UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-13692

AMERIGAS PARTNERS, L.P.

(Exact name of registrant as specified in its charters)

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)

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 þ No o

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 þ No o

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

At April 30, 2011 there were 57,124,296 Common Units of AmeriGas Partners, L.P. outstanding.

 

 

AMERIGAS PARTNERS, L.P.

TABLE OF CONTENTS

			PAGES
Part I Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2011, September 30, 2011 and March 31, 2010			1
Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2011 and 2010			2
Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2011 and 2010			3
Condensed Consolidated Statements of Partners’ Capital for the six months ended March 31, 2011 and 2010			4
Notes to Condensed Consolidated Financial Statements			5 – 17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18 – 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			26 – 27
Item 4. Controls and Procedures			28
Part II Other Information
Item 1A. Risk Factors			28
Item 6. Exhibits			29
Signatures			30
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

AMERIGAS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)

		March 31,				September 30,				March 31,
		2011				2010				2010
ASSETS
Current assets:
Cash and cash equivalents		$	35,396			$	7,726			$	9,852
Accounts receivable (less allowances for doubtful accounts of $17,713 $15,290 and $17,053, respectively)			326,858				172,708				302,516
Accounts receivable — related parties			2,881				7,039				6,833
Inventories			122,651				114,122				115,806
Derivative financial instruments			11,278				7,478				7,932
Prepaid expenses and other current assets			13,756				16,785				14,053
Total current assets			512,820				325,858				456,992
Property, plant and equipment (less accumulated depreciation and amortization of $904,158, $867,250 and $839,475, respectively)			651,283				642,778				636,949
Goodwill			689,523				678,721				666,510
Intangible assets, net			42,827				37,590				32,913
Other assets			16,257				11,272				11,943
Total assets		$	1,912,710			$	1,696,219			$	1,805,307
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current maturities of long-term debt		$	5,473			$	20,123			$	82,787
Bank loans			194,000				91,000				23,000
Accounts payable — trade			183,726				130,575				152,285
Accounts payable — related parties			17				2,352				3,210
Customer deposits and advances			34,833				86,154				38,401
Derivative financial instruments			—				—				16,977
Other current liabilities			98,568				130,058				104,813
Total current liabilities			516,617				460,262				421,473
Long-term debt			829,386				771,279				784,369
Other noncurrent liabilities			56,289				71,792				69,713
Total liabilities			1,402,292				1,303,333				1,275,555
Commitments and contingencies (note 6)
Partners’ capital:
AmeriGas Partners, L.P. partners’ capital:
Common unitholders (units issued - 57,124,296, 57,088,509 and 57,088,509, respectively)			481,270				372,220				507,077
General partner			4,866				3,751				5,116
Accumulated other comprehensive income			10,767				4,877				4,169
Total AmeriGas Partners, L.P. partners’ capital			496,903				380,848				516,362
Noncontrolling interest			13,515				12,038				13,390
Total partners’ capital			510,418				392,886				529,752
Total liabilities and partners’ capital		$	1,912,710			$	1,696,219			$	1,805,307

See accompanying notes to condensed consolidated financial statements.

AMERIGAS PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Thousands of dollars, except per unit amounts)

		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2011				2010				2011				2010
Revenues:
Propane		$	859,595			$	845,043			$	1,513,407			$	1,459,401
Other			47,181				41,058				93,589				83,295
			906,776				886,101				1,606,996				1,542,696
Costs and expenses:
Cost of sales — propane (excluding depreciation shown below)			551,709				529,393				972,409				904,842
Cost of sales — other (excluding depreciation shown below)			13,085				10,344				27,690				24,464
Operating and administrative expenses			170,472				166,096				326,900				312,910
Depreciation			20,346				19,931				40,418				39,914
Amortization			2,858				1,907				5,453				3,305
Other expense (income), net			(6,320	)			5,182				(12,075	)			1,399
			752,150				732,853				1,360,795				1,286,834
Operating income			154,626				153,248				246,201				255,862
Loss on extinguishment of debt			(18,801	)			—				(18,801	)			—
Interest expense			(16,347	)			(16,710	)			(31,722	)			(33,203	)
Income before income taxes			119,478				136,538				195,678				222,659
Income tax benefit (expense)			71				(549	)			(348	)			(1,716	)
Net income			119,549				135,989				195,330				220,943
Less: net income attributable to noncontrolling interest			(1,547	)			(1,506	)			(2,460	)			(2,501	)
Net income attributable to AmeriGas Partners, L.P.		$	118,002			$	134,483			$	192,870			$	218,442
General partner’s interest in net income attributable to AmeriGas Partners, L.P.		$	2,133			$	1,913			$	3,834			$	3,319
Limited partners’ interest in net income attributable to AmeriGas Partners, L.P.		$	115,869			$	132,570			$	189,036			$	215,123
Income per limited partner unit — basic and diluted (note 2)
Basic		$	1.45			$	1.59			$	2.51			$	2.74
Diluted		$	1.45			$	1.59			$	2.51			$	2.74
Average limited partner units outstanding (thousands):
Basic			57,128				57,077				57,109				57,066
Diluted			57,175				57,124				57,159				57,114

See accompanying notes to condensed consolidated financial statements.

AMERIGAS PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Thousands of dollars)

		Six Months Ended
		March 31,
		2011				2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	195,330			$	220,943
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			45,871				43,219
Provision for uncollectible accounts			6,821				7,503
Loss on interest rate hedges			—				12,193
Net change in realized gains and losses deferred as cash flow hedges			2,565				4,020
Loss on extinguishment of debt			18,801				—
Other, net			152				161
Net change in:
Accounts receivable			(155,823	)			(173,986	)
Inventories			(7,742	)			(27,480	)
Accounts payable			50,815				38,201
Other current assets			3,031				(1,645	)
Other current liabilities			(98,742	)			(65,368	)
Net cash provided by operating activities			61,079				57,761
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment			(40,614	)			(45,384	)
Proceeds from disposals of assets			1,695				2,554
Acquisitions of businesses, net of cash acquired			(25,419	)			(7,259	)
Net cash used by investing activities			(64,338	)			(50,089	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions			(83,259	)			(78,395	)
Noncontrolling interest activity			(1,040	)			(1,087	)
Increase in bank loans			103,000				23,000
Issuance of long-term debt			461,980				—
Repayment of long-term debt			(450,386	)			(1,134	)
Proceeds associated with equity-based compensation plans, net of tax withheld			616				566
Capital contributions from General Partner			18				17
Net cash provided (used) by financing activities			30,929				(57,033	)
Cash and cash equivalents increase (decrease)		$	27,670			$	(49,361	)
CASH AND CASH EQUIVALENTS:
End of period		$	35,396			$	9,852
Beginning of period			7,726				59,213
Increase (decrease)		$	27,670			$	(49,361	)

See accompanying notes to condensed consolidated financial statements.

