AMERIGAS PARTNERS LP, 10-Q filed on 8/4/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Jun. 30, 2017
Jul. 31, 2017
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
AMERIGAS PARTNERS LP 
 
Entity Central Index Key
0000932628 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2017 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
Current Fiscal Year End Date
--09-30 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
92,958,586 
Condensed Consolidated Balance Sheets (unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2016
Current assets:
 
 
 
Cash and cash equivalents
$ 4,710 
$ 15,827 
$ 307,657 
Accounts receivable (less allowances for doubtful accounts of $12,801, $11,436 and $11,952, respectively)
205,039 
182,665 
187,551 
Accounts receivable — related parties
3,236 
2,643 
3,108 
Inventories
93,892 
78,823 
81,571 
Derivative instruments
2,080 
7,994 
8,968 
Prepaid expenses and other current assets
52,129 
56,496 
48,264 
Total current assets
361,086 
344,448 
637,119 
Property, plant and equipment (less accumulated depreciation and amortization of $1,584,416, $1,499,396 and $1,468,332, respectively)
1,231,653 
1,274,557 
1,285,518 
Goodwill
2,002,046 
1,978,981 
1,978,894 
Intangible assets, net
399,738 
411,319 
420,473 
Derivative instruments
279 
1,166 
891 
Other assets
43,172 
47,299 
43,864 
Total assets
4,037,974 
4,057,770 
4,366,759 
Current liabilities:
 
 
 
Current maturities of long-term debt
11,332 
8,475 
358,605 
Short-term borrowings
75,500 
153,200 
11,400 
Accounts payable — trade
89,097 
94,007 
81,358 
Accounts payable — related parties
869 
2,759 
684 
Customer deposits and advances
69,024 
119,319 
79,174 
Derivative instruments
2,457 
381 
4,562 
Other current liabilities
182,198 
210,314 
178,173 
Total current liabilities
430,477 
588,455 
713,956 
Long-term debt
2,567,994 
2,325,334 
2,329,000 
Derivative instruments
14 
36 
963 
Other noncurrent liabilities
136,732 
124,736 
116,855 
Total liabilities
3,135,217 
3,038,561 
3,160,774 
Commitments and contingencies (Note 6)
   
   
   
AmeriGas Partners, L.P. partners’ capital:
 
 
 
Common unitholders (units issued — 92,958,063, 92,923,410 and 92,922,926, respectively)
850,578 
967,073 
1,150,641 
General partner
15,973 
17,148 
19,004 
Total AmeriGas Partners, L.P. partners’ capital
866,551 
984,221 
1,169,645 
Noncontrolling interest
36,206 
34,988 
36,340 
Total partners’ capital
902,757 
1,019,209 
1,205,985 
Total liabilities and partners’ capital
$ 4,037,974 
$ 4,057,770 
$ 4,366,759 
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2016
Statement of Financial Position [Abstract]
 
 
 
Accounts receivable, allowances for doubtful accounts
$ 12,801 
$ 11,436 
$ 11,952 
Property, plant and equipment, accumulated depreciation and amortization
$ 1,584,416 
$ 1,499,396 
$ 1,468,332 
Common unitholders, units issued
92,958,063 
92,923,410 
92,922,926 
Condensed Consolidated Statements of Operations (unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Revenues:
 
 
 
 
Propane
$ 403,954 
$ 385,566 
$ 1,803,816 
$ 1,718,748 
Other
63,542 
61,118 
204,506 
199,521 
Total, revenues
467,496 
446,684 
2,008,322 
1,918,269 
Costs and expenses:
 
 
 
 
Cost of sales — propane (excluding depreciation shown below)
181,047 
121,812 
762,531 
591,355 
Cost of sales — other (excluding depreciation shown below)
22,367 
21,145 
60,276 
59,173 
Operating and administrative expenses
227,372 
217,154 
694,180 
686,578 
Depreciation
35,482 
35,668 
103,891 
110,807 
Amortization
10,659 
10,742 
31,873 
32,228 
Other operating income, net
(8,294)
(6,041)
(10,787)
(22,079)
Total, costs and expenses
468,633 
400,480 
1,641,964 
1,458,062 
Operating (loss) income
(1,137)
46,204 
366,358 
460,207 
Loss on extinguishments of debt
(4,434)
(37,086)
(59,729)
(37,086)
Interest expense
(40,577)
(40,838)
(120,596)
(122,669)
(Loss) income before income taxes
(46,148)
(31,720)
186,033 
300,452 
Income tax expense
(646)
(907)
(2,129)
(2,107)
Net (loss) income including noncontrolling interest
(46,794)
(32,627)
183,904 
298,345 
Add net loss (deduct net income) attributable to noncontrolling interest
42 
(442)
(3,614)
(4,533)
Net (loss) income attributable to AmeriGas Partners, L.P.
(46,752)
(33,069)
180,290 
293,812 
General partner’s interest in net (loss) income attributable to AmeriGas Partners, L.P.
10,862 
10,101 
34,000 
30,663 
Limited partners’ interest in net (loss) income attributable to AmeriGas Partners, L.P.
$ (57,614)
$ (43,170)
$ 146,290 
$ 263,149 
(Loss) income per limited partner unit — basic and diluted:
 
 
 
 
Basic (in usd per unit)
$ (0.62)
$ (0.46)
$ 1.56 
$ 2.81 
Diluted (in usd per unit)
$ (0.62)
$ (0.46)
$ 1.56 
$ 2.80 
Weighted average limited partner units outstanding (thousands):
 
 
 
 
Basic (in units)
93,009 
92,960 
92,993 
92,945 
Diluted (in units)
93,009 
92,960 
93,045 
93,019 
Condensed Consolidated Statements of Cash Flows (unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
Net income including noncontrolling interest
$ 183,904 
$ 298,345 
Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities:
 
 
Depreciation and amortization
135,764 
143,035 
Provision for uncollectible accounts
9,667 
9,354 
Change in unrealized losses (gains) on derivative instruments
8,853 
(61,671)
Loss on extinguishments of debt
59,729 
37,086 
Other, net
16,534 
649 
Net change in:
 
 
Accounts receivable
(33,942)
427 
Inventories
(14,648)
12,609 
Accounts payable
(3,699)
(22,105)
Other current assets
(3,272)
10,610 
Other current liabilities
(70,402)
(65,937)
Net cash provided by operating activities
288,488 
362,402 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
Expenditures for property, plant and equipment
(74,482)
(74,472)
Proceeds from disposals of assets
16,252 
11,230 
Acquisitions of businesses, net of cash acquired
(36,824)
(36,678)
Net cash used by investing activities
(95,054)
(99,920)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
Distributions
(298,232)
(288,891)
Noncontrolling interest activity
(2,396)
(4,350)
Decrease in short-term borrowings
(77,700)
(56,700)
Issuances of long-term debt, net of issuance costs
1,207,727 
1,333,407 
Repayments of long-term debt, including redemption premiums
(1,035,430)
(954,186)
Proceeds associated with equity-based compensation plans, net of tax withheld
1,465 
1,127 
Capital contributions from General Partner
15 
11 
Net cash (used) provided by financing activities
(204,551)
30,418 
Cash and cash equivalents (decrease) increase
(11,117)
292,900 
CASH AND CASH EQUIVALENTS
 
 
End of period
4,710 
307,657 
Beginning of period
15,827 
14,757 
(Decrease) increase
$ (11,117)
$ 292,900 
Condensed Consolidated Statements of Partners' Capital (unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Total AmeriGas Partners, L.P. partners’ capital
Common units
General partner
Noncontrolling interest
Beginning Balance at Sep. 30, 2015
$ 1,200,373 
$ 1,164,216 
$ 1,145,291 
$ 18,925 
$ 36,157 
Beginning Balance (in units) at Sep. 30, 2015
 
