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1. |
Nature of Operations
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UGI Corporation (“UGI”) is a holding company that, through subsidiaries and affiliates,
distributes and markets energy products and related services. In the United States, we own
and operate (1) a retail propane marketing and distribution business; (2) natural gas and
electric distribution utilities; (3) electricity generation facilities; and (4) an energy
marketing, midstream infrastructure and energy services business. Internationally, we market
and distribute propane and other liquefied petroleum gases (“LPG”) in Europe and China. We
refer to UGI and its consolidated subsidiaries collectively as “the Company” or “we.”
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We conduct a domestic propane marketing and distribution business through AmeriGas Partners,
L.P. (“AmeriGas Partners”), a publicly traded limited partnership, and its principal
operating subsidiary AmeriGas Propane, L.P. (“AmeriGas OLP”) and, prior to its October 1,
2010 merger with AmeriGas OLP, AmeriGas OLP’s subsidiary, AmeriGas Eagle Propane, L.P.
(together with AmeriGas OLP, the “Operating Partnership”). AmeriGas Partners and AmeriGas
OLP are Delaware limited partnerships. UGI’s wholly owned second-tier subsidiary AmeriGas
Propane, Inc. (the “General Partner”) serves as the general partner of AmeriGas Partners and
AmeriGas OLP. We refer to AmeriGas Partners and its subsidiaries together as “the
Partnership” and the General Partner and its subsidiaries, including the Partnership, as
“AmeriGas Propane.” At December 31, 2010, the General Partner held a 1% general partner
interest and 42.8% limited partner interest in AmeriGas Partners and an effective 44.4%
ownership interest in AmeriGas OLP. Our limited partnership interest in AmeriGas Partners
comprises 24,691,209 AmeriGas Partners Common Units (“Common Units”). The remaining 56.2%
interest in AmeriGas Partners comprises 32,400,450 Common Units held by the general public
as limited partner interests.
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Our wholly owned subsidiary UGI Enterprises, Inc. (“Enterprises”) through subsidiaries (1)
conducts an LPG distribution business in France (“Antargaz”); (2) conducts an LPG
distribution business in other European countries (“Flaga”); and (3) conducts an LPG
distribution business in the Nantong region of China. We refer to our foreign operations
collectively as “International Propane.” Enterprises, through UGI Energy Services, Inc.
(“Energy Services”) and its subsidiaries, conducts an energy marketing, midstream
infrastructure and energy services business primarily in the Mid-Atlantic region of the
United States. In addition, Energy Services’ wholly owned subsidiary, UGI Development
Company (“UGID”), owns all or a portion of electric generation facilities located in
Pennsylvania. The businesses of Energy Services and its subsidiaries, including UGID, are
referred to herein collectively as “Midstream & Marketing.” Enterprises also conducts
heating, ventilation, air-conditioning, refrigeration and electrical contracting businesses
in the Mid-Atlantic region through first-tier subsidiaries.
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Our natural gas and electric distribution utility businesses are conducted through our
wholly owned subsidiary UGI Utilities, Inc. (“UGI Utilities”) and its subsidiaries UGI Penn
Natural Gas, Inc. (“PNG”) and UGI Central Penn Gas, Inc. (“CPG”). UGI Utilities, PNG and CPG
own and operate natural gas distribution utilities in eastern, northeastern and central
Pennsylvania. UGI Utilities also owns and operates an electric distribution
utility in northeastern Pennsylvania (“Electric Utility”). UGI Utilities’ natural gas
distribution utility is referred to as “UGI Gas;” PNG’s natural gas distribution utility is
referred to as “PNG Gas;” and CPG’s natural gas distribution utility is referred to as “CPG
Gas.” UGI Gas, PNG Gas and CPG Gas are collectively referred to as “Gas Utility.” Gas
Utility is subject to regulation by the Pennsylvania Public Utility Commission (“PUC”) and
the Maryland Public Service Commission, and Electric Utility is subject to regulation by the
PUC. Gas Utility and Electric Utility are collectively referred to as “Utilities.”
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2. |
Significant Accounting Policies
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Our condensed consolidated financial statements include the accounts of UGI and its
controlled subsidiary companies which, except for the Partnership, are majority owned. We
eliminate all significant intercompany accounts and transactions when we consolidate. We
report the public’s limited partner interests in the Partnership and the outside ownership
interests in certain subsidiaries of Antargaz and Flaga as noncontrolling interests.
Entities in which we own 50 percent or less and in which we exercise significant influence
over operating and financial policies are accounted for by the equity method.
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The accompanying condensed consolidated financial statements are unaudited and have been
prepared in accordance with the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”). They include all adjustments which we consider necessary for a fair
statement of the results for the interim periods presented. Such adjustments consisted only
of normal recurring items unless otherwise disclosed. The September 30, 2010 condensed
consolidated balance sheet data were derived from audited financial statements but do not
include all disclosures required by accounting principles generally accepted in the United
States of America (“GAAP”). These financial statements should be read in conjunction with
the financial statements and related notes included in our Annual Report on Form 10-K for
the year ended September 30, 2010 (“Company’s 2010 Annual Financial Statements and Notes”).
Due to the seasonal nature of our businesses, the results of operations for interim periods
are not necessarily indicative of the results to be expected for a full year.
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Restricted Cash. Restricted cash represents those cash balances in our commodity futures
and option brokerage accounts which are restricted from withdrawal.
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Earnings Per Common Share. Basic earnings per share attributable to UGI Corporation
stockholders reflect the weighted-average number of common shares outstanding. Diluted
earnings per share attributable to UGI Corporation include the effects of dilutive stock
options and common stock awards.
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Shares used in computing basic and diluted earnings per share are as follows:
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Three Months Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Denominator (thousands of shares):
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Average common shares
outstanding for basic computation
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110,894 | 109,077 | ||||||
Incremental shares issuable for stock
options and awards
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1,522 | 800 | ||||||
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Average common shares outstanding for
diluted computation
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112,416 | 109,877 | ||||||
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Comprehensive Income. The following table presents the components of comprehensive
income for the three months ended December 31, 2010 and 2009:
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Three Months Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Net income
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$ | 155.0 | $ | 145.5 | ||||
Other comprehensive income
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29.7 | 31.2 | ||||||
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Comprehensive income (including
noncontrolling interests)
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184.7 | 176.7 | ||||||
Less: comprehensive income attributable
to noncontrolling interests
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(46.7 | ) | (67.2 | ) | ||||
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Comprehensive income attributable
to UGI Corporation
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$ | 138.0 | $ | 109.5 | ||||
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Other comprehensive income principally comprises (1) gains and losses on derivative
instruments qualifying as cash flow hedges, net of
reclassifications to net income; (2) actuarial gains and losses on postretirement benefit
plans, net of associated amortization; and (3) foreign currency translation adjustments.