AMERIGAS PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(unaudited)
(Thousands of dollars, except unit data)

														Accumulated				Total
														other				AmeriGas								Total
		Number of				Common				General				comprehensive				Partners, L.P.				Noncontrolling				partners’
		Common Units				unitholders				partner				income (loss)				partners’ capital				interest				capital
For the six months ended March 31, 2011:
Balance September 30, 2010			57,088,509			$	372,220			$	3,751			$	4,877			$	380,848			$	12,038			$	392,886
Net income							189,036				3,834								192,870				2,460				195,330
Net gains on derivative instruments															25,022				25,022				255				25,277
Reclassification of net gains on derivative instruments															(19,132	)			(19,132	)			(198	)			(19,330	)
Comprehensive income							189,036				3,834				5,890				198,760				2,517				201,277
Distributions							(80,522	)			(2,737	)							(83,259	)			(1,137	)			(84,396	)
Unit-based compensation expense							1,108				—								1,108				—				1,108
Common Units issued in connection with incentive compensation plans, net of tax withheld			35,787				(572	)			18								(554	)							(554	)
General Partner contribution to AmeriGas Propane, L.P.																							97				97
Balance March 31, 2011			57,124,296			$	481,270			$	4,866			$	10,767			$	496,903			$	13,515			$	510,418

														Accumulated				Total
														other				AmeriGas								Total
		Number of				Common				General				comprehensive				Partners, L.P.				Noncontrolling				partners’
		Common Units				unitholders				partner				income (loss)				partners’ capital				interest				capital
For the six months ended March 31, 2010:
Balance September 30, 2009			57,046,388			$	367,708			$	3,698			$	(6,947	)		$	364,459			$	11,866			$	376,325
Net income							215,123				3,319								218,442				2,501				220,943
Net gains on derivative instruments															32,393				32,393				330				32,723
Reclassification of net gains on derivative instruments															(21,277	)			(21,277	)			(220	)			(21,497	)
Comprehensive income							215,123				3,319				11,116				229,558				2,611				232,169
Distributions							(76,476	)			(1,918	)							(78,394	)			(1,087	)			(79,481	)
Unit-based compensation expense							1,073				—								1,073				—				1,073
Common Units issued in connection with incentive compensation plans, net of tax withheld			42,121				(351	)			17								(334	)							(334	)
Balance March 31, 2010			57,088,509			$	507,077			$	5,116			$	4,169			$	516,362			$	13,390			$	529,752

See accompanying notes to condensed consolidated financial statements.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

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”) and prior to its merger with AmeriGas OLP on October 1, 2010 (“the Merger”), AmeriGas OLP’s subsidiary, AmeriGas Eagle Propane, L.P. (“Eagle OLP”). AmeriGas Partners and AmeriGas OLP are Delaware limited partnerships. AmeriGas OLP subsequent to the Merger, and AmeriGas OLP and Eagle OLP collectively prior to the Merger, are referred to herein as “the Operating Partnership.” 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 March 31, 2011, AmeriGas Propane, Inc. (the “General Partner”), an indirect wholly owned subsidiary of UGI Corporation (“UGI”), held a 1% general partner interest in AmeriGas Partners and a 1.01% general partner interest in AmeriGas OLP. The General Partner and its wholly owned subsidiary Petrolane Incorporated (“Petrolane,” a predecessor company of the Partnership) also owned 24,691,209 AmeriGas Partners Common Units (“Common Units”). The remaining 32,433,087 Common Units are publicly held. The Common Units represent limited partner interests in AmeriGas Partners.

AmeriGas Partners holds a 99% limited partner interest in AmeriGas OLP. Through September 30, 2010, AmeriGas OLP, indirectly through subsidiaries, owned an effective 0.1% general partner interest and a direct approximate 99.9% limited partner interest in Eagle OLP.

AmeriGas Partners and the Operating Partnership have no employees. Employees of the General Partner conduct, direct and manage our operations. Prior to the Merger, the General Partner provided management and administrative services to AmeriGas Eagle Holdings, Inc. (“AEH”), the general partner of Eagle OLP, under a management services agreement. The General Partner is reimbursed monthly for all direct and indirect expenses it incurs on our behalf (see Note 4).

2.

Significant Accounting Policies

The condensed consolidated financial statements include the accounts of AmeriGas Partners and its majority-owned subsidiaries principally comprising AmeriGas OLP and, prior to the Merger, Eagle OLP. 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 a noncontrolling interest in the condensed consolidated financial statements.

AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp. are wholly owned finance subsidiaries of AmeriGas Partners. Their sole purpose is to serve as co-obligors for debt securities issued by AmeriGas Partners.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

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. Weather significantly impacts demand for propane and profitability because many customers use propane for heating purposes. Due to the seasonal nature of the Partnership’s propane business, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

Allocation of Net Income Attributable to AmeriGas Partners. 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 Fourth Amended and Restated Agreement of Limited Partnership of AmeriGas Partners (“Partnership Agreement”).

Net Income Per Unit. Income per limited partner unit is computed in accordance with GAAP regarding the application of the two-class method for determining income 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).

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

The following table sets forth the numerators and denominators of the basic and diluted income per limited partner unit computations:

		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2011				2010				2011				2010
Common Unitholders’ interest in net income attributable to AmeriGas Partners under the two-class method for MLPs		$	82,631			$	90,942			$	143,463			$	156,350
Weighted average Common Units outstanding — basic (thousands)			57,128				57,077				57,109				57,066
Potentially dilutive Common Units (thousands)			47				47				50				48
Weighted average Common Units outstanding — diluted (thousands)			57,175				57,124				57,159				57,114

Theoretical distributions of net income attributable to AmeriGas Partners, L.P. in accordance with the two-class method for the three months ended March 31, 2011 and 2010 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 $0.58 and $0.73, respectively. Theoretical distributions of net income attributable to AmeriGas Partners, L.P. in accordance with the two-class method for the six months ended March 31, 2011 and 2010 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 $0.80 and $1.03, respectively.

Potentially dilutive Common Units included in the diluted limited partner units outstanding computation reflect the effects of restricted Common Unit awards granted under the General Partner’s incentive compensation plans.

Comprehensive Income. Comprehensive income comprises net income and other comprehensive income (loss). Other comprehensive income (loss) results from gains and losses on derivative instruments qualifying as cash flow hedges, net of reclassifications of net gains and losses to net income.

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.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

3.

