10-Q 1 d920151d10q.htm FORM 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 28, 2015

¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-14222

SUBURBAN PROPANE PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware |  | 22-3410353
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

240 Route 10 West

Whippany, NJ 07981

(973) 887-5300

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer |  | x |  | Accelerated filer |  | ¨
Non-accelerated filer |  | ¨ (do not check if a smaller reporting company) |  | Smaller reporting company |  | ¨

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

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

INDEX TO FORM 10-Q

|  | PART I. FINANCIAL INFORMATION |  | Page |
ITEM 1. |  | FINANCIAL STATEMENTS (UNAUDITED) |  |  |  |
|  | Condensed Consolidated Balance Sheets as of March 28, 2015 and September 27, 2014 |  |  | 1 |
|  | Condensed Consolidated Statements of Operations for the three months ended March 28, 2015 and March 29, 2014 |  |  | 2 |
|  | Condensed Consolidated Statements of Operations for the six months ended March 28, 2015 and March 29, 2014 |  |  | 3 |
|  | Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 28, 2015 and March 29, 2014 |  |  | 4 |
|  | Condensed Consolidated Statements of Cash Flows for the six months ended March 28, 2015 and March 29, 2014 |  |  | 5 |
|  | Condensed Consolidated Statement of Partners’ Capital for the six months ended March 28, 2015 |  |  | 6 |
|  | Notes to Condensed Consolidated Financial Statements |  |  | 7 |
ITEM 2. |  | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  |  | 24 |
ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |  |  | 39 |
ITEM 4. |  | CONTROLS AND PROCEDURES |  |  | 41 |
|  | PART II. OTHER INFORMATION |  |  |  |
ITEM 1. |  | LEGAL PROCEEDINGS |  |  | 42 |
ITEM 1A. |  | RISK FACTORS |  |  | 42 |
ITEM 2. |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |  |  | 42 |
ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES |  |  | 42 |
ITEM 4. |  | MINE SAFETY DISCLOSURES |  |  | 42 |
ITEM 5. |  | OTHER INFORMATION |  |  | 42 |
ITEM 6. |  | EXHIBITS |  |  | 43 |
SIGNATURES |  |  | 44 |

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements (“Forward-Looking Statements”) as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to future business expectations and predictions and financial condition and results of operations of Suburban Propane Partners, L.P. (the “Partnership”). Some of these statements can be identified by the use of forward-looking terminology such as “prospects,” “outlook,” “believes,” “estimates,” “intends,” “may,” “will,” “should,” “anticipates,” “expects” or “plans” or the negative or other variation of these or similar words, or by discussion of trends and conditions, strategies or risks and uncertainties. These Forward-Looking Statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such Forward-Looking Statements (statements contained in this Quarterly Report identifying such risks and uncertainties are referred to as “Cautionary Statements”). The risks and uncertainties and their impact on the Partnership’s results include, but are not limited to, the following risks:

• |  | The impact of weather conditions on the demand for propane, fuel oil and other refined fuels, natural gas and electricity;

• |  | Volatility in the unit cost of propane, fuel oil and other refined fuels and natural gas, the impact of the Partnership’s hedging and risk management activities, and the adverse impact of price increases on volumes as a result of customer conservation;

• |  | The cost savings expected from the Partnership’s acquisition of the retail propane operations formerly owned by Inergy, L.P. (the “Inergy Propane Acquisition”) may not be fully realized or realized within the expected time frame;

• |  | The costs of integrating the business acquired in the Inergy Propane Acquisition into the Partnership’s existing operations may be greater than expected;

• |  | The ability of the Partnership to compete with other suppliers of propane, fuel oil and other energy sources;

• |  | The impact on the price and supply of propane, fuel oil and other refined fuels from the political, military or economic instability of the oil producing nations, global terrorism and other general economic conditions;

• |  | The ability of the Partnership to acquire sufficient volumes of, and the costs to the Partnership of acquiring, transporting and storing, propane, fuel oil and other refined fuels;

• |  | The ability of the Partnership to acquire and maintain reliable transportation for its propane, fuel oil and other refined fuels;

• |  | The ability of the Partnership to retain customers or acquire new customers;

• |  | The impact of customer conservation, energy efficiency and technology advances on the demand for propane, fuel oil and other refined fuels, natural gas and electricity;

• |  | The ability of management to continue to control expenses;

• |  | The impact of changes in applicable statutes and government regulations, or their interpretations, including those relating to the environment and global warming, derivative instruments and other regulatory developments on the Partnership’s business;

• |  | The impact of changes in tax laws that could adversely affect the tax treatment of the Partnership for income tax purposes;

• |  | The impact of legal proceedings on the Partnership’s business;

• |  | The impact of operating hazards that could adversely affect the Partnership’s operating results to the extent not covered by insurance;

• |  | The Partnership’s ability to make strategic acquisitions and successfully integrate them, including but not limited to Inergy Propane;

• |  | The impact of current conditions in the global capital and credit markets, and general economic pressures;

• |  | The operating, legal and regulatory risks the Partnership may face; and

• |  | Other risks referenced from time to time in filings with the Securities and Exchange Commission (“SEC”) and those factors listed or incorporated by reference into our most recent Annual Report under “Risk Factors.”

Some of these Forward-Looking Statements are discussed in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report. Reference is also made to the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 27, 2014. On different occasions, the Partnership or its representatives have made or may make Forward-Looking Statements in other filings with the SEC, press releases or oral statements made by or with the approval of one of the Partnership’s authorized executive officers. Readers are cautioned not to place undue reliance on Forward-Looking Statements, which reflect management’s view only as of the date made. The Partnership undertakes no obligation to update any Forward-Looking Statement or Cautionary Statement, except as required by law. All subsequent written and oral Forward-Looking Statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements in this Quarterly Report and in future SEC reports.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

|  | March 28, 2015 |  |  | September 27, 2014 |
ASSETS |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 110,066 |  |  | $ | 92,639 |
Accounts receivable, less allowance for doubtful accounts of $7,130 and $11,122, respectively |  |  | 186,960 |  |  |  | 96,915 |
Inventories |  |  | 58,902 |  |  |  | 90,965 |
Other current assets |  |  | 24,250 |  |  |  | 14,346 |
Total current assets |  |  | 380,178 |  |  |  | 294,865 |
Property, plant and equipment, net |  |  | 806,269 |  |  |  | 826,826 |
Goodwill |  |  | 1,087,429 |  |  |  | 1,087,429 |
Other intangible assets, net |  |  | 336,475 |  |  |  | 359,293 |
Other assets |  |  | 41,133 |  |  |  | 40,950 |
Total assets |  | $ | 2,651,484 |  |  | $ | 2,609,363 |
LIABILITIES AND PARTNERS’ CAPITAL |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 49,548 |  |  | $ | 49,253 |
Accrued employment and benefit costs |  |  | 27,266 |  |  |  | 24,033 |
Customer deposits and advances |  |  | 51,642 |  |  |  | 107,386 |
Accrued interest |  |  | 16,517 |  |  |  | 16,313 |
Other current liabilities |  |  | 26,293 |  |  |  | 25,281 |
Total current liabilities |  |  | 171,266 |  |  |  | 222,266 |
Long-term borrowings |  |  | 1,242,508 |  |  |  | 1,242,685 |
Accrued insurance |  |  | 51,775 |  |  |  | 52,410 |
Other liabilities |  |  | 70,325 |  |  |  | 70,549 |
Total liabilities |  |  | 1,535,874 |  |  |  | 1,587,910 |
Commitments and contingencies |  |  |  |  |  |  |  |
Partners’ capital: |  |  |  |  |  |  |  |
Common Unitholders (60,484 and 60,317 units issued and outstanding at March 28, 2015 and September 27, 2014, respectively) |  |  | 1,159,623 |  |  |  | 1,067,358 |
Accumulated other comprehensive loss |  |  | (44,013 | ) |  |  | (45,905 | )
Total partners’ capital |  |  | 1,115,610 |  |  |  | 1,021,453 |
Total liabilities and partners’ capital |  | $ | 2,651,484 |  |  | $ | 2,609,363 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit amounts)

(unaudited)

|  | Three Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |
Revenues |  |  |  |  |  |  |  |
Propane |  | $ | 498,616 |  |  | $ | 728,504 |
Fuel oil and refined fuels |  |  | 60,426 |  |  |  | 93,722 |
Natural gas and electricity |  |  | 28,281 |  |  |  | 39,083 |
All other |  |  | 12,066 |  |  |  | 12,463 |
|  |  | 599,389 |  |  |  | 873,772 |
Costs and expenses |  |  |  |  |  |  |  |
Cost of products sold |  |  | 253,667 |  |  |  | 517,198 |
Operating |  |  | 120,465 |  |  |  | 131,731 |
General and administrative |  |  | 20,437 |  |  |  | 20,517 |
Depreciation and amortization |  |  | 33,229 |  |  |  | 33,282 |
|  |  | 427,798 |  |  |  | 702,728 |
Operating income |  |  | 171,591 |  |  |  | 171,044 |
Loss on debt extinguishment |  |  | 15,072 |  |  |  | — |
Interest expense, net |  |  | 19,711 |  |  |  | 21,226 |
Income before provision for income taxes |  |  | 136,808 |  |  |  | 149,818 |
Provision for income taxes |  |  | 174 |  |  |  | 271 |
Net income |  | $ | 136,634 |  |  | $ | 149,547 |
Net income per Common Unit - basic |  | $ | 2.26 |  |  | $ | 2.47 |
Weighted average number of Common Units outstanding - basic |  |  | 60,573 |  |  |  | 60,425 |
Net income per Common Unit - diluted |  | $ | 2.24 |  |  | $ | 2.46 |
Weighted average number of Common Units outstanding - diluted |  |  | 60,917 |  |  |  | 60,692 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit amounts)

(unaudited)

|  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |
Revenues |  |  |  |  |  |  |  |
Propane |  | $ | 853,266 |  |  | $ | 1,167,098 |
Fuel oil and refined fuels |  |  | 99,356 |  |  |  | 147,990 |
Natural gas and electricity |  |  | 44,248 |  |  |  | 57,399 |
All other |  |  | 25,463 |  |  |  | 27,341 |
|  |  | 1,022,333 |  |  |  | 1,399,828 |
Costs and expenses |  |  |  |  |  |  |  |
Cost of products sold |  |  | 441,588 |  |  |  | 797,724 |
Operating |  |  | 227,582 |  |  |  | 245,044 |
General and administrative |  |  | 39,746 |  |  |  | 37,852 |
Depreciation and amortization |  |  | 65,858 |  |  |  | 68,109 |
|  |  | 774,774 |  |  |  | 1,148,729 |
Operating income |  |  | 247,559 |  |  |  | 251,099 |
Loss on debt extinguishment |  |  | 15,072 |  |  |  | — |
Interest expense, net |  |  | 39,710 |  |  |  | 42,433 |
Income before provision for income taxes |  |  | 192,777 |  |  |  | 208,666 |
Provision for income taxes |  |  | 336 |  |  |  | 448 |
Net income |  | $ | 192,441 |  |  | $ | 208,218 |
Net income per Common Unit - basic |  | $ | 3.18 |  |  | $ | 3.45 |
Weighted average number of Common Units outstanding - basic |  |  | 60,536 |  |  |  | 60,409 |
Net income per Common Unit - diluted |  | $ | 3.16 |  |  | $ | 3.43 |
Weighted average number of Common Units outstanding - diluted |  |  | 60,856 |  |  |  | 60,668 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

|  | Three Months Ended |  |  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | March 28, 2015 |  |  | March 29, 2014 |
Net income |  | $ | 136,634 |  |  | $ | 149,547 |  |  | $ | 192,441 |  |  | $ | 208,218 |
Other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized losses on cash flow hedges |  |  | (500 | ) |  |  | (90 | ) |  |  | (727 | ) |  |  | (256 | )
Reclassification of realized losses on cash flow hedges into earnings |  |  | 344 |  |  |  | 346 |  |  |  | 701 |  |  |  | 699 |
Amortization of net actuarial losses and prior service credits into earnings |  |  | 959 |  |  |  | 955 |  |  |  | 1,918 |  |  |  | 1,910 |
Other comprehensive income |  |  | 803 |  |  |  | 1,211 |  |  |  | 1,892 |  |  |  | 2,353 |
Total comprehensive income |  | $ | 137,437 |  |  | $ | 150,758 |  |  | $ | 194,333 |  |  | $ | 210,571 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

|  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income |  | $ | 192,441 |  |  | $ | 208,218 |
Adjustments to reconcile net income to net cash provided by operations: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 65,858 |  |  |  | 68,109 |
Loss on debt extinguishment |  |  | 15,072 |  |  |  | — |
Other, net |  |  | 5,834 |  |  |  | 1,714 |
Changes in assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (90,045 | ) |  |  | (200,476 | )
Inventories |  |  | 32,063 |  |  |  | (18,898 | )
Other current and noncurrent assets |  |  | (10,588 | ) |  |  | (6,280 | )
Accounts payable |  |  | 911 |  |  |  | 21,195 |
Accrued employment and benefit costs |  |  | 3,233 |  |  |  | 3,276 |
Customer deposits and advances |  |  | (55,744 | ) |  |  | (60,632 | )
Other current and noncurrent liabilities |  |  | 902 |  |  |  | 4,161 |
Net cash provided by operating activities |  |  | 159,937 |  |  |  | 20,387 |
Cash flows from investing activities: |  |  |  |  |  |  |  |
Capital expenditures |  |  | (19,903 | ) |  |  | (14,357 | )
Acquisition of business |  |  | (6,500 | ) |  |  | — |
Proceeds from sale of property, plant and equipment |  |  | 4,867 |  |  |  | 5,986 |
Net cash (used in) investing activities |  |  | (21,536 | ) |  |  | (8,371 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Proceeds from long-term borrowings |  |  | 250,000 |  |  |  | — |
Repayment of long-term borrowings (includes premium and fees) |  |  | (260,777 | ) |  |  | — |
Proceeds from borrowings under revolving credit facility |  |  | — |  |  |  | 61,700 |
Repayment of borrowings under revolving credit facility |  |  | — |  |  |  | (6,700 | )
Issuance costs associated with long-term borrowings |  |  | (4,518 | ) |  |  | — |
Partnership distributions |  |  | (105,679 | ) |  |  | (105,470 | )
Net cash (used in) financing activities |  |  | (120,974 | ) |  |  | (50,470 | )
Net increase (decrease) in cash and cash equivalents |  |  | 17,427 |  |  |  | (38,454 | )
Cash and cash equivalents at beginning of period |  |  | 92,639 |  |  |  | 107,232 |
Cash and cash equivalents at end of period |  | $ | 110,066 |  |  | $ | 68,778 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

(in thousands)

(unaudited)

|  | Number of Common Units |  |  | Common Unitholders |  |  | Accumulated Other Comprehensive (Loss) |  |  | Total Partners’ Capital |
Balance at September 27, 2014 |  |  | 60,317 |  |  | $ | 1,067,358 |  |  | $ | (45,905 | ) |  | $ | 1,021,453 |
Net income |  |  |  |  |  |  | 192,441 |  |  |  |  |  |  |  | 192,441 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  | 1,892 |  |  |  | 1,892 |
Partnership distributions |  |  |  |  |  |  | (105,679 | ) |  |  |  |  |  |  | (105,679 | )
Common Units issued under Restricted Unit Plans |  |  | 167 |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation cost recognized under Restricted Unit Plans, net of forfeitures |  |  |  |  |  |  | 5,503 |  |  |  |  |  |  |  | 5,503 |
Balance at March 28, 2015 |  |  | 60,484 |  |  | $ | 1,159,623 |  |  | $ | (44,013 | ) |  | $ | 1,115,610 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except unit and per unit amounts)

(unaudited)

1. | Partnership Organization and Formation

Suburban Propane Partners, L.P. (the “Partnership”) is a publicly traded Delaware limited partnership principally engaged, through its operating partnership and subsidiaries, in the retail marketing and distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. In addition, to complement its core marketing and distribution businesses, the Partnership services a wide variety of home comfort equipment, particularly for heating and ventilation. The publicly traded limited partner interests in the Partnership are evidenced by common units traded on the New York Stock Exchange (“Common Units”), with 60,484,035 Common Units outstanding at March 28, 2015. The holders of Common Units are entitled to participate in distributions and exercise the rights and privileges available to limited partners under the Third Amended and Restated Agreement of Limited Partnership as amended (the “Partnership Agreement”). Rights and privileges under the Partnership Agreement include, among other things, the election of all members of the Board of Supervisors and voting on the removal of the general partner.