 
92,889,980 
 
 
Increase (Decrease) in Partners' Capital
 
 
 
 
 
Net income including noncontrolling interest
298,345 
293,812 
263,149 
30,663 
4,533 
Distributions
(293,241)
(288,891)
(258,296)
(30,595)
(4,350)
Unit-based compensation expense
1,070 
1,070 
1,070 
 
 
Common Units issued in connection with employee and director plans, net of tax withheld (in units)
 
 
32,946 
 
 
Common Units issued in connection with employee and director plans, net of tax withheld
(562)
(562)
(573)
11 
 
Ending Balance at Jun. 30, 2016
1,205,985 
1,169,645 
1,150,641 
19,004 
36,340 
Ending Balance (in units) at Jun. 30, 2016
 
 
92,922,926 
 
 
Beginning Balance at Sep. 30, 2016
1,019,209 
984,221 
967,073 
17,148 
34,988 
Beginning Balance (in units) at Sep. 30, 2016
 
 
92,923,410 
 
 
Increase (Decrease) in Partners' Capital
 
 
 
 
 
Net income including noncontrolling interest
183,904 
180,290 
146,290 
34,000 
3,614 
Distributions
(302,230)
(298,232)
(263,042)
(35,190)
(3,998)
Unit-based compensation expense
1,013 
1,013 
1,013 
 
 
General Partner contribution to AmeriGas Propane, L.P.
1,602 
 
 
1,602 
Common Units issued in connection with employee and director plans, net of tax withheld (in units)
 
 
34,653 
 
 
Common Units issued in connection with employee and director plans, net of tax withheld
(741)
(741)
(756)
15 
 
Ending Balance at Jun. 30, 2017
$ 902,757 
$ 866,551 
$ 850,578 
$ 15,973 
$ 36,206 
Ending Balance (in units) at Jun. 30, 2017
 
 
92,958,063 
 
 
Nature of Operations
Nature of Operations
Note 1 — Nature of Operations

AmeriGas Partners, L.P. (“AmeriGas Partners”) is a publicly traded limited partnership that conducts a national propane distribution business through its principal operating subsidiary AmeriGas Propane, L.P. (“AmeriGas OLP”). AmeriGas Partners and AmeriGas OLP are Delaware limited partnerships. AmeriGas Partners, AmeriGas OLP and all of their subsidiaries are collectively referred to herein as “the Partnership” or “we.”

AmeriGas OLP is engaged in the distribution of propane and related equipment and supplies. AmeriGas OLP 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 June 30, 2017, 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, prior to its merger with and into the General Partner effective October 1, 2016, Petrolane Incorporated (a predecessor company of the Partnership), also owns AmeriGas Partners Common Units (“Common Units”). The remaining Common Units outstanding represents publicly held Common Units. Common Units represent limited partner interests in AmeriGas Partners. AmeriGas Partners holds a 98.99% limited partner interest in AmeriGas OLP.

AmeriGas Partners and AmeriGas OLP have no employees. Employees of the General Partner conduct, direct and manage our operations. The General Partner is reimbursed monthly for all direct and indirect expenses it incurs on our behalf (see Note 9).
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Note 2 — Summary of Significant Accounting Policies
 
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 consist only of normal recurring items unless otherwise disclosed. The September 30, 2016, condensed consolidated balance sheet data was derived from audited financial statements but does 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 fiscal year ended September 30, 2016 (“the Partnership’s 2016 Annual Report”). 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.

Principles of Consolidation. The consolidated financial statements include the accounts of AmeriGas Partners, its majority-owned subsidiary AmeriGas OLP, and its 100%-owned finance subsidiaries AmeriGas Finance Corp., AmeriGas Eagle Finance Corp., AP Eagle Finance Corp., and AmeriGas Finance LLC. AmeriGas Partners and AmeriGas OLP are under the common control of the General Partner. The General Partner of AmeriGas OLP, which is also the General Partner of AmeriGas Partners, makes all decisions for AmeriGas OLP; limited partners of AmeriGas OLP do not have the ability to remove the General Partner or participate in the decision-making for AmeriGas OLP. The accounts of AmeriGas OLP are included based upon the determination that AmeriGas Partners has a controlling financial interest in and is the primary beneficiary of AmeriGas OLP.

Allocation of Net Income (Loss). Net income (loss) 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, L.P., as amended (“Partnership Agreement”).

Net Income (Loss) Per Unit. Income (loss) per limited partner unit is computed in accordance with GAAP regarding the application of the two-class method for determining income (loss) per unit for master limited partnerships (“MLPs”) when IDRs are present. The two-class method requires that income per limited partner unit be calculated as if all earnings for the period were distributed and requires a separate calculation for each quarter- and year-to-date period. In periods when our net income attributable to AmeriGas Partners exceeds our Available Cash, as defined in the Partnership Agreement, and is above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the General Partner. Generally, in periods when our Available Cash in respect of the quarter- or year-to-date periods exceeds our net income (loss) attributable to AmeriGas Partners, the calculation according to the two-class method results in an allocation of earnings to the General Partner greater than its relative ownership interest in the Partnership (or in the case of a net loss attributable to AmeriGas Partners, an allocation of such net loss to the Common Unitholders greater than their relative ownership interest in the Partnership).

The following table sets forth reconciliations of the numerators and denominators of the basic and diluted income per limited partner unit computations:
 
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
 
2017
 
2016
 
2017
 
2016
Net (loss) income attributable to AmeriGas Partners, L.P.
 
$
(46,752
)
 
$
(33,069
)
 
$
180,290

 
$
293,812

Adjust for general partner share and theoretical distributions of net income attributable to AmeriGas Partners, L.P. to the general partner in accordance with the two-class method for MLPs
 
(10,862
)
 
(10,101
)
 
(34,908
)
 
(33,039
)
Common Unitholders’ interest in net (loss) income attributable to AmeriGas Partners, L.P. under the two-class method for MLPs
 
$
(57,614
)
 
$
(43,170
)
 
$
145,382

 
$
260,773

Weighted average Common Units outstanding — basic (thousands)
 
93,009

 
92,960

 
92,993

 
92,945

Potentially dilutive Common Units (thousands)
 

 

 
52

 
74

Weighted average Common Units outstanding — diluted (thousands)
 
93,009

 
92,960

 
93,045

 
93,019



Theoretical distributions of net income attributable to AmeriGas Partners, L.P. in accordance with the two-class method for the nine months ended June 30, 2017 and 2016, resulted in an increased allocation of net income attributable to AmeriGas Partners, L.P. to the General Partner in the computation of income per limited partner unit which had the effect of decreasing earnings per limited partner unit by $0.01 and $0.03, respectively. There was no dilutive effect based on the computation of income (loss) per limited partner unit in accordance with the two-class method for the three months ended June 30, 2017 and 2016.

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.

Derivative Instruments. Derivative instruments are reported on the Condensed Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase and normal sale (“NPNS”) exception under GAAP. The accounting for changes in fair value depends upon the purpose of the derivative instrument and whether it is designated and qualifies for hedge accounting. For the nine months ended June 30, 2017 and 2016, none of our derivative instruments were designated as hedges under GAAP.

Changes in the fair values of commodity derivative instruments for all periods presented are reflected in “Cost of sales — propane” on the Condensed Consolidated Statements of Operations. Cash flows from derivative instruments are included in cash flows from operating activities.

For additional information on the accounting for our derivative instruments, see Note 2, “Summary of Significant Accounting Policies,” in the Partnership’s 2016 Annual Report.

Deferred Debt Issuance Costs. During the fourth quarter of Fiscal 2016, we adopted new accounting guidance regarding the classification of deferred debt issuance costs. Deferred debt issuance costs associated with long-term debt are reflected as a direct deduction from the carrying amount of such debt. Deferred debt issuance costs associated with line of credit facilities continue to be classified as “Other assets” on our Condensed Consolidated Balance Sheets. As a result of the retrospective application of the new accounting guidance, the Partnership has reflected $30,480 of such costs as a reduction to long-term debt, including current maturities, on the June 30, 2016, Condensed Consolidated Balance Sheet. Previously, these costs were presented within “Prepaid expenses and other current assets” and “Other assets.”

Environmental Matters. We are subject to environmental laws and regulations intended to mitigate or remove the effects of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current or former operating sites.

Environmental reserves are accrued when assessments indicate that it is probable that a liability has been incurred and an amount can be reasonably estimated. Amounts recorded as environmental liabilities on the Condensed Consolidated Balance Sheets represent our best estimate of costs expected to be incurred or, if no best estimate can be made, the minimum liability associated with a range of expected environmental investigation and remediation costs. Our estimated liability for environmental contamination is reduced to reflect anticipated participation of other responsible parties but is not reduced for possible recovery from insurance carriers. In those instances for which the amount and timing of cash payments associated with environmental investigation and cleanup are reliably determinable, we discount such liabilities to reflect the time value of money. We intend to pursue recovery of incurred costs through all appropriate means.

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.

Correction of Prior Period Error. During the first quarter of Fiscal 2017, the Partnership determined that it had not properly recorded gains on sales of fixed assets relating to certain assets acquired in the acquisition of Heritage Propane in Fiscal 2012.  The Partnership evaluated the impact of the error on prior periods and determined that the effect was not material to the financial statements for the nine months ended June 30, 2017, or any prior period financial statements, and recorded the cumulative effect of the error in accounting for certain property, plant and equipment disposals as of October 1, 2016. The correction of the error decreased “Other operating income, net” by $8,847 and decreased “Depreciation” by $1,162, which is reflected in the Condensed Consolidated Statements of Operations for the nine months ended June 30, 2017.

Reclassifications. Certain prior period amounts have been reclassified to conform to the current-period presentation.
Accounting Changes
Accounting Changes
Note 3 — Accounting Changes

Adoption of New Accounting Standards

Consolidation. Effective October 1, 2016, the Partnership adopted Accounting Standards Update (“ASU”) No. 2015-02, “Amendments to Consolidation Analysis” and ASU No. 2016-17, “Interest Held through Related Parties That Are under Common Control.” These ASUs provide new accounting guidance regarding whether a reporting entity should consolidate certain types of legal entities including variable interest entities (“VIEs”). Among other things, the new guidance affects the consolidation analysis of reporting entities that are involved with VIEs and requires that, under ASU 2015-02, if a single decision maker and its related parties are under common control, the single decision maker consider indirect interests in the entity held through these related parties to be the equivalent of direct interests, in their entirety. ASU 2016-07 amended the guidance in ASU 2015-02 to provide that such indirect interests be considered the equivalent of direct interests, on a proportionate basis. The adoption of this new guidance did not impact our consolidated financial statements.

Accounting Standards Not Yet Adopted

Goodwill Impairment. In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” Under the new accounting guidance, an entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity will perform its goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value but not to exceed the total amount of the goodwill of the reporting unit. The provisions of the new accounting guidance are required to be applied prospectively. The new accounting guidance is effective for the Partnership for goodwill impairment tests performed in fiscal years beginning after December 15, 2019 (Fiscal 2021). Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The Partnership expects to adopt the new guidance in the fourth quarter of Fiscal 2017.

Cash Flow Classification. In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” This ASU provides guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2017 (Fiscal 2019). Early adoption is permitted. The amendments in the ASU should generally be adopted on a retrospective basis. The Partnership is in the process of assessing the impact on its financial statements from the adoption of the new guidance and determining the period in which the new guidance will be adopted.

Leases. In February 2016, the FASB issued ASU No. 2016-02, "Leases." This ASU amends existing guidance to require entities that lease assets to recognize the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The new guidance also requires additional disclosures about the amount, timing and uncertainty of cash flows from leases. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2018 (Fiscal 2020). Early adoption is permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Partnership is in the process of assessing the impact on its financial statements from the adoption of the new guidance and determining the period in which the new guidance will be adopted but anticipates an increase in the recognition of right-of-use assets and lease liabilities.

Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The guidance provided under this ASU, as amended, supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition,” and most industry-specific guidance included in the ASC. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance is effective for the Partnership for interim and annual periods beginning after December 15, 2017 (Fiscal 2019) and allows for either full retrospective adoption or modified retrospective adoption. The Partnership has not yet selected a transition method and is in the process of assessing the impact on its financial statements from the adoption of the new guidance.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Note 4 — Goodwill and Intangible Assets

The Partnership’s goodwill and intangible assets comprise the following:
 
 
June 30,
2017
 
September 30,
2016
 
June 30,
2016
Goodwill (not subject to amortization)
 
$
2,002,046

 
$
1,978,981

 
$
1,978,894

Intangible assets:
 
 
 
 
 
 
Customer relationships and noncompete agreements
 
$
536,894

 
$
520,180

 
$
529,739

Accumulated amortization
 
(220,100
)
 
(191,805
)
 
(192,210
)
Intangible assets, net (definite-lived)
 
316,794

 
328,375

 
337,529

Trademarks and tradenames (indefinite-lived)
 
82,944

 
82,944

 
82,944

Total intangible assets, net
 
$
399,738

 
$
411,319

 
$
420,473



Amortization expense of intangible assets was $9,466 and $9,545 for the three months ended June 30, 2017 and 2016, respectively. Amortization expense of intangible assets was $28,295 and $28,646 for the nine months ended June 30, 2017 and 2016, respectively. No amortization expense is included in cost of sales on the Condensed Consolidated Statements of Operations. The estimated aggregate amortization expense of intangible assets for the remainder of Fiscal 2017 and the next four fiscal years is as follows: remainder of Fiscal 2017$9,642; Fiscal 2018$38,248; Fiscal 2019$37,024; Fiscal 2020$35,803; Fiscal 2021$33,968.
Debt
Debt
Note 5 — Debt

In December 2016, AmeriGas Partners and AmeriGas Finance Corp., a 100% wholly owned finance subsidiary of AmeriGas Partners, issued $700,000 of 5.50% Senior Notes due May 2025 (the “5.50% Senior Notes”). The 5.50% Senior Notes rank equally with AmeriGas Partners’ existing outstanding senior notes. The net proceeds from the issuance of the 5.50% Senior Notes were used in December 2016 for (1) the early repayment, pursuant to a tender offer, of a portion of AmeriGas Partners’ 7.00% Senior Notes (the “7.00% Senior Notes”) having an aggregate principal balance of $499,970 plus accrued and unpaid interest and early redemption premiums; (2) the reduction of short-term borrowings; and (3) general corporate purposes.

In February 2017, AmeriGas Partners and AmeriGas Finance Corp. issued $525,000 of 5.75% Senior Notes due May 2027 (the “5.75% Senior Notes”). The 5.75% Senior Notes rank equally with AmeriGas Partners’ existing outstanding senior notes. The net proceeds from the issuance of the 5.75% Senior Notes were used in February 2017 for (1) the early repayment, pursuant to a tender offer, of a portion of the 7.00% Senior Notes having an aggregate principal balance of $378,340 plus accrued and unpaid interest and early redemption premiums; (2) the repayment of short-term borrowings; and (3) general corporate purposes.

In May 2017, AmeriGas Partners repaid the remaining 7.00% Senior Notes not previously tendered, having an aggregate principal balance of $102,512, plus early redemption premiums and accrued and unpaid interest.

In connection with the early repayments of the Partnership’s Senior Notes, during the three and nine months ended June 30, 2017 and 2016, the Partnership recognized losses which are reflected in “Loss on extinguishments of debt” on the Condensed Consolidated Statements of Operations and comprise the following:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Early redemption premiums
 
$
3,588

 
$
30,338

 
$
51,253

 
$
30,338

Write-off of unamortized debt issuance costs
 
846

 
6,748

 
8,476

 
6,748

Loss on extinguishments of debt
 
$
4,434

 
$
37,086

 
$
59,729

 
$
37,086

Commitments and Contingencies
Commitments and Contingencies
Note 6 — Commitments and Contingencies

Contingencies

Saranac Lake Environmental Matter. By letter dated March 6, 2008, the New York State Department of Environmental Conservation (“DEC”) notified AmeriGas OLP that DEC had placed property purportedly owned by AmeriGas OLP in Saranac Lake, New York on its Registry of Inactive Hazardous Waste Disposal Sites. A site characterization study performed by the DEC disclosed contamination related to a former manufactured gas plant (“MGP”). At that time, AmeriGas OLP reviewed the preliminary site characterization prepared by the DEC and researched the history of the site, including the extent of AmeriGas OLP’s ownership of the site. In its written response to the DEC in early 2009, AmeriGas OLP disputed DEC’s contention it was a potentially responsible party (“PRP”) as it did not operate the MGP and appeared to only own a portion of the site. The DEC did not respond to the 2009 communication. In March 2017, the DEC communicated to AmeriGas OLP that the DEC had performed significant testing at the site and had drafted three Records of Decision (“RODs”) related to the site and requested additional information related to AmeriGas OLP’s purported ownership of the site.  The DEC has estimated that its selected remediation plan will cost approximately $27,000. AmeriGas OLP is in the process of responding to the DEC’s request for ownership information and continues to assert defenses based on the nature of its ownership and use of the site. AmeriGas believes it has identified other PRPs and is reviewing the appropriateness of the DEC’s remediation plan, which could affect the amount and allocation of financial responsibility. To AmeriGas OLP’s knowledge, the DEC has not commenced implementation of the remediation plan and has not indicated when such remediation will start.  Based upon currently available information, the Partnership is unable to estimate the ultimate outcome and timing with respect to the resolution of this matter.  The Partnership is working with outside counsel and its environmental consultants to determine the potential exposure and liability due to AmeriGas OLP’s purported ownership of the site.  Based on our preliminary evaluation of the available information, during the third quarter of Fiscal 2017, the Partnership accrued an environmental remediation liability of $7,545 related to the site, which amount is included in “Operating and administrative expenses” on the Condensed Consolidated Statements of Operations. Our share of the actual remediation costs could be significantly more or less than the accrued amount.

Class Action Judgment. In connection with the Partnership’s 2012 acquisition of the subsidiaries of Energy Transfer Partners, L.P. (“ETP”) that operated ETP’s propane distribution business (“Heritage Propane”), the Partnership became party to a class action lawsuit that was filed against Heritage Operating, L.P. in 2005 by Alfred L. Williams, II, on behalf of himself and all others similarly situated. The class action lawsuit alleged, among other things, wrongful collection of tank rental payments from legacy customers of People’s Gas, which was acquired by Heritage Propane in 2000. In 2010, the Florida District Court certified the class and in January 2015, the Florida District Court awarded the class approximately $18,000. In April 2016, the Partnership appealed the verdict to the Florida Second District Court of Appeals (the “Second DCA”) and, in September 2016, the Second DCA affirmed the verdict without opinion. Prior to the Second DCA’s action in the case, we believed that the likelihood of the Second DCA affirming the Florida District Court’s decision was remote. As a result of the Second DCA’s actions, in September 2016, the Partnership recorded a $14,950 adjustment to its litigation accrual to reflect the full amount of the judgment plus associated interest. In October 2016, the Partnership filed a Motion for Written Opinion and for Rehearing En Banc with the Second DCA. Following denial of such motion, the Partnership satisfied such judgment.

Purported Class Action Lawsuits. Between May and October of 2014, more than 35 purported class action lawsuits were filed in multiple jurisdictions against the Partnership/UGI and a competitor by certain of their direct and indirect customers.  The class action lawsuits allege, among other things, that the Partnership and its competitor colluded, beginning in 2008, to reduce the fill level of portable propane cylinders from 17 pounds to 15 pounds and combined to persuade their common customer, Walmart Stores, Inc., to accept that fill reduction, resulting in increased cylinder costs to retailers and end-user customers in violation of federal and certain state antitrust laws.  The claims seek treble damages, injunctive relief, attorneys’ fees and costs on behalf of the putative classes. 

On October 16, 2014, the United States Judicial Panel on Multidistrict Litigation transferred all of these purported class action cases to the Western Division of the United States District Court for the Western District of Missouri (“District Court”).  In July 2015, the District Court dismissed all claims brought by direct customers. In June 2017, the United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) ruled en banc to reverse the dismissal by the District Court, which had previously been affirmed by a panel of the Eighth Circuit.  We are considering the filing of a Petition for a Writ of Certiorari to the U.S. Supreme Court appealing the decision of the Eighth Circuit.   

In July 2015, the District Court also dismissed all claims brought by the indirect customers other than those for injunctive relief.  The indirect customers filed an amended complaint with the District Court claiming injunctive relief and state law claims under Wisconsin, Maine and Vermont law.  In September 2016, the District Court dismissed the amended complaint in its entirety.  The indirect customers appealed this decision to the Eighth Circuit; such appeal was subject to a stay pending the en banc review of the direct purchasers’ claims.  In light of the Eighth Circuit decision with respect to the direct purchaser claims, the briefing schedule in respect of the indirect purchaser appeal will now resume.  On July 21, 2016, several new indirect customer plaintiffs filed an antitrust class action lawsuit against the Partnership in the Western District of Missouri.  The new indirect customer class action lawsuit was dismissed in September 2016 and certain indirect customer plaintiffs appealed the decision, consolidating their appeal with the indirect customer appeal still pending in the Eighth Circuit.

We are unable to reasonably estimate the impact, if any, arising from such litigation. We believe we have strong defenses to the claims and intend to vigorously defend against them.

In addition to the matters described above, there are other pending claims and legal actions arising in the normal course of our businesses. Although we cannot predict the final results of these pending claims and legal actions, we believe, after consultation with counsel, that the final outcome of these matters will not have a material effect on our financial statements.
Fair Value Measurements
Fair Value Measurements
Note 7 — Fair Value Measurements

Derivative Instruments

The following table presents on a gross basis our derivative assets and liabilities, including both current and noncurrent portions, that are measured at fair value on a recurring basis within the fair value hierarchy, as of June 30, 2017September 30, 2016 and June 30, 2016: 
 
 
Asset (Liability)
 
 
Level 1
 
Level 2
 
Level 3
 
Total
June 30, 2017:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
6,369

 
$

 
$
6,369

Liabilities:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
(6,481
)
 
$

 
$
(6,481
)
September 30, 2016:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
13,522

 
$

 
$
13,522

Liabilities:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
(4,779
)
 
$

 
$
(4,779
)
June 30, 2016:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
14,063

 
$

 
$
14,063

Liabilities:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
(9,729
)
 
$

 
$
(9,729
)

 
The fair values of our non-exchange traded commodity derivative contracts included in Level 2 are based upon indicative price quotations available through brokers, industry price publications or recent market transactions and related market indicators. For commodity option contracts not traded on an exchange, we use a Black Scholes option pricing model that considers time value and volatility of the underlying commodity.

Other Financial Instruments

The carrying amounts of other financial instruments included in current assets and current liabilities (except for current maturities of long-term debt) approximate their fair values because of their short-term nature. We estimate the fair value of long-term debt by using current market prices and by discounting future cash flows using rates available for similar type debt (Level 2). The carrying amount and estimated fair value of our long-term debt (including current maturities but excluding unamortized debt issuance costs) at June 30, 2017, September 30, 2016 and June 30, 2016 were as follows:

 
June 30, 2017
 
September 30, 2016
 
June 30, 2016
Carrying amount
$
2,611,981

 
$
2,360,434

 
$
2,718,085

Estimated fair value
$
2,667,681

 
$
2,483,565

 
$
2,774,520



Financial instruments other than derivative instruments, such as short-term investments and trade accounts receivable, could expose us to concentrations of credit risk. We limit credit risk from short-term investments by investing only in investment-grade commercial paper, money market mutual funds, securities guaranteed by the U.S. Government or its agencies and FDIC insured bank deposits. The credit risk arising from concentrations of trade accounts receivable is limited because we have a large customer base that extends across many different U.S. markets.
Derivative Instruments and Hedging Activities
Derivative Instruments and Hedging Activities
Note 8 — Derivative Instruments and Hedging Activities

The Partnership is exposed to certain market risks associated with its ongoing business operations. Management uses derivative financial and commodity instruments, among other things, to manage these risks. The primary risk managed by derivative instruments is commodity price 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. Although our commodity derivative instruments extend over a number of years, a significant portion of our commodity derivative instruments economically hedge commodity price risk during the next twelve months.

Commodity Price Risk

In order to manage market risk associated with the Partnership’s fixed-price programs, the Partnership uses over-the-counter derivative commodity instruments, principally price swap contracts. In addition, the Partnership uses over-the-counter price swap and option contracts to reduce propane price volatility associated with a portion of forecasted propane purchases. In addition, the Partnership from time to time enters into price swap and put option agreements to reduce the effects of short-term commodity price volatility. At June 30, 2017, September 30, 2016 and June 30, 2016, total volumes associated with propane commodity derivatives totaled 213.8 million gallons, 245.4 million gallons and 259.4 million gallons, respectively. At June 30, 2017, the maximum period over which we are economically hedging propane market price risk is 27 months.

Derivative Instruments Credit Risk

The Partnership is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Our counterparties principally comprise major energy companies and major U.S. financial institutions. We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by the Partnership in the forms of letters of credit, parental guarantees or cash. Although we have concentrations of credit risk associated with derivative instruments held by certain derivative instrument counterparties, the maximum amount of loss due to credit risk that we would incur if these counterparties failed to perform according to the terms of their contracts, based upon the gross fair values of the derivative instruments, was not material at June 30, 2017. Certain of our derivative contracts have credit-risk-related contingent features that may require the posting of additional collateral in the event of a downgrade in the Partnership’s debt rating. At June 30, 2017, if the credit-risk-related contingent features were triggered, the amount of collateral required to be posted would not be material.

Offsetting Derivative Assets and Liabilities

Derivative assets and liabilities (and cash collateral received and pledged) are presented net by counterparty on the Condensed Consolidated Balance Sheets if the right of offset exists. Our derivative instruments comprise over-the-counter transactions. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Certain over-the-counter contracts contain contractual rights of offset through master netting arrangements and contract default provisions. In addition, the contracts are subject to conditional rights of offset through counterparty nonperformance, insolvency or other conditions.

In general, most of our over-the-counter transactions are subject to collateral requirements. Types of collateral generally include cash or letters of credit. Cash collateral paid by us to our over-the-counter derivative counterparties, if any, is reflected in the table below to offset derivative liabilities. Cash collateral received by us from our over-the-counter derivative counterparties, if any, is reflected in the table below to offset derivative assets. Certain other accounts receivable and accounts payable balances recognized on the Condensed Consolidated Balance Sheets with our derivative counterparties are not included in the table below but could reduce our net exposure to such counterparties because such balances are subject to master netting or similar arrangements.

Fair Value of Derivative Instruments

The following table presents our derivative assets and liabilities by type, as well as the effects of offsetting, as of June 30, 2017, September 30, 2016 and June 30, 2016:

 
 
June 30,
2017
 
September 30,
2016
 
June 30,
2016
Derivative assets not designated as hedging instruments:
 
 
 
 
 
 
Propane contracts
 
$
6,369

 
$
13,522

 
$
14,063

Total derivative assets — gross
 
6,369

 
13,522

 
14,063

Gross amounts offset in the balance sheet
 
(4,010
)
 
(4,362
)
 
(4,204
)
Total derivative assets — net
 
$
2,359

 
$
9,160

 
$
9,859

 
 
 
 
 
 
 
Derivative liabilities not designated as hedging instruments:
 
 
 
 
 
 
Propane contracts
 
$
(6,481
)
 
$
(4,779
)
 
$
(9,729
)
Total derivative liabilities — gross
 
(6,481
)
 
(4,779
)
 
(9,729
)
Gross amounts offset in the balance sheet
 
4,010

 
4,362

 
4,204

Total derivative liabilities — net
 
$
(2,471
)
 
$
(417
)
 
$
(5,525
)


Effect of Derivative Instruments

The following tables provide information on the effects of derivative instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2017 and 2016:
 
 
 Gain (Loss)
Recognized in Income
 
Location of Gain (Loss)
Recognized in Income
Three Months Ended June 30,
 
2017
 
2016
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
 
 
Propane contracts
 
$
(2,744
)
 
$
20,409

 
Cost of sales  propane
 
 
 
 
 
 
 
 
 
Gain
Recognized in Income
 
Location of Gain
Recognized in Income
Nine Months Ended June 30,
 
2017
 
2016
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
 
 
Propane contracts
 
$
18,650

 
$
4,579

 
Cost of sales  propane

We are also a party to a number of contracts that have elements of a derivative instrument. These contracts include, among others, binding purchase orders, contracts that provide for the purchase and delivery of propane and service contracts that require the counterparty to provide commodity storage or transportation service to meet our normal sales commitments. Although certain of these contracts have the requisite elements of a derivative instrument, these contracts qualify for NPNS 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.
Related Party Transactions
Related Party Transactions
Note 9 — Related Party Transactions

Pursuant to the Partnership Agreement and a management services agreement, the General Partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of the Partnership. These costs, which totaled $131,501 and $129,773 for the three months ended June 30, 2017 and 2016, respectively, and $428,919 and $431,314 for the nine months ended June 30, 2017 and 2016, 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 $4,173 and $4,392 for the three months ended June 30, 2017 and 2016, respectively, and $13,554 and $13,784 for the nine months ended June 30, 2017 and 2016, 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 incurred related to these items during the three and nine months ended June 30, 2017 and 2016, were not material.

From time to time, AmeriGas OLP purchases propane on an as needed basis from UGI Energy Services, LLC (“Energy Services”). The price of the purchases is generally based on the market price at the time of purchase. There were no purchases of propane by AmeriGas OLP from Energy Services during the three and nine months ended June 30, 2017 and 2016.

In addition, the Partnership sells propane to affiliates of UGI. Sales of propane to affiliates of UGI during the three and nine months ended June 30, 2017 and 2016 were not material.
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation. The consolidated financial statements include the accounts of AmeriGas Partners, its majority-owned subsidiary AmeriGas OLP, and its 100%-owned finance subsidiaries AmeriGas Finance Corp., AmeriGas Eagle Finance Corp., AP Eagle Finance Corp., and AmeriGas Finance LLC. AmeriGas Partners and AmeriGas OLP are under the common control of the General Partner. The General Partner of AmeriGas OLP, which is also the General Partner of AmeriGas Partners, makes all decisions for AmeriGas OLP; limited partners of AmeriGas OLP do not have the ability to remove the General Partner or participate in the decision-making for AmeriGas OLP. The accounts of AmeriGas OLP are included based upon the determination that AmeriGas Partners has a controlling financial interest in and is the primary beneficiary of AmeriGas OLP.
Allocation of Net Income (Loss). Net income (loss) 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, L.P., as amended (“Partnership Agreement”).
Net Income (Loss) Per Unit. Income (loss) per limited partner unit is computed in accordance with GAAP regarding the application of the two-class method for determining income (loss) per unit for master limited partnerships (“MLPs”) when IDRs are present. The two-class method requires that income per limited partner unit be calculated as if all earnings for the period were distributed and requires a separate calculation for each quarter- and year-to-date period. In periods when our net income attributable to AmeriGas Partners exceeds our Available Cash, as defined in the Partnership Agreement, and is above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the General Partner. Generally, in periods when our Available Cash in respect of the quarter- or year-to-date periods exceeds our net income (loss) attributable to AmeriGas Partners, the calculation according to the two-class method results in an allocation of earnings to the General Partner greater than its relative ownership interest in the Partnership (or in the case of a net loss attributable to AmeriGas Partners, an allocation of such net loss to the Common Unitholders greater than their relative ownership interest in the Partnership).

Derivative Instruments. Derivative instruments are reported on the Condensed Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase and normal sale (“NPNS”) exception under GAAP. The accounting for changes in fair value depends upon the purpose of the derivative instrument and whether it is designated and qualifies for hedge accounting. For the nine months ended June 30, 2017 and 2016, none of our derivative instruments were designated as hedges under GAAP.

Changes in the fair values of commodity derivative instruments for all periods presented are reflected in “Cost of sales — propane” on the Condensed Consolidated Statements of Operations. Cash flows from derivative instruments are included in cash flows from operating activities.
Deferred Debt Issuance Costs. During the fourth quarter of Fiscal 2016, we adopted new accounting guidance regarding the classification of deferred debt issuance costs. Deferred debt issuance costs associated with long-term debt are reflected as a direct deduction from the carrying amount of such debt. Deferred debt issuance costs associated with line of credit facilities continue to be classified as “Other assets” on our Condensed Consolidated Balance Sheets.
Environmental Matters. We are subject to environmental laws and regulations intended to mitigate or remove the effects of past operations and improve or maintain the quality of the environment. These laws and regulations require the removal or remedy of the effect on the environment of the disposal or release of certain specified hazardous substances at current or former operating sites.

Environmental reserves are accrued when assessments indicate that it is probable that a liability has been incurred and an amount can be reasonably estimated. Amounts recorded as environmental liabilities on the Condensed Consolidated Balance Sheets represent our best estimate of costs expected to be incurred or, if no best estimate can be made, the minimum liability associated with a range of expected environmental investigation and remediation costs. Our estimated liability for environmental contamination is reduced to reflect anticipated participation of other responsible parties but is not reduced for possible recovery from insurance carriers. In those instances for which the amount and timing of cash payments associated with environmental investigation and cleanup are reliably determinable, we discount such liabilities to reflect the time value of money. We intend to pursue recovery of incurred costs through all appropriate means.
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.
Reclassifications. Certain prior period amounts have been reclassified to conform to the current-period presentation.
Adoption of New Accounting Standards

Consolidation. Effective October 1, 2016, the Partnership adopted Accounting Standards Update (“ASU”) No. 2015-02, “Amendments to Consolidation Analysis” and ASU No. 2016-17, “Interest Held through Related Parties That Are under Common Control.” These ASUs provide new accounting guidance regarding whether a reporting entity should consolidate certain types of legal entities including variable interest entities (“VIEs”). Among other things, the new guidance affects the consolidation analysis of reporting entities that are involved with VIEs and requires that, under ASU 2015-02, if a single decision maker and its related parties are under common control, the single decision maker consider indirect interests in the entity held through these related parties to be the equivalent of direct interests, in their entirety. ASU 2016-07 amended the guidance in ASU 2015-02 to provide that such indirect interests be considered the equivalent of direct interests, on a proportionate basis. The adoption of this new guidance did not impact our consolidated financial statements.

Accounting Standards Not Yet Adopted

Goodwill Impairment. In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” Under the new accounting guidance, an entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity will perform its goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value but not to exceed the total amount of the goodwill of the reporting unit. The provisions of the new accounting guidance are required to be applied prospectively. The new accounting guidance is effective for the Partnership for goodwill impairment tests performed in fiscal years beginning after December 15, 2019 (Fiscal 2021). Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. The Partnership expects to adopt the new guidance in the fourth quarter of Fiscal 2017.

Cash Flow Classification. In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” This ASU provides guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2017 (Fiscal 2019). Early adoption is permitted. The amendments in the ASU should generally be adopted on a retrospective basis. The Partnership is in the process of assessing the impact on its financial statements from the adoption of the new guidance and determining the period in which the new guidance will be adopted.

Leases. In February 2016, the FASB issued ASU No. 2016-02, "Leases." This ASU amends existing guidance to require entities that lease assets to recognize the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The new guidance also requires additional disclosures about the amount, timing and uncertainty of cash flows from leases. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2018 (Fiscal 2020). Early adoption is permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Partnership is in the process of assessing the impact on its financial statements from the adoption of the new guidance and determining the period in which the new guidance will be adopted but anticipates an increase in the recognition of right-of-use assets and lease liabilities.

Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The guidance provided under this ASU, as amended, supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition,” and most industry-specific guidance included in the ASC. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance is effective for the Partnership for interim and annual periods beginning after December 15, 2017 (Fiscal 2019) and allows for either full retrospective adoption or modified retrospective adoption. The Partnership has not yet selected a transition method and is in the process of assessing the impact on its financial statements from the adoption of the new guidance.
Summary of Significant Accounting Policies (Tables)
Schedule of Income Per Limited Partner Unit
The following table sets forth reconciliations of the numerators and denominators of the basic and diluted income per limited partner unit computations:
 
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
 
2017
 
2016
 
2017
 
2016
Net (loss) income attributable to AmeriGas Partners, L.P.
 
$
(46,752
)
 
$
(33,069
)
 
$
180,290

 
$
293,812

Adjust for general partner share and theoretical distributions of net income attributable to AmeriGas Partners, L.P. to the general partner in accordance with the two-class method for MLPs
 
(10,862
)
 
(10,101
)
 
(34,908
)
 
(33,039
)
Common Unitholders’ interest in net (loss) income attributable to AmeriGas Partners, L.P. under the two-class method for MLPs
 
$
(57,614
)
 
$
(43,170
)
 
$
145,382

 
$
260,773

Weighted average Common Units outstanding — basic (thousands)
 
93,009

 
92,960

 
92,993

 
92,945

Potentially dilutive Common Units (thousands)
 

 

 
52

 
74

Weighted average Common Units outstanding — diluted (thousands)
 
93,009

 
92,960

 
93,045

 
93,019



Goodwill and Intangible Assets (Tables)
Components of Goodwill and Intangible Assets
The Partnership’s goodwill and intangible assets comprise the following:
 
 
June 30,
2017
 
September 30,
2016
 
June 30,
2016
Goodwill (not subject to amortization)
 
$
2,002,046

 
$
1,978,981

 
$
1,978,894

Intangible assets:
 
 
 
 
 
 
Customer relationships and noncompete agreements
 
$
536,894

 
$
520,180

 
$
529,739

Accumulated amortization
 
(220,100
)
 
(191,805
)
 
(192,210
)
Intangible assets, net (definite-lived)
 
316,794

 
328,375

 
337,529

Trademarks and tradenames (indefinite-lived)
 
82,944

 
82,944

 
82,944

Total intangible assets, net
 
$
399,738

 
$
411,319

 
$
420,473

Debt (Tables)
Early Repayments of Debt
In connection with the early repayments of the Partnership’s Senior Notes, during the three and nine months ended June 30, 2017 and 2016, the Partnership recognized losses which are reflected in “Loss on extinguishments of debt” on the Condensed Consolidated Statements of Operations and comprise the following:
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Early redemption premiums
 
$
3,588

 
$
30,338

 
$
51,253

 
$
30,338

Write-off of unamortized debt issuance costs
 
846

 
6,748

 
8,476

 
6,748

Loss on extinguishments of debt
 
$
4,434

 
$
37,086

 
$
59,729

 
$
37,086

Fair Value Measurements (Tables)
The following table presents on a gross basis our derivative assets and liabilities, including both current and noncurrent portions, that are measured at fair value on a recurring basis within the fair value hierarchy, as of June 30, 2017September 30, 2016 and June 30, 2016: 
 
 
Asset (Liability)
 
 
Level 1
 
Level 2
 
Level 3
 
Total
June 30, 2017:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
6,369

 
$

 
$
6,369

Liabilities:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
(6,481
)
 
$

 
$
(6,481
)
September 30, 2016:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
13,522

 
$

 
$
13,522

Liabilities:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
(4,779
)
 
$

 
$
(4,779
)
June 30, 2016:
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
14,063

 
$

 
$
14,063

Liabilities:
 
 
 
 
 
 
 
 
Propane contracts
 
$

 
$
(9,729
)
 
$

 
$
(9,729
)
The carrying amount and estimated fair value of our long-term debt (including current maturities but excluding unamortized debt issuance costs) at June 30, 2017, September 30, 2016 and June 30, 2016 were as follows:

 
June 30, 2017
 
September 30, 2016
 
June 30, 2016
Carrying amount
$
2,611,981

 
$
2,360,434

 
$
2,718,085

Estimated fair value
$
2,667,681

 
$
2,483,565

 
$
2,774,520

Derivative Instruments and Hedging Activities (Tables)
The following table presents our derivative assets and liabilities by type, as well as the effects of offsetting, as of June 30, 2017, September 30, 2016 and June 30, 2016:

 
 
June 30,
2017
 
September 30,
2016
 
June 30,
2016
Derivative assets not designated as hedging instruments:
 
 
 
 
 
 
Propane contracts
 
$
6,369

 
$
13,522

 
$
14,063

Total derivative assets — gross
 
6,369

 
13,522

 
14,063

Gross amounts offset in the balance sheet
 
(4,010
)
 
(4,362
)
 
(4,204
)
Total derivative assets — net
 
$
2,359

 
$
9,160

 
$
9,859

 
 
 
 
 
 
 
Derivative liabilities not designated as hedging instruments:
 
 
 
 
 
 
Propane contracts
 
$
(6,481
)
 
$
(4,779
)
 
$
(9,729
)
Total derivative liabilities — gross
 
(6,481
)
 
(4,779
)
 
(9,729
)
Gross amounts offset in the balance sheet
 
4,010

 
4,362

 
4,204

Total derivative liabilities — net
 
$
(2,471
)
 
$
(417
)
 
$
(5,525
)


The following tables provide information on the effects of derivative instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2017 and 2016:
 
 
 Gain (Loss)
Recognized in Income
 
Location of Gain (Loss)
Recognized in Income
Three Months Ended June 30,
 
2017
 
2016
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
 
 
Propane contracts
 
$
(2,744
)
 
$
20,409

 
Cost of sales  propane
 
 
 
 
 
 
 
 
 
Gain
Recognized in Income
 
Location of Gain
Recognized in Income
Nine Months Ended June 30,
 
2017
 
2016
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
 
 
Propane contracts
 
$
18,650

 
$
4,579

 
Cost of sales  propane

Nature of Operations (Details)
9 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Number of states in which the company has market share
50 
General Partners Interest
 
Number of employees of the AmeriGas Partners and the Operating Partnership
AmeriGas Propane Inc Partnership Interest in AmeriGas Partners
 
General Partners Interest
 
General partners ownership interest (as a percent)
1.00% 
AmeriGas OLP
 
General Partners Interest
 
General partners ownership interest (as a percent)
1.01% 
Limited partner interest held by AmeriGas Partners in AmeriGas OLP (as a percent)
98.99% 
Summary of Significant Accounting Policies - Principles of Consolidation (Details) (AmeriGas Finance Corp., AP Eagle Finance Corp. and AmeriGas Finance LLC)
Jun. 30, 2017
AmeriGas Finance Corp., AP Eagle Finance Corp. and AmeriGas Finance LLC
 
Investment
 
Ownership interest percentage
100.00% 
Summary of Significant Accounting Policies - Allocation of Net Income (Loss) (Details) (AmeriGas Propane Inc Partnership Interest in AmeriGas Partners)
9 Months Ended
Jun. 30, 2017
AmeriGas Propane Inc Partnership Interest in AmeriGas Partners
 
Investment
 
General partners ownership interest (as a percent)
1.00% 
Summary of Significant Accounting Policies - Schedule of Income Per Limited Partner Unit (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Accounting Policies [Abstract]
 
 
 
 
Net (loss) income attributable to AmeriGas Partners, L.P.
$ (46,752)
$ (33,069)
$ 180,290 
$ 293,812 
Adjust for general partner share and theoretical distributions of net income attributable to AmeriGas Partners, L.P. to the general partner in accordance with the two-class method for MLPs
(10,862)
(10,101)
(34,908)
(33,039)
Common Unitholders’ interest in net (loss) income attributable to AmeriGas Partners, L.P. under the two-class method for MLPs
$ (57,614)
$ (43,170)
$ 145,382 
$ 260,773 
Weighted average Common Units outstanding—basic (in units)
93,009 
92,960 
92,993 
92,945 
Potentially dilutive Common Units (in units)
52 
74 
Weighted average Common Units outstanding—diluted (in units)
93,009 
92,960 
93,045 
93,019 
Summary of Significant Accounting Policies - Net Income (Loss) Per Unit (Details)
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Accounting Policies [Abstract]
 
 
 
 
Dilutive effect of theoretical distributions of net income on earnings (in usd per unit)
$ 0 
$ 0 
$ (0.01)
$ (0.03)
Summary of Significant Accounting Policies - Deferred Debt Issuance Costs (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Accounting Policies [Abstract]
 
Deferred debt issuance costs
$ 30,480 
Summary of Significant Accounting Policies - Correction of Prior Period Error (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Increase in other operating expense
$ (8,294)
$ (6,041)
$ (10,787)
$ (22,079)
Decrease in depreciation
(35,482)
(35,668)
(103,891)
(110,807)
Restatement Adjustment |
Correction of Error in Accounting for Gains on Sales of Fixed Assets
 
 
 
 
Increase in other operating expense
 
 
8,847 
 
Decrease in depreciation
 
 
$ 1,162 
 
Goodwill And Intangible Assets - Components of Goodwill and Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Goodwill (not subject to amortization)
$ 2,002,046 
$ 1,978,981 
$ 1,978,894 
Intangible assets:
 
 
 
Customer relationships and noncompete agreements
536,894 
520,180 
529,739 
Accumulated amortization
(220,100)
(191,805)
(192,210)
Intangible assets, net (definite-lived)
316,794 
328,375 
337,529 
Trademarks and tradenames (indefinite-lived)
82,944 
82,944 
82,944 
Total intangible assets, net
$ 399,738 
$ 411,319 
$ 420,473 
Goodwill and Intangible Assets - Narrative (Details) (USD $)
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Finite-Lived Intangible Assets
 
 
 
 
Amortization expense of intangible assets
$ 9,466,000 
$ 9,545,000 
$ 28,295,000 
$ 28,646,000 
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity
 
 
 
 
Remainder of Fiscal 2017
9,642,000 
 
9,642,000 
 
Fiscal 2018
38,248,000 
 
38,248,000 
 
Fiscal 2019
37,024,000 
 
37,024,000 
 
Fiscal 2020
35,803,000 
 
35,803,000 
 
Fiscal 2021
33,968,000 
 
33,968,000 
 
Cost of Sales
 
 
 
 
Finite-Lived Intangible Assets
 
 
 
 
Amortization expense of intangible assets
$ 0 
$ 0 
$ 0 
$ 0 
Debt - Narrative (Details) (USD $)
1 Months Ended
May 31, 2017
Feb. 28, 2017
Dec. 31, 2016
Senior Notes |
5.50% Senior Notes due May 2025
 
 
 
Debt Instrument [Line Items]
 
 
 
Debt issued
 
 
$ 700,000,000 
Stated interest rate
 
 
5.50% 
Senior Notes |
7.00% Senior Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Stated interest rate
7.00% 
7.00% 
7.00% 
Aggregate principal balance of debt repaid
102,512,000 
378,340,000 
499,970,000 
Senior Notes |
5.75% Senior Notes due May 2027
 
 
 
Debt Instrument [Line Items]
 
 
 
Debt issued
 
$ 525,000,000 
 
Stated interest rate
 
5.75% 
 
AmeriGas Finance Corp.
 
 
 
Debt Instrument [Line Items]
 
 
 
Ownership interest percentage
 
 
100.00% 
Debt - Early Repayments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Extinguishment of Debt [Line Items]
 
 
 
 
Loss on extinguishments of debt
$ 4,434 
$ 37,086 
$ 59,729 
$ 37,086 
Senior Notes |
7.00% Senior Notes
 
 
 
 
Extinguishment of Debt [Line Items]
 
 
 
 
Early redemption premiums
3,588 
30,338 
51,253 
30,338 
Write-off of unamortized debt issuance costs
846 
6,748 
8,476 
6,748 
Loss on extinguishments of debt
$ 4,434 
$ 37,086 
$ 59,729 
$ 37,086 
Commitments and Contingencies (Details) (USD $)
In Thousands, unless otherwise specified
1 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2016
Jan. 31, 2015
Oct. 31, 2014
lawsuit
Jun. 30, 2017
FTC Cylinder Investigation
lb
Jun. 30, 2017
AmeriGas OLP
DEC Remediation Plan
Saranac Lake, New York
Mar. 31, 2017
AmeriGas OLP
DEC Remediation Plan
Saranac Lake, New York
Loss Contingencies
 
 
 
 
 
 
Estimated remediation plan cost
 
 
 
 
 
$ 27,000 
Liability accrued for potential remediation costs
 
 
 
 
7,545 
 
Amount of propane in cylinders before reduction (in pounds)
 
 
 
17 
 
 
Amount of propane in cylinders after reduction (in pounds)
 
 
 
15 
 
 
Amount awarded
 
18,000 
 
 
 
 
Adjustment to litigation accrual
$ 14,950 
 
 
 
 
 
Class action lawsuits (more than)
 
 
35 
 
 
 
Fair Value Measurements - Financial Assets and Financial Liabilities at Fair Value On a Recurring Basis (Details) (Fair Value, Measurements, Recurring, Propane Contracts, USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2016
Assets:
 
 
 
Derivative Assets
$ 6,369 
$ 13,522 
$ 14,063 
Liabilities:
 
 
 
Derivative Liabilities
(6,481)
(4,779)
(9,729)
Level 1
 
 
 
Assets:
 
 
 
Derivative Assets
Liabilities:
 
 
 
Derivative Liabilities
Level 2
 
 
 
Assets:
 
 
 
Derivative Assets
6,369 
13,522 
14,063 
Liabilities:
 
 
 
Derivative Liabilities
(6,481)
(4,779)
(9,729)
Level 3
 
 
 
Assets:
 
 
 
Derivative Assets
Liabilities:
 
 
 
Derivative Liabilities
$ 0 
$ 0 
$ 0 
Fair Value Measurements - Other Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2016
Carrying amount
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Long-term debt
$ 2,611,981 
$ 2,360,434 
$ 2,718,085 
Estimated fair value
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Long-term debt
$ 2,667,681 
$ 2,483,565 
$ 2,774,520 
Derivative Instruments and Hedging Activities - Narrative (Details)
9 Months Ended
Jun. 30, 2017
gal
Sep. 30, 2016
gal
Jun. 30, 2016
gal
Derivative Instruments and Hedging Activities Disclosure [Abstract]
 
 
 
Volume of commodity derivative (gallons)
213,800,000 
245,400,000 
259,400,000 
Maximum period of price risk cash flow hedging (in months)
27 months 
 
 
Derivative Instruments and Hedging Activities - Components of Fair Value of Derivative Assets and Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2016
Derivative assets not designated as hedging instruments:
 
 
 
Total derivative assets — gross
$ 6,369 
$ 13,522 
$ 14,063 
Gross amounts offset in the balance sheet
(4,010)
(4,362)
(4,204)
Total derivative assets — net
2,359 
9,160 
9,859 
Derivative liabilities not designated as hedging instruments:
 
 
 
Total derivative liabilities — gross
(6,481)
(4,779)
(9,729)
Gross amounts offset in the balance sheet
4,010 
4,362 
4,204 
Total derivative liabilities — net
(2,471)
(417)
(5,525)
Not Designated as Hedging Instrument |
Propane contracts
 
 
 
Derivative assets not designated as hedging instruments:
 
 
 
Total derivative assets — gross
6,369 
13,522 
14,063 
Derivative liabilities not designated as hedging instruments:
 
 
 
Total derivative liabilities — gross
$ (6,481)
$ (4,779)
$ (9,729)
Derivative Instruments and Hedging Activities - Components of Derivative Instruments Gain Loss in Statement of Operations (Details) (Not Designated as Hedging Instrument, Propane contracts, Cost of sales — propane, USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Not Designated as Hedging Instrument |
Propane contracts |
Cost of sales — propane
 
 
 
 
Derivative Instruments, Gain (Loss)
 
 
 
 
Gain (Loss) Recognized in Income
$ (2,744)
$ 20,409 
$ 18,650 
$ 4,579 
Related Party Transactions (Details) (USD $)
3 Months Ended 9 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
General Partner |
Reimbursed Expenses or Payments
 
 
 
 
Related Party Transaction
 
 
 
 
Related party costs and expenses
$ 131,501,000 
$ 129,773,000 
$ 428,919,000 
$ 431,314,000 
General Partner |
UGI Corp |
General and Administrative Services
 
 
 
 
Related Party Transaction
 
 
 
 
Related party costs and expenses
4,173,000 
4,392,000 
13,554,000 
13,784,000 
Affiliated Entity |
Energy Services |
Propane Purchases
 
 
 
 
Related Party Transaction
 
 
 
 
Related party costs and expenses
$ 0 
$ 0 
$ 0 
$ 0