Significant Accounting Policies

Basis of Presentation. Our condensed consolidated financial statements include the accounts of UGI Utilities and its subsidiaries (collectively, “we” or the “Company”). We eliminate all significant intercompany accounts when we consolidate.

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 that we consider necessary for a fair statement of the results for the interim periods presented. Such adjustments consisted only of normal recurring items unless otherwise disclosed. The September 30, 2013, condensed consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). These financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the year ended September 30, 2013 (“Company’s 2013 Annual Financial Statements and Notes”). Due to the seasonal nature of our businesses, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

Comprehensive Income. Comprehensive income comprises net income and other comprehensive income. Other comprehensive income principally reflects net gains (losses) on interest rate protection agreements qualifying as cash flow hedges and actuarial gains and losses on postretirement benefit plans, net of reclassifications to net income.

Changes in accumulated other comprehensive loss during the three and six months ended March 31, 2014 are as follows:




	Postretirement			Derivative
Three Months Ended March 31, 2014:	Benefit Plans			Instruments			Total
Balance, December 31, 2013	$	(5,185	)	$	(3,046	)	$	(8,231	)
Reclassification of benefit plan actuarial losses and prior service cost	95			—			95
Reclassifications of net losses on interest rate protection agreements	—			392			392

Balance, March 31, 2014	$	(5,090	)	$	(2,654	)	$	(7,744	)

Six Months Ended March 31, 2014:
Balance, September 30, 2013	$	(5,283	)	$	(3,437	)	$	(8,720	)
Reclassification of benefit plan actuarial losses and prior service cost	193			—			193
Reclassifications of net losses on interest rate protection agreements	—			783			783

Balance, March 31, 2014	$	(5,090	)	$	(2,654	)	$	(7,744	)

Amounts in the table above are net of tax.

Reclassifications of net losses on interest rate protection agreements are reflected in interest expense on the Condensed Consolidated Statements of Income.

Restricted Cash. Restricted cash represents those cash balances in our commodity futures brokerage accounts that are restricted from withdrawal.

Correction of Error. We identified an error in the classification of deferred income tax assets on the March 31, 2013, Condensed Consolidated Balance Sheet. We evaluated the impact of the error and have determined that such error is not material. We have revised the March 31, 2013, Condensed Consolidated Balance Sheet to correct the error which decreased the following Condensed Consolidated Balance Sheet items by $20,709: current deferred income taxes; total current assets and total assets; long-term deferred income tax liabilities; total liabilities; and total liabilities and stockholder’s equity.

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.