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Effective December 31, 2010, UGI Utilities merged the two defined benefit pension plans that
it sponsors. In accordance with GAAP relating to accounting for retirement benefits, we were
required to remeasure the merged plan’s assets and benefit obligations as of December 31,
2010 and record the funded status in the Condensed Consolidated Balance Sheet. Among other
things, the remeasurement resulted in an after-tax increase in other comprehensive income
of $2.2 for the three months ended December 31, 2010 (See Notes 7 and 8).
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Use of Estimates. 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.
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3. |
Accounting Changes
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Adoption of New Accounting Standard
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Transfers of Financial Assets. Effective October 1, 2010, the Company adopted new guidance
regarding accounting for transfers of financial assets. Among other things, the new guidance
eliminates the concept of Qualified Special Purpose Entities (“QSPEs”). It also amends
previous derecognition guidance. The adoption of the new accounting guidance changed the
Company’s accounting prospectively for sales of undivided interests in accounts receivable
to the commercial paper conduit of a major bank under the Energy Services Receivables
Facility. Effective October 1, 2010, trade receivables sold to the commercial paper conduit
remain on the Company’s balance sheet and the Company reflects a liability equal to the
amount advanced by the commercial paper conduit. Prior to October 1, 2010, trade accounts
receivable sold to the commercial paper conduit were removed from the balance sheet. Also
effective October 1, 2010, the Company records interest expense on amounts owed to the
commercial paper conduit. Prior to October 1, 2010, losses on sales of accounts receivable
to the commercial paper conduit were reflected in other income, net. Additionally, effective
October 1, 2010 borrowings and repayments associated with the Energy Services Receivables
Facility are reflected in cash flows from financing activities. Previously such transactions
were reflected in cash flows from operating activities. For further information, see Note 6.
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4. |
Intangible Assets
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The Company’s intangible assets comprise the following:
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December 31, | September 30, | December 31, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
Goodwill (not subject to amortization)
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$ | 1,564.7 | $ | 1,562.7 | $ | 1,567.5 | ||||||
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Other intangible assets:
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Customer relationships, noncompete
agreements and other
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$ | 219.8 | $ | 215.4 | $ | 217.8 | ||||||
Trademark (not subject to amortization)
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45.4 | 46.3 | 48.6 | |||||||||
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Gross carrying amount
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265.2 | 261.7 | 266.4 | |||||||||
Accumulated amortization
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(115.1 | ) | (111.6 | ) | (107.8 | ) | ||||||
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Net carrying amount
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$ | 150.1 | $ | 150.1 | $ | 158.6 | ||||||
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The increases in goodwill and other intangible assets during the three months ended
December 31, 2010 principally reflects the effects of acquisitions partially offset by the
effects of currency translation. Amortization expense of intangible assets was $5.5 and $4.9
for the three months ended December 31, 2010 and 2009, respectively. No amortization is
included in cost of sales in the Condensed Consolidated Statements of Income. Our expected
aggregate amortization expense of intangible assets for the next five fiscal years is as
follows: Fiscal 2011 — $20.1; Fiscal 2012 — $20.9; Fiscal 2013 — $20.7; Fiscal 2014 —
$19.6; Fiscal 2015 — $14.9.
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5. |
Segment Information
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We have organized our business units into six reportable segments generally based upon
products sold, geographic location (domestic or international) or regulatory environment.
Our reportable segments are: (1) AmeriGas Propane; (2) an international LPG segment
comprising Antargaz; (3) an international LPG segment comprising Flaga, our propane
distribution business in China and certain International Propane nonoperating entities
(“Flaga & Other”); (4) Gas Utility; (5) Electric Utility; and (6) Midstream & Marketing. We
refer to both international segments collectively as “International Propane.”
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The accounting policies of our reportable segments are the same as those described in Note
2, “Significant Accounting Policies” in the Company’s 2010 Annual Financial Statements and
Notes. We evaluate AmeriGas Propane’s performance principally based upon the Partnership’s
earnings before interest expense, income taxes, depreciation and amortization (“Partnership
EBITDA”). Although we use Partnership EBITDA to evaluate AmeriGas Propane’s profitability,
it should not be considered as an alternative to net income (as an indicator of operating
performance) or as an alternative to cash flow (as a measure of liquidity or ability to
service debt obligations) and is not a measure of performance or financial condition under
GAAP. Our definition of Partnership EBITDA may be different from that used by other
companies. We evaluate the performance of our International Propane, Gas Utility, Electric
Utility and Midstream & Marketing segments principally based upon their income before income
taxes.
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Reportable Segments | ||||||||||||||||||||||||||||||||||||
International Propane | ||||||||||||||||||||||||||||||||||||
AmeriGas | Gas | Electric | Midstream & | Flaga & | Corporate | |||||||||||||||||||||||||||||||
Total | Elims. | Propane | Utility | Utility | Marketing | Antargaz | Other | & Other (b) | ||||||||||||||||||||||||||||
Revenues
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$ | 1,765.6 | $ | (40.1 | )(c) | $ | 700.2 | $ | 321.1 | $ | 28.9 | $ | 279.6 | $ | 336.0 | $ | 118.9 | $ | 21.0 | |||||||||||||||||
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Cost of sales
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$ | 1,162.6 | $ | (39.3 | )(c) | $ | 435.3 | $ | 194.9 | $ | 18.6 | $ | 240.1 | $ | 214.6 | $ | 87.1 | $ | 11.3 | |||||||||||||||||
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Segment profit:
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Operating income
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$ | 252.3 | $ | 0.1 | $ | 91.6 | $ | 75.1 | $ | 3.6 | $ | 27.5 | $ | 51.9 | $ | 2.1 | $ | 0.4 | ||||||||||||||||||
Loss from equity investees
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(0.2 | ) | — | — | — | — | — | (0.2 | ) | — | — | |||||||||||||||||||||||||
Interest expense
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(33.3 | ) | — | (15.4 | ) | (10.1 | ) | (0.5 | ) | (0.7 | ) | (5.5 | ) | (0.9 | ) | (0.2 | ) | |||||||||||||||||||
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Income before income taxes
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$ | 218.8 | $ | 0.1 | $ | 76.2 | $ | 65.0 | $ | 3.1 | $ | 26.8 | $ | 46.2 | $ | 1.2 | $ | 0.2 | ||||||||||||||||||
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Partnership EBITDA (a)
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$ | 113.3 | ||||||||||||||||||||||||||||||||||
Noncontrolling interests’ net income
