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AmeriGas Partners Reports Third Quarter Results, Updates Guidance

AmeriGas is the nation’s largest retail propane marketer, serving over two million customers in all 50 states from over 1,200 locations. UGI Corporation, through subsidiaries, is the sole General Partner and owns 26% of the Partnership. An affiliate of Energy Transfer Partners, L.P. owns 32% of the Partnership and the public owns the remaining 42%.

AmeriGas Partners, L.P. will hold a live Internet Audio Webcast of its conference call to discuss third quarter earnings and other current activities at 4:00 PM ET on Tuesday, August 7, 2012. Interested parties may listen to the audio webcast both live and in replay on the Internet at http://investor.shareholder.com/ugi/apu/events.cfm or at the company website http://www.amerigas.com under Investor Relations. A telephonic replay will be available from 7:00 PM ET on August 7 through midnight Friday, August 10. The replay may be accessed at 1-855-859-2056, passcode 36869525 and International access 1-404-537-3406, passcode 36869525.

Comprehensive information about AmeriGas is available on the Internet at http://www.amerigas.com.

This press release contains certain forward-looking statements which management believes to be reasonable as of today’s date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management’s control. You should read the Partnership’s Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are adverse weather conditions, cost volatility and availability of propane, increased customer conservation measures, the capacity to transport propane to our market areas, the impact of pending and future legal proceedings, political, economic and regulatory conditions in the U.S. and abroad, and our ability to successfully integrate Heritage Propane and achieve anticipated synergies. The Partnership undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today.
         
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
REPORT OF EARNINGS
(Thousands, except per unit and where otherwise indicated)
(Unaudited)
   
 
 
Three Months Ended Nine Months Ended Twelve Months Ended
June 30, June 30, June 30,
2012 2011 2012   2011 2012 2011
Revenues:
Propane $ 507,529 $ 428,286 $ 2,227,576 $ 1,941,693 $ 2,646,322 $ 2,284,257
Other   64,416     42,544     183,755     136,133     225,142     174,602  
  571,945     470,830     2,411,331     2,077,826     2,871,464     2,458,859  
 
Costs and expenses:
Cost of sales - propane 312,487 284,629 1,394,860 1,257,038 1,683,983 1,472,266
Cost of sales - other 21,516 16,212 52,962 43,902 68,186 58,589
Operating and administrative expenses 242,905 147,139 655,090 474,039 801,627 632,135
Depreciation 38,311 21,435 94,593 61,853 115,717 81,879
Amortization 11,204 3,063 23,902 8,516 27,119 10,784
Other (income) expense, net   (6,190 )   (8,329 )   (16,931 )   (20,404 )   (22,090 )   (24,359 )
  620,233     464,149     2,204,476     1,824,944     2,674,542     2,231,294  
Operating (loss) income (48,288 ) 6,681 206,855 252,882 196,922 227,565
Gain (loss) on extinguishments of debt 30 - (13,349 ) (18,801 ) (32,665 ) (18,801 )
Interest expense   (41,853 )   (15,643 )   (103,431 )   (47,365 )   (119,584 )   (62,287 )

(Loss) income before income taxes
(90,111 ) (8,962 ) 90,075 186,716 44,673 146,477
Income tax benefit (expense)   208     (139 )   (1,006 )   (487 )   (909 )   (1,374 )
Net (loss) income (89,903 ) (9,101 ) 89,069 186,229 43,764 145,103

Less: net (loss) income attributable to noncontrolling interests
  521     (51 )   (2,041 )   (2,511 )   (1,931 )   (2,242 )
Net (loss) income attributable to AmeriGas Partners, L.P. $ (89,382 ) $ (9,152 ) $ 87,028   $ 183,718   $ 41,833   $ 142,861  
 

General partner's interest in net (loss) income attributable to AmeriGas Partners, L.P.
$ 3,355   $ 1,474   $ 9,628   $ 5,308   $ 10,742   $ 5,852  
 

Limited partners' interest in net (loss) income attributable to AmeriGas Partners, L.P.
$ (92,737 ) $ (10,626 ) $ 77,400   $ 178,410   $ 31,091   $ 137,009  
 
 
(Loss) income per limited partner unit (a)
 
Basic $ (1.00 ) $ (0.19 ) $ 0.91   $ 2.83   $ 0.33   $ 2.39  
 
Diluted $ (1.00 ) $ (0.19 ) $ 0.91   $ 2.83   $ 0.33   $ 2.39  
 
Average limited partner units outstanding:
Basic   92,783     57,129     77,615     57,115     72,466     57,108  
 
Diluted   92,783     57,129     77,668     57,165     72,520     57,158  
 
SUPPLEMENTAL INFORMATION:
 
Retail gallons sold (millions) 204.0 155.1 814.3 727.8 960.7 874.5
EBITDA (b) $ 1,778 $ 31,128 $ 309,960 $ 301,939 $ 305,162 $ 299,185
Expenditures for property, plant and equipment:
Maintenance capital expenditures $ 14,203 $ 8,441 $ 38,850 $ 28,161 $ 57,303 $ 41,376
Growth capital expenditures $ 10,961 $ 10,145 $ 31,414 $ 31,040 $ 49,575 $ 41,199
 
 
(a) Income per limited partner unit is computed 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. Refer to Note 2 to the consolidated financial statements included in the AmeriGas Partners, L.P. Annual Report on Form 10-K for the fiscal year ended September 30, 2011.
 
(b) Earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") should not be considered as an alternative to net income attributable to AmeriGas Partners, L.P. (as an indicator of operating performance) and is not a measure of performance or financial condition under accounting principles generally accepted in the United States ("GAAP"). Management believes EBITDA is a meaningful non-GAAP financial measure used by investors to (1) compare the Partnership's operating performance with that of other companies within the propane industry and (2) assess the Partnership's ability to meet loan covenants. The Partnership's definition of EBITDA may be different from those used by other companies.
 
Management uses EBITDA to compare year-over-year profitability of the business without regard to capital structure as well as to compare the relative performance of the Partnership to that of other master limited partnerships without regard to their financing methods, capital structure, income taxes or historical cost basis. In view of the omission of interest, income taxes, depreciation and amortization from EBITDA, management also assesses the profitability of the business by comparing net income attributable to AmeriGas Partners, L.P. for the relevant years.
 
Management also uses EBITDA to assess the Partnership's profitability because its parent, UGI Corporation, uses the Partnership's EBITDA to assess the profitability of the Partnership which is one of UGI Corporation's industry segments. UGI Corporation discloses the Partnership's EBITDA in its disclosure about industry segments as the profitability measure for its domestic propane segment. EBITDA in the three months ended June 30, 2012 includes acquisition and transition expense of $15,037 associated with the Heritage Propane acquisition. EBITDA in the nine months ended June 30, 2012 includes a net pre-tax loss of $13,349 from extinguishment of debt and acquisition and transition expense of $26,892 associated with the Heritage Propane acquisition. EBITDA for the twelve months ended June 30, 2012 includes a net pre-tax loss of $32,665 from extinguishment of debt and acquisition and transition expense of $26,892 associated with the Heritage Propane acquisition. EBITDA in the nine and twelve months ended June 30, 2011 includes pre-tax losses of $18,801 from extinguishments of debt. EBITDA for the twelve months ended June 30, 2011 also includes a $7,000 pre-tax loss associated with increased litigation reserves.
 
The following table includes reconciliations of net income attributable to AmeriGas Partners, L.P. to EBITDA and Adjusted EBITDA (1) for all periods presented:
 
           
Three Months Ended Nine Months Ended Twelve Months Ended
June 30, June 30, June 30,
2012   2011 2012 2011 2012   2011
 

Net (loss) income attributable to AmeriGas Partners, L.P.
$ (89,382 ) $ (9,152 ) $ 87,028 $ 183,718 $ 41,833 $ 142,861
Income tax (benefit) expense (208 ) 139 1,006 487 909 1,374
Interest expense 41,853 15,643 103,431 47,365 119,584 62,287
Depreciation 38,311 21,435 94,593 61,853 115,717 81,879
Amortization   11,204     3,063     23,902   8,516   27,119   10,784
EBITDA $ 1,778 $ 31,128 $ 309,960 $ 301,939 $ 305,162 $ 299,185
Heritage Propane acquisition and transition expense 15,037 - 26,892 - 26,892 -
(Gain) loss on extinguishments of debt (30 ) - 13,349 18,801 32,665 18,801
Litigation reserve   -     -     -   -   -   7,000
Adjusted EBITDA (1) $ 16,785   $ 31,128   $ 350,201 $ 320,740 $ 364,719 $ 324,986
 
The following table includes a reconciliation of forecasted net income attributable to AmeriGas Partners, L.P. to forecasted EBITDA and Adjusted EBITDA for the fiscal years ending September 30, 2012 and 2013:
 
Forecast Forecast
Fiscal Fiscal
Year Year
Ending Ending

September 30,

September 30,
2012 2013

Net income attributable to AmeriGas Partners, L.P. (estimate)
$ 11,000 $ 254,000
Interest expense (estimate) 145,000 167,000
Income tax expense (estimate) 1,000 2,000
Depreciation (estimate) 133,000 154,000
Amortization (estimate)   35,000   43,000
EBITDA $ 325,000 $ 620,000
Transition expenses (estimate) 42,000 20,000
Loss on extinguishment of debt (estimate)   13,000   -
Adjusted EBITDA (1) $ 380,000 $ 640,000
 
(1) Adjusted EBITDA is a non-GAAP financial measure. Management believes the presentation of this measure provides useful information to investors to more effectively evaluate the year-over-year results of operations of the Partnership. Management uses Adjusted EBITDA to exclude from AmeriGas Partners' EBITDA 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. This measure is not comparable to measures used by other entities and should only be considered in conjunction with net income attributable to AmeriGas Partners, L.P. for the relevant periods.
 

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