<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

         [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2001

                                       OR

         [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                          Commission file number 1-1398

                               UGI UTILITIES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                          <C>
                           Pennsylvania                                            23-1174060
                  (State or other jurisdiction of                               (I.R.S. Employer
                  incorporation or organization)                              Identification No.)
</TABLE>


                               UGI UTILITIES, INC.
                         100 Kachel Boulevard, Suite 400
                    Green Hills Corporate Center, Reading, PA
                    (Address of principal executive offices)
                                      19607
                                   (Zip Code)
                                 (610) 796-3400
              (Registrant's telephone number, including area code)

         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
                                              ---    ---

         At July 31, 2001, there were 26,781,785 shares of UGI Utilities, Inc.
Common Stock, par value $2.25 per share, outstanding, all of which were held,
beneficially and of record, by UGI Corporation.

<PAGE>   2


                               UGI UTILITIES, INC.

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                     PAGES
                                                                                                     -----
<S>                                                                                             <C>
PART I FINANCIAL INFORMATION

      Item 1.    Financial Statements

                 Condensed Consolidated Balance Sheets as of June 30, 2001,
                     September 30, 2000 and June 30, 2000                                              1

                 Condensed Consolidated Statements of Income for the three, nine
                     and twelve months ended June 30, 2001 and 2000                                    2

                 Condensed Consolidated Statements of Cash Flows for the
                     nine and twelve months ended June 30, 2001 and 2000                               3

                 Notes to Condensed Consolidated Financial Statements                                4 - 10

      Item 2.    Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                                            11 - 19


      Item 3.    Quantitative and Qualitative Disclosures About Market Risk                           19


PART II OTHER INFORMATION

      Item 6.    Exhibits and Reports on Form 8-K                                                     20

      Signatures                                                                                      21
</TABLE>

                                      -i-
<PAGE>   3

                               UGI UTILITIES, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
                             (Thousands of dollars)

<TABLE>
<CAPTION>
                                                                                  June 30,         September 30,       June 30,
                                                                                    2001               2000              2000
                                                                                --------------     -------------     -------------
<S>                                                                             <C>                <C>               <C>
ASSETS
------
     Current assets:
          Cash and cash equivalents                                                 $   1,656         $  15,575         $   3,060
          Accounts receivable (less allowances for doubtful accounts
               of $5,835, $2,061 and $2,734, respectively)                             52,753            33,341            34,148
          Accrued utility revenues                                                      8,084            10,486             7,040
          Inventories                                                                  38,628            36,934            22,197
          Deferred income taxes                                                         8,422               336             5,268
          Regulatory assets                                                                 -             7,195                 -
          Prepaid expenses and other current assets                                     1,840             3,077             4,139
                                                                                --------------     -------------     -------------
               Total current assets                                                   111,383           106,944            75,852

     Property, plant and equipment, at cost (less accumulated depreciation
          and amortization of $281,842, $287,835 and $285,451, respectively)          573,019           569,970           563,001

     Regulatory assets                                                                 54,560            55,081            56,576
     Other assets                                                                      34,549            19,142            18,464
                                                                                --------------     -------------     -------------
          Total assets                                                              $ 773,511         $ 751,137         $ 713,893
                                                                                ==============     =============     =============


LIABILITIES  AND  STOCKHOLDERS'  EQUITY
---------------------------------------
     Current liabilities:
          Current maturities of long-term debt                                      $       -         $  15,000         $  22,143
          Bank loans                                                                   53,300           100,400            61,900
          Accounts payable                                                             52,298            54,138            33,532
          Other current liabilities                                                    52,721            40,793            47,862
                                                                                --------------     -------------     -------------
               Total current liabilities                                              158,319           210,331           165,437

     Long-term debt                                                                   208,502           157,924           157,919
     Deferred income taxes                                                            119,071           114,681           114,940
     Other noncurrent liabilities                                                      19,860            23,728            23,399

     Commitments and contingencies (note 3)

     Redeemable preferred stock                                                        20,000            20,000            20,000

     Common stockholder's equity:
          Common Stock, $2.25 par value (authorized - 40,000,000 shares;
               issued and outstanding - 26,781,785 shares)                             60,259            60,259            60,259
          Additional paid-in capital                                                   72,559            68,559            68,559
          Retained earnings                                                           114,941            95,655           103,380
                                                                                --------------     -------------     -------------
               Total common stockholder's equity                                      247,759           224,473           232,198
                                                                                --------------     -------------     -------------
          Total liabilities and stockholders' equity                                $ 773,511         $ 751,137         $ 713,893
                                                                                ==============     =============     =============
</TABLE>


See accompanying notes to consolidated financial statements.

                                      -1-
<PAGE>   4

                               UGI UTILITIES, INC.