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$ | 41.9 | $ | — | $ | 41.5 | $ | — | $ | — | $ | — | $ | 0.4 | $ | — | $ | — | ||||||||||||||||||
Depreciation and amortization
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$ | 55.3 | $ | — | $ | 22.7 | $ | 12.2 | $ | 1.0 | $ | 1.7 | $ | 12.3 | $ | 4.9 | $ | 0.5 | ||||||||||||||||||
Capital expenditures
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$ | 85.6 | $ | — | $ | 21.3 | $ | 16.1 | $ | 1.5 | $ | 34.6 | $ | 9.4 | $ | 2.5 | $ | 0.2 | ||||||||||||||||||
Total assets (at period end)
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$ | 6,807.8 | $ | (89.7 | ) | $ | 1,904.5 | $ | 2,061.3 | $ | 141.0 | $ | 548.5 | $ | 1,690.9 | $ | 395.2 | $ | 156.1 | |||||||||||||||||
Bank loans (at period end)
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$ | 273.6 | $ | — | $ | 178.0 | $ | 74.0 | $ | — | $ | — | $ | — | $ | 21.6 | $ | — | ||||||||||||||||||
Investments in equity investees (at period end)
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$ | 0.3 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 0.3 | $ | — | ||||||||||||||||||
Goodwill (at period end)
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$ | 1,564.7 | $ | — | $ | 690.1 | $ | 180.1 | $ | — | $ | 2.8 | $ | 591.0 | $ | 93.7 | $ | 7.0 |
Reportable Segments | ||||||||||||||||||||||||||||||||||||
International Propane | ||||||||||||||||||||||||||||||||||||
AmeriGas | Gas | Electric | Midstream & | Flaga & | Corporate | |||||||||||||||||||||||||||||||
Total | Elims. | Propane | Utility | Utility | Marketing | Antargaz | Other | & Other (b) | ||||||||||||||||||||||||||||
Revenues
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$ | 1,618.8 | $ | (39.9 | )(c) | $ | 656.6 | $ | 327.8 | $ | 34.0 | $ | 312.3 | $ | 264.1 | $ | 42.8 | $ | 21.1 | |||||||||||||||||
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Cost of sales
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$ | 1,026.8 | $ | (38.5 | )(c) | $ | 389.6 | $ | 209.8 | $ | 21.5 | $ | 271.3 | $ | 135.2 | $ | 26.8 | $ | 11.1 | |||||||||||||||||
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Segment profit:
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Operating income
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$ | 243.2 | $ | (0.2 | ) | $ | 102.6 | $ | 63.7 | $ | 5.4 | $ | 27.7 | $ | 41.3 | $ | 2.6 | $ | 0.1 | |||||||||||||||||
Loss from equity investees
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— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Interest expense
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(34.2 | ) | — | (16.5 | ) | (10.2 | ) | (0.4 | ) | — | (6.1 | ) | (0.9 | ) | (0.1 | ) | ||||||||||||||||||||
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Income before income taxes
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$ | 209.0 | $ | (0.2 | ) | $ | 86.1 | $ | 53.5 | $ | 5.0 | $ | 27.7 | $ | 35.2 | $ | 1.7 | $ | — | |||||||||||||||||
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Partnership EBITDA (a)
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$ | 123.0 | ||||||||||||||||||||||||||||||||||
Noncontrolling interests’ net income
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$ | 47.1 | $ | — | $ | 46.8 | $ | — | $ | — | $ | — | $ | 0.3 | $ | — | $ | — | ||||||||||||||||||
Depreciation and amortization
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$ | 53.0 | $ | (0.1 | ) | $ | 21.4 | $ | 12.3 | $ | 1.0 | $ | 2.1 | $ | 13.2 | $ | 2.8 | $ | 0.3 | |||||||||||||||||
Capital expenditures
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$ | 75.0 | $ | — | $ | 26.7 | $ | 13.0 | $ | 0.8 | $ | 22.5 | $ | 9.4 | $ | 2.2 | $ | 0.4 | ||||||||||||||||||
Total assets (at period end)
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$ | 6,452.7 | $ | (82.8 | ) | $ | 1,830.3 | $ | 2,015.4 | $ | 115.8 | $ | 429.0 | $ | 1,749.8 | $ | 256.5 | $ | 138.7 | |||||||||||||||||
Bank loans (at period end)
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$ | 219.5 | $ | — | $ | 24.0 | $ | 169.2 | $ | 9.8 | $ | — | $ | — | $ | 16.5 | $ | — | ||||||||||||||||||
Investments in equity investees (at period end)
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$ | 2.9 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2.9 | $ | — | ||||||||||||||||||
Goodwill (at period end)
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$ | 1,567.5 | $ | (4.0 | ) | $ | 670.8 | $ | 180.1 | $ | — | $ | 11.8 | $ | 632.8 | $ | 68.9 | $ | 7.1 |
(a) |
The following table provides a reconciliation of Partnership EBITDA to AmeriGas Propane
operating income:
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Three months Ended December 31, | 2010 | 2009 | ||||||
Partnership EBITDA
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$ | 113.3 | $ | 123.0 | ||||
Depreciation and amortization
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(22.7 | ) | (21.4 | ) | ||||
Noncontrolling interests (i)
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1.0 | 1.0 | ||||||
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Operating income
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$ | 91.6 | $ | 102.6 | ||||
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(i) |
Principally represents the General Partner’s 1.01% interest in AmeriGas OLP.
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(b) |
Corporate & Other results principally comprise UGI Enterprises’ heating, ventilation,
air-conditioning, refrigeration and electrical contracting business (“HVAC/R”), net expenses
of UGI’s captive general liability insurance company and UGI Corporation’s unallocated
corporate and general expenses and interest income. Corporate & Other assets principally
comprise cash, short-term investments, assets of HVAC/R and an intercompany loan. The
intercompany loan and associated interest is removed in the segment presentation.
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Principally represents the elimination of intersegment transactions principally among
Midstream & Marketing, Gas Utility and AmeriGas Propane.
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6. |
Energy Services Accounts Receivable Securitization Facility
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Energy Services has a $200 receivables purchase facility (“Receivables Facility”) with an
issuer of receivables-backed commercial paper currently scheduled to expire in April 2011,
although the Receivables Facility may terminate prior to such date due to the termination of
commitments of the Receivables Facility back-up purchasers.
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Under the Receivables Facility, Energy Services transfers, on an ongoing basis and without
recourse, its trade accounts receivable to its wholly owned, special purpose subsidiary,
Energy Services Funding Corporation (“ESFC”), which is consolidated for financial statement
purposes. ESFC, in turn, has sold, and subject to certain conditions, may from time to time
sell, an undivided interest in some or all of the receivables to a commercial paper conduit
of a major bank. ESFC was created and has been structured to isolate its assets from
creditors of Energy Services and its affiliates, including UGI. Energy Services continues to
service, administer and collect trade receivables on behalf of the commercial paper issuer
and ESFC.
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Effective October 1, 2010, the Company adopted a new accounting standard that changes the
accounting for the Receivables Facility on a prospective basis (see Note 3). Effective
October 1, 2010, trade receivables sold to the commercial paper conduit remain on the
Company’s balance sheet; the Company reflects a liability equal to the amount advanced by
the commercial paper conduit; and the Company records interest expense on amounts sold to
the commercial paper conduit. Prior to October 1, 2010, trade accounts receivable sold to
the commercial paper conduit were removed from the balance sheet and any losses on sales of
accounts receivable were reflected in other income, net.