Intangible Assets

The Partnership’s goodwill and intangible assets comprise the following:

		March 31,				September 30,				March 31,
		2011				2010				2010
Subject to amortization:
Customer relationships and noncompete agreements		$	74,199			$	65,203			$	59,768
Accumulated amortization			(31,372	)			(27,613	)			(26,855	)
		$	42,827			$	37,590			$	32,913
Not subject to amortization:
Goodwill		$	689,523			$	678,721			$	666,510

The increase in goodwill and other intangible assets during the six months ended March 31, 2011 reflects the effects of acquisitions. Amortization expense of intangible assets was $1,985 and $1,492 for the three months ended March 31, 2011 and 2010, respectively. Amortization expense of intangible assets was $3,755 and $2,885 for the six months ended March 31, 2011 and 2010, respectively. No amortization is included in cost of sales in the Condensed Consolidated Statements of Operations. Our expected aggregate amortization expense of intangible assets for the next five fiscal years is as follows: Fiscal 2011 — $7,868; Fiscal 2012 — $8,210; Fiscal 2013 — $7,626; Fiscal 2014 — $6,631; Fiscal 2015 — $4,829.

4.

Related Party Transactions

Pursuant to the Partnership Agreement and a Management Services Agreement between AmeriGas Eagle Holdings, Inc., the general partner of Eagle OLP prior to the Merger, and the General Partner, the General Partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of the Partnership. These costs which totaled $102,485 and $196,193 for the three and six months ended March 31, 2011, respectively, and $97,634 and $188,129 for the three and six months ended March 31, 2010, respectively, 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 $5,187 and $7,804 during the three and six months ended March 31, 2011, respectively, and $4,668 and $5,872 during the three and six months ended March 31, 2010, respectively. 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 $783 and $1,568 for the three and six months ended March 31, 2011, respectively, and $627 and $1,436 for the three and six months ended March 31, 2010, respectively.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

AmeriGas OLP purchases propane from Atlantic Energy, LLC (“Atlantic Energy”), a former subsidiary of UGI Energy Services, Inc. (“Energy Services”), a subsidiary of UGI, pursuant to a propane sales agreement (“Product Sales Agreement”) expiring on April 2015, whereby Atlantic Energy has agreed to sell and AmeriGas OLP has agreed to purchase a specified amount of propane annually at a terminal located in Chesapeake, Virginia. The price to be paid for product purchased under the agreement is determined annually using a contractual formula that takes into account published index prices and the locational value of deliveries at the terminal. On July 30, 2010, Energy Services sold its interest in Atlantic Energy. In addition, from time to time, AmeriGas OLP purchases propane on an as needed basis from Energy Services. The prices of the purchases are generally based on market price at the time of purchase. Purchases of propane by AmeriGas OLP from Energy Services and Atlantic Energy (through the date of its sale) totaled $2,633 and $4,073 during the three and six months ended March 31, 2011, respectively, and $23,973 and $33,756 during the three and six months ended March 31, 2010, respectively. The sale of the terminal did not affect the terms of the Product Sales Agreement.

The Partnership also sells propane to other affiliates of UGI. Such amounts were not material during the periods presented.

5.

Debt

During the three months ended March 31, 2011, AmeriGas Partners issued $470,000 principal amount of 6.50% Senior Notes due 2021. The proceeds from the issuance of the 6.50% Senior Notes were used to repay AmeriGas Partners’ $415,000 7.25% Senior Notes due May 15, 2015 pursuant to a January 5, 2011 tender offer and subsequent redemption. The 6.50% Senior Notes due 2021 rank pari passu with AmeriGas Partners’ outstanding senior debt. In addition, during the three months ended March 31, 2011, AmeriGas Partners redeemed the outstanding $14,640 principal amount of its 8.875% Senior Notes due May 2011. The Partnership incurred a loss of $18,801 on these early extinguishments of debt which amount is reflected on the Condensed Consolidated Statements of Operations under the caption “Loss on extinguishment of debt.” The loss reduced net income attributable to AmeriGas Partners, L.P. by $18,801 during the three and six months ended March 31, 2011.

6.

Commitments and Contingencies

Environmental Matters

By letter dated March 6, 2008, the New York State Department of Environmental Conservation (“DEC”) notified AmeriGas OLP that DEC had placed property owned by the Partnership in Saranac Lake, New York on its Registry of Inactive Hazardous Waste Disposal Sites. A site characterization study performed by DEC disclosed contamination related to former manufactured gas plant (“MGP”) operations on the site. DEC has classified the site as a significant threat to public health or environment with further action required. The Partnership has researched the history of the site and its ownership interest in the site. The Partnership has reviewed the preliminary site characterization study prepared by the DEC, the extent of the contamination, and the possible existence of other potentially responsible parties. The Partnership has communicated the results of its research to DEC and is awaiting a response before doing any additional investigation. Because of the preliminary nature of available environmental information, the ultimate amount of expected clean up costs cannot be reasonably estimated.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

Other Matters

On May 27, 2009, the General Partner was named as a defendant in a purported class action lawsuit in the Superior Court of the State of California in which plaintiffs challenged AmeriGas OLP’s weight disclosure with regard to its portable propane grill cylinders. After that initial suit, various AmeriGas entities were named in more than a dozen similar suits that were filed in various courts throughout the United States. All of those cases were consolidated and transferred to the United States District Court for the Western District of Missouri. On May 19, 2010, the Court granted the class’ motion seeking preliminary approval of the parties’ settlement. On October 4, 2010, the Court ruled that the settlement was fair, reasonable and adequate to the class and granted final approval of the settlement.

On or about October 21, 2009, the General Partner received a notice that the Offices of the District Attorneys of Santa Clara, Sonoma, Ventura, San Joaquin and Fresno Counties and the City Attorney of San Diego have commenced an investigation into AmeriGas OLP’s cylinder labeling and filling practices in California and issued an administrative subpoena seeking documents and information relating to those practices. We have responded to the administrative subpoena, but have had no further requests from the District Attorneys since the initial inquiry.

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.

In 2005, the Swigers also filed what purports to be a class action in the Circuit Court of Harrison County, West Virginia against UGI, an insurance subsidiary of UGI, certain officers of UGI and the General Partner, and their insurance carriers and insurance adjusters. In the Harrison County lawsuit, the Swigers are seeking compensatory and punitive damages on behalf of the putative class for alleged violations of the West Virginia Insurance Unfair Trade Practice Act, negligence, intentional misconduct, and civil conspiracy. The Swigers have also requested that the Court rule that insurance coverage exists under the policies issued by the defendant insurance companies for damages sustained by the members of the class in the Monongalia County lawsuit. The Circuit Court of Harrison County has not certified the class in the Harrison County lawsuit at this time and, in October 2008, stayed that lawsuit pending resolution of the class action lawsuit in Monongalia County. We believe we have good defenses to the claims in this action.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

We cannot predict with certainty the final results of any of the environmental or other pending claims or legal actions described above. However, it is reasonably possible that some of them could be resolved unfavorably to us and result in losses in excess of recorded amounts. We are unable to estimate any possible losses in excess of recorded amounts. Although we currently believe, after consultation with counsel, that damages or settlements, if any, recovered by the plaintiffs in such claims or actions will not have a material adverse effect on our financial position, damages or settlements could be material to our operating results or cash flows in future periods depending on the nature and timing of future developments with respect to these matters and the amounts of future operating results and cash flows. In addition to the matters described above, there are other pending claims and legal actions arising in the normal course of our businesses. While the results of these other pending claims and legal actions cannot be predicted with certainty, we believe, after consultation with counsel, the final outcome of such other matters will not have a significant effect on our consolidated financial position, results of operations or cash flows.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

7.