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)
                             (Thousands of dollars)


<TABLE>
<CAPTION>
                                                  Three Months Ended           Nine Months Ended           Twelve Months Ended
                                                        June 30,                    June 30,                    June 30,
                                               --------------------------  --------------------------   --------------------------
                                                  2001          2000          2001          2000           2001          2000
                                               ------------  ------------  ------------  ------------   ------------  ------------
<S>                                            <C>           <C>           <C>           <C>            <C>           <C>
Revenues                                          $103,772      $ 77,554      $501,866      $368,574       $570,234      $431,421
                                               ------------  ------------  ------------  ------------   ------------  ------------

Costs and expenses:
     Gas, fuel and purchased power                  64,849        35,907       323,993       185,822        356,290       214,442
     Operating and administrative expenses          20,106        21,826        66,981        62,628         89,778        85,775
     Operating and administrative expenses
          - related parties                          1,149           986         3,908         2,988          5,079         4,207
     Taxes other than income taxes                   1,713         2,913         7,179        14,280          9,951        18,454
     Depreciation and amortization                   5,992         5,794        17,798        17,202         24,208        23,019
     Other income, net                              (2,782)       (2,177)      (10,701)       (9,447)       (13,914)      (10,823)
                                               ------------  ------------  ------------  ------------   ------------  ------------
                                                    91,027        65,249       409,158       273,473        471,392       335,074
                                               ------------  ------------  ------------  ------------   ------------  ------------

Operating income                                    12,745        12,305        92,708        95,101         98,842        96,347
Interest expense                                     4,485         4,348        14,520        13,755         19,118        18,287
                                               ------------  ------------  ------------  ------------   ------------  ------------
Income before income taxes                           8,260         7,957        78,188        81,346         79,724        78,060
Income taxes                                         3,270         3,085        30,947        31,538         31,815        30,660
                                               ------------  ------------  ------------  ------------   ------------  ------------
Net income                                           4,990         4,872        47,241        49,808         47,909        47,400
Dividends on preferred stock                           388           388         1,163         1,163          1,550         1,550
                                               ------------  ------------  ------------  ------------   ------------  ------------
Net income after dividends on preferred stock     $  4,602      $  4,484      $ 46,078      $ 48,645       $ 46,359      $ 45,850
                                               ============  ============  ============  ============   ============  ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                      -2-
<PAGE>   5

                               UGI UTILITIES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                             (Thousands of dollars)

<TABLE>
<CAPTION>

                                                                       Nine Months Ended               Twelve Months Ended
                                                                           June 30,                          June 30,
                                                                   --------------------------       ---------------------------
                                                                      2001          2000                2001           2000
                                                                   -----------   ------------       -------------   -----------
<S>                                                                <C>           <C>                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                      $  47,241       $ 49,808            $ 47,909      $ 47,400
    Adjustments to reconcile net income to net cash provided
       by operating activities:
          Depreciation and amortization                                17,798         17,202              24,208        23,019
          Deferred income taxes, net                                   (5,414)        (1,136)             (1,412)        4,508
          Other, net                                                      408          3,936               2,820         5,200
                                                                   -----------   ------------       -------------   -----------
                                                                       60,033         69,810              73,525        80,127
          Net change in:
             Accounts receivable and accrued utility revenues         (24,247)       (15,560)            (23,510)       (7,173)
             Inventories                                               (3,030)         5,906             (17,767)         (821)
             Deferred fuel costs                                       14,016          7,882               2,383        (4,108)
             Accounts payable                                          (1,840)        (4,349)             18,766         3,047
             Other current assets and liabilities                       6,344         14,521               1,116         8,254
                                                                   -----------   ------------       -------------   -----------
          Net cash provided by operating activities                    51,276         78,210              54,513        79,326
                                                                   -----------   ------------       -------------   -----------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Expenditures for property, plant and equipment                    (23,240)       (23,230)            (36,401)      (34,600)
    Net costs of property, plant and equipment disposals                 (502)          (313)             (1,027)         (697)
    Investment in joint venture partnership                            (6,000)             -              (6,000)            -
                                                                   -----------   ------------       -------------   -----------
       Net cash used by investing activities                          (29,742)       (23,543)            (43,428)      (35,297)
                                                                   -----------   ------------       -------------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payment of dividends                                              (27,956)       (37,170)            (36,349)      (37,558)
    Issuance of long-term debt                                         50,603              -              50,603             -
    Repayment of long-term debt                                       (15,000)             -             (22,143)       (7,143)
    Bank loans increase (decrease)                                    (47,100)       (25,500)             (8,600)        2,300
    Capital contribution from UGI                                       4,000              -               4,000             -
                                                                   -----------   ------------       -------------   -----------
       Net cash used by financing activities                          (35,453)       (62,670)            (12,489)      (42,401)
                                                                   -----------   ------------       -------------   -----------

    Cash and cash equivalents increase (decrease)                   $ (13,919)      $ (8,003)           $ (1,404)     $  1,628
                                                                   ===========   ============       =============   ===========