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During the three months ended December 31, 2010 and 2009, Energy Services transferred trade
receivables totaling $290.8 and $296.7, respectively, to ESFC. During the three months ended
December 31, 2010 and 2009, ESFC sold an aggregate $61.5 and $120.2, respectively, of
undivided interests in its trade receivables to the commercial paper conduit. At December
31, 2010, the balance of ESFC receivables was $109.7 and there were no amounts sold to the
commercial paper conduit. At December 31, 2009, the outstanding balance of ESFC receivables
was $88.3 which is reflected net of $27.6 that was sold to the commercial paper conduit and
removed from the balance sheet.
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7. |
Utility Regulatory Assets and Liabilities and Regulatory Matters
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For a description of the Company’s regulatory assets and liabilities other than those
described below, see Note 8 to the Company’s 2010 Annual Financial Statements and Notes. UGI
Utilities does not recover a rate of return on its regulatory assets. The following
regulatory assets and liabilities associated with Gas Utility and Electric Utility are
included in our accompanying Condensed Consolidated Balance Sheets:
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December 31, | September 30, | December 31, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
Regulatory assets:
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Income taxes recoverable
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$ | 83.6 | $ | 82.5 | $ | 80.5 | ||||||
Underfunded pension and postretirement plans
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116.3 | 159.2 | 10.9 | |||||||||
Environmental costs
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22.5 | 22.6 | 25.8 | |||||||||
Deferred fuel and power costs
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18.1 | 36.6 | 10.3 | |||||||||
Other
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6.3 | 5.8 | 4.4 | |||||||||
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Total regulatory assets
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$ | 246.8 | $ | 306.7 | $ | 131.9 | ||||||
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Regulatory liabilities:
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Postretirement benefits
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$ | 10.8 | $ | 10.5 | $ | 9.5 | ||||||
Environmental overcollections
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7.0 | 7.2 | 8.4 | |||||||||
Deferred fuel and power refunds
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15.2 | 8.3 | 40.3 | |||||||||
State tax benefits — distribution system repairs
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6.7 | 6.7 | — | |||||||||
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Total regulatory liabilities
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$ | 39.7 | $ | 32.7 | $ | 58.2 | ||||||
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Underfunded pension and postretirement plans. This regulatory asset represents the
portion of prior service cost and net actuarial losses associated with pension and
postretirement benefits which is probable of being recovered through future rates based upon
established regulatory practices. These regulatory assets are adjusted annually or more
frequently under certain circumstances when the funded status of the plans is recorded in
accordance with GAAP relating to accounting for retirement benefits. These costs are
amortized over the average remaining future service lives of the plan participants.
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Effective December 31, 2010, UGI Utilities merged the two defined benefit pension plans that
it sponsors. In accordance with GAAP relating to accounting for retirement benefits, we were
required to remeasure the merged plan’s assets and benefit obligations as of December 31,
2010 and record the funded status in the Condensed Consolidated Balance Sheet. Among other
things, the remeasurement resulted in a decrease in regulatory assets of $43.0 (see Note 8).
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Deferred fuel and power — costs and refunds. Gas Utility’s tariffs and, commencing January
1, 2010 Electric Utility’s default service tariffs, contain clauses which permit recovery of
all prudently incurred purchased gas and power costs through the application of purchased
gas cost (“PGC”) rates in the case of Gas Utility and default service (“DS”) rates in the
case of Electric Utility. The clauses provide for periodic adjustments to PGC and DS rates
for differences between the total amount of purchased gas and electric generation supply
costs collected from customers and recoverable costs incurred. Net undercollected costs are
classified as a regulatory asset and net overcollections are classified as a regulatory
liability.
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Gas Utility uses derivative financial instruments to reduce volatility in the cost of gas it
purchases for firm- residential, commercial and industrial (“retail core-market”) customers.
Realized and unrealized gains or losses on natural gas derivative financial instruments are
included in deferred fuel costs or refunds. Unrealized gains (losses) on
such contracts at December 31, 2010, September 30, 2010 and December 31, 2009 were $2.2,
$(1.4) and $(0.1), respectively.
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Electric Utility enters into forward electricity purchase contracts to meet a substantial
portion of its electricity supply needs. As more fully described in Note 12, during Fiscal
2010, Electric Utility determined that it could no longer assert that it would take physical
delivery of substantially all of the electricity it had contracted for under its forward
power purchase agreements and, as a result, such contracts no longer qualified for the
normal purchases and normal sales exception under GAAP related to derivative financial
instruments. As a result, Electric Utility’s electricity supply contracts are required to be
recorded on the balance sheet at fair value, with an associated adjustment to regulatory
assets or liabilities in accordance with GAAP relating to rate-regulated entities and
Electric Utility’s DS procurement, implementation and contingency plans. At December 31,
2010 and September 30, 2010, the fair values of Electric Utility’s electricity supply
contracts were losses of $13.4 and $19.7, respectively, which amounts are reflected in
current derivative financial instrument liabilities and other noncurrent liabilities on the
Condensed Consolidated Balance Sheets with equal and offsetting amounts reflected in
deferred fuel and power costs in the table above.
|
In order to reduce volatility associated with a substantial portion of its electric
transmission congestion costs, Electric Utility obtains financial transmission rights
(“FTRs”). FTRs are derivative financial instruments that entitle the holder to receive
compensation for electricity transmission congestion charges when there is insufficient
electricity transmission capacity on the electric transmission grid. Because Electric
Utility is entitled to fully recover its DS costs commencing January 1, 2010 through DS
rates, realized and unrealized gains or losses on FTRs associated with periods beginning
January 1, 2010 are included in deferred fuel and power — costs or refunds. Unrealized gains
on FTRs at December 31, 2010 and 2009 were not material.
|
Other Regulatory Matters
|
Approval of Transfer of CPG Storage Assets. On October 21, 2010, the Federal Energy
Regulatory Commission (“FERC”) approved CPG’s application to abandon a storage service and
approved the transfer of its Tioga, Meeker and Wharton natural gas storage facilities, along
with related assets, to UGI Storage Company, a subsidiary of Energy Services. CPG will
transfer the natural gas storage facilities on April 1, 2011. The net book value of the
storage facility assets was approximately $11.0 as of December 31, 2010.
|
Subsequent Event — CPG Base Rate Filing. On January 14, 2011, CPG filed a request with the
PUC to increase its base operating revenues by $16.5 annually. The increased revenues would
fund system improvements and operations necessary to maintain safe and reliable natural gas
service and fund new programs that would provide rebates and other incentives for customers
to install new high-efficiency equipment. CPG is requesting that the new gas rates become
effective March 15, 2011. However, the PUC typically suspends the effective date for
general base rate proceedings to allow for investigation and
public hearings. This review process is expected to last approximately nine months, which
would delay implementation of the new rates until late October 2011.
