Summary of AMERIGAS PARTNERS LP

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, consumer protection and accounting matters; (6) competitive pressures from the same and alternative energy sources; (7) failure to acquire new customers and retain current customers thereby reducing or limiting any increase in revenues; (8) liability for environmental claims; (9) increased customer conservation measures due to high energy prices and improvements in energy efficiency and technology resulting in reduced demand; (10) adverse labor relations; (11) large customer, counter-party 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; (17) the timing and success of our acquisitions and investments to grow our business; and (18) our ability to successfully integrate acquired businesses, including Heritage Propane, and achieve anticipated synergies. 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, 2011, are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. We undertake no obligation to update publicly any forward-looking statement whether as a result of new information or future events except as required by the federal securities laws.

ANALYSIS OF RESULTS OF OPERATIONS The following analyses compare the Partnership's results of operations for the three months ended June 30, 2012 ("2012 three-month period") with the three months ended June 30, 2011 ("2011 three-month period") and the nine months ended June 30, 2012 ("2012 nine-month period") with the nine months ended June 30, 2011 ("2011 nine-month period").
Executive Overview
Results for the 2012 three- and nine-month periods were significantly affected by the Heritage Acquisition. On January 12, 2012, AmeriGas Partners completed the acquisition of the subsidiaries of ETP that operate ETP's propane distribution business (collectively referred to as "Heritage Propane") for total consideration of approximately $2.6 billion, including approximately $1.5 billion in cash and 29,567,362 AmeriGas Partners Common Units with a fair value of approximately $1.1 billion. The cash portion of the Heritage Acquisition was financed by the issuance of $1.55 billion face amount of AmeriGas Partners Senior Notes. Results for the 2012 periods reflect Heritage Propane from January 12, 2012 (for more information on the Heritage Acquisition, see Note 4 to the condensed consolidated financial statements).
Net loss attributable to AmeriGas Partners for the 2012 three-month period was $89.4 million compared with net loss attributable to AmeriGas Partners for the 2011 three-month period of $9.2 million. As previously mentioned, results for the 2012 three-month period reflect a greater seasonal loss resulting from the Heritage Acquisition, including integration transition expenses, and the effects of significantly warmer than normal temperatures across the Partnership's service territory. Temperatures in our service territory during the 2012 three-month period were affected by weather that was approximately 24% warmer than normal compared with temperatures last year that were approximately normal. In addition, an early end to the heating season with temperatures in March that averaged more than 38% warmer than normal had a follow on effect on the June 2012 quarter. Retail propane gallons

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AMERIGAS PARTNERS, L.P.

sold were 31% higher than in the prior-year period reflecting the effects of the Heritage Acquisition partially offset by the impacts of the significantly warmer weather and early end to the heating season on volumes from our legacy operations. Results for the 2012 three-month period include $15.0 million of acquisition and transition costs associated with the Heritage Acquisition. Net income attributable to AmeriGas Partners for the 2012 nine-month period was $87.0 million compared with net income attributable to AmeriGas Partners for the 2011 nine-month period of $183.7 million. Net income attributable to AmeriGas Partners for the 2012 nine-month period and the 2011 nine-month period includes pre-tax losses of $13.3 million and $18.8 million, respectively, associated with extinguishments of debt. The 2012 nine-month period was affected by historically warm weather that was approximately 18% warmer than normal and 19% warmer than the prior-year nine-month period. As previously mentioned, the heating season came to an early end in 2012 as temperatures in March averaged more than 38% warmer than normal. Retail propane gallons sold were 11.9% higher than in the prior-year period reflecting the effects of the Heritage Acquisition partially offset by the impact of the significantly warmer weather on volumes from our legacy operations. Results for the 2012 nine-month period include $26.9 million of acquisition and transition costs associated with the Heritage Acquisition.

2012 three-month period compared with 2011 three-month period

Three Months Ended June 30,                  2012            2011            Increase (Decrease)
(millions of dollars)
Gallons sold (millions):
Retail                                        204.0           155.1             48.9          31.5  %
Wholesale                                      14.8            21.6             (6.8 )       (31.5 )%
                                              218.8           176.7             42.1          23.8  %
Revenues:
Retail propane                           $    491.5      $    394.7      $      96.8          24.5  %
Wholesale propane                              16.0            33.6            (17.6 )       (52.4 )%
Other                                          64.4            42.5             21.9          51.5  %
                                         $    571.9      $    470.8      $     101.1          21.5  %

Total margin (a)                         $    237.9      $    170.0      $      67.9          39.9  %
EBITDA (b)                               $      1.8      $     31.1      $     (29.3 )       (94.2 )%
Operating (loss) income (b)              $    (48.3 )    $      6.7      $     (55.0 )      (820.9 )%
Net loss attributable to AmeriGas
Partners                                 $    (89.4 )    $     (9.2 )    $     (80.2 )       871.7  %
Heating degree days-% (warmer) colder
than normal (c)                               (23.8 )%         (1.4 )%             -             -

(a) Total margin represents total revenues less cost of sales - propane and cost of sales - other.

(b) Earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") should not be considered as an alternative to net income attributable to AmeriGas Partners (as an indicator of operating performance) and is not a measure of performance or financial condition under accounting principles generally accepted in the United States of America ("GAAP"). Management believes EBITDA is a meaningful non-GAAP financial measure used by investors to (1) compare the Partnership's operating performance with that of other companies within the propane industry and (2) assess the Partnership's ability to meet loan covenants. The Partnership's definition of EBITDA may be different from those used by other companies. Management uses EBITDA to compare year-over-year profitability of the business without regard to capital structure as well as to compare the relative performance of the Partnership to that of other master limited partnerships without regard to their financing methods, capital structure, income taxes or historical cost basis. In view of the omission of interest, income taxes, depreciation and amortization from EBITDA, management also assesses the profitability of the business by comparing net income attributable to AmeriGas Partners for the relevant years. Management also uses EBITDA to assess the Partnership's profitability because its parent, UGI Corporation, uses the Partnership's EBITDA to assess the profitability of the Partnership which is one of UGI Corporation's industry segments. UGI Corporation discloses the Partnership's EBITDA in its disclosure about industry segments as the profitability measure for its domestic propane segment. EBITDA for the three months ended June 30, 2012 includes transition expenses of $15.0 million associated with Heritage Propane integration activities.

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

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                            AMERIGAS PARTNERS, L.P.


                                                Three Months Ended June 30,
(millions of dollars)                              2012              2011
Net loss attributable to AmeriGas Partners   $       (89.4 )     $      (9.2 )
Income tax expense                                    (0.2 )             0.1
Interest expense                                      41.9              15.6
Depreciation                                          38.3              21.5
Amortization                                          11.2               3.1
EBITDA                                       $         1.8       $      31.1

(c) Deviation from average heating degree days for the 30-year period 1971-2000 based upon national weather statistics provided by the National Oceanic and Atmospheric Administration ("NOAA") for 335 airports in the United States, excluding Alaska.

Results for the 2012 three-month period reflect the operations of Heritage Propane. Temperatures based upon heating degree day data averaged 23.8% warmer than normal during the 2012 three-month period compared with temperatures that were approximately normal in the prior-year period. The significantly warmer spring weather reduced heating-related volumes. In addition, the heating season came to an early end in Fiscal 2012 as temperatures in March averaged more than 38% warmer than normal. Notwithstanding the impact of the significantly warmer weather on our legacy business, retail propane gallons sold were 31.5% higher than in the prior-year period reflecting the impact of the Heritage Acquisition (approximately 69 million gallons).

Retail propane revenues increased $96.8 million during the 2012 three-month period reflecting incremental revenues from Heritage Propane partially offset by the effects of weather-reduced volumes in our legacy business and lower average retail propane prices associated with lower propane product costs. Wholesale propane revenues decreased $17.6 million principally reflecting lower total wholesale volumes sold and lower average wholesale prices. Average daily wholesale propane commodity prices at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 35% lower in the 2012 three-month period compared to such prices in the 2011 three-month period. Total revenues from fee income and other ancillary sales and services were $21.9 million higher than the prior-year three-month period reflecting the impact of the Heritage acquisition. Total cost of sales increased $33.2 million reflecting incremental cost of sales from Heritage Propane offset by the effects of the lower retail and wholesale volumes sold by our legacy operations and lower propane commodity prices.
Total margin increased $67.9 million in the 2012 three-month period as propane margin attributable to Heritage Propane and higher total margin from ancillary sales and services ($16.6 million) principally attributable to Heritage Propane were partially offset by lower total propane margin from the legacy business resulting from the significantly warmer weather.
EBITDA in the 2012 three-month period was $1.8 million compared to $31.1 million in the prior-year three-month period, a decrease of $29.3 million, as the higher total margin ($67.9 million) was more than offset by higher operating and administrative expenses ($95.8 million) primarily attributable to Heritage Propane. Included in the 2012 three-month period operating expenses are $15.0 million of integration transition expenses. Operating income decreased $55.0 million reflecting the $29.3 million decrease in EBITDA and a $25.0 million increase in depreciation and amortization expense principally associated with Heritage Propane.

Interest expense for the 2012 three-month period was $41.9 million compared to $15.6 million in the prior-year period. The increase reflects interest on long-term debt issued to fund the cash portion of the Heritage Acquisition.

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                            AMERIGAS PARTNERS, L.P.


2012 nine-month period compared with 2011 nine-month period

Nine Months Ended June 30,                   2012            2011            Increase (Decrease)
(millions of dollars)
Gallons sold (millions):
Retail                                        814.3           727.8             86.5          11.9  %
Wholesale                                      83.4            99.0            (15.6 )       (15.8 )%
                                              897.7           826.8             70.9           8.6  %
Revenues:
Retail propane                           $  2,106.7      $  1,796.3      $     310.4          17.3  %
Wholesale propane                             120.9           145.4            (24.5 )       (16.9 )%
Other                                         183.7           136.1             47.6          35.0  %
                                         $  2,411.3      $  2,077.8      $     333.5          16.1  %
Total margin (a)                         $    963.5      $    776.9      $     186.6          24.0  %
EBITDA (b)                               $    310.0      $    301.9      $       8.1           2.7  %
Operating income (b)                     $    206.9      $    252.9      $     (46.0 )       (18.2 )%
Net income attributable to AmeriGas
Partners                                 $     87.0      $    183.7      $     (96.7 )       (52.6 )%
Heating degree days-% (warmer) colder
than normal (c)                               (18.3 )%         (0.1 )%             -             -

(a) Total margin represents total revenues less cost of sales - propane and cost of sales - other.

(b) Earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") should not be considered as an alternative to net income attributable to AmeriGas Partners (as an indicator of operating performance) and is not a measure of performance or financial condition under accounting principles generally accepted in the United States of America ("GAAP"). Management believes EBITDA is a meaningful non-GAAP financial measure used by investors to (1) compare the Partnership's operating performance with that of other companies within the propane industry and (2) assess the Partnership's ability to meet loan covenants. The Partnership's definition of EBITDA may be different from those used by other companies. Management uses EBITDA to compare year-over-year profitability of the business without regard to capital structure as well as to compare the relative performance of the Partnership to that of other master limited partnerships without regard to their financing methods, capital structure, income taxes or historical cost basis. In view of the omission of interest, income taxes, depreciation and amortization from EBITDA, management also assesses the profitability of the business by comparing net income attributable to AmeriGas Partners for the relevant years. Management also uses EBITDA to assess the Partnership's profitability because its parent, UGI Corporation, uses the Partnership's EBITDA to assess the profitability of the Partnership which is one of UGI Corporation's industry segments. UGI Corporation discloses the Partnership's EBITDA in its disclosure about industry segments as the profitability measure for its domestic propane segment. EBITDA for the nine months ended June 30, 2012 and 2011 includes net pre-tax losses of $13.3 million and $18.8 million, respectively, associated with extinguishments of debt. EBITDA for the nine months ended June 30, 2012 includes acquisition and transition expenses of $26.9 million associated with Heritage Propane.

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

                                                   Nine Months Ended
                                                        June 30,
(millions of dollars)                               2012           2011
Net income attributable to AmeriGas Partners   $     87.0        $ 183.7
Income tax expense                                    1.0            0.5
Interest expense                                    103.4           47.3
Depreciation                                         94.6           61.9
Amortization                                         24.0            8.5
EBITDA                                         $    310.0        $ 301.9

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Based upon heating degree-day data, temperatures in the Partnership's service territories during the 2012 nine-month period averaged more than 18% warmer than normal and the prior-year period. Notwithstanding the record warm weather's impact on our legacy business volumes, retail propane gallons sold were 86.5 million gallons greater than in the prior-year period reflecting the impact of Heritage Propane (approximately 206 million gallons). The winter heating season came to an early end with temperatures in the month of March averaging more than 38% warmer than normal.
Retail propane revenues increased $310.4 million during the 2012 nine-month period reflecting incremental retail propane revenues from Heritage Propane partially offset by the effects of lower revenues from weather-reduced volumes in our legacy operations and lower propane commodity prices. Wholesale propane revenues decreased $24.5 million principally reflecting lower total wholesale volumes sold. Average daily wholesale propane commodity prices during the nine months ended June 30, 2012 at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 12% lower than such prices during the 2011 nine-month period. Total revenues from fee income and other ancillary sales and services were $47.6 million higher than the prior-year nine-month period reflecting such revenues from Heritage Propane. Total cost of sales increased $146.9 million principally reflecting incremental cost of sales from Heritage Propane offset in part by the lower retail and wholesale volumes sold by our legacy operations and the lower average propane commodity prices.

Total margin increased $186.6 million in the 2012 nine-month period as propane margin attributable to Heritage Propane and higher total margin from ancillary sales and services ($38.6 million) principally attributable to Heritage Propane were partially offset by lower total propane margin from the legacy business resulting from the significantly warmer weather.
EBITDA in the 2012 nine-month period increased $8.1 million principally a result of the higher total margin ($186.6 million) and a $5.5 million lower loss from extinguishments of debt in the 2012 nine-month period partially offset by higher operating and administrative expenses ($181.1 million) primarily attributable to Heritage Propane. Included in 2012 nine-month period operating expenses are $26.9 million of acquisition and transition expenses. Operating income (which excludes the losses on extinguishments of debt) decreased $46.0 million in the 2012 nine-month period principally reflecting the $8.1 million increase in EBITDA offset by a $48.1 million increase in depreciation and amortization expense principally associated with Heritage Propane.

Interest expense for the 2012 nine-month period was $103.4 million compared to $47.4 million in the prior-year period. The increase principally reflects interest on long-term debt issued to fund the cash portion of the Heritage Acquisition.

FINANCIAL CONDITION AND LIQUIDITY Financial Condition
The Partnership's debt outstanding at June 30, 2012 totaled $2,413.9 million (including current maturities of long-term debt of $43.4 million and bank loans of $68.8 million). The Partnership's debt outstanding at September 30, 2011 totaled $1,029.0 million (including current maturities of long-term debt of $4.7 million and bank loans of $95.5 million). Total long-term debt outstanding at June 30, 2012, including current maturities, comprises $2,250.8 million of AmeriGas Partners' Senior Notes, $72.7 million of HOLP Senior Notes and $21.6 million of other long-term debt.
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. At June 30, 2012, AmeriGas OLP had a $525 million unsecured credit agreement ("Credit Agreement"). Concurrently with the Heritage Acquisition, on January 12, 2012, the Credit Agreement was amended to, among other things, increase the total amount available to $525 million from $325 million previously, extend its expiration date to October 2016, and amend certain financial covenants for a limited time period as a result of the Heritage Acquisition. In April 2012, the Credit Agreement was further amended to provide the Partnership greater flexibility in its financial leverage ratio. At June 30, 2012, there were $68.8 million of borrowings outstanding under the Credit Agreement which are classified as bank loans on the Condensed Consolidated Balance Sheets. Issued and outstanding letters of credit under the Credit Agreement, which reduce the amount available for borrowings, totaled $39.1 million at June 30, 2012. The average daily and peak bank loan borrowings outstanding under the Credit Agreement during the 2012 nine-month period were $111.5 million and $239.5 million, respectively. The average daily and peak bank loan borrowings outstanding under credit agreements during the 2011 nine-month period were $161.8 million and $235 million, respectively. At June 30, 2012, the Partnership's available borrowing capacity under the Credit Agreement was $417.1 million.
The Partnership's management believes that the Partnership will be able to meet its anticipated contractual commitments and projected cash needs for the remainder of Fiscal 2012 from existing cash balances, cash expected to be generated from operations and borrowings available under the Credit Agreement. On July 30, 2012, the General Partner's Board of Directors approved a quarterly distribution of $0.80 per Common Unit payable

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on August 17, 2012 to unitholders of record on August 10, 2012. During the nine months ended June 30, 2012, the Partnership declared and paid quarterly distributions on all limited partner units at a rate of $0.80 per Common Unit for the quarter ended March 31, 2012, $0.7625 per Common Unit for the quarter ended December 31, 2011 and $0.74 per Common Unit for the quarter ended September 30, 2011. 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 Agreement, 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 $253.5 million in the 2012 nine-month period compared to $120.0 million in the 2011 nine-month period. Cash flow from operating activities before changes in operating working capital was $237.0 million in the 2012 nine-month period compared with $284.0 million in the prior-year period, largely reflecting the impact of the Heritage Acquisition offset in large part by the decline in our legacy business results. Cash generated from changes in operating working capital was $16.5 million in the 2012 nine-month period compared to cash used to fund changes in operating . . .