CASH AND CASH EQUIVALENTS:
    End of period                                                   $   1,656       $  3,060            $  1,656      $  3,060
    Beginning of period                                                15,575         11,063               3,060         1,432
                                                                   -----------   ------------       -------------   -----------
       Increase (decrease)                                          $ (13,919)      $ (8,003)           $ (1,404)     $  1,628
                                                                   ===========   ============       =============   ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                      -3-
<PAGE>   6


                               UGI UTILITIES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
                             (Thousands of dollars)


1.       BASIS OF PRESENTATION

         The accompanying condensed consolidated financial statements include
         the accounts of UGI Utilities, Inc. ("UGI Utilities") and its wholly
         owned subsidiaries (collectively, "the Company" or "we"). We eliminate
         all significant intercompany accounts and transactions when we
         consolidate. We have reclassified certain prior-period balances to
         conform with the current period presentation. UGI Utilities is a wholly
         owned subsidiary of UGI Corporation ("UGI") and operates a natural gas
         distribution utility ("Gas Utility") in parts of eastern and
         southeastern Pennsylvania and an electric distribution utility and
         electricity generation business (collectively, "Electric Utility") in
         northeastern Pennsylvania.

         The accompanying condensed consolidated financial statements are
         unaudited and have been prepared in accordance with the rules and
         regulations of the U.S. Securities and Exchange Commission. They
         include all adjustments which we consider necessary for a fair
         statement of the results for the interim periods presented. Such
         adjustments consisted only of normal recurring items unless otherwise
         disclosed. These financial statements should be read in conjunction
         with the financial statements and the related notes included in our
         Annual Report on Form 10-K for the year ended September 30, 2000
         ("Company's 2000 Annual Report"). Due to the seasonal nature of our
         businesses, the results of operations for interim periods are not
         necessarily indicative of the results to be expected for a full year.
         UGI Utilities' comprehensive income as determined under Statement of
         Financial Accounting Standards ("SFAS") No. 130 "Reporting
         Comprehensive Income" was the same as its net income for all periods
         presented.


                                      -4-
<PAGE>   7
                               UGI UTILITIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (unaudited)
                             (Thousands of dollars)


2.       SEGMENT INFORMATION

         Based upon SFAS No. 131, "Disclosures about Segments of an Enterprise
         and Related Information" ("SFAS 131"), we have determined that the
         Company has two reportable segments: (1) Gas Utility and (2) Electric
         Utility. The accounting policies of our two reportable segments are the
         same as those described in the Significant Accounting Policies note
         contained in the Company's 2000 Annual Report. We evaluate each
         segment's performance principally based upon its earnings before income
         taxes. No single customer represents more than 10% of the total
         revenues of either Gas Utility or Electric Utility. Financial
         information by business segment follows:






                                      -5-
<PAGE>   8


                               UGI UTILITIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (unaudited)
                             (Thousands of dollars)

2.     SEGMENT INFORMATION   (continued)

       THREE MONTHS ENDED JUNE 30, 2001:

<TABLE>
<CAPTION>
                                                                                     Gas            Electric
                                              Total          Eliminations          Utility           Utility
                                           ---------------------------------------------------------------------
<S>                                        <C>               <C>                 <C>               <C>
       Segment revenues                      $ 103,772         $   -              $ 84,532          $ 19,240
                                           =====================================================================

       Segment profit:
           EBITDA (1)                        $  18,737         $   -              $ 15,918          $  2,819
           Depreciation and amortization        (5,992)            -                (5,112)             (880)
                                           ---------------------------------------------------------------------
           Operating income                     12,745             -                10,806             1,939
           Interest expense                     (4,485)            -                (3,796)             (689)
                                           ---------------------------------------------------------------------
           Income before income taxes        $   8,260         $   -              $  7,010          $  1,250
                                           =====================================================================

       Segment assets (at period end)        $ 773,511         $ (137)            $672,085          $101,563
                                           =====================================================================

       Investment in equity investee         $  11,378         $   -              $    -            $ 11,378
                                           =====================================================================
</TABLE>

       THREE MONTHS ENDED JUNE 30, 2000:

<TABLE>
<CAPTION>
                                                                                   Gas            Electric
                                              Total          Eliminations        Utility           Utility
                                           ---------------------------------------------------------------------
<S>                                          <C>                 <C>            <C>               <C>
       Segment revenues                      $ 77,554            $ -            $ 59,252          $18,302
                                           =====================================================================

       Segment profit:
           EBITDA (1)                        $ 18,099            $ -            $ 14,334          $ 3,765
           Depreciation and amortization       (5,794)             -              (4,873)            (921)
                                           ---------------------------------------------------------------------
           Operating income                    12,305              -               9,461            2,844
           Interest expense                    (4,348)             -              (3,790)            (558)
                                           ---------------------------------------------------------------------
           Income before income taxes        $  7,957            $ -            $  5,671          $ 2,286
                                           =====================================================================

       Segment assets (at period end)        $713,893            $ -            $617,061          $96,832
                                           =====================================================================
</TABLE>


      --------

        (1) EBITDA (earnings before interest expense, income taxes, depreciation
        and amortization) should not be considered as an alternative to net
        income (as an indicator of operating performance) or as an alternative
        to cash flow (as a measure of liquidity or ability to service debt
        obligations) and is not a measure of performance or financial condition
        under accounting principles generally accepted in the U.S.


                                      -6-
<PAGE>   9


                               UGI UTILITIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (unaudited)
                             (Thousands of dollars)

2.     SEGMENT INFORMATION   (continued)

       NINE MONTHS ENDED JUNE 30, 2001:

<TABLE>
<CAPTION>
                                                                                       Gas            Electric
                                                  Total          Eliminations        Utility           Utility
                                               ---------------------------------------------------------------------
<S>                                              <C>             <C>                <C>               <C>
       Segment revenues                          $ 501,866           $  -            $ 439,708         $  62,158
                                               =====================================================================

       Segment profit:
           EBITDA                                $ 110,506           $  -            $  99,140         $  11,366
           Depreciation and amortization           (17,798)             -              (15,069)           (2,729)
                                               ---------------------------------------------------------------------
           Operating income                         92,708              -               84,071             8,637
           Interest expense                        (14,520)             -              (12,459)           (2,061)
                                               ---------------------------------------------------------------------
           Income before income taxes            $  78,188           $  -            $  71,612         $   6,576
                                               =====================================================================

       Segment assets (at period end)            $ 773,511           $ (137)         $ 672,085         $ 101,563
                                               =====================================================================

       Investment in equity investee             $  11,378           $  -            $     -           $  11,378
                                               =====================================================================
</TABLE>

       NINE MONTHS ENDED JUNE 30, 2000:

<TABLE>
<CAPTION>
                                                                                       Gas            Electric
                                                  Total          Eliminations        Utility           Utility
                                               ---------------------------------------------------------------------
<S>                                              <C>             <C>                <C>               <C>
       Segment revenues                          $ 368,574            $ -            $ 310,095         $ 58,479
                                               =====================================================================

       Segment profit:
           EBITDA                                $ 112,303            $ -            $  96,690         $ 15,613
           Depreciation and amortization           (17,202)             -              (14,258)          (2,944)
                                               ---------------------------------------------------------------------
           Operating income                         95,101              -               82,432           12,669
           Interest expense                        (13,755)             -              (12,077)          (1,678)
                                               ---------------------------------------------------------------------
           Income before income taxes            $  81,346            $ -            $  70,355         $ 10,991
                                               =====================================================================

       Segment assets (at period end)            $ 713,893            $ -            $ 617,061         $ 96,832
                                               =====================================================================
</TABLE>


                                      -7-
<PAGE>   10


                               UGI UTILITIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (unaudited)
                             (Thousands of dollars)

2.     SEGMENT INFORMATION   (continued)

       TWELVE MONTHS ENDED JUNE 30, 2001:

<TABLE>
<CAPTION>
                                                                                       Gas            Electric
                                                  Total          Eliminations        Utility           Utility
                                               ---------------------------------------------------------------------
<S>                                              <C>             <C>                <C>               <C>
       Segment revenues                          $ 570,234            $  -           $ 488,654         $  81,580
                                               =====================================================================

       Segment profit:
           EBITDA                                $ 123,050            $  -           $ 107,725         $  15,325
           Depreciation and amortization           (24,208)              -             (19,908)           (4,300)
                                               ---------------------------------------------------------------------
           Operating income                         98,842               -              87,817            11,025
           Interest expense                        (19,118)              -             (16,557)           (2,561)
                                               ---------------------------------------------------------------------
           Income before income taxes            $  79,724            $  -           $  71,260         $   8,464
                                               =====================================================================

       Segment assets (at period end)            $ 773,511            $ (137)        $ 672,085         $ 101,563
                                               =====================================================================

       Investment in equity investee             $  11,378            $  -           $     -           $  11,378
                                               =====================================================================
</TABLE>

       TWELVE MONTHS ENDED JUNE 30, 2000:

<TABLE>
<CAPTION>
                                                                                     Gas            Electric
                                                  Total        Eliminations        Utility           Utility       Other
                                               ---------------------------------------------------------------------------
<S>                                              <C>               <C>            <C>               <C>             <C>
       Segment revenues                          $ 431,421         $ -            $ 353,139         $ 78,282      $   -
                                               ===========================================================================

       Segment profit (loss):
           EBITDA                                $ 119,366         $ -            $ 102,050         $ 17,355      $ (39)
           Depreciation and amortization           (23,019)          -              (19,042)          (3,977)         -
                                               ---------------------------------------------------------------------------
           Operating income (loss)                  96,347           -               83,008           13,378        (39)
           Interest expense                        (18,287)          -              (16,164)          (2,123)         -
                                               ---------------------------------------------------------------------------
           Income (loss) before income taxes     $  78,060         $ -            $  66,844         $ 11,255      $ (39)
                                               ===========================================================================

       Segment assets (at period end)            $ 713,893         $ -            $ 617,061         $ 96,832      $   -
                                               ===========================================================================
</TABLE>


                                      -8-
<PAGE>   11


                               UGI UTILITIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (unaudited)
                             (Thousands of dollars)


3.       COMMITMENTS AND CONTINGENCIES

         There have been no significant subsequent developments to the
         commitments and contingencies reported in the Company's 2000 Annual
         Report.

4.       ADOPTION OF SFAS 133

         Effective October 1, 2000, we adopted the provisions of SFAS No. 133,
         "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
         133"). SFAS 133, as amended by SFAS Nos. 137 and 138, establishes
         accounting and reporting standards for derivative instruments and for
         hedging activities. It requires that all derivative instruments be
         recognized as either assets or liabilities and measured at fair value.
         The accounting for changes in fair value depends upon the purpose of
         the derivative instrument and whether it is designated and qualifies
         for hedge accounting.

         On occasion we use a managed program of derivative instruments
         including natural gas and oil futures contracts to preserve forecasted
         gross margin associated with certain of our natural gas customers.
         These contracts are generally designated as cash flow hedges. We are
         also a party to a number of contracts that have elements of a
         derivative instrument. These contracts include, among others, binding
         purchase orders, contracts which provide for the delivery of natural
         gas, and service contracts that require the counterparty to provide
         commodity storage, transportation or capacity service to meet our
         normal sales commitments. Although many of these contracts have the
         requisite elements of a derivative instrument, these contracts are not
         subject to the accounting requirements of SFAS 133 because they provide
         for the delivery of products or services in quantities that are
         expected to be used in the normal course of operating our business.
         Other contracts do not meet the definition of a derivative instrument
         because they represent requirements-based commitments. Although the
         adoption of SFAS 133 did not materially impact our results of
         operations or financial position during the three and nine months ended
         June 30, 2001, it may impact future results of operations or financial
         position depending upon the extent to which we use derivative
         instruments and their designation and effectiveness as hedges of market
         risk.


                                      -9-
<PAGE>   12


                               UGI UTILITIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (unaudited)
                             (Thousands of dollars)



5.       FORMATION OF HUNLOCK CREEK ENERGY VENTURES

         On December 8, 2000, our wholly owned subsidiary, UGI Development
         Company, contributed its coal-fired Hunlock Creek generating station
         ("Hunlock") and certain related assets having a net book value of
         $4,214, and $6,000 in cash, to Hunlock Creek Energy Ventures ("Energy
         Ventures"), a general partnership jointly owned by the Company and a
         subsidiary of Allegheny Energy, Inc. ("Allegheny"). Also on December 8,
         2000, Allegheny contributed a newly constructed, gas-fired combustion
         turbine generator to be operated at the Hunlock site. Under the
         joint-venture agreement, each partner is entitled to purchase 50% of
         the output of the joint venture at cost. The Company's investment in
         Energy Ventures is being accounted for under the equity method of
         accounting. No gain or loss was recognized as a result of the formation
         of Energy Ventures. The joint venture's results did not materially
         impact the Company's results of operations during the three and nine
         months ended June 30, 2001.


                                      -10-
<PAGE>   13

                               UGI UTILITIES, INC.


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

                        ANALYSIS OF RESULTS OF OPERATIONS

The following analyses compare our results of operations for (1) the three
months ended June 30, 2001 ("2001 three-month period") with the three months
ended June 30, 2000 ("2000 three-month period"); (2) the nine months ended June
30, 2001 ("2001 nine-month period") with the nine months ended June 30, 2000
("2000 nine-month period"); and (3) the twelve months ended June 30, 2001 ("2001
twelve-month period") with the twelve months ended June 30, 2000 ("2000
twelve-month period"). Our analyses of results of operations should be read in
conjunction with the segment information included in Note 2 to the Condensed
Consolidated Financial Statements.

2001 THREE-MONTH PERIOD COMPARED WITH 2000 THREE-MONTH PERIOD

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                          Increase
Three Months Ended June 30,                             2001            2000              (Decrease)
---------------------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S>                                                   <C>            <C>             <C>               <C>
GAS UTILITY:
       Revenues                                       $   84.5       $   59.3        $    25.2         42.5 %
       Total margin (a)                               $   31.4       $   31.7        $    (0.3)        (0.9)%
       EBITDA (b)                                     $   15.9       $   14.3        $     1.6         11.2 %
       Operating income                               $   10.8       $    9.5        $     1.3         13.7 %
       Natural gas system throughput - bcf                13.4           15.4             (2.0)       (13.0)%
       Heating degree days - % warmer
         than normal                                     (12.8)          (7.4)             -            -

ELECTRIC UTILITY:
       Revenues                                       $   19.2       $   18.3        $     0.9          4.9 %
       Total margin (a)                               $    6.8       $    9.2        $    (2.4)       (26.1)%
       EBITDA (b)                                     $    2.8       $    3.8        $    (1.0)       (26.3)%
       Operating income                               $    1.9       $    2.8        $    (0.9)       (32.1)%
       Electric sales - gwh                              209.6          205.5              4.1          2.0 %
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         bcf - billions of cubic feet.  gwh - millions of kilowatt hours.

(a)      Gas and Electric utilities' total margin represents total revenues less
         cost of sales and revenue-related taxes, i.e. gross receipts taxes. For
         financial statement purposes, revenue- related taxes are included in
         "taxes other than income taxes" on the condensed consolidated
         statements of income. As of January 1, 2000, the Gas Competition Act,
         in conjunction with a companion bill, eliminated the gross receipts tax
         on sales of gas.

(b)      EBITDA (earnings before interest expense, income taxes, depreciation
         and amortization) should not be considered as an alternative to net
         income (as an indicator of operating performance) or as an alternative
         to cash flow (as a measure of liquidity or ability to


                                      -11-
<PAGE>   14

                               UGI UTILITIES, INC.


         service debt obligations) and is not a measure of performance or
         financial condition under accounting principles generally accepted in
         the U.S.

GAS UTILITY. Weather in Gas Utility's service territory during the 2001
three-month period was slightly warmer than in the prior-year period. Total
system throughput declined 2.0 bcf reflecting lower interruptible volumes and,
to a lesser extent, lower firm delivery service volumes. The decline in
interruptible delivery service volumes reflects in large part the impact of
higher natural gas prices relative to oil prices which prompted fuel switching
by certain of Gas Utility's customers having alternate fuel capability. In
addition, throughput was negatively impacted by price-induced conservation as a
result of higher natural gas prices and the slowing economy.

The increase in Gas Utility revenues is primarily the result of higher purchased
gas cost ("PGC") rates associated with our firm- residential, commercial and
industrial ("core-market") customers. The higher PGC rates in effect during
fiscal 2001 reflect a significant increase in the market price of natural gas
purchased by Gas Utility to serve its core-market customers. Gas Utility cost of
gas was $53.1 million in the 2001 three-month period compared to $27.5 million
in the prior year reflecting the higher PGC rates.

Gas Utility total margin decreased $0.3 million as a $1.8 million increase in
core-market margin resulting from higher core-market base rates was more than
offset by lower interruptible delivery service margin. The decline in
interruptible margin reflects lower interruptible volumes during the 2001
three-month period as well as a decline in unit margins as a result of a less
favorable spread between oil and natural gas prices resulting from higher
natural gas prices.

Gas Utility EBITDA and operating income in the 2001 three-month period increased
$1.6 million and $1.3 million, respectively, as the previously mentioned
decrease in total margin was more than offset by lower operating and
administrative expenses and a $1.1 million increase in other income. Operating
expenses including taxes other than income taxes decreased $0.8 million as a
$0.7 million increase in uncollectible accounts expense was more than offset
principally by $2.0 million of income from an insurance recovery and reductions
to (1) accruals for taxes other than income taxes and (2) SFAS 106
overcollections (see "Impact of Gas Restructuring Order" below).

ELECTRIC UTILITY. Electric Utility distribution system sales increased 4.1 gwh
(2.0%) during the 2001 three-month period on weather that was comparable with
the prior-year period. Electric Utility revenues increased principally as a
result of the greater distribution system sales as well as off-system sales of
electricity generated by Hunlock Creek Energy Ventures ("Energy Ventures"), our
electricity generation joint-venture with Allegheny Energy. Electric Utility
cost of sales was $11.7 million, an increase of $3.3 million, reflecting higher
per-unit purchased power costs, the effect of the greater sales, and the impact
on cost of sales resulting from purchasing power from Energy Ventures. Prior to
the formation of Energy Ventures, our Hunlock Creek generating unit produced a
substantial portion of Electric Utility's electricity requirements. Its
contribution to Energy Ventures results in lower power production and
depreciation expenses but requires Electric Utility to purchase a larger
percentage of its electricity needs from others, including Energy Ventures.



                                      -12-
<PAGE>   15

                               UGI UTILITIES, INC.


Total Electric Utility margin declined $2.4 million as a result of higher
purchased power costs. EBITDA and operating income decreased $1.0 million and
$0.9 million, respectively, as the decline in total margin was partially offset
by lower power production and depreciation expenses.

INTEREST EXPENSE. Interest expense was $4.5 million in the 2001 three-month
period compared to $4.3 million in the prior-year period reflecting higher
long-term debt outstanding.

2001 NINE-MONTH PERIOD COMPARED WITH 2000 NINE-MONTH PERIOD

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                                    Increase
Nine Months Ended June 30,                                     2001              2000              (Decrease)
-----------------------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S>                                                        <C>             <C>            <C>                <C>
GAS UTILITY:
     Revenues                                              $  439.7        $    310.1     $    129.6         41.8 %
     Total margin                                          $  152.2        $    145.0     $      7.2          5.0 %
     EBITDA                                                $   99.1        $     96.7     $      2.4          2.5 %
     Operating income                                      $   84.1        $     82.4     $      1.7          2.1 %
     Natural gas system throughput - bcf                       66.1              67.2           (1.1)        (1.6)%
     Heating degree days - % colder
        (warmer) than normal                                    2.0             (11.1)           -            -

ELECTRIC UTILITY:
     Revenues                                              $   62.2        $     58.5     $      3.7           6.3 %
     Total margin                                          $   23.2        $     31.3     $     (8.1)        (25.9)%
     EBITDA                                                $   11.4        $     15.6     $     (4.2)        (26.9)%
     Operating income                                      $    8.6        $     12.7     $     (4.1)        (32.3)%
     Electric sales - gwh                                     716.8             689.5           27.3           4.0 %
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

GAS UTILITY. Weather in Gas Utility's service territory in the 2001 nine-month
period was 2.0% colder than normal compared with weather that was 11.1% warmer
than normal in the prior-year. Total distribution system throughput declined 1.1
bcf, notwithstanding the colder weather, as greater core-market sales were more
than offset by lower interruptible volumes and, to a lesser extent, firm
delivery service volumes. The decline in interruptible volumes reflects fuel
switching by some customers having alternate fuel capability. In addition,
throughput was negatively impacted by price-induced conservation and the slowing
economy.

The increase in Gas Utility revenues principally reflects the impact of higher
core-market PGC rates and greater core-market sales. Gas Utility cost of gas was
$287.5 million compared to $161.1 million in the prior year period reflecting
higher PGC rates and greater core-market sales.

Gas Utility total margin increased $7.2 million in the 2001 nine-month period as
an increase in core-market margin due principally to greater core-market sales
was partially offset by lower interruptible customer margin. The decline in
interruptible customer margin is a result of lower interruptible unit margins
reflecting a less favorable spread between oil and natural gas prices and the
lower interruptible volumes.



                                      -13-
<PAGE>   16


                               UGI UTILITIES, INC.


Gas Utility EBITDA and operating income were up slightly in the 2001 nine-month
period as the previously mentioned increase in total margin and greater other
income was partially offset by higher operating and administrative expenses and,
with respect to operating income, greater depreciation expense. Operating and
administrative expenses increased $6.6 million principally reflecting the
effects of a $4.1 million increase in uncollectible accounts expense, higher
distribution system maintenance expense, and greater incentive compensation
costs partially offset by reductions to accruals for taxes other than income
taxes.

ELECTRIC UTILITY. Distribution system sales increased 4.0% in the 2001
nine-month period principally reflecting the impact of colder heating-season
weather. Revenues increased $3.7 million as a result of the greater distribution
system sales and, to a lesser extent, off-system sales of electricity purchased
from Energy Ventures. Electric Utility cost of sales increased $11.7 million to
$36.4 million reflecting higher per-unit purchased power costs, the previously
mentioned impact on cost of sales from purchasing electricity from Energy
Ventures, and higher costs associated with the greater sales.

Total Electric Utility margin decreased $8.1 million reflecting the higher
purchased power costs. EBITDA and operating income declined $4.2 million and
$4.1 million, respectively, as the previously mentioned decrease in total margin
and a $0.6 million decrease in other income was partially offset by a decrease
in power production expenses subsequent to the formation of Energy Ventures and
lower utility realty tax expense.

INTEREST EXPENSE. Interest expense was $14.5 million in the 2001 nine-month
period compared to $13.8 million in the prior-year reflecting higher levels of
long-term debt outstanding.

2001 TWELVE-MONTH PERIOD COMPARED WITH 2000 TWELVE-MONTH PERIOD

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                                  Increase
Twelve Months Ended June 30,                                   2001          2000                (Decrease)
---------------------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S>                                                          <C>             <C>          <C>               <C>
GAS UTILITY:
     Revenues                                                $ 488.7         $ 353.1       $ 135.6          38.4 %
     Total margin                                            $ 178.0         $ 169.2       $   8.8           5.2 %
     EBITDA                                                  $ 107.7         $ 102.1       $   5.6           5.5 %
     Operating income                                        $  87.8         $  83.0       $   4.8           5.8 %
     Natural gas system throughput - bcf                        78.6            79.3          (0.7)         (0.9)%
     Heating degree days - % colder (warmer) than
         normal                                                  2.8           (11.6)            -             -

ELECTRIC UTILITY:
     Revenues                                                $  81.6         $  78.3       $   3.3           4.2 %
     Total margin                                            $  32.4         $  39.3       $  (6.9)        (17.6)%
     EBITDA                                                  $  15.3         $  17.4       $  (2.1)        (12.1)%
     Operating income                                        $  11.0         $  13.4       $  (2.4)        (17.9)%
     Electric sales - gwh                                      934.5           913.3           21.2          2.3 %
---------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -14-
<PAGE>   17

                               UGI UTILITIES, INC.


GAS UTILITY. Weather in Gas Utility's service territory based upon heating
degree days was 2.8% colder than normal in the 2001 twelve-month period compared
to weather that was 11.6% warmer than normal in the prior year twelve-month
period. Notwithstanding the impact of the colder weather on core-market sales,
total system throughput declined 0.7 bcf principally reflecting lower
interruptible and firm delivery service volumes and the impact of price-induced
customer conservation. The decline in delivery service volumes resulted
primarily from price-induced fuel switching and conservation by certain of our
large industrial and commercial customers.

The significant increase in Gas Utility revenues is primarily a result of higher
core-market revenues reflecting greater PGC rates as well as higher
weather-related sales. Gas Utility cost of gas totaled $310.7 million in the
2001 twelve-month period compared with $178.6 million in the 2000 twelve-month
period reflecting higher average PGC rates and the higher core-market sales.

Gas Utility total margin increased $8.8 million reflecting a $13.5 million
increase in core-market margin partially offset by lower total margin from
interruptible customers. The decline in interruptible margin reflects lower
average interruptible unit margins and lower volumes delivered to these
customers having alternate fuel capability.

Gas Utility EBITDA and operating income increased $5.6 million and $4.8 million,
respectively, principally as a result of the increase in total margin and a $3.1
million increase in other income partially offset by an increase in operating
and administrative expenses and, with respect to operating income, higher
charges for depreciation. The increase in operating and administrative expenses
includes, among other things, greater allowances for uncollectible accounts
reflecting significantly higher 2001 twelve-month period customer bills and
higher distribution system maintenance expenses.

ELECTRIC UTILITY. Distribution system sales in the 2001 twelve-month period
increased 2.3% on colder heating-season weather. Revenues increased as a result
of the higher distribution system sales as well as off-system sales of
electricity generated by Energy Ventures. Cost of sales was $45.6 million in the
2001 twelve-month period compared to $35.8 million in the prior year. The
increase reflects higher per-unit purchased power costs, the impact on cost of
sales subsequent to the formation of Energy Ventures, and the higher 2001
twelve-month period sales.

Total Electric Utility margin decreased $6.9 million as a result of the higher
purchased power costs. EBITDA and operating income declined less than the
decline in total margin principally reflecting lower power production expenses
subsequent to the formation of Energy Ventures, lower utility realty taxes and
with respect to operating income, lower depreciation expense.

INTEREST EXPENSE. The greater interest expense in the 2001 twelve-month period
resulted primarily from greater long-term debt outstanding.



                                      -15-
<PAGE>   18


                               UGI UTILITIES, INC.


                        FINANCIAL CONDITION AND LIQUIDITY

FINANCIAL CONDITION

The Company's debt outstanding at June 30, 2001 totaled $261.8 million compared
with $273.3 million at September 30, 2000. Included in these amounts are bank
loans of $53.3 million and $100.4 million, respectively. In March 2001 and
December 2000, UGI Utilities issued $30 million and $20 million, respectively,
of fixed-rate five-year notes under its Medium-Term Note program. The notes bear
interest at effective interest rates of 6.64% and 7.14%, respectively. The
proceeds were used to repay bank loans, to fund the repayment of $15 million of
maturing Medium-Term Notes in March 2001, and for working capital purposes.

CASH FLOWS

The Company's cash flows from operating activities are seasonal and are
generally greatest during the second and third fiscal quarters when customers
pay bills incurred during the heating season and are generally lowest during the
first and fourth fiscal quarters. Accordingly, cash flows from operations for
the nine months ended June 30, 2001 are not necessarily indicative of cash flows
to be expected for a full year.

OPERATING ACTIVITIES. Cash provided by operating activities was $51.3 million
during the nine months ended June 30, 2001. In the prior-year period, cash
provided by operating activities was $78.2 million. The decrease in 2001
nine-month period operating cash flow is a result of higher cash requirements to
fund working capital, primarily increases in customer accounts receivable,
greater income tax payments, and lower net income. The increase in accounts
receivable is a result of higher natural gas costs in the 2001 nine-month
period. Cash flow from operating activities before changes in operating working
capital was $60.0 million in the 2001 nine-month period, a decrease of $9.8
million from the prior-year period.

INVESTING ACTIVITIES. Expenditures for property, plant and equipment were $23.2
million in the 2001 nine-month period, equal to expenditures in the prior-year
period. During the 2001 nine-month period, the Company contributed $6 million in
cash to Energy Ventures in addition to its Hