Good day and welcome everyone to the UGI and AmeriGas Partners Second Quarter fiscal year 2008 earnings results conference call and webcast. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Robert Kirck, Vice President and Treasurer, UGI. Please go ahead, sir.

Good. Thank you, Shirley. Good afternoon and thank you for joining us today. As we begin, let me remind you that our comments will contain certain forward-looking statements, which the management of UGI and AmeriGas believe to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management's control. You should read the Annual Reports on Form 10-K for a fuller list of factors that could affect results, but among them are adverse weather conditions, price volatility, and availability of all energy products including natural gas, propane and fuel oil, increased customer conservation measures, political, economic, legislative, and regulatory changes in the US and abroad, currency exchange rates, and competition from the same and alternative energy sources. UGI and AmeriGas undertake no obligation to release revisions to these forward-looking statements to reflect events or circumstances occurring after today. With me today are John Walsh, President and COO of UGI; Gene Bissell, President and CEO of AmeriGas; Peter Kelly, CFO of UGI; and your host, Chairman and CEO of UGI, Lon Greenberg. Lon?

Thank you, Bob. Let me also welcome all of you to our call today. I trust you've had the opportunity to review our press releases covering both our higher level of earnings and increases in dividends in the case of UGI and increases in distributions in the case of AmeriGas. To Summarize, UGI reported a 4.5% increase in earnings per share, which grew to $1.17 from $1.12 last year. UGI also announced a 4% increase in the dividend on its common stock, which on an annualized basis now will be $0.77 per share. This is the 21st consecutive dividend year in which we have raised the dividend and we have been paying a dividend for six generations and I think 124 years. With regard to AmeriGas, it was an excellent year as well. AmeriGas reported net income of $133 million compared to $119.9 million last year. AmeriGas’ EBITDA grew to $172 million this year from $156 million for last year's quarter. Finally, AmeriGas announced a 5% increase in its distribution to $0.64 per unit from $0.61 quarterly and stated its intention to increase the distribution annually by 5%, which is an increase from the at least 3% policy, which was in effect prior to that time. Just one brief comment on results and I will turn it over to the other folks and then come back. This quarter once again demonstrated the beneficial effects of business unit and geographical diversification that we have been talking about for sometime now. As you may recall, we have pointed out many times that having four separate, but related energy distribution and marketing companies upscale, reduces risk for our owners. This quarter, significant improvements and earnings from our energy services and domestic propane business units offset relatively modest declines and performance in our regulated utilities and our International Propane segment. At this point let me turn it over to Peter, John and Eugene and then I'll have more to say at the end of the call. So, Peter?

Thanks Lon. For the quarter ended March, we earned $126.1 million or $1.17 per share, an increase of 4.5% versus the same quarter last year. For the first six months of fiscal 2008, we earned $1.90 a share, an improvement of 12.4% on our performance for the same period in 2007 and putting this in good shape to achieve our full year target of between $1.95 and $2.05 per share. In the phase of record high commodity costs and mix weather we delivered a very credible performance in the second quarter. AmeriGas and our Energy Services businesses did particularly well. Our utility business delivered results with similar level to last year, on weather there was over 4% warmer and although the weather in our European business was colder than last year, it was much warmer than normal, which resulted in weaker than expected results. Looking at each of our businesses in turn, AmeriGas Partners, our domestic propane business had another record-breaking quarter on weather that was virtually normal and 4% colder than last year. In the second quarter, net income attributable to UGI was $36 million, versus the $32.3 million delivered in the same quarter of last year. AmeriGas' retail volumes were essentially unchanged from the same period as last year and the partnership EBITDA increased approximately 9.8% to $171.8 million. Net income from our international propane operations was $32.7 million, down from the $34.8 million reported in the same period last year. Volumes in our French business increased from 95 million retail gallons to 97 million gallons of LPG, on weather that was 10% warmer than normal and 6.7% colder than last year. Although volumes did increase, it was less than expected due to the recent run of very warm weather in France. And what could have been a…

Thanks Peter. Now that Peter has provided you with the details on our financial performance in Q2, I’d like to comment on our progress in three areas critical to achievement of UGI's long-term strategic objectives, growing our core businesses, continuously improving operations, and reinvesting cash in high-quality projects. First, growing our core businesses, developing growth segments within each of our core businesses is a priority for us. Our market conditions in the second quarter presented us with some challenges. We made excellent progress on a number of fronts. Our Gas Utility is delivering solid growth despite the slowdown in new home construction. We expect to add approximately 11,000 new residential and commercial customers in FY '08. Our utilities marketing team has focused on residential conversions in mid-sized commercial accounts to largely offset the weakness in new home starts. Antargaz has had great success with the national rollout of a lightweight composite cylinder marketed under the Clifso [ph] brand. Antargaz has placed 200,000 new Clifso cylinders with customers over the first 15 months of their national campaign. The successful introduction of this new product strengthens the Antargaz's position in the critical cylinder segment and further reinforces their leadership position in new product development. As Peter commented, Energy Services had an outstanding winter peaking season as they successfully brought two new propane air projects on stream. These investments expanded our peak day capacity by 30 million cubic feet per day to a total of 140 million cubic feet per day and strengthened our peaking infrastructure. This increase in capacity coupled with improved peaking rates resulted in a significant increase in the contribution for peaking services in the first half of FY '08. Now in terms of continuously improving operations, as a distributor and marketer of energy products and services we must consistently…

Thanks, John. I am pleased that the AmeriGas team was able to deliver a 10.9% increase in net income for the second quarter despite the challenges presented by high energy prices. Our net income increased from $119.9 million last year to $133 million. EBITDA increased by $15 million for the quarter from $156.4 million to $171.8 million. This represents a 9.8% increase and is a new record for AmeriGas. For the six months, we were also ahead by $15 million and are on track to achieve our EBITA guidance for 2008 of $300 million to $310 million. I'm even more excited about the announcement that we made yesterday of our intention to increase the distribution by 5% per year. This new policy reflects the confidence that the management team and the AmeriGas Board have in our ability to continue to deliver consistent growth and earnings and at the same time maintain a strong balance sheet. Beyond good locking and tackling our track record of earnings growth has been the result of effective execution of our growth strategies. We have been able to leverage our scale and our industry leading geographic coverage through ACE strategic accounts and acquisitions. We have also been focused on growing our traditional customer base of residential and commercial customers through improvements in customer service balanced with careful management of our prices. Our second quarter results reflect our focus on these strategies, the volume was essentially flat, the acquisitions we completed last year and slightly colder weather allowed us to largely offset the impact of lower propane usage due to a number of factors, including customer conservation in the days of 25% higher propane prices. LNG [ph] prices also increased our expenses for the quarter along with the acquisitions that we completed last year. Of the $9…

Okay. Thank you, Gene. I would like to leave everyone with the following thoughts as we end our prepared remarks. First, with regard to our earnings per share for this fiscal year that is the year ended September 30 of this year. Our earnings per share at $1.90 for the six-month period are over 12% higher than last year’s $1.69 for the similar period. We ended last year with earnings per share of $1.77 if you adjust out the 12% [ph] from AmeriGas’ sale of a terminal last year. We believe our earnings per share this year will be in the $1.95 to $2.5 range, which would be an increase of approximately 13% over last year. We use the midpoint of that range and eliminate the one-time gain from last year. Obviously this is in excess of our stated 6% to 10% earnings per share growth target. Similarly, we expect AmeriGas to have an outstanding year. EBITDA for the six months this year stands at $265 million compared to $250 million last year, which is an increase of about 6%. We expect EBITDA as Gene said in the range of $300 million to $310 million this year, which would be an increase of $12 million or 4% over last year's $293 million, again after deducting the $46 million gain on the sale of the terminal last year. We firmly believe this performance will contrast markedly with many of our competitors, as we have been successful and focusing on achieving our growth strategies, which we believe differentiate us from many in the marketplace. Our confidence attributable to both our performance this year as well as our prospects resulted in both a 4% dividend increase at UGI and a 5% distribution increase in AmeriGas. Our goal going forward are to do the…

Thank you, sir. [Operator Instructions] We will take our first question from Shneur Gershuni from UBS..

Hi, good afternoon guys.

Hi.

A couple of questions... I guess the first one is just a big picture question. One, with most recent acquisition are you done making acquisitions for this year and I guess a second part of that question was... given the right price are you willing to do something significantly larger than the most recent acquisitions?

Yeah. Let me talk about are we done for the year, which is, there are those who suggest whatever done. You know our policy is to explore acquisitions that makes sense for the company, within our vision that are accretive and beneficial to our shareholders. So, I can tell you we are constantly in general on the look for acquisitions, but I can't comment on any specific acquisition that we may or may not be looking at, but it is our policy to be active in the acquisition area. With regard to scale, we are mindful of scale, we've said that many times before. We certainly would look at transactions larger than TPL Gas or even the Southern Union transaction because as our scale grows, those transactions are the same scale that they would be three, four years ago. So, we are mindful of scale in the aggregate and we are particularly mindful of large scale in the current financial environment where it’s very difficult to access capital markets even for a company as strong as we are. But we are in the look out and if we see a transaction that meets our hurdle rates that provides value for our shareholders that's within our vision for the company. We will pursue those acquisitions.

Okay. If we can turn over to the International Propane segment for a second, I know, John gave some decent color on this and so forth, I was just wondering if you can expand a little bit on what's going to happen to margins on a go-forward basis? Just want to understand I guess, how are they expected to grow a return to where they were a couple of years ago and also where you see volumes going as well, too [ph]?

Sure. Let's start with volumes. Volumes, if you look at the first quarter was substantially above last year and we had little bit colder than normal weather in the first quarter. Second quarter, we met weather similar to last year in January and February, two critical months for this business. And if you saw how the quarter evolved, December's weather was decent so, January was decent. January's weather was off of [ph], February was off of, and March's weather was decent and March’s results improved as the month went on. I would tell you that we are not concerned with volume for say our bulk volumes behaved, probably better than we thought they would in this quarter given the weather. Cylinder volumes are holding up nicely in a very competitive market as well. Behind the scenes we lost some share or lost some customers and the... I would say very large butane, very large propane side of the business where margins aren’t very high and few adjusted volumes to reflect those loss of higher volume, very low margin customers, the volume performance would look better that it even does now. So, from a volume standpoint, we think the business is performing well and it is weather depended however. And if we go back to the years '05, '06, when we had normal second quarters, there is very ample and adequate opportunity for volumes to meet our expectations. And the expectations we had when we bought this business several years ago. So I don’t think it’s necessarily a volume issue, John mentioned, some initiatives we have in the pipe-gas side and help collective housing helps the cylinder side, we have been very innovative. So, think on the volume side to summarize again. We are doing okay. It’s not that, we don't…

Okay. If I can just turn over to AmeriGas for one minute, just with respective to margins there clearly they segmented very well this past quarter. What's your belief on being able to maintain those margins and is there any concern with respect to uncollectables?

First let me talk about the margins first. I think we would expect margins to continue to be above last year, but lower than they have been, just because of the seasonal change in the mix of business that we have in the last six months of the year. That said obviously we are going to manage margins in line with competitive situations. So one of our goals is to continue to grow our base business. So we will have to manage our pricing in line with that. On the bad debt side, year-to-date we've seen only a very small increase in the percentage of our receivables, that's over 60 days. We haven't seen that much impact, really when you would see that would be in the last six months of the year. So it's too early to declare victory in that area. But today we haven't seen a big impact on the receivables, the balances are bigger, because the revenue is bigger on a higher selling price.

Okay, great. Thank you very much guys.

For sure.

Next we will move to Darren Horowitz from Raymond James.