|
|
8. |
Defined Benefit Pension and Other Postretirement Plans
|
After the plan merger described below, we currently sponsor one defined benefit pension plan
for employees hired prior to January 1, 2009 of UGI, UGI Utilities, PNG, CPG and certain of
UGI’s other domestic wholly owned subsidiaries (“Pension Plan”). We also provide
postretirement health care benefits to certain retirees and a limited number of active
employees, and postretirement life insurance benefits to nearly all domestic active and
retired employees. In addition, Antargaz employees are covered by certain defined benefit
pension and postretirement plans.
|
Net periodic pension expense and other postretirement benefit costs include the following
components:
|
Other | ||||||||||||||||
Pension Benefits | Postretirement Benefits | |||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Service cost
|
$ | 2.3 | $ | 2.2 | $ | 0.1 | $ | 0.1 | ||||||||
Interest cost
|
5.9 | 5.9 | 0.3 | 0.3 | ||||||||||||
Expected return on assets
|
(6.5 | ) | (6.5 | ) | (0.1 | ) | (0.1 | ) | ||||||||
Amortization of:
|
||||||||||||||||
Prior service cost (benefit)
|
0.1 | — | (0.2 | ) | (0.1 | ) | ||||||||||
Actuarial loss
|
2.3 | 1.5 | 0.1 | 0.1 | ||||||||||||
|
||||||||||||||||
Net benefit cost
|
4.1 | 3.1 | 0.2 | 0.3 | ||||||||||||
Change in associated regulatory liabilities
|
— | — | 0.8 | 0.7 | ||||||||||||
|
||||||||||||||||
Net expense
|
$ | 4.1 | $ | 3.1 | $ | 1.0 | $ | 1.0 | ||||||||
|
Pension Plan assets are held in trust and consist principally of publicly traded,
diversified equity and fixed income mutual funds and UGI Common Stock. It is our general
policy to fund amounts for pension benefits equal to at least the minimum contribution
required by ERISA. Based upon current assumptions, the Company estimates that it will be
required to contribute approximately $20.3 to the Pension Plan during the next twelve
months. UGI Utilities has established a Voluntary Employees’ Beneficiary Association
(“VEBA”) trust to pay UGI Gas and Electric Utility’s postretirement health care and life
insurance benefits referred to above by depositing into the VEBA the annual amount of
postretirement benefit costs determined under GAAP for postretirement benefits other than
pensions. The difference between such amounts calculated under GAAP and the amounts included
in UGI Gas’ and Electric Utility’s rates is deferred for future recovery from, or refund to,
ratepayers. Amounts contributed to the VEBA by UGI Utilities were not material during the
three months ended December 31, 2010, nor are they expected to be material for all of Fiscal
2011.
|
We also sponsor unfunded and non-qualified defined benefit supplemental executive retirement
plans. We recorded pre-tax expense associated with these plans of
$0.6 for each of the three-month periods ended December 31, 2010 and 2009.
|
Effective December 31, 2010, UGI Utilities merged its two defined benefit pension plans. The
merged plan will maintain separate benefit formulas and specific rights and features of each
predecessor plan. As a result of the merger and in accordance with GAAP relating to
accounting for retirement benefits, the Company remeasured the combined plan’s assets and
benefit obligations as of December 31, 2010 which decreased other noncurrent liabilities by
$46.7; decreased associated regulatory assets by $43.0; and increased pre-tax other
comprehensive income by $3.7 (see Notes 2 and 7).
|
The following table provides a reconciliation of the projected benefit obligation (“PBO”),
plan assets and the funded status of the merged Pension Plan as of December 31, 2010:
|
Three Months | ||||
Ended | ||||
December 31, | ||||
2010 | ||||
Change in benefit obligations:
|
||||
Benefit obligations — October 1, 2010
|
$ | 465.0 | ||
Service cost
|
2.2 | |||
Interest cost
|
5.8 | |||
Actuarial gain
|
(30.6 | ) | ||
Benefits paid
|
(4.7 | ) | ||
|
||||
Benefit obligations — December 31, 2010
|
$ | 437.7 | ||
|
||||
|
||||
Change in plan assets:
|
||||
Fair value of plan assets — October 1, 2010
|
$ | 287.9 | ||
Actual gain on assets
|
19.3 | |||
Employer contributions
|
1.8 | |||
Benefits paid
|
(4.7 | ) | ||
|
||||
Fair value of plan assets — December 31, 2010
|
$ | 304.3 | ||
|
||||
Funded status of the merged plan — December 31, 2010
|
$ | (133.4 | ) | |
|
||||
Liabilities recorded in the balance sheet:
|
||||
Unfunded liabilities — included in other current liabilities
|
$ | (20.3 | ) | |
Unfunded liabilities — included in other noncurrent liabilities
|
(113.1 | ) | ||
|
||||
Net amount recognized
|
$ | (133.4 | ) | |
|
||||
Amounts recorded in regulatory assets and liabilities:
|
||||
Prior service cost
|
$ | 0.3 | ||
Net actuarial loss
|
112.7 | |||
|
||||
Total
|
$ | 113.0 | ||
|
||||
Amounts recorded in stockholders’ equity:
|
||||
Prior service cost
|
$ | 0.1 | ||
Net actuarial loss
|
9.8 | |||
|
||||
Total
|
$ | 9.9 | ||
|
The accumulated benefit obligation (“ABO”) of the merged plan at December 31, 2010 is
$391.2. Actuarial assumptions for the merged plan at December 31, 2010 are as follows:
discount rate — 5.5%; expected return on plan assets — 8.5%; rate of increase in salary
levels — 3.8%.
|
|
9. |
Commitments and Contingencies
|
Environmental Matters
|
From the late 1800s through the mid-1900s, UGI Utilities and its former subsidiaries owned
and operated a number of manufactured gas plants (“MGPs”) prior to the general availability
of natural gas. Some constituents of coal tars and other residues of the manufactured gas
process are today considered hazardous substances under the Superfund Law and may be present
on the sites of former MGPs. Between 1882 and 1953, UGI Utilities owned the stock of
subsidiary gas companies in Pennsylvania and elsewhere and also operated the businesses of
some gas companies under agreement. Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, by the early 1950s UGI Utilities divested all of its utility
operations other than certain Pennsylvania operations, including those which now constitute
UGI Gas and Electric Utility.
|
UGI Utilities does not expect its costs for investigation and remediation of hazardous
substances at Pennsylvania MGP sites to be material to its results of operations because UGI
Gas is currently permitted to include in rates, through future base rate proceedings, a
five-year average of such prudently incurred remediation costs. At December 31, 2010,
neither the undiscounted nor the accrued liability for environmental investigation and
cleanup costs for UGI Gas was material.
|
UGI Utilities has been notified of several sites outside Pennsylvania on which private
parties allege MGPs were formerly owned or operated by it or owned or operated by its former
subsidiaries. Such parties are investigating the extent of environmental contamination or
performing environmental remediation. UGI Utilities is currently litigating three claims
against it relating to out-of-state sites.
