGas Cylinder Exchange, our national cylinder
exchange program, continues to add new accounts.
Cylinders are available at nearly 48,500 retail locations
throughout the U.S.
• Our National Accounts program, which takes advantage
of our industry leading footprint covering all 50 states,
added over 30 new accounts and approximately 2,400
customer locations. This program has delivered record
volume in each of the last three years and now serves
40,000 customer locations across the U.S.
• Our acquisition program reviewed many opportunities in
2015 and closed on nine small-scale propane acquisitions
of quality local businesses with good synergies when
combined with our local stores. Our national distribution
footprint creates significant synergy opportunities in
almost every deal we pursue and there are over 3,000
targets remaining, which means there is plenty of
opportunity for further consolidation within the industry.
approximately 5% for the ninth consecutive year, while
maintaining solid distribution coverage and a strong balance
sheet. Our unit price has held up very well despite overall
weakness in the energy sector following the significant decline
of crude oil prices. We do not make propane, we are purely
a distribution business; therefore, lower prices are good for
AmeriGas as our customers also see lower propane costs.
AmeriGas has consistently offered a stable, tax-advantaged
investment supported by strong cash flows and a significant
level of geographic and customer diversification. We will
continue to drive our customer service culture and operational
efficiency to ensure we deliver value for our unitholders.
On behalf of our Board of Directors, we thank you for your
continued investment in AmeriGas.
Lon R. Greenberg
Chairman
John L. Walsh
Vice Chairman
Jerry E. Sheridan
President and
Chief Executive Officer
District Dashboard
The District Dashboard is an essential tool that aggregates
all of the activity within a local office to provide insights
into our productivity and customer service. It is comprised
of real-time data that our frontline managers use on a daily
basis to ensure we are meeting our customers’ needs.
AmeriGas.com
Our website is a central tool in providing a more holistic customer
experience. We have added features and capabilities that enable
our customers to monitor their account, pay bills, place will-call
orders, and check tank levels at their convenience.
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, 2015
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:
Title of Each Class
Name of each Exchange on Which Registered
Common Units representing limited partner interests
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
No
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
No
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
No
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
No
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.
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
Accelerated filer
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of AmeriGas Partners, L.P. Common Units held by non-affiliates of AmeriGas Partners, L.P. on March 31, 2015 was
approximately $4,434,512,696. At November 17, 2015, there were outstanding 92,892,582 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. Mine Safety Disclosures
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
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Index to Financial Statements and Financial Statement Schedules
F- 2
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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,” 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 and
achievement of anticipated synergies; (5) changes in laws and regulations, including safety, tax, consumer protection and accounting
matters; (6) competitive pressures from the same and alternative energy sources; (7) failure to acquire new customers and retain
current 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, counterparty 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 2 million residential, commercial, industrial, agricultural, wholesale and motor fuel customers in all 50 states
from approximately 2,000 propane distribution locations.
We are a holding company and we conduct our business principally through our subsidiary, AmeriGas Propane, L.P. (“AmeriGas
OLP”), a Delaware limited partnership. AmeriGas OLP is referred to herein as “the Operating Partnership.” 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 2015” and “Fiscal 2014” refer to the
fiscal years ended September 30, 2015 and September 30, 2014, respectively.
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 26% effective ownership interest in the Partnership.
Business Strategy
Our strategy is to grow by (i) pursuing opportunistic acquisitions, (ii) developing internal sales and marketing programs to improve
customer service and attract and retain customers, and (iii) leveraging our scale and driving productivity. We regularly consider
and evaluate opportunities for growth through the acquisition of local, regional, and national propane distributors. We compete
3
for acquisitions with others engaged in the propane distribution business. During Fiscal 2015, we completed the acquisition of
nine 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 propane cylinders or exchange
propane cylinders at various retail locations, and our National Accounts program, through which we encourage multi-location
propane users to enter into a supply agreement with us rather than with many suppliers. In addition, the Company strives to achieve
superior safety performance.
General Partner Information
The Partnership’s website can be found at www.amerigas.com. Information on our website is not intended to be incorporated into
this Report. The Partnership makes available free of charge at this website (under the tab “Investor Relations,” caption “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 Treasurer, AmeriGas Propane, Inc., P.O. Box 965, Valley Forge, PA 19482.
Products, Services and Marketing
The Partnership serves approximately 2 million customers in all 50 states from approximately 2,000 propane distribution locations.
In addition to distributing propane, the Partnership also sells, installs and services propane appliances, including heating systems,
and operates a residential heating, ventilation, air conditioning, plumbing, and related services business in certain counties of
Pennsylvania, Delaware, and Maryland. Typically, we are located in suburban and rural areas where natural gas is not readily
available. Our local offices generally consist of a business office and propane storage. As part of its overall transportation and
distribution infrastructure, the Partnership operates as an interstate carrier in all states throughout the continental United States.
The Partnership sells propane primarily to residential, commercial/industrial, motor fuel, agricultural and wholesale customers.
The Partnership distributed over 1.2 billion gallons of propane in Fiscal 2015. Approximately 96% of the Partnership’s Fiscal
2015 sales (based on gallons sold) were to retail accounts and approximately 4% were to wholesale and supply customers. Sales
to residential customers in Fiscal 2015 represented approximately 39% of retail gallons sold; commercial/industrial customers
36%; motor fuel customers 15%; and agricultural customers 6%. Transport gallons, which are large-scale deliveries to retail
customers other than residential, accounted for 4% of Fiscal 2015 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 program. At September 30, 2015, ACE cylinders were
available at nearly 48,500 retail locations throughout the United States. Sales of our ACE cylinders to retailers are included in
commercial/industrial sales. The ACE program enables consumers to purchase or exchange propane 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 cylinders directly at the retailer’s location.
Residential and commercial customers use propane primarily for home heating, water heating and cooking purposes. Commercial
users include hotels, restaurants, churches, warehouses, and retail stores. 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, commercial lawn mowers, and stationary
engines. Agricultural uses include tobacco curing, chicken brooding, crop drying, and orchard heating. 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 cylinders. Some of these deliveries are made to the customer’s location, where cylinders are either picked up or replenished
in place.
4
Propane Supply and Storage
The United States propane market 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. The propane industry experienced record
inventory levels and the lowest propane prices in the U.S. in nearly 15 years during the Fiscal 2015 winter heating season. The
availability and pricing 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 and exported supply.
In recent years, there has been an increase in demand for propane overseas from the U.S. propane export market with total U.S.
propane exports nearly doubling over the last two years. During Fiscal 2015, over 85% of the Partnership’s propane supply was
purchased under supply agreements with terms of 1 to 3 years. 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 the fiscal year ending
September 30, 2016 (“Fiscal 2016”). 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 adversely affected. Enterprise Products Partners, L.P., Plains Marketing, L.P., and Targa Liquids Marketing &
Trade LLC supplied approximately 40% of the Partnership’s Fiscal 2015 propane supply. No other single supplier provided more
than 10% of the Partnership’s total propane supply in Fiscal 2015. In certain geographical 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, or keep pace with such increases, 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.”
5
The following graph shows the average prices of propane on the propane spot market during the last five fiscal years at Mont
Belvieu, Texas and Conway, Kansas, both major storage areas.
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 considered a clean alternative fuel
under the Clean Air Act Amendments of 1990, 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 generally more expensive than propane on a British thermal unit (“Btu”) equivalent basis, but the
convenience and efficiency of electricity makes it an attractive energy source for consumers and developers of new homes. Fuel
oil is also a major competitor of propane and, although a less environmentally attractive energy source, is currently 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 significantly 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 areas of the country where propane is sold for heating and cooking purposes.
For motor fuel customers, propane competes with gasoline, diesel fuel, electric batteries, fuel cells, and, in certain applications,
liquefied natural gas and compressed natural gas. 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.
Retail propane industry volumes have been declining for several years and no or modest growth in total demand is 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 National Accounts program
(through which the Partnership encourages multi-location propane users to enter into a single AmeriGas supply agreement rather
than multiple agreements with other suppliers), as well as the success of its sales and marketing programs designed to attract and
6
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 farm
cooperatives, rural electric cooperatives, and fuel oil distributors include propane distribution in their businesses 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 guaranteed price programs, fixed price arrangements and pricing arrangements based on published propane
prices at specified terminals.
In Fiscal 2015, the Partnership’s retail propane sales totaled nearly 1.2 billion gallons. Based on the most recent annual survey
by the American Petroleum Institute, 2013 domestic retail propane sales (annual sales for other than chemical uses) in the United
States totaled approximately 8.8 billion gallons. Based on LP-GAS magazine rankings, 2013 sales volume of the ten largest
propane companies (including AmeriGas Partners) represented approximately 38% of domestic retail sales.
Trade Names, Trade and Service Marks
The Partnership markets propane principally under the “AmeriGas®”, “America’s Propane Company®”, “Heritage Propane®”,
“Relationships Matter®”, and “ServiceMark®” 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 Partnership also markets propane under
various other trade names throughout the United States. 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., AmeriGas Polska Sp. z.o.o. 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. During Fiscal 2015,
approximately 67% of the Partnership’s retail sales volume occurred, and substantially all of the Partnership’s operating income
was earned, during the peak heating season from October through March. As a result of this seasonality, sales are typically 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 information on national weather
statistics, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Government Regulation
The Partnership is subject to various federal, state and local environmental, health, safety and transportation laws and regulations
governing the storage, distribution and transportation of propane and the operation of bulk storage propane terminals. Generally,
these laws impose limitations on the discharge of pollutants, establish standards for the handling of solid and hazardous substances,
and require the investigation and cleanup of environmental contamination. These laws include, among others, the federal 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. The Partnership incurs expenses associated
with compliance with its obligations under federal and state environmental laws and regulations, and we believe that the Partnership
is in material compliance with all of its obligations. The Partnership maintains various permits that are necessary to operate its
facilities, some of which may be material to its operations. The Partnership continually monitors its operations with respect to
potential environmental issues, including changes in legal requirements.
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Hazardous Substances and Wastes
The Partnership is investigating and remediating contamination at a number of present and former operating sites in the United
States, including former sites where it or its former subsidiaries operated manufactured gas plants. CERCLA and similar state
laws impose 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 CERCLA.
Health and Safety
The Partnership is subject to the requirements of the federal Occupational Safety and Health Act (“OSHA”) and comparable state
laws that regulate the protection of the health and safety of its workers. These laws require the Partnership, among other things,
to maintain information about materials, some of which may be hazardous or toxic, that are used, released, or produced in the
course of its operations. Certain portions of this information must be provided to employees, state and local governmental authorities
and responders, commercial and industrial customers, and local citizens in accordance with applicable federal and state Emergency
Planning and Community Right-to-Know Act requirements. The Partnership’s operations are also subject to the safety hazard
communication requirements and reporting obligations set forth in federal workplace standards.
All states in which the Partnership operates have adopted fire safety codes that regulate the storage, distribution, and use 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 and/
or one or more of various international codes (including international fire, building and fuel gas codes) establish rules and procedures
governing the safe handling of propane, or comparable regulations, which 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, and use 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, the Hazardous Materials & Transportation Act, and the Homeland Security Act
of 2002. Regulations under these statutes cover the security and transportation of hazardous materials, including propane for
purposes of these regulations, and are administered by the United States Department of Transportation (“DOT”), Pipeline and
Hazardous Materials Safety Administration. 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 two or more commercial customers from
a single source and to a propane gas system any portion of which is located in a public place. The DOT’s pipeline safety regulations
require operators of all gas systems to provide operator qualification standards and training and written instructions for employees
and third party contractors working on covered pipelines and facilities, establish written procedures to minimize the hazards
resulting from gas pipeline emergencies, and conduct and keep records of inspections and testing. Operators are subject to the
Pipeline Safety Improvement Act of 2002. Management believes that the procedures currently in effect at all of the Partnership’s
facilities for the handling, storage, transportation and distribution of propane are consistent with industry standards and are in
compliance, in all material respects, with applicable laws and regulations.
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. Because propane is considered a clean alternative fuel
under the federal Clean Air Act Amendments of 1990, the Partnership anticipates that this will provide it with a competitive
advantage over other sources of energy, such as fuel oil and coal, to the extent new climate change regulations become effective.
At the same time, increased regulation of GHG emissions, especially in the transportation sector, could impose significant additional
costs on the Partnership, its suppliers and its customers. In recent years, there has been an increase in state initiatives aimed at
regulating GHG emissions. For example, the California Environmental Protection Agency established a Cap & Trade program
that requires certain covered entities, including propane distribution companies, to purchase allowances to compensate for the
GHG emissions created by their business operations. The impact of new legislation and regulations will depend on a number of
factors, including (i) which 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.
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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, 2015, the General Partner had nearly 8,500 employees, including over 500 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.
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 60% 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, including periods of significant rainfall, 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 ACE cylinders.
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 fully be able to pass on product cost increases to our customers when product costs rise, or
when our competitors do not raise their product prices in a timely manner. Finally, market volatility may cause us to sell inventory
at less than the price we purchased it, which would adversely affect our operating results.
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.
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 propane 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 2015, AmeriGas Propane purchased over 88% of its propane needs from twenty suppliers. If supplies from these
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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 geographical
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. In addition, increased demand for domestically produced propane overseas may, depending on production volumes
in the United States, result in higher domestic propane prices and expose us to additional liquidity risks.
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 and is generally more expensive than propane on a Btu equivalent basis for space
heating, water heating, and cooking. The convenience and efficiency of electricity makes it an attractive energy source for
consumers and developers of new homes. Fuel oil is also a major competitor of propane and, although a less environmentally
attractive energy source, is currently 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 significantly 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.
Our potential to increase revenues may be affected by the decline of the retail propane industry and our ability to retain and
grow our customer base.
The retail propane industry has been declining over the past several years, with no or modest 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 National Accounts programs, as well as the success of our
sales and 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.
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 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. Developments in the credit markets during the past few years 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 current 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 adversely affect our operating 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.
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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 and internal controls, as well as in the assimilation of broad and geographically dispersed personnel and
operations. The failure to successfully integrate acquisitions could have an adverse effect 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. These risks could result in substantial losses due
to personal injury and/or loss of life, and severe damage to and destruction of property and equipment arising from explosions
and other catastrophic events, including acts of terrorism. 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.
The risk of terrorism may adversely affect the economy and the price and availability of propane.
Terrorist attacks may adversely impact the price and availability of propane, as well as our results of operations, our ability to
raise capital, and our future growth. The impact that the foregoing may have on our industry in general, and on us in particular,
is not known at this time. An act of terror could result in disruptions of crude oil or natural gas supplies and markets (the sources
of propane), cause price volatility in the cost of propane, and our infrastructure facilities could be direct or indirect targets. Terrorist
activity may also hinder our ability to transport propane if our means of supply transportation, such as rail or pipeline, become
damaged as a result of an attack. A lower level of economic activity could result in a decline in energy consumption, which could
adversely affect our revenues or restrict our future growth. Instability in the financial markets as a result of terrorism could also
affect our ability to raise capital. We have opted to purchase insurance coverage for terrorist acts within our property and casualty
insurance programs, but we can give no assurance that our insurance coverage will be adequate to fully compensate us for any
losses to our business or property resulting from terrorist acts.
If we are unable to protect our information technology systems against service interruption, misappropriation of data, or
breaches of security resulting from cyber security attacks or other events, or we encounter other unforeseen difficulties in the
operation of our information technology systems, our operations could be disrupted, our business and reputation may suffer,
and our internal controls could be adversely affected.
In the ordinary course of business, we rely on information technology systems, including the Internet and third-party hosted
services, to support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii)
our proprietary business information and that of our suppliers and business partners, (iii) personally identifiable information of
our customers and employees, and (iv) data with respect to invoicing and the collection of payments, accounting, procurement,
and supply chain activities. In addition, we rely on our information technology systems to process financial information and
results of operations for internal reporting purposes and to comply with financial reporting, legal, and tax requirements. Despite
our security measures, our information technology systems may be vulnerable to attacks by hackers or breached due to employee
error, malfeasance, sabotage, or other disruptions. A loss of our information technology systems, or temporary interruptions in
the operation of our information technology systems, misappropriation of data, and breaches of security could have a material
adverse effect on our business, financial condition, results of operations, and reputation.
Moreover, the efficient execution of our business is dependent upon the proper functioning of our internal systems, including an
information technology system that supports our Order-to-Cash business processes. Any significant failure or malfunction of this
information technology 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.
Our cash flow and 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
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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 GHG emissions,
most notably carbon dioxide, to global warming. Increased regulation of GHG emissions, especially in the transportation sector,
could impose significant additional costs on us, our suppliers and our customers. Some states have adopted laws and regulations
regulating the emission of GHGs for some industry sectors. For example, the California Environmental Protection Agency
established a Cap & Trade program that requires certain covered entities, including propane companies, to purchase allowances
to compensate for the GHG emissions created by their business operations. However, there is currently no federal or regional
legislation mandating the reduction of GHG emissions in the United States. Although Congress has not enacted federal climate
change legislation, the EPA has begun adopting and implementing regulations to restrict emissions of GHGs from motor vehicles
and certain large stationary sources, and to require reporting of GHG emissions by certain regulated facilities on an annual basis.
The Partnership’s facilities are not currently subject to these regulations, but the potential increased costs of regulatory compliance
and mandatory reporting by our customers and suppliers could have an effect on our operations or financial condition.
The adoption of additional federal or state climate change legislation or regulatory programs to reduce emissions of GHGs could
also require the Partnership or its suppliers to incur increased capital and operating costs, with resulting impact on product price
and demand. The impact of new legislation and regulations will depend on a number of factors, including (i) which 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 operations in the future.
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);
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.
As is the case for most master limited partnerships, our Fourth Amended and Restated Agreement of Limited Partnership dated
as of July 27, 2009, as amended as of March 13, 2012 and as of July 27, 2015 (the “Partnership Agreement”) requires that
distributions to our partners upon our liquidation (or to a partner upon certain redemptions) be made in accordance with positive
capital account balances in order to comply with Treasury regulations (“Treasury Regulations”) promulgated under the Internal
Revenue Code of 1986, as amended (the “Code”), as to our allocations of tax items. Although our Partnership Agreement grants
our General Partner broad discretion to use special allocations, capital account adjustments, and other corrective measures to
prevent this capital account liquidation requirement from causing economic distortions, it is not possible to confirm in all instances
that such economic distortions will not result from this capital account liquidation requirement.
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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.
We are a holding company and have no material operations or assets. Accordingly, unitholders will receive distributions only
if we receive distributions from our Operating Partnership after it meets its own financial obligations.
We are a holding company for our subsidiaries, with no material operations and only limited assets. We are dependent on cash
distributions from the Operating Partnership to make cash distributions to our unitholders.
Unitholders will not receive cash distributions unless the Operating Partnership is able to make distributions to us after it first
satisfies its obligations under the terms of its own borrowing arrangements and reserves any necessary amounts to meet its own
financial obligations. The Operating Partnership is required to distribute all of its available cash each quarter, less the amounts
of cash reserves that our General Partner determines are necessary or appropriate in its reasonable discretion to provide for the
proper conduct of our Operating Partnership’s business, to enable it to make distributions to us so that we can make timely
distributions to our limited partners and the General Partner under our Partnership Agreement during the next four quarters, or to
comply with applicable law or any of our Operating Partnership’s debt or other agreements.
The agreements governing certain of the Operating Partnership’s debt obligations require the Operating Partnership to include in
its cash reserves amounts for future required payments. This limits the amount of available cash the Operating Partnership may
distribute to us each quarter.
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:
incur additional indebtedness;
engage in transactions with affiliates;
create or incur liens;
sell assets;
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• make restricted payments, loans and investments;
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enter into business combinations and asset sale transactions; and
engage in other lines of business.
Holders of Common Units have limited voting rights, management and control of us.
Our General Partner manages and operates AmeriGas Partners. Unlike the holders of common stock in a corporation, holders of
outstanding Common Units have only limited voting rights on matters affecting our business. Holders of Common Units have no
right to elect the general partner or its directors, and our General Partner generally may not be removed except pursuant to the
vote of the holders of not less than two-thirds of the outstanding units. In addition, removal of the general partner may result in a
default under our debt instruments and loan agreements. As a result, holders of Common Units have limited say in matters affecting
our operations and others may find it difficult to attempt to gain control or influence our activities.
Holders of Common Units may be required to sell their Common Units against their will.
If at any time our General Partner and its affiliates hold 80% or more of the issued and outstanding Common Units, our General
Partner will have the right (but not the obligation) to purchase all, but not less than all, of the remaining Common Units held by
nonaffiliates at certain specified prices pursuant to the Partnership Agreement. Accordingly, under certain circumstances holders
of Common Units may be required to sell their Common Units against their will and the price that they receive for those securities
may be less than they would like to receive. They may also incur a tax liability upon a sale of their Common Units.
Holders of Common Units may not have limited liability in certain circumstances and may be liable for the return of distributions
that cause our liabilities to exceed our assets.
The limitations on the liability of holders of Common Units for the obligations of a limited partnership have not been clearly
established in some states. If it were determined that AmeriGas Partners had been conducting business in any state without
compliance with the applicable limited partnership statute, or that the right or the exercise of the right by the holders of Common
Units as a group to remove or replace our General Partner, to make certain amendments to our Partnership Agreement or to take
other action pursuant to that Partnership Agreement constituted participation in the “control” of the business of AmeriGas Partners,
then a holder of Common Units could be held liable under certain circumstances for our obligations to the same extent as our
General Partner. We are not obligated to inform holders of Common Units about whether we are in compliance with the limited
partnership statutes of any states.
Holders of Common Units may also have to repay AmeriGas Partners amounts wrongfully returned or distributed to them. Under
Delaware law, we may not make a distribution to holders of Common Units if the distribution causes our liabilities to exceed the
fair value of our assets. Liabilities to partners on account of their partnership interests and nonrecourse liabilities are not counted
for purposes of determining whether a distribution is permitted. Delaware law provides that a limited partner who receives such
a distribution and knew at the time of the distribution that the distribution violated Delaware law will be liable to the limited
partnership for the distribution amount for three years from the distribution date.
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
14
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.
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.
Our substantial debt could impair our financial condition and our ability to make distributions to holders of Common Units
and operate our business.
Our substantial debt and our ability to incur significant additional indebtedness, subject to the restrictions under AmeriGas OLP’s
bank credit agreement, the outstanding HOLP note agreements and the indentures governing our outstanding notes of the master
15
limited partnership could adversely affect our ability to make distributions to holders of our Common Units and could limit our
flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive
disadvantage compared to our competitors that have proportionately less debt. If we are unable to meet our debt service obligations,
we could be forced to restructure or refinance our indebtedness, seek additional equity capital or sell assets. We may be unable to
obtain financing or sell assets on satisfactory terms, or at all.
Our agreement with Energy Transfer Partners, L.P. (“ETP”) may delay or prevent a change of control, which could adversely
affect the price of our Common Units.
Various provisions in the Contingent Residual Support Agreement (“CRSA”) that we entered into on January 12, 2012 with ETP
and UGI Corporation may delay or prevent a change in control of AmeriGas Partners, which could adversely affect the price of
our Common Units. These provisions may also make it more difficult for our unitholders to benefit from transactions, including
an actual or threatened change in control of us, even though such a transaction may offer our unitholders the opportunity to sell
their Common Units at a price above the prevailing market price. The CRSA provides that, during the five-year period following
the effectiveness of the CRSA, UGI Corporation may not cease to control the General Partner without the consent of ETP (such
consent not to be unreasonably withheld). Thereafter, until termination of the CRSA, which will occur on the earlier of (a) payment
in full of the Supported Debt Principal Amount as defined in the CRSA and (b) payment by ETP of the maximum amount due by
ETP under the CRSA, ETP will not have any consent right with respect to a change of control of the General Partner unless such
change of control would result in a downgrade of the credit rating of the senior notes issued in connection with the Heritage
Propane acquisition. Such provisions may prevent unitholders from realizing potential increases in the price of our Common Units
from an actual or threatened change in control.
Our partnership agreement limits our General Partner’s fiduciary duties of care to unitholders and restricts remedies available
to unitholders for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duties.
Our partnership agreement contains provisions that reduce the standards of care to which our General Partner would otherwise
be held by state fiduciary duty law. For example, our partnership agreement waives or limits, to the extent permitted by law, any
standard of care and duty imposed under state law to act in accordance with the provisions of our partnership agreement so long
as such action is reasonably believed by our General Partner to be in, or not inconsistent with, our best interest. Accordingly, you
may not be entitled to the benefits of certain fiduciary duties imposed by statute or otherwise that would ordinarily apply to directors
and senior officers of publicly traded corporations.
Tax Risks
Our tax treatment depends on our status as a partnership for federal income tax purposes. If the IRS were to treat us as a
corporation, then our cash available for distribution to holders of Common Units would be substantially reduced.
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 (including, but not limited to, due to a change in our business
or a change in current law), we would be required to pay tax on our income at corporate tax rates (currently a maximum 35%
federal rate, in addition to state and local income taxes at varying rates), 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.
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, our
Partnership distribution levels will 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.
In addition, the IRS, on May 5, 2015, issued proposed regulations concerning which activities give rise to qualifying income within
the meaning of Section 7704 of the Internal Revenue Code. We do not believe the proposed regulations affect our ability to qualify
as a publicly traded partnership. However, finalized regulations could modify the amount of our gross income that we are able to
treat as qualifying income for the purposes of the qualifying income requirement.
16
If federal or state tax treatment of partnerships changes to impose entity-level taxation, the amount of cash available to us for
distributions may be lower and distribution levels may have to be decreased.
Current law may change, causing us to be treated as a corporation for federal income tax purposes or otherwise subjecting us to
entity-level taxation. For example, the Obama Administration and members of Congress have recently considered substantive
changes to the existing federal income tax laws that would have affected certain publicly traded partnerships. Specifically, federal
income tax legislation has been considered that would have eliminated partnership tax treatment for certain publicly traded
partnerships and recharacterized certain types of income received from partnerships. Similarly, several states currently impose
entity-level taxes on partnerships, including us. If any additional states were to impose a tax upon us as an entity, our cash available
for distribution would be reduced. We are unable to predict whether any such changes in state entity-level taxes will ultimately
be enacted. Any such changes could negatively impact the value of an investment in our Common Units.
Holders of Common Units will likely be subject to state, local and other taxes in states where holders of Common Units live or
as a result of an investment in the Common Units.
In addition to United States federal income taxes, unitholders will likely be subject to other taxes, such as state and local taxes,
unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which
the unitholder resides or in which we do business or own property. A unitholder will likely be required to file state and local income
tax returns and pay state and local income taxes in some or all of the various jurisdictions in which we do business or own property
and may be subject to penalties for failure to comply with those requirements. It is the responsibility of each unitholder to file all
applicable United States federal, state and local tax returns.
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 on their allocable share of our taxable income 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 taxable 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 at the highest applicable effective
tax rate, and foreign persons will be required to file U.S. federal income tax returns and pay tax on their share of our taxable
income. Prospective unitholders who are tax-exempt organizations or foreign persons should consult their tax advisors before
investing in Common Units.
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.
17
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.
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.
We prorate our items of income, gain, loss, and deduction for federal income tax purposes between transferors and transferees
of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the
date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of
income, gain, loss, and deduction amount our unitholders.
We will prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors and transferees
of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date
a particular unit is transferred. The use of this proration method may not be permitted under existing Treasury Regulations, and,
accordingly, our counsel is unable to opine as to the validity of this method. Recently, however, the U.S. Treasury Department
issued proposed regulations that provide a safe harbor pursuant to which publicly traded partnerships may use a similar monthly
simplifying convention to allocate tax items among transferor and transferee unitholders. Nonetheless, the proposed regulations
do not specifically authorize the use of the proration method. If the IRS were to challenge this method or new Treasury regulations
were issued, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.
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.
The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the
termination of our partnership for federal income tax purposes.
We will be considered to have technically terminated our partnership for federal income tax purposes if there is a sale or exchange
of 50% or more of the total interests in our capital and profits within any twelve-month period. Our termination would, among
other things, result in the closing of our taxable year for all unitholders, which would result in us filing more than one tax return
18
(and our unitholders could receive two Schedules K-1) for one fiscal year and could result in a significant deferral of depreciation
deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a fiscal
year ending December 31, the closing of our taxable year may also result in more than twelve months of our taxable income or
loss being includable in his or her taxable income for the year of termination. Our termination would not affect our classification
as a partnership for federal income tax purposes, but, instead, we would be treated as a new partnership for tax purposes. If treated
as a new partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a
termination occurred. However, under an IRS relief program, a publicly traded partnership that technically terminates may be
allowed to provide one Schedule K-1 to unitholders for the year, notwithstanding that it has more than one partnership tax year.
Following Heritage ETC, L.P.’s completion of public offerings of an aggregate 25,200,000 of our Common Units and subsequent
private sales, Heritage ETC, L.P. currently holds 3,125,000 Common Units. ETP directly and indirectly owns 100% of the equity
interests in Heritage ETC, L.P. If ETP transfers our Common Units it beneficially received in the Heritage Propane acquisition or
engages in certain other transactions with respect to such Common Units, these transactions may be treated for tax purposes as a
sale or exchange of our Common Units. If there is a sale or exchange of our Common Units by any other unitholders within 12
months of such a transaction that would result in a sale or exchange of 50% or more of our Common Units in the aggregate, then
we may be considered to have technically terminated for federal income tax purposes with the attendant consequences described
above.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it may collect any resulting
taxes (including any applicable penalties and interest) directly from us, in which case our cash available for distribution to
our unitholders might be substantially reduced.
Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes audit adjustments to our income tax returns for tax years beginning
after 2017, it may collect any resulting taxes (including any applicable penalties and interest) directly from us. We will generally
have the ability to shift any such tax liability to our General Partner and our unitholders in accordance with their interests in us
during the year under audit, but there can be no assurance that we will be able to do so under all circumstances. If we are required
to make payments of taxes, penalties and interest resulting from audit adjustments, our cash available for distribution to our
unitholders might be substantially reduced.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
As of September 30, 2015, the Partnership owned approximately 81% of its over 700 local offices throughout the country. 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, 2015, the Partnership operated a transportation fleet
with the following assets:
Approximate Quantity & Equipment Type
% Owned
% Leased
1,000
375
500
3,700
425
4,000
Trailers
Tractors
Railroad tank cars
Bobtail trucks
Rack trucks
Service and delivery trucks
76%
9%
2%
39%
38%
52%
24%
91%
98%
61%
62%
48%
Other assets owned at September 30, 2015 included approximately 1.8 million stationary storage tanks with typical capacities of
more than 120 gallons and approximately 4.7 million portable propane cylinders with typical capacities of 1 to 120 gallons.
ITEM 3.
LEGAL PROCEEDINGS
With the exception of the matters set forth in Note 12 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.
19
ITEM 4.
MINE SAFETY DISCLOSURES
None.
PART II:
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER 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.
2015 Fiscal Year
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2014 Fiscal Year
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Price Range
High
Low
47.85
49.87
52.72
48.50
$
$
$
$
39.13
45.25
46.01
42.06
Price Range
High
Low
46.54
48.36
45.00
45.74
$
$
$
$
43.56
42.17
40.96
41.70
Cash
Distribution
0.920
$
0.920
$
0.880
$
0.880
$
Cash
Distribution
0.880
$
0.880
$
0.840
$
0.840
$
$
$
$
$
$
$
$
$
As of November 19, 2015, there were 764 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., as amended (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. Reserves may be maintained to provide for (i) the proper conduct of the Partnership’s business, (ii) distributions
during the next four fiscal quarters and (iii) compliance with applicable law or any debt instrument or other agreement or obligation
to which the Partnership is a party or its assets are subject. The information concerning restrictions on distributions required by
Item 5 of this Report is incorporated herein by reference to Notes 5 and 6 to Consolidated Financial Statements which are
incorporated herein by reference.
20
ITEM 6.
SELECTED FINANCIAL DATA
(Dollars in thousands, except per unit
amounts)
FOR THE PERIOD:
Income statement data:
Revenues
Net income including noncontrolling
interest
Less: net income attributable to
noncontrolling interest
Net income attributable to AmeriGas
Partners, L.P.
Limited partners’ interest in net income
attributable to AmeriGas Partners, L.P.
Income (loss) per limited partner unit —
basic and diluted (b)
Cash distributions declared per limited
partner unit
$
$
1.91
3.60
Year Ended September 30,
2015
2014
2013 (a)
2012 (a)
2011
$ 2,885,322
$ 3,712,935
$ 3,166,543
$ 2,921,616
$ 2,537,959
$ 214,969
$
294,441
$ 225,091
$
12,671
$ 140,924
(3,758)
(4,548)
(3,869)
(1,646)
(2,401)
$ 211,211
$ 178,742
$
$
$
$
289,893
$ 221,222
263,144
$ 199,724
2.82
3.44
$
$
2.14
3.28
$
$
$
$
11,025
$ 138,523
(2,094)
$ 132,101
(0.11)
3.10
$
$
2.30
2.89
AT PERIOD END:
Balance sheet data:
Current assets
Total assets
$ 366,361
$
505,908
$ 504,994
$ 523,368
$ 393,819
$ 4,141,712
$ 4,364,058
$ 4,437,671
$ 4,517,331
$ 1,795,735
Current liabilities (excluding debt)
$ 468,515
$
496,925
$ 492,362
$ 590,239
$ 350,829
Total debt
Partners’ capital:
AmeriGas Partners, L.P. partners’
capital
Noncontrolling interest
Total partners’ capital
OTHER DATA:
Capital expenditures (including capital
leases)
$ 2,351,596
$ 2,400,734
$ 2,417,011
$ 2,377,969
$ 1,029,022
$ 1,164,216
$ 1,322,514
$ 1,385,103
$ 1,429,108
$ 338,656
36,157
38,376
39,034
39,452
12,823
$ 1,200,373
$ 1,360,890
$ 1,424,137
$ 1,468,560
$ 351,479
$ 102,009
$
113,934
$ 111,058
$ 103,140
$
77,228
Retail propane gallons sold (millions)
1,184.3
1,275.6
1,245.2
1,017.5
874.2
Degree days — % (warmer) colder than
normal (c)
Distributable Cash Flow (“DCF”) (d):
(5.8)%
3.4%
(4.9)%
(18.6)%
(1.0)%
DCF
$ 399,875
DCF after growth capital expenditures
$ 355,681
Total distributions paid
$ 368,426
$
$
$
430,864
$ 403,014
$ 196,265
$ 235,579
387,217
$ 363,818
$ 155,798
$ 196,523
346,744
$ 327,000
$ 271,839
$ 171,821
Ratio of DCF to total distributions paid
Ratio of DCF after growth capital
expenditures to total distributions paid
1.1
1.0
1.2
1.1
1.2
1.1
0.7
0.6
1.4
1.1
(a)
(b)
(c)
Reflects the acquisition of Heritage Propane on January 12, 2012 and, during Fiscal 2012 and Fiscal 2013, the impact of
subsequent transition and integration activities.
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 2 to Consolidated Financial Statements.
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.
21
(d)
The following table reconciles net cash provided by operating activities to (1) DCF and (2) DCF after growth capital
expenditures:
Year Ended September 30,
(Thousands of dollars)
2015
2014
2013
2012
2011
Net cash provided by operating activities
$ 523,858
$ 480,070
$ 355,603
$ 344,429
$ 188,851
Add: Heritage Propane acquisition and transition expenses (i)
—
—
26,539
46,187
—
Exclude the impact of changes in operating working capital:
Accounts receivable
Inventories
Accounts payable
Other current assets
Other current liabilities
Provision for uncollectible accounts
Other cash flows from operating activities, net
Maintenance capital expenditures (ii)
DCF (iii) (A)
Growth capital expenditures (ii)
DCF after growth capital expenditures (iii) (B)
Distributions:
Distributions to Common Unitholders
Distributions to the General Partner
Total distributions paid (C)
(51,613)
(86,198)
52,975
10,889
8,825
(15,800)
14,754
15,246
22,804
16,643
(2,429)
(11,045)
(26,403)
6,265
43,378
(5,403)
661
2,305
42,795
(16,477)
5,100
457,690
(57,815)
399,875
(44,194)
$ 355,681
501,151
(70,287)
430,864
(43,647)
$ 387,217
454,501
(51,487)
403,014
(39,196)
$ 363,818
(78,703)
(53,061)
34,577
(11,863)
(24,129)
(15,088)
(1,019)
241,330
(45,065)
196,265
(40,467)
$ 155,798
65,578
20,532
(25,690)
(2,912)
37,387
(12,807)
2,812
273,751
(38,172)
235,579
(39,056)
$ 196,523
$ 334,387
$ 319,427
$ 304,444
$ 256,112
$ 165,066
34,039
27,317
22,556
15,727
6,755
$ 368,426
$ 346,744
$ 327,000
$ 271,839
$ 171,821
Ratio of DCF to total distributions paid (A)/(C)
Ratio of DCF after growth capital expenditures to total
distributions paid (B)/(C)
1.1
1.0
1.2
1.1
1.2
1.1
0.7
0.6
1.4
1.1
(i)
(ii)
(iii)
Heritage Propane acquisition and transition expenses and transition capital expenditures are excluded from the
determination of the distribution coverage ratios above because these expenditures are associated with integration activities
of Heritage Propane acquired in January 2012 and their exclusion from the amounts above provides a more meaningful
indication of ongoing DCF.
The Partnership considers maintenance capital expenditures to include those capital expenditures that maintain the
operating capacity of the Partnership while growth capital expenditures include capital expenditures that increase the
operating capacity of the Partnership.
"DCF" and "DCF after growth capital expenditures" should not be considered as alternatives to net income (as an indicator
of operating performance) or alternatives to cash flow (as a measure of liquidity or ability to service debt obligations)
and are not measures of performance or financial condition under accounting principles generally accepted in the United
States of America (“GAAP”). Management believes DCF and DCF after growth capital expenditures are meaningful
non-GAAP measures for evaluating the Partnership’s ability to declare and pay distributions pursuant to the terms of the
Partnership Agreement. The Partnership’s definitions of DCF and DCF after growth capital expenditures may be different
from those used by other companies. The ability of the Partnership to pay distributions on all units depends upon a
number of factors. These factors include (1) the level of Partnership earnings; (2) the cash needs of the Partnership’s
operations (including cash needed for maintaining and increasing operating capacity); (3) changes in operating working
capital; and (4) the Partnership’s ability to borrow under its Credit Agreement, to refinance maturing debt and to increase
its long-term debt. Some of these factors are affected by conditions beyond our control including weather, competition
in markets we serve, the cost of propane and changes in capital market conditions.
22
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.
Effective April 1, 2014, the Partnership discontinued cash flow hedge accounting for all commodity derivative instruments entered
into beginning April 1, 2014. In addition, effective October 1, 2014, AmeriGas Propane de-designated its remaining commodity
derivative instruments accounted for as cash flow hedges. As a result of these changes in accounting for commodity derivative
instruments, volatility in net income attributable to AmeriGas Partners as determined in accordance with U.S. generally accepted
accounting principles (“GAAP”) can occur as changes in unrealized (non-cash) gains and losses, and certain realized gains and
losses, on commodity derivative instruments not associated with current-period transactions are reflected in cost of sales.
As a result of the discontinuance of cash flow hedge accounting as described above, AmeriGas Partners’ management presents
the non-GAAP measures “adjusted EBITDA,” “adjusted net income attributable to AmeriGas Partners,” “adjusted total margin,”
and “adjusted operating income” (in addition to “net income attributable to AmeriGas Partners” determined in accordance with
GAAP) in order to assist in the evaluation of the Partnership’s overall performance. Management believes that these non-GAAP
measures provide meaningful information to investors about AmeriGas Partners’ performance because they eliminate the impact
of (1) changes in unrealized gains and losses, and certain realized gains and losses, on commodity derivative instruments not
associated with current-period transactions and (2) certain other gains and losses that competitors do not necessarily have, to
provide additional insight into the comparison of year-over-year profitability to that of other master limited partnerships. For
additional information on these non-GAAP measures as well as the non-GAAP measure, “EBITDA,” including reconciliations
of these non-GAAP measures to the most closely associated GAAP terms, see the non-GAAP information included in the section
“Non-GAAP Financial Measures” below.
Executive Overview
We recorded GAAP net income attributable to AmeriGas Partners for Fiscal 2015 of $211.2 million compared to GAAP net income
attributable to AmeriGas Partners for Fiscal 2014 of $289.9 million. The significant decrease in Fiscal 2015 GAAP net income
includes the effects of $47.8 million of losses on commodity derivative instruments not associated with current-period transactions
compared with only $9.5 million of such losses in Fiscal 2014. The significantly higher losses on commodity derivative instruments
not associated with current-period transactions resulted from substantial declines in energy commodity prices, including propane,
during Fiscal 2015. The decline in Fiscal 2015 GAAP net income also reflects a 7.2% decrease in retail gallons sold resulting in
large part from the effects of warmer weather.
Adjusted net income attributable to AmeriGas Partners for Fiscal 2015 was $258.6 million compared with adjusted net income
attributable to AmeriGas Partners for Fiscal 2014 of $299.3 million. The $40.7 million decline in adjusted net income attributable
to AmeriGas Partners principally reflects the previously mentioned effects of warmer weather on retail volumes sold. Average
temperatures in Fiscal 2015 based upon heating degree days were 5.8% warmer than normal and 8.9% warmer than in Fiscal 2014.
Adjusted total margin in Fiscal 2015 decreased $60.5 million (3.8%) as a result of the lower retail volumes sold partially offset
by slightly higher average retail unit margin. The increase in average retail unit margin reflects in part the effects of significantly
lower commodity propane prices during Fiscal 2015. Average daily wholesale propane commodity prices during Fiscal 2015 at
Mont Belvieu, Texas were approximately 50% lower than such prices during Fiscal 2014. Adjusted operating income in Fiscal
2015 decreased $43.6 million principally reflecting the lower adjusted total margin offset in part by lower operating, administrative
and depreciation expenses and slightly higher other operating income.
Looking ahead, our results in Fiscal 2016 will be influenced by a number of factors including, among others, temperatures and
the severity of weather in our service territories during the peak heating-season, the level of volatility of commodity prices for
propane, the level of customer conservation and the strength of economic activity.
Non-GAAP Financial Measures
The Partnership’s management uses certain non-GAAP financial measures, including adjusted total margin, EBITDA, adjusted
EBITDA, adjusted operating income, and adjusted net income attributable to AmeriGas Partners, when evaluating the Partnership’s
overall performance. These financial measures are not in accordance with, or an alternative to, GAAP and should be considered
in addition to, and not as a substitute for, the comparable GAAP measures.
23
Management believes earnings before interest, income taxes, depreciation and amortization (“EBITDA”), as adjusted for the
effects of gains and losses on commodity derivative instruments not associated with current-period transactions and other gains
and losses that competitors do not necessarily have (“adjusted EBITDA”), is a meaningful non-GAAP financial measure used by
investors to (1) compare the Partnership’s operating performance with that of other companies within the propane industry and
(2) assess the Partnership’s ability to meet loan covenants. The Partnership’s definition of adjusted EBITDA may be different
from those used by other companies. Management uses adjusted 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, the effects of gains and losses on commodity
derivative instruments not associated with current-period transactions or historical cost basis. In view of the omission of interest,
income taxes, depreciation and amortization, gains and losses on commodity derivative instruments not associated with current-
period transactions and other gains and losses that competitors do not necessarily have from adjusted EBITDA, management also
assesses the profitability of the business by comparing net income attributable to AmeriGas Partners for the relevant years.
Management also uses adjusted EBITDA to assess the Partnership’s profitability because its parent, UGI Corporation, uses the
Partnership’s adjusted EBITDA to assess the profitability of the Partnership which is one of UGI Corporation’s reportable segments.
UGI Corporation discloses the Partnership’s adjusted EBITDA in its disclosure about reportable segments as the profitability
measure for its domestic propane segment.
Our other non-GAAP financial measures comprise adjusted total margin, adjusted operating income and adjusted net income
attributable to AmeriGas Partners. Management believes the presentations of these non-GAAP financial measures provide useful
information to investors to more effectively evaluate the period-over-period results of operations of the Partnership. Management
uses these non-GAAP financial measures because they eliminate the impact of (1) gains and losses on commodity derivative
instruments not associated with current-period transactions and (2) other gains and losses that competitors do not necessarily have
to provide insight into the comparison of period-over-period profitability to that of other master limited partnerships.
24
The following tables include reconciliations of adjusted total margin, adjusted operating income, adjusted net income attributable
to AmeriGas Partners, EBITDA and adjusted EBITDA to the most directly comparable financial measures calculated and presented
in accordance with GAAP for the years presented:
(Millions of dollars)
Adjusted total margin:
Total revenues
Cost of sales - propane
Cost of sales - other (a)
Total margin
Add net losses on commodity derivative instruments not associated with
current-period transactions
Adjusted total margin
Adjusted operating income:
Operating income
Add net losses on commodity derivative instruments not associated with
current-period transactions
Adjusted operating income
Adjusted net income attributable to AmeriGas Partners:
Net income attributable to AmeriGas Partners
Add net losses on commodity derivative instruments not associated with
current-period transactions
Noncontrolling interest in net losses on commodity derivative instruments not
associated with current-period transactions (a)
Adjusted net income attributable to AmeriGas Partners
EBITDA and Adjusted EBITDA:
Net income attributable to AmeriGas Partners
Income tax expense (a)
Interest expense
Depreciation
Amortization
EBITDA
Add net losses on commodity derivative instruments not associated with
current-period transactions
Heritage transition expenses
Noncontrolling interest in net gains (losses) on commodity derivative
instruments not associated with current-period transactions and Heritage
transition expenses(a)
Adjusted EBITDA
(a) Includes the impact of rounding.
$
$
$
$
$
$
$
Year Ended September 30,
2015
2014
2013
$
2,885.3
(1,301.2)
(86.6)
1,497.5
$
3,712.9
(2,034.6)
(82.0)
1,596.3
3,166.5
(1,571.6)
(88.5)
1,506.4
47.8
9.5
—
1,545.3
$
1,605.8
$
1,506.4
380.7
$
462.6
$
392.2
47.8
9.5
428.5
$
472.1
$
—
392.2
211.2
$
289.9
$
221.2
47.8
9.5
—
(0.4)
258.6
$
(0.1)
299.3
$
—
221.2
211.2
$
289.9
$
2.9
162.8
152.2
42.7
571.8
47.8
—
2.6
165.6
154.0
43.2
655.3
9.5
—
221.2
1.7
165.4
159.3
43.6
591.2
—
26.5
(0.4)
619.2
$
(0.1)
664.7
$
(0.3)
617.4
$
25
Analysis of Results of Operations
The following analyses compare the Partnership’s results of operations for (1) Fiscal 2015 with Fiscal 2014 and (2) Fiscal 2014
with the year ended September 30, 2013 (“Fiscal 2013”).
Fiscal 2015 Compared with Fiscal 2014
(Dollars in millions)
Gallons sold (millions):
Retail
Wholesale
Revenues:
Retail propane
Wholesale propane
Other
Total margin (a) (b)
Operating and administrative expenses
Operating income (b)
Net income attributable to AmeriGas Partners (b)
Non-GAAP financial measures (c):
Adjusted total margin
EBITDA (b)
Adjusted EBITDA
Adjusted operating income
Adjusted net income attributable to AmeriGas Partners
2015
2014
Increase (Decrease)
1,184.3
54.4
1,238.7
1,275.6
93.4
1,369.0
$
2,570.7
$
3,307.6
$
41.7
272.9
2,885.3
1,497.5
953.3
380.7
211.2
1,545.3
571.8
619.2
428.5
258.6
$
$
$
$
$
$
$
$
$
$
133.2
272.1
3,712.9
1,596.3
964.0
462.6
289.9
1,605.8
655.3
664.7
472.1
299.3
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(91.3)
(39.0)
(130.3)
(736.9)
(91.5)
0.8
(827.6)
(98.8)
(10.7)
(81.9)
(78.7)
(60.5)
(83.5)
(45.5)
(43.6)
(40.7)
—
(7.2)%
(41.8)%
(9.5)%
(22.3)%
(68.7)%
0.3 %
(22.3)%
(6.2)%
(1.1)%
(17.7)%
(27.1)%
(3.8)%
(12.7)%
(6.8)%
(9.2)%
(13.6)%
—
Heating degree days — % (warmer) colder than normal (d)
(5.8)%
3.4%
(a)
(b)
(c)
(d)
Total margin represents total revenues less cost of sales — propane and cost of sales — other.
Total margin, EBITDA, operating income and net income attributable to AmeriGas Partners for Fiscal 2015 and Fiscal
2014 include the impact of net unrealized losses of $47.8 million and $9.5 million, respectively, on commodity derivative
instruments not associated with current-period transactions.
These financial measures are non-GAAP financial measures and are not in accordance with, or an alternative to, GAAP
and should be considered in addition to, and not a substitute for, the comparable GAAP measures. See section “Non-
GAAP Financial Measures” above.
Deviation from average heating degree days for the 30-year period 1971-2000 based upon national weather statistics
provided by NOAA for 335 airports in the United States, excluding Alaska.
The Partnership’s retail gallons sold during Fiscal 2015 decreased 7.2%. The decline in retail gallons sold principally reflects
average temperatures based upon heating degree days that were 5.8% warmer than normal and 8.9% warmer than in Fiscal 2014
principally reflecting significantly warmer weather in the western U.S.
Retail propane revenues decreased $736.9 million during Fiscal 2015 reflecting lower average retail selling prices ($500.2 million),
principally the result of the lower propane product costs, and the effects of lower retail volumes sold ($236.7 million). Wholesale
propane revenues decreased $91.5 million during Fiscal 2015 reflecting the effects of lower wholesale volumes sold ($55.6 million)
and lower wholesale selling prices ($35.9 million). Average daily wholesale propane commodity prices during Fiscal 2015 at Mont
Belvieu, Texas were more than 50% lower than such prices during Fiscal 2014. Revenues from fee income and other ancillary
sales and services in Fiscal 2015 were slightly higher than in the prior-year. Total cost of sales during Fiscal 2015 decreased $728.8
26
million from Fiscal 2014. Cost of sales in Fiscal 2015 includes $47.8 million of losses on commodity derivative instruments not
associated with current-period transactions compared with losses in the prior-year period of $9.5 million. Excluding the effects
on cost of sales of the net losses on derivative commodity instruments, total propane cost of sales decreased $771.8 million
principally reflecting the effects of the significantly lower average propane product costs ($582.4 million) and the effects of the
lower retail and wholesale volumes sold ($189.4 million) on propane cost of sales.
Total margin, which includes $47.8 million and $9.5 million of net losses on commodity derivative instruments not associated
with current-period transactions in Fiscal 2015 and Fiscal 2014, respectively, decreased $98.8 million in Fiscal 2015. Adjusted
total margin, which excludes the effects of such gains and (losses), decreased $60.5 million principally reflecting lower retail
propane total margin ($53.8 million) and, to a much lesser extent, lower margin from wholesale sales and ancillary sales and
services. The decrease in retail propane total margin largely reflects the previously mentioned decline in retail gallons sold partially
offset by higher average propane retail unit margins.
Fiscal 2015 EBITDA and operating income, including the effects of the previously mentioned losses on commodity derivative
instruments not associated with current-period transactions, decreased $83.5 million and $81.9 million, respectively, from Fiscal
2014. Adjusted EBITDA in Fiscal 2015 decreased $45.5 million principally reflecting the lower adjusted total margin ($60.5
million) offset in part by lower operating and administrative expenses ($10.7 million) and higher other operating income ($3.9
million) resulting, in large part, from sales of excess assets. The decrease in operating and administrative expenses reflects lower
vehicle expenses ($18.3 million), principally reflecting lower vehicle fuel expenses, and lower uncollectible accounts expense
($10.6 million) partially offset by, among other things, higher insurance and self-insured casualty and liability expenses. Adjusted
operating income decreased $43.6 million in Fiscal 2015 principally reflecting the lower Partnership adjusted EBITDA ($45.5
million) partially offset by lower depreciation expense.
Fiscal 2014 Compared with Fiscal 2013
(Dollars in millions)
Gallons sold (millions):
Retail
Wholesale
Revenues:
Retail propane
Wholesale propane
Other
Total margin (a) (b)
Operating and administrative expenses
Operating income (b)
Net income attributable to AmeriGas Partners (b)
Non-GAAP financial measures (c):
Adjusted total margin
EBITDA (b)
Adjusted EBITDA
Adjusted operating income
Adjusted net income attributable to AmeriGas Partners
2014
2013
Increase (Decrease)
1,275.6
93.4
1,369.0
1,245.2
101.8
1,347.0
$
3,307.6
$
2,775.8
133.2
272.1
3,712.9
1,596.3
964.0
462.6
289.9
1,605.8
655.3
664.7
472.1
299.3
109.0
281.7
3,166.5
1,506.4
943.9
392.2
221.2
1,506.4
591.2
617.4
392.2
221.2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
30.4
(8.4)
22.0
531.8
24.2
(9.6)
546.4
89.9
20.1
70.4
68.7
99.4
64.1
47.3
79.9
78.1
—
2.4 %
(8.3)%
1.6 %
19.2 %
22.2 %
(3.4)%
17.3 %
6.0 %
2.1 %
18.0 %
31.1 %
6.6 %
10.8 %
7.7 %
20.4 %
35.3 %
—
Heating degree days — % colder (warmer) than normal (d)
3.4%
(4.9)%
(a)
(b)
Total margin represents total revenues less cost of sales — propane and cost of sales — other.
Total margin, EBITDA, operating income and net income attributable to AmeriGas Partners for Fiscal 2014 includes the
impact of net losses of $9.5 million on commodity derivative instruments not associated with current-period transactions.
27
(c)
(d)
These financial measures are non-GAAP financial measures and are not in accordance with, or an alternative to, GAAP
and should be considered in addition to, and not a substitute for, the comparable GAAP measures. See section “Non-
GAAP Financial Measures” above.
Deviation from average heating degree days for the 30-year period 1971-2000 based upon national weather statistics
provided by NOAA for 335 airports in the United States, excluding Alaska.
The 2.4% increase in retail gallons sold in Fiscal 2014 reflects average temperatures based upon heating degree days that were
3.4% colder than normal and 8.8% colder than the prior year. The colder average weather reflects significantly colder winter
weather in the eastern half of the United States partially offset by warmer weather in the western U.S. The effects of the colder
winter weather on retail gallons sold, however, were muted by supply challenges in certain regions of the U.S. that experienced
prolonged periods of unusually cold winter weather. In order to ensure that customers in these regions were adequately supplied
during these extreme weather conditions, the Partnership instituted supply allocation measures in certain areas, which limited total
retail volumes sold and increased distribution costs per gallon.
Retail propane revenues increased $531.8 million during Fiscal 2014 reflecting the effects of higher average retail selling prices
($464.0 million), largely the result of higher propane product costs, and the higher retail volumes sold ($67.8 million). Wholesale
propane revenues increased $24.2 million during Fiscal 2014 reflecting the effects of higher wholesale selling prices ($33.2 million)
partially offset by the effects of slightly lower wholesale volumes sold ($9.0 million). Average daily wholesale propane commodity
prices during Fiscal 2014 at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 25% higher
than such prices during Fiscal 2013. In addition, certain regions of the U.S. experienced an even greater increase in wholesale
commodity prices due to supply constraints caused by industry-wide storage and transportation issues exacerbated by the unusually
cold winter weather conditions. Partially offsetting the higher retail and wholesale revenues were slightly lower revenues from
fee income and other ancillary sales and services. Total cost of sales during Fiscal 2014 increased $456.5 million from Fiscal 2013.
Cost of sales in Fiscal 2014 includes $9.5 million of losses on commodity derivative instruments not associated with current period
transactions. As previously mentioned, effective April 1, 2014, we determined, on a prospective basis, that we would no longer
elect cash flow hedge accounting for commodity derivative contracts. As a result, all gains or losses from changes in the fair
values of commodity derivative contracts entered into beginning April 1, 2014, are required, under GAAP, to be included in propane
cost of sales in the Consolidated Statement of Operations. Excluding the effects on cost of sales of the net losses on commodity
derivative instruments in Fiscal 2014, cost of sales increased $447.0 million principally reflecting the effects of the higher average
propane product costs ($426.4 million) and, to a lesser extent, the effects of the greater retail and wholesale volumes sold ($27.1
million) partially offset by lower cost of sales from ancillary sales and services.
Total margin, which in Fiscal 2014 includes $9.5 million of net losses on commodity derivative instruments not associated with
current period transactions, increased $89.9 million in Fiscal 2014. Adjusted total margin, which excludes the effects of such
losses, increased $99.4 million principally reflecting higher retail propane total margin ($102.6 million) partially offset by slightly
lower margin from ancillary sales and services. The increase in retail propane total margin reflects modestly higher average retail
propane unit margins and, to a lesser extent, the previously mentioned increase in retail volumes sold.
EBITDA in Fiscal 2014 increased $64.1 million principally reflecting the higher total margin ($89.9 million) partially offset by
slightly higher operating and administrative expenses ($20.1 million), including the impact of $26.5 million of transition expenses
in Fiscal 2013 associated with the integration of Heritage Propane, acquired in January 2012, and lower other income ($5.0 million).
Adjusted EBITDA in Fiscal 2014 increased $47.3 million principally reflecting the higher adjusted total margin ($99.4 million)
partially offset by a $46.6 million increase in operating and administrative expenses, excluding the impact of $26.5 million of
Heritage Propane transition expenses recorded in Fiscal 2013, and the lower other income. The increase in operating and
administrative expenses excluding the effects of the Heritage Propane transition expenses in the prior-year period reflects, among
other things, higher distribution-related expenses associated with the higher retail volumes sold and higher distribution costs caused
by the supply challenges in certain regions of the U.S. during the second quarter of Fiscal 2014. The increase in operating and
administrative costs also reflects higher uncollectible accounts expense ($9.9 million) and higher casualty and general liability
expenses ($6.3 million). Adjusted operating income increased $79.9 million in Fiscal 2014 principally reflecting the higher adjusted
total margin ($99.4 million) and slightly lower depreciation and amortization ($5.7 million) partially offset by the slightly higher
operating and administrative expenses ($20.1 million) and the lower other income.
28
Financial Condition and Liquidity
Capitalization and Liquidity
The Partnership’s debt outstanding at September 30, 2015, totaled $2,351.6 million (including current maturities of long-term debt
of $9.7 million and Credit Agreement borrowings of $68.1 million). The Partnership’s debt outstanding at September 30, 2014,
totaled $2,400.7 million (including current maturities of long-term debt of $11.6 million and short-term borrowings of $109.0
million). Total long-term debt outstanding at September 30, 2015, including current maturities, comprises $2,250.8 million of
AmeriGas Partners’ Senior Notes, $21.0 million of HOLP Senior Notes and $11.7 million of other long-term debt.
AmeriGas OLP has an Amended and Restated Credit Agreement (the “Credit Agreement”) with a group of banks which provides
for borrowings up to $525 million (including a $125 million sublimit for letters of credit) and expires in June 2019. 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, or at a one-week, one-, two-, three-, or six-month Eurodollar Rate,
as defined in the Credit Agreement, plus a margin.
At September 30, 2015 and 2014, there were $68.1 million and $109.0 million of borrowings outstanding under the Credit
Agreement, respectively. The average interest rates on Credit Agreement borrowings at September 30, 2015 and 2014, were 2.20%
and 2.16%, respectively. Borrowings under the Credit Agreement are classified as short-term borrowings on the Consolidated
Balance Sheets. Issued and outstanding letters of credit under the Credit Agreement, which reduce the amounts available for
borrowings, totaled $64.7 million at September 30, 2015 and 2014. The average daily and peak short-term borrowings outstanding
under the Credit Agreement during Fiscal 2015 were $119.5 million and $349.0 million, respectively. The average daily and peak
short-term borrowings outstanding under the Credit Agreement and a predecessor credit agreement during Fiscal 2014 were $156.6
million and $320.0 million, respectively. At September 30, 2015, the Partnership’s available borrowing capacity under the Credit
Agreement was $392.2 million.
Based on existing cash balances, cash expected to be generated from operations, and borrowings available under the 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 2016. For a more detailed discussion of the Credit Agreement, see Note 6 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, as amended, (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.
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 2015, Fiscal 2014 and Fiscal 2013 were as
follows:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
2015
2014
2013
$0.88
$0.88
$0.92
$0.92
$0.84
$0.84
$0.88
$0.88
$0.80
$0.80
$0.84
$0.84
29
During Fiscal 2015, Fiscal 2014 and Fiscal 2013, the Partnership made quarterly distributions to Common Unitholders in excess
of $0.605 per limited partner unit. As a result, the General Partner 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 $39.3 million in Fiscal 2015,
$32.4 million in Fiscal 2014 and $27.4 million in Fiscal 2013. Included in these amounts are incentive distributions received by
the General Partner during Fiscal 2015, Fiscal 2014 and Fiscal 2013 of $30.4 million, $23.9 million and $19.3 million, respectively.
Cash Flows
Year Ended September 30,
(millions of dollars)
Net cash provided by operating activities
2015
2014
2013
$
523.9
$
480.1
$
355.6
Due to the seasonal nature of the Partnership’s business, cash flows from operating activities are generally greatest 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 Agreement
to satisfy its seasonal operating cash flow needs.
Cash flow from operating activities was higher in Fiscal 2015 compared with Fiscal 2014 principally reflecting a significant
increase in cash flow from changes in operating working capital. Cash flow from operating activities before changes in operating
working capital was $458.7 million in Fiscal 2015, $521.3 million in Fiscal 2014 and $439.3 million in Fiscal 2013. The year-
over-year changes in cash flow from operating activities before changes in working capital principally reflects the year-over-year
impact of changes in operating results. Changes in operating working capital provided (used) operating cash flow of $65.1 million
in Fiscal 2015, $(41.2) million in Fiscal 2014 and $(83.7) million in Fiscal 2013. Cash flow from changes in operating working
capital primarily reflects the impact of propane prices on cash receipts from customers as reflected in changes in accounts receivable,
and cash paid for propane purchased as reflected in changes in inventories and accounts payable. The increase in cash flow from
changes in operating working capital in Fiscal 2015 reflects, in large part, the impact on such cash flows from the previously
mentioned significant decline in LPG commodity costs which occurred during Fiscal 2015. Among other things, cash flow from
changes in operating working capital in Fiscal 2014 compared to Fiscal 2013 includes greater cash used to fund higher volumes
of propane inventory at September 30, 2014 compared to propane inventory volumes at September 30, 2013.
Year Ended September 30,
(millions of dollars)
Net cash used in investing activities
2015
2014
2013
$
(99.0) $
(109.7) $
(108.9)
Investing activity cash flow principally comprises expenditures for property, plant and equipment, cash paid for acquisitions of
businesses and proceeds from disposals of assets. We spent $102.0 million for property, plant and equipment in Fiscal 2015;
$113.9 million in Fiscal 2014; and $111.1 million in Fiscal 2013.
Year Ended September 30,
(millions of dollars)
Net cash used in financing activities
2015
2014
2013
$
(423.5) $
(369.5) $
(294.2)
Financing activity cash flow principally comprises distributions on AmeriGas Partners Common Units, issuances and repayments
of long-term debt, short-term borrowings, and issuances of AmeriGas Partners Common Units. Distributions on Common Units
and the General Partner interest totaled $368.4 million, $346.7 million and $327.0 million in Fiscal 2015, Fiscal 2014 and Fiscal
2013, respectively. The year-over-year increases in distributions principally reflect the effects of increases in the distribution rate
over the three-year period. The decrease in short-term borrowings was higher in Fiscal 2015 compared with Fiscal 2014 principally
as a result of the previously mentioned higher Fiscal 2015 cash provided by operating activities.
Capital Expenditures
In the following table, we present capital expenditures (which exclude acquisitions) for Fiscal 2015, Fiscal 2014 and Fiscal 2013.
We also provide amounts we expect to spend in Fiscal 2016. We expect to finance Fiscal 2016 capital expenditures principally
from cash generated by operations and borrowings under our Credit Agreement.
30
Year Ended September 30,
(millions of dollars)
Maintenance capital expenditures
Growth capital expenditures
Heritage Propane transition capital expenditures
Total capital expenditures
2016
(estimate)
2015
2014
2013
$
$
$
60.9
49.1
—
$
57.8
44.2
—
$
70.3
43.6
—
51.5
39.2
20.4
110.0
$
102.0
$
113.9
$
111.1
The Partnership considers a number of factors in determining whether its capital expenditures are growth capital expenditures or
maintenance capital expenditures. The Partnership considers growth capital to include those expenditures that increase the operating
capacity of the Partnership. Examples of growth expenditures include, but are not limited to, expenditures to build new plants,
expenditures related to the growth of our base business, such as new customer tanks and equipment, expansion of our National
Accounts or ACE programs and expenditures in technology that enable us to leverage our scale to generate efficiencies or expand
our operations. Maintenance capital expenditures are generally considered to be any capital expenditure that maintains the
Partnership’s operating capacity and include capital repairs to buildings, bulk storage plants, vehicles, company-owned tanks and
any expenditures related to the maintenance of our existing infrastructure.
Contractual Cash Obligations and Commitments
The Partnership has certain contractual cash obligations that extend beyond Fiscal 2015 including scheduled repayments of 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, 2015:
(millions of dollars)
Long-term debt (a)
Interest on long-term fixed-rate debt (b)
Operating leases
Propane supply contracts
Derivative instruments (c)
Total
$
$
Payments Due by Period
Total
Fiscal 2016
Fiscal 2017 -
2018
Fiscal 2019 -
2020
Fiscal 2021
and
thereafter
2,281.0
889.0
318.2
58.2
55.2
3,601.6
$
$
9.2
153.1
57.4
53.5
47.5
320.7
$
$
11.4
305.2
91.6
4.7
7.3
420.2
$
$
1,009.3
275.8
73.2
—
0.4
1,358.7
$
$
1,251.1
154.9
96.0
—
—
1,502.0
(a)
(b)
(c)
Based upon stated maturity dates.
Based upon stated interest rates.
Represents the sum of amounts due from us if derivative liabilities were settled at September 30, 2015, amounts reflected
in the Consolidated Balance Sheet.
The components of other noncurrent liabilities included in our Consolidated Balance Sheet at September 30, 2015, 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. Certain of
our operating lease arrangements, primarily vehicle leases with remaining lease terms of one to ten years, have residual value
guarantees. Although such fair values at the end of the leases have historically exceeded the guaranteed amount, at September 30,
2015, the maximum potential amount of future payments under lease guarantees, assuming the leased equipment was deemed
worthless at the end of the lease term, was approximately $32.4 million.
Related Party Transactions
Pursuant to the Partnership Agreement, 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 $576.1 million in Fiscal 2015, $555.4 million in
Fiscal 2014, and $540.3 million in Fiscal 2013, include employee compensation and benefit expenses of employees of the General
Partner and general and administrative expenses.
31
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 $22.6
million in Fiscal 2015, $20.5 million in Fiscal 2014 and $18.6 million in Fiscal 2013. 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 $3.0 million in Fiscal 2015, $4.0 million in Fiscal 2014 and $4.5 million in Fiscal 2013.
From time to time, the AmeriGas OLP purchases propane on an as needed basis from UGI Energy Services, LLC (“Energy
Services”). The price of the purchases are generally based on market price at the time of purchase. There were no purchases of
propane by AmeriGas OLP from Energy Services in Fiscal 2015. Purchases of propane by AmeriGas OLP from Energy Services
totaled $0.9 million and $2.0 million during Fiscal 2014 and Fiscal 2013, respectively.
In addition, AmeriGas OLP sells propane to affiliates of UGI. Sales of propane to affiliates of UGI totaled $1.2 million, $1.2
million and $1.3 million during Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively.
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.
Market Risk Disclosures
Our primary financial market risks include commodity prices for propane and interest rates on borrowings. 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.
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. The fair value of unsettled commodity price risk sensitive instruments at September 30, 2015 and 2014, were losses
of $57.3 million and $6.4 million, respectively. A hypothetical 10% adverse change in the market price of propane would result
in decreases in such fair values of $16.3 million and $28.0 million, respectively.
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.
At September 30, 2015, our variable-rate debt includes borrowings under the Credit Agreement. Credit Agreement borrowings
have interest rates that are generally indexed to short-term market interest rates. At September 30, 2015 and 2014, there were
$68.1 million and $109.0 million of borrowings outstanding under the Credit Agreement and our previous credit agreement,
respectively. Based upon the average level of borrowings outstanding under these agreements during Fiscal 2015 and 2014, an
increase in short-term interest rates of 100 basis points (1%) would have increased our Fiscal 2015 and Fiscal 2014 annual interest
expense by $1.2 million and $1.6 million, respectively.
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 approximately $79 million and $89 million at September 30, 2015
and 2014, respectively. A 100 basis point decrease in market interest rates would result in increases in the fair market value of this
debt of approximately $61 million and $56 million at September 30, 2015 and 2014, respectively.
32
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 may enter into interest rate protection
agreements. There were no settled or unsettled amounts relating to interest rate protection agreements at September 30, 2015 or
2014.
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
Accounting policies and estimates discussed in this section are those that we consider to be the most critical to an understanding
of our financial statements because they involve significant judgments and uncertainties. Changes in these policies and estimates
could have a material effect on the financial statements. The application of these accounting policies and estimates 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 the General Partner’s Audit Committee. In addition, management has
reviewed the following disclosures regarding the application of these critical accounting policies and estimates with the Audit
Committee. Also, see Note 2 to Consolidated Financial Statements which discusses our significant accounting policies.
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.
Accounting For Derivative Instruments At Fair Value. The Partnership enters into derivative instruments to economically
hedge the risks associated with changes in commodity prices for propane. These derivatives are recognized as assets and liabilities
at fair value on the Consolidated Balance Sheets. Derivative assets and liabilities are presented net by counterparty on our
Consolidated Balance Sheets if the right of offset exists. 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. Effective April 1, 2014, we determined
that on a prospective basis we would not elect cash flow hedge accounting for our commodity derivative transactions. In addition,
effective October 1, 2014, the Partnership de-designated its remaining commodity derivative instruments accounted for as cash
flow hedges. As a result, all unrealized gains and losses on our derivative commodity transactions entered into beginning April 1,
2014, and changes in the fair values of commodity derivative de-designated as cash flow hedges as of October 1, 2014, are included
as a component of cost of sales on the Consolidated Statement of Operations. Previously, changes in the fair values of certain
derivative instruments that qualified and were designated as cash flow hedges were recorded in accumulated other comprehensive
income (“AOCI”) or noncontrolling interest, both of which are components of equity, to the extent effective at offsetting changes
in the hedged item, until earnings were affected by the hedged item. The fair values of our commodity derivative are based upon
indicative price quotations available through brokers, industry price publications or recent market transactions and related market
indicators. For commodity option contracts not traded on an exchange, we use a Black Scholes option pricing model that considers
time value and volatility of the underlying commodity. We maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair values of derivatives. At September 30, 2015, the net fair value of our derivative assets
totaled $1.2 million and the net fair value of our derivative liabilities totaled $58.6 million.
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 3 to 40 years. We also use amortization methods and determine asset
values of intangible assets subject to amortization 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
33
on our results of operations. As of September 30, 2015, our net property, plant and equipment totaled $1,324.3 million and we
recorded depreciation expense of $152.2 million during Fiscal 2015. As of September 30, 2015, our net intangible assets subject
to amortization totaled $350.8 million and we recorded amortization expense on intangible assets subject to amortization of $37.9
million during Fiscal 2015.
Purchase Price Allocations. 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.
Recently Issued Accounting Pronouncements
See Note 3 to the Consolidated Financial Statements for a discussion of the effects of recently issued accounting guidance.
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)
(b)
(c)
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 or submitted 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 September 30, 2015, were effective at the reasonable assurance level.
For “Management’s Annual Report on Internal Control Over Financial Reporting” see Item 8 of this Report (which
information is incorporated herein by reference).
During the most recent fiscal quarter, no change in the Partnership’s internal control over financial reporting occurred
that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial
reporting.
ITEM 9B.
OTHER INFORMATION
None.
34
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 13 to
Consolidated Financial Statements.
Board Committees
The Board of Directors of the General Partner has an Audit Committee, Compensation/Pension Committee, Corporate Governance
Committee and Executive Committee. The functions of and other information about these committees are summarized below.
Audit Committee: The Audit Committee has the authority to (i) make determinations or review determinations made by
management in transactions that require special approval by the Audit 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;
oversee the Partnership’s policies and programs to promote cyber security;
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. Marrazzo (Chair), Ford and Turner. 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 Board of Directors of the General Partner has also determined, in
light of Mr. Turner’s experience in the energy industry, the similarity of the businesses of the boards on which Mr. Turner serves
as a director and audit committee member, his accounting and finance background, and his affirmative interest and willingness to
devote the necessary time and effort to the Audit Committee, that Mr. Turner’s service on more than three public company audit
committees will not impair his ability to serve as an effective member of the Audit Committee.
Compensation/Pension Committee: The Compensation/Pension Committee members are Messrs. Schlanger (Chair) and Marrazzo
and Mrs. Pol. 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 the Chief Executive Officer, approves base salary, annual bonus
target levels and long-term compensation awards for senior executives (other than the Chief Executive Officer), 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. A copy of the current charter of the Compensation/Pension Committee is posted on the Partnership’s website,
www.amerigas.com; see “Investor Relations - Corporate Governance.”
35
Corporate Governance Committee: The Corporate Governance Committee members are Mrs. Pol (Chair) and Messrs. Ford and
Schlanger. 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. A copy of the current charter of the
Corporate Governance Committee is posted on the Partnership’s website, www.amerigas.com; see “Investor Relations - Corporate
Governance.”
Executive Committee: The Executive Committee members are Messrs. Schlanger (Chair), Greenberg, Marrazzo and Walsh. The
Committee has limited powers to act on behalf of the Board of Directors between regularly scheduled meetings on matters that
cannot be delayed.
Code of Ethics
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 Treasurer, AmeriGas Propane, Inc., P. O. Box 965, 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
Jerry E. Sheridan
Lon R. Greenberg
John L. Walsh
Brian R. Ford
William J. Marrazzo
Anne Pol
Pedro A. Ramos
Marvin O. Schlanger
K. Richard Turner
Robert J. Cane
Troy E. Fee
Hugh J. Gallagher
Monica M. Gaudiosi
Anthony Rosback
David L. Lugar
Andrew J. Peyton
Kathy L. Prigmore
Kevin Rumbelow
Age
Position with the General Partner
50 President, Chief Executive Officer and Director
65 Chairman and Director
60 Vice Chairman and Director
66 Director
66 Director
68 Director
50 Director
67 Director
57 Director
50 Controller and Chief Accounting Officer
47 Vice President - Human Resources and Strategic Initiatives
52 Vice President - Finance and Chief Financial Officer
52 Vice President, General Counsel and Secretary
52 Vice President and Chief Operating Officer
58 Vice President - Supply and Logistics
47 Vice President - Corporate Development
52 Vice President - Operations Support and Customer Advocacy
55 Vice President - Supply Chain
Listed below is the biographical information for each of the Directors of the General Partner, as well as a description of the specific
experience, qualifications, attributes and skills that led the Board to conclude that, in light of the Company’s business and structure,
the individual should serve as a director. The biographical business experience of the executive officers of the General Partner is
also listed below.
36
Jerry E. Sheridan is President, Chief Executive Officer and a Director of the General Partner (since March 2012). Previously, he
served as Vice President - Operations and Chief Operating Officer of the General Partner (2011 to 2012) and as Vice President -
Finance and Chief Financial Officer (2005 to 2011). Mr. Sheridan served as President and Chief Executive Officer (2003 to 2005)
of Potters Industries, Inc., a global manufacturer of engineered glass materials and a wholly-owned subsidiary of PQ Corporation,
a global producer of inorganic specialty chemicals. 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. Mr. Sheridan also serves on the Management
Board of CP Kelco (since 2013), a privately held company that provides innovative products and solutions through the use of
nature-based chemistry.
Mr. Sheridan’s senior executive experience as the Company’s President and Chief Executive Officer, and previously as Vice
President, Chief Operating Officer and Chief Financial Officer, provide him with executive leadership experience and in-depth
knowledge and understanding of all aspects of the Partnership’s operations, including business, competition, risks, and health,
environmental and safety issues. Mr. Sheridan also possesses industry and retail knowledge.
Lon R. Greenberg is a Director (since 1994) and Non-Executive Chairman of the General Partner. He previously served as
Executive Chairman of the General Partner (1996 to 2013), Chief Executive Officer (1995 to 2013), President (1994 to 2005) and
Senior Vice President - Legal and Corporate Development of UGI Corporation (1989 to 1994). Mr. Greenberg also serves as a
Director and Non-Executive Chairman of UGI Corporation, the General Partner’s parent company, and UGI Utilities, Inc., an
affiliate of the General Partner (since 1998). Additionally, Mr. Greenberg serves as a director of Ameriprise Financial, Inc.,
AmerisourceBergen Corporation and Aqua America, Inc. As previously announced, Mr. Greenberg will retire as Non-Executive
Chairman of the Board of Directors of the General Partner, effective January 27, 2016.
Mr. Greenberg’s qualifications to serve as a director include his extensive knowledge of the Partnership’s retail propane business
operations, customers and the regulatory environments in which the Partnership operates. Mr. Greenberg, by virtue of his senior
executive leadership experience, possesses in-depth expertise in strategic planning and business development, as evidenced by
the Partnership’s successful growth during Mr. Greenberg’s tenure as Chairman of the General Partner’s Board of Directors.
Additionally, Mr. Greenberg’s service as a member of other public company boards provides the General Partner with a breadth
of experience and exposure to complex business issues.
John L. Walsh is a Director and Vice Chairman of the General Partner (since 2005). He also serves as a Director and President
(since 2005) and Chief Executive Officer (since 2013) of UGI Corporation, the General Partner’s parent company. In addition,
Mr. Walsh is a Director and Vice Chairman (since 2005) of UGI Utilities, Inc., an affiliate of the General Partner. He served as
Chief Operating Officer (2005 to 2013) of UGI Corporation and as President and Chief Executive Officer (2009 to 2011) 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). Mr. Walsh also
serves as a Vice President and Director of the World LPG Association. As previously announced, Mr. Walsh will serve as the
General Partner’s Executive Chairman, effective January 27, 2016.
Mr. Walsh’s qualifications to serve as a director include his in-depth knowledge of the Partnership’s business, competition, risks,
and health, environmental and safety issues. Additionally, Mr. Walsh’s extensive strategic planning, operational, executive
leadership experience and educational background enables him to provide valuable strategic, management development,
operational and business leadership as the Partnership’s Vice Chairman.
Brian R. Ford was elected as a Director of the General Partner on November 1, 2013. Mr. Ford served as the Chief Executive
Officer of Washington Philadelphia Partners, LP, a real estate investment company (2008 to 2010). Prior to that, Mr. Ford was a
partner of Ernst & Young LLP, a multinational professional services firm offering assurance, tax, consulting, and advisory services,
where he served in various roles of increasing responsibility from 1971 until his retirement in 2008. Mr. Ford currently serves as
a director of GulfMark Offshore, Inc., NRG Yield, Inc., a public, wholly owned subsidiary of NRG Energy, Inc., and FSIC III, a
specialty finance company that invests primarily in the debt securities of private U.S. middle-market companies.
Mr. Ford’s qualifications to serve as a director include his extensive financial, audit, accounting, and retail experience as a partner
of a large public accounting firm. The Board also considered Mr. Ford’s experience as a director and committee member of other
public and private companies.
William J. 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., a publicly traded corporation (1988 to 1997), served as Water Commissioner
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for the Philadelphia Water Department (1971 to 1988) and was Managing Director for the City of Philadelphia (1983 to 1984).
He also serves as a director of American Water Works Company, Inc.
Mr. Marrazzo’s qualifications to serve as a director include his extensive experience as Chief Executive Officer of both non-profit
and public companies, and his city government leadership experience. Mr. Marrazzo’s senior-level executive experience in both
the public and private sectors provide him with financial, strategic planning, risk management, business development and
operational expertise.
Anne Pol was elected a Director of the General Partner on January 23, 2013. Mrs. Pol retired in 2005 as President and Chief
Operating Officer of Trex Enterprises Corporation, a high technology research and development company (2001 to 2005). She
previously served as Senior Vice President (1998 to 2001) and Vice President (1996 to 1998) of Thermo Electron Corporation,
an environmental monitoring and analytical instruments company and a major producer of recycling equipment, biomedical
products and alternative energy systems. Mrs. Pol also served as President of Pitney Bowes Shipping and Weighing Systems
Division, a business unit of Pitney Bowes Inc., a company that sells mailing and related business equipment (1993 to 1996); Vice
President of New Product Programs in the Mailing Systems Division of Pitney Bowes Inc. (1991 to 1993); and Vice President of
Manufacturing Operations in the Mailing Systems Division of Pitney Bowes Inc. (1990 to 1991). Mrs. Pol also serves as a Director
(since 1998) of UGI Corporation, the General Partner’s parent company, and UGI Utilities, Inc., an affiliate of the General Partner.
Mrs. Pol’s qualifications to serve as a director include her strategic planning, business development and technology experience
as a senior-level executive with a diversified high-technology company. By virtue of Mrs. Pol’s business and board and committee
experience, she also possesses an important understanding of, and insight into, the areas of executive compensation, human resource
management, corporate governance and government regulation.
Pedro A. Ramos was elected a Director of the General Partner on September 28, 2015. Mr. Ramos is the President and Chief
Executive Officer of The Philadelphia Foundation, a charitable foundation committed to improving the quality of life in the five-
county Philadelphia region (since August 2015). Previously, Mr. Ramos served as a Partner with the law firm Schnader Harrison
Segal & Lewis LLP (August 2013 to July 2015). From June 2009 until the firm’s attorneys joined Schnader Harrison Segal &
Lewis LLP in August 2013, he served as a Partner with the law firm Trujillo Rodriguez & Richards, LLC. Prior to that, Mr. Ramos
was a Partner with the law firm Blank Rome LLP (2007 to 2009). Mr. Ramos served as Managing Director of the City of
Philadelphia (2005 to 2007) and as City Solicitor of the City of Philadelphia (2004 to 2005). Additionally, Mr. Ramos served as
Vice President and Chief of Staff to the President of the University of Pennsylvania (2002 to 2004), and prior to that, as a Partner
and Associate with the law firm Ballard Spahr LLP (1992 to 2001). Mr. Ramos was formerly Chairman of the Philadelphia School
Reform Commission, a gubernatorial appointment (2011 to 2013). Mr. Ramos also serves as a director of FS Investment
Corporation, a publicly traded business development company that provides companies with customized credit solutions.
Mr. Ramos’ qualifications to serve as a director include his expertise and extensive business experience as an attorney at various
law firms advising clients in the areas of compliance, transactional matters, strategy, risk management, internal investigations,
fiduciary responsibility, pension, executive compensation and employee benefits laws. The Board also considered his strong
leadership experience by virtue of his varied and extensive civic and community engagement activities, including Managing
Director of the City of Philadelphia and Vice President and Chief of Staff to the President of the University of Pennsylvania.
Marvin O. 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 management services and capital firm for chemical and allied industries (since
1998). Mr. Schlanger previously served as Chief Executive Officer of CEVA Holdings BV and CEVA Holdings, LLC, an
international logistics supplier (2012 to 2013). Mr. Schlanger is currently a director of UGI Corporation, the General Partner’s
parent company, and UGI Utilities, Inc. (since 1998), an affiliate of the General Partner. He also serves as a director of CEVA
Holdings, LLC, where he serves as chairman, Hexion, Inc., and Momentive Performance Materials, Inc. Mr. Schlanger was
previously a director with LyondellBassell Industries (until 2013).
Mr. Schlanger’s qualifications to serve as a director include his senior management, strategic planning, business development,
risk management, and general operations experience throughout his career as Chief Executive Officer, Chief Operating Officer,
and Chief Financial Officer of Arco Chemical Company, a large public company. The Board also considered Mr. Schlanger’s
experience serving as chairman, director and committee member on the boards of directors of large public and private companies.
K. Richard Turner was elected a Director of the General Partner on March 21, 2012. Mr. Turner is currently Managing Director,
Altos Energy Partners, a private equity firm (since 2012), after having retired as Senior Managing Director from the Stephens
Group, LLC, a private, family-owned investment firm (1983 to 2011). He also serves as a board member for the general partner
of Energy Transfer Equity, L.P. (since 2002), North American Energy Partners Inc. (since 2003), and Sunoco LP (since 2014). He
also has served on the Board of Directors of the general partner of Energy Transfer Partners, L.P. (“ETP”) (2004 to 2011). ETP
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designated Mr. Turner as its nominee to serve on the Board of Directors of the General Partner pursuant to its rights under the
Contingent Residual Support Agreement by and among AmeriGas Partners, L.P., AmeriGas Finance LLC, AmeriGas Finance
Corp., UGI Corporation, and ETP dated as of January 12, 2012.
Mr. Turner’s qualifications to serve as a director include his extensive experience as a private equity executive, including serving
in accounting and investment roles. Mr. Turner is a non-practicing certified public accountant and also has public accounting
experience. The Board also considered Mr. Turner’s public company directorship and committee experience, including serving
on boards and audit committees of other energy companies and master limited partnerships, providing him with significant industry
experience.
Robert J. Cane is Controller and Chief Accounting Officer of the General Partner (since February 2013). Mr. Cane joined the
General Partner in 2004 as Director of Accounting and Financial Control and has held various positions at the General Partner,
including Director of Field Service Initiative (September 2012 to February 2013), Director of Integration Management Office
(2011 to 2012), and Director of Corporate Development (2007 to 2011). Mr. Cane also served as Corporate Controller (2002 to
2004) at ImageMax, Inc., a provider of outsourced document management solutions.
Troy E. Fee is Vice President - Human Resources and Strategic Initiatives of the General Partner (since May 2013). Mr. Fee
served as Senior Vice President - Human Resources (2007 to 2013) at PEP BOYS, a retail and service chain serving the automotive
aftermarket. Prior to joining PEP BOYS, Mr. Fee served as Senior Vice President, Human Resources Shared Services (2006 to
2007) of TBC Corporation, a marketer of tires for the automotive replacement market and as Vice President - Human Resources
of TBC Retail Group (2003 to 2006). Mr. Fee also served in various positions at Sears, Roebuck & Company, a nationwide retail
company, including as Director Human Resources - Sears Automotive Group (2002 to 2003), Northwest Regional Human Resources
Director - Sears Stores (2001 to 2002), Labor Relations Manager - Sears (2000 to 2001), and Regional Human Resources Manager
- Sears Automotive (1999 to 2000). Mr. Fee held various positions of increasing responsibility at Sears, Roebuck & Company
from 1987 to 1999.
Hugh J. Gallagher is Vice President - Finance and Chief Financial Officer of the General Partner (since April 2013). Previously,
Mr. Gallagher served as Treasurer of both UGI Corporation and the General Partner (2011 to 2014), Director - Treasury Services
and Investor Relations (2009 to 2011) and Director - Treasury Services (2007 to 2009). He has also served as the General Partner’s
Director - Corporate Development (2004 to 2007), Director of Financial Planning, (2000 to 2004), Financial Manager - Operations
(1999 to 2000), Manager of Financial Reporting (1996 to 1999), and Team Leader - Financial Reporting (1995 to 1996). Mr.
Gallagher joined UGI Corporation in 1990, serving in various finance and accounting roles of increasing responsibility.
Monica M. Gaudiosi is Vice President (since 2012), General Counsel (since July 2015) and Secretary (since 2012) of the General
Partner. Ms. Gaudiosi is also Vice President, General Counsel and Secretary of UGI Corporation, the General Partner’s parent
company, and UGI Utilities, Inc., an affiliate of the General Partner (since April 2012). Prior to joining the General Partner, Ms.
Gaudiosi served as a Senior Vice President and General Counsel (2007 to 2012) and Senior Vice President and Associate General
Counsel (2005 to 2007) of Southern Union Company. Prior to joining Southern Union Company in 2005, Ms. Gaudiosi held
various positions with General Electric Capital Corporation (1997 to 2005). Before joining General Electric Capital Corporation,
Ms. Gaudiosi was an associate at the law firms of Hunton & Williams (1994 to 1997) and Sutherland, Asbill & Brennan (1988 to
1994).
David L. Lugar is Vice President - Supply and Logistics of the General Partner (since 2000). Previously, he served as Director -
NGL Marketing for Conoco, Inc., where he spent 20 years in various positions of increasing responsibility in propane marketing,
operations, and supply.
Andrew J. Peyton is Vice President - Corporate Development of the General Partner (since 2012). Previously, he served the
General Partner as Vice President - Sales and Marketing (2010 to 2012), General Manager, Southern Region and Northeast Region
(2009 to 2010) and 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.
Kathy L. Prigmore is Vice President - Operations Support and Customer Advocacy of the General Partner (since 2012). She
previously served as General Manager of the Northeast Region (2006 to 2008 and 2010 to 2012) and as a member of the team
leading the development and roll-out of the General Partner’s proprietary revenue system (2008 to 2010). Prior to 2006, Ms.
Prigmore held various positions of increasing responsibility with the General Partner, including Vice President and General Manager
of the former Mountain Central Region and Group Director, Process Improvement and Training since joining the General Partner
in 1983.
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Anthony Rosback is Vice President and Chief Operating Officer of the General Partner (since March 2015). Mr. Rosback served
as Senior Director, West Region Operations and North American Logistics of Williams Scotsman, Inc., a mobile and modular
space and storage solution company (2014 to 2015). He previously served as Senior Vice President, General Manager, West of
The Brickman Group Ltd., a commercial landscaping and property maintenance company (2013 to 2014). Previously, Mr. Rosback
served as Area President (2012 to 2013), Regional Vice President, Operations (2010 to 2012), Vice President, Operations Support
(2008 to 2010) and Vice President, Sales and Marketing (2006 to 2008) at Republic Services, Inc., a provider of recycling and
non-hazardous waste services in the U.S. From 1999 to 2006, Mr. Rosback served as an Assistant Vice President at Cintas
Corporation, a provider of uniforms, first aid and safety and fire protection products and services.
Kevin Rumbelow is Vice President - Supply Chain of the General Partner (since March 2012). Previously, Mr. Rumbelow served
as the General Partner’s Vice President - Operations Support (2006 to 2012). Prior to joining the General Partner, 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).
Director Independence
The Board of Directors of the General Partner has determined that, other than Messrs. Sheridan, 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; and
(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 that do not exceed the greater of $1,000,000 or two percent of the
charitable organization’s total revenues per year 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 (i) 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,
and (ii) Mr. Schlanger’s service on the Board of CEVA Logistics, a customer of AmeriGas Propane, L.P. All such transactions
were in compliance with the categorical standards set by the Board of Directors for determining director independence.
Executive Sessions
Non-management directors meet at regularly scheduled executive sessions without management present. These sessions are led
by Mr. Schlanger, who currently holds the position of Presiding Director.
Communications with the Board of Directors and Non-management Directors
Interested persons wishing to communicate directly with the Board of Directors, an individual non-management director, 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, an individual non-management
director, 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.
Any communications directed to the Board of Directors, an individual non-management director, or the non-management directors
as a group from employees or others that concern complaints regarding accounting, financial statements, internal controls, ethical,
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, an individual non-management director, or the non-management directors as a
group are initially reviewed by the Corporate Secretary. In the event the Corporate Secretary has any question as to whether the
directors should be made aware of any issue raised, the Corporate Secretary shall be entitled to consult with the Chair of the Board
in making such determination. The Corporate Secretary will distribute communications to the Board, an individual director, or to
selected directors, depending on the content of the communication. 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.
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Typically, we do not forward to our Board of Directors communications from our shareholders or other parties that are of a personal
nature or are not related to the duties and responsibilities of the Board, including, but not limited to junk mail & mass mailings,
resumes and other forms of job inquiries, opinion surveys and polls, business solicitations or advertisements.
These procedures have been posted on the Partnership’s website at www.amerigas.com; see “Investor Relations - Corporate
Governance - click the “Investor Relations” caption, then click the “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, as amended (the “Exchange Act”), requires 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 2015, all of such reporting persons complied with all Section 16(a) reporting requirements applicable to them.
However, Mr. Robert J. Cane was inadvertently late in filing one Form 4 relating to his receipt of 500 AmeriGas Partners, L.P.
Common Units on September 30, 2014 as a result of the vesting of 500 Phantom Units that were awarded to him in 2011. Mr.
Cane filed a Form 5 on December 11, 2014 to correct the oversight.
ITEM 11.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation/Pension Committee of the General Partner are Messrs. Schlanger (Chair) and Marrazzo and
Mrs. Pol. 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 with management the Compensation Discussion and Analysis.
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, 2015.
Compensation/Pension Committee
Marvin O. Schlanger, Chairman
William J. Marrazzo
Anne Pol
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
In this Compensation Discussion and Analysis, we address the compensation paid or awarded to the following executive officers:
Jerry E. Sheridan, our President and Chief Executive Officer; Hugh J. Gallagher, our Vice President - Finance and Chief Financial
Officer; John L. Walsh, our Vice Chairman; Anthony D. Rosback, our Vice President and Chief Operating Officer, since March;
and Monica M. Gaudiosi, our Vice President, General Counsel and Secretary. We refer to these executive officers as our “named
executive officers” for Fiscal 2015.
Compensation decisions for Messrs. Sheridan, Gallagher and Rosback (collectively, the “AmeriGas NEOs”) 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 Mr. Walsh and Ms. Gaudiosi were made by the independent members of the
Board of Directors of UGI Corporation 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
discussions, unless the context indicates otherwise. We will use the term “Company” or “General Partner” to refer to AmeriGas
Propane, Inc.
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Executive Summary
Objectives of Our Compensation Program
Our compensation program for named executive officers is designed to provide a competitive level of total compensation;
motivate and encourage our executives to contribute to our financial success; retain talented and experienced executives; and
reward our executives for leadership excellence and performance that promotes sustainable growth in unitholder value.
Fiscal 2015 Components
The following chart summarizes the principal elements of our Fiscal 2015 executive compensation program. We describe these
elements, as well as retirement, severance and other benefits, in more detail later in this Compensation Discussion and Analysis.
Component
Principal Objectives
Fiscal 2015 Compensation Actions
Salary
Annual Bonus
Awards
Base Components
Compensate executives as appropriate for his or
her position, experience and responsibilities based
on market data.
Motivate executives to focus on achievement of
our annual business objectives.
Merit salary increases ranged from 3.5% to 5.0%.
Target incentives ranged from 50% to 125% of
salary. Actual bonus payouts to our named
executive officers ranged from 83.6% to 118.9%
of target, primarily based on achievement of
financial goals.
Long-Term Incentive Awards
Performance Units
Align executive interests with unitholder and
shareholder interests; create a strong financial
incentive for achieving long-term performance
goals by encouraging total AmeriGas common
unitholder return that compares favorably to other
energy master limited partnerships and its two
propane peer companies (or total UGI shareholder
return that compares favorably to other utility-
based companies); further align long-term
compensation with strategic goals and objectives
related to customer gain/loss performance.
UGI Stock Options
Align executive interests with shareholder
interests; create a strong financial incentive for
achieving or exceeding long-term performance
goals, as the value of stock options is a function of
the price of UGI stock.
Compensation and Corporate Governance Practices
The number of performance units awarded in
Fiscal 2015 ranged from 4,200 to 45,000. A
portion of the AmeriGas NEOs’ performance
units (payable in AmeriGas Partners common
units, other than for Mr. Walsh and Ms. Gaudiosi)
will be earned based on total unitholder return
(“TUR”) relative to master limited partnerships in
the Alerian MLP Index, modified by AmeriGas
Partners’ TUR performance as compared to the
other two propane distribution companies in the
Alerian MLP Index, over a three-year period. The
remaining portion of performance units awarded
in Fiscal 2015 to the AmeriGas NEOs will be
payable in AmeriGas Partners common units
provided a customer gain/loss metric is met. For
Mr. Walsh and Ms. Gaudiosi, performance units
will be payable in UGI Corporation common
stock based on total shareholder return of
Company stock relative to entities in an industry
index over a three-year period.
The number of shares underlying option awards
ranged from 15,000 shares to 306,000 shares.
The Committee seeks to implement and maintain sound compensation and corporate governance practices, which include the
following:
• The Committee is composed entirely of directors who are independent, as defined in the corporate governance listing
standards of the New York Stock Exchange.
• The Committee utilizes the services of Pay Governance LLC (“Pay Governance”), an independent outside compensation
consultant.
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• AmeriGas Partners allocates a substantial portion of compensation to performance-based compensation. In Fiscal 2015,
76 percent of the principal compensation components, in the case of Mr. Sheridan, and 59 percent to 82 percent of the
principal compensation components, in the case of all other named executive officers were variable and tied to financial
performance or total shareholder return.
• AmeriGas Partners awards a substantial portion of compensation in the form of long-term awards, namely stock options
and performance units, so that executive officers’ interests are aligned with unitholders and our long-term performance.
• Annual bonus opportunities for the named executive officers are based primarily on key financial metrics. Similarly,
long-term incentives for the AmeriGas NEOs were based on the relative performance of AmeriGas Partners Common
Units and customer gain/loss performance. In the case of Mr. Walsh and Ms. Gaudiosi, long-term incentives were based
on UGI Corporation common stock values and relative stock price performance.
• We require termination of employment for payment under our change in control agreements (referred to as a “double
trigger”). We also have not entered into change in control agreements providing for tax gross-up payments under Section
280G of the Internal Revenue Code since 2010. See “Potential Payments Upon Termination of Employment or Change
in Control - Change in Control Agreements.”
• We have meaningful equity ownership guidelines. See “Equity Ownership Guidelines” in this Compensation Discussion
and Analysis for information on equity ownership.
• We have a recoupment policy for incentive-based compensation paid or awarded to current and former executive officers
in the event of a restatement due to material non-compliance with financial reporting requirements.
• We have a policy prohibiting directors and executive officers from (i) hedging the securities of AmeriGas Partners and
UGI Corporation, (ii) holding AmeriGas Partners and UGI Corporation securities in margin accounts as collateral for a
margin loan, and (iii) pledging the securities of AmeriGas Partners and UGI Corporation.
•
In Fiscal 2015, the Company’s Board of Directors adopted an annual limit of $400,000 with respect to individual Director
equity awards. In establishing this limit, the Board of Directors considered competitive pay levels as well as the need to
retain its current Directors and attract new directors with the relevant skills and attributes desired in director candidates.
The Compensation Committee believes that, during Fiscal 2015, there was no conflict of interest between Pay Governance and
the Compensation Committee. Additionally, the Compensation Committee believes that Pay Governance was independent. In
reaching the foregoing conclusions, the Compensation Committee considered the factors set forth by the New York Stock Exchange
regarding compensation committee advisor independence.
Compensation Philosophy and Objectives
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 2014, the components of our compensation program included salary, annual bonus awards, 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 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 2015 compensation, the Committees engaged Pay Governance as their compensation consultant. The primary
duties of Pay Governance 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;
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• Review components of our compensation program as requested from time to time by the Committees and recommend
plan design changes as appropriate; and
Provide general consulting services related to the fulfillment of the Committees’ charters.
•
Pay Governance has not provided actuarial or other services relating to pension and post-retirement plans or services related to
other benefits to us or our affiliates, and generally all of its services are those that it provides to the Committees. Pay Governance
has provided market data for positions below the senior executive level as requested by management as well as market data for
director compensation, but its fees for this work historically are modest relative to its overall fees.
In assessing competitive compensation, we referenced market data provided to us in Fiscal 2014 by Pay Governance. Pay
Governance provided us with two reports: the “2014 Executive Cash Compensation Review” and the “2014 Executive Long-Term
Incentive Review.” We do not benchmark against specific companies in the databases utilized by Pay Governance in preparing its
reports. Our Committees do benchmark, however, by using Pay Governance’s analysis of 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 (both within and among our business units) and sustained individual and
company performance, when setting our executives’ compensation.
For the AmeriGas NEOs, the executive compensation analysis is based on general industry data in Towers Watson’s 2014 General
Industry Executive Compensation Database (“General Industry Database”). For Mr. Walsh and Ms. Gaudiosi, the analysis was
based on the General Industry Database and Towers Watson’s 2014 Energy Services Executive Compensation Database (“Energy
Services Database”). Pay Governance weighted the General Industry Database survey data 75 percent and the Energy Services
Database survey data 25 percent and added the two. For example, if the relevant market rate for a particular executive position
derived from information in the General Industry Database was $100,000 and the relevant market rate derived from information
in the Energy Services Database was $90,000, Pay Governance would provide us with a market rate of $97,500 for that position
(($100,000 x 75 percent = $75,000) plus ($90,000 x 25 percent = $22,500)). The impact of weighting information derived from
the two databases is to obtain a market rate designed to approximate the relative sizes of our nonutility and utility businesses.
Towers Watson’s General Industry Database is comprised of approximately 445 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 110 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 or her salary
grade approximates the 50th percentile of the “going rate” for comparable executives included in the executive compensation
database material referenced by Pay Governance. By comparable executive, we mean an executive having a similar range of
responsibilities and the experience to fully perform these responsibilities. Pay Governance size-adjusted the survey data to account
for the relative revenues of the survey companies in relation to ours. In other words, the adjustment reflects the expectation that
a larger company would be more likely to pay a higher amount of compensation for the same position than a smaller company.
Using this adjustment, Pay Governance developed going rates for positions comparable to those of our executives, as if the
companies included in the respective databases had revenues similar to ours. We believe that Pay Governance’s application of size
adjustments to applicable positions in these databases is an appropriate method for establishing market rates. After consultation
with Pay Governance, we considered salary grade midpoints that were within 15 percent of the median going rate developed by
Pay Governance to be competitive.
Elements of Compensation
Salary
Salary is designed to compensate executives for their level of responsibility and sustained individual performance. We pay our
executive officers a salary that is competitive with that of other executive officers providing comparable services, taking into
account the size and nature of the business of AmeriGas Partners and UGI Corporation, 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 at
approximately the 50th percentile of the going rate for executives in comparable positions. Based on the data provided by Pay
Governance in July 2014, we increased the range of salary in each salary grade for Fiscal 2015 for each named executive officer,
other than Mr. Walsh, by 2 percent. The Committee established Mr. Walsh’s Fiscal 2015 salary grade midpoint at the market
median of comparable executives as identified by Pay Governance based on its analysis of the executive compensation databases.
For Mr. Walsh, this resulted in an increase of the range of salary in his salary grade from the prior year of 3.6 percent.
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For Fiscal 2015, the merit increases were targeted at 3 percent, but individual increases varied based on performance evaluations
and the individual’s position within the salary range. Performance evaluations were based on qualitative and subjective assessments
of each individual’s contribution to the achievement of our business strategies, including the development of growth opportunities
and leadership in carrying out our talent development program. Messrs. Sheridan and Walsh, in their capacities as chief executive
officers of the General Partner and UGI Corporation, respectively, had additional goals and objectives for Fiscal 2015, as established
during the first quarter of Fiscal 2015. Mr. Sheridan’s annual goals and objectives for Fiscal 2015 included achievement of annual
financial goals, leadership development objectives, and implementation of the General Partner’s growth strategies, including with
respect to customer growth and retention and customer service initiatives. Mr. Walsh’s annual goals and objectives included the
development of the Company’s senior management team, the recruitment of experienced individuals to fill key roles within the
organization, achievement of annual financial and strategic goals, and leadership in identifying investment opportunities for the
Company and its subsidiaries. All named executive officers received a salary in Fiscal 2015 that was within 91 percent to 110
percent of the midpoint for his or her salary range.
The following table sets forth each named executive officer’s Fiscal 2015 salary.
Name
Jerry E. Sheridan
Hugh J. Gallagher
John L. Walsh
Anthony D. Rosback
Monica M. Gaudiosi
Salary
$527,020
$296,400
$1,079,728
$360,000(1)
$435,006
Percentage Increase
over Fiscal 2014 Salary
4.0%
4.0%
5.0%
N/A
3.5%
(1) Mr. Rosback’s salary was prorated in Fiscal 2015 based on his commencement of employment with the General Partner. As a result, Mr.
Rosback’s actual salary received in Fiscal 2015 (based an employment commencement date of March 23, 2015) was $180,003.
Annual Bonus Awards
Our annual bonus plans provide our named executive officers with the opportunity to earn an annual cash incentive, provided that
certain performance goals are satisfied. Our annual cash incentive is intended to motivate our executives to focus on the achievement
of our annual business objectives by providing competitive incentive opportunities to those executives who have the ability to
significantly impact our financial performance. We believe that basing a meaningful portion of an executive’s compensation on
financial performance emphasizes our pay for performance philosophy and will result in the enhancement of unitholder or
shareholder value. We also believe that annual bonus payments to our most senior executives should reflect our overall financial
results for the fiscal year and that the Partnership’s earnings before interest, taxes, depreciation (“EBITDA”), as adjusted, and
amortization and UGI’s earnings per share (“EPS”), as adjusted, provide straightforward, “bottom line” measures of performance.
The Partnership’s Fiscal 2015 EBITDA is adjusted to exclude the mark-to-market loss in unsettled commodity hedging instruments
(“Adjusted EBITDA”) and UGI Corporation’s Fiscal 2015 EPS is adjusted to exclude (i) the net loss on commodity derivative
instruments not associated with Fiscal 2015 transactions in its Midstream & Marketing and AmeriGas Propane businesses ($.30
per diluted share), (ii) acquisition and transition expenses associated with a Fiscal 2015 acquisition by its subsidiary in France
($.08 per diluted share), and (iii) a loss on extinguishment of debt at its Antargaz business ($.03 per diluted share) (“Adjusted
EPS”).
In determining each executive position’s target award level under our annual bonus plans, we considered database information
derived by Pay Governance 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 positioned the amount at approximately
the 50th percentile for comparable positions.
The AmeriGas NEOs participate in the AmeriGas Propane, Inc. Executive Annual Bonus Plan (the “AmeriGas Bonus Plan”). For
the AmeriGas NEOs, 90 percent of the target award opportunity was based on AmeriGas Partners’ Adjusted EBITDA, subject to
modification based on achievement of a safety performance goal, as described below. The other 10 percent was based on achievement
of customer service goals, but contingent on a payout under the financial component of the award. We believe that customer service
for AmeriGas Partners is an important component of the bonus calculation because we foresee no or minimal growth in total
demand for propane in the next several years, and, therefore, customer service is an important factor in our ability to improve the
long-term financial performance of AmeriGas Partners. We also believe that achievement of superior safety performance is an
important short-term and long-term strategic initiative and is therefore included as a component of the AmeriGas Propane bonus
calculation.
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Mr. Walsh and Ms. Gaudiosi participate in the UGI Corporation Executive Annual Bonus Plan (the “UGI Bonus Plan”). For
reasons similar to those underlying our use of Adjusted EBITDA as a goal for the AmeriGas NEOs, the entire target award
opportunity for Mr. Walsh and Ms. Gaudiosi was based on UGI’s Adjusted EPS. We also believe that Adjusted EPS is an appropriate
measure for Mr. Walsh and Ms. Gaudiosi because their duties encompass UGI and its affiliated businesses, including the General
Partner and AmeriGas Partners. Adjusted EPS is not subject to adjustment based on customer growth or similar metrics.
Each Committee has discretion under our executive annual bonus plans to (i) adjust Adjusted EBITDA and Adjusted EPS for
extraordinary items or other events as the Committee deems appropriate, (ii) increase or decrease the amount of an award determined
to be payable under the bonus plan by up to 50 percent, and (iii) review quantitative factors (such as performance) and qualitative
factors (such as individual performance and overall contributions to the General Partner and UGI) when determining the annual
bonus to be paid to an executive who terminates employment during the fiscal year on account of retirement, death or disability.
The AmeriGas Bonus Plan and the UGI Bonus Plan each provides that, unless the Committee determines otherwise, all executive
officers who have not fulfilled their respective equity ownership requirements receive as part of their ongoing compliance up to
10 percent of their gross annual bonus in fully vested AmeriGas Partners common units or UGI Corporation stock, as applicable.
As noted above, the 90 percent component of the bonus award opportunity for each of the AmeriGas NEOs was based on Adjusted
EBITDA of AmeriGas Partners, subject to modification based on customer growth and structured so that no amount would be
paid unless AmeriGas Partners Adjusted EBITDA was at least 90 percent of the target amount, while 200 percent of the target
bonus could be payable if Adjusted EBITDA equaled or exceeded 110 percent of the target amount. The percentage of target bonus
payable based on the level of achievement of Adjusted EBITDA is referred to as the “Adjusted EBITDA Leverage Factor.” The
Adjusted EBITDA Leverage Factor is then modified to reflect the degree of achievement of a predetermined safety performance
objective tied to AmeriGas Propane’s Fiscal 2015 Occupational Safety and Health Administration (“OSHA”) recordables (“Safety
Leverage Factor”). For Fiscal 2015, the percentage representing the Safety Leverage Factor ranged from 80 percent if the
performance target was not achieved, to a maximum of 120 percent if performance exceeded the target. We believe the Safety
Leverage Factor for Fiscal 2015 represented an achievable but challenging performance target. Once the Adjusted EBITDA
Leverage Factor and Safety Leverage Factor are determined, the Adjusted EBITDA Leverage Factor is multiplied by the Safety
Leverage Factor to obtain a total adjusted leverage factor (the “Total Adjusted Leverage Factor”). The Total Adjusted Leverage
Factor is then multiplied by the target bonus opportunity to arrive at the 90 percent portion of the bonus award payable for the
fiscal year. The actual Adjusted EBITDA achieved for Fiscal 2015 was $619.19 million. The applicable range for targeted Adjusted
EBITDA for bonus purposes for Fiscal 2015 was $670 million to $700 million. The remaining 10 percent component of the bonus
award opportunity was based on customer service goals. For Fiscal 2015, AmeriGas Propane engaged a third party company to
conduct surveys of the Partnership’s customers in order to better understand customer satisfaction with services provided by the
Partnership. Each individual survey is given an overall satisfaction score and the scores are then aggregated by the third party
company to calculate a total score known as a net promoter score. The award opportunity for the customer service component for
each of the AmeriGas NEOs was structured so that no amount would be paid unless the net promoter score was at least 85 percent
of the net promoter score target, with the target bonus award being paid out if the net promoter score was 100 percent of the targeted
goal. The maximum award, equal to 150 percent of the targeted award, would be payable if the net promoter score exceeded the
net promoter score target. The AmeriGas NEOs each received a bonus payout of 47 percent for the 10 percent customer service
component of their respective bonus award opportunities. As a result of the calculation described above, Messrs. Sheridan,
Gallagher, and Rosback each received a bonus payout equal to 83.6 percent of his target for Fiscal 2015.
The bonus award opportunity for Mr. Walsh and Ms. Gaudiosi was structured so that no amounts would be paid unless UGI’s
Adjusted EPS was at least 80 percent of the target amount, with the target bonus award being paid out if UGI’s Adjusted EPS was
100 percent of the targeted Adjusted EPS. The maximum award, equal to 200 percent of the target award, would be payable if
Adjusted EPS equaled or exceeded 120 percent of the Adjusted EPS target. The targeted Adjusted EPS for bonus purposes for
Fiscal 2015 was established to be in the range of $1.88 to $1.98 per UGI common share, and Adjusted EPS achieved for Fiscal
2015 was $2.01. For Fiscal 2015, the Committee exercised its discretion and adjusted the actual Adjusted EPS for annual bonus
purposes to exclude the Fiscal 2015 operating loss associated with a May 29, 2015 acquisition in France. As a result, Adjusted
EPS, as adjusted for purposes of the bonus calculation, was $2.02 and Mr. Walsh and Ms. Gaudiosi each received a bonus payout
equal to 118.9 percent of his or her target award for Fiscal 2015.
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The following annual bonus payments were made for Fiscal 2015:
Name
Percent of Target Bonus Paid
Jerry E. Sheridan
Hugh J. Gallagher(1)
John L. Walsh
83.6%
83.6%
118.9%
Payout
$352,471
$123,895
$1,604,745
Monica M. Gaudiosi
Anthony D. Rosback(1)(2)
(1) Messrs. Gallagher and Rosback each received 10 percent of their annual bonus payment in AmeriGas Partners common units in
accordance with the General Partner’s equity ownership policy. Ms. Gaudiosi received 7.4 percent of her annual bonus payment in UGI
common stock in accordance with UGI’s stock ownership policy.
(2) Mr. Rosback’s bonus payment was prorated based on the date his employment commenced with the General Partner.
$336,194
$96,558
118.9%
83.6%
Long-Term Compensation - Fiscal 2015 Equity Awards
Background and Determination of Grants - Stock Options, Performance Units and Restricted Units
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 shareholder interests. Additionally, we believe our long-term incentives provide us the ability to attract and retain
talented executives in a competitive market.
Our long-term compensation for Fiscal 2015 included UGI Corporation stock option grants and either AmeriGas Partners or UGI
Corporation performance unit awards. AmeriGas Partners performance units and restricted units were awarded under the 2010
AmeriGas Propane, Inc. Long-Term Incentive Plan on behalf of AmeriGas Partners, L.P. (the “AmeriGas 2010 Plan”). UGI
Corporation stock options and performance units were awarded under the UGI Corporation 2013 Omnibus Incentive Compensation
Plan (the “2013 UGI Plan”). UGI Corporation stock options generally have a term of ten years and become exercisable in three
equal annual installments beginning on the first anniversary of the grant date. As more particularly set forth below, the Compensation
Committee approved a change to the long-term incentive plan design for performance units granted to the AmeriGas NEOs during
Fiscal 2015 to (i) tie a portion of the performance unit award to a customer gain/loss metric, and (ii) apply a modifier to that portion
of the performance unit award subject to a relative TUR metric based on the Alerian MLP Index. Mr. Walsh and Ms. Gaudiosi
were awarded UGI Corporation performance units tied to the three-year total shareholder return performance of UGI common
stock relative to that of the companies in the Adjusted Russell MidCap Utilities Index. Each performance unit represents the right
of the recipient to receive a common unit or 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 Pay Governance’s analysis of executive
compensation database information in establishing equity compensation for the named executive officers. In determining the total
dollar value of the long-term compensation opportunity to be provided in Fiscal 2015, we initially referenced (i) median salary
information, and (ii) competitive market-based long-term incentive compensation information, both as calculated by Pay
Governance.
For the AmeriGas NEOs, we initially applied approximately 30 percent of the amount of the long-term incentive opportunity to
UGI Corporation stock options and approximately 70 percent to AmeriGas performance units (of which 30 percent is applied to
AmeriGas Partners performance compared to the Alerian MLP Index, as modified by AmeriGas Partners’ TUR performance
compared to the other two retail propane distribution companies, Ferrellgas Partners, L.P. and Suburban Propane Partners, L.P.,
included in the Alerian MLP Index (the “Propane MLP Group”), and 40 percent is tied to a customer gain/loss performance metric).
For Mr. Walsh and Ms. Gaudiosi, 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 believe this bifurcation provides a good balance between
two important goals. Because the value of stock options is a function of the appreciation or depreciation of stock price, stock
options are designed to align the executive’s interests with shareholder interests. As explained in more detail below, the performance
units are designed to encourage increased total unitholder or shareholder return over a period of time.
For Fiscal 2015 equity awards, Pay Governance provided the competitive market incentive levels based on its assessment of
accounting values. Pay Governance then provided data for our long-term incentive values by utilizing accounting values.
Accounting values are reported directly by companies to the survey databases and are determined in accordance with GAAP.
While management used the Pay Governance calculations as a starting point, in accordance with past practice, management
recommended adjustments to the aggregate number of UGI Corporation stock options and AmeriGas Partners and UGI performance
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units calculated by Pay Governance. 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 equity awards made under the 2013 UGI Plan and UGI
Corporation 2004 Omnibus Equity Compensation Plan Amended and Restated as of December 5, 2006 (the “2004 Plan”), as
applicable, for the fiscal years 2013 through 2015, expressed as a percentage of common shares outstanding at fiscal year-end,
will not exceed 2 percent. 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 4.67 shares. The adjustments generally resulted in a decrease
in both the number of shares underlying options and the number of performance units awarded to each named executive officer,
in each case as compared to amounts calculated by Pay Governance using accounting values.
As a result of the Committee’s acceptance of management’s recommendations, the named executive officers, excluding Mr. Rosback
who joined the General Partner during Fiscal 2015, received between approximately 77 percent and 112 percent of the total dollar
value of long-term compensation opportunity recommended by Pay Governance using accounting values. The actual grant amounts
based on the foregoing analysis are as follows:
Name
Jerry E. Sheridan
Hugh J. Gallagher
John L. Walsh
Monica M. Gaudiosi
Anthony D. Rosback
Shares Underlying
Stock Options
# Granted
60,000
15,000
306,000
63,000
21,000
Performance Units
Alerian MLP Index (as
modified)
# Granted
6,950
1,600
(1)
(1)
2,000
Performance Units
Customer Gain/Loss
# Granted
13,300
2,600
(1)
(1)
3,750
(1) Mr. Walsh and Ms. Gaudiosi were awarded 45,000 and 9,450 UGI performance units, respectively, during Fiscal 2015.
Peer Groups and Performance Metrics
As previously discussed, the Compensation Committee approved a change to the long-term incentive plan design for performance
units granted to the AmeriGas NEOs during Fiscal 2015 to (i) tie a portion of the performance unit awards to a customer gain/
loss metric, and (ii) apply a modifier to that portion of the performance unit awards subject to a relative TUR metric based on
the Alerian MLP Index. The Committee determined that a metric directly tied to customer gains and losses would strengthen the
link between pay and performance and advance AmeriGas Propane’s long-term strategic goals and objectives. As a result of the
foregoing, the AmeriGas NEOs were awarded performance unit awards for the period from January 1, 2015 to December 31,
2017 tied to two different metrics: (i) the three-year TUR performance of AmeriGas Partners common units relative to that of
the entities in the Alerian MLP Index, as modified based on the three-year TUR performance of AmeriGas Partners common
units relative to that of the other companies in the Propane MLP Group, and (ii) a customer gain/loss metric. The performance
units awarded to Messrs. Sheridan and Gallagher during Fiscal 2014 included a separate performance metric tied directly to
AmeriGas Partners’ TUR performance compared to the TUR performance of the companies in the Propane MLP Group. For the
Fiscal 2015 grants, the Committee believes that a combined metric is more appropriate than stand-alone metrics, given the
similarities of the performance metrics, including the fact that the companies in the Propane MLP Group are already included in
the Alerian MLP Index.
With respect to AmeriGas Partners performance units tied to the Alerian MLP Index, we will compare the TUR of AmeriGas
Partners’ common units relative to the TUR performance of those entities comprising the Alerian MLP Index as of the beginning
of the performance period using the comparative returns methodology used by Bloomberg L.P. or its successor at the time of
calculation. The result is then modified based on AmeriGas Partners’ TUR performance compared to the Propane MLP Group. If
AmeriGas Partners’ Alerian TUR performance qualifies for a payout at the conclusion of the three-year period ending December
31, 2017, then that payout would be modified as follows: (i) if AmeriGas Partners’ TUR during the three-year period ranks first
compared to the other companies in the Propane MLP Group, then the performance unit payout would be leveraged at 130 percent;
(ii) if AmeriGas Partners’ TUR during the three-year period ranks second compared to the other companies in the Propane MLP
Group, then the performance unit payout would be leveraged at 100 percent; and (iii) if AmeriGas Partners’ TUR during the three-
year period ranks third compared to the other Propane MLP Group companies, then the performance unit payout would be leveraged
at 70 percent. The overall payout is capped at 200 percent of the target number of performance units awarded. In calculating the
TUR for purposes of the modification, we will compare the TUR of AmeriGas Partners’ common units relative to the TUR
performance of those entities comprising the Propane MLP Group using the comparative returns methodology used by Bloomberg
L.P. or its successor at the time of calculation. In computing TUR, we will use the average price for the calendar quarter 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. If one of the other two companies in the Propane
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MLP Group ceases to exist as a publicly traded company or declares bankruptcy (“Adjustment Event”) during the first year of the
performance period, then the performance units tied to the Propane MLP Group will become payable at the end of the three-year
performance period based on AmeriGas Partners TUR performance compared to the Alerian MLP Index and no modification will
be made. If an Adjustment Event occurs during the second year of the performance period, then one-half of the modifier would
be applied to the payout calculated under the Alerian MLP Index. If an Adjustment Event occurs during the third year of the
performance period, then the full Propane MLP Group modifier would be calculated using the TUR as of the day immediately
preceding the first public announcement of the Adjustment Event. The entities comprising the Alerian MLP Index as of January 1,
2015 were as follows:
Exterran Partners, L.P.
Ferrellgas Partners, L.P.
Genesis Energy, L.P.
Golar LNG Partners, L.P.
Holly Energy Partners, L.P.
Legacy Reserves LP
Linn Energy, LLC
Access Midstream Partners, L.P.
Alliance Resource Partners, L.P.
AmeriGas Partners, L.P.
Atlas Pipeline Partners, L.P.
Boardwalk Pipeline Partners, L.P.
Breitburn Energy Partners, L.P.
Buckeye Partners, L.P.
Calumet Specialty Products Partners, L.P. Magellan Midstream Partners, L.P.
Crestwood Midstream Partners, LP
Crosstex Energy, L.P.
DCP Midstream Partners, LP
Enbridge Energy Partners, L.P.
Energy Transfer Partners, L.P.
Enterprise Products Partners L.P.
EQT Midstream Partners, L.P.
EV Energy Partners, L.P.
Markwest Energy Partners, L.P.
Martin Midstream Partners L.P.
Memorial Production Partners, L.P. Teekay Offshore Partners L.P.
MPLX, L.P.
Natural Resource Partners L.P.
Navios Maritime Partners L.P.
NGL Energy Partners, L.P.
Tesora Logistics, L.P.
Vanguard Natural Resources LLC
Western Gas Partners, LP
Williams Partners L.P.
NuStar Energy L.P.
ONEOK Partners, L.P.
Plains All American Pipeline, L.P.
Regency Energy Partners LP
Spectra Energy Partners, LP
Suburban Propane Partners, L.P.
Sunoco Logistics Partners L.P.
TC PipeLines, LP
Targa Resources Partners LP
Teekay LNG Partners L.P.
The Fiscal 2015 performance units awarded to the AmeriGas NEOs and tied to customer gain and loss performance will be paid
at the conclusion of the three-year performance period ending September 30, 2017 (assuming continued employment through
December 31, 2017), but measured based on individual year targets, subject to adjustment based on the achievement of cumulative
three-year performance goals. Achievement of each year’s goal is weighted equally at one-third. The adjustment based on the
cumulative three-year performance goals can adjust the payout for year one and year two performance by thirty percent, up or
down. The overall payout is capped at 200 percent of the target number of performance units awarded. The Committee believes
that challenging goals and targets have been established with respect to the customer gain/loss metric for the described performance
units. For illustrative purposes, there would have been no payout during at least the last five fiscal years had this metric been in
place.
With respect to UGI performance units, we will compare the TSR of UGI’s common stock relative to the TSR performance of
those companies comprising the Adjusted Russell MidCap Utilities Index as of the beginning of the performance period using
the comparative returns methodology used by Bloomberg L.P. or its successor at the time of calculation. In computing TSR, the
Company uses the average of the daily closing prices for its common stock and the common stock of each company in the Adjusted
Russell MidCap Utilities Index for the calendar quarter 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 Adjusted Russell MidCap Utilities Index during a three-year performance period,
we do not include that company in our TSR analysis. We will only remove a company that was included in the Adjusted Russell
MidCap Utilities Index at the beginning of a performance period if such company ceases to exist during the applicable performance
period. Those companies in the Adjusted Russell MidCap Utilities Index as of January 1, 2015 were as follows:
49
AGL Resources Inc.
Alliant Energy Corporation
Ameren Corporation
American Water Works Company, Inc.
Aqua America, Inc.
Atmos Energy Corporation
Calpine Corporation
Centerpoint Energy, Inc.
CMS Energy Corporation
Consolidated Edison, Inc.
DTE Energy Company
Edison International
Energen Corporation
Entergy Corporation
FirstEnergy Corp.
Great Plains Energy Inc.
Hawaiian Electric Industries, Inc.
Integrys Energy Group, Inc.
ITC Holdings Corp.
MDU Resources Group, Inc.
National Fuel Gas Company
NiSource Inc.
Northeast Utilities
NRG Energy, Inc.
OGE Energy Corp.
ONEOK, Inc.
Pepco Holdings, Inc.
Pinnacle West Capital Corp.
PPL Corporation
Public Service Enterprise Group
Questar Corporation
SCANA Corporation
Sempra Energy
TECO Energy, Inc.
The AES Corporation
UGI Corporation
Vectren Corporation
Westar Energy, Inc.
Wisconsin Energy Corporation
Xcel Energy Inc.
The Committee determined that the Adjusted Russell MidCap Utilities Index is an appropriate peer group because the companies
included in the Russell MidCap Utilities Index generally are comparable to the Company in terms of market capitalization and
the Company is included in the Russell MidCap Utilities Index. The Company, with approval of the Committee, excluded
telecommunications companies from the peer group because the nature of the telecommunications business is markedly different
from that of other companies in the utilities industry. The minimum award, equivalent to 25 percent of the number of performance
units, will be payable if the Company’s TSR rank is at the 25th percentile of the Adjusted Russell MidCap Utilities Index. The
target award, equivalent to 100 percent of the number of performance units, will be payable if the 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 Company’s TSR rank
is at the 90th percentile of the Adjusted Russell MidCap Utilities Index.
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,
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 a limited number of the shares or common units 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 shares earned in excess of target is paid entirely in cash.
All performance units have 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 during the performance period on AmeriGas Partners common
units on a distribution payment date. A dividend equivalent relates to UGI common stock and is determined in a similar manner.
Accrued distribution and dividend equivalents are payable in cash based on the number of common units or UGI common shares,
if any, paid out at the end of the performance period.
Long-Term Compensation - Payout of Performance Units for 2012-2014 Period
During Fiscal 2015, we paid out awards to those executives who received UGI performance units covering the period from
January 1, 2012 to December 31, 2014. For that period, UGI’s TSR ranked 2nd relative to the other companies in the S&P Utilities
Index, placing UGI at the 97th percentile ranking, resulting in a 193.4 percent payout of the target award. AmeriGas Partners’
TUR ranked 27th relative to its peer group, placing AmeriGas Partners below the threshold for a payout. Because the payout
exceeded 100 percent, the 2004 Plan provides that cash will be paid in lieu of units for any amount in excess of the 100 percent
target. As a result, Mr. Walsh received a performance unit payout of 23,272 shares of UGI common stock with a payout value of
$1,481,220 and a cash payout of $2,152,644. Ms. Gaudiosi received a performance unit payout of 10,071 shares of UGI common
stock with a payout value of $569,700 and a cash payout of $780,366.
Perquisites and Other Compensation
We provide limited perquisite opportunities to our named executive officers. We provide reimbursement for tax preparation services
(discontinued in Fiscal 2011 for newly hired executives) and limited spousal travel. Our named executive officers may also
occasionally use UGI’s tickets for sporting events for personal rather than business purposes. The aggregate cost of perquisites
for all named executive officers in Fiscal 2015 was less than $10,000. In connection with the commencement of Mr. Rosback’s
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employment, he received reimbursement for relocation expenses in accordance with the General Partner’s relocation policy in the
amount of $10,000.
Other Benefits
Our named executive officers participate in various retirement, pension, 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 time off for holidays and vacations. These benefits generally are
available to all of our full-time employees, although the General Partner provided certain enhanced disability and life insurance
benefits to its senior executives, which for the AmeriGas NEOs had a total aggregate cost in Fiscal 2015 of less than $20,000.
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 Savings Plan”)
This plan is a tax-qualified defined contribution plan for employees of the General Partner. Subject to Code limits, which are the
same as described below with respect to the UGI Savings Plan, an employee may contribute, on a pre-tax basis, up to 50 percent
of his or her eligible compensation, 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. Participants in the AmeriGas Savings Plan may invest amounts
credited to their account among a number of funds, including the UGI stock fund. Each of the AmeriGas NEOs is eligible to
participate in the AmeriGas Savings Plan.
UGI Utilities, Inc. Savings Plan (the “UGI Savings Plan”)
This plan is a tax-qualified defined contribution plan available to, among others, employees of UGI. Under the plan, an employee
may contribute, subject to Internal Revenue Code (the “Code”) limitations (which, among other things, limited annual contributions
in 2015 to $18,000), 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, UGI provides matching
contributions targeted at 100 percent of the first 5 percent of eligible compensation contributed by the employee in any pay period.
Amounts credited to an employee’s account in the plan may be invested among a number of funds, including the Company’s stock
fund. Mr. Walsh and Ms. Gaudiosi 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. 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. Mr. Walsh participates in
the UGI Pension Plan. See Compensation of Executive Officers - Pension Benefits Table - Fiscal 2015 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 to employees hired prior to January 1, 2009, but are prohibited 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. Mr. Walsh participates in the UGI Corporation Supplemental Executive Retirement Plan. See Compensation of
Executive Officers - Pension Benefits Table - Fiscal 2015 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 to employees hired prior to January 1, 2009 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
51
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. Mr. Walsh is eligible to participate in the UGI Corporation Supplemental
Savings Plan. See Compensation of Executive Officers - Nonqualified Deferred Compensation Table - Fiscal 2015 and
accompanying narrative for additional information.
2009 UGI Corporation Supplemental Executive Retirement Plan for New Employees
The 2009 UGI Corporation Supplemental Executive Retirement Plan for New Employees (the “2009 UGI SERP”) is a nonqualified
deferred compensation plan that is intended to provide retirement benefits to executive officers who are not eligible to participate
in the UGI Pension Plan, having commenced employment with UGI on or after January 1, 2009. Under the 2009 UGI SERP, the
Company 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 ($265,000 in 2015) and 10 percent of compensation in excess of such limit.
In addition, if any portion of the Company’s matching contribution under the UGI 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 their account balances among a number of mutual funds, which are generally the
same funds available to participants in the UGI Savings Plan, other than the UGI stock fund. Ms. Gaudiosi is eligible to participate
in the 2009 UGI SERP. See Compensation of Executive Officers - Nonqualified Deferred Compensation Table - Fiscal 2015 and
accompanying narrative for additional information.
AmeriGas Propane, Inc. Supplemental Executive Retirement Plan
The General Partner maintains a supplemental executive retirement plan, which is a nonqualified deferred compensation plan for
highly compensated employees of the General Partner. Under the plan, the General Partner credits to each participant’s account
annually an amount equal to 5 percent of the participant’s compensation up to the Code compensation limits 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
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. The AmeriGas NEOs participate in the AmeriGas Propane, Inc. Supplemental Executive
Retirement Plan. See Compensation of Executive Officers - Nonqualified Deferred Compensation Table - Fiscal 2015 and
accompanying narrative for additional information.
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. The
AmeriGas NEOs are eligible to participate in the AmeriGas Propane, Inc. Nonqualified Deferred Compensation Plan. See
Compensation of Executive Officers - Nonqualified Deferred Compensation Table - Fiscal 2015 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 Code 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 AmeriGas
Propane, Inc. Supplemental Executive Retirement Plan, (iii) benefits payable under the UGI Corporation Supplemental Executive
Retirement Plan, and (iv) the 2009 UGI Corporation SERP. If an eligible participant elects to defer payment under the plan, the
participant may receive future benefits after separation from service as (x) a lump sum payment, (y) annual installment payments
over a period between two and ten years, or (z) one to five retirement distribution amounts to be paid in a lump sum in the year
specified by the individual. Deferred benefits, other than stock units and phantom units, will be deemed to be invested in investment
funds selected by the participant from among a list of available funds. The plan also provides newly eligible participants with a
deferral election that must be acted upon promptly.
Severance Pay Plans for Senior Executive Employees
The General Partner and UGI each maintain a severance pay plan that provides severance compensation to certain senior level
employees. The plans are designed to alleviate the financial hardships that may be experienced by executive employee participants
whose employment is terminated without just cause, other than in the event of death or disability. The General Partner’s plan
52
covers the AmeriGas NEOs and the UGI plan covers Mr. Walsh and Ms. Gaudiosi. See Compensation of Executive Officers -
Potential Payments Upon Termination or Change in Control for further information regarding the severance plans.
Change in Control Agreements
The General Partner has change in control agreements with each of the AmeriGas NEOs and UGI has change in control agreements
with Mr. Walsh and Ms. Gaudiosi. 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 the 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 the AmeriGas NEOs, the General
Partner or AmeriGas Partners). See Compensation of Executive Officers - Potential Payments Upon Termination 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 stockholders. Under our guidelines, an executive must meet
10 percent of the ownership requirement within one year from the date of employment or promotion. The AmeriGas Bonus Plan
and the UGI Bonus Plan each provides that, unless the Committee determines otherwise, all executive officers who have not
fulfilled their equity ownership requirement receive up to 10 percent of their gross annual bonus in fully vested AmeriGas Partners
common units or UGI Corporation stock. 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. The guidelines also require
that, until the equity ownership requirement is met, the executive retain all common units or UGI shares received in connection
with the payout of performance units. 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.
As of September 30, 2015, the equity ownership requirements for the named executive officers were as follows: (1) Mr. Sheridan
- 40,000 common units; (2) Mr. Gallagher - 12,000 common units; (3) Mr. Walsh - 225,000 UGI Corporation common shares; (4)
Ms. Gaudiosi - 30,000 UGI Corporation common shares; and (5) Mr. Rosback - 20,000 common units. Messrs. Sheridan, Gallagher,
and Rosback are permitted to satisfy their requirements through ownership of AmeriGas Partners common units, UGI common
stock, or a combination of AmeriGas Partners common units and UGI common stock, with each AmeriGas Partners common unit
equivalent to 1.5 shares of UGI common stock. Although not all named executive officers have met their respective ownership
requirements due to the amount of time they have served in their current positions, all named executive officers are in compliance
with the guidelines requiring the accumulation of units or common shares over time.
Stock Option Grant Practices
The Committees approve annual stock option grants to named executive officers in the last calendar quarter of each year, to be
effective the following January 1. The exercise price per share of the options is equal to or greater than the closing share price of
UGI’s 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 or greater than the closing price per share of UGI’s 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 or after the date of Committee action and have an exercise price equal to or greater than the closing price per share
of UGI’s common stock on the effective 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 2015 compensation, Mr. Walsh, aided by our corporate human resources department, provided statistical
data and recommendations to the appropriate Committee to assist it in determining compensation levels. Mr. Walsh did not make
recommendations as to his own compensation and was excused from the Committee meeting when his compensation was discussed
by the Committee. While the Committees utilized information provided by Mr. Walsh, and valued Mr. Walsh’s observations with
regard to other executive officers, the ultimate decisions regarding executive compensation were made by the Committee for all
named executive officers, except Messrs. Sheridan and Walsh, for whom executive compensation decisions were made by the
independent members of the appropriate Board of Directors following Committee recommendations.
53
Tax Considerations
In Fiscal 2015, we paid salary and annual bonus compensation to named executive officers that were not fully deductible under
U.S. federal tax law because it did not meet the statutory performance criteria. Section 162(m) of the Code precludes us from
deducting certain forms of compensation in excess of $1,000,000 paid to the named executive officers in any one year. Our policy
generally is to preserve the federal income tax deductibility of equity compensation paid to our executives by making it performance-
based. We will continue to consider and evaluate all of our compensation programs in light of federal tax law and regulations.
Nevertheless, we believe that, in some circumstances, factors other than tax deductibility take precedence in determining the forms
and amount of compensation, and we retain the flexibility to authorize compensation that may not be deductible if we believe it
is in the best interests of our Company.
RISKS RELATED TO COMPENSATION POLICIES AND PRACTICES
Management conducted a risk assessment of our compensation policies and practices for Fiscal 2015. Based on its evaluation,
management does not believe that any such policies or practices create risks that are reasonably likely to have a material
adverse effect on the Partnership.
SUMMARY COMPENSATION TABLE
The following tables, narrative and footnotes provide information regarding the compensation of our Chief Executive Officer,
Chief Financial Officer and our 3 other most highly compensated executive officers in Fiscal 2015.
Summary Compensation Table — Fiscal 2015
Non-Equity
Incentive
Plan
Compensation
($)
(3)
(g)
Option
Awards
($)
(2)
(f)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(4)
(h)
All Other
Compensation
($)
(5)
(i)
Bonus
($)
(d)
Stock
Awards
($)
(2)(e)
601,384
319,920
352,471
0
877,682
678,156
138,448
173,552
59,103
1,741,050
2,053,380
1,877,710
365,621
420,546
338,366
79,980
99,603
9,441
1,705,338
1,992,060
1,060,319
351,099
302,834
255,371
123,895
106,448
37,100
1,604,746
1,974,336
902,454
336,194
0
0
21,058
48,868
6,696
1,920,003
1,009,878
481,670
0
88,145
110,391
76,241
42,437
42,431
10,519
67,810
41,037
26,618
72,447
Total
($)
(6)
(j)
1,888,394
2,217,471
1,822,673
701,911
755,440
214,590
8,117,289
8,097,860
5,205,148
1,559,972
146,900
97,293
96,558
0
24,656
545,410
Name and
Principal
Position
(a)
J. E. Sheridan
President and
Chief Executive Officer
H. J. Gallagher
Vice President - Finance
Chief Financial Officer
J. L. Walsh
Vice Chairman
M. M. Gaudiosi
Vice President, General
Counsel and Secretary
A. D. Rosback
Vice President and
Chief Operating Officer
Fiscal
Year
(b)
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
Salary
($)
(1)(c)
526,474
506,018
474,539
296,093
284,538
91,731
1,078,342
1,027,169
856,377
434,611
2015
180,003
0
0
0
0
0
0
0
0
0
0
0
(1)
(2)
The amounts shown in column (c) represent salary payments actually received during the fiscal year shown based on the
number of pay periods within such fiscal year. Mr. Gallagher received a prorated salary in Fiscal 2013 based on his
employment date of May 20, 2013 with the General Partner. Mr. Walsh’s Fiscal 2013 salary reflects the portion of Fiscal
2013 that he served as President and Chief Operating Officer (until April 1, 2013) as well as his promotion to President
and Chief Executive Officer (effective April 1, 2013). Mr. Rosback’s Fiscal 2015 salary was prorated based on his
employment date of March 23, 2015 with the General Partner.
The amounts shown in columns (e) and (f) above represent the fair value of awards of performance units, restricted units
and stock options, as the case may be, on the date of grant. The assumptions used in the calculation of the amounts shown
are included in Note 2 and Note 11 to our Consolidated Financial Statements for Fiscal 2015 and in Exhibit No. 99 to
this Report.
(3)
The amounts shown in this column represent payments made under the applicable performance-based annual bonus plan.
Messrs. Gallagher and Rosback received 10% of their respective payouts in AmeriGas Partners Common Units in
54
(4)
compliance with the Company’s ongoing equity ownership compliance requirements. Ms. Gaudiosi received 7.4% of
her payout payout in UGI Corporation common stock in compliance with UGI’s ongoing stock ownership compliance
requirements.
The amounts shown in column (h) of the Summary Compensation Table - Fiscal 2015 reflect (i) for Messrs. Walsh and
Gallagher, the change in the actuarial present value from September 30, 2014 to September 30, 2015 of the named
executive officer’s accumulated benefit under UGI’s defined benefit 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. Gallagher has a vested annual benefit under the Retirement Income Plan for Employees of
UGI Utilities, Inc. based on prior credited service of approximately $37,100. Mr. Gallagher is not currently earning
benefits under that plan. Messrs. Sheridan and Rosback and Ms. Gaudiosi are 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 2015 and the Nonqualified Deferred Compensation Table - Fiscal 2015, 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 2015,
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 2015 was 3.29 percent, which is 120 percent of the federal long-term rate for December 2014. 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 2015 are itemized below.
Name
J. E. Sheridan
H. J. Gallagher
J. L. Walsh
M. M. Gaudiosi
A. D. Rosback
Change in
Pension Value
(a)
Above-
Market
Earnings on
Deferred
Compensation
$
$
$
$
$
0
21,058
1,893,089
0
0
$
$
$
$
$
0
0
26,914
0
0
(5)
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 2015. None of the named executive officers received
perquisites with an aggregate value of $10,000 or more during Fiscal 2015.
Employer
Contribution
to AmeriGas
Supplemental
Executive
Retirement
Plan/UGI
Supplemental
Savings Plan
($)
Employer
Contribution
to
401(k)
Savings Plan
($)
Relocation
Expense
Reimbursement
($)
$
$
$
$
$
13,250 $
13,438 $
5,865 $
8,366 $
0 $
74,895 $
28,999 $
61,945 $
64,081 $
14,656 $
0 $
0 $
0 $
0 $
10,000 $
Total
($)
88,145
42,437
67,810
72,447
24,656
Name
J. E. Sheridan
H. J. Gallagher
J. L. Walsh
M. M. Gaudiosi
A. D. Rosback (a)
(a) In connection with the commencement of Mr. Rosback’s employment, he received reimbursement for relocation
expenses in accordance with the General Partner’s relocation policy in the amount of $10,000.
(6)
The compensation reported for Mr. Walsh and Ms. Gaudiosi is paid by UGI. For Fiscal 2015, UGI charged the Partnership
49 percent of the total compensation expense, other than the change in pension value, for Mr. Walsh and Ms. Gaudiosi.
55
56Grants of Plan-Based Awards In Fiscal 2015 The following table and footnotes provide information regarding equity and non-equity plan grants to the named executive officers in Fiscal 2015.Grants of Plan-Based Awards Table — Fiscal 2015Estimated Possible Payouts UnderAllOtherStock Awards:All OtherOptionAwards: Number ofExercise orBaseGrant DateFair ValueBoardNon-Equity Incentive PlanAwards (1)Estimated Future Payouts UnderEquity Incentive Plan Awards (2)Number ofShares ofSecuritiesUnderlyingPrice ofOptionofStock and GrantActionThresholdTargetMaximumThresholdTargetMaximumStock orOptions (#)AwardsOptionNameDateDate($)($)($)(#)(#)(#)Units (#)(3)($/Sh)Awards(a)(a)(a)(d)(e)(f)(g)(h)(i)(j)(k)(l)(m)J. E. Sheridan10/1/201411/20/2014182,138421,616843,2321/21/20151/21/201560,00038.05319,920 1/21/20151/21/20151,7376,95013,900601,384 1/21/20151/21/20153,32513,30026,6001,300,299H. J. Gallagher10/1/201411/20/201464,022148,200296,4001/21/20151/21/20154001,6003,20015,00038.0579,9801/21/20151/21/20154001,6003,200138,4481/21/20151/21/20156502,6005,200275,078J. L. Walsh10/1/201411/19/2014809,7961,349,6602,699,3201/1/201511/19/2014306,00037.981,705,3381/1/201511/19/201411,25045,00090,0001,741,050M. M. Gaudiosi10/1/201411/19/2014169,652282,754565,5081/1/201511/19/201463,00037.98351,0991/1/201511/19/20142,3629,45018,900365,621A. D. Rosback3/23/20153/2/201549,896115,500231,0003/23/20153/2/201521,00033.4897,2933/23/20153/2/20155002,0004,000146,9003/23/20153/2/20159373,7507,500324,725(1) The amounts shown under this heading relate to bonus opportunities under the relevant company’s annual bonus plan for Fiscal 2015. See “Compensation Discussion and Analysis” for a description of the annual bonus plans. Payments for these awards have already been determined and are included in the Non-Equity Incentive Plan Compensation column (column (g)) of the Summary Compensation Table - Fiscal 2015. The threshold amount shown for Messrs. Sheridan, Gallagher, and Rosback is based on achievement of (i) 90 percent of the financial goal with the resulting amount reduced to the maximum extent provided for below-target achievement of the safety goal, and (ii) 90 percent of the customer service goal. The threshold amount shown for Mr. Walsh and Ms. Gaudiosi is based on achievement of 80 percent of the UGI financial goal. (2) The awards shown for Messrs. Sheridan, Gallagher, and Rosback are performance units under the 2010 AmeriGas Long-Term Incentive Plan, as described in “Compensation Discussion and Analysis.” Performance units are forfeitable until the end of the performance period in the event of termination of employment, with pro-rated forfeitures in the case of termination of employment due to retirement, death or disability. In the case of a change in control, outstanding performance units and distribution equivalents will be paid in cash in an amount equal to the greater of (i) the target award, or (ii) the award amount that would be payable if the performance period ended on the date of the change in control, based on the Partnership’s achievement of the performance goal as of the date of the change in control, as determined by the Compensation/Pension Committee. The awards shown for Mr. Walsh and Ms. 57Gaudiosi are performance units under the 2013 UGI Plan, as described in “Compensation Discussion and Analysis.” Terms of these awards with respect to forfeitures and change in control, as defined in the 2013 UGI Plan, are analogous to the terms of the performance units granted under the 2010 AmeriGas Long-Term Incentive Plan. (3) Options are granted under the 2013 UGI Plan. Under this Plan, the option exercise price is not less than 100 percent of the fair market value of UGI’s Common Stock on the effective date of the grant, which is either the date of the grant or a specified future date. The term of each option is generally 10 years, which is the maximum allowable term. The options become exercisable in three equal annual installments beginning on the first anniversary of the grant date. All options are nontransferable and generally exercisable only while the optionee is employed by the General Partner, UGI or an affiliate, with exceptions for exercise following termination without cause, retirement, disability and death. In the case of termination without cause, the option will be exercisable only to the extent that it has vested as of the date of termination of employment and the option will terminate upon the earlier of the expiration date of the option and the expiration of the 13-month period commencing on the date of termination of employment. If termination of employment occurs due to retirement, the option will thereafter become exercisable as if the optionee had continued to be employed by, or continued to provide service to, the Company, and the option will terminate upon the original expiration date of the option. If termination of employment occurs due to disability, the option term is shortened to the earlier of the third anniversary of the date of such termination of employment, and the original expiration date, and vesting continues in accordance with the original vesting schedule. In the event of death of the optionee while an employee, the option will become fully vested and the option term will be shortened to the earlier of the expiration of the 12-month period following the optionee’s death, and the original expiration date. Options are subject to adjustment in the event of recapitalizations, stock splits, mergers, and other similar corporate transactions affecting UGI’s common stock. Outstanding Equity Awards at Year-EndThe table below shows the outstanding equity awards as of September 30, 2015 for each of the named executive officers:Outstanding Equity Awards at Year-End Table — Fiscal 2015 58 Option AwardsStock Awards Number ofSecuritiesUnderlyingUnexercisedOptions(#)Number ofSecuritiesUnderlyingOptions(#)OptionExercisePriceOptionExpirationNumber of Shares or Units of Stock/PartnershipUnits that Have Not VestedMarket Value ofShares or Units of Stock/PartnershipUnits That Have Not VestedEquityIncentivePlan Awards:Number ofUnearnedShares, Unitsor Other Rights That Have NotVestedEquityIncentivePlan Awards:Marketor Payout Valueof UnearnedShares, Units orOther RightsThat Have NotVestedNameExercisable Unexercisable ($)Date(#)($)(#) ($) (a)(b) (c) (e)(f)(g)(h)(i) (j) J. E. Sheridan35,625(1)21.8112/31/202214,250(14)929,151 57,000(2)27.6412/31/2023 9,500(15)394,535 60,000(3)38.051/20/2025 8,000(16)332,240 6,950(17)288,634 13,300(18)552,349H. J. Gallagher4,687(4)21.656/30/20211,100(19)71,7228,500(5)19.6012/31/20212,200(15)91,366 9,000(1)9,000(1)21.8112/31/20222,000(16)83,060 1,500(6)750(6)27.625/19/20231,600(17)66,4486,750(2)13,500(2)27.6412/31/20232,600(18)107,97815,000(3)38.051/20/2025J. L. Walsh100,000(7)16.2812/31/201834,500(20)2,378,554 187,500(8)16.1312/31/201931,500(21)2,171,723 187,500(9)21.0612/31/202063,000(22)2,193,660 187,500(5)62,500(5)19.6012/31/202145,000(23)1,566,900 119,000(1)59,500(1)21.8112/31/2022 86,000(10)43,000(10)25.503/31/2023135,000(2)270,000(2)27.6412/31/2023306,000(11)37.9812/31/2024M. M. Gaudiosi75,000(12)17.754/22/202215,000(20)1,034,15450,000(1)25,000(1)21.8112/31/202212,750(22)443,95525,000(2)50,000(2)27.6412/31/20239,450(23)329,04963,000(11)37.9812/31/2024A. D. Rosback21,000(13)33.483/22/20252,000(24)83,060 3,750(25)155,738 Note: Column (d) was intentionally omitted.
(1) These options were granted effective January 1, 2013. These options vest 33 1/3 percent on each anniversary of the grant
date and will be fully vested on January 1, 2016.
(2) These options were granted effective January 1, 2014. These options vest 33 1/3 percent on each anniversary of the grant
date and will be fully vested on January 1, 2017.
(3) These options were granted effective January 21, 2015. These options vest 33 1/3 percent on each anniversary of the
grant date and will be fully vested on January 21, 2018.
(4) These options were granted effective July 1, 2011 and were fully vested on July 1, 2014.
(5) These options were granted effective January 1, 2012 and were fully vested on January 1, 2015.
(6) These options were granted effective May 20, 2013 in connection with Mr. Gallagher’s promotion to Vice President -
Finance and Chief Financial Officer. These options vest 33 1/3 percent on each anniversary of the grant date and will be
fully vested on May 20, 2016.
(7) These options were granted effective January 1, 2009 and were fully vested on January 1, 2012.
(8) These options were granted effective January 1, 2010 and were fully vested on January 1, 2013.
(9) These options were granted effective January 1, 2011 and were fully vested on January 1, 2014.
(10) These options were granted effective April 1, 2013 in connection with Mr. Walsh’s promotion to Chief Executive Officer
in 2013. These options vest 33 1/3 percent on each anniversary of the grant date and will be fully vested on April 1,
2016.
(11) These options were granted effective January 1, 2015. These options vest 33 1/3 percent on each anniversary of the grant
date and will be fully vested on January 1, 2018.
(12) These options were granted effective April 23, 2012 in connection with the commencement of Ms. Gaudiosi’s employment
and were fully vested on April 23, 2015.
(13) These options were granted effective March 23, 2015. These options vest 33 1/3 percent on each anniversary of the
grant date and will be fully vested on March 23, 2018.
(14) The amount shown relates to a target award of AmeriGas Partners performance units granted effective January 1, 2013.
The performance measurement period for these restricted units is January 1, 2013 through December 31, 2015. The value
of the number of units that may be earned at the end of the performance period is based on the AmeriGas Partners’ TUR
relative to that of each of the master limited partnerships in the Alerian MLP Index as of the first day of the performance
measurement period. The actual number of restricted units and accompanying distribution equivalents earned may be
higher (up to 200% of the target award) or lower than the amount shown, based on TUR performance through the end
of the performance period. The restricted units will be payable, if at all, on January 1, 2016. As of October 31, 2015, the
AmeriGas Partners’ TUR ranking (11th out of 38 companies) qualified for 157% leverage of the target number of
performance units originally granted. See COMPENSATION DISCUSSION AND ANALYSIS - Long-Term Compensation - Fiscal
2015 Equity Awards for more information on the TUR performance goal measurements.
(15) These performance units were awarded January 1, 2014. The measurement period for the performance goal is January 1,
2014 through December 31, 2016. The performance goal is the same as described in footnote 14, but it is measured for
a different three-year period. The performance units will be payable, if at all, on January 1, 2017.
(16) These performance units were granted effective January 1, 2014. The performance measurement period for these
performance units is January 1, 2014 through December 31, 2016. The value of the number of restricted units that may
be earned at the end of the performance period is based on the AmeriGas Partners’ TUR relative to that of each of the
other two retail propane distribution companies included in the Alerian MLP Index as of the first day of the performance
measurement period. No payout will occur unless AmeriGas Partners has the highest TUR for the performance period
as compared to the other companies in the Propane MLP Group. The target and maximum award, equivalent to 150 percent
59
of the number of performance units, will be payable if AmeriGas Partners has the highest TUR of the companies comprising
the Propane MLP Group. The restricted units will be payable, if at all, on January 1, 2017. See COMPENSATION DISCUSSION
AND ANALYSIS - Long-Term Compensation - Fiscal 2015 Equity Awards for more information on the TUR performance
goal measurements.
(17) The amount shown relates to a target award of AmeriGas Partners performance units granted effective January 21, 2015.
The performance measurement period for these units is January 1, 2015 through December 31, 2017. The value of the
number of units that may be earned at the end of the performance period is based on the AmeriGas Partners’ TUR relative
to that of each of the master limited partnerships in the Alerian MLP Index as of the first day of the performance
measurement period, and then modified based on AmeriGas Partners’ three-year TUR relative to the TUR of the other
companies in the Propane MLP Group. The actual number of units and accompanying distribution equivalents earned
may be higher (up to 200% of the target award) or lower than the amount shown, based on TUR performance through
the end of the performance period. This number is then modified as follows: (i) if AmeriGas Partners’ TUR ranks first
in the Propane MLP Group for the three-year period, then the performance unit payout will be leveraged at 130%; (ii) if
AmeriGas Partners’ TUR ranks second in the Propane MLP Group for the three-year period, then the performance unit
payout will be leveraged at 100%; and (iii) if AmeriGas Partners’ TUR ranks third in the Propane MLP Group for the
three-year period, then the performance unit payout will be leveraged at 70%. The overall payout is capped at 200% of
the target number of performance units awarded. See COMPENSATION DISCUSSION AND ANALYSIS - Long-Term Compensation
- Fiscal 2015 Equity Awards for more information on the TUR performance goal measurements.
(18) The amount shown relates to a target award of AmeriGas Partners performance units granted effective January 21, 2015.
The performance measurement period for these units is October 1, 2015 through September 30, 2017, but payable, if at
all, on January 1, 2018. The value of the number of units that may be earned at the end of the performance period is based
on AmeriGas Partners’ customer gain/loss performance during the three-year performance period, but measured based
on annual targets, each with a one-third weighting. The annual amounts are then subject to adjustment depending on the
overall achievement of cumulative three-year performance goals. If the three-year cumulative customer gain/loss goal
is exceeded, then each year’s individual result will be multiplied by 130%. If the three-year cumulative customer gain/
loss goal is not met, then each year’s individual result will be multiplied by 70%. The overall payout is capped at 200%
of the target number of performance units awarded. Based on customer gain/loss performance during Fiscal 2015, the
year one target was not achieved. See COMPENSATION DISCUSSION AND ANALYSIS - Long-Term Compensation - Fiscal 2015
Equity Awards for more information on the TUR performance goal measurements.
(19) These performance units were awarded on May 20, 2013 in connection with Mr. Gallagher’s promotion to Chief Financial
Officer. The measurement period is the same as described in footnote 14 and the performance goal is the same as described
in footnote 14. The performance units will be payable, if at all, on January 1, 2016.
(20) The amount shown relates to a target award of performance units granted effective January 24, 2013. The performance
measurement period for these performance units is January 1, 2013 through December 31, 2015. The value of the number
of performance units that may be earned at the end of the performance period is based on the Company’s TSR relative
to that of each of the companies in the Russell Midcap Utility Index, excluding telecommunications companies, as of the
first day of the performance measurement period. The actual number of performance units and accompanying dividend
equivalents earned may be higher (up to 200% of the target award) or lower than the amount shown, based on TSR
performance through the end of the performance period. The performance units will be payable, if at all, on January 1,
2016. As of November 30, 2015, the Company’s TSR ranking (4th out of 36 companies) qualified for 200% leverage of
the target number of performance units originally granted. See COMPENSATION DISCUSSION AND ANALYSIS - Long-Term
Compensation - Fiscal 2015 Equity Awards for more information on the TSR performance goal measurements.
(21) These performance units were awarded April 1, 2013 in connection with Mr. Walsh’s promotion to Chief Executive
Officer in 2013. The measurement period is the same as described in footnote 12 and the performance goal is the same
as described in footnote 12. The performance units will be payable, if at all, on January 1, 2016.
(22) These performance units were awarded January 1, 2014. The measurement period for the performance goal is January 1,
2014 through December 31, 2016. The performance goal is the same as described in footnote 10, but is measured for a
different three-year period. The performance units will be payable, if at all, on January 1, 2017.
(23) These performance units were awarded January 1, 2015. The measurement period for the performance goal is
January 1, 2015 through December 31, 2017. The performance goal is the same as described in footnote 10, but is
measured for a different three-year period. The performance units will be payable, if at all, on January 1, 2018.
60
(24) These performance units were awarded March 23, 2015. The measurement period for the performance goal is January
1, 2015 through December 31, 2017. The performance goal is the same as described in footnote 17. The performance
units will be payable, if at all, on January 1, 2018.
(25) These performance units were awarded March 23, 2015. The performance measurement period for these units is
October 1, 2015 through September 30, 2017. The performance goal is the same as described in footnote 18. The
performance units will be payable, if at all, on January 1, 2018.
Option Exercises and Stock Vested Table — Fiscal 2015
The following table sets forth (1) the number of shares of UGI common stock acquired by the named executive officers in Fiscal
2015 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. Sheridan and Gallagher, the number of AmeriGas Partners phantom units previously granted that vested in Fiscal 2015,
(4) for Messrs. Walsh and Oliver and Ms. Gaudiosi, the number of UGI performance units previously granted that vested in Fiscal
2015, and (5) for Messrs. Sheridan and Gallagher, the value realized was based on the closing price on the NYSE for AmeriGas
Partners Common Units and for Messrs. Walsh and Oliver and Ms. Gaudiosi, the value realized was based on the closing price
on the NYSE for shares of UGI common stock, on the vesting date. There was no AmeriGas Partners performance unit payout
in Fiscal 2015. For Mr. Gallagher, 6,672 UGI performance units, with a value of $253,403, vested in Fiscal 2015. These performance
units were granted to Mr. Gallagher in Fiscal 2012 for his service as Treasurer of UGI Corporation.
Option Awards
Stock/Unit Awards
Number of
Shares
Acquired on
Exercise
(#)
(b)
100,125
0
87,500
0
0
Value
Realized
on Exercise
($)
(c)
1,305,940
0
1,705,375
0
0
Number of
Shares/Units
Acquired on
Vesting
(#)
(d)
5,010
6,672
75,426
29,010
0
Value
Realized
on Vesting
($)
(e)
251,022
253,403
2,864,679
1,101,800
0
Name
(a)
J. E. Sheridan
H. J. Gallagher
J. L. Walsh
M. M. Gaudiosi
A. D. Rosback
Retirement Benefits
The following table shows the number of years of credited service for the named executive officers under the UGI Utilities, Inc.
Retirement Income Plan (which we refer to below as the “UGI Utilities Retirement Plan”) and the UGI Corporation Supplemental
Executive Retirement Plan (which we refer to below as the “UGI SERP”) and the actuarial present value of accumulated benefits
under those plans as of September 30, 2015 and any payments made to the named executive officers in Fiscal 2015 under those
plans.
61
Pension Benefits Table — Fiscal 2015
Name
(a)
J. E. Sheridan (1)
H. J. Gallagher (2)
J. L. Walsh
M. M. Gaudiosi (1)
A. D. Rosback (1)
Plan Name
(b)
None
UGI Utilities Retirement Income Plan
UGI SERP
UGI SERP
UGI Utilities Retirement Income Plan
None
None
Number of
Years
Credited
Service
(#)
(c)
Present Value
of
Accumulated
Benefit
($)
(d)
Payments
During Last
Fiscal Year
($)
(e)
0
11
11
10
10
0
0
0
324,966
15,261
4,998,106
554,435
0
0
0
0
0
0
0
0
0
(1)
(2)
Messrs. Sheridan and Rosback and Ms. Gaudiosi do not participate in any defined benefit pension plan.
Mr. Gallagher has a vested annual benefit amount under the UGI Utilities, Inc. Retirement Plan based on prior credited
service of approximately $37,100. Mr. Gallagher is not currently earning benefits under that plan.
Retirement Income Plan for Employees of UGI Utilities, Inc.
UGI participates in the UGI Utilities Retirement Plan, a qualified defined benefit retirement plan (“Pension Plan”) to provide
retirement income to its employees hired prior to January 1, 2009. 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 five years of vesting service.
The Pension Plan provides normal annual retirement benefits at age 65, unreduced early retirement benefits at age 62 with ten
years of service and reduced, but subsidized, early retirement benefits at age 55 with ten years of service. Employees terminating
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 = The minimum of (1) and (2), where
(1) = 1.9% of five-year final average earnings (as defined in the Pension Plan) multiplied by years of service;
(2) = 60% of the highest year of earnings; and
B = 1% of the estimated primary Social Security benefit multiplied by years of service.
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.
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 2015, the limit on the
compensation that may be used is $265,000 and the limit on annual benefits payable for an employee retiring at age 65 in 2015
is $210,000. 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.
Mr. Walsh is currently eligible for early retirement benefits under the Pension Plan.
62
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, 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 or rolled over to the
company’s nonqualified deferred compensation plan. 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 the 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.
Actuarial assumptions used to determine values in the Pension Benefits Table
The amounts shown in the Pension Benefit Table above are actuarial present values of the benefits accumulated through September
30, 2015. 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 that, 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 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 for SERP,
for pre-commencement calculations
SERP lump sum rate
Retirement age:
Postretirement mortality for Pension Plan
Postretirement Mortality for SERP
Preretirement Mortality
Termination and disability rates
Form of payment - qualified plan
Form of payment - nonqualified plan
September 30, 2015
September 30, 2014
4.60%
2.70% for applicable
pre-2004 service; 2.50% for
other service
62
RP-2014 blue collar table,
adjusted to 2006 using
MP-2014 with rates then
decreased by 4.3%; projected
forward on a generational
basis using Scale BB-2D
4.60%
2.70% for applicable
pre-2004 service; 2.50% for
other service
62
RP-2000, combined, healthy
table projected to 2020 using
Scale AA without collar
adjustments
1994 GAR Unisex
1994 GAR Unisex
none
none
none
none
Single life annuity
Lump sum
Single life annuity
Lump sum
63
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 2015
Name
(a)
J. E. Sheridan
H. J. Gallagher
J. L. Walsh
M. M. Gaudiosi
A. D. Rosback
_________________
Plan Name
AmeriGas SERP
AmeriGas SERP
UGI Supplemental Savings Plan
2009 UGI SERP for New Employees
AmeriGas SERP
Executive
Contributions
in Last Fiscal
Year
Employer
Contributions
in Last Fiscal
Year
Aggregate
Earnings
in Last
Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at
Last
Fiscal Year
($)
(b)
($)
(c)
0
0
0
0
0
74,895 (1)
28,999 (1)
61,945 (3)
64,081 (3)
14,656 (1)
($)
(d)
17,487
522
29,349
3,245
0
($)
(e)
($)(2)
(f)
492,011
32,257
368,175
149,650
0
0
0
0
0
0
(1)
(2)
(3)
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 2015 in the “All Other Compensation” column.
The aggregate balances include the following aggregate amounts previously reported in the Summary Compensation
Table as compensation in prior years: Mr. Sheridan, $399,649; Mr. Gallagher, $61,790; and Mr. Walsh, $343,247.
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 2015 in the “All Other Compensation” column.
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 ($265,000 in 2015) 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 Corporation 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.”
64
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 Corporation 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 plan year 2013 was $250,000, for plan year 2014 was $255,000 and for plan year 2015 was $260,000. The Code
contribution limit for fiscal year 2013 was $50,000, for fiscal year 2014 was $51,000 and for fiscal year 2015 was $52,000. 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 and 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.
The 2009 UGI Corporation Supplemental Executive Retirement Plan for New Employees (the “2009 UGI SERP”) is a nonqualified
deferred compensation plan that is intended to provide retirement benefits to executive officers who are not eligible to participate
in the Pension Plan, having been hired on or after January 1, 2009. Under the 2009 UGI SERP, the Company 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 ($260,000 in plan year 2015) and 10 percent of compensation in excess of such limit. In addition, if any
portion of the Company’s matching contribution under the UGI Utilities, Inc. 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 UGI Utilities, Inc. 401(k) Savings Plan, other than the UGI Corporation 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 2009 UGI SERP
may be deferred in accordance with the UGI Corporation 2009 Deferral Plan. See Compensation Discussion and Analysis - UGI
Corporation 2009 Deferral Plan.
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. Sheridan, Gallagher, and Rosback, 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 of the senior executive’s death or disability. Under
the AmeriGas Severance Plan, “just cause” generally means dismissal of an executive due to (i) 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. Sheridan, the Continuation Period ranges from 12 months to 24 months, depending on length of service. In addition, a
65
participant may receive an annual bonus for his or her year of termination, subject to the Committee’s discretion and not to exceed
the amount of his or her bonus under the Annual Bonus Plan, pro-rated for the number of months served in the fiscal year prior
to termination. 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), provided continued medical and dental coverage would
not result in adverse tax consequences to the participant or the General Partner and its affiliates and is permitted under the applicable
medical and dental plans. 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, if eligible, are entitled to receive reimbursement for tax preparation services
for the final year of employment.
In order to receive benefits under the AmeriGas Severance Plan, a participant is required to execute a release that 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 Mr. Walsh and Ms. Gaudiosi,
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 dismissal of
an executive due to (i) 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 the Continuation Period. In the case of Mr. Walsh, the Continuation
Period is 30 months. In addition, a participant may receive an annual bonus for his or her year of termination, subject to the
Committee’s discretion and not to exceed the amount of his or her bonus under the Annual Bonus Plan, pro-rated for the number
of months served in the fiscal year prior to termination. The levels of severance payment were established by the Compensation
and Management Development Committee based on competitive practice and are reviewed by management and the Compensation
and Management Development Committee from time to time.
Under the UGI Severance Plan, the participant also receives a payment equal to the cost he would have incurred to continue
medical and dental coverage under 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), provided continued medical and dental coverage would
not result in adverse tax consequences to the participant or UGI and its affiliates and is permitted under the applicable medical
and dental plans. 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, if eligible, are entitled to receive reimbursement for tax preparation services for their
final year of employment under the UGI Severance Plan.
In order to receive benefits under the UGI Severance Plan, a participant is required to execute a release that 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. Sheridan, Gallagher, and Rosback 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 each year, unless in each case, prior to a change in control, the General Partner terminates such
agreement. In the absence of a change in control or termination by the General Partner, each agreement will terminate when, for
66
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;
• 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. Sheridan, Gallagher, and Rosback with cash 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. Sheridan,
Gallagher, and Rosback 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. Sheridan’s base salary and annual bonus and 2 times the base salary
and annual bonus of each of Messrs. Gallagher and Rosback. 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. Sheridan, Gallagher, and
Rosback 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. Sheridan and 2 years in the case of the other AmeriGas executives (in each case
less the amount he would be required to contribute for such coverage if he were an active employee). Messrs. Sheridan, Gallagher,
and Rosback 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, and (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 2015.”
AmeriGas Propane discontinued the use of a tax gross-up in November of 2010 and, as a result, the benefits for Messrs. Sheridan,
Gallagher, and Rosback are not 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.
67
In order to receive benefits under his change in control agreement, each named executive is required to execute a release that
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. Each of Mr. Walsh and Ms. Gaudiosi has an agreement with UGI which
provides benefits in the event of a change in control. The agreement has a term of 3 years with automatic one-year extensions
each year, 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, the agreement will terminate when, for any reason, the executive terminates his 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;
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 Mr. Walsh and Ms. Gaudiosi with cash benefits if UGI terminates his or her employment without “cause” or if
he or she 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 Mr. Walsh and Ms.
Gaudiosi will be as specified under his or her 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 Mr. Walsh’s and Ms. Gaudiosi’s respective base salary and annual
bonus. Each executive would also receive the cash equivalent of his or her target bonus, prorated for the number of months served
in the fiscal year. In addition, Mr. Walsh and Ms. Gaudiosi are each entitled to receive a payment equal to the cost he or she would
incur if he or she enrolled in UGI’s medical and dental plans for 3 years (less the amount he or she would be required to contribute
for such coverage if he or she were an active employee). Mr. Walsh and Ms. Gaudiosi would also have benefits under UGI’s
Supplemental Executive Retirement Plan calculated as if he or she 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, and (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 2015.”
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 Mr. Walsh will be reduced to the
extent necessary to avoid imposition of the excise tax on “excess parachute payments.” UGI Corporation discontinued the use of
a tax gross-up in July 2010 for executives who enter into change in control agreements subsequent thereto.
In order to receive benefits under his or her change in control agreement, Mr. Walsh and Ms. Gaudiosi are each required to execute
a release that discharges UGI and its subsidiaries from liability for any claims he or she 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.
68
Potential Payments Upon Termination or Change in Control Table — Fiscal 2015
The amounts shown in the table below assume that each named executive officer's termination was effective as of September 30,
2015 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 or her 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 2015” and the “Nonqualified Deferred Compensation Table - Fiscal 2015.” There are no
incremental payments in the event of voluntary resignation, termination for cause, disability or upon retirement.
Potential Payments Upon Termination or Change in Control Table - Fiscal 2015
Name & Triggering Event
J. E. Sheridan
Severance
Pay($)(1)(2)
Equity
Awards with
Accelerated
Vesting($)(3)
Nonqualified
Retirement
Benefits($)(4)
Welfare &
Other Benefits
($)(5)
Total($)
Death
Involuntary Termination Without Cause
Termination Following Change in Control
0
1,815,381
3,267,524
2,229,388
0
4,271,016
0
0
244,841
H. J. Gallagher
Death
Involuntary Termination Without Cause
Termination Following Change in Control
0
815,100
1,037,400
559,658
0
1,083,616
7,808
8,734
71,154
0
69,587
95,291
0
68,679
64,905
2,229,388
1,884,968
7,878,672
567,466
892,513
2,257,075
J. L. Walsh
Death
Involuntary Termination Without Cause
Termination Following Change in Control
0
6,171,061
8,637,824
7,396,315
0
12,946,588
4,476,809
5,229,917
9,558,799
0
59,047
10,844,402
11,873,124
11,460,025
41,987,613
M. M. Gaudiosi
Death
Involuntary Termination Without Cause
Termination Following Change in Control
0
757,580
2,538,054
1,612,203
0
2,800,644
A. D. Rosback
Death
Involuntary Termination Without Cause
Termination Following Change in Control
0
364,223
1,066,500
107,739
0
349,998
_________________
0
0
191,535
0
0
68,500
0
26,439
29,341
1,612,203
784,019
5,559,574
0
30,717
40,826
107,739
394,940
1,525,824
(1)
(2)
(3)
(4)
(5)
Amounts shown under “Severance Pay” in the case of involuntary termination without cause are calculated under the
terms of the UGI Severance Plan for Mr. Walsh and Ms. Gaudiosi, and the AmeriGas Severance Plan for Messrs. Sheridan,
Gallagher, and Rosback. We assumed that 100 percent of the target annual bonus was paid.
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.
In calculating the amounts shown under “Equity Awards with Accelerated Vesting,” we assumed (i) the continuation of
AmeriGas Partners’ distribution (and UGI’s dividend, as applicable) at the rate in effect on September 30, 2015; and (ii)
performance at the greater of actual through September 30, 2015 and target levels with respect to performance units.
Amounts shown under “Nonqualified Retirement Benefits” are in addition to amounts shown in the “Pension Benefits
Table - Fiscal 2015” and “Non-Qualified Deferred Compensation Table - Fiscal 2015.”
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 payment of $10,789,877 for Mr. Walsh in the event of a change in control.
69
COMPENSATION OF DIRECTORS
The table below shows the components of director compensation for Fiscal 2015. A Director who is an officer or employee of
the General Partner or its subsidiaries is not compensated for service on the Board of Directors or on any Committee of the Board.
Director Compensation Table — Fiscal 2015
Fees
Earned
or Paid
in Cash
($)(1)
(b)
85,000
176,667
90,000
72,500
534
87,500
85,000
Stock
Awards
($)(2)
(c)
Option
Awards
($)
(d)
63,934
0
63,934
63,934
0
63,934
63,934
0
0
0
0
0
0
0
Non-Equity
Incentive
Plan
Compensation
($)
(e)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(f)
All Other
Compensation
($)
(g)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Total
($)
(h)
148,934
176,667
153,934
136,434
534
151,434
148,934
Name
(a)
B. R. Ford
L. R. Greenberg
W. J. Marrazzo
A. Pol
P. A. Ramos (3)
M. O. Schlanger
K. R. Turner
_________________
(1)
(2)
In Fiscal 2015, the General Partner paid its non-management directors an annual retainer of $65,000 for Board service.
It paid an additional annual retainer of $20,000 to members of the Audit Committee, other than the chairperson. The
chairperson of the Audit Committee was paid an additional annual retainer of $25,000. The General Partner also paid
an additional retainer of $7,500 for the chairperson of the Compensation/Pension and the Corporate Governance
Committees. The General Partner also paid its Presiding Director a retainer of $15,000 in Fiscal 2015. The General
Partner pays no meeting attendance fees to its directors. In 2014, the independent members of the Board of Directors,
upon recommendation of the Corporate Governance Committee, approved a reduction in Mr. Greenberg’s annual cash
retainer for his service as Non-Executive Chairman from $200,000 to $165,000 effective February 2, 2015. Additionally,
Mr. Greenberg will not receive any equity compensation for his service as Non-Executive Chairman.
All non-employee Directors, excluding Mr. Greenberg, received 1,300 Phantom Units in Fiscal 2015 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 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
Common Units and 35 percent in cash, based on the value of a Common Unit, upon retirement or termination of service
unless otherwise deferred. 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 11 to our audited
consolidated financial statements for Fiscal 2015. For the number of Phantom Units credited to each Director’s account
as of September 30, 2015, 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.”
(3)
Mr. Ramos’ compensation for Fiscal 2015 was prorated based on his September 28, 2015 election as a director of AmeriGas
Propane, Inc. Mr. Ramos will receive a grant of Phantom Units in January 2016.
70
Equity Ownership Guidelines for Independent Directors: All independent directors are required to hold AmeriGas Partners,
L.P. units equal to five times the cash portion of their annual retainer. They have five years to meet this ownership threshold.
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 October 1, 2015.
AmeriGas Propane, Inc. is the sole general partner of the Partnership.
Title of Class
Common Units
Name and Address (1) of
Beneficial Owner
UGI Corporation
AmeriGas, Inc.
AmeriGas Propane, Inc.
Petrolane Incorporated
Amount and
Nature of
Beneficial
Ownership of
Partnership Units
23,756,882(2)
23,756,882(3)
23,756,882(4)
6,905,584(4)
Percent of
Class
26%
26%
26%
7%
(1)
(2)
(3)
(4)
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.
Based on the number of units held by its indirect, wholly-owned subsidiaries, AmeriGas Propane, Inc. and Petrolane.
Based on the number of units held by its direct and indirect, wholly-owned subsidiaries, AmeriGas Propane, Inc. and
Petrolane.
AmeriGas Propane, Inc.’s beneficial ownership includes 6,905,584 Common Units held by its subsidiary, Petrolane.
Beneficial ownership of those Common Units is shared with UGI and AmeriGas, Inc.
71
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, 2015, 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
J. E. Sheridan
H. J. Gallagher
M. M. Gaudiosi
A. D. Rosback
L. R. Greenberg
J. L. Walsh
B. R. Ford
W. J. Marrazzo
A. Pol
P. A. Ramos
M. O. Schlanger
K. R. Turner
Directors and executive officers as a group (18 persons)
_________________
Amount and
Nature of
Beneficial
Ownership
of
Partnership
Common
Units (1)
Number of
AmeriGas
Partners
Phantom
Units (9)
41,732 (2)
3,829
0
0
15,000 (3)
7,000 (4)
1,550 (5)
1,000 (6)
0
0
1,000 (7)
6,500 (8)
99,695
0
0
0
0
0
0
2,600
5,417
3,581
0
5,417
4,224
21,239
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Sole voting and investment power unless otherwise specified.
Mr. Sheridan’s Units are held jointly with his spouse.
Mr. Greenberg’s Units are held jointly with his spouse.
Mr. Walsh’s Units are held jointly with his spouse.
Mr. Ford’s Units are held in the following manner: (i) 1,200 Units are held jointly with his spouse; (ii) 50 Units are held
jointly with Colleen Ford; (iii) 50 Units are held jointly with Kevin Ford; (iv) 50 Units are held jointly with Brandon
Ford; and (v) 200 Units are held jointly with Brian Ford, Jr.
Mr. Marrazzo’s Units are held jointly with his spouse.
The Units shown are owned by Mr. Schlanger’s spouse. Mr. Schlanger disclaims beneficial ownership of his spouse’s
Units.
The Turner Family Partnership holds 1,000 of Mr. Turner’s Units and Mr. Turner disclaims beneficial ownership of these
Units, except to the extent of his interest as the general partner of the Turner Family Partnership.
The 2010 Plan provides that Phantom Units will be converted to AmeriGas Partners Common Units and paid out to
Directors upon termination of service.
72
Equity Compensation Plan Information
The following table sets forth information as of the end of Fiscal 2015 with respect to compensation plans under which equity
securities of the Partnership are authorized for issuance.
(c)
Number of
securities
remaining
available
for future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(b)
Weighted
average
exercise price
of
outstanding
options,
warrants and
rights
0
2,416,473(1)
(a)
Number of
securities to
be issued
upon exercise
of
outstanding
options,
warrants and
rights
192,583
192,583
Plan category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
(1)
Securities are issued under 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, 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 13 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 2015.
Interests of the General Partner in the Partnership
We make quarterly cash distributions of all of our Available Cash, generally defined as all cash on hand at the end of such quarter,
plus all additional cash on hand as of the date of determination resulting from borrowings subsequent to the end of such quarter,
less the amount of cash reserves established by the General Partner in its reasonable discretion for future cash requirements.
According to the Partnership Agreement, the General Partner receives cash distributions as follows:
Distributions of Available Cash are made 98% to limited partners and 2% to the General Partner (giving effect to the 1.01% interest
of the General Partner in distributions of Available Cash from AmeriGas OLP to the Partnership) until Available Cash exceeds the
Minimum Quarterly Distribution of $0.55 and the First Target Distribution of $0.055 per Common Unit (or a total of $0.605 per
Common Unit). When Available Cash exceeds $0.605 per Common Unit in any quarter, the General Partner will receive a greater
percentage of the total Partnership distribution but only with respect to the amount by which the distribution per Common Unit
to limited partners exceeds $0.605.
Related Person Transactions
The General Partner employs persons responsible for managing and operating the Partnership. The Partnership reimburses the
General Partner for the direct and indirect costs of providing these services, including all compensation and benefit costs. For
Fiscal 2015, these costs totaled approximately $576.1 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 stop loss medical coverage per occurrence in excess of $0.3 million per employee per year. Another wholly-
73
owned subsidiary of UGI leases office space to the General Partner for its headquarters staff. The Partnership is also covered by
UGI master insurance policies that generally provide excess liability, property and other standard insurance coverages. In general,
the coverage afforded by the UGI master policies is shared with other UGI 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 2015, the Partnership paid approximately $25.6 million for the services referred to
in this paragraph.
AmeriGas OLP purchases propane from UGI Energy Services, LLC and its subsidiaries (“Energy Services”), which are affiliates
of UGI. There were no purchases of propane by AmeriGas OLP from Energy Services in Fiscal 2015.
The Partnership sold propane to certain affiliates of UGI which totaled approximately $1.2 million in Fiscal 2015. The highest
amounts due from affiliates of the Partnership during Fiscal 2015 and at November 1, 2015 were $5.0 million and $2.72 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.”
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed by Ernst & Young LLP, the Company’s independent registered public accounting firm in Fiscal 2015,
and PricewaterhouseCoopers LLP, the Partnership’s independent registered public accounting firm in Fiscal 2014, were as follows:
Audit Fees(1)
Audit-Related Fees
Tax Fees(2)
All Other Fees
Total Fees for Services Provided
_________________
2015
1,568,070 $
$
0
0
0
$
1,568,070 $
2014
1,653,717
0
535,000
0
2,188,717
(1)
Audit Fees were for audit services, including (i) the annual audit of the consolidated financial statements of the Partnership,
(ii) subsidiary audits, (iii) review of the interim financial statements included in the Quarterly Reports on Form 10-Q of
the Partnership, and (iv) services that only the independent registered public accounting firm can reasonably be expected
to provide, such as services associated with SEC registration statements, and documents issued in connection with
securities offerings.
(2)
Tax Fees for Fiscal 2014 were for the preparation of Substitute Schedule K-1 forms for unitholders of AmeriGas Partners.
In the course of its meetings, the Audit Committee considered whether the provision by Ernst & Young LLP of the professional
services described under “Tax Fees” was compatible with Ernst & Young LLP’s independence. The Committee concluded that
the independent auditor was independent from the Partnership and its management.
74
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting
compensation and overseeing the work of the Company’s independent accountants. In recognition of this responsibility, the Audit
Committee has a policy of pre-approving audit and permissible non-audit services provided by the independent accountants. The
Audit Committee has delegated such approval authority to its Chair, to be exercised in the intervals between meetings, in accordance
with the Audit Committee’s pre-approval policy.
Prior to engagement of the Company’s independent accountants for the next year’s audit, management submits a list of services
and related fees expected to be rendered during that year within each of the four categories of services noted above to the Audit
Committee for approval.
75
PART IV:
ITEM 15.
EXHIBITS, 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 Annual Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm (on Consolidated Financial Statements and
Schedules) - Ernst & Young LLP
Report of Independent Registered Public Accounting Firm (on Internal Control over Financial Reporting)
- Ernst & Young LLP
Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP
Consolidated Balance Sheets as of September 30, 2015 and 2014
Consolidated Statements of Operations for the years ended September 30, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income for the years ended September 30, 2015, 2014 and
2013
Consolidated Statements of Cash Flows for the years ended September 30, 2015, 2014 and 2013
Consolidated Statements of Partners’ Capital for the years ended September 30, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
Quarterly Data for the years ended September 30, 2015 and 2014
(2)
Financial Statement Schedules:
I — Condensed Financial Information of Registrant (Parent Company)
II — Valuation and Qualifying Accounts for the years ended September 30, 2015, 2014 and 2013
We have omitted all other financial statement schedules because the required information is (1) not present;
(2) not present in amounts sufficient to require submission of the schedule; or (3) included elsewhere in
the financial statements or notes thereto contained in this report.
(3)
List of Exhibits:
The exhibits filed as part of this report are as follows (exhibits incorporated by reference are set forth with
the name of the registrant, the type of report and registration number or last date of the period for which it
was filed, and the exhibit number in such filing):
Incorporation by Reference
Exhibit No.
2.1
2.2
2.3
Exhibit
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.
Conveyance and Contribution Agreement among
AmeriGas Partners, L.P., AmeriGas Propane, L.P. and
Petrolane Incorporated.
Contribution and Redemption Agreement, dated
October 15, 2011, by and among AmeriGas Partners, L.P.,
Energy Transfer Partners, L.P., Energy Transfer Partners
GP, L.P. and Heritage ETC, L.P.
Registrant
AmeriGas
Partners, L.P.
Filing
Registration
Statement on
Form S-4
(No. 33-92734)
AmeriGas
Partners, L.P.
AmeriGas
Partners, L.P.
Registration
Statement on
Form S-4
(No. 33-92734)
Form 8-K
(10/15/11)
Exhibit
10.21
10.22
2.1
76
Exhibit No.
2.4
2.5
2.6
2.7
3.1
3.2
3.3
3.4
4.1
4.2
4.3
4.4
4.5
2.1
2.1
2.1
3.1
3.1
3.1
Registrant
AmeriGas
Partners, L.P.
Filing
Form 8-K
(12/1/11)
Exhibit
2.1
Incorporation by Reference
Exhibit
Amendment No. 1, dated as of December 1, 2011, to the
Contribution and Redemption Agreement, dated as of
October 15, 2011, by and among Energy Transfer Partners,
L.P., Energy Transfer Partners GP, L.P., Heritage ETC, L.P.
and AmeriGas Partners, L.P.
Amendment No. 2, dated as of January 11, 2012, to the
Contribution and Redemption Agreement, dated as of
October 15, 2012, by and among Energy Transfer Partners,
L.P., Energy Transfer Partners GP, L.P., Heritage ETC, L.P.
and AmeriGas Partners, L.P.
Letter Agreement, dated as of January 11, 2012, by and
among Energy Transfer Partners, L.P., Energy Transfer
Partners GP, L.P., Heritage ETC, L.P. and AmeriGas
Partners, L.P.
Amendment to Contribution and Redemption Agreement,
dated as of October 15, 2011, by an among Energy
Transfer Partners, L.P., Energy Transfer Partners GP, L.P.,
Heritage ETC, L.P. and AmeriGas Partners, L.P., dated as
of March 20, 2013.
AmeriGas
Partners, L.P.
Form 8-K
(1/11/12)
AmeriGas
Partners, L.P.
Form 8-K
(1/11/12)
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/13)
Fourth Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, L.P. dated as of July 27,
2009.
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/09)
Amendment No. 1 to Fourth Amended and Restated
Agreement of Limited Partnership of AmeriGas Partners,
L.P. dated as of March 13, 2012.
AmeriGas
Partners, L.P.
Form 8-K
(3/14/12)
Amendment No. 2 to Fourth Amended and Restated
Agreement of Limited Partnership of AmeriGas Partners,
L.P. dated as of July 27, 2015.
AmeriGas
Partners, L.P.
Form 8-K
(7/27/15)
Second Amended and Restated Agreement of Limited
Partnership of AmeriGas Propane, L.P. dated as of
December 1, 2004.
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).
AmeriGas
Partners, L.P.
Form 10-K
(9/30/04)
3.1(a)
Indenture, dated as of January 20, 2011, by and among
AmeriGas Partners, L.P., AmeriGas Finance Corp. and
U.S. Bank National Association, as trustee.
AmeriGas
Partners, L.P.
Form 10-Q
(12/31/10)
First Supplemental Indenture, dated as of January 20,
2011, to Indenture dated as of January 20, 2011, by and
among AmeriGas Partners, L.P., AmeriGas Finance Corp.
and U.S. Bank National Association, as trustee.
Second Supplemental Indenture, dated as of August 10,
2011, to Indenture dated as of January 20, 2011, by and
among AmeriGas Partners, L.P., AmeriGas Finance Corp.
and U.S. Bank National Association, as trustee.
Indenture, dated as of January 12, 2012, among AmeriGas
Finance Corp., AmeriGas Finance LLC, AmeriGas
Partners, L.P., as guarantor, and U.S. Bank National
Association, as trustee.
AmeriGas
Partners, L.P.
Form 8-K
(1/19/11)
AmeriGas
Partners, L.P.
Form 8-K
(8/10/11)
AmeriGas
Partners, L.P.
Form 8-K
(1/12/12)
4.1
4.1
4.1
4.1
77
Exhibit No.
4.6
10.1**
10.2**
10.3**
10.4**
10.5**
10.6**
10.7**
10.8**
10.9**
10.10**
10.11**
10.12**
10.13**
10.14**
10.15**
10.16**
10.17**
Incorporation by Reference
Registrant
AmeriGas
Partners, L.P.
Filing
Form 8-K
(1/12/12)
Exhibit
4.2
Exhibit
First Supplemental Indenture, dated as of January 12,
2012, among AmeriGas Finance Corp., AmeriGas Finance
LLC, AmeriGas Partners, L.P., as guarantor, 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
November, 2012.
UGI Corporation Senior Executive Employee Severance
Plan, as amended and restated as of November 16, 2012.
UGI Corporation Executive Employee Severance Plan, as
amended and restated as of November 16, 2012.
UGI Corporation Executive Annual Bonus Plan effective
as of October 1, 2006, as amended November 16, 2012.
UGI
UGI
UGI
UGI
UGI
Form 8-K
(2/27/07)
Form 10-K
(9/30/13)
Form 10-Q
(6/30/13)
Form 10-Q
(6/30/13)
Form 10-Q
(3/31/13)
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan
on Behalf of AmeriGas Partners, L.P. effective July 30,
2010.
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan
on Behalf of AmeriGas Partners, L.P. effective July 30,
2010 - Terms and Conditions.
AmeriGas
Partners, L.P.
Form 8-K
(7/30/10)
AmeriGas
Partners, L.P.
Form 10-K
(9/30/10)
AmeriGas Propane, Inc. Senior Executive Employee
Severance Plan, as amended and restated as of November
15, 2012.
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/13)
AmeriGas Propane, Inc. Executive Employee Severance
Plan, as amended and restated as of November 15, 2012.
AmeriGas
Partners, L.P.
AmeriGas Propane, Inc. Executive Annual Bonus Plan,
effective as of October 1, 2006, as amended November 15,
2012.
UGI Corporation 2013 Omnibus Incentive Compensation
Plan, effective January 24, 2013.
UGI Corporation Supplemental Executive Retirement Plan
and Supplemental Savings Plan, as Amended and Restated,
effective November 22, 2013.
UGI Corporation 2009 Supplemental Executive
Retirement Plan for New Employees, as Amended and
Restated, effective November 22, 2013.
UGI Corporation 2009 Deferral Plan, as Amended and
Restated, effective January 24, 2014.
UGI Corporation 2004 Omnibus Equity Compensation
Plan Nonqualified Stock Option Grant Letter for Non
Employee Directors, dated January 8, 2015.
UGI Corporation 2013 Omnibus Incentive Compensation
Plan Performance Unit Grant Letter for UGI Employees,
dated January 1, 2015.
UGI Corporation 2013 Omnibus Incentive Compensation
Plan Stock Unit Grant Letter for Non Employee Directors,
dated January 8, 2015.
AmeriGas
Partners, L.P.
UGI
UGI
UGI
UGI
UGI
UGI
UGI
Form 10-Q
(6/30/13)
Form 10-Q
(3/31/13)
Registration
Statement on
Form S-8
(No. 333-186178)
Form 10-Q
(3/31/14)
Form 10-Q
(3/31/14)
Form 10-Q
(3/31/14)
Form 10-Q
(3/31/15)
Form 10-Q
(3/31/15)
Form 10-Q
(3/31/15)
78
10.1
10.2
10.1
10.2
10.14
10.2
10.10
10.1
10.2
10.9
99.1
10.3
10.4
10.5
10.1
10.2
10.2
Exhibit No.
10.18**
Exhibit
UGI Corporation 2013 Omnibus Incentive Compensation
Plan Nonqualified Stock Option Grant Letter for UGI
Employees, dated January 1, 2015.
Registrant
UGI
Incorporation by Reference
UGI Corporation 2013 Omnibus Incentive Compensation
Plan Nonqualified Stock Option Grant Letter for
AmeriGas Employees, dated January 21, 2015.
UGI
Filing
Form 10-Q
(3/31/15)
Form 10-Q
(3/31/15)
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan
on Behalf of AmeriGas Partners, L.P. Phantom Unit Grant
Letter for Directors, dated January 8, 2015.
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/15)
AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan
on Behalf of AmeriGas Partners, L.P., Performance Unit
Grant Letter for Employees, dated January 21, 2015.
AmeriGas Propane, Inc. Non-Qualified Deferred
Compensation Plan, as Amended and Restated, effective
November 22, 2013.
AmeriGas Propane, Inc. Supplemental Executive
Retirement Plan, as Amended and Restated, effective
November 22, 2013.
Description of oral compensation arrangement for Mr.
John L. Walsh.
Description of oral compensation arrangement for Messrs.
Jerry E. Sheridan, Hugh J. Gallagher and Anthony D.
Rosback.
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/15)
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/14)
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/14)
*10.26**
Description of oral compensation arrangement for Ms.
Monica M. Gaudiosi.
*10.27**
Summary of Director Compensation of AmeriGas
Propane, Inc. dated October 1, 2015.
Form of Change in Control Agreement Amended and
Restated as of May 12, 2008 for Mr. Walsh.
UGI
Change in Control Agreement for Mr. Sheridan Amended
and Restated as of March 3, 2012.
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/08)
Form 10-Q
(3/31/12)
Change in Control Agreement for Monica M. Gaudiosi
dated as of April 23, 2012.
AmeriGas
Partners, L.P.
Form 10-Q
(6/30/12)
Form of Change in Control Agreement for Messrs. Hugh J.
Gallagher and Anthony D. Rosback.
AmeriGas
Partners, L.P.
Form of Confidentiality and Post-Employment Activities
Agreement with AmeriGas Propane, Inc. for Messrs. Hugh
J. Gallagher, Jerry E. Sheridan and Anthony D. Rosback.
AmeriGas
Partners, L.P.
10.19**
10.20**
10.21**
10.22**
10.23**
*10.24**
*10.25**
10.28**
10.29**
10.30**
10.31**
10.32**
10.33
10.34
10.35
Form 10-K
(9/30/13)
Form 10-K
(9/30/09)
Form 10-K
(9/30/10)
UGI
AmeriGas
Partners, L.P.
Form 10-Q
(12/31/10)
AmeriGas
Partners, L.P.
Form 10-K
(9/30/06)
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.
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.
79
Exhibit
10.9
10.3
10.2
10.1
10.4
10.5
10.3
10.6
10.1
10.39
10.29
10.37
10.1
10.3
Exhibit No.
10.36
10.37
10.38
10.39
*10.40
14
*21
*23.1
*23.2
*31.1
*31.2
*32
Incorporation by Reference
Registrant
AmeriGas
Partners, L.P.
Filing
Form 8-K
(1/11/12)
Exhibit
10.1
AmeriGas
Partners, L.P.
Form 10-Q
(3/31/13)
AmeriGas
Partners, L.P.
Form 8-K
(1/11/12)
AmeriGas
Partners, L.P.
Form 8-K
(6/18/14)
10.1
10.2
10.1
Exhibit
Contingent Residual Support Agreement dated as of
January 12, 2012, among Energy Transfer Partners, L.P.,
AmeriGas Finance LLC, AmeriGas Finance Corp.,
AmeriGas Partners, L.P., and for certain limited purposes
only, UGI Corporation.
Amendment to Contingent Residual Support Agreement
dated as of January 12, 2012, among Energy Transfer
Partners, L.P., AmeriGas Finance LLC, AmeriGas Finance
Corp., AmeriGas Partners, L.P., and for certain limited
purposes only, UGI Corporation, dated as of March 20,
2013.
Unitholder Agreement, dated as of January 12, 2012, by
and among Heritage ETC, L.P., AmeriGas Partners, L.P.,
and, for limited purposes, Energy Transfer Partners, L.P.,
Energy Transfer Partners GP, L.P., and Energy Transfer
Equity, L.P.
Amended and Restated Credit Agreement dated as of June
18, 2014 by and among AmeriGas Propane, L.P., as
Borrower, AmeriGas Propane, Inc., as Guarantor, Wells
Fargo Securities, LLC, as Sole Lead Arranger and Sole
Book Manager, and the other financial institutions from
time to time party thereto.
First Amendment, dated as of November 18, 2015, to
Trademark License Agreement, dated April 19, 1995, by
and among UGI Corporation, AmeriGas, Inc., AmeriGas
Propane, Inc., AmeriGas Partners, L.P., and AmeriGas
Propane, L.P.
Code of Ethics for principal executive, financial and
accounting officers.
UGI
Form 10-K
(9/30/03)
14
Subsidiaries of the Registrant.
Consent of Ernst & Young LLP.
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, 2015 pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification by the Chief Financial Officer relating to the
Registrant’s Report on Form 10-K for the fiscal year ended
September 30, 2015 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, 2015,
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
*99.1
UGI Corporation Equity-Based Compensation
Information.
*101.INS
XBRL Instance
*101.SCH XBRL Taxonomy Extension Schema
*101.CAL XBRL Taxonomy Extension Calculation Linkbase
*101.DEF XBRL Taxonomy Extension Definition Linkbase
80
Exhibit No.
*101.LAB XBRL Taxonomy Extension Labels Linkbase
Exhibit
Registrant
Filing
Exhibit
Incorporation by Reference
*101.PRE XBRL Taxonomy Extension Presentation Linkbase
*
**
Filed herewith.
As required by Item 15(a)(3), this exhibit is identified as a compensatory plan or arrangement.
81
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
Date: November 25, 2015
AMERIGAS PARTNERS, L.P.
By: AmeriGas Propane, Inc.,
Its General Partner
By:
/s/ Hugh J. Gallagher
Hugh J. Gallagher
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 25, 2015,
by the following persons on behalf of the Registrant in the capacities indicated.
Signature
/s/ Jerry E. Sheridan
Jerry E. Sheridan
/s/ John L. Walsh
John L. Walsh
/s/ Hugh J. Gallagher
Hugh J. Gallagher
/s/ Robert J. Cane
Robert J. Cane
/s/ Lon R. Greenberg
Lon R. Greenberg
/s/ Brian R. Ford
Brian R. Ford
/s/ William J. Marrazzo
William J. Marrazzo
/s/ Anne Pol
Anne Pol
/s/ Pedro A. Ramos
Pedro A. Ramos
/s/ Marvin O. Schlanger
Marvin O. Schlanger
/s/ K. Richard Turner
K. Richard Turner
Title
President and Chief Executive Officer
(Principal Executive Officer) and Director
Vice Chairman and Director
Vice President — Finance and Chief Financial Officer
(Principal Financial Officer)
Controller and Chief Accounting Officer
(Principal Accounting Officer)
Chairman and Director
Director
Director
Director
Director
Director
Director
82
AMERIGAS PARTNERS, L.P.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 2015
F- 1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements:
Management’s Annual Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm (on Internal Control over Financial Reporting) -
Ernst & Young LLP
Report of Independent Registered Public Accounting Firm (on Consolidated Financial Statements and
Schedules) - Ernst & Young LLP
Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP
Consolidated Balance Sheets as of September 30, 2015 and 2014
Consolidated Statements of Operations for the years ended September 30, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income for the years ended September 30, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the years ended September 30, 2015, 2014 and 2013
Consolidated Statements of Partners’ Capital for the years ended September 30, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
Financial Statements Schedules:
For the years ended September 30, 2015, 2014 and 2013:
I — Condensed Financial Information of Registrant (Parent Company)
II — Valuation and Qualifying Accounts
Pages
F- 3
F- 4
F- 5
F- 6
F- 7
F- 8
F- 9
F- 10
F- 11
F- 12
S-1
S-4
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
General Partner’s Reports
Financial Statements
The Partnership’s consolidated financial statements and other financial information contained in this Annual Report were 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 (“GAAP”) 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, each of whom is independent
and a non-employee director of the General Partner. The Committee is responsible for monitoring and overseeing the financial
reporting process, the adequacy of internal accounting controls, the independence and performance of the Partnership’s independent
registered accounting firm and internal auditors. The Committee meets regularly, with and without management present, with the
independent registered accounting firm and the internal auditors, both of which report directly to the Committee. In addition, the
Committee provides regular reports to the Board of Directors.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Partnership,
as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended. 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 as of September 30, 2015,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO 2013 Framework”).
Internal control over financial reporting refers to the process, designed under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer, and effected by the General Partners’ Board of
Directors, 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 GAAP and includes policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Partnership; (2) 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 Partnership are
being made only in accordance with authorizations of management and directors of the General Partner; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’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 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, 2015, based on the COSO 2013 Framework. Ernst & Young LLP, our independent registered public accounting
firm, has audited the effectiveness of the Partnership’s internal control over financial reporting as of September 30, 2015, as stated
in their report, which appears herein.
/s/ Jerry E. Sheridan
Chief Executive Officer
/s/ Hugh J. Gallagher
Chief Financial Officer
/s/ Robert J. Cane
Chief Accounting Officer
F- 3
Report of Independent Registered Public Accounting Firm
The Board of Directors of AmeriGas Propane, Inc. and the Partners of AmeriGas Partners, L.P.:
We have audited AmeriGas Partners, L.P.’s internal control over financial reporting as of September 30, 2015, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). AmeriGas Partners, L.P.’s management is responsible for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting
included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is
to express an opinion on the Partnership’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion.
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 (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) 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 (3) 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.
In our opinion, AmeriGas Partners, L.P. maintained, in all material respects, effective internal control over financial reporting as
of September 30, 2015, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheet of AmeriGas Partners, L.P. as of September 30, 2015, and the related consolidated statements of
operations, comprehensive income, cash flows and partners’ capital for the year then ended of AmeriGas Partners, L.P. and our
report dated November 25, 2015 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
November 25, 2015
F- 4
Report of Independent Registered Public Accounting Firm
The Board of Directors of AmeriGas Propane, Inc. and the Partners of AmeriGas Partners, L.P.:
We have audited the accompanying consolidated balance sheet of AmeriGas Partners, L.P. as of September 30, 2015, and the
related consolidated statements of operations, comprehensive income, cash flows and partners’ capital for the year then ended.
Our audit also included the financial statement schedules for the year ended September 30, 2015 listed in the Index at Item 15(a).
These financial statements and schedules are the responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of AmeriGas Partners, L.P. at September 30, 2015, and the consolidated results of its operations and its cash flows for the year
then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
AmeriGas Partners, L.P.’s internal control over financial reporting as of September 30, 2015, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated November 25, 2015 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
November 25, 2015
F- 5
Report of Independent Registered Public Accounting Firm
To the Board of Directors of AmeriGas Propane, Inc. and the Partners of AmeriGas Partners, L.P.:
In our opinion, the consolidated balance sheet as of September 30, 2014 and the related consolidated statements of operations,
of comprehensive income, of partners’ capital and of cash flows for each of the two years in the period ended September 30,
2014 present fairly, in all material respects, the financial position of AmeriGas Partners, L.P. and its subsidiaries at September
30, 2014, and the results of their operations and their cash flows for each of the two years in the period ended September 30,
2014, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedules for each of the two years in the period ended September 30, 2014 present fairly, in all material
respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These
financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our
audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
November 26, 2014
F- 6
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable (less allowances for doubtful accounts of $12,257 and $17,681,
respectively)
Accounts receivable — related parties
Inventories
Derivative instruments
Prepaid expenses
Insurance indemnification receivable
Other current assets
Total current assets
Property, plant and equipment (less accumulated depreciation and amortization of
$1,369,733 and $1,239,767, respectively)
Goodwill
Intangible assets
Other assets
Total assets
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current maturities of long-term debt
Short-term borrowings
Accounts payable — trade
Accounts payable — related parties
Employee compensation and benefits accrued
Interest accrued
Customer deposits and advances
Derivative instruments
Other current liabilities
Total current liabilities
Long-term debt
Derivative instruments
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (Note 12)
Partners’ capital:
AmeriGas Partners, L.P. partners’ capital:
Common unitholders (units issued — 92,889,980 and 92,867,204, respectively)
General partner
Accumulated other comprehensive income
Total AmeriGas Partners, L.P. partners’ capital
Noncontrolling interest
Total partners’ capital
Total liabilities and partners’ capital
See accompanying Notes to Consolidated Financial Statements.
F- 7
September 30,
2015
2014
$
14,757
$
13,480
199,067
2,360
93,934
—
21,519
18,958
15,766
366,361
1,324,327
1,956,688
433,713
60,623
4,141,712
9,679
68,100
101,588
445
57,961
48,693
117,087
47,507
95,234
546,294
2,273,817
7,670
113,558
2,941,339
$
$
278,995
1,925
181,946
272
18,608
10,495
187
505,908
1,386,910
1,945,748
464,338
61,154
4,364,058
11,589
109,000
154,053
1,081
45,501
48,701
129,840
6,653
111,096
617,514
2,280,145
26
105,483
3,003,168
1,145,291
18,925
—
1,164,216
36,157
1,200,373
4,141,712
$
1,299,260
20,460
2,794
1,322,514
38,376
1,360,890
4,364,058
$
$
$
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per unit amounts)
Year Ended
September 30,
2015
2014
2013
$
2,612,401
$
3,440,868
$
2,884,766
272,921
2,885,322
272,067
3,712,935
281,777
3,166,543
Revenues:
Propane
Other
Costs and expenses:
Cost of sales — propane (excluding depreciation shown below)
1,301,167
2,034,592
1,571,574
Cost of sales — other (excluding depreciation shown below)
Operating and administrative expenses
Depreciation
Amortization
Other income, net
Operating income
Interest expense
Income before income taxes
Income tax expense
Net income including noncontrolling interest
Less: net income attributable to noncontrolling interest
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
See accompanying Notes to Consolidated Financial Statements.
86,638
953,283
152,204
42,676
(31,355)
2,504,613
380,709
(162,842)
217,867
(2,898)
214,969
(3,758)
211,211
32,469
178,742
1.91
1.91
92,910
92,977
$
$
$
$
$
81,982
963,963
154,020
43,195
(27,450)
3,250,302
462,633
(165,581)
297,052
(2,611)
294,441
(4,548)
289,893
26,749
263,144
2.82
2.82
92,876
92,946
$
$
$
$
$
88,479
943,928
159,306
43,565
(32,503)
2,774,349
392,194
(165,432)
226,762
(1,671)
225,091
(3,869)
221,222
21,498
199,724
2.14
2.14
92,832
92,910
F- 8
AMERIGAS PARTNERS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Thousands of dollars)
Net income including noncontrolling interest
Other comprehensive income (loss):
Net gains on derivative instruments
Reclassifications of net (gains) losses on derivative instruments
Other comprehensive (loss) income
Total comprehensive income including noncontrolling interest
Less: comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to AmeriGas Partners, L.P.
See accompanying Notes to Consolidated Financial Statements.
Year Ended September 30,
2014
2013
2015
$
214,969
$
294,441
$
225,091
—
(2,822)
(2,822)
212,147
(3,730)
208,417
$
44,203
(56,517)
(12,314)
282,127
(4,426)
277,701
$
6,647
52,503
59,150
284,241
(4,464)
279,777
$
F- 9
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interest
Adjustments to reconcile net income including noncontrolling interest to
net cash provided by operating activities:
Depreciation and amortization
Provision for uncollectible accounts
Unrealized losses on derivative instruments
Other, net
Net change in:
Accounts receivable
Inventories
Accounts payable
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
Acquisitions of businesses, net of cash acquired
Net cash used by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions
Noncontrolling interest activity
(Decrease) increase in short-term borrowings
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
Cash and cash equivalents increase (decrease)
CASH AND CASH EQUIVALENTS:
End of year
Beginning of year
Increase (decrease)
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
See accompanying Notes to Consolidated Financial Statements.
Year Ended
September 30,
2014
2015
2013
$
214,969
$
294,441
$
225,091
194,880
15,800
47,841
(14,754)
51,613
86,198
(52,975)
(10,889)
(8,825)
523,858
(102,009)
23,816
(20,840)
(99,033)
(368,426)
(5,949)
(40,900)
(11,808)
3,501
34
(423,548)
1,277
14,757
13,480
1,277
158,837
$
$
$
$
197,215
26,403
9,495
(6,265)
(15,246)
(22,804)
(16,643)
2,429
11,045
480,070
(113,934)
19,931
(15,746)
(109,749)
(346,744)
(5,084)
(7,900)
(12,272)
2,499
25
(369,476)
845
13,480
12,635
845
161,518
$
$
$
$
202,871
16,477
—
(5,100)
(43,378)
5,403
(661)
(2,305)
(42,795)
355,603
(111,058)
22,113
(19,946)
(108,891)
(327,000)
(4,882)
67,000
(30,531)
1,221
13
(294,179)
(47,467)
12,635
60,102
(47,467)
161,562
$
$
$
$
F- 10
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(Thousands of dollars, except unit data)
Number of
Common
Units
Common
unitholders
General
partner
Accumulated
other
comprehensive
income (loss)
Total
AmeriGas
Partners,
L.P.
partners’
capital
Noncontrolling
Interest
Total
partners’
capital
Balance September 30, 2012
92,801,347
$ 1,455,702
$
16,975
$
(43,569) $ 1,429,108
$
39,452
$ 1,468,560
Net income including noncontrolling interest
199,724
21,498
Net gains on derivative instruments
Reclassification of net losses on derivative
instruments
Distributions
Unit-based compensation expense
Common Units issued in connection with
employee and director plans, net of tax
withheld
Balance September 30, 2013
(304,444)
(22,556)
3,472
23,192
(267)
92,824,539
1,354,187
13
15,930
26,749
Net income including noncontrolling interest
263,144
Net gains on derivative instruments
Reclassification of net losses on derivative
instruments
6,583
221,222
6,583
3,869
64
225,091
6,647
51,972
51,972
531
52,503
(327,000)
3,472
(254)
(4,882)
(331,882)
3,472
(254)
14,986
1,385,103
39,034
1,424,137
43,754
289,893
43,754
4,548
449
294,441
44,203
(55,946)
(55,946)
(571)
(56,517)
Distributions
(319,427)
(27,317)
(346,744)
(5,084)
(351,828)
Unit-based compensation expense
2,299
Goodwill push-down adjustment associated
with prior-year acquisition
Common Units issued in connection with
employee plans, net of tax withheld
Balance September 30, 2014
42,665
(943)
92,867,204
1,299,260
Net income including noncontrolling interest
178,742
5,073
25
20,460
32,469
Reclassification of net gains on derivative
instruments
Distributions
Unit-based compensation expense
Common Units issued in connection with
employee and director plans, net of tax
withheld
Distribution related to common control
transaction (Note 13)
(334,387)
(34,039)
2,228
22,776
(552)
35
2,299
5,073
(918)
2,299
5,073
(918)
2,794
1,322,514
38,376
1,360,890
211,211
3,758
214,969
(2,794)
(2,794)
(28)
(2,822)
(368,426)
2,228
(517)
—
(5,305)
(373,731)
2,228
(517)
(644)
(644)
Balance September 30, 2015
92,889,980
$ 1,145,291
$
18,925
$
— $ 1,164,216
$
36,157
$ 1,200,373
See accompanying Notes to Consolidated Financial Statements.
F- 11
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Index to Notes:
Note 1 — Nature of Operations
Note 2 — Summary of Significant Accounting Policies
Note 3 — Accounting Changes
Note 4 — Acquisitions
Note 5 — Quarterly Distributions of Available Cash
Note 6 — Debt
Note 7 — Employee Retirement Plans
Note 8 — Inventories
Note 9 — Property, Plant and Equipment
Note 10 — Goodwill and Intangible Assets
Note 11 — Partners’ Capital and Incentive Compensation Plans
Note 12 — Commitments and Contingencies
Note 13 — Related Party Transactions
Note 14 — Other Current Liabilities
Note 15 — Fair Value Measurements
Note 16 — Derivative Instruments and Hedging Activities
Note 17 — Other Income, Net
Note 18 — 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 subsidiary AmeriGas Propane, L.P. (“AmeriGas OLP”), which is referred to herein as the
“Operating Partnership.” AmeriGas Partners and AmeriGas OLP are Delaware limited partnerships. AmeriGas Partners, the
Operating Partnership and all of their subsidiaries are collectively referred to herein as “the Partnership” or “we.”
The Operating Partnership is engaged in the distribution of propane and related equipment and supplies. The Operating Partnership
comprises 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, 2015, 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 23,756,882 AmeriGas Partners Common Units (“Common Units”). The remaining Common Units outstanding
comprise 69,133,098 publicly held Common Units. Common Units represent limited partner interests in AmeriGas Partners.
AmeriGas Partners holds a 98.99% limited partner interest in AmeriGas OLP.
AmeriGas Partners and the Operating Partnership have no employees. Employees of the General Partner conduct, direct and
manage our operations. The General Partner is reimbursed monthly for all direct and indirect expenses it incurs on our behalf
(see Note 13).
Note 2 — Summary of 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.
Certain prior-year amounts have been reclassified to conform to the current-year presentation.
Principles of Consolidation. The consolidated financial statements include the accounts of AmeriGas Partners, its majority-owned
subsidiary AmeriGas OLP, and its 100%-owned finance subsidiaries AmeriGas Finance Corp., AP Eagle Finance Corp. and
F- 12
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
AmeriGas Finance LLC. The accounts of the AmeriGas Partners’ majority-owned subsidiary AmeriGas OLP are included based
upon the determination that, given the Partnership’s structure, AmeriGas Partners will absorb a majority of AmeriGas OLP’s
expected losses, will receive a majority of AmeriGas OLP’s expected residual returns and is AmeriGas OLP’s primary beneficiary.
AmeriGas OLP includes the accounts of its wholly 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 as noncontrolling interest
in the consolidated financial statements.
Finance Corps. AmeriGas Finance Corp., AP Eagle Finance Corp. and AmeriGas Finance LLC are 100%-owned finance
subsidiaries of AmeriGas Partners. Their sole purpose is to serve as issuers or co-obligors for debt securities issued or guaranteed
by AmeriGas Partners.
Fair Value Measurements. The Company applies fair value measurements on a recurring and, as otherwise required under GAAP,
also on a nonrecurring basis. Fair value measurements performed on a recurring basis principally relate to derivative instruments.
GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three
levels. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (level 1
measurements) and the lowest priority to unobservable inputs (level 3 measurements). A level within the fair value hierarchy is
based on the lowest level of any input that is significant to the fair value measurement.
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.
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 markets that are not active, 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.
Level 3 — Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for
the asset or liability.
Fair value is 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. We evaluate the
need for credit adjustments to our derivative instrument fair values. These credit adjustments were not material to the fair values
of our derivative instruments.
Derivative Instruments. Derivative instruments are reported in the Consolidated Balance Sheets at their fair values, unless the
derivative instruments qualify for the normal purchase and normal sale (“NPNS”) exception under GAAP. 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.
Prior to April 1, 2014, substantially all of our derivative financial instruments were designated and qualified as cash flow hedges.
For cash flow hedges, changes in the fair values of derivative instruments are recorded in accumulated other comprehensive income
(“AOCI”) or noncontrolling interest, to the extent effective at offsetting changes in the hedged item, until earnings are affected
by such hedged item. We discontinue cash flow hedge accounting if the occurrence of the forecasted transaction is determined to
be no longer probable. Hedge accounting is also discontinued for derivatives that cease to be highly effective. Effective April 1,
2014, the Partnership determined that on a prospective basis, it would no longer elect cash flow hedge accounting for its commodity
derivative instruments. Effective October 1, 2014, the Partnership de-designated its remaining commodity derivative instruments
accounted for as cash flow hedges. Changes in the fair values of these derivative instruments are reflected in cost of sales on the
Consolidated Statements of Operations. Cash flows from derivative 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 other information, see Note 16.
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
F- 13
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
recognized upon completion of services. Revenues from annually billed fees are recorded on a straight-line basis over one year.
We present revenue-related taxes collected on behalf of customers and remitted to taxing authorities, principally sales and use
taxes, on a net basis.
During the three months ended March 31, 2013, we identified an error in our accounting for certain customer credits. We determined
that the recording of propane revenues did not appropriately consider the effects of certain customer credits which were recorded
when issued in a subsequent period. As a result, we changed the accounting for customer credits to record an estimate of such
credits at the time propane revenues are recorded. Such estimate considers the Partnership’s history of providing credits, propane
revenue activity and other factors. We evaluated the impact of the error on prior periods and determined that the effect was not
material to any prior period financial statement. The correction of the error in accounting for customer credits had the effect of
decreasing propane revenues and accounts receivable by $4,700, and decreasing net income attributable to AmeriGas Partners,
L.P. by $4,652, for Fiscal 2013.
Accounts Receivable
Accounts receivable are reported on the Consolidated Balance Sheets at the gross outstanding amount adjusted for an allowance
for doubtful accounts. Accounts receivable that are acquired are initially recorded at fair value on the date of acquisition. Provisions
for uncollectible accounts are established based upon our collection experience and the assessment of the collectability of specific
amounts. Accounts receivable are written off in the period in which the receivable is deemed uncollectible.
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 Partnership are not directly subject to federal income taxes. Instead, their
taxable income or loss is allocated to their individual partners. The Operating Partnership has 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., as amended (“Partnership Agreement”) and the Internal
Revenue Code.
Comprehensive Income. Comprehensive income comprises net income and other comprehensive income (loss). Other
comprehensive income (loss) principally results from gains and losses on derivative instruments qualifying as cash flow hedges,
net of reclassifications to net income.
Cash and Cash Equivalents. All highly liquid investments with maturities of three months or less when purchased are classified
as cash equivalents.
Inventories. At September 30, 2015, our inventories are stated at the lower of cost or net realizable value and, prior to September
30, 2015, 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. During the fourth quarter of Fiscal 2015, the
Partnership adopted new accounting guidance regarding the measurement of inventory which simplified the determination of
market value. The adoption of the new guidance did not impact the valuation of our inventories (see Note 3).
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; 6 to 30 years for storage and customer tanks and cylinders; and 3
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 10 years.
F- 14
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
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 10 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.
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. 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.
Goodwill and Intangible Assets. In accordance with GAAP relating to intangible assets, we amortize intangible assets over their
estimated useful lives unless we determine their lives to be indefinite. Estimated useful lives of definite-lived intangible assets,
consisting of customer relationships and noncompete agreements, do not exceed 15 years. We review definite-lived intangible
assets for impairment whenever events or changes in circumstances indicate that the associated carrying amounts may not be
recoverable. Determining whether an impairment loss occurred requires comparing the carrying amount to the sum of undiscounted
cash flows expected to be generated by the asset. Intangible assets with indefinite lives are not amortized but are tested annually
(and more frequently if events or changes in circumstances between annual tests indicate that it is more likely than not that they
are impaired) for impairment and written down to fair value, if impaired.
We do not amortize goodwill, but test it at least annually for impairment at the reporting unit level. A reporting unit is an operating
segment or one level below an operating segment (a component) if discrete financial information is prepared and regularly reviewed
by segment management. We are required to recognize an impairment charge under GAAP if the carrying amount of the reporting
unit exceeds its fair value and the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill.
As permitted under GAAP, we assess qualitative factors to determine whether it is more likely than not that the fair value of the
Partnership is less than its carrying amount. Among the significant factors considered in performing the qualitative assessment is
the market price of AmeriGas Partners Common Units. Based upon this assessment, we determined that it is not more likely than
not that the fair value of the Partnership is less than its carrying amount.
There were no accumulated impairment losses at September 30, 2015 and 2014 and no provisions for goodwill or other intangible
asset impairments were recorded during Fiscal 2015, Fiscal 2014 or Fiscal 2013. No amortization expense of intangible assets is
included in cost of sales in the Consolidated Statements of Operations. For further information, see Note 10.
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. If the undiscounted future cash flows indicate that the recorded amounts
are not expected to be recoverable, such long-lived assets are reduced to their estimated fair values. Estimates of fair values are
generally based on recent sales of similar assets and other market indicators (Level 2). No provisions for impairments were
recorded during Fiscal 2015 or Fiscal 2014. During Fiscal 2013, the Partnership recorded long-lived asset impairment charges of
$3,000.
Deferred Debt Issuance Costs. Included in other assets on the Consolidated Balance Sheets are net deferred debt issuance costs
of $23,623 and $28,226 at September 30, 2015 and 2014, respectively. We are amortizing these costs over the terms of the related
debt.
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 11) 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 on 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
F- 15
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
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 11.
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.
Environmental reserves are accrued when assessments indicate that it is probable that a liability has been incurred and an amount
can reasonably be estimated and 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. At September 30,
2015 and 2014, the Partnership’s accrued liabilities for environmental investigation and cleanup costs were 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 5).
Net Income (Loss) Per Unit. Income (loss) per limited partner unit is computed in accordance with GAAP regarding the application
of the two-class method for determining income (loss) per unit for master limited partnerships (“MLPs”) when IDRs are present.
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 following table sets forth reconciliations of the numerators and denominators of the basic and diluted income (loss) per limited
partner unit computations:
Net income attributable to AmeriGas Partners, L.P.
$
211,211
$
289,893
$
221,222
Adjust for general partner share and theoretical distributions of net income
attributable to AmeriGas Partners, L.P. to the general partner in accordance
with the two-class method for MLPs
Common Unitholders’ interest in net income attributable to AmeriGas
Partners, L.P. under the two-class method for MLPs
(33,845)
(27,895)
(22,639)
$
177,366
$
261,998
$
198,583
2015
2014
2013
Weighted average Common Units outstanding — basic (thousands)
Potentially dilutive Common Units (thousands)
Weighted average Common Units outstanding — diluted (thousands)
92,910
67
92,977
92,876
70
92,946
92,832
78
92,910
Theoretical distributions of net income attributable to AmeriGas Partners, L.P. in accordance with the two-class method for Fiscal
2015, Fiscal 2014 and Fiscal 2013 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 $0.02, $0.01, and $0.01, respectively.
Note 3 — Accounting Changes
Adoption of New Accounting Standards
Measurement of Inventory. During the fourth quarter of Fiscal 2015, the Partnership adopted new accounting guidance regarding
the measurement of inventory. The new guidance amends existing guidance and requires inventory be measured at the lower of
cost or net realizable value. Net realizable value is generally defined as estimated selling prices in the ordinary course of business
F- 16
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
less reasonably predictable costs of completion, disposal and transportation. We applied this guidance prospectively and the
adoption of this guidance did not impact our results of operations, cash flows or financial position for Fiscal 2015.
Business Combinations. During the fourth quarter of Fiscal 2015, the Partnership adopted new accounting guidance regarding
accounting for measurement period adjustments associated with prior business combinations. The new guidance requires that an
acquirer recognize adjustments to provisional amounts in the reporting period in which the adjustments are determined and record,
in the same period’s financial statements, the effects on earnings of changes in depreciation, amortization and other income effects,
if any, as a result of such adjustments. The new guidance also requires certain disclosures regarding amounts recorded in the
current period that would have been recorded in previous reporting periods if such adjustments had been recognized as of the
acquisition date. We applied this guidance prospectively and the adoption of this guidance did not have a material impact on our
results of operations, cash flows or financial position for Fiscal 2015.
Accounting Standards Not Yet Adopted
Debt Issuance Costs. In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This ASU amends existing guidance to require the
presentation of debt issuance costs in the balance sheet as a direct deduction from the carrying amount of the related debt liability
instead of a deferred charge. The amendments in this ASU are effective for annual reporting periods beginning after December
15, 2015. Early adoption is permitted. Entities will apply the new guidance retrospectively to all periods presented. The Partnership
expects to adopt the new guidance in Fiscal 2016. The adoption of the new guidance is not expected to have a material impact
on the Partnership’s financial statements.
Consolidation. In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.” This ASU
provides new guidance regarding whether a reporting entity should consolidate certain types of legal entities. Among other things,
the new guidance modifies the evaluation of whether limited partnerships and similar entities are variable interest entities (“VIEs”)
or voting interest entities, and also eliminates the presumption that a general partner should consolidate a limited partnership. The
new guidance also affects the consolidation analysis of reporting entities that are involved with VIEs including those that have
fee arrangements and related party relationships. The new guidance is effective for the Partnership beginning in Fiscal 2017. Early
adoption is permitted. The Partnership is in the process of assessing the impact on our financial statements, if any, from the adoption
of the new guidance.
Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU
supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition,”
and most industry-specific guidance included in the ASC. The standard requires that an entity recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. This standard is effective for the Partnership for interim and annual periods
beginning October 1, 2018 (Fiscal 2019) and allows for either full retrospective adoption or modified retrospective adoption. We
have not yet selected a transition method and are currently evaluating the impact of adopting this guidance on our consolidated
financial statements.
Note 4 — Acquisitions
During Fiscal 2015, Fiscal 2014 and Fiscal 2013, AmeriGas OLP acquired a number of domestic retail propane distribution
businesses for total net cash consideration of $20,840, $15,746 and $19,946, respectively. In conjunction with these acquisitions,
liabilities of $4,160 in Fiscal 2015, $4,491 in Fiscal 2014 and $3,969 in Fiscal 2013 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:
F- 17
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Net current assets
Property, plant and equipment
Goodwill
Customer relationships and noncompete agreements (estimated useful life
of 10 and 5 years, respectively)
Other
Total
2015
2014
2013
1,609
5,880
10,940
7,279
(708)
25,000
$
$
136
6,916
6,751
6,434
—
20,237
$
$
691
5,167
12,481
5,576
—
23,915
$
$
The goodwill above is primarily the result of anticipated synergies between the acquired businesses and our existing propane
business. The pro forma effects of these transactions were not material.
Note 5 — 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.
2.
3.
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 after the end of such quarter,
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.
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.
Quarterly distributions of Available Cash per limited partner unit paid during Fiscal 2015, Fiscal 2014 and Fiscal 2013 were as
follows:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
2015
2014
2013
$
$
$
$
0.88
0.88
0.92
0.92
$
$
$
$
0.84
0.84
0.88
0.88
$
$
$
$
0.80
0.80
0.84
0.84
During Fiscal 2015, Fiscal 2014 and Fiscal 2013, the Partnership made quarterly distributions to Common Unitholders in excess
of $0.605 per limited partner unit. As a result, the General Partner received a greater percentage of the total Partnership distribution
than its aggregate 2% general partner interest in AmeriGas OLP and AmeriGas Partners. During Fiscal 2015, Fiscal 2014 and
Fiscal 2013, the total amount of distributions received by the General Partner with respect to its aggregate 2% general partner
ownership interests totaled $39,346, $32,401 and $27,438, respectively. Included in these amounts are incentive distributions
received by the General Partner during Fiscal 2015, Fiscal 2014 and Fiscal 2013 of $30,357, $23,850 and $19,286, respectively.
F- 18
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Note 6 — Debt
Long-term debt comprises the following at September 30:
AmeriGas Partners Senior Notes:
7.00%, due May 2022
6.75%, due May 2020
6.50%, due May 2021
6.25%, due August 2019
Heritage Operating, L.P. (“HOLP”) Senior Secured Notes
Other
Total long-term debt
Less: current maturities
Total long-term debt due after one year
2015
2014
$
$
980,844
550,000
270,001
450,000
20,998
11,653
2,283,496
(9,679)
2,273,817
$
$
980,844
550,000
270,001
450,000
26,497
14,392
2,291,734
(11,589)
2,280,145
Scheduled principal repayments of long-term debt for each of the next five fiscal years ending September 30 are as follows: Fiscal
2016 — $9,155; Fiscal 2017 — $6,050; Fiscal 2018 — $5,349; Fiscal 2019 — $454,986; Fiscal 2020 — $554,303.
AmeriGas Partners Senior Notes
In order to finance the cash portion of AmeriGas Partners’ January 2012 acquisition of Energy Transfer Partner, L.P.’s (“ETP”)
retail propane distribution business (“the Heritage Acquisition”), AmeriGas Finance Corp. and AmeriGas Finance LLC, wholly
owned finance subsidiaries of AmeriGas Partners (the “Issuers”), issued $550,000 principal amount of 6.75% Notes due May 2020
and $1,000,000 principal amount of 7.00% Notes due May 2022. The 6.75% Notes and the 7.00% Notes are fully and unconditionally
guaranteed on a senior unsecured basis by AmeriGas Partners. The Issuers have the right to redeem the 6.75% Notes, in whole or
in part, at any time on or after May 20, 2016 and to redeem the 7.00% Notes, in whole or in part, at any time on or after May 20,
2017, subject to certain restrictions. A premium applies to redemptions of the 6.75% Notes and 7.00% Notes through May 2018
and May 2020, respectively. The 6.75% Notes and the 7.00% Notes and the guarantees rank equal in right of payment with all of
AmeriGas Partners’ existing senior notes. In connection with the Heritage Acquisition, AmeriGas Partners, AmeriGas Finance
Corp., AmeriGas Finance LLC and UGI entered into a Contingent Residual Support Agreement (“CRSA”) with ETP pursuant to
which ETP will provide contingent, residual support of $1,500,000 of debt (“Supported Debt” as defined in the CRSA).
HOLP Senior Secured Notes
The Partnership’s total long-term debt at September 30, 2015 and 2014, includes $20,998 and $26,497, respectively, of HOLP
Senior Secured Notes including unamortized premium of $2,543 and $3,134, respectively. The face interest rates on the HOLP
Notes ranged from 7.89% to 8.87% with an effective interest rate of 6.75%. The HOLP Senior Secured Notes are collateralized
by AmeriGas OLP’s receivables, contracts, equipment, inventory, general intangibles and cash.
AmeriGas OLP Credit Agreement
In June 2014, AmeriGas OLP entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with a group of
banks which provides for borrowings up to $525,000 (including a $125,000 sublimit for letters of credit) and expires in June 2019.
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, or at a one-week, one-, two-, three-, or six-month Eurodollar
Rate, as defined in the Credit Agreement, plus a margin. Under the Credit Agreement, the applicable margin on base rate borrowings
ranges from 0.50% to 1.50%; the applicable margin on Eurodollar Rate borrowings ranges from 1.50% to 2.50%; and the facility
fee ranges from 0.30% to 0.45%. The aforementioned margins and facility fees are dependent upon AmeriGas Partners’ ratio of
debt to earnings before interest expense, income taxes, depreciation and amortization (each as defined in the Credit Agreement).
At September 30, 2015 and 2014, there were $68,100 and $109,000 of borrowings outstanding under the Credit Agreement, which
amounts are reflected as short-term borrowings on the Consolidated Balance Sheets. The weighted-average interest rates on
borrowings under these credit agreements at September 30, 2015 and 2014 were 2.20% and 2.16%, respectively. Issued and
F- 19
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
outstanding letters of credit, which reduce available borrowings under these credit agreements, totaled $64,655 and $64,705 at
September 30, 2015 and 2014, respectively.
Restrictive Covenants
The AmeriGas Partners Senior Notes 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 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.
2.
no event of default exists or would exist upon making such distributions and
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 $75,000 less the total amount of distributions made during the immediately preceding 16 Fiscal quarters. At September 30,
2015, 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 5.
The HOLP Senior Secured Notes contain restrictive covenants including the maintenance of financial covenants and limitations
on the disposition of assets, changes in ownership, additional indebtedness, restrictive payments and the creation of liens. The
financial covenants require AmeriGas OLP to maintain a ratio of Consolidated Funded Indebtedness to Consolidated EBITDA (as
defined) below certain thresholds and to maintain a minimum ratio of Consolidated EBITDA to Consolidated Interest Expense
(as defined).
The Credit Agreement restricts the incurrence of additional indebtedness and also restricts certain liens, guarantees, investments,
loans and advances, payments, mergers, consolidations, asset transfers, transactions with affiliates, sales of assets, acquisitions
and other transactions. The Credit Agreement requires that AmeriGas OLP and AmeriGas Partners maintain ratios of total
indebtedness to EBITDA, as defined, below certain thresholds. In addition, the Partnership must maintain a minimum ratio of
EBITDA to interest expense, as defined and as calculated on a rolling four-quarter basis. Generally, as long as no default exists or
would result therefrom, 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, 2015, 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 AmeriGas
OLP’s partnership agreement, totaled approximately $3,100,000.
Note 7 — 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 $11,435 in Fiscal 2015, $11,237 in Fiscal
2014 and $10,777 in Fiscal 2013.
The General Partner also 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 2015, Fiscal 2014 and Fiscal 2013.
F- 20
Note 8 — Inventories
Inventories comprise the following at September 30:
Propane gas
Materials, supplies and other
Appliances for sale
Total inventories
2015
2014
68,076
20,354
5,504
93,934
$
$
157,032
19,680
5,234
181,946
$
$
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 9 — 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 work in progress
Gross property, plant and equipment
Less accumulated depreciation and amortization
Net property, plant and equipment
Note 10 — Goodwill and Intangible Assets
Changes in the carrying amount of goodwill are as follows:
Balance September 30, 2013
Acquisitions
Purchase accounting adjustments
Goodwill push-down adjustment associated with prior-year acquisition
Balance September 30, 2014
Acquisitions
Balance September 30, 2015
The Partnership’s intangible assets comprise the following at September 30:
Customer relationships and noncompete agreements
Trademarks and tradenames (not subject to amortization)
Gross carrying amount
Accumulated amortization
Intangible assets, net
F- 21
2015
140,129
190,625
257,454
256,854
1,636,502
212,496
2,694,060
(1,369,733)
1,324,327
2015
514,333
82,944
597,277
(163,564)
433,713
2014
142,505
188,183
243,437
248,757
1,598,120
205,675
2,626,677
(1,239,767)
1,386,910
1,936,608
6,751
(2,684)
5,073
1,945,748
10,940
1,956,688
2014
519,103
82,944
602,047
(137,709)
464,338
$
$
$
$
$
$
$
$
$
$
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Amortization expense of intangible assets was $37,905, $38,428 and $38,810 in Fiscal 2015, Fiscal 2014 and Fiscal 2013,
respectively. Estimated amortization expense of intangible assets during the next five fiscal years is as follows: Fiscal 2016 —
$37,110; Fiscal 2017 — $34,946; Fiscal 2018 — $33,586; Fiscal 2019 — $32,390; Fiscal 2020 — $31,207.
Note 11 — 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 $5,635, $4,286
and $4,647 in Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively.
Under the AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P. (“2010 Propane Plan”),
the General Partner may award to employees and non-employee directors grants of Common Units (comprising “AmeriGas Stock
Units” and “AmeriGas 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 2010 Propane 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.
AmeriGas Stock Unit and AmeriGas Performance Unit awards entitle the grantee to AmeriGas Partners Common Units or cash
once the service condition is met and, with respect to AmeriGas Performance Units, subject to market performance conditions,
and for certain awards granted in January 2015, actual net customer acquisition and retention performance. Recipients of 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 number, or it
may be zero. For that portion of Performance Unit awards whose ultimate payout is based upon market-based conditions (as further
described below), the number of awards ultimately paid is based upon AmeriGas Partners’ Total Unitholder Return (“TUR”)
percentile rank relative to entities in a master limited partnership peer group (“Alerian MLP Group”) and, for certain AmeriGas
Performance Awards granted beginning in January 2014, based upon AmeriGas Partners’ TUR relative to the two other publicly
traded propane master limited partnerships in the Alerian MLP Group (“Propane MLP Group”). For Performance Unit awards
granted in January 2015, the number of AmeriGas Performance Units ultimately paid is based upon AmeriGas Partner’s TUR
percentile rank relative to entities in the Alerian MLP Group as modified by AmeriGas Partners’ performance relative to the Propane
MLP Group.
With respect to AmeriGas Performance Unit awards subject to measurement compared with the Alerian MLP Group, grantees
may receive from 0% to 200% of the target award granted. For grants issued before January 1, 2013, grantees of AmeriGas
Performance Units will not be paid if AmeriGas Partners’ TUR is below the 40th percentile of the Alerian MLP Group. At the
40th percentile, the grantee will be paid an award equal to 50% of the target award; at the 50th percentile, 100%; at the 60th
percentile, 125%; at the 75th percentile, 150%; at the 90th percentile, 175%; and at the 100th percentile, 200%. The actual amount
of the award is interpolated between these percentile rankings. For such grants issued on or after January 1, 2013, if AmeriGas
Partners’ TUR is below the 25th percentile compared to the peer group, the grantee will not be paid. At the 25th percentile, the
employee will be paid an award equal to 25% of the target award; at the 40th percentile, 70%; at the 50th percentile, 100%; at the
60th percentile, 125%; at the 75th percentile, 162.5%; and at the 90th percentile or above, 200%. For such grants issued in January
2015, the amount ultimately paid shall be modified based upon AmeriGas Partners’ TUR ranking relative to the Propane MLP
Group over the performance period (“MLP Modifier”). Such modification ranges from 70% to 130%, but in no event shall the
amount ultimately paid, after such modification, exceed 200% of the target award grant.
With respect to AmeriGas Performance Unit awards granted in January 2014 subject to measurement compared with the Propane
MLP Group, grantees will receive 150% of the target award if AmeriGas Partners’ TUR exceeds the TUR of all the other members
of the Propane MLP Group. Otherwise there will be no payout of such AmeriGas Performance Units. If one of the other two
members of the Propane MLP Group ceases to exist as a publicly traded company or declares bankruptcy (“MLP Event”) and,
depending upon the timing of such MLP Event, the ultimate amount of such AmeriGas Performance Unit awards to be issued
pursuant to the January 2014 grant, and the amount of distribution equivalents to be paid, will depend upon AmeriGas Partners’
TUR rank relative to (1) the Alerian MLP Group for the entire performance period; (2) the Alerian MLP Group for the entire
F- 22
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
performance period and the Propane MLP Group (through the date of the MLP Event); or (3) the Propane MLP Group through
the date of the MLP Event. For those performance awards granted in January 2015 that are subject to the MLP Modifier, if an
MLP Event were to occur during the performance period such MLP Modifier would be based upon AmeriGas Partners’ TUR rank
as determined in (1),(2) or (3) above, as appropriate.
With respect to AmeriGas Performance Unit awards granted in January 2015 whose payout is based upon net customer gain and
retention performance, grantees may ultimately receive between 0% and 200% of the target award based upon the annual actual
net customer gain and retention performance as adjusted for the net customer gain and retention performance over the three years
performance period.
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, AmeriGas Performance Unit awards that are subject to market-based conditions are equity awards 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 subject to market-based conditions are
estimated using a Monte Carlo valuation model. The fair value associated with the target award which will be paid in Common
Units, is accounted for as equity, and the fair value of the award over the target, as well as all Common Unit distribution equivalents,
which will be paid in cash, is accounted for as a liability. For purposes of valuing AmeriGas Performance Unit awards that are
subject to market-based conditions, expected volatility is based on the historical volatility of Common Units over a three year
period. The risk-free interest rate is based on the 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 expected term of the AmeriGas Performance Unit awards is three years based on
the performance period. AmeriGas Performance Unit awards whose ultimate payout is based upon net customer acquisition and
retention performance measures are recorded as expense when it is probable all or a portion of the award will be paid. The fair
value associated with the target award is the market price of the Common Units on the date of grant. The fair value of the award
over the target, as well as all Common Unit distribution equivalents, which will be paid in cash, is accounted for as a liability.
The following table summarizes the weighted-average assumptions used to determine the fair value of AmeriGas Performance
Unit awards subject to market-based conditions and related compensation costs:
Grants Awarded in Fiscal Year
2014
2013
2015
Risk-free rate
Expected life
Expected volatility
Dividend Yield
0.9%
3 years
19.2%
6.8%
0.8%
3 years
21.1%
7.5%
0.4%
3 years
20.7%
8.2%
The General Partner granted awards under the 2010 Propane Plan representing 80,336, 86,458 and 65,136 Common Units in Fiscal
2015, Fiscal 2014 and Fiscal 2013, respectively, having weighted-average grant date fair values per Common Unit subject to award
of $61.00, $43.34 and $42.58, respectively. At September 30, 2015, 2,416,473 Common Units were available for future award
grants under the 2010 Propane Plan.
F- 23
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
The following table summarizes AmeriGas Common Unit-based award activity for Fiscal 2015:
Total
Vested
Non-Vested
September 30, 2014
AmeriGas Performance Units:
Granted
Forfeited
Vested
Number of
Common
Units
Subject to
Award
200,235
65,525
$
$
(12,110) $
— $
Weighted
Average
Grant
Date
Fair Value
(per Unit)
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)
44.82
37,207
44.27
163,028
$
44.95
$
$
64.02
55.09
—
3,290
— $
$
39,516
(37,981) $
64.85
—
46.39
48.24
62,235
$
(12,110) $
(39,516) $
— $
$
6,800
(4,177) $
(30,577) $
— $
63.97
55.09
46.39
—
46.13
50.89
47.57
—
145,683
$
51.22
Performance criteria not met
(37,981) $
48.24
AmeriGas Stock Units:
Granted
Forfeited
Vested
Awards paid
September 30, 2015
14,811
$
(4,177) $
— $
(33,720) $
192,583
$
47.65
50.89
—
47.65
49.70
8,011
$
48.93
— $
30,577
$
(33,720) $
$
46,900
—
47.57
47.65
44.97
During Fiscal 2015, Fiscal 2014 and Fiscal 2013, the Partnership paid AmeriGas Performance Unit and AmeriGas Stock Unit
awards in Common Units and cash as follows:
AmeriGas Performance Unit awards:
Number of Common Units subject to original Awards granted
Fiscal year granted
Payment of awards:
AmeriGas Partners Common Units issued
Cash paid
AmeriGas Stock Unit awards:
Number of Common Units subject to original Awards granted
Payment of awards:
AmeriGas Partners Common Units issued
Cash paid
2015
2014
2013
55,750
2012
41,251
2011
—
— $
—
— $
48,150
2010
—
—
42,532
72,023
35,934
21,509
789
$
40,842
1,364
$
23,192
629
$
$
As of September 30, 2015, there was $1,108 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, 2015, there was a total
of approximately $2,699 of unrecognized compensation cost associated with 192,583 Common Units subject to award that is
expected to be recognized over a weighted-average period of 1.6 years. The total fair values of Common Unit-based awards that
vested during Fiscal 2015, Fiscal 2014 and Fiscal 2013 were $2,625, $4,100 and $2,752, respectively. As of September 30, 2015
and 2014, total liabilities of $3,326 and $1,513 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 in AmeriGas Partners Common
Units.
F- 24
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Note 12 — 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 $67,304 in Fiscal 2015, $63,055 in Fiscal 2014 and $63,585 in Fiscal 2013.
Minimum future payments under noncancelable operating leases are as follows:
Year Ending September 30,
2016
2017
2018
2019
2020
Thereafter
Total minimum operating lease payments
$
$
57,359
48,399
43,204
37,446
35,761
96,046
318,215
Certain of our operating lease arrangements, primarily vehicle leases with remaining lease terms of one to ten years, have residual
value guarantees. At the end of the lease term, we guarantee that the fair value of the equipment will equal or exceed the guaranteed
amount or we will pay the lessors the difference. Although such fair values at the end of the leases have historically exceeded the
guaranteed amount, at September 30, 2015, the maximum potential amount of future payments under lease guarantees, assuming
the leased equipment was deemed worthless at the end of the lease term, was approximately $32,389. The fair values of residual
lease guarantees were not material at September 30, 2015.
The Partnership enters into fixed-price and variable-price contracts with suppliers to purchase a portion of its propane supply
requirements. Obligations under these contracts existing at September 30, 2015, are: Fiscal 2016 - $53,534 and Fiscal 2017 -
$4,743.
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
Purported Class Action Lawsuit. Between May and October 2014, more than 35 purported class action lawsuits were filed in
multiple jurisdictions against the Partnership/UGI Corporation and a competitor by certain of their direct and indirect customers.
The class action lawsuits allege, among other things, that the Partnership and its competitor colluded, beginning in 2008, to reduce
the fill level of portable propane cylinders from 17 pounds to 15 pounds and combined to persuade its common customer, Walmart
Stores, Inc., to accept that fill reduction, resulting in increased cylinder costs to retailers and end-user customers in violation of
federal and certain state antitrust laws. The claims seek treble damages, injunctive relief, attorneys’ fees and costs on behalf of
the putative classes. On October 16, 2014, the United States Judicial Panel on Multidistrict Litigation transferred all of these
purported class action cases to the Western Division of the United States District Court for the Western District of Missouri. In
July 2015, the Court dismissed all claims brought by direct customers and all claims other than those for injunctive relief brought
by indirect customers. The direct customers have filed an appeal with the United States Court of Appeals for the Eighth Circuit.
The indirect customers have filed an amended complaint claiming injunctive relief and state law claims under Wisconsin, Maine,
and Vermont law. We are unable to reasonably estimate the impact, if any, arising from such litigation. We believe we have strong
defenses to the claims and intend to vigorously defend against them.
In addition to the matters described above, there are other pending claims and legal actions arising in the normal course of our
businesses. Although we cannot predict the final results of these pending claims and legal actions, we believe, after consultation
with counsel, that the final outcome of these matters will not have a material effect on our financial position, results of operations
or cash flows.
F- 25
Note 13 — Related Party Transactions
Pursuant to the Partnership Agreement and a management services agreement, 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 $576,135
in Fiscal 2015, $555,401 in Fiscal 2014, and $540,273 in Fiscal 2013, 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 $22,624
in Fiscal 2015, $20,531 in Fiscal 2014 and $18,568 in Fiscal 2013. 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
$2,985 in Fiscal 2015, $3,989 in Fiscal 2014 and $4,543 in Fiscal 2013.
From time to time, AmeriGas OLP purchases propane on an as needed basis from UGI Energy Services, LLC (“Energy Services”).
The price of the purchases are generally based on market price at the time of purchase. There were no purchases of propane by
AmeriGas OLP from Energy Services in Fiscal 2015. Purchases of propane by AmeriGas OLP from Energy Services totaled $850
and $1,979 during Fiscal 2014 and Fiscal 2013, respectively.
In addition, the Partnership sells propane to affiliates of UGI. Sales of propane to affiliates of UGI totaled $1,216, $1,212 and
$1,340 during Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively.
Pursuant to an Asset Sale and Purchase Agreement, on October 13, 2014, AmeriGas OLP purchased from UGI HVAC Enterprises,
Inc. (“HVAC”), a second-tier, wholly owned subsidiary of UGI, a residential heating, ventilation, air conditioning, plumbing and
related services business for $2,000 cash. Because the transaction was between entities under common control, the purchase price
in excess of the carrying value of assets transferred was considered an equity transaction and has been recorded as a distribution
in the Consolidated Statements of Partners’ Capital. In connection with this transaction, AmeriGas OLP entered into a Shared
Service Agreement (“SSA”) whereby HVAC provides certain financial and administrative services to the Partnership with respect
to the business purchased. Expenses associated with the SSA totaled $991 for Fiscal 2015.
Note 14 — Other Current Liabilities
Other current liabilities comprise the following at September 30:
Litigation, property and casualty liabilities
Taxes other than income taxes
Propane exchange liabilities
Deferred tank fee revenue
Other
Total other current liabilities
2015
2014
40,216
12,950
—
22,232
19,836
95,234
$
$
35,933
16,353
21,402
21,239
16,169
111,096
$
$
F- 26
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Note 15 — Fair Value Measurements
The following table presents on a gross basis our financial assets and liabilities including both current and noncurrent portions,
that are measured at fair value on a recurring basis within the fair value hierarchy as described in Note 2, as of September 30,
2015 and 2014:
Asset (Liability)
Level 1
Level 2
Level 3
Total
September 30, 2015:
Derivative instruments:
Assets:
Commodity contracts
Liabilities:
Commodity contracts
September 30, 2014
Derivative instruments:
Assets:
Commodity contracts
Liabilities:
Commodity contracts
$
$
$
$
— $
1,242
$
— $
1,242
— $
(58,579) $
— $
(58,579)
— $
3,065
$
— $
3,065
— $
(9,472) $
— $
(9,472)
The fair values of our non-exchange traded commodity derivative contracts included in Level 2 are based upon indicative price
quotations available through brokers, industry price publications or recent market transactions and related market indicators. For
commodity option contracts not traded on an exchange, we use a Black Scholes option pricing model that considers time value
and volatility of the underlying commodity.
Other Financial Instruments
The carrying amounts of other financial instruments included in current assets and current liabilities (except for current maturities
of long-term debt) approximate their fair values because of their short-term nature. At September 30, 2015, the carrying amount
and estimated fair value of our long-term debt (including current maturities) were $2,283,496 and $2,325,741, respectively. At
September 30, 2014, the carrying amount and estimated fair value of our long-term debt (including current maturities) were
$2,291,734 and $2,395,332, 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 (Level 2).
We have other 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 16 — 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.
F- 27
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Commodity Price Risk
In order to manage market risk associated with the Partnership’s fixed-price programs, the Partnership uses over-the-counter
derivative commodity instruments, principally price swap contracts. In addition, the Partnership uses over-the-counter price swap
and option contracts to reduce propane price volatility associated with a portion of forecasted propane purchases. In addition,
the Partnership from time to time enters into price swap and put option agreements to reduce the effects of short-term commodity
price volatility. At September 30, 2015 and 2014, total volumes associated with propane commodity derivatives totaled 345.9
million gallons and 266.9 million gallons, respectively. At September 30, 2015, the maximum period over which we are
economically hedging propane market price risk is 39 months.
At September 30, 2015, there were no amounts remaining in AOCI associated with commodity cash flow hedges.
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”). We account for IRPAs as cash flow hedges. At September 30,
2015 or 2014, we had no settled or unsettled IRPAs.
Derivative 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 comprise 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
instruments held by certain derivative instrument counterparties, the maximum amount of loss due to credit risk that, based upon
the gross fair values of the derivative 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, 2015. Certain of our derivative contracts have
credit-risk-related contingent features that may require the posting of additional collateral in the event of a downgrade in the
Partnership’s debt rating. At September 30, 2015, if the credit-risk-related contingent features were triggered, the amount of
collateral required to be posted would not be material.
Offsetting Derivative Assets and Liabilities
Derivative assets and liabilities are presented net by counterparty on our Consolidated Balance Sheets if the right of offset exists.
Our derivative instruments comprise over-the-counter transactions. Over-the-counter contracts are bilateral contracts that are
transacted directly with a third party. Certain over-the-counter contracts contain contractual rights of offset through master netting
arrangements and contract default provisions. In addition, the contracts are subject to conditional rights of offset through
counterparty nonperformance, insolvency, or other conditions.
In general, most of our over-the-counter transactions are subject to collateral requirements. Types of collateral generally include
cash or letters of credit. Cash collateral paid by us to our over-the-counter derivative counterparties, if any, is reflected in the table
below to offset derivative liabilities. Cash collateral received by us from our over-the-counter derivative counterparties, if any, is
reflected in the table below to offset derivative assets. Certain other accounts receivable and accounts payable balances recognized
on our Consolidated Balance Sheets with our derivative counterparties are not included in the table below but could reduce our
net exposure to such counterparties because such balances are subject to master netting or similar arrangements.
Fair Value of Derivative Instruments
The following table presents our derivative assets and liabilities by type, as well as the effects of offsetting, as of September 30,
2015 and 2014:
F- 28
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
Derivative assets:
Derivatives designated as hedging instruments:
Propane contracts
Derivatives not designated as hedging instruments:
Propane contracts
Total derivative assets - gross
Gross amounts offset in the balance sheet
Total derivative assets - net
Derivative liabilities:
Derivatives designated as hedging instruments:
Propane contracts
Derivatives not designated as hedging instruments:
Propane contracts
Total derivative liabilities - gross
Gross amounts offset in the balance sheet
Cash collateral pledged
Total derivative liabilities - net
Effect of Derivative Instruments
2015
2014
$
$
$
— $
2,278
1,242
1,242
(1,242)
— $
787
3,065
(2,793)
272
— $
(217)
(58,579)
(58,579)
1,242
2,160
(55,177) $
$
(9,255)
(9,472)
2,793
—
(6,679)
The following table provides information on the effects of derivative instruments on the Consolidated Statements of Operations
and changes in AOCI and noncontrolling interest for Fiscal 2015, Fiscal 2014 and Fiscal 2013:
Gain Recognized in
AOCI and Noncontrolling
Interest
Gain (Loss) Reclassified from
AOCI and Noncontrolling
Interest into Income
2015
2014
2013
2015
2014
2013
$
— $ 44,203
$
6,647
$
2,822
$ 56,517
$ (52,503)
Gain (Loss)
Recognized in Income
2015
2014
2013
Location of Gain (Loss)
Recognized in Income
Location of Gain
(Loss)
Reclassified from
AOCI and
Noncontrolling
Interest into Income
Cost of sales -
propane
$(209,351) $
(4,863) $
1,848
Cost of sales - propane
Cash Flow Hedges:
Propane contracts
Derivatives Not
Designated as Hedging
Instruments:
Propane contracts
For those derivative instruments accounted for as cash flow hedges during Fiscal 2014 or Fiscal 2013, the amounts of derivative
gains or losses representing ineffectiveness, and the amounts of gains or losses recognized in income as a result of excluding
derivatives from ineffectiveness testing, were not material.
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 that 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
sales exception accounting under GAAP because they provide for the delivery of products or services in quantities that are expected
F- 29
AmeriGas Partners and Subsidiaries
Notes to Consolidated Financial Statements
(Thousands of dollars, except where indicated otherwise)
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.
17 — Other Income, Net
Other income, net, comprises the following:
Gains on sales of fixed assets
Finance charges
Other
Total other income, net
Note 18 — Quarterly Data (Unaudited)
2015
2014
2013
$
$
14,260
$
6,524
$
12,665
4,430
17,459
3,467
31,355
$
27,450
$
4,115
21,390
6,998
32,503
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 unless otherwise indicated. Our quarterly results
fluctuate because of the seasonal nature of our propane business.
December 31,
March 31,
June 30,
September 30,
2014
2013
2015
2014
2015
2014
2015
2014
888,792
$1,045,826
$ 1,100,317
$ 1,493,623
$ 477,977
2,340
$ 179,693
$
371,681
$
284,922
$ 15,635
$
$
613,237
$ 418,236
$
560,249
4,426
$
(8,947) $
(6,408)
(39,564) $ 136,672
$
329,779
$
242,950
$ (25,441) $
(37,749) $ (49,805) $
(47,432)
(39,571) $ 134,898
$
326,055
$
240,103
$ (25,578) $
(37,761) $ (49,695) $
(47,347)
(0.49) $
(0.49) $
1.14
1.14
$
$
2.18
2.17
$
$
1.71
1.71
$
$
(0.37) $
(0.47) $
(0.62) $
(0.37) $
(0.47) $
(0.62) $
(0.58)
(0.58)
$
$
$
$
$
$
Revenues
Operating income (loss)
Net (loss) income
including noncontrolling
interest
Net (loss) income
attributable to AmeriGas
Partners, L.P.
Income (loss) per
limited partner unit (a):
Basic
Diluted
(a)
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 (see Note 2) 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 as follows:
Quarter ended:
Decrease in income per limited partner unit
December 31,
March 31,
2014
2013
2015
2014
$
— $
(0.24) $
(1.23) $
(0.79)
F- 30
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(Thousands of dollars)
ASSETS
Current assets:
Cash
Accounts receivable — related party
Prepayments and other current assets
Total current assets
Investment in AmeriGas Propane, L.P.
Other assets
Total assets
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable and other liabilities
Accrued interest
Total current liabilities
Long-term debt
Commitments and contingencies
Partners’ capital:
Common unitholders
General partner
Accumulated other comprehensive income
Total partners’ capital
Total liabilities and partners’ capital
Commitments and Contingencies
September 30,
2015
2014
$
8,842
$
499
—
9,341
4,746
3,147
1,155
9,048
3,434,114
3,588,863
19,872
23,610
$
3,463,327
$
3,621,521
$
604
$
47,662
48,266
500
47,662
48,162
2,250,845
2,250,845
1,145,291
1,299,260
18,925
—
20,460
2,794
1,164,216
1,322,514
$
3,463,327
$
3,621,521
Scheduled principal repayments of long-term debt during the next five fiscal years include $450,000 in Fiscal 2019 and $550,000
in Fiscal 2020.
S-1
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(Thousands of dollars)
Operating expenses, net
Interest expense
Loss before income taxes
Income tax (benefit) expense
Loss before equity in income of AmeriGas Propane, L.P.
Equity in income of AmeriGas Propane, L.P.
Net income attributable to AmeriGas Partners
Equity in other comprehensive (loss) income of AmeriGas Propane, L.P.
Comprehensive income attributable to AmeriGas Partners
General partner’s interest in net income attributable to AmeriGas Partners
Limited partners’ interest in net income attributable to AmeriGas Partners
Income per limited partner unit — basic and diluted
Average limited partner units outstanding — basic (thousands)
Average limited partner units outstanding — diluted (thousands)
Year Ended
September 30,
2015
2014
2013
$
(1,517) $
(258) $
(155,510)
(157,027)
(6)
(157,021)
368,232
211,211
(2,794)
208,417
32,469
178,742
1.91
92,910
92,977
$
$
$
$
(155,510)
(155,768)
6
(155,774)
445,667
289,893
(12,192)
277,701
26,749
263,144
2.82
92,876
92,946
$
$
$
$
$
$
$
$
(289)
(154,593)
(154,882)
1
(154,883)
376,105
221,222
58,555
279,777
21,498
199,724
2.14
92,832
92,910
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,
2014
2015
2013
NET CASH PROVIDED BY OPERATING ACTIVITIES (a)
$
368,987
$
348,704
$
325,320
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions
(368,426)
(346,744)
(327,000)
Proceeds associated with equity based compensation plans, net of tax
withheld
Capital contribution from General Partner
Net cash used by financing activities
Increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS:
End of year
Beginning of year
Increase (decrease)
3,501
34
(364,891)
4,096
8,842
4,746
4,096
$
$
$
2,499
25
(344,220)
4,484
4,746
262
4,484
$
$
$
1,221
13
(325,766)
(446)
262
708
(446)
$
$
$
(a)
Includes cash distributions received from AmeriGas Propane, L.P. of $519,885, $498,204 and $478,458 for the years
ended September 30, 2015, 2014 and 2013, respectively.
S-3
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)
Balance at
beginning
of year
Charged
to costs and
expenses
Other
Balance at
end of
year
Year Ended September 30, 2015
Reserves deducted from assets in the consolidated balance
sheet:
Allowance for doubtful accounts
$
17,681
$
15,800
$
(21,224) (1) $
12,257
Year Ended September 30, 2014
Reserves deducted from assets in the consolidated balance
sheet:
Allowance for doubtful accounts
$
18,552
$
26,403
$
(27,274) (1) $
17,681
Year Ended September 30, 2013
Reserves deducted from assets in the consolidated
balance sheet:
Allowance for doubtful accounts
$
17,217
$
16,477
$
(15,142) (1) $
18,552
(1)
Uncollectible accounts written off, net of recoveries.
S-4
Exhibit No.
10.24
Description
Description of oral compensation arrangement for Mr. John L. Walsh.
EXHIBIT INDEX
10.25
10.26
10.27
10.40
21
23.1
23.2
31.1
31.2
32
99.1
Description of oral compensation arrangement for Messrs. Jerry E. Sheridan, Hugh J. Gallagher, and Anthony
D. Rosback.
Description of oral compensation arrangement for Ms. Monica M. Gaudiosi.
Summary of Director Compensation of AmeriGas Propane, Inc. dated October 1, 2015.
First Amendment, dated as of November 18, 2015, to Trademark License Agreement, dated April 19, 1995,
by and among UGI Corporation, AmeriGas, Inc., AmeriGas Propane, Inc., AmeriGas Partners, L.P., and
AmeriGas Propane, L.P.
Subsidiaries of the Registrant.
Consent of Ernst & Young LLP.
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.
UGI Corporation Equity-Based Compensation Information.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Instance
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Labels Linkbase
XBRL Taxonomy Extension Presentation Linkbase
EXHIBIT 31.1
I, Jerry E. Sheridan, certify that:
1.
I have reviewed this annual report on Form 10-K of AmeriGas Partners, L.P.;
CERTIFICATION
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 25, 2015
/s/ Jerry E. Sheridan
Jerry E. Sheridan
President and Chief Executive Officer of AmeriGas
Propane, Inc.
EXHIBIT 31.2
CERTIFICATION
I, Hugh J. Gallagher, 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 25, 2015
/s/ Hugh J. Gallagher
Hugh J. Gallagher
Vice President — Finance and Chief Financial Officer of
AmeriGas Propane, Inc.
Certification by the Chief Executive Officer and Chief Financial Officer
Relating to a Periodic Report Containing Financial Statements
EXHIBIT 32
I, Jerry E. Sheridan, Chief Executive Officer, and I, Hugh J. Gallagher, 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, 2015 (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/ Jerry E. Sheridan
Jerry E. Sheridan
Date: November 25, 2015
/s/ Hugh J. Gallagher
Hugh J. Gallagher
Date: November 25, 2015
Call Technology
We have invested in technology that enables us to track the answer
speed and wait times of calls from our customers. During the
heating season, when call volume is higher, we are able to divert
calls to locations that have lower call volume to reduce the wait
time before our customers are able to reach a representative. Our
Zoom Call recording tool is a quality control feature that enables us
to train customer service representatives more effectively.
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 30170
College Station, TX 77842-3170
800-254-5196 (U.S. and Canada)
312-360-5100 (other countries)
By Overnight Delivery:
Computershare Investor Services
211 Quality Circle, Suite 210
College Station, TX 77845
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:
800-822-2794 (U.S. and Canada)
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:
Treasurer
AmeriGas Propane, Inc.
P.O. Box 965
Valley Forge, PA 19482
610-337-7000
News, Earnings, Financial Reports and Governance Documents
Comprehensive news, webcast events and other information about AmeriGas Partners, L.P.
and UGI Corporation are available via the internet at: www.amerigas.com.
Board of Directors
Lon R. Greenberg 2
Non-Executive Chairman of the Board
John L. Walsh 2
Vice Chairman
Jerry E. Sheridan
President and Chief Executive Officer
Brian R. Ford 1, 4
Retired Partner, Ernst & Young LLP
William J. Marrazzo 1, 2, 3
Chief Executive Officer and President, WHYY, Inc.
Anne Pol 3, 4
Retired President and Chief Operating Officer, Trex Enterprises Corporation
Pedro A. Ramos
President and Chief Executive Officer, The Philadelphia Foundation and
Former Partner, Schnader Harrison Segal & Lewis LLP
Marvin O. Schlanger (Presiding Director) 2, 3, 4
Principal, Cherry Hill Chemical Investments, LLC
K. Richard Turner 1
Managing Director, Altos Energy Partners
1 Audit Committee
3 Compensation/Pension Committee
2 Executive Committee
4 Corporate Governance Committee
Officers
John L. Walsh, Vice Chairman
Jerry E. Sheridan, President and Chief Executive Officer
You can also request reports filed with the SEC and corporate governance documents,
Robert J. Cane, Controller and Chief Accounting Officer
including the General Partner’s Codes of Ethics and Principles of Corporate Governance,
free of charge, by writing to Treasurer of AmeriGas Propane, Inc. 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, 2016, tax information in the form of a Schedule K-1, which will sum-
marize each unitholder’s allocated share of the Partnership’s reportable tax items for the
calendar year ended December 31, 2015, 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 advisor. AmeriGas Tax Information Services, at
800-310-9145, is available for questions regarding the Schedule K-1.
Troy E. Fee, Vice President – Human Resources & Strategic Initiatives
Hugh J. Gallagher, Vice President – Finance and Chief Financial Officer
Monica M. Gaudiosi, Vice President, General Counsel and Secretary
James C. Hamilton, II, Vice President, Southern Region
David L. Lugar, Vice President – Supply and Logistics
James Marshall, Vice President, Central Region
James L. Palkovic, Vice President, Western Region
Warren J. Patterson, Vice President, Eastern Region
Andrew J. Peyton, Vice President – Corporate Development
Daniel J. Platt, Treasurer
Kathy L. Prigmore, Vice President – Operations Support and Customer Advocacy
Anthony D. Rosback, Vice President and Chief Operating Officer
Kevin Rumbelow, Vice President – Supply Chain
AmeriGas Partners, L.P.
P.O. Box 965
Valley Forge, PA 19482
You can obtain news and other information about
AmeriGas Partners, L.P. at www.amerigas.com