Thanks. Lon, I'm trying to get a sense of how retail propane bonds you are tracking? When you look at your results this quarter, they were down slightly year-over-year similar to how the December quarter numbers were and obviously you are facing some commodity price head wins there as well as end-user curtailment. But offsetting that to a certain extent have been just in aggregate, the amount of customers that you've added last year. Can you give us a sense for the expectations in the back half of this fiscal year as you currently said today, i.e., do you think that it's possible based on a perpetuating higher sustainable commodity price environment that margins might be flat to slightly down year-over-year?

Let me just give a ballpark and then Eugene jump in. If you adjust for acquisitions and all the puts and takes that go into the process, volumes are probably up on the order of 4% to 5% year-over-year and that ballpark combination is clearly some conservation out there. The difficulty in the propane business of estimating conservation is you don't know relative levels of customer storage of your product. So you can estimate... you can try to estimate that, but it's not a perfect flow like it is in the Gas Utility for example. And so, I think it's clear evidence of conservation. I think there is clear evidence at least in my mind that the economies slowed a little and different categories get affected by that to some degree. And I think as well just the nature of the weather patterns here affects volumes, when it's real warm in the southeast for example you get a different result in our models and if it's real warm in somewhere else. And so it's just the way the weather hits. Overall, I’d guess, Eugene in volumes kind of trending as they have trended. I don't think we see anything accelerated now?

We will have ACE volumes up a bit year-over-year for last six months. But generally about the same kind of trend that we've seen.

Yeah, as Eugene said, you get a little bit less weather sensitivity in your volumes. But there is a strong incentive for people to delay buying as long as they can, given the high price there is... out there. So...

And then weather in September.

And then weather in September, as Eugene pointed out. So I think if you are looking at volume performance for rest of the year, it’s kind of flat to last year, give or take a little bit would be a rational expectation.

Okay. That's helpful. I appreciate it. And then just switching gears to the operating and maintenance side, relative to your earlier comments, when you look at O&M on a year-over-year basis and sequentially in absolute terms it was up, but obviously as a percent of revenue generated it was a little bit lower. So as we factored in the recent acquisitions, how do we think about O&M going forward?

For operating expenses going forward I think the trend will be fairly consistent with what you've seen year-to-date. There is nothing particularly unusual this year about the expenses year-to-date.

The big increase year-over-year is of course the acquisitions is a big part of it?

Is acquisitions, it's a vehicle fuel, it's bad debt because we reserve on the basis of a percent of revenues. So you will see expenses continue to be higher just as a result of those same factors. But in line with what you have been saying.

Okay. So this quarter should be used as a pretty good platform then?

Yes.

Okay. Thanks guys, I appreciate it.

Yes.

[Operator Instructions] And next we will go to William Ju [ph] from Janney Montgomery Scott.

Good afternoon.

Hi.

I have a question about the Gas Utility.

Sure.

I believe that there was a decline in retail core market margin, could you just provide a little insight about that please? Thank you.

Well, certainly unit margins don't change on the retail core market... margin if it change too much it would be weather-oriented, that is that the weather was 4.5% warmer than the prior year and so throughput on the retail core market was down, which is offset by higher delivery service volumes that ran through, so volume in an aggregate basis throughput was relatively flat. But the only change that you would see in that retail core market would be weather related really. You didn't have a huge fly up in gas price... natural gas prices like you did propane, heating oil, any oil-based product, natural gas prices year-over-year until recently had to moved to whole lots. So for the winter months it wasn't a big issue and you got your normal conservation I suspect, which we always think of this on the order of 1%, but the big difference is all weather related.

Thank you very much.

Sure.

It appears to be no further questions at this time gentlemen.

Okay. Well, thank you all very much for dialing in and listening to what we have to say and those of you who would listen to it otherwise again we are really optimistic about what our future looks like. We are exceeding our earnings goal for this year, raised our dividend as we said we would, have some business performance that looks promising for the future, and an earnings estimate for both businesses as we go forward that looks pretty much as we thought it would and increases our goal yet again. So we look forward to talking to all of you and we will be in touch hopefully soon. Thank you very much.

That concludes today's conference. We appreciate your participation. You may now disconnect.