Fair Value Measurement

Derivative Financial Instruments

The following table presents our financial assets and financial liabilities that are measured at fair value on a recurring basis for each of the fair value hierarchy levels, including both current and noncurrent portions, as of March 31, 2011, September 30, 2010 and March 31, 2010:

		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
March 31, 2011:
Assets:
Derivative financial instruments:
Commodity contracts		$	—			$	11,407			$	—			$	11,407
September 30, 2010:
Assets:
Derivative financial instruments:
Commodity contracts		$	—			$	8,025			$	—			$	8,025
March 31, 2010:
Assets:
Derivative financial instruments:
Commodity contracts		$	—			$	5,122			$	—			$	5,122
Interest rate contracts		$	—			$	2,834			$	—			$	2,834
Liabilities:
Derivative financial instruments:
Commodity contracts		$	—			$	—			$	—			$	—
Interest rate contracts		$	—			$	(16,977	)		$	—			$	(16,977	)

The fair values of our non-exchange traded commodity derivative contracts are based upon indicative price quotations available through brokers, industry price publications or recent market transactions and related market indicators. For commodity option contracts we use a Black Scholes option pricing model that considers time value and volatility of the underlying commodity. The fair values of interest rate contracts are based upon third-party quotes or indicative values based on recent market transactions.

Other Financial Instruments

The carrying amounts of financial instruments included in current assets and current liabilities (excluding unsettled derivative instruments and current maturities of long-term debt) approximate their fair values because of their short-term nature. The carrying amount and estimated fair value of our long-term debt at March 31, 2011 were $834,859 and $861,209, respectively. The carrying amount and estimated fair value of our long-term debt at March 31, 2010 were $867,156 and $874,106, 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.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

We have financial instruments such as short-term investments and trade accounts receivable which could expose us to concentrations of credit risk. We limit our credit risk from short-term investments by investing only in investment-grade commercial paper and U.S. Government securities. The credit risk from trade accounts receivable is limited because we have a large customer base which extends across many different U.S. markets.

8.

Disclosures About Derivative Instruments and Hedging Activities

The Partnership is exposed to certain market risks related to its ongoing business operations. Management uses derivative financial and commodity instruments, among other things, to manage these risks. The primary risks managed by derivative instruments are commodity price risk and interest rate risk. Although we use derivative financial and commodity instruments to reduce market risk associated with forecasted transactions, we do not use derivative financial and commodity instruments for speculative or trading purposes. The use of derivative instruments is controlled by our risk management and credit policies which govern, among other things, the derivative instruments the Partnership can use, counterparty credit limits and contract authorization limits. Because our derivative instruments generally qualify as hedges under GAAP, we expect that changes in the fair value of derivative instruments used to manage commodity or interest rate market risk would be substantially offset by gains or losses on the associated anticipated transactions.

Commodity Price Risk

In order to manage market risk associated with the Partnership’s fixed-price programs which permit customers to lock in the prices they pay for propane principally during the months of October through March, the Partnership uses over-the-counter derivative commodity instruments, principally price swap contracts. At March 31, 2011 and 2010 there were 46.5 million gallons and 71.2 million gallons, respectively, of propane hedged with over-the-counter price swap and option contracts. At March 31, 2011, the maximum period over which we are hedging propane market price risk is 18 months with a weighted average of 3 months. In addition, the Partnership from time to time enters into price swap agreements to reduce short-term commodity price volatility and to provide market price risk support to a limited number of its wholesale customers. These agreements are not designated as hedges for accounting purposes and the volumes of propane subject to these agreements were not material.

We account for substantially all of our commodity price risk contracts as cash flow hedges. Changes in the fair values of contracts qualifying for cash flow hedge accounting are recorded in accumulated other comprehensive income ("AOCI") and noncontrolling interests, to the extent effective in offsetting changes in the underlying commodity price risk, until earnings are affected by the hedged item. At March 31, 2011, the amount of net gains associated with commodity price risk hedges expected to be reclassified into earnings during the next twelve months based upon current fair values is $13,522.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

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. Changes in the fair values of IRPAs are recorded in AOCI to the extent effective in offsetting changes in the underlying interest rate risk, until earnings are affected by the hedged interest expense. There are no unsettled IRPAs outstanding at March 31, 2011. The amount of net losses associated with IRPAs expected to be reclassified into earnings during the next twelve months is $538.

As previously disclosed, during the three months ended March 31, 2010, the Partnership’s management determined that it was likely that it would not issue $150,000 of long-term debt during the summer of 2010. As a result, the Partnership discontinued cash flow hedge accounting treatment for interest rate protection agreements associated with this previously anticipated long-term debt issuance and recorded a $12,193 loss during the three months ended March 31, 2010 which is reflected in other expense (income), net on the Condensed Consolidated Statements of Operations.

Derivative Financial Instruments Credit Risk

The Partnership is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Our counterparties principally consist of major energy companies and major U.S. financial institutions. We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by the Partnership in the forms of letters of credit, parental guarantees or cash. Although we have concentrations of credit risk associated with derivative financial instruments held by certain derivative financial instrument counterparties, the maximum amount of loss due to credit risk that, based upon the gross fair values of the derivative financial instruments, we would incur if these counterparties that make up the concentration failed to perform according to the terms of their contracts was not material at March 31, 2011. We generally do not have credit-risk-related contingent features in our derivative contracts.