Suburban Propane, L.P. (the “Operating Partnership”), a Delaware limited partnership, is the Partnership’s operating subsidiary formed to operate the propane business and assets. In addition, Suburban Sales & Service, Inc. (the “Service Company”), a subsidiary of the Operating Partnership, was formed to operate the service work and appliance and parts businesses of the Partnership. The Operating Partnership, together with its direct and indirect subsidiaries, accounts for substantially all of the Partnership’s assets, revenues and earnings. The Partnership, the Operating Partnership and the Service Company commenced operations in March 1996 in connection with the Partnership’s initial public offering.

The general partner of both the Partnership and the Operating Partnership is Suburban Energy Services Group LLC (the “General Partner”), a Delaware limited liability company, the sole member of which is the Partnership’s Chief Executive Officer. Other than as a holder of 784 Common Units that will remain in the General Partner, the General Partner does not have any economic interest in the Partnership or the Operating Partnership.

The Partnership’s fuel oil and refined fuels, natural gas and electricity and services businesses are structured as either limited liability companies that are treated as corporations or corporate entities (collectively referred to as the “Corporate Entities”) and, as such, are subject to corporate level income tax.

Suburban Energy Finance Corp., a direct 100%-owned subsidiary of the Partnership, was formed on November 26, 2003 to serve as co-issuer, jointly and severally with the Partnership, of the Partnership’s senior notes.

2. | Basis of Presentation

Principles of Consolidation. The condensed consolidated financial statements include the accounts of the Partnership, the Operating Partnership and all of its direct and indirect subsidiaries. All significant intercompany transactions and account balances have been eliminated. The Partnership consolidates the results of operations, financial condition and cash flows of the Operating Partnership as a result of the Partnership’s 100% limited partner interest in the Operating Partnership.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). They include all adjustments that the Partnership considers necessary for a fair statement of the results for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed. These financial statements should be read in conjunction with the financial statements included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014. Due to the seasonal nature of the Partnership’s operations, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

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Fiscal Period. The Partnership uses a 52/53 week fiscal year which ends on the last Saturday in September. The Partnership’s fiscal quarters are generally thirteen weeks in duration. When the Partnership’s fiscal year is 53 weeks long, the corresponding fourth quarter is fourteen weeks in duration.

Revenue Recognition. Sales of propane, fuel oil and refined fuels are recognized at the time product is delivered to the customer. Revenue from the sale of appliances and equipment is recognized at the time of sale or when installation is complete, as applicable. Revenue from repairs, maintenance and other service activities is recognized upon completion of the service. Revenue from service contracts is recognized ratably over the service period. Revenue from the natural gas and electricity business is recognized based on customer usage as determined by meter readings for amounts delivered, some of which may be unbilled at the end of each accounting period. Revenue from annually billed tank fees is deferred at the time of billings and recognized on a straight-line basis over one year.

Fair Value Measurements. The Partnership measures certain of its assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants – in either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability.

The common framework for measuring fair value utilizes a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.

• |  | Level 1: Quoted prices in active markets for identical assets or liabilities.

• |  | Level 2: Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

• |  | Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

Business Combinations. The Partnership accounts for business combinations using the acquisition method and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the Partnership, and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Identifiable intangible assets with finite lives are amortized over their useful lives. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. The Partnership expenses all acquisition-related costs as incurred.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates have been made by management in the areas of self-insurance and litigation reserves, pension and other postretirement benefit liabilities and costs, valuation of derivative instruments, depreciation and amortization of long-lived assets, asset impairment assessments, tax valuation allowances, allowances for doubtful accounts, and purchase price allocation for acquired businesses. On October 27, 2014, the Society of Actuaries (“SOA”) issued new mortality tables (RP-2014) and a new mortality improvement scale (MP-2014). The Partnership uses SOA life expectancy information when developing the annual mortality assumptions for its pension and postretirement benefit plans, which are used to measure net periodic benefit costs and the obligations under these plans. While the Partnership is still in the process of evaluating the potential impact of using the new mortality tables and improvement scale in connection with the year-end measurement of the plans’ benefit obligations, the Partnership does not expect such use to have a material impact on its financial condition, results of operations or cash flows. Actual results could differ from those estimates, making it reasonably possible that a material change in these estimates could occur in the near term.

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Recently Issued Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). This update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the presentation of debt discounts. ASU 2015-03 is effective for the first interim period within annual reporting periods beginning after December 15, 2015, which will be the Partnership’s first quarter of fiscal year 2017. Other than the reclassification of existing debt issuance costs on the balance sheet, the adoption of ASU 2015-03 will have no impact on the Partnership’s operations or cash flows.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”). This update provides a principles-based approach to revenue recognition, requiring revenue recognition to depict the transfer of 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 ASU provides a five-step model to be applied to all contracts with customers. The five steps are to identify the contract(s) with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when each performance obligation is satisfied. On April 1, 2015, the FASB voted to propose a one-year deferral of the effective date of ASU 2014-09. If accepted, the revenue standard would then be effective for the first interim period within annual reporting periods beginning after December 15, 2017, which will be the Partnership’s first quarter of fiscal year 2019. ASU 2014-09 can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the update recognized at the date of the initial application along with additional disclosures. The Partnership does not expect the adoption of ASU 2014-09 will have a material impact on the Partnership’s results of operations, financial position or cash flows.

3. | Financial Instruments and Risk Management

Cash and Cash Equivalents. The Partnership considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short-term maturity of these instruments.

Derivative Instruments and Hedging Activities.

Commodity Price Risk. Given the retail nature of its operations, the Partnership maintains a certain level of priced physical inventory to help ensure its field operations have adequate supply commensurate with the time of year. The Partnership’s strategy is to keep its physical inventory priced relatively close to market for its field operations. The Partnership enters into a combination of exchange-traded futures and option contracts and, in certain instances, over-the-counter options and swap contracts (collectively, “derivative instruments”) to hedge price risk associated with propane and fuel oil physical inventories, as well as future purchases of propane or fuel oil used in its operations and to help ensure adequate supply during periods of high demand. In addition, the Partnership sells propane and fuel oil to customers at fixed prices, and enters into derivative instruments to hedge a portion of its exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. Under this risk management strategy, realized gains or losses on derivative instruments will typically offset losses or gains on the physical inventory once the product is sold or delivered as it pertains to fixed price contracts. All of the Partnership’s derivative instruments are reported on the condensed consolidated balance sheet at their fair values. In addition, in the course of normal operations, the Partnership routinely enters into contracts such as forward priced physical contracts for the purchase or sale of propane and fuel oil that qualify for and are designated as normal purchase or normal sale contracts. Such contracts are exempted from the fair value accounting requirements and are accounted for at the time product is purchased or sold under the related contract. The Partnership does not use derivative instruments for speculative trading purposes. Market risks associated with futures, options, forward and swap contracts are monitored daily for compliance with the Partnership’s Hedging and Risk Management Policy which includes volume limits for open positions. Priced on-hand inventory is also reviewed and managed daily as to exposures to changing market prices.

On the date that derivative instruments are entered into, other than those designated as normal purchases or normal sales, the Partnership makes a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or

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other comprehensive income (“OCI”), depending on whether the derivative instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, the Partnership formally assesses, both at the hedge contract’s inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into earnings during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of cash flow hedges are recognized in earnings immediately. Changes in the fair value of derivative instruments that are not designated as cash flow hedges, and that do not meet the normal purchase and normal sale exemption, are recorded within earnings as they occur. Cash flows associated with derivative instruments are reported as operating activities within the condensed consolidated statement of cash flows.

Interest Rate Risk. A portion of the Partnership’s borrowings bear interest at prevailing interest rates based upon, at the Operating Partnership’s option, LIBOR plus an applicable margin or the base rate, defined as the higher of the Federal Funds Rate plus 1⁄2 of 1% or the agent bank’s prime rate, or LIBOR plus 1%, plus the applicable margin. The applicable margin is dependent on the level of the Partnership’s total leverage (the ratio of total debt to consolidated income before deducting interest expense, income taxes, depreciation and amortization (“EBITDA”)). Therefore, the Partnership is subject to interest rate risk on the variable component of the interest rate. The Partnership manages part of its variable interest rate risk by entering into interest rate swap agreements. The interest rate swaps have been designated as, and are accounted for as, cash flow hedges. The fair value of the interest rate swaps are determined using an income approach, whereby future settlements under the swaps are converted into a single present value, with fair value being based on the value of current market expectations about those future amounts. Changes in the fair value are recognized in OCI until the hedged item is recognized in earnings. However, due to changes in the underlying interest rate environment, the corresponding value in OCI is subject to change prior to its impact on earnings.

Valuation of Derivative Instruments. The Partnership measures the fair value of its exchange-traded commodity-related options and futures contracts using quoted market prices found on the New York Mercantile Exchange (the “NYMEX”) (Level 1 inputs); the fair value of its swap contracts using quoted forward prices and the fair value of its interest rate swaps using model-derived valuations driven by observable projected movements of the 3-month LIBOR (Level 2 inputs); and the fair value of its over-the-counter options contracts using Level 3 inputs. The Partnership’s over-the-counter commodity-related options contracts are valued based on an internal option model. The inputs utilized in the model are based on publicly available information as well as broker quotes. The significant unobservable inputs used in the fair value measurements of the Partnership’s over-the-counter options contracts are interest rate and market volatility.

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The following summarizes the gross fair value of the Partnership’s derivative instruments and their location in the condensed consolidated balance sheet as of March 28, 2015 and September 27, 2014, respectively:

|  | As of March 28, 2015 |  |  | As of September 27, 2014 |
Asset Derivatives |  | Location |  | Fair Value |  |  | Location |  | Fair Value |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |
Commodity-related derivatives |  | Other current assets |  | $ | 5,562 |  |  | Other current assets |  | $ | 3,924 |
|  | Other assets |  |  | 134 |  |  | Other assets |  |  | 62 |
|  |  |  | $ | 5,696 |  |  |  |  | $ | 3,986 |
Liability Derivatives |  | Location |  | Fair Value |  |  | Location |  | Fair Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap |  | Other current liabilities |  | $ | 1,164 |  |  | Other current liabilities |  | $ | 1,257 |
|  | Other liabilities |  |  | 402 |  |  | Other liabilities |  |  | 283 |
|  |  |  | $ | 1,566 |  |  |  |  | $ | 1,540 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |
Commodity-related derivatives |  | Other current liabilities |  | $ | 3,019 |  |  | Other current liabilities |  | $ | 1,527 |
|  | Other liabilities |  |  | — |  |  | Other liabilities |  |  | 53 |
|  |  |  | $ | 3,019 |  |  |  |  | $ | 1,580 |

The following summarizes the reconciliation of the beginning and ending balances of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

|  | Fair Value Measurement Using Significant Unobservable Inputs (Level 3) |
|  | Six Months Ended March 28, 2015 |  |  | Six Months Ended March 29, 2014 |
|  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Beginning balance of over-the-counter options |  | $ | 1,512 |  |  | $ | — |  |  | $ | 1,847 |  |  | $ | — |
Beginning balance realized during the period |  |  | (910 | ) |  |  | — |  |  |  | (389 | ) |  |  | — |
Contracts purchased during the period |  |  | 461 |  |  |  | — |  |  |  | — |  |  |  | 159 |
Change in the fair value of outstanding contracts |  |  | 2,755 |  |  |  | — |  |  |  | 42 |  |  |  | — |
Ending balance of over-the-counter options |  | $ | 3,818 |  |  | $ | — |  |  | $ | 1,500 |  |  | $ | 159 |

As of March 28, 2015 and September 27, 2014, the Partnership’s outstanding commodity-related derivatives had a weighted average maturity of approximately five and four months, respectively.

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The effect of the Partnership’s derivative instruments on the condensed consolidated statement of operations and the condensed consolidated statement of comprehensive income, as applicable, for the three and six months ended March 28, 2015 and March 29, 2014 are as follows:

|  | Three months ended March 28, 2015 |  |  | Three months ended March 29, 2014 |
Derivatives in Cash Flow Hedging Relationships |  | Gains (Losses) Recognized in OCI (Effective Portion) |  |  | Gains (Losses) Reclassified from Accumulated OCI into Income |  |  | Gains (Losses) Recognized in OCI (Effective Portion) |  |  | Gains (Losses) Reclassified from Accumulated OCI into Income |
|  | Location |  | Amount |  |  |  | Location |  | Amount |
Interest rate swap |  | $ | (500 | ) |  | Interest expense |  | $ | (344 | ) |  | $ | (90 | ) |  | Interest expense |  | $ | (346 | )
Derivatives Not Designated as Hedging Instruments |  |  |  |  | Unrealized Gains (Losses) Recognized in Income |  |  |  |  |  | Unrealized Gains (Losses) Recognized in Income |
|  |  |  |  | Location |  | Amount |  |  |  |  |  | Location |  | Amount |
Commodity-related derivatives |  |  |  |  |  | Cost of products sold |  | $ | (7,433 | ) |  |  |  |  |  | Cost of products sold |  | $ | 291 |
|  | Six months ended March 28, 2015 |  |  | Six months ended March 29, 2014 |
Derivatives in Cash Flow Hedging Relationships |  | Gains (Losses) Recognized in OCI (Effective Portion) |  |  | Gains (Losses) Reclassified from Accumulated OCI into Income |  |  | Gains (Losses) Recognized in OCI (Effective Portion) |  |  | Gains (Losses) Reclassified from Accumulated OCI into Income |
|  | Location |  | Amount |  |  |  | Location |  | Amount |
Interest rate swap |  | $ | (727 | ) |  | Interest expense |  | $ | (701 | ) |  | $ | (256 | ) |  | Interest expense |  | $ | (699 | )
Derivatives Not Designated as Hedging Instruments |  |  |  |  | Unrealized Gains (Losses) Recognized in Income |  |  |  |  |  | Unrealized Gains (Losses) Recognized in Income |
|  |  |  |  | Location |  | Amount |  |  |  |  |  | Location |  | Amount |
Commodity-related derivatives |  |  |  |  |  | Cost of products sold |  | $ | 2,072 |  |  |  |  |  |  | Cost of products sold |  | $ | 1 |

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The following table presents the fair value of the Partnership’s recognized derivative assets and liabilities on a gross basis and amounts offset on the condensed consolidated balance sheets subject to enforceable master netting arrangements or similar agreements:

|  | As of March 28, 2015 |
|  | Gross amounts |  |  | Effects of netting |  |  | Net amounts presented in the balance sheet |
Asset Derivatives |  |  |  |  |  |  |  |  |  |  |  |
Commodity-related derivatives |  | $ | 13,526 |  |  | $ | (7,830 | ) |  | $ | 5,696 |
Interest rate swap |  |  | 1,297 |  |  |  | (1,297 | ) |  |  | — |
|  | $ | 14,823 |  |  | $ | (9,127 | ) |  | $ | 5,696 |
Liability Derivatives |  |  |  |  |  |  |  |  |  |  |  |
Commodity-related derivatives |  | $ | 10,849 |  |  | $ | (7,830 | ) |  | $ | 3,019 |
Interest rate swap |  |  | 2,863 |  |  |  | (1,297 | ) |  |  | 1,566 |
|  | $ | 13,712 |  |  | $ | (9,127 | ) |  | $ | 4,585 |
|  | As of September 27, 2014 |
|  | Gross amounts |  |  | Effects of netting |  |  | Net amounts presented in the balance sheet |
Asset Derivatives |  |  |  |  |  |  |  |  |  |  |  |
Commodity-related derivatives |  | $ | 9,533 |  |  | $ | (5,547 | ) |  | $ | 3,986 |
Interest rate swap |  |  | 2,139 |  |  |  | (2,139 | ) |  |  | — |
|  | $ | 11,672 |  |  | $ | (7,686 | ) |  | $ | 3,986 |
Liability Derivatives |  |  |  |  |  |  |  |  |  |  |  |
Commodity-related derivatives |  | $ | 7,127 |  |  | $ | (5,547 | ) |  | $ | 1,580 |
Interest rate swap |  |  | 3,679 |  |  |  | (2,139 | ) |  |  | 1,540 |
|  | $ | 10,806 |  |  | $ | (7,686 | ) |  | $ | 3,120 |

The Partnership had $3,090 and $-0- posted cash collateral as of March 28, 2015 and September 27, 2014, respectively, with its brokers for outstanding commodity-related derivatives.

Bank Debt and Senior Notes. The fair value of the borrowings under the Revolving Credit Facility (defined below) approximates the carrying value since the interest rates are periodically adjusted to reflect market conditions. Based upon quoted market prices (a Level 1 input), the fair value of the Senior Notes (defined below) of the Partnership are as follows:

|  | As of |
|  | March 28, 2015 |  |  | September 27, 2014 |
7.375% senior notes due March 15, 2020 |  | $ | — |  |  | $ | 263,250 |
7.375% senior notes due August 1, 2021 |  |  | 373,874 |  |  |  | 363,489 |
5.5% senior notes due June 1, 2024 |  |  | 540,094 |  |  |  | 508,594 |
5.75% senior notes due March 1, 2025 |  |  | 255,000 |  |  |  | — |
|  | $ | 1,168,968 |  |  | $ | 1,135,333 |

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4. | Inventories

Inventories are stated at the lower of cost or market. Cost is determined using a weighted average method for propane, fuel oil and refined fuels and natural gas, and a standard cost basis for appliances, which approximates average cost. Inventories consist of the following:

|  | As of |
|  | March 28, 2015 |  |  | September 27, 2014 |
Propane, fuel oil and refined fuels and natural gas |  | $ | 56,779 |  |  | $ | 89,470 |
Appliances |  |  | 2,123 |  |  |  | 1,495 |
|  | $ | 58,902 |  |  | $ | 90,965 |

5. | Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is subject to an impairment review at a reporting unit level, on an annual basis as of the end of fiscal July of each year, or when an event occurs or circumstances change that would indicate potential impairment.

The Partnership has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Partnership determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if the Partnership concludes otherwise, then it is required to perform the first step of the two-step impairment test.

Under the two-step impairment test, the Partnership assesses the carrying value of goodwill at a reporting unit level based on an estimate of the fair value of the respective reporting unit. Fair value of the reporting unit is estimated using discounted cash flow analyses taking into consideration estimated cash flows in a ten-year projection period and a terminal value calculation at the end of the projection period. If the fair value of the reporting unit exceeds its carrying value, the goodwill associated with the reporting unit is not considered to be impaired. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized to the extent that the carrying amount of the associated goodwill, if any, exceeds the implied fair value of the goodwill.

The carrying values of goodwill assigned to the Partnership’s operating segments are as follows:

|  | As of |
|  | March 28, 2015 |  |  | September 27, 2014 |
Propane |  | $ | 1,075,091 |  |  | $ | 1,075,091 |
Fuel oil and refined fuels |  |  | 4,438 |  |  |  | 4,438 |
Natural gas and electricity |  |  | 7,900 |  |  |  | 7,900 |
|  | $ | 1,087,429 |  |  | $ | 1,087,429 |

6. | Net Income Per Common Unit

Computations of basic income per Common Unit are performed by dividing net income by the weighted average number of outstanding Common Units and restricted units granted under the restricted unit plans to retirement-eligible grantees. Computations of diluted income per Common Unit are performed by dividing net income by the weighted average number of outstanding Common Units and unvested restricted units granted under the restricted unit plans. In computing diluted net income per Common Unit, weighted average units outstanding used to compute

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basic net income per Common Unit were increased by 343,922 and 320,398 units for the three and six months ended March 28, 2015, respectively, and 266,948 and 259,433 units for the three and six months ended March 29, 2014, respectively, to reflect the potential dilutive effect of the unvested restricted units outstanding using the treasury stock method.

7. | Long-Term Borrowings

Long-term borrowings consist of the following:

|  | As of |
|  | March 28, 2015 |  |  | September 27, 2014 |
7.375% senior notes, due March 15, 2020, net of unamortized discount of $-0- and $1,183, respectively |  | $ | — |  |  | $ | 248,817 |
7.375% senior notes, due August 1, 2021, including unamortized premium of $21,328 and $22,688, respectively |  |  | 367,508 |  |  |  | 368,868 |
5.5% senior notes, due June 1, 2024 |  |  | 525,000 |  |  |  | 525,000 |
5.75% senior notes, due March 1, 2025 |  |  | 250,000 |  |  |  | — |
Revolving Credit Facility, due January 5, 2017 |  |  | 100,000 |  |  |  | 100,000 |
|  | $ | 1,242,508 |  |  | $ | 1,242,685 |

Senior Notes.

2018 Senior Notes and 2021 Senior Notes

On August 1, 2012, the Partnership and its 100%-owned subsidiary, Suburban Energy Finance Corp., issued $496,557 in aggregate principal amount of unregistered 7.5% senior notes due October 1, 2018 (the “2018 Senior Notes”) and $503,443 in aggregate principal amount of unregistered 7.375% senior notes due August 1, 2021 (the “2021 Senior Notes”) in a private placement in connection with the Inergy Propane Acquisition. Based on market rates for similar issues, the 2018 Senior Notes and 2021 Senior Notes were valued at 106.875% and 108.125%, respectively, of the principal amount, on the Acquisition Date as they were issued in exchange for Inergy’s outstanding notes, not for cash. The 2021 Senior Notes require semi-annual interest payments in February and August. On December 19, 2012, the Partnership completed an offer to exchange its then-outstanding unregistered 7.5% senior notes due 2018 and 7.375% senior notes due 2021 (collectively, the “Old Notes”) for an equal principal amount of 7.5% senior notes due 2018 and 7.375% senior notes due 2021 (collectively, the “Exchange Notes”), respectively, that have been registered under the Securities Act of 1933, as amended.

On August 2, 2013, the Partnership repurchased, pursuant to an optional redemption, $133,400 of its 2021 Senior Notes using net proceeds from a May 2013 public offering of Common Units and net proceeds from the underwriters’ exercise of their over-allotment option to purchase additional Common Units. In addition, on August 6, 2013, the Partnership repurchased $23,863 of 2021 Senior Notes in a private transaction using cash on hand.

On May 27, 2014, the Partnership repurchased and satisfied and discharged all of its 2018 Senior Notes with net proceeds from the issuance of the 2024 Senior Notes, as defined below, and cash on hand pursuant to a tender offer and redemption during the third quarter of fiscal 2014. In connection with this tender offer and redemption, the Partnership recognized a loss on the extinguishment of debt of $11,589 consisting of $31,633 for the redemption premium and related fees, as well as the write-off of $5,230 and ($25,274) in unamortized debt origination costs and unamortized premium, respectively.

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2020 Senior Notes

On March 23, 2010, the Partnership and its 100%-owned subsidiary, Suburban Energy Finance Corp., completed a public offering of $250,000 in aggregate principal amount of 7.375% senior notes due March 15, 2020 (the “2020 Senior Notes”). The 2020 Senior Notes were issued at 99.136% of the principal amount and require semi-annual interest payments in March and September.

On February 25, 2015, the Partnership repurchased and satisfied and discharged all of its previously outstanding 2020 Senior Notes with net proceeds from the issuance of the 2025 Senior Notes, as defined below, and cash on hand pursuant to a tender offer and redemption during the second quarter of fiscal 2015. In connection with this tender offer and redemption, the Partnership recognized a loss on the extinguishment of debt of $15,072 consisting of $11,124 for the redemption premium and related fees, as well as the write-off of $2,855 and $1,093 in unamortized debt origination costs and unamortized discount, respectively.

2024 Senior Notes

On May 27, 2014, the Partnership and its 100%-owned subsidiary, Suburban Energy Finance Corp., completed a public offering of $525,000 in aggregate principal amount of 5.5% senior notes due June 1, 2024 (the “2024 Senior Notes”). The 2024 Senior Notes were issued at 100% of the principal amount and require semi-annual interest payments in June and December. The net proceeds from the issuance of the 2024 Senior Notes, along with cash on hand, were used to repurchase and satisfy and discharge all of the 2018 Senior Notes.

2025 Senior Notes

On February 25, 2015, the Partnership and its 100%-owned subsidiary, Suburban Energy Finance Corp., completed a public offering of $250,000 in aggregate principal amount of 5.75% senior notes due March 1, 2025 (the “2025 Senior Notes”). The 2025 Senior Notes were issued at 100% of the principal amount and require semi-annual interest payments in March and September. The net proceeds from the issuance of the 2025 Senior Notes, along with cash on hand, were used to repurchase and satisfy and discharge all of the 2020 Senior Notes.

The Partnership’s obligations under the 2021 Senior Notes, 2024 Senior Notes and 2025 Senior Notes (collectively, the “Senior Notes”) are unsecured and rank senior in right of payment to any future subordinated indebtedness and equally in right of payment with any future senior indebtedness. The Senior Notes are structurally subordinated to, which means they rank effectively behind, any debt and other liabilities of the Operating Partnership. The Partnership is permitted to redeem some or all of the Senior Notes at redemption prices and times as specified in the indentures governing the Senior Notes. The Senior Notes each have a change of control provision that would require the Partnership to offer to repurchase the notes at 101% of the principal amount repurchased, if a change of control, as defined in the indenture, occurs and is followed by a rating decline (a decrease in the rating of the notes by either Moody’s Investors Service or Standard and Poor’s Rating Group by one or more gradations) within 90 days of the consummation of the change of control.

Credit Agreement

The Operating Partnership has an amended and restated credit agreement entered into on January 5, 2012, as amended on August 1, 2012 and May 9, 2014 (collectively, the “Amended Credit Agreement”) that provides for a five-year $400,000 revolving credit facility (the “Revolving Credit Facility”), of which $100,000 was outstanding as of March 28, 2015 and September 27, 2014. Borrowings under the Revolving Credit Facility may be used for general corporate purposes, including working capital, capital expenditures and acquisitions. The Operating Partnership has the right to prepay any borrowings under the Revolving Credit Facility, in whole or in part, without penalty at any time prior to maturity.

The amendment and restatement of the credit agreement on January 5, 2012 amended the previous credit agreement to, among other things, extend the maturity date from June 25, 2013 to January 5, 2017, reduce the borrowing rate and commitment fees, and amend certain affirmative and negative covenants.

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The amendment on August 1, 2012 amended, among other things, certain restrictive and affirmative covenants applicable to the Operating Partnership and the Partnership, as well as certain financial covenants, including (a) requiring the Partnership’s consolidated interest coverage ratio, as defined in the amendment, to be not less than 2.0 to 1.0 as of the end of any fiscal quarter; (b) prohibiting the total consolidated leverage ratio, as defined in the amendment, of the Partnership from being greater than 7.0 to 1.0 as of the end of any fiscal quarter. The minimum consolidated interest coverage ratio increased over time, and commencing with the second quarter of fiscal 2014, such minimum ratio is 2.5 to 1.0. The maximum consolidated leverage ratio decreased over time, as well as upon the occurrence of certain events (such as the issuance of Common Units where the net proceeds from the issuance exceed certain thresholds). Commencing with the second quarter of fiscal 2013, such maximum ratio is 4.75 to 1.0 (or 5.0 to 1.0 during an acquisition period as defined in the amendment). The amendment on May 9, 2014 made certain technical amendments with respect to agreements relating to debt refinancing.

The Partnership acts as a guarantor with respect to the obligations of the Operating Partnership under the Amended Credit Agreement pursuant to the terms and conditions set forth therein. The obligations under the Amended Credit Agreement are secured by liens on substantially all of the personal property of the Partnership, the Operating Partnership and their subsidiaries, as well as mortgages on certain real property.

Borrowings under the Revolving Credit Facility of the Amended Credit Agreement bear interest at prevailing interest rates based upon, at the Operating Partnership’s option, LIBOR plus the applicable margin or the base rate, defined as the higher of the Federal Funds Rate plus 1⁄2 of 1%, the agent bank’s prime rate, or LIBOR plus 1%, plus in each case the applicable margin. The applicable margin is dependent upon the Partnership’s ratio of total debt to EBITDA on a consolidated basis, as defined in the Revolving Credit Facility. As of March 28, 2015, the interest rate for the Revolving Credit Facility was approximately 2.5%. The interest rate and the applicable margin will be reset at the end of each calendar quarter.

In connection with the Amended Credit Agreement, the Operating Partnership entered into an interest rate swap agreement with a notional amount of $100,000, an effective date of June 25, 2013 and a maturity date of January 5, 2017. Under this interest rate swap agreement, the Operating Partnership will pay a fixed interest rate of 1.63% to the issuing lender on the notional principal amount outstanding, and the issuing lender will pay the Operating Partnership a floating rate, namely LIBOR, on the same notional principal amount. The interest rate swap has been designated as a cash flow hedge.

As of March 28, 2015, the Partnership had standby letters of credit issued under the Revolving Credit Facility in the aggregate amount of $53,230 which expire periodically through April 3, 2016. After considering outstanding borrowings of $100,000, the Partnership had available borrowing capacity of $246,770 under the Revolving Credit Facility as of March 28, 2015.

The Amended Credit Agreement and the Senior Notes both contain various restrictive and affirmative covenants applicable to the Operating Partnership and the Partnership, respectively, including (i) restrictions on the incurrence of additional indebtedness, and (ii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions. Under the Amended Credit Agreement and the indentures governing the Senior Notes, the Operating Partnership and the Partnership are generally permitted to make cash distributions equal to available cash, as defined, as of the end of the immediately preceding quarter, if no event of default exists or would exist upon making such distributions, and with respect to the indentures governing the Senior Notes, the Partnership’s consolidated fixed charge coverage ratio, as defined, is greater than 1.75 to 1. The Partnership and the Operating Partnership were in compliance with all covenants and terms of the Senior Notes and the Amended Credit Agreement as of March 28, 2015.

The aggregate amounts of long-term debt maturities subsequent to March 28, 2015 are as follows: fiscal 2015 through fiscal 2016: $-0-; fiscal 2017: $100,000; fiscal 2018: $-0-; fiscal 2019: $-0-; and thereafter: $1,121,180.

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8. | Distributions of Available Cash

The Partnership makes distributions to its partners no later than 45 days after the end of each fiscal quarter in an aggregate amount equal to its Available Cash for such quarter. Available Cash, as defined in the Partnership Agreement, generally means all cash on hand at the end of the respective fiscal quarter less the amount of cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. These reserves are retained for the proper conduct of the Partnership’s business, the payment of debt principal and interest and for distributions during the next four quarters.

On April 23, 2015, the Partnership announced a quarterly distribution of $0.8875 per Common Unit, or $3.55 per Common Unit on an annualized basis, in respect of the second quarter of fiscal 2015, payable on May 12, 2015 to holders of record on May 5, 2015. The annualized distribution represents an increase of $0.05, or 1.4%, per Common Unit from the previous distribution rate.

9. | Unit-Based Compensation Arrangements

The Partnership recognizes compensation cost over the respective service period for employee services received in exchange for an award of equity or equity-based compensation based on the grant date fair value of the award. The Partnership measures liability awards under an equity-based payment arrangement based on remeasurement of the award’s fair value at the conclusion of each interim and annual reporting period until the date of settlement, taking into consideration the probability that the performance conditions will be satisfied.

Restricted Unit Plans. In fiscal 2000 and fiscal 2009, the Partnership adopted the Suburban Propane Partners, L.P. 2000 Restricted Unit Plan and 2009 Restricted Unit Plan (collectively, the “Restricted Unit Plans”), respectively, which authorizes the issuance of Common Units to executives, managers and other employees and members of the Board of Supervisors of the Partnership. The total number of Common Units authorized for issuance under the Restricted Unit Plans was 1,902,122 as of March 28, 2015. In accordance with an August 6, 2013 amendment to the Restricted Unit Plans, unless otherwise stipulated by the Compensation Committee of the Partnership’s Board of Supervisors on or before the grant date, all restricted unit awards granted after the date of the amendment will vest 33.33% on each of the first three anniversaries of the award grant date. Prior to the August 6, 2013 amendment, unless otherwise stipulated by the Compensation Committee of the Partnership’s Board of Supervisors on or before the grant date, restricted units issued under the Restricted Unit Plans vest over time with 25% of the Common Units vesting at the end of each of the third and fourth anniversaries of the grant date and the remaining 50% of the Common Units vesting at the end of the fifth anniversary of the grant date. The Restricted Unit Plans participants are not eligible to receive quarterly distributions on, or vote, their respective restricted units until vested. Restricted units cannot be sold or transferred prior to vesting. The value of the restricted unit is established by the market price of the Common Unit on the date of grant, net of estimated future distributions during the vesting period. Restricted units are subject to forfeiture in certain circumstances as defined in the Restricted Unit Plans. Compensation expense for the unvested awards is recognized ratably over the vesting periods and is net of estimated forfeitures.

During the six months ended March 28, 2015, the Partnership awarded 154,403 restricted units under the Restricted Unit Plans at an aggregate grant date fair value of $5,804. The following is a summary of activity for the Restricted Unit Plans for the six months ended March 28, 2015:

|  | Units |  |  | Weighted Average Grant Date Fair Value Per Unit |
Outstanding September 27, 2014 |  |  | 694,927 |  |  | $ | 32.07 |
Awarded |  |  | 154,403 |  |  |  | 37.59 |
Forfeited |  |  | (4,048 | ) |  |  | (31.82 | )
Issued |  |  | (167,289 | ) |  |  | (36.72 | )
Outstanding March 28, 2015 |  |  | 677,993 |  |  | $ | 32.18 |

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As of March 28, 2015, unrecognized compensation cost related to unvested restricted units awarded under the Restricted Unit Plans amounted to $8,427. Compensation cost associated with unvested awards is expected to be recognized over a weighted-average period of 1.2 years. Compensation expense recognized under the Restricted Unit Plans, net of forfeitures, for the three and six months ended March 28, 2015, was $2,613 and $5,503, respectively, and $1,951 and $3,589 for the three and six months ended March 29, 2014, respectively.

Long-Term Incentive Plan. The Partnership has a non-qualified, unfunded long-term incentive plan for officers and key employees (the “LTIP”) which provides for payment, in the form of cash, of an award of equity-based compensation at the end of a three-year performance period. For the fiscal 2013 award, the level of compensation earned under the LTIP is based on the market performance of the Partnership’s Common Units on the basis of total return to Unitholders (“TRU”) compared to the TRU of a predetermined peer group consisting solely of other master limited partnerships, approved by the Compensation Committee of the Board of Supervisors, over the same three-year performance period. On August 6, 2013, the Compensation Committee of the Partnership’s Board of Supervisors adopted the 2014 Long-Term Incentive Plan of the Partnership (“2014 LTIP”) as a replacement for the existing LTIP. As a result, for the fiscal 2015 and 2014 awards, the level of compensation earned under the 2014 LTIP is based on the Partnership’s average distribution coverage ratio over the three-year measurement period. The Partnership’s average distribution coverage ratio is calculated as the Partnership’s average distributable cash flow, as defined in the 2014 LTIP, for each of the three years in the measurement period, subject to certain adjustments as set forth in the 2014 LTIP, divided by the amount of annualized cash distributions to be paid by the Partnership, based on the annualized cash distribution rate at the beginning of the measurement period.

As a result of the quarterly remeasurement of the liability for awards under the LTIP and 2014 LTIP, compensation expense for the three months and six months ended March 28, 2015 was $556 and $1,754, respectively, and $153 and $1,505 for the three and six months ended March 29, 2014, respectively. As of March 28, 2015 and September 27, 2014, the Partnership had a liability included within accrued employment and benefit costs (or other liabilities, as applicable) of $4,801 and $3,047, respectively, related to estimated future payments under the LTIP.

10. | Commitments and Contingencies

Self-Insurance. The Partnership is self-insured for general and product, workers’ compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. As of March 28, 2015 and September 27, 2014, the Partnership had accrued insurance liabilities of $62,415 and $62,450, respectively, representing the total estimated losses under these self-insurance programs. For the portion of the estimated self-insurance liability that exceeds insurance deductibles, the Partnership records an asset within other assets (or other current assets, as applicable) related to the amount of the liability expected to be covered by insurance which amounted to $18,911 and $18,410 as of March 28, 2015 and September 27, 2014, respectively.

Legal Matters. The Partnership’s operations are subject to operating hazards and risks normally incidental to handling, storing and delivering combustible liquids such as propane. The Partnership has been, and will continue to be, a defendant in various legal proceedings and litigation as a result of these operating hazards and risks, and as a result of other aspects of its business. Although any litigation is inherently uncertain, based on past experience, the information currently available to the Partnership, and the amount of its accrued insurance liabilities, the Partnership does not believe that currently pending or threatened litigation matters, or known claims or known contingent claims, will have a material adverse effect on its results of operations, financial condition or cash flow.

11. | Guarantees

The Partnership has residual value guarantees associated with certain of its operating leases, related primarily to transportation equipment, with remaining lease periods scheduled to expire periodically through fiscal 2021. Upon completion of the lease period, the Partnership guarantees that the fair value of the equipment will equal or exceed the guaranteed amount, or the Partnership will pay the lessor the difference. Although the fair value of equipment at the end of its lease term has historically exceeded the guaranteed amounts, the maximum potential amount of aggregate future payments the Partnership could be required to make under these leasing arrangements, assuming the equipment is deemed worthless at the end of the lease term, was $12,101 as of March 28, 2015. The fair value of residual value guarantees for outstanding operating leases was de minimis as of March 28, 2015 and September 27, 2014.

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12. | Pension Plans and Other Postretirement Benefits

The following table provides the components of net periodic benefit costs:

|  | Pension Benefits |
|  | Three Months Ended |  |  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | March 28, 2015 |  |  | March 29, 2014 |
Interest cost |  | $ | 1,282 |  |  | $ | 1,443 |  |  | $ | 2,564 |  |  | $ | 2,887 |
Expected return on plan assets |  |  | (1,228 | ) |  |  | (1,275 | ) |  |  | (2,457 | ) |  |  | (2,551 | )
Amortization of net loss (gain) |  |  | 1,131 |  |  |  | 1,123 |  |  |  | 2,261 |  |  |  | 2,246 |
Net periodic benefit cost |  | $ | 1,185 |  |  | $ | 1,291 |  |  | $ | 2,368 |  |  | $ | 2,582 |
|  | Postretirement Benefits |
|  | Three Months Ended |  |  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | March 28, 2015 |  |  | March 29, 2014 |
Interest cost |  | $ | 143 |  |  | $ | 161 |  |  | $ | 288 |  |  | $ | 323 |
Amortization of prior service costs |  |  | (123 | ) |  |  | (122 | ) |  |  | (245 | ) |  |  | (245 | )
Amortization of net loss (gain) |  |  | (49 | ) |  |  | (46 | ) |  |  | (98 | ) |  |  | (91 | )
Net periodic benefit cost |  | $ | (29 | ) |  | $ | (7 | ) |  | $ | (55 | ) |  | $ | (13 | )

There are no projected minimum employer cash contribution requirements under ERISA laws for fiscal 2015 under the Partnership’s defined benefit pension plan. The projected annual contribution requirements related to the Partnership’s postretirement health care and life insurance benefit plan for fiscal 2015 is $1,276, of which $460 has been contributed during the six months ended March 28, 2015.

As a result of the Inergy Propane Acquisition, the Partnership contributes to multi-employer pension plans (“MEPP”) in accordance with various collective bargaining agreements covering union employees. As one of the many participating employers in these MEPPs, the Partnership is responsible with the other participating employers for any plan underfunding. As of March 28, 2015, the Partnership had accrued $6,821 for its estimated obligation to certain MEPPs due to the Partnership’s voluntary partial withdrawal from one such MEPP and full withdrawal from four MEPPs. Due to the uncertainty regarding future factors that could trigger withdrawal liability, including the integration of Inergy Propane, the Partnership is unable to determine the amount and timing of any future withdrawal liability, if any.

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13. | Amounts Reclassified Out of Accumulated Other Comprehensive Income

The following table summarizes amounts reclassified out of accumulated other comprehensive income for the three and six months ended March 28, 2015 and March 29, 2014:

|  | Three Months Ended |  |  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | March 28, 2015 |  |  | March 29, 2014 |
Cash Flow Hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | (1,410 | ) |  | $ | (2,241 | ) |  | $ | (1,540 | ) |  | $ | (2,428 | )
Other comprehensive income before reclassifications: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized (losses) |  |  | (500 | ) |  |  | (90 | ) |  |  | (727 | ) |  |  | (256 | )
Reclassifications to earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized losses (a) |  |  | 344 |  |  |  | 346 |  |  |  | 701 |  |  |  | 699 |
Other comprehensive income (loss) |  |  | (156 | ) |  |  | 256 |  |  |  | (26 | ) |  |  | 443 |
Balance, end of period |  | $ | (1,566 | ) |  | $ | (1,985 | ) |  | $ | (1,566 | ) |  | $ | (1,985 | )
Pension Benefits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | (47,904 | ) |  | $ | (48,864 | ) |  | $ | (49,034 | ) |  | $ | (49,987 | )
Reclassifications to earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of net loss (b) |  |  | 1,131 |  |  |  | 1,123 |  |  |  | 2,261 |  |  |  | 2,246 |
Other comprehensive income (loss) |  |  | 1,131 |  |  |  | 1,123 |  |  |  | 2,261 |  |  |  | 2,246 |
Balance, end of period |  | $ | (46,773 | ) |  | $ | (47,741 | ) |  | $ | (46,773 | ) |  | $ | (47,741 | )
Postretirement Benefits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 4,498 |  |  | $ | 4,894 |  |  | $ | 4,669 |  |  | $ | 5,062 |
Reclassifications to earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of prior service costs (b) |  |  | (123 | ) |  |  | (122 | ) |  |  | (245 | ) |  |  | (245 | )
Amortization of net (gain) (b) |  |  | (49 | ) |  |  | (46 | ) |  |  | (98 | ) |  |  | (91 | )
Other comprehensive income (loss) |  |  | (172 | ) |  |  | (168 | ) |  |  | (343 | ) |  |  | (336 | )
Balance, end of period |  | $ | 4,326 |  |  | $ | 4,726 |  |  | $ | 4,326 |  |  | $ | 4,726 |
Accumulated Other Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | (44,816 | ) |  | $ | (46,211 | ) |  | $ | (45,905 | ) |  | $ | (47,353 | )
Other comprehensive income before reclassifications |  |  | (500 | ) |  |  | (90 | ) |  |  | (727 | ) |  |  | (256 | )
Reclassifications to earnings |  |  | 1,303 |  |  |  | 1,301 |  |  |  | 2,619 |  |  |  | 2,609 |
Other comprehensive income (loss) |  |  | 803 |  |  |  | 1,211 |  |  |  | 1,892 |  |  |  | 2,353 |
Balance, end of period |  | $ | (44,013 | ) |  | $ | (45,000 | ) |  | $ | (44,013 | ) |  | $ | (45,000 | )

(a) | Reclassification of realized losses on cash flow hedges are recognized in interest expense.

(b) | These amounts are included in the computation of net periodic benefit cost. See Note 12, “Pension Plan and Other Postretirement Benefits”.

14. | Income Taxes

For federal income tax purposes, as well as for state income tax purposes in the majority of the states in which the Partnership operates, the earnings attributable to the Partnership and the Operating Partnership are not subject to income tax at the partnership level. With the exception of those states that impose an entity-level income tax on partnerships, the taxable income or loss attributable to the Partnership, and to the Operating Partnership, which may vary substantially from the income before income taxes reported by the Partnership in the condensed consolidated statement of operations, are includable in the federal and state income tax returns of the Common Unitholders. The aggregate difference in the basis of the Partnership’s net assets for financial and tax reporting purposes cannot be readily determined as the Partnership does not have access to each Common Unitholder’s basis in the Partnership.

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As described in Note 1, the earnings of the Corporate Entities are subject to corporate level federal and state income tax. However, based upon past performance, the Corporate Entities are currently reporting an income tax provision composed primarily of minimum state income taxes. A full valuation allowance has been provided against the deferred tax assets based upon an analysis of all available evidence, both negative and positive at the balance sheet date, which, taken as a whole, indicates that it is more likely than not that sufficient future taxable income will not be available to utilize the assets. Management’s periodic reviews include, among other things, the nature and amount of the taxable income and expense items, the expected timing of when assets will be used or liabilities will be required to be reported and the reliability of historical profitability of businesses expected to provide future earnings. Furthermore, management considered tax-planning strategies it could use to increase the likelihood that the deferred assets will be realized.

15. | Segment Information

The Partnership manages and evaluates its operations in five operating segments, three of which are reportable segments: Propane, Fuel Oil and Refined Fuels and Natural Gas and Electricity. The chief operating decision maker evaluates performance of the operating segments using a number of performance measures, including revenues and income before interest expense and provision for income taxes (operating profit). Costs excluded from these profit measures are captured in Corporate and include corporate overhead expenses not allocated to the operating segments. Unallocated corporate overhead expenses include all costs of back office support functions that are reported as general and administrative expenses within the consolidated statements of operations. In addition, certain costs associated with field operations support that are reported in operating expenses within the consolidated statements of operations, including purchasing, training and safety, are not allocated to the individual operating segments. Thus, operating profit for each operating segment includes only the costs that are directly attributable to the operations of the individual segment. The accounting policies of the operating segments are otherwise the same as those described in Note 2, “Summary of Significant Accounting Policies,” in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014.

The propane segment is primarily engaged in the retail distribution of propane to residential, commercial, industrial and agricultural customers and, to a lesser extent, wholesale distribution to large industrial end users. In the residential and commercial markets, propane is used primarily for space heating, water heating, cooking and clothes drying. Industrial customers use propane generally as a motor fuel burned in internal combustion engines that power over-the-road vehicles, forklifts and stationary engines, to fire furnaces and as a cutting gas. In the agricultural markets, propane is primarily used for tobacco curing, crop drying, poultry brooding and weed control.

The fuel oil and refined fuels segment is primarily engaged in the retail distribution of fuel oil, diesel, kerosene and gasoline to residential and commercial customers for use primarily as a source of heat in homes and buildings.

The natural gas and electricity segment is engaged in the marketing of natural gas and electricity to residential and commercial customers in the deregulated energy markets of New York and Pennsylvania. Under this operating segment, the Partnership owns the relationship with the end consumer and has agreements with the local distribution companies to deliver the natural gas or electricity from the Partnership’s suppliers to the customer.

Activities in the “all other” category include the Partnership’s service business, which is primarily engaged in the sale, installation and servicing of a wide variety of home comfort equipment, particularly in the areas of heating and ventilation, and activities from the Partnership’s Suburban Franchising subsidiaries.

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The following table presents certain relevant financial information by reportable segment and provides a reconciliation of total operating segment information to the corresponding consolidated amounts for the periods presented:

|  | Three Months Ended |  |  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | March 28, 2015 |  |  | March 29, 2014 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 498,616 |  |  | $ | 728,504 |  |  | $ | 853,266 |  |  | $ | 1,167,098 |
Fuel oil and refined fuels |  |  | 60,426 |  |  |  | 93,722 |  |  |  | 99,356 |  |  |  | 147,990 |
Natural gas and electricity |  |  | 28,281 |  |  |  | 39,083 |  |  |  | 44,248 |  |  |  | 57,399 |
All other |  |  | 12,066 |  |  |  | 12,463 |  |  |  | 25,463 |  |  |  | 27,341 |
Total revenues |  | $ | 599,389 |  |  | $ | 873,772 |  |  | $ | 1,022,333 |  |  | $ | 1,399,828 |
Operating income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 189,265 |  |  | $ | 189,517 |  |  | $ | 292,341 |  |  | $ | 295,899 |
Fuel oil and refined fuels |  |  | 9,434 |  |  |  | 9,271 |  |  |  | 10,880 |  |  |  | 9,750 |
Natural gas and electricity |  |  | 7,457 |  |  |  | 5,022 |  |  |  | 10,215 |  |  |  | 7,674 |
All other |  |  | (5,289 | ) |  |  | (6,538 | ) |  |  | (10,967 | ) |  |  | (12,388 | )
Corporate |  |  | (29,276 | ) |  |  | (26,228 | ) |  |  | (54,910 | ) |  |  | (49,836 | )
Total operating income |  |  | 171,591 |  |  |  | 171,044 |  |  |  | 247,559 |  |  |  | 251,099 |
Reconciliation to net income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss on debt extinguishment |  |  | 15,072 |  |  |  | — |  |  |  | 15,072 |  |  |  | — |
Interest expense, net |  |  | 19,711 |  |  |  | 21,226 |  |  |  | 39,710 |  |  |  | 42,433 |
Provision for income taxes |  |  | 174 |  |  |  | 271 |  |  |  | 336 |  |  |  | 448 |
Net income |  | $ | 136,634 |  |  | $ | 149,547 |  |  | $ | 192,441 |  |  | $ | 208,218 |
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 27,562 |  |  | $ | 26,808 |  |  | $ | 54,641 |  |  | $ | 52,541 |
Fuel oil and refined fuels |  |  | 728 |  |  |  | 899 |  |  |  | 1,561 |  |  |  | 3,195 |
Natural gas and electricity |  |  | 2 |  |  |  | 2 |  |  |  | 4 |  |  |  | 42 |
All other |  |  | 69 |  |  |  | 192 |  |  |  | 149 |  |  |  | 397 |
Corporate |  |  | 4,868 |  |  |  | 5,381 |  |  |  | 9,503 |  |  |  | 11,934 |
Total depreciation and amortization |  | $ | 33,229 |  |  | $ | 33,282 |  |  | $ | 65,858 |  |  | $ | 68,109 |

|  | As of |
|  | March 28, 2015 |  |  | September 27, 2014 |
Assets: |  |  |  |  |  |  |  |
Propane |  | $ | 2,378,783 |  |  | $ | 2,365,320 |
Fuel oil and refined fuels |  |  | 73,599 |  |  |  | 69,360 |
Natural gas and electricity |  |  | 20,224 |  |  |  | 13,992 |
All other |  |  | 3,381 |  |  |  | 3,342 |
Corporate |  |  | 175,497 |  |  |  | 157,349 |
Total assets |  | $ | 2,651,484 |  |  | $ | 2,609,363 |

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

The following is a discussion of the financial condition and results of operations of the Partnership as of and for the three and six months ended March 28, 2015. The discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the historical consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 27, 2014.

Executive Overview

The following are factors that regularly affect our operating results and financial condition. In addition, our business is subject to the risks and uncertainties described in Item 1A included in the Annual Report on Form 10-K for the fiscal year ended September 27, 2014.

Product Costs and Supply

The level of profitability in the retail propane, fuel oil, natural gas and electricity businesses is largely dependent on the difference between retail sales price and our costs to acquire and transport products. The unit cost of our products, particularly propane, fuel oil and natural gas, is subject to volatility as a result of supply and demand dynamics or other market conditions, including, but not limited to, economic and political factors impacting crude oil and natural gas supply or pricing. We enter into product supply contracts that are generally one-year agreements subject to annual renewal, and also purchase product on the open market. We attempt to reduce price risk by pricing product on a short-term basis. Our propane supply contracts typically provide for pricing based upon index formulas using the posted prices established at major supply points such as Mont Belvieu, Texas, or Conway, Kansas (plus transportation costs) at the time of delivery.

To supplement our annual purchase requirements, we may utilize forward fixed price purchase contracts to acquire a portion of the propane that we resell to our customers, which allows us to manage our exposure to unfavorable changes in commodity prices and to assure adequate physical supply. The percentage of contract purchases, and the amount of supply contracted for under forward contracts at fixed prices, will vary from year to year based on market conditions.

Changes in our costs to acquire and transport products can occur rapidly over a short period of time and can impact profitability. There is no assurance that we will be able to pass on product acquisition and transportation cost increases fully or immediately, particularly when such costs increase rapidly. Therefore, average retail sales prices can vary significantly from year to year as our costs fluctuate with the propane, fuel oil, crude oil and natural gas commodity markets and infrastructure conditions. In addition, periods of sustained higher commodity and/or transportation prices can lead to customer conservation, resulting in reduced demand for our product.

Seasonality

The retail propane and fuel oil distribution businesses, as well as the natural gas marketing business, are seasonal because these fuels are primarily used for heating in residential and commercial buildings. Historically, approximately two-thirds of our retail propane volume is sold during the six-month peak heating season from October through March. The fuel oil business tends to experience greater seasonality given its more limited use for space heating and approximately three-fourths of our fuel oil volumes are sold between October and March. Consequently, sales and operating profits are concentrated in our first and second fiscal quarters. Cash flows from operations, therefore, are greatest during the second and third fiscal quarters when customers pay for product purchased during the winter heating season. We expect lower operating profits and either net losses or lower net income during the period from April through September (our third and fourth fiscal quarters). To the extent necessary, we will reserve cash from the second and third quarters for distribution to holders of our Common Units in the fourth quarter and the following fiscal year first quarter.

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Weather

Weather conditions have a significant impact on the demand for our products, in particular propane, fuel oil and natural gas, for both heating and agricultural purposes. Many of our customers rely heavily on propane, fuel oil or natural gas as a heating source. Accordingly, the volume sold is directly affected by the severity of the winter weather in our service areas, which can vary substantially from year to year. In any given area, sustained warmer than normal temperatures will tend to result in reduced propane, fuel oil and natural gas consumption, while sustained colder than normal temperatures will tend to result in greater consumption.

Hedging and Risk Management Activities

We engage in hedging and risk management activities to reduce the effect of price volatility on our product costs and to ensure the availability of product during periods of short supply. We enter into propane forward, options and swap agreements with third parties, and use futures and options contracts traded on the New York Mercantile Exchange (“NYMEX”) to purchase and sell propane, fuel oil and crude oil at fixed prices in the future. The majority of the futures, forward and options agreements are used to hedge price risk associated with propane and fuel oil physical inventory, as well as, in certain instances, forecasted purchases of propane or fuel oil. In addition, we sell propane and fuel oil to customers at fixed prices, and enter into derivative instruments to hedge a portion of our exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. Forward contracts are generally settled physically at the expiration of the contract whereas futures, options and swap contracts are generally settled at the expiration of the contract through a net settlement mechanism. Although we use derivative instruments to reduce the effect of price volatility associated with priced physical inventory and forecasted transactions, we do not use derivative instruments for speculative trading purposes. Risk management activities are monitored by an internal Commodity Risk Management Committee, made up of seven members of management and reporting to the Audit Committee of our Board of Supervisors, through enforcement of our Hedging and Risk Management Policy.

Critical Accounting Policies and Estimates

Our significant accounting policies are summarized in Note 2, “Summary of Significant Accounting Policies,” included within the Notes to Consolidated Financial Statements section of our Annual Report on Form 10-K for the fiscal year ended September 27, 2014.

Certain amounts included in or affecting our consolidated financial statements and related disclosures must be estimated, requiring management to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We are also subject to risks and uncertainties that may cause actual results to differ from estimated results. Estimates are used when accounting for depreciation and amortization of long-lived assets, employee benefit plans, self-insurance and litigation reserves, environmental reserves, allowances for doubtful accounts, asset valuation assessments and valuation of derivative instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known to us. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Supervisors.

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Results of Operations and Financial Condition

Net income for the second quarter of fiscal 2015 was $136.6 million, or $2.26 per Common Unit, compared to net income of $149.5 million, or $2.47 per Common Unit, in the prior year second quarter. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the second quarter of fiscal 2015 amounted to $189.7 million, compared to $204.3 million in the prior year second quarter.

Net income and EBITDA for the second quarter of fiscal 2015 included a loss on debt extinguishment of $15.1 million and $2.1 million in expenses related to the ongoing integration of Inergy Propane. Net income and EBITDA for the second quarter of fiscal 2014 included expenses of $2.2 million related to the Inergy Propane integration. Excluding the effects of these charges, as well as the unrealized (non-cash) mark-to-market adjustments on derivative instruments in both quarters, Adjusted EBITDA (as defined and reconciled below) amounted to $214.3 million for the second quarter of fiscal 2015, an increase of $8.0 million, or 3.9%, compared to Adjusted EBITDA of $206.3 million in the prior year second quarter.

Retail propane gallons sold in the second quarter of fiscal 2015 decreased 14.0 million gallons, or 6.6%, to 199.7 million gallons from 213.7 million gallons in the prior year second quarter. Sales of fuel oil and other refined fuels decreased 2.7 million gallons, to 19.9 million gallons compared to 22.6 million gallons in the prior year second quarter. According to the National Oceanic and Atmospheric Administration, average temperatures (as measured by heating degree days) across all of our service territories for the second quarter of fiscal 2015 were 7% colder than normal and 2% warmer than the prior year second quarter. The weather pattern during the second quarter was characterized by inconsistent temperatures during January, followed by considerably colder than normal temperatures in the Partnership’s eastern and midwestern service territories, and sustained warmer than normal temperatures in the Partnership’s western service territories. Average temperatures in the Partnership’s western territories were 21% warmer than normal and 5% warmer than the prior year second quarter.

Revenues of $599.4 million decreased $274.4 million, or 31.4%, compared to the prior year second quarter, primarily due to lower retail selling prices associated with lower wholesale product costs and, to a lesser extent, lower volumes sold. Average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices were 59.4% and 40.2% lower than the prior year second quarter, respectively. Cost of products sold for the second quarter of fiscal 2015 of $253.7 million decreased $263.5 million, or 51.0%, compared to $517.2 million in the prior year second quarter, primarily due to lower wholesale product costs and, to a lesser extent, lower volumes sold. Cost of products sold for the second quarter of fiscal 2015 included a $7.4 million unrealized (non-cash) loss attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $0.3 million unrealized (non-cash) gain in the prior year second quarter. These unrealized gains and losses are excluded from Adjusted EBITDA for both periods in the table below.

Combined operating and general and administrative expenses of $140.9 million for the second quarter of fiscal 2015 were $11.3 million, or 7.5%, lower than the prior year second quarter, primarily due to operating efficiencies and synergies realized during the period associated with the integration of Inergy Propane, including lower headcount and lower vehicle count, as well as lower general insurance and bad debt expense. Depreciation and amortization expense of $33.2 million was relatively flat compared to the prior year second quarter. Net interest expense of $19.7 million decreased $1.5 million, or 7.1%, primarily due to the refinancing of our previously outstanding senior notes due 2018 completed in May 2014, combined with savings from the refinancing of our $250.0 million in aggregate principal amount of 7.375% Senior Notes due 2020 with $250.0 million in aggregate principal amount of 5.75% Senior Notes due 2025 completed in the second quarter of fiscal 2015.

With respect to the ongoing integration of Inergy Propane, fiscal 2015 represents the third year of our integration efforts. We have made significant progress implementing our operating model across the combined platform – bringing together systems, locations, brands and cultures. Looking ahead, we will continue to focus on fine-tuning our operating model and cost structure in order to maximize efficiencies, deliver excellence in customer satisfaction and enhance the overall profitably of the combined business.

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As announced on April 23, 2015, our Board of Supervisors declared the 30th increase (since our recapitalization in 1999) in our quarterly distribution from $0.8750 to $0.8875 for the three months ended March 28, 2015. On an annualized basis, this distribution rate equates to $3.55 per Common Unit, which is an increase of $0.05, or 1.4%, per Common Unit from the previous annualized distribution rate. The $0.8875 per Common Unit distribution is payable on May 12, 2015 to Common Unitholders of record as of May 5, 2015.

During the second quarter of fiscal 2015, we funded all working capital and capital expenditure needs, as well as the premium, fees and expenses associated with the refinancing of our Senior Notes due 2020, from cash on hand, and we ended the quarter with $110.1 million of cash.

Our anticipated cash requirements for the remainder of fiscal 2015 include: (i) maintenance and growth capital expenditures of approximately $14.1 million; (ii) interest payments of approximately $37.1 million; and (iii) cash distributions of approximately $107.4 million to our Common Unitholders based on the current quarterly distribution rate of $0.8875 per Common Unit. As of March 28, 2015, we had unused borrowing capacity under our Revolving Credit Facility of $246.8 million, after considering outstanding letters of credit of $53.2 million and outstanding borrowings of $100.0 million.

Three Months Ended March 28, 2015 Compared to Three Months Ended March 29, 2014

Revenues

(Dollars and gallons in thousands) |  | Three Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 498,616 |  |  | $ | 728,504 |  |  | $ | (229,888 | ) |  |  | (31.6 | )%
Fuel oil and refined fuels |  |  | 60,426 |  |  |  | 93,722 |  |  |  | (33,296 | ) |  |  | (35.5 | )%
Natural gas and electricity |  |  | 28,281 |  |  |  | 39,083 |  |  |  | (10,802 | ) |  |  | (27.6 | )%
All other |  |  | 12,066 |  |  |  | 12,463 |  |  |  | (397 | ) |  |  | (3.2 | )%
Total revenues |  | $ | 599,389 |  |  | $ | 873,772 |  |  | $ | (274,383 | ) |  |  | (31.4 | )%
Retail gallons sold |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  |  | 199,690 |  |  |  | 213,689 |  |  |  | (13,999 | ) |  |  | (6.6 | )%
Fuel oil and refined fuels |  |  | 19,898 |  |  |  | 22,617 |  |  |  | (2,719 | ) |  |  | (12.0 | )%

Revenues from the distribution of propane and related activities of $498.6 million decreased $229.9 million, or 31.6%, compared to $728.5 million primarily due to lower average retail selling prices and, to a lesser extent, lower retail propane volumes sold. Average propane selling prices decreased 26.7% as a result of lower wholesale propane costs, resulting in a $173.3 million decrease in revenues. Retail propane gallons sold decreased 14.0 million gallons, or 6.6%, to 199.7 million gallons from 213.7 million gallons, resulting in a year-over-year decrease in revenues of $45.6 million. Propane volumes were adversely affected by the carryover effect of unseasonably warm weather from the first quarter of fiscal 2015 that resulted in customer tanks being at higher than normal storage levels at the beginning of the second quarter, coupled with warmer than normal temperatures during much of January across our service territories. In addition, our western service territories experienced sustained warmer than normal temperatures throughout the quarter. Included within the propane segment are revenues from other propane activities of $21.8 million, which decreased $11.0 million.

Revenues from the distribution of fuel oil and refined fuels of $60.4 million decreased $33.3 million, or 35.5%, from $93.7 million primarily due to lower average selling prices and, to a lesser extent, lower volumes sold. Average selling prices in our fuel oil and refined fuels segment decreased 26.6%, resulting in a $21.9 million decrease in revenues. Fuel oil and refined fuels gallons sold decreased 2.7 million gallons, or 12.0%, to 19.9 million gallons from 22.6 million gallons, resulting in a year-over-year decrease in revenues of $11.4 million. The decrease in volumes sold was primarily due to the impact of the unfavorable weather trends discussed above.

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Revenues in our natural gas and electricity segment decreased $10.8 million, or 27.6%, to $28.3 million compared to $39.1 million as a result of lower natural gas and electricity volumes sold, coupled with lower average selling prices for electricity.

Cost of Products Sold

(Dollars in thousands) |  | Three Months Ended |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Cost of products sold |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 189,818 |  |  | $ | 409,007 |  |  | $ | (219,189 | ) |  |  | (53.6 | )%
Fuel oil and refined fuels |  |  | 42,211 |  |  |  | 73,697 |  |  |  | (31,486 | ) |  |  | (42.7 | )%
Natural gas and electricity |  |  | 17,824 |  |  |  | 30,535 |  |  |  | (12,711 | ) |  |  | (41.6 | )%
All other |  |  | 3,814 |  |  |  | 3,959 |  |  |  | (145 | ) |  |  | (3.7 | )%
Total cost of products sold |  | $ | 253,667 |  |  | $ | 517,198 |  |  | $ | (263,531 | ) |  |  | (51.0 | )%
As a percent of total revenues |  |  | 42.3 | % |  |  | 59.2 | % |  |  |  |  |  |  |  |

The cost of products sold reported in the consolidated statements of operations represents the weighted average unit cost of propane, fuel oil and refined fuels, natural gas and electricity sold, including transportation costs to deliver product from our supply points to storage or to our customer service centers. Cost of products sold also includes the cost of appliances and related parts sold or installed by our customer service centers computed on a basis that approximates the average cost of the products. Unrealized (non-cash) gains or losses from changes in the fair value of derivative instruments that are not designated as cash flow hedges are recorded within cost of products sold. Cost of products sold excludes depreciation and amortization; these amounts are reported separately within the consolidated statements of operations.

Given the retail nature of our operations, we maintain a certain level of priced physical inventory to help ensure that our field operations have adequate supply commensurate with the time of year. Our strategy has been, and will continue to be, to keep our physical inventory priced relatively close to market for our field operations. Consistent with past practices, we principally utilize futures and/or options contracts traded on the NYMEX to mitigate the price risk associated with our priced physical inventory. Under this risk management strategy, realized gains or losses on futures or options contracts, which are reported in cost of products sold, will typically offset losses or gains on the physical inventory once the product is sold (which may or may not occur in the same accounting period). We do not use futures or options contracts, or other derivative instruments, for speculative trading purposes.

In the commodities markets, posted propane prices (basis Mont Belvieu, Texas) were somewhat volatile during the second quarter of fiscal 2015 with prices reaching a high of $0.62 per gallon and a low of $0.45 per gallon (representing an intra-quarter swing of 37%). While posted propane prices at the end of March 2015 were relatively flat compared to posted prices at the end of December 2014, average posted propane prices for the second quarter of fiscal 2015 were 30.7% lower than the first quarter of fiscal 2015. The movement in propane prices during the second quarter of fiscal 2015 was in contrast to the prior year second quarter where prices were rising due to industry wide supply and logistics challenges. Overall, average posted propane and fuel oil prices were 59.4% and 40.2% lower than the prior year second quarter, respectively. The net change in the fair value of derivative instruments during the period resulted in unrealized (non-cash) losses of $7.4 million and unrealized (non-cash) gains of $0.3 million reported in cost of products sold in the second quarter of fiscal 2015 and 2014, respectively, resulting in an increase of $7.7 million in cost of products sold compared to the prior year second quarter, all of which was reported in the propane segment.

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Cost of products sold associated with the distribution of propane and related activities of $189.8 million decreased $219.2 million, or 53.6% primarily due to lower average wholesale costs and, to a lesser extent, lower volumes sold. Lower average propane costs and lower propane volumes sold resulted in decreases of $185.6 million and $25.6 million, respectively. Cost of products sold from other propane activities decreased $15.7 million.

Cost of products sold associated with our fuel oil and refined fuels segment of $42.2 million decreased $31.5 million, or 42.7%. Lower fuel oil and refined fuels wholesale costs and lower volumes sold resulted in decreases of $22.6 million and $8.9 million, respectively.

Cost of products sold in our natural gas and electricity segment of $17.8 million decreased $12.7 million, or 41.6%, primarily due to lower volumes sold and lower wholesale costs.

Total cost of products sold as a percent of total revenues decreased 16.9 percentage points to 42.3% from 59.2% primarily due to the decline in wholesale propane costs outpacing the decline in propane average selling prices during the fiscal 2015 second quarter.

Operating Expenses

(Dollars in thousands) |  | Three Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Operating expenses |  | $ | 120,465 |  |  | $ | 131,731 |  |  | $ | (11,266 | ) |  |  | (8.6 | )%
As a percent of total revenues |  |  | 20.1 | % |  |  | 15.1 | % |  |  |  |  |  |  |  |

All costs of operating our retail distribution and appliance sales and service operations are reported within operating expenses in the consolidated statements of operations. These operating expenses include the compensation and benefits of field and direct operating support personnel, costs of operating and maintaining our vehicle fleet, overhead and other costs of our purchasing, training and safety departments and other direct and indirect costs of operating our customer service centers.

Operating expenses of $120.5 million for the second quarter of fiscal 2015 decreased $11.3 million, or 8.6%, compared to $131.7 million in the prior year second quarter, primarily due to operating efficiencies and synergies realized during the period associated with the integration of Inergy Propane, including lower headcount and lower vehicle count, as well as lower fuel costs to operate our fleet and lower bad debt and insurance expenses. Operating expenses for the second quarter included integration-related expenses of $1.5 million associated with the integration of the Inergy Propane operations compared to $1.6 million in the prior year second quarter. These charges were excluded from our calculation of Adjusted EBITDA below.

General and Administrative Expenses

(Dollars in thousands) |  | Three Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
General and administrative expenses |  | $ | 20,437 |  |  | $ | 20,517 |  |  | $ | (80 | ) |  |  | (0.4 | )%
As a percent of total revenues |  |  | 3.4 | % |  |  | 2.3 | % |  |  |  |  |  |  |  |

All costs of our back office support functions, including compensation and benefits for executives and other support functions, as well as other costs and expenses to maintain finance and accounting, treasury, legal, human resources, corporate development and the information systems functions are reported within general and administrative expenses in the consolidated statements of operations.

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General and administrative expenses of $20.4 million for the second quarter of fiscal 2015 were essentially flat compared to the prior year second quarter. General and administrative expenses for the second quarters of fiscal 2015 and 2014 both included $0.6 million of professional services and other expenses associated with the integration of the Inergy Propane operations. These items were excluded from our calculation of Adjusted EBITDA below.

Depreciation and Amortization

(Dollars in thousands) |  | Three Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Depreciation and amortization |  | $ | 33,229 |  |  | $ | 33,282 |  |  | $ | (53 | ) |  |  | (0.2)% |
As a percent of total revenues |  |  | 5.5 | % |  |  | 3.8 | % |  |  |  |  |  |  |  |

Depreciation and amortization expense of $33.2 million in the second quarter of fiscal 2015 was essentially flat to the prior year second quarter.

Interest Expense, net

(Dollars in thousands) |  | Three Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Interest expense, net |  | $ | 19,711 |  |  | $ | 21,226 |  |  | $ | (1,515 | ) |  |  | (7.1)% |
As a percent of total revenues |  |  | 3.3 | % |  |  | 2.4 | % |  |  |  |  |  |  |  |

Net interest expense of $19.7 million decreased $1.5 million, or 7.1%, primarily due to the refinancing of $496.6 million in aggregate principal amount of 7.5% Senior Notes due 2018 with $525.0 million in aggregate principal amount of 5.5% Senior Notes due 2024 in the third quarter of fiscal 2014 and, to a lesser extent, the refinancing of $250.0 million in aggregate principal amount of 7.375% Senior Notes due 2020 with $250.0 million in aggregate principal amount of 5.75% Senior Notes due 2025 in the second quarter of fiscal 2015. See Liquidity and Capital Resources below for additional discussion.

Loss on Debt Extinguishment

On February 25, 2015, we repurchased and satisfied and discharged all of our previously outstanding 2020 Senior Notes with net proceeds from the issuance of the 2025 Senior Notes and cash on hand, pursuant to a tender offer and redemption during the second quarter of fiscal 2015. In connection with this tender offer and redemption, we recognized a loss on the extinguishment of debt of $15.1 million consisting of $11.1 million for the redemption premium and related fees, as well as the write-off of $2.9 million and $1.1 million in unamortized debt origination costs and unamortized discount, respectively.

EBITDA and Adjusted EBITDA

EBITDA represents net income before deducting interest expense, income taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA excluding the unrealized net gain or loss on mark-to-market activity for derivative instruments and other items, as applicable, as provided in the table below. Our management uses EBITDA and Adjusted EBITDA as supplemental measures of operating performance and we are including them because we believe that they provide our investors and industry analysts with additional information to evaluate our operating results. EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be considered as an alternative to net income or net cash provided by operating activities determined in accordance with US GAAP. Because EBITDA and Adjusted EBITDA as determined by us excludes some, but not all, items that affect net income, they may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other companies.

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The following table sets forth our calculations of EBITDA and Adjusted EBITDA:

(Dollars in thousands) |  | Three Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |
Net income |  | $ | 136,634 |  |  | $ | 149,547 |
Add: |  |  |  |  |  |  |  |
Provision for income taxes |  |  | 174 |  |  |  | 271 |
Interest expense, net |  |  | 19,711 |  |  |  | 21,226 |
Depreciation and amortization |  |  | 33,229 |  |  |  | 33,282 |
EBITDA |  |  | 189,748 |  |  |  | 204,326 |
Loss on debt extinguishment |  |  | 15,072 |  |  |  | — |
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives |  |  | 7,433 |  |  |  | (291 | )
Integration-related costs |  |  | 2,063 |  |  |  | 2,234 |
Adjusted EBITDA |  | $ | 214,316 |  |  | $ | 206,269 |

Six Months Ended March 28, 2015 Compared to Six Months Ended March 29, 2014

Revenues

(Dollars and gallons in thousands) |  | Six Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 853,266 |  |  | $ | 1,167,098 |  |  | $ | (313,832 | ) |  |  | (26.9 | )%
Fuel oil and refined fuels |  |  | 99,356 |  |  |  | 147,990 |  |  |  | (48,634 | ) |  |  | (32.9 | )%
Natural gas and electricity |  |  | 44,248 |  |  |  | 57,399 |  |  |  | (13,151 | ) |  |  | (22.9 | )%
All other |  |  | 25,463 |  |  |  | 27,341 |  |  |  | (1,878 | ) |  |  | (6.9 | )%
Total revenues |  | $ | 1,022,333 |  |  | $ | 1,399,828 |  |  | $ | (377,495 | ) |  |  | (27.0 | )%
Retail gallons sold |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  |  | 334,224 |  |  |  | 371,547 |  |  |  | (37,323 | ) |  |  | (10.0 | )%
Fuel oil and refined fuels |  |  | 31,159 |  |  |  | 36,614 |  |  |  | (5,455 | ) |  |  | (14.9 | )%

Total revenues decreased $377.5 million, or 27.0%, to $1,022.3 million for the first half of fiscal 2015 compared to $1,399.8 million for the prior year period, primarily due to lower average selling prices and, to a lesser extent, lower volumes sold for propane and fuel oil and refined fuels. Average temperatures (as measured in heating degree days) across all of our service territories for the first six months of fiscal 2015 were 1% colder than normal and 4% warmer than the comparable prior year period. The weather pattern during the first half of fiscal 2015 was characterized by warmer than normal temperatures for much of the first quarter, particularly in the month of December 2014 (December 2014 was 15% warmer than normal and 21% warmer than December 2013), which continued during much of January 2015. However, this persistent streak of warm weather was followed by considerably colder than normal temperatures in our eastern and mid-western territories throughout February 2015

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and much of March 2015. Our western operations continued to experience unseasonably warmer than normal weather as average temperatures during the first six months of fiscal 2015 were 22% warmer than normal and 11% warmer than the comparable prior year period.

Revenues from the distribution of propane and related activities of $853.3 million decreased $313.8 million, or 26.9%, compared to $1,167.1 million primarily due to lower average retail selling prices and, to a lesser extent, lower retail propane volumes sold. Average propane selling prices decreased 19.2% as a result of lower wholesale propane costs, resulting in a $192.7 million decrease in revenues. Retail propane gallons sold decreased 37.3 million gallons, or 10.0%, to 334.2 million gallons from 371.5 million gallons, resulting in a decrease in revenues of $112.3 million. While our overall propane volumes were adversely affected by the unseasonably warm weather discussed above, our volumes responded in those areas where and when we experienced cold temperatures. Included within the propane segment are revenues from other propane activities of $39.9 million, which decreased $8.8 million.

Revenues from the distribution of fuel oil and refined fuels of $99.4 million decreased $48.6 million, or 32.9%, from $148.0 million, due to lower average selling prices and, to a lesser extent, lower volumes sold. Average selling prices in our fuel oil and refined fuels segment decreased 21.1%, resulting in a $26.5 million decrease in revenues. Fuel oil and refined fuels gallons sold decreased 5.5 million gallons, or 14.9%, to 31.1 million gallons from 36.6 million gallons, resulting in a decrease in revenues of $22.1 million. The decrease in volumes sold was primarily due to the impact of the unfavorable weather trends discussed above.

Revenues in our natural gas and electricity segment decreased $13.2 million, or 22.9%, to $44.2 million compared to $57.4 million primarily as a result of lower natural gas and electricity volumes sold.

Cost of Products Sold

(Dollars in thousands) |  | Six Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Cost of products sold |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Propane |  | $ | 332,754 |  |  | $ | 628,147 |  |  | $ | (295,393 | ) |  |  | (47.0 | )%
Fuel oil and refined fuels |  |  | 72,043 |  |  |  | 117,446 |  |  |  | (45,403 | ) |  |  | (38.7 | )%
Natural gas and electricity |  |  | 28,566 |  |  |  | 43,397 |  |  |  | (14,831 | ) |  |  | (34.2 | )%
All other |  |  | 8,225 |  |  |  | 8,734 |  |  |  | (509 | ) |  |  | (5.8 | )%
Total cost of products sold |  | $ | 441,588 |  |  | $ | 797,724 |  |  | $ | (356,136 | ) |  |  | (44.6 | )%
As a percent of total revenues |  |  | 43.2 | % |  |  | 57.0 | % |  |  |  |  |  |  |  |

As discussed above, the movement in propane prices during the first six months of fiscal 2015 was in stark contrast to the comparable prior year period where prices were rising rapidly due to industry wide supply and logistics challenges. Overall, average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices were 48.2% and 31.4% lower than in the first half of the prior year, respectively. The net change in the fair value of derivative instruments during the period resulted in unrealized (non-cash) gains of $2.1 million reported in cost of products sold in the first half of fiscal 2015 compared to a de minimis unrealized gain in the first six months of the prior year, resulting in a decrease of $2.1 million in cost of products sold compared to the prior year, all of which was reported in the propane segment.

Cost of products sold associated with the distribution of propane and related activities of $332.8 million decreased $295.4 million, or 47.0%, primarily due to lower average wholesale costs and, to a lesser extent, lower volumes sold. Lower average propane costs and lower propane volumes sold resulted in decreases of $214.3 million and $61.3 million, respectively, in cost of products sold. Cost of products sold from other propane activities decreased $17.7 million.

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Cost of products sold associated with our fuel oil and refined fuels segment of $72.0 million decreased $45.4 million, or 38.7%. Lower wholesale costs and lower fuel oil and refined fuels volumes sold resulted in decreases of $28.0 million and $17.4 million, respectively, in costs of products sold.

Cost of products sold in our natural gas and electricity segment of $28.6 million decreased $14.8 million, or 34.2%, primarily due to lower natural gas and electricity volumes sold and lower wholesale costs.

Total cost of products sold as a percent of total revenues decreased 13.8 percentage points to 43.2% from 57.0% primarily due to the decline in wholesale propane costs outpacing the decline in propane average selling prices.

Operating Expenses

(Dollars in thousands) |  | Six Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Operating expenses |  | $ | 227,582 |  |  | $ | 245,044 |  |  | $ | (17,462 | ) |  |  | (7.1 | )%
As a percent of total revenues |  |  | 22.3 | % |  |  | 17.5 | % |  |  |  |  |  |  |  |

Operating expenses of $227.6 million for the first six months of fiscal 2015 decreased $17.5 million, or 7.1%, compared to $245.0 million in the prior year period, primarily due to operating efficiencies and synergies realized during the period associated with the integration of Inergy Propane, including lower headcount and lower vehicle count, as well as lower fuel costs to operate our fleet and lower bad debt and insurance expenses. Operating expenses for the first half of the year included integration-related expenses of $3.0 million associated with the integration of the Inergy Propane operations compared to $2.8 million in the first half of the prior year. These charges were excluded from our calculation of Adjusted EBITDA below.

General and Administrative Expenses

(Dollars in thousands) |  | Six Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Increase |  |  | Percent Increase |
General and administrative expenses |  | $ | 39,746 |  |  | $ | 37,852 |  |  | $ | 1,894 |  |  |  | 5.0 | %
As a percent of total revenues |  |  | 3.9 | % |  |  | 2.7 | % |  |  |  |  |  |  |  |

General and administrative expenses of $39.7 million for the first six month of fiscal 2015 increased $1.9 million from $37.8 million in the prior year period, primarily due to higher payroll and benefit related expenses and higher professional services fees associated with uninsured legal matters. General and administrative expenses for the first six months of fiscal 2015 and 2014 included $1.0 million and $2.0 million, respectively, of professional services and other expenses associated with the integration of the Inergy Propane operations. These items were excluded from our calculation of Adjusted EBITDA below.

Depreciation and Amortization

(Dollars in thousands) |  | Six Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Depreciation and amortization |  | $ | 65,858 |  |  | $ | 68,109 |  |  | $ | (2,251 | ) |  |  | (3.3 | )%
As a percent of total revenues |  |  | 6.4 | % |  |  | 4.9 | % |  |  |  |  |  |  |  |

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Depreciation and amortization expense of $65.9 million in the first six months of fiscal 2015 decreased $2.2 million, primarily as a result of accelerated depreciation expense recorded in the prior year for assets taken out of service from integration activities.

Interest Expense, net

(Dollars in thousands) |  | Six Months Ended |  |  |  |  |  |  |
|  | March 28, 2015 |  |  | March 29, 2014 |  |  | Decrease |  |  | Percent Decrease |
Interest expense, net |  | $ | 39,710 |  |  | $ | 42,433 |  |  | $ | (2,723 | ) |  |  | (6.4 | )%
As a percent of total revenues |  |  | 3.9 | % |  |  | 3.0 | % |  |  |  |  |  |  |  |

Net interest expense of $39.7 million decreased $2.7 million, or 6.4%, primarily due to the refinancing of $496.6 million in aggregate principal amount of 7.5% Senior Notes due 2018 with $525.0 million in aggregate principal amount of 5.5% Senior Notes due 2024 in the third quarter of fiscal 2014 and, to a lesser extent, the refinancing of $250.0 million in aggregate principal amount of 7.375% Senior Notes due 2020 with $250.0 million in aggregate principal amount of 5.75% Senior Notes due 2025 in the second quarter of fiscal 2015. See Liquidity and Capital Resources below for additional discussion.

Loss on Debt Extinguishment

On February 25, 2015, we repurchased and satisfied and discharged all of our previously outstanding 2020 Senior Notes with net proceeds from the issuance of the 2025 Senior Notes, and cash on hand, pursuant to a tender offer and redemption during the second quarter of fiscal 2015. In connection with this tender offer and redemption, we recognized a loss on the extinguishment of debt of $15.1 million consisting of $11.1 million for the redemption premium and related fees, as well as the write-off of $2.9 million and $1.1 million in unamortized debt origination costs and unamortized discount, respectively.

EBITDA and Adjusted EBITDA

The following table sets forth our calculations of EBITDA and Adjusted EBITDA:

(Dollars in thousands) |  | Six Months Ended |
|  | March 28, 2015 |  |  | March 29, 2014 |
Net income |  | $ | 192,441 |  |  | $ | 208,218 |
Add: |  |  |  |  |  |  |  |
Provision for income taxes |  |  | 336 |  |  |  | 448 |
Interest expense, net |  |  | 39,710 |  |  |  | 42,433 |
Depreciation and amortization |  |  | 65,858 |  |  |  | 68,109 |
EBITDA |  |  | 298,345 |  |  |  | 319,208 |
Loss on debt extinguishment |  |  | 15,072 |  |  |  | — |
Unrealized (non-cash) (gains) on changes in fair value of derivatives |  |  | (2,072 | ) |  |  | (1 | )
Integration-related costs |  |  | 3,976 |  |  |  | 4,770 |
Adjusted EBITDA |  | $ | 315,321 |  |  | $ | 323,977 |

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Liquidity and Capital Resources

Analysis of Cash Flows

Operating Activities. Net cash provided by operating activities for the first six months of fiscal 2015 and fiscal 2014 was $159.9 million and $20.4 million, respectively. The increase in net cash provided by operating activities was primarily attributable to a substantial decrease in working capital requirements as a result of the impact of the decline in wholesale propane costs on our inventory, accounts receivable and accounts payable.

Investing Activities. Net cash used in investing activities of $21.5 million for the first six months of fiscal 2015 consisted of capital expenditures of $19.9 million (including approximately $11.1 million to support the growth of operations and $8.8 million for maintenance expenditures) and $6.5 million for the acquisition of a business, partially offset by $4.9 million in net proceeds from the sale of property, plant and equipment.

Net cash used in investing activities of $8.4 million for the first six months of fiscal 2014 consisted of capital expenditures of $14.4 million (including approximately $6.6 million to support the growth of operations and $7.8 million for maintenance expenditures), partially offset by $6.0 million in net proceeds from the sale of property, plant and equipment.

Financing Activities. Net cash used in financing activities for the first six months of fiscal 2015 of $121.0 million reflects $105.7 million in quarterly distributions to Common Unitholders at a rate of $0.8750 per Common Unit paid in respect of the fourth quarter of fiscal 2014 and first quarter of fiscal 2015. In addition, cash used in financing activities included proceeds of $250.0 million from the issuance of the 2025 Senior Notes in February 2015. The net proceeds from the 2025 Senior Notes offering were used, along with cash on hand, to repurchase and satisfy and discharge all of the previously outstanding 2020 Senior Notes, as well as to pay tender premiums and other related fees of $11.1 million and debt issuance costs of $4.6 million, pursuant to a tender offer and redemption.

Net cash used in financing activities for the first six months of fiscal 2014 of $50.5 million reflects $105.5 million in quarterly distributions to Common Unitholders at a rate of $0.8750 per Common Unit paid in respect of the fourth quarter of fiscal 2013 and first quarter of fiscal 2014, partially offset by net borrowings of $55.0 million under our Revolving Credit Facility to fund working capital requirements.

Summary of Long-Term Debt Obligations and Revolving Credit Lines

As of March 28, 2015, our long-term debt consisted of $346.2 million in aggregate principal amount of 7.375% senior notes due August 1, 2021, $525.0 million in aggregate principal amount of 5.5% senior notes due June 1, 2024, $250.0 million in aggregate principal amount of 5.75% senior notes due March 1, 2025 and $100.0 million outstanding under our senior secured Revolving Credit Facility.

Senior Notes

2018 Senior Notes and 2021 Senior Notes

On August 1, 2012, we and our 100%-owned subsidiary, Suburban Energy Finance Corp., issued $496.6 million in aggregate principal amount of unregistered 7.5% senior notes due October 1, 2018 (the “2018 Senior Notes”) and $503.4 million in aggregate principal amount of unregistered 7.375% senior notes due August 1, 2021 (the “2021 Senior Notes”) in a private placement in connection with the Inergy Propane Acquisition. Based on market rates for similar issues, the 2018 Senior Notes and 2021 Senior Notes were valued at 106.875% and 108.125%, respectively, of the principal amount, on the Acquisition Date as they were issued in exchange for Inergy’s outstanding notes, not for cash. The 2021 Senior Notes require semi-annual interest payments in February and August. On December 19, 2012, we completed an offer to exchange our then-outstanding unregistered 7.5% senior notes due 2018 and 7.375% senior notes due 2021 (collectively, the “Old Notes”) for an equal principal amount of 7.5% senior notes due 2018 and 7.375% senior notes due 2021 (collectively, the “Exchange Notes”), respectively, that have been registered under the Securities Act of 1933, as amended.

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On August 2, 2013, we repurchased, pursuant to an optional redemption, $133.4 million of our 2021 Senior Notes using net proceeds from our May 2013 public offering and net proceeds from the underwriters’ exercise of their over-allotment option to purchase additional Common Units. In addition, on August 6, 2013, we repurchased $23.9 million of our 2021 Senior Notes in a private transaction using cash on hand.

On May 27, 2014, we repurchased and satisfied and discharged all of our 2018 Senior Notes with net proceeds from the issuance of the 2024 Senior Notes, as defined below, and cash on hand, pursuant to a tender offer and redemption during the third quarter of fiscal 2014. In connection with this tender offer and redemption, we recognized a loss on the extinguishment of debt of $11.6 million consisting of $31.6 million for the redemption premium and related fees, as well as the write-off of $5.3 million and ($25.3) million in unamortized debt origination costs and unamortized premium, respectively.

2020 Senior Notes

On March 23, 2010, we and our 100%-owned subsidiary, Suburban Energy Finance Corp., completed a public offering of $250.0 million in aggregate principal amount of 7.375% senior notes due March 15, 2020 (the “2020 Senior Notes”). The 2020 Senior Notes were issued at 99.136% of the principal amount and require semi-annual interest payments in March and September.

On February 25, 2015, we repurchased and satisfied and discharged all of our 2020 Senior Notes with net proceeds from the issuance of the 2025 Senior Notes, as defined below, and cash on hand, pursuant to a tender offer and redemption during the second quarter of fiscal 2015. In connection with this tender offer and redemption, we recognized a loss on the extinguishment of debt of $15.1 million consisting of $11.1 million for the redemption premium and related fees, as well as the write-off of $2.9 million and $1.1 million in unamortized debt origination costs and unamortized discount, respectively.

2024 Senior Notes

On May 27, 2014, we and our 100%-owned subsidiary, Suburban Energy Finance Corp., completed a public offering of $525.0 million in aggregate principal amount of 5.5% senior notes due June 1, 2024 (the “2024 Senior Notes”). The 2024 Senior Notes were issued at 100% of the principal amount and require semi-annual interest payments in June and December. The net proceeds from the issuance of the 2024 Senior Notes, along with cash on hand, were used to repurchase and satisfy and discharge all of the 2018 Senior Notes.

2025 Senior Notes

On February 25, 2015, we and our 100%-owned subsidiary, Suburban Energy Finance Corp., completed a public offering of $250.0 million in aggregate principal amount of 5.75% senior notes due March 1, 2025 (the “2025 Senior Notes”). The 2025 Senior Notes were issued at 100% of the principal amount and require semi-annual interest payments in March and September. The net proceeds from the issuance of the 2025 Senior Notes, along with cash on hand, were used to repurchase and satisfy and discharge all of the 2020 Senior Notes.

Our obligations under the 2021 Senior Notes, 2024 Senior Notes and 2025 Senior Notes (collectively, the “Senior Notes”) are unsecured and rank senior in right of payment to any future subordinated indebtedness and equally in right of payment with any future senior indebtedness. The Senior Notes are structurally subordinated to, which means they rank effectively behind, any debt and other liabilities of the Operating Partnership. We are permitted to redeem some or all of the Senior Notes at redemption prices and times as specified in the indentures governing the Senior Notes. The Senior Notes each have a change of control provision that would require us to offer to repurchase the notes at 101% of the principal amount repurchased, if a change of control, as defined in the indenture, occurs and is followed by a rating decline (a decrease in the rating of the notes by either Moody’s Investors Service or Standard and Poor’s Rating Group by one or more gradations) within 90 days of the consummation of the change of control.

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Credit Agreement

Our Operating Partnership has an amended and restated credit agreement entered into on January 5, 2012, as amended on August 1, 2012 and May 9, 2014 (collectively, the “Amended Credit Agreement”) that provides for a five-year $400.0 million revolving credit facility (the “Revolving Credit Facility”), of which $100.0 million was outstanding as of March 28, 2015 and September 27, 2014. Borrowings under the Revolving Credit Facility may be used for general corporate purposes, including working capital, capital expenditures and acquisitions. Our Operating Partnership has the right to prepay any borrowings under the Revolving Credit Facility, in whole or in part, without penalty at any time prior to maturity.

The amendment and restatement of the credit agreement on January 5, 2012 amended the previous credit agreement to, among other things, extend the maturity date from June 25, 2013 to January 5, 2017, reduce the borrowing rate and commitment fees, and amend certain affirmative and negative covenants.

The amendment on August 1, 2012 amended, among other things, certain restrictive and affirmative covenants applicable to our Operating Partnership and to us, as well as certain financial covenants, including (a) requiring our consolidated interest coverage ratio, as defined in the amendment, to be not less than 2.0 to 1.0 as of the end of any fiscal quarter; (b) prohibiting the total consolidated leverage ratio, as defined in the amendment, of the Partnership from being greater than 7.0 to 1.0 as of the end of any fiscal quarter. The minimum consolidated interest coverage ratio increased over time, and commencing with the second quarter of fiscal 2014, such minimum ratio is 2.5 to 1.0. The maximum consolidated leverage ratio decreased over time, as well as upon the occurrence of certain events, and, commencing with the second quarter of fiscal 2013, such maximum ratio is 4.75 to 1.0 (or 5.0 to 1.0 during an acquisition period as defined in the amendment). The amendment on May 9, 2014 made certain technical amendments with respect to agreements relating to debt refinancing.

We act as a guarantor with respect to the obligations of our Operating Partnership under the Amended Credit Agreement pursuant to the terms and conditions set forth therein. The obligations under the Amended Credit Agreement are secured by liens on substantially all of the personal property of the Partnership, the Operating Partnership and their subsidiaries, as well as mortgages on certain real property.

Borrowings under the Revolving Credit Facility of the Amended Credit Agreement bear interest at prevailing interest rates based upon, at the Operating Partnership’s option, LIBOR plus the applicable margin or the base rate, defined as the higher of the Federal Funds Rate plus 1⁄2 of 1%, the agent bank’s prime rate, or LIBOR plus 1%, plus in each case the applicable margin. The applicable margin is dependent upon our ratio of Consolidated Total Debt to Consolidated EBITDA, as defined in the Revolving Credit Facility. As of March 28, 2015, the interest rate for the Revolving Credit Facility was approximately 2.5%. The interest rate and the applicable margin will be reset at the end of each calendar quarter.

In connection with the Amended Credit Agreement, our Operating Partnership entered into an interest rate swap agreement with a notional amount of $100.0 million, an effective date of June 25, 2013 and a maturity date of January 5, 2017. Under this interest rate swap agreement, our Operating Partnership will pay a fixed interest rate of 1.63% to the issuing lender on the notional principal amount outstanding, and the issuing lender will pay our Operating Partnership a floating rate, namely LIBOR, on the same notional principal amount. The interest rate swap has been designated as a cash flow hedge.

As of March 28, 2015, our Operating Partnership had standby letters of credit issued under the Revolving Credit Facility in the aggregate amount of $53.2 million which expire periodically through April 3, 2016. Therefore, as of March 28, 2015, after giving effect to $100.0 million in outstanding borrowings, we had available borrowing capacity of $246.8 million under the Revolving Credit Facility.

The Amended Credit Agreement and the Senior Notes both contain various restrictive and affirmative covenants applicable to the Operating Partnership and the Partnership, respectively, including (i) restrictions on the incurrence of additional indebtedness, and (ii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions. Under the Amended Credit Agreement and the indentures governing the Senior Notes, the Operating Partnership and the

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Partnership are generally permitted to make cash distributions equal to available cash, as defined, as of the end of the immediately preceding quarter, if no event of default exists or would exist upon making such distributions, and with respect to the indentures governing the Senior Notes, our consolidated fixed charge coverage ratio, as defined, is greater than 1.75 to 1. We and our Operating Partnership were in compliance with all covenants and terms of the Senior Notes and the Amended Credit Agreement as of March 28, 2015.

The aggregate amounts of long-term debt maturities subsequent to March 28, 2015 are as follows: fiscal 2015 through fiscal 2016: $-0-; fiscal 2017: $100.0 million; fiscal 2018: $-0-; fiscal 2019: $-0-; and thereafter: $1,121.2 million.

Partnership Distributions

We are required to make distributions in an amount equal to all of our Available Cash, as defined in our Third Amended and Restated Partnership Agreement, as amended (the “Partnership Agreement”), no more than 45 days after the end of each fiscal quarter to holders of record on the applicable record dates. Available Cash, as defined in the Partnership Agreement, generally means all cash on hand at the end of the respective fiscal quarter less the amount of cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. These reserves are retained for the proper conduct of our business, the payment of debt principal and interest and for distributions during the next four quarters. The Board of Supervisors reviews the level of Available Cash on a quarterly basis based upon information provided by management.

On April 23, 2015, we announced a quarterly distribution of $0.8875 per Common Unit, or $3.55 on an annualized basis, in respect of the second quarter of fiscal 2015, payable on May 12, 2015 to holders of record on May 5, 2015. The annualized distribution represents an increase of $0.05, or 1.4%, per Common Unit from the previous distribution rate, making it the 30th increase since our recapitalization in 1999.

Other Commitments

We have a noncontributory, cash balance format, defined benefit pension plan which was frozen to new participants effective January 1, 2000. Effective January 1, 2003, the defined benefit pension plan was amended such that future service credits ceased and eligible employees would receive interest credits only toward their ultimate retirement benefit. We also provide postretirement health care and life insurance benefits for certain retired employees under a plan that was also frozen to new participants effective January 1, 2000. At March 28, 2015, we had a liability for the defined benefit pension plan and accrued retiree health and life benefits of $32.2 million and $19.8 million, respectively.

We are self-insured for general and product, workers’ compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. At March 28, 2015, we had accrued insurance liabilities of $62.4 million, and an insurance recovery asset of $18.9 million related to the amount of the liability expected to be covered by insurance.

Legal Matters

Our operations are subject to operating hazards and risks normally incidental to handling, storing and delivering combustible liquids such as propane. We have been, and will continue to be, a defendant in various legal proceedings and litigation as a result of these operating hazards and risks, and as a result of other aspects of our business. Although any litigation is inherently uncertain, based on past experience, the information currently available to us, and the amount of our accrued insurance liabilities, we do not believe that currently pending or threatened litigation matters, or known claims or known contingent claims, will have a material adverse effect on our results of operations, financial condition or cash flow.

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Off-Balance Sheet Arrangements

Guarantees

We have residual value guarantees associated with certain of our operating leases, related primarily to transportation equipment, with remaining lease periods scheduled to expire periodically through fiscal 2021. Upon completion of the lease period, we guarantee that the fair value of the equipment will equal or exceed the guaranteed amount, or we will pay the lessor the difference. Although the fair value of equipment at the end of its lease term has historically exceeded the guaranteed amounts, the maximum potential amount of aggregate future payments we could be required to make under these leasing arrangements, assuming the equipment is deemed worthless at the end of the lease term, was approximately $12.1 million as of March 28, 2015. The fair value of residual value guarantees for outstanding operating leases was de minimis as of March 28, 2015.

Recently Issued Accounting Pronouncements.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). This update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the presentation of debt discounts. ASU 2015-03 is effective for the first interim period within annual reporting periods beginning after December 15, 2015, which will be our first quarter of fiscal year 2017. Other than the reclassification of existing debt issuance costs on the balance sheet, the adoption of ASU 2015-03 will have no impact on our operations or cash flows.

In May 2014, FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”). This update provides a principles-based approach to revenue recognition, requiring revenue recognition to depict the transfer of 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 ASU provides a five-step model to be applied to all contracts with customers. The five steps are to identify the contract(s) with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when each performance obligation is satisfied. On April 1, 2015, the FASB voted to propose a one-year deferral of the effective date of ASU 2014-09. Therefore, the revenue standard would then be effective for the first interim period within annual reporting periods beginning after December 15, 2017, which will be our first quarter of fiscal year 2019. ASU 2014-09 can be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the update recognized at the date of the initial application along with additional disclosures. We do not expect the adoption of ASU 2014-09 will have a material impact on our results of operations, financial position or cash flows.

ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We enter into product supply contracts that are generally one-year agreements subject to annual renewal, and also purchase product on the open market. Our propane supply contracts typically provide for pricing based upon index formulas using the posted prices established at major supply points such as Mont Belvieu, Texas, or Conway, Kansas (plus transportation costs) at the time of delivery. In addition, to supplement our annual purchase requirements, we may utilize forward fixed price purchase contracts to acquire a portion of the propane that we resell to our customers, which allows us to manage our exposure to unfavorable changes in commodity prices and to help ensure adequate physical supply. The percentage of contract purchases, and the amount of supply contracted for under forward contracts at fixed prices, will vary from year to year based on market conditions. In certain instances, and when market conditions are favorable, we are able to purchase product under our supply arrangements at a discount to the market.

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Product cost changes can occur rapidly over a short period of time and can impact profitability. We attempt to reduce commodity price risk by pricing product on a short-term basis. The level of priced, physical product maintained in storage facilities and at our customer service centers for immediate sale to our customers will vary depending on several factors, including, but not limited to, price, supply and demand dynamics for a given time of the year. Typically, our on hand priced position does not exceed more than four to eight weeks of our supply needs, depending on the time of the year. In the course of normal operations, we routinely enter into contracts such as forward priced physical contracts for the purchase or sale of propane and fuel oil that, under accounting rules for derivative instruments and hedging activities, qualify for and are designated as normal purchase or normal sale contracts. Such contracts are exempted from fair value accounting and are accounted for at the time product is purchased or sold under the related contract.

Under our hedging and risk management strategies, we enter into a combination of exchange-traded futures and options contracts and, in certain instances, over-the-counter options and swap contracts (collectively, “derivative instruments”) to manage the price risk associated with physical product and with future purchases of the commodities used in our operations, principally propane and fuel oil, as well as to help ensure the availability of product during periods of high demand. In addition, we sell propane and fuel oil to customers at fixed prices, and enter into derivative instruments to hedge a portion of its exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. We do not use derivative instruments for speculative or trading purposes. Futures and swap contracts require that we sell or acquire propane or fuel oil at a fixed price for delivery at fixed future dates. An option contract allows, but does not require, its holder to buy or sell propane or fuel oil at a specified price during a specified time period. However, the writer of an option contract must fulfill the obligation of the option contract, should the holder choose to exercise the option. At expiration, the contracts are settled by the delivery of the product to the respective party or are settled by the payment of a net amount equal to the difference between the then market price and the fixed contract price or option exercise price. To the extent that we utilize derivative instruments to manage exposure to commodity price risk and commodity prices move adversely in relation to the contracts, we could suffer losses on those derivative instruments when settled. Conversely, if prices move favorably, we could realize gains. Under our hedging and risk management strategy, realized gains or losses on derivative instruments will typically offset losses or gains on the physical inventory once the product is sold to customers at market prices, or delivered to customers as it pertains to fixed price contracts.

Futures are traded with brokers of the NYMEX and require daily cash settlements in margin accounts. Forward contracts are generally settled at the expiration of the contract term by physical delivery, and swap and options contracts are generally settled at expiration through a net settlement mechanism. Market risks associated with our derivative instruments are monitored daily for compliance with our Hedging and Risk Management Policy which includes volume limits for open positions. Open inventory positions are reviewed and managed daily as to exposures to changing market prices.

Credit Risk

Exchange-traded futures and options contracts are guaranteed by the NYMEX and, as a result, have minimal credit risk. We are subject to credit risk with over-the-counter forward, swap and options contracts to the extent the counterparties do not perform. We evaluate the financial condition of each counterparty with which we conduct business and establish credit limits to reduce exposure to the risk of non-performance by our counterparties.

Interest Rate Risk

A portion of our borrowings bear interest at prevailing interest rates based upon, at the Operating Partnership’s option, LIBOR, plus an applicable margin or the base rate, defined as the higher of the Federal Funds Rate plus 1⁄2 of 1% or the agent bank’s prime rate, or LIBOR plus 1%, plus the applicable margin. The applicable margin is dependent on the level of the Partnership’s total leverage (the total ratio of debt to consolidated EBITDA). Therefore, we are subject to interest rate risk on the variable component of the interest rate. We manage our interest rate risk by entering into interest rate swap agreements. The interest rate swaps have been designated as a cash flow hedge. Changes in the fair value of the interest rate swaps are recognized in other comprehensive income (“OCI”) until the hedged item is recognized in earnings. At March 28, 2015, the fair value of the interest rate swaps was a net liability of $1.6 million, which is included within other current liabilities and other liabilities, as applicable, with a corresponding unrealized loss reflected in accumulated OCI.

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Derivative Instruments and Hedging Activities

All of our derivative instruments are reported on the balance sheet at their fair values. On the date that derivative instruments are entered into, we make a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or OCI, depending on whether a derivative instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, we formally assess, both at the hedge contract’s inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into earnings during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of cash flow hedges are immediately recognized in earnings. Changes in the fair value of derivative instruments that are not designated as cash flow hedges, and that do not meet the normal purchase and normal sale exemption, are recorded in earnings as they occur. Cash flows associated with derivative instruments are reported as operating activities within the condensed consolidated statement of cash flows.

Sensitivity Analysis

In an effort to estimate our exposure to unfavorable market price changes in commodities related to our open positions under derivative instruments, we developed a model that incorporates the following data and assumptions:

| A. | The fair value of open positions as of March 28, 2015.

| B. | The market prices for the underlying commodities used to determine A. above were adjusted adversely by a hypothetical 10% change and compared to the fair value amounts in A. above to project the potential negative impact on earnings that would be recognized for the respective scenario.

Based on the sensitivity analysis described above, a hypothetical 10% adverse change in market prices for open derivative instruments as of March 28, 2015 indicates a decrease in potential future net gains of $2.5 million. See also Item 7A of our Annual Report on Form 10-K for the fiscal year ended September 27, 2014. The above hypothetical change does not reflect the worst case scenario. Actual results may be significantly different depending on market conditions and the composition of the open position portfolio.

ITEM 4. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Partnership maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in the Partnership’s filings and submissions under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to the Partnership’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

The Partnership completed an evaluation under the supervision and with participation of the Partnership’s management, including the Partnership’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures as of March 28, 2015. Based on this evaluation, the Partnership’s principal executive officer and principal financial officer have concluded that as of March 28, 2015, such disclosure controls and procedures were effective to provide the reasonable assurance described above.

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Changes in Internal Control Over Financial Reporting

There have not been any changes in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 28, 2015 that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

PART II

ITEM 1. | LEGAL PROCEEDINGS

Part I, Item 1. Financial Statements, Note 10 to the Condensed Consolidated Financial Statements, of this Form 10-Q is hereby incorporated herein by reference.

ITEM 1A. | RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014.

ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. | DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. | MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. | OTHER INFORMATION

None.

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ITEM 6. | EXHIBITS

(a) Exhibits

INDEX TO EXHIBITS

The exhibits listed on this Exhibit Index are filed as part of this Quarterly Report. Exhibits required to be filed by Item 601 of Regulation S-K, which are not listed below, are not applicable.

Exhibit Number |  | Description
4.1 |  | Second Supplemental Indenture, dated as of February 24, 2015, relating to the 7-3/8% Senior Notes due 2020, among Suburban Propane Partners, L.P., Suburban Energy Finance Corp. and The Bank of New York Mellon, as Trustee. (Incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K filed February 25, 2015).
4.2 |  | Second Supplemental Indenture, dated as of February 25, 2015, relating to the 5.750% Senior Notes due 2025, among Suburban Propane Partners, L.P., Suburban Energy Finance Corp. and The Bank of New York Mellon, as Trustee. (Incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K filed February 25, 2015).
31.1 |  | Certification of the President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
31.2 |  | Certification of the Chief Financial Officer and Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
32.1 |  | Certification of the President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
32.2 |  | Certification of the Chief Financial Officer and Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
101.INS |  | XBRL Instance Document
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document

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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  |  | SUBURBAN PROPANE PARTNERS, L.P.
May 7, 2015 |  |  |  | By: |  | /s/ MICHAEL A. KUGLIN
Date |  |  |  |  |  | Michael A. Kuglin
|  |  |  |  |  | Chief Financial Officer and Chief Accounting Officer

May 7, 2015 |  |  |  | By: |  | /s/ DANIEL S. BLOOMSTEIN
Date |  |  |  |  |  | Daniel S. Bloomstein
|  |  |  |  |  | Controller

44