|
Management believes that under applicable law UGI Utilities should not be liable in those
instances in which a former subsidiary owned or operated an MGP. There could be, however,
significant future costs of an uncertain amount associated with environmental damage caused
by MGPs outside Pennsylvania that UGI Utilities directly operated, or that were owned or
operated by former subsidiaries of UGI Utilities if a court were to conclude that (1) the
subsidiary’s separate corporate form should be disregarded or (2) UGI Utilities should be
considered to have been an operator because of its conduct with respect to its subsidiary’s
MGP.
|
South Carolina Electric & Gas Company v. UGI Utilities, Inc. On September 22, 2006, South
Carolina Electric & Gas Company (“SCE&G”), a subsidiary of SCANA Corporation, filed a
lawsuit against UGI Utilities in the District Court of South Carolina
seeking contribution from UGI Utilities for past and future remediation costs related to the
operations of a former MGP located in Charleston, South Carolina. SCE&G asserts that the
plant operated from 1855 to 1954 and alleges that through control of a subsidiary that owned
the plant UGI Utilities controlled operations of the plant from 1910 to 1926 and is liable
for approximately 25% of the costs associated with the site. SCE&G asserts that it has spent
approximately $22 in remediation costs and paid $26 in third-party claims relating to the
site and estimates that future response costs, including a claim by the United States
Justice Department for natural resource damages, could be as high as $14. Trial took place
in March 2009 and the court’s decision is pending.
|
Frontier Communications Company v. UGI Utilities, Inc. et al. In April 2003, Citizens
Communications Company, now known as Frontier Communications Company (“Frontier”), served a
complaint naming UGI Utilities as a third-party defendant in a civil action pending in the
United States District Court for the District of Maine. In that action, the City of Bangor,
Maine (“City”) sued Frontier to recover environmental response costs associated with MGP
wastes generated at a plant allegedly operated by Frontier’s predecessors at a site on the
Penobscot River. Frontier subsequently joined UGI Utilities and ten other third-party
defendants alleging that the third-party defendants are responsible for an equitable share
of any costs Frontier would be required to pay to the City for cleaning up tar deposits in
the Penobscot River. Frontier alleged that through ownership and control of a subsidiary,
Bangor Gas Light Company, UGI Utilities and its predecessors owned and operated the plant
from 1901 to 1928. Frontier made similar allegations of control against another third-party
defendant, CenterPoint Energy Resources Corporation (“CenterPoint”), whose predecessor owned
the Bangor subsidiary from 1928 to 1944. Frontier’s third-party claims were stayed pending a
resolution of the City’s suit against Frontier, which was tried in September 2005. On June
27, 2006, the court issued an order finding Frontier responsible for 60% of the cleanup
costs, which were estimated at $18. On February 14, 2007, Frontier and the City entered into
a settlement agreement pursuant to which Frontier agreed to pay $7.6. The City’s suit was
dismissed, and Frontier filed the current action against the original third-party
defendants, repeating its claims for contribution. On September 22, 2009, the court granted
summary judgment in favor of co-defendant CenterPoint. UGI Utilities subsequently filed a
motion for summary judgment with respect to Frontier’s claims and the court referred the
motion to a magistrate judge for findings and a recommendation. On October 19, 2010, the
magistrate judge entered an order recommending that the court grant UGI Utilities’ motion.
On November 19, 2010, the court affirmed the recommended decision of the magistrate judge
granting summary judgment in favor of UGI Utilities.
|
Sag Harbor, New York Matter. By letter dated June 24, 2004, KeySpan Energy (“KeySpan”)
informed UGI Utilities that KeySpan has spent $2.3 and expects to spend another $11 to clean
up an MGP site it owns in Sag Harbor, New York. KeySpan believes that UGI Utilities is
responsible for approximately 50% of these costs as a result of UGI Utilities’ alleged
direct ownership and operation of the plant from 1885 to 1902. By letter dated June 6, 2006,
KeySpan reported that the New York Department of Environmental Conservation has approved a
remedy for the site that is estimated to cost approximately
$10. KeySpan believes that the cost could be as high as $20. UGI Utilities is in the process
of reviewing the information provided by KeySpan and is investigating this claim.
|
Yankee Gas Services Company and Connecticut Light and Power Company v. UGI Utilities, Inc.
On September 11, 2006, UGI Utilities received a complaint filed by Yankee Gas Services
Company and Connecticut Light and Power Company, subsidiaries of Northeast Utilities
(together the “Northeast Companies”), in the United States District Court for the District
of Connecticut seeking contribution from UGI Utilities for past and future remediation costs
related to MGP operations on thirteen sites owned by the Northeast Companies in nine cities
in the State of Connecticut. The Northeast Companies allege that UGI Utilities controlled
operations of the plants from 1883 to 1941 through control of former subsidiaries that owned
the MGPs. The Northeast Companies estimated that remediation costs for all of the sites
could total approximately $215 and asserted that UGI Utilities is responsible for
approximately $103 of this amount. The Northeast Companies subsequently withdrew their
claims with respect to three of the sites and UGI Utilities acknowledged that it had
operated one of the sites, Waterbury North, pursuant to a lease. In April 2009, the court
conducted a trial to determine whether UGI Utilities operated any of the nine remaining
sites that were owned and operated by former subsidiaries. On May 22, 2009, the court
granted judgment in favor of UGI Utilities with respect to all nine sites. The Northeast
Companies have appealed the decision. With respect to Waterbury North, the Northeast
Companies are expected to complete additional environmental investigations in early 2011. A
second phase of the trial is scheduled for August 2011 to determine what, if any,
contamination at Waterbury North is related to UGI Utilities’ period of operation. The
Northeast Companies previously estimated that remediation costs at Waterbury North could
total $25.
|
AmeriGas OLP Saranac Lake. By letter dated March 6, 2008, the New York State Department of
Environmental Conservation (“DEC”) notified AmeriGas OLP that DEC had placed property owned
by the Partnership in Saranac Lake, New York on its Registry of Inactive Hazardous Waste
Disposal Sites. A site characterization study performed by DEC disclosed contamination
related to former MGP operations on the site. DEC has classified the site as a significant
threat to public health or environment with further action required. The Partnership has
researched the history of the site and its ownership interest in the site. The Partnership
has reviewed the preliminary site characterization study prepared by the DEC, the extent of
contamination and the possible existence of other potentially responsible parties. The
Partnership has communicated the results of its research to DEC and is awaiting a response
before doing any additional investigation. Because of the preliminary nature of available
environmental information, the ultimate amount of expected clean up costs cannot be
reasonably estimated.
|
Other Matters
|
Purported AmeriGas Class Action Lawsuits. On May 27, 2009, the General Partner was named as
a defendant in a purported class action lawsuit in the Superior Court of the State of
California in which plaintiffs are challenging AmeriGas OLP’s weight disclosure with regard
to its portable propane grill cylinders. The complaint purports to be brought on behalf of a
class of all consumers in the state of California during the four years prior to
the date of the California complaint, who exchanged an empty cylinder and were provided with
what is alleged to be only a partially filled cylinder. The plaintiffs seek restitution,
injunctive relief, interest, costs, attorneys’ fees and other appropriate relief.
|
Since that initial suit, various AmeriGas entities have been named in more than a dozen
similar suits that have been filed in various courts throughout the United States. These
complaints purport to be brought on behalf of nationwide classes, which are loosely defined
as including all purchasers of liquefied propane gas cylinders marketed or sold by AmeriGas
OLP and another unaffiliated entity nationwide. The complaints claim that defendants’
conduct constituted unfair and deceptive practices that injured consumers and violated the
consumer protection statutes of at least thirty-seven states and the District of Columbia,
thereby entitling the class to damages, restitution, disgorgement, injunctive relief, costs
and attorneys’ fees. Some of the complaints also allege violation of state “slack filling”
laws. Additionally, the complaints allege that defendants were unjustly enriched by their
conduct and they seek restitution of any unjust benefits received, punitive or treble
damages, and pre-judgment and post-judgment interest. A motion to consolidate the purported
class action lawsuits was heard by the Multidistrict Litigation Panel (“MDL Panel”) on
September 24, 2009 in the United States District Court for the District of Kansas. By Order,
dated October 6, 2009, the MDL Panel transferred the pending cases to the United States
District Court for the Western District of Missouri. The AmeriGas entities named in the
consolidated class action lawsuits have entered into a settlement agreement with the class.
On May 19, 2010, the United States District Court for the District of Kansas granted the
classes’ motion seeking preliminary approval of the settlement. On October 4, 2010, after
the expiration of the time in which claims were, or could have been, made by the class
members, the District Court ruled that the settlement was fair, reasonable and adequate to
the class and granted final approval of the settlement. Two parties have appealed that final
order and the matter is now awaiting review by the 8th Circuit Court of Appeals.
|
AmeriGas Cylinder Investigations. On or about October 21, 2009, the General Partner received
a notice that the Offices of the District Attorneys of Santa Clara, Sonoma, Ventura, San
Joaquin and Fresno Counties and the City Attorney of San Diego have commenced an
investigation into AmeriGas OLP’s cylinder labeling and filling practices in California and
issued an administrative subpoena seeking documents and information relating to these
practices. We have responded to the administrative subpoena, but have had no further requests from the District Attorneys since that initial inquiry.
|
Swiger, et al. v. UGI/AmeriGas, Inc. et al. In 1996, a fire occurred at the residence of
Samuel and Brenda Swiger (the “Swigers”) when propane that leaked from an underground line
ignited. In July 1998, the Swigers filed a class action lawsuit against AmeriGas Propane,
L.P. (named incorrectly as “UGI/AmeriGas, Inc.”), in the Circuit Court of Monongalia County,
West Virginia, in which they sought to recover an unspecified amount of compensatory and
punitive damages and attorney’s fees, for themselves and on behalf of persons in West
Virginia for whom the defendants had installed propane gas lines, resulting from the
defendants’ alleged failure to install underground propane lines at depths required by
applicable safety standards. On
December 14, 2010, AmeriGas OLP and its affiliates entered into a settlement agreement with
the class, which was preliminarily approved by the Circuit Court of Monongalia County on
January 13, 2011.
|
|
10. |
Equity
|
UGI Shareholders | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Non- | Comprehensive | |||||||||||||||||||||||
controlling | Common | Retained | Income | Treasury | Total | |||||||||||||||||||
Interests | Stock | Earnings | (Loss) | Stock | Equity | |||||||||||||||||||
|
||||||||||||||||||||||||
Three Months Ended December 31, 2010:
|
||||||||||||||||||||||||
Balance September 30, 2010
|
$ | 237.1 | $ | 906.1 | $ | 966.7 | $ | (10.1 | ) | $ | (38.2 | ) | $ | 2,061.6 | ||||||||||
Net income
|
41.9 | 113.1 | 155.0 | |||||||||||||||||||||
Net gains on derivative instruments
|
7.2 | 18.7 | 25.9 | |||||||||||||||||||||
Reclassifications of net (gains)
losses on derivative instruments
|
(2.4 | ) | 16.1 | 13.7 | ||||||||||||||||||||
Benefit plans
|
2.2 | 2.2 | ||||||||||||||||||||||
Foreign currency translation
adjustments
|
(12.1 | ) | (12.1 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||
Comprehensive income
|
46.7 | 113.1 | 24.9 | 184.7 | ||||||||||||||||||||
Dividends and distributions
|
(22.8 | ) | (27.8 | ) | (50.6 | ) | ||||||||||||||||||
Equity transactions
|
0.4 | 10.2 | 3.9 | 14.5 | ||||||||||||||||||||
Other
|
(0.4 | ) | (0.4 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||
Balance December 31, 2010
|
$ | 261.0 | $ | 916.3 | $ | 1,052.0 | $ | 14.8 | $ | (34.3 | ) | $ | 2,209.8 | |||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Three Months Ended December 31, 2009:
|
||||||||||||||||||||||||
Balance September 30, 2009
|
$ | 225.4 | $ | 875.6 | $ | 804.3 | $ | (38.9 | ) | $ | (49.6 | ) | $ | 1,816.8 | ||||||||||
Net income
|
47.1 | 98.4 | 145.5 | |||||||||||||||||||||
Net gains on derivative instruments
|
24.8 | 0.2 | 25.0 | |||||||||||||||||||||
Reclassifications of net (gains) losses on
derivative instruments
|
(4.7 | ) | 15.7 | 11.0 | ||||||||||||||||||||
Benefit plans
|
0.8 | 0.8 | ||||||||||||||||||||||
Foreign currency translation
adjustments
|
(5.6 | ) | (5.6 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||
Comprehensive income
|
67.2 | 98.4 | 11.1 | 176.7 | ||||||||||||||||||||
Dividends and distributions
|
(21.7 | ) | (21.9 | ) | (43.6 | ) | ||||||||||||||||||
Equity transactions
|
0.2 | 2.2 | 0.6 | 3.0 | ||||||||||||||||||||
Other
|
(0.5 | ) | (0.5 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||
Balance December 31, 2009
|
$ | 270.6 | $ | 877.8 | $ | 880.8 | $ | (27.8 | ) | $ | (49.0 | ) | $ | 1,952.4 | ||||||||||
|
|
11. |
Fair Value Measurement
|
Asset (Liability) | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | |||||||||||||||
Identical Assets | Observable | Unobservable | ||||||||||||||
and Liabilities | Inputs | Inputs | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
December 31, 2010:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Derivative financial instruments:
|
||||||||||||||||
Commodity contracts
|
$ | 2.9 | $ | 18.0 | $ | — | $ | 20.9 | ||||||||
Foreign currency contracts
|
$ | — | $ | 2.8 | $ | — | $ | 2.8 | ||||||||
Interest rate contracts
|
$ | — | $ | 7.2 | $ | — | $ | 7.2 | ||||||||
Liabilities:
|
||||||||||||||||
Derivative financial instruments:
|
||||||||||||||||
Commodity contracts
|
$ | (22.3 | ) | $ | (12.0 | ) | $ | — | $ | (34.3 | ) | |||||
Foreign currency contracts
|
$ | — | $ | (0.9 | ) | $ | — | $ | (0.9 | ) | ||||||
Interest rate contracts
|
$ | — | $ | (8.0 | ) | $ | — | $ | (8.0 | ) | ||||||
|
||||||||||||||||
September 30, 2010:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Derivative financial instruments:
|
||||||||||||||||
Commodity contracts
|
$ | 1.1 | $ | 10.7 | $ | — | $ | 11.8 | ||||||||
Foreign currency contracts
|
$ | — | $ | 0.8 | $ | — | $ | 0.8 | ||||||||
Liabilities:
|
||||||||||||||||
Derivative financial instruments:
|
||||||||||||||||
Commodity contracts
|
$ | (49.4 | ) | $ | (20.3 | ) | $ | — | $ | (69.7 | ) | |||||
Foreign currency contracts
|
$ | — | $ | (2.9 | ) | $ | — | $ | (2.9 | ) | ||||||
Interest rate contracts
|
$ | — | $ | (18.5 | ) | $ | — | $ | (18.5 | ) | ||||||
|
||||||||||||||||
December 31, 2009:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Derivative financial instruments:
|
||||||||||||||||
Commodity contracts
|
$ | 0.6 | $ | 42.0 | $ | — | $ | 42.6 | ||||||||
Foreign currency contracts
|
$ | — | $ | 0.7 | $ | — | $ | 0.7 | ||||||||
Interest rate contracts
|
$ | — | $ | 3.9 | $ | — | $ | 3.9 | ||||||||
Liabilities:
|
||||||||||||||||
Derivative financial instruments:
|
||||||||||||||||
Commodity contracts
|
$ | (8.9 | ) | $ | (1.7 | ) | $ | — | $ | (10.6 | ) | |||||
Foreign currency contracts
|
$ | — | $ | (3.1 | ) | $ | — | $ | (3.1 | ) | ||||||
Interest rate contracts
|
$ | — | $ | (29.0 | ) | $ | — | $ | (29.0 | ) |
|
12. |
Disclosures About Derivative Instruments and Hedging Activities
|
Volumes | ||||||||
Commodity | 2010 | 2009 | ||||||
|
||||||||
LPG (millions of gallons)
|
123.7 | 95.0 | ||||||
Natural gas (millions of dekatherms)
|
34.3 | 22.4 | ||||||
Electricity (millions of kilowatt-hours)
|
1,612.7 | 484.5 |
Derivative Assets | Derivative (Liabilities) | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Balance Sheet | December 31, | Balance Sheet | December 31, | |||||||||||||||||
Location | 2010 | 2009 | Location | 2010 | 2009 | |||||||||||||||
Derivatives Designated as Hedging Instruments:
|
||||||||||||||||||||
Commodity contracts
|
Derivative financial instruments and Other assets | $ | 16.6 | $ | 40.3 | Derivative financial instruments and Other noncurrent liabilities | $ | (20.9 | ) | $ | (10.5 | ) | ||||||||
Foreign currency contracts
|
Derivative financial instruments | 2.8 | 0.7 | Derivative financial instruments and Other noncurrent liabilities | (0.9 | ) | (3.1 | ) | ||||||||||||
Interest rate contracts
|
Other assets | 7.2 | 3.9 | Derivative financial instruments and Other noncurrent liabilities | (8.0 | ) | (29.0 | ) | ||||||||||||
|
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Total Derivatives Designated as Hedging Instruments
|
$ | 26.6 | $ | 44.9 | $ | (29.8 | ) | $ | (42.6 | ) | ||||||||||
|
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|
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Derivatives Accounted for under ASC 980:
|
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|
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Commodity contracts
|
Derivative financial instruments | $ | 2.6 | $ | 0.6 | Derivative financial instruments and Other noncurrent liabilities | $ | (13.4 | ) | $ | (0.1 | ) | ||||||||
|
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Derivatives Not Designated as Hedging Instruments:
|
||||||||||||||||||||
Commodity contracts
|
Derivative financial instruments | $ | 1.7 | $ | 1.7 | |||||||||||||||
|
||||||||||||||||||||
|
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Total Derivatives
|
$ | 30.9 | $ | 47.2 | $ | (43.2 | ) | $ | (42.7 | ) | ||||||||||
|
Gain | Gain (Loss) | Location of | ||||||||||||||||||
Recognized in | Reclassified from | Gain (Loss) | ||||||||||||||||||
AOCI and | AOCI and Noncontrolling | Reclassified from | ||||||||||||||||||
Noncontrolling Interests | Interests into Income | AOCI and Noncontrolling | ||||||||||||||||||
2010 | 2009 | 2010 | 2009 | Interests into Income | ||||||||||||||||
Cash Flow
|
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Hedges:
|
||||||||||||||||||||
Commodity contracts
|
$ | 19.9 | $ | 28.6 | $ | (20.0 | ) | $ | (17.7 | ) | Cost of sales |
|||||||||
Foreign currency contracts
|
2.9 | 2.6 | (1.0 | ) | 0.3 | Cost of sales |
||||||||||||||
Interest rate contracts
|
14.4 | 5.3 | (3.7 | ) | (4.4 | ) | Interest expense |
|||||||||||||
|
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Total
|
$ | 37.2 | $ | 36.5 | $ | (24.7 | ) | $ | (21.8 | ) | ||||||||||
|
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|
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Net Investment
|
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Hedges:
|
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|
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Foreign currency contracts
|
$ | 0.5 | $ | 1.0 | ||||||||||||||||
|
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Gain (Loss) | ||||||||||||||||||||
Recognized in Income | Location of Gain (Loss) | |||||||||||||||||||
2010 | 2009 | Recognized in Income | ||||||||||||||||||
Derivatives Not
Designated as Hedging
Instruments:
|
||||||||||||||||||||
Commodity contracts
|
$ | (0.1 | ) | $ | 0.5 | Cost of sales |
||||||||||||||
Commodity contracts
|
0.2 | 0.2 | Operating expenses / other income |
|||||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 0.1 | $ | 0.7 | ||||||||||||||||
|
|
13. |
Inventories
|
December 31, | September 30, | December 31, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
Non-utility LPG and natural gas
|
$ | 234.7 | $ | 157.9 | $ | 166.9 | ||||||
Gas Utility natural gas
|
100.1 | 111.5 | 170.2 | |||||||||
Materials, supplies and other
|
52.5 | 44.6 | 50.3 | |||||||||
|
||||||||||||
Total inventories
|
$ | 387.3 | $ | 314.0 | $ | 387.4 | ||||||
|
|
14. |
Subsequent Event – Partnership Debt Refinancing
|