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

The following table provides information regarding the fair values and balance sheet locations of our derivative assets and liabilities existing as of March 31, 2011 and 2010:

Derivative Assets

Derivative (Liabilities)

Balance Sheet

Fair

Balance Sheet

Fair

As of March 31, 2011

Location

Value

Location

Value

Derivatives Designated as Hedging Instruments:

Propane contracts

Derivative financial instruments and Other assets

$

11,407

Derivative financial instruments and Other noncurrent liabilities

$

—

Derivatives Not Designated as Hedging Instruments:

Propane contracts

Derivative financial instruments

—

Derivative financial instruments

—

Total Derivatives

$

11,407

$

—

		Derivative Assets						Derivative (Liabilities)
		Balance Sheet		Fair				Balance Sheet		Fair
As of March 31, 2010		Location		Value				Location		Value
Derivatives Designated as Hedging Instruments:
Propane contracts		Derivative financial instruments and Other assets		$	5,120			Derivative financial instruments and Other noncurrent liabilities		$	—
Derivatives Not Designated as Hedging Instruments:
Propane contracts		Derivative financial instruments		$	2			Derivative financial instruments		$	—
Interest rate contracts (a)		Derivative financial instruments			2,835			Derivative financial instruments			(16,977	)
Total Derivatives Not Designated as Hedging Instruments				$	2,837					$	(16,977	)
Total Derivatives				$	7,957					$	(16,977	)

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

The following table provides information on the effects of derivative instruments on the Condensed Consolidated Statements of Operations and changes in AOCI and noncontrolling interest for the three and six months ended March 31, 2011:

Three Months Ended March 31, 2011

										Location of
		Gain				Gain (Loss)				Gain (Loss)
		Recognized in				Reclassified from				Reclassified from
		AOCI and Noncontrolling				AOCI and Noncontrolling				AOCI and Noncontrolling
		Interest				Interest into Income				Interest into Income
Cash Flow
Hedges:
Propane contracts		$	12,315			$	15,163			Cost of sales
Interest rate contracts			—				(135	)		Interest expense
Total		$	12,315			$	15,028

Six Months Ended March 31, 2011

										Location of
		Gain				Gain (Loss)				Gain (Loss)
		Recognized in				Reclassified from				Reclassified from
		AOCI and Noncontrolling				AOCI and Noncontrolling				AOCI and Noncontrolling
		Interest				Interest into Income				Interest into Income
Cash Flow
Hedges:
Propane contracts		$	25,277			$	19,599			Cost of sales
Interest rate contracts			—				(269	)		Interest expense
Total		$	25,277			$	19,330

AMERIGAS PARTNERS, L.P.

Notes to Condensed Consolidated Financial Statements
(unaudited)
(Thousands of dollars, except per unit)

The following table provides information on the effects of derivative instruments on the Condensed Consolidated Statements of Operations and changes in AOCI and noncontrolling interest for the three and six months ended March 31, 2010:

Three Months Ended March 31, 2010

										Location of
		Loss				Gain (Loss)				Gain (Loss)
		Recognized in				Reclassified from				Reclassified from
		AOCI and Noncontrolling				AOCI and Noncontrolling				AOCI and Noncontrolling
		Interest				Interest into Income				Interest into Income
Cash Flow
Hedges:
Propane contracts		$	(7,962	)		$	25,295			Cost of sales
Interest rate contracts			(3,950	)			(12,327	)		Interest expense/other expense
Total		$	(11,912	)		$	12,968

Six Months Ended March 31, 2010

										Location of
		Gain				Gain (Loss)				Gain (Loss)
		Recognized in				Reclassified from				Reclassified from
		AOCI and Noncontrolling				AOCI and Noncontrolling				AOCI and Noncontrolling
		Interest				Interest into Income				Interest into Income
Cash Flow
Hedges:
Propane contracts		$	30,984			$	33,959			Cost of sales
Interest rate contracts			1,739				(12,462	)		Interest expense/other expense
Total		$	32,723			$	21,497

The amounts of derivative gains or losses representing ineffectiveness, and the amounts of gains or losses recognized in income as a result of excluding from ineffectiveness testing, were not material. The amount of net gains or losses associated with propane contracts that are not designated as hedging instruments was not material during the three and six months ended March 31, 2011 or 2010.

We are also a party to a number of contracts that have elements of a derivative instrument. These contracts include, among others, binding purchase orders, contracts which provide for the purchase and delivery of propane and service contracts that require the counterparty to provide commodity storage or transportation service to meet our normal sales commitments. Although many of these contracts have the requisite elements of a derivative instrument, these contracts qualify for normal purchase and normal sales exception accounting under GAAP because they provide for the delivery of products or services in quantities that are expected to be used in the normal course of operating our business and the price in the contract is based on an underlying that is directly associated with the price of the product or service being purchased or sold.

AMERIGAS PARTNERS, L.P.

ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Information contained in this Quarterly Report on Form 10-Q may contain forward-looking statements. Such statements use forward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,” “expect,” “may,” “will,” or other similar words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, we caution you that actual results almost always vary from assumed facts or bases, and the differences between actual results and assumed facts or bases can be material, depending on the circumstances. When considering forward-looking statements, you should keep in mind the following important factors which could affect our future results and could cause those results to differ materially from those expressed in our forward-looking statements: (1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability of propane, and the capacity to transport propane to our customers; (3) the availability of, and our ability to consummate, acquisition or combination opportunities; (4) successful integration and future performance of acquired assets or businesses; (5) changes in laws and regulations, including safety, tax and accounting matters; (6) competitive pressures from the same and alternative energy sources; (7) failure to acquire new customers thereby reducing or limiting any increase in revenues; (8) liability for environmental claims; (9) increased customer conservation measures due to high energy prices and improvements in energy efficiency and technology resulting in reduced demand; (10) adverse labor relations; (11) large customer, 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, and those factors set forth in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010, 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 our business, financial condition or 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.

AMERIGAS PARTNERS, L.P.

ANALYSIS OF RESULTS OF OPERATIONS

The following analyses compare the Partnership’s results of operations for (1) the three months ended March 31, 2011 (“2011 three-month period”) with the three months ended March 31, 2010 (“2010 three-month period”) and the six months ended March 31, 2011 (“2011 six-month period”) with the six months ended March 31, 2010 (“2010 six-month period”).

Executive Overview

Net income attributable to AmeriGas Partners for the 2011 three-month period was $118.0 million compared with net income attributable to AmeriGas Partners for the 2010 three-month period of $134.5 million. The 2011 three-month period results reflect an $18.8 million loss on early extinguishment of Partnership Senior Notes. Results in the 2010 three-month period include a $12.2 million loss associated with the discontinuance of interest rate hedges. Temperatures in our service territory during the 2011 three-month period averaged slightly colder than normal and the prior year. Although weather nationally was colder than normal and colder than in the prior-year period, weather in our southern operating regions in February and March was significantly warmer than in the comparable prior-year period. The warmer southern weather and customer conservation more than offset the beneficial impacts of colder weather in the northern and western U.S. Operating results for the 2011 three-month period also reflect higher operating and administrative expenses.

Net income attributable to AmeriGas Partners for the 2011 six-month period was $192.9 million compared with net income attributable to AmeriGas Partners for the 2010 six-month period of $218.4 million. The 2011 six-month period EBITDA reflects the $18.8 million loss on early extinguishment of debt whereas the 2010 six-month period EBITDA and operating income reflect the $12.2 million loss associated with the discontinuance of interest rate hedges. Average temperatures in our service territory during both the 2011 and 2010 six-month periods were near normal. However, during the 2011 six-month period, early fall temperatures were significantly warmer than normal and we experienced an early end to the heating season weather in our southern regions. The effects of these weather patterns, customer conservation and the impact on the prior-year’s volumes of a strong crop-drying season resulted in lower year-over-year retail volume sales. Total margin decreased as a result of the lower volumes sold partially offset by slightly higher average retail unit margins. Operating results for the 2011 six-month period also reflect higher operating and administrative expenses.

We believe that the Partnership has sufficient liquidity in the form of revolving credit agreements. Additionally, AmeriGas OLP expects to refinance its credit agreements, which are scheduled to expire in July 2011 and October 2011, during the third quarter of Fiscal 2011.

AMERIGAS PARTNERS, L.P.

2011 three-month period compared with 2010 three-month period

										Increase
Three Months Ended March 31,		2011				2010				(Decrease)
(millions of dollars)
Gallons sold (millions):
Retail			316.3				329.2				(12.9	)			(3.9	)%
Wholesale			41.5				45.9				(4.4	)			(9.6	)%
			357.8				375.1				(17.3	)			(4.6	)%
Revenues:
Retail propane		$	797.8			$	782.7			$	15.1				1.9	%
Wholesale propane			61.8				62.4				(0.6	)			(1.0	)%
Other			47.2				41.0				6.2				15.1	%
		$	906.8			$	886.1			$	20.7				2.3	%
Total margin (a)		$	342.0			$	346.4			$	(4.4	)			(1.3	)%
EBITDA (b)		$	157.5			$	173.6			$	(16.1	)			(9.3	)%
Operating income (b)		$	154.6			$	153.2			$	1.4				0.9	%
Net income attributable to AmeriGas Partners		$	118.0			$	134.5			$	(16.5	)			(12.3	)%
Heating degree days — % colder than normal (c)			1.9	%			0.2	%			—				—

AMERIGAS PARTNERS, L.P.

The following table includes reconciliations of net income attributable to AmeriGas Partners to EBITDA for the periods presented:

		Three Months Ended
		March 31,
		2011				2010
Net income attributable to AmeriGas Partners		$	118.0			$	134.5
Income tax expense			—				0.6
Interest expense			16.3				16.7
Depreciation			20.3				19.9
Amortization			2.9				1.9
EBITDA		$	157.5			$	173.6

Based upon heating degree-day data, average temperatures in the Partnership’s service territories were 1.9% colder than normal during the 2011 three-month period compared with temperatures that were approximately normal in the prior-year period. Although average temperatures were slightly colder than last year, the Partnership experienced significantly warmer weather in its southern regions during February and March 2011. Retail propane gallons sold declined principally due to the effects of the regional weather patterns and customer conservation partially offset by volumes acquired through acquisitions.

Retail propane revenues increased $15.1 million during the 2011 three-month period reflecting higher average retail sales prices ($45.8 million) partially offset by lower retail volumes sold ($30.7 million). Wholesale propane revenues were about equal to the prior-year period. Average wholesale propane prices at Mont Belvieu, Texas, a major supply location in the U.S., were approximately 12% higher during the 2011 three-month period compared with average wholesale propane prices during the 2010 three-month period. Other revenues from fee income and ancillary sales and services increased $6.2 million in the 2011 three-month period. Total cost of sales increased $25.1 million, to $564.8 million, reflecting higher 2011 wholesale propane product costs.

Total margin was $4.4 million lower in the 2011 three-month period primarily due to lower total retail margin ($8.3 million) partially offset principally by an increase in margin from fee income. The lower total retail margin reflects the effects of the lower retail volumes sold ($12.3 million) partially offset by the effects of slightly higher average retail unit margins ($4.0 million).

The $16.1 million decrease in EBITDA during the 2011 three-month period primarily reflects (1) the loss on early extinguishment of Partnership Senior Notes ($18.8 million); (2) slightly higher operating and administrative expenses ($4.4 million) resulting primarily from higher employee benefits costs and vehicle expenses; and (3) the previously mentioned decrease in 2011 three-month total margin ($4.4 million). The effect of these items on the change in EBITDA was partially offset by the absence of a $12.2 million loss recorded in the prior-year three-month period resulting from the discontinuance of interest rate hedges.

AMERIGAS PARTNERS, L.P.

Operating income (which excludes the loss on early extinguishment of debt) increased $1.4 million in the 2011 three-month period principally reflecting the absence of the loss on interest rate hedges recorded in the prior year ($12.2 million) substantially offset by (1) the higher operating and administrative and depreciation and amortization expenses ($5.7 million) and (2) the lower total margin ($4.4 million). Interest expense was $0.4 million lower in the 2011 three-month period. The $16.5 million decrease in net income attributable to AmeriGas Partners principally reflects the previously mentioned $18.8 million loss on early extinguishment of debt.

2011 six-month period compared with 2010 six-month period

										Increase
Six Months Ended March 31,		2011				2010				(Decrease)
(millions of dollars)
Gallons sold (millions):
Retail			572.7				596.6				(23.9	)			(4.0	)%
Wholesale			77.4				90.5				(13.1	)			(14.5	)%
			650.1				687.1				(37.0	)			(5.4	)%
Revenues:
Retail propane		$	1,401.6			$	1,343.6			$	58.0				4.3	%
Wholesale propane			111.8				115.8				(4.0	)			(3.5	)%
Other			93.6				83.3				10.3				12.4	%
		$	1,607.0			$	1,542.7			$	64.3				4.2	%
Total margin (a)		$	606.9			$	613.4			$	(6.5	)			(1.1	)%
EBITDA (b)		$	270.8			$	296.6			$	(25.8	)			(8.7	)%
Operating income (b)		$	246.2			$	255.9			$	(9.7	)			(3.8	)%
Net income attributable to AmeriGas Partners		$	192.9			$	218.4			$	(25.5	)			(11.7	)%
Heating degree days — % colder than normal (c)			0.1	%			0.6	%			—				—

AMERIGAS PARTNERS, L.P.

The following table includes reconciliations of net income attributable to AmeriGas Partners to EBITDA for the periods presented:

		Six Months Ended
		March 31,
		2011				2010
Net income attributable to AmeriGas Partners		$	192.9			$	218.4
Income tax expense			0.3				1.8
Interest expense			31.7				33.2
Depreciation			40.4				39.9
Amortization			5.5				3.3
EBITDA		$	270.8			$	296.6

Based upon heating degree-day data, average temperatures in the Partnership’s service territories were near normal for each of the six month periods ended March 31, 2011 and 2010. However, during the 2011 six-month period, early fall temperatures were significantly warmer than normal and we experienced an early end to the heating season weather in our southern regions. Retail propane gallons sold declined principally due to the effects of these weather patterns, customer conservation and the impact on our prior-year volumes of a strong crop-drying season partially offset by volumes acquired through acquisitions.

Retail propane revenues increased $58.0 million during the 2011 six-month period reflecting higher average retail sales prices ($111.8 million) partially offset by lower retail volumes sold ($53.8 million). Wholesale propane revenues decreased $4.0 million principally reflecting lower wholesale volumes sold ($16.8 million) partially offset by higher wholesale selling prices ($12.8 million). Average wholesale propane prices at Mont Belvieu, Texas, a major supply location in the U.S., were approximately 14% higher during the 2011 six-month period compared with average wholesale propane prices during the 2010 six-month period. Other revenues from fee income and ancillary sales and services increased $10.3 million in the 2011 six-month period. Total cost of sales increased $70.8 million, to $1,000.1 million, principally reflecting the higher 2011 wholesale propane product costs.

Total margin was $6.5 million lower in the 2011 six-month period primarily due to lower total retail margin ($12.9 million) partially offset principally by an increase in margin from fee income. The lower total retail margin reflects the effects of the lower retail volumes sold ($22.1 million) partially offset by the effects of slightly higher average retail unit margins ($9.2 million).

The $25.8 million decrease in EBITDA during the 2011 six-month period primarily reflects (1) the loss on the early extinguishment of Partnership Senior Notes ($18.8 million); (2) higher operating and administrative expenses ($14.0 million); and (3) the previously mentioned decrease in 2011 six-month total margin ($6.5 million). The effects of these items on the change in EBITDA were partially offset by the absence of a $12.2 million loss recorded in the prior-year six-month period resulting from the discontinuance of interest rate hedges.

AMERIGAS PARTNERS, L.P.

Operating income (which excludes the loss on early extinguishment of debt) decreased $9.7 million in the 2011 six-month period principally reflecting (1) higher operating and administrative and depreciation and amortization expenses ($16.6 million) and (2) the lower total margin ($6.5 million). These decreases in operating income were partially offset by the absence of the loss on interest rate hedges recorded in the prior year ($12.2 million). Interest expense was $1.5 million lower in the 2011 six-month period principally reflecting lower interest expense on long-term debt outstanding partially offset by higher interest expense on working capital borrowings. Net income attributable to AmeriGas Partners in the 2011 six-month period was $25.5 million lower than the 2010 six-month period reflecting the $18.8 million loss on extinguishment of debt and the lower operating income ($9.7 million).

FINANCIAL CONDITION AND LIQUIDITY

Financial Condition

The Partnership’s debt outstanding at March 31, 2011 totaled $1,028.9 million (including current maturities of long-term debt of $5.5 million and bank loans of $194 million). The Partnership’s debt outstanding at September 30, 2010 totaled $882.4 million (including current maturities of long-term debt of $20.1 million and bank loans of $91 million). Total long-term debt outstanding at March 31, 2011, including current maturities, comprises $820 million of AmeriGas Partners’ Senior Notes and $14.9 million of other long-term debt. During the three months ended March 31, 2011, AmeriGas Partners issued $470 million principal amount of 6.50% Senior Notes due 2021. The proceeds from the issuance of the 6.50% Senior Notes were used to repay AmeriGas Partners’ $415 million 7.25% Senior Notes due May 15, 2015 pursuant to a January 5, 2011 tender offer and subsequent redemption. The 6.50% Senior Notes due 2021 rank pari passu with AmeriGas Partners’ outstanding senior debt. In addition, during the three months ended March 31, 2011, AmeriGas Partners redeemed $14.6 million of its 8.875% Senior Notes due May 2011. The Partnership incurred a loss on extinguishment of debt associated with these refinancings of $18.8 million.

AmeriGas OLP’s short-term borrowing needs are seasonal and are typically greatest during the fall and winter heating-season months due to the need to fund higher levels of working capital. In order to meet its short-term cash needs, AmeriGas OLP has a $200 million unsecured credit agreement (“Credit Agreement”) which expires on October 15, 2011. AmeriGas OLP also has a $75 million unsecured revolving credit facility (“2009 Supplemental Credit Agreement”) which expires on June 30, 2011. AmeriGas OLP expects to refinance its credit agreements during the third quarter of Fiscal 2011. AmeriGas OLP’s Credit Agreement consists of (1) a $125 million Revolving Credit Facility and (2) a $75 million Acquisition Facility. The Revolving Credit Facility may be used for working capital and general purposes of AmeriGas OLP. The Acquisition Facility provides AmeriGas OLP with the ability to borrow up to $75 million to finance the purchase of propane businesses or propane business assets or, to the extent it is not so used, for working capital and general purposes. The 2009 Supplemental Credit Agreement permits AmeriGas OLP to borrow up to $75 million for working capital and general purposes.

AMERIGAS PARTNERS, L.P.

At March 31, 2011, there were $140 million of borrowings outstanding under the Credit Agreement and $54 million of borrowings outstanding under the 2009 Supplemental Credit Agreement. Borrowings under our credit agreements are classified as bank loans on the Condensed Consolidated Balance Sheets. Issued and outstanding letters of credit under the Revolving Credit Facility, which reduce the amount available for borrowings, totaled $35.7 million at March 31, 2011 and $36.1 million at March 31, 2010. The average daily and peak bank loan borrowings outstanding under the credit agreements during the 2011 six-month period were $153.1 million and $235 million, respectively. The average daily and peak bank loan borrowings outstanding under the credit agreements during the 2010 six-month period were $25.5 million and $75 million, respectively. At March 31, 2011, the Partnership’s available borrowing capacity under the credit agreements was $45.3 million.

Based on existing cash balances, cash expected to be generated from operations, and borrowings available under AmeriGas OLP revolving credit agreements, the Partnership’s management believes that the Partnership will be able to meet its anticipated contractual commitments and projected cash needs during Fiscal 2011.

On April 27, 2011, the General Partner’s Board of Directors approved a quarterly distribution of $0.74 per Common Unit equal to an annual rate of $2.96 per Common Unit. The new quarterly rate is effective with the distribution payable on May 18, 2011 to unitholders of record on May 10, 2011. This distribution reflects an increase of approximately 5% from the previous quarter’s regular quarterly distribution rate of $0.705 per Common Unit. During the six months ended March 31, 2011, the Partnership declared and paid quarterly distributions on all limited partner units at a rate of $0.705 per Common Unit for the quarters ended December 31, 2010 and September 30, 2010. The ability of the Partnership to declare and pay the quarterly distribution on its Common Units in the future 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 agreements, refinance maturing debt, and increase its long-term debt. Some of these factors are affected by conditions beyond the Partnership’s control including weather, competition in markets we serve, the cost of propane and changes in capital market conditions.

Cash Flows

Operating activities. Due to the seasonal nature of the Partnership’s business, cash flows from operating activities are generally strongest during the second and third fiscal quarters when customers pay for propane consumed during the heating season months. Conversely, operating cash flows are generally at their lowest levels during the first and fourth fiscal quarters when the Partnership’s investment in working capital, principally accounts receivable and inventories, is generally greatest. The Partnership may use its credit agreements to satisfy its seasonal operating cash flow needs.

Cash flow provided by operating activities was $61.1 million in the 2011 six-month period compared to $57.8 million in the 2010 six-month period. Cash flow from operating activities before changes in operating working capital was $269.5 million in the 2011 six-month period compared with $288.0 million in the prior-year period principally reflecting the lower 2011 six-month period operating results. Cash required to fund changes in operating working capital totaled $208.5 million in the 2011 six-month period compared with $230.3 million in the prior-year period. The decrease in cash required to fund operating working capital in the current-year period principally reflects the timing and amount of cash payments for purchases of propane.

AMERIGAS PARTNERS, L.P.

Investing activities. Investing activity cash flow is principally affected by investments in property, plant and equipment, cash paid for acquisitions of businesses and proceeds from sales of assets. Cash flow used in investing activities was $64.3 million in the 2011 six-month period compared with $50.1 million in the prior-year period. We spent $40.6 million for property, plant and equipment (comprising $19.7 million of maintenance capital expenditures and $20.9 million of growth capital expenditures) in the 2011 six-month period compared with $45.4 million (comprising $21.3 million of maintenance capital expenditures and $24.1 million of growth capital expenditures) in the 2010 six-month period. Cash paid for acquisitions reflects 11 propane business acquisitions completed during the 2011 six-month period compared to 6 propane business acquisitions in the 2010 six-month period.

Financing activities. The Partnership’s financing activities cash flows are typically the result of repayments and issuances of long-term debt, borrowings under AmeriGas OLP’s credit agreements, issuances of Common Units and distributions on partnership interests. Cash provided by financing activities was $30.9 million in the 2011 six-month period compared with cash used by financing activities of $57.0 million in the prior-year period. Distributions in the 2011 six-month period totaled $83.3 million compared with $78.4 million in the prior-year period principally reflecting a higher quarterly per-unit distribution rate. We borrowed $103 million under the credit agreements during the 2011 six-month period compared to $23 million during the 2010 six-month period. The lower credit agreement borrowings in the prior year reflect higher beginning-of-period cash balances available to fund operating, investing and financing activities. As previously mentioned, the Partnership refinanced its $415 million 7.25% Senior Notes due 2015 through the issuance of $470 million of 6.50% Senior Notes due 2021. In addition, it redeemed its $14.6 million 8.875% Senior Notes due 2011. Repayments of long-term debt includes $16.8 million of transaction fees and expenses associated with the early extinguishments of debt.

ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 March 31, 2011 was a gain of $11.4 million. A hypothetical 10% adverse change in the market price of propane would result in a decrease in fair value of $6.3 million.

AMERIGAS PARTNERS, L.P.

Because the Partnership’s propane derivative instruments generally qualify as hedges under GAAP, we expect that changes in the fair value of derivative instruments used to manage propane market price risk would be substantially offset by gains or losses on the associated anticipated transactions.

Interest Rate Risk

The Partnership has both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but generally do not impact their fair value. Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not impact their cash flows.

Our variable-rate debt includes borrowings under AmeriGas OLP’s credit agreements. These agreements have interest rates that are generally indexed to short-term market interest rates. The remainder of our debt outstanding is subject to fixed rates of interest. Our long-term debt is typically issued at fixed rates of interest based upon market rates for debt having similar terms and credit ratings. As these long-term debt issues mature, we may refinance such debt with new debt having interest rates reflecting then-current market conditions. This debt may have an interest rate that is more or less than the refinanced debt. In order to reduce interest rate risk associated with forecasted issuances of fixed-rate debt, from time to time we enter into interest rate protection agreements. There were no unsettled interest rate protection agreements outstanding at March 31, 2011.

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.

AMERIGAS PARTNERS, L.P.

ITEM 4.		CONTROLS AND PROCEDURES

(a)		Evaluation of Disclosure Controls and Procedures
		The Partnership’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Partnership in reports filed under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The General Partner’s management, with the participation of the General Partner’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Partnership’s disclosure controls and procedures as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership’s disclosure controls and procedures, as of the end of the period covered by this Report, were effective at the reasonable assurance level.

(b)		Change in Internal Control over Financial Reporting
		No change in the Partnership’s internal control over financial reporting occurred during the Partnership’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1A.		RISK FACTORS

In addition to the other information presented in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Partnership. Other unknown or unpredictable factors could also have material adverse effects on future results.

AMERIGAS PARTNERS, L.P.

ITEM 6.		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.

Exhibit

Registrant

Filing

Exhibit

10.1

Amendment No. 2, dated as of March 17, 2011, to the Credit Agreement dated as of April 17, 2009, among the Partnership, AmeriGas Propane, Inc., Petrolane Incorporated, Citizens Bank of Pennsylvania, JPMorgan Chase Bank N.A., and Wells Fargo Bank, N.A.

AmeriGas Partners, L.P.

Form 8-K (3/17/2011)

10.1

10.2

Amendment No. 1, dated as of March 17, 2011, to the Credit Agreement dated as of November 6, 2006, among the Partnership, AmeriGas Propane, Inc., Petrolane Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Credit Suisse Securities (USA) LLC, and Wells Fargo Bank, N.A.

AmeriGas Partners, L.P.

Form 8-K (3/17/2011)

10.2

31.1

Certification by the Chief Executive Officer relating to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2011, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification by the Chief Financial Officer relating to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2011, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32

Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2011, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following materials from AmeriGas Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statements of Partners’ Capital; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. This Exhibit 101 is deemed not filed for purposes of Section 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

AMERIGAS PARTNERS, L.P.

SIGNATURES

Pursuant to the requirements 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.

AMERIGAS PARTNERS, L.P.

EXHIBIT INDEX

	31.1			Certification by the Chief Executive Officer relating to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2011, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2			Certification by the Chief Financial Officer relating to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2011, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32			Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2011, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101			The following materials from AmeriGas Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statements of Partners’ Capital; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. This Exhibit 101 is deemed not filed for purposes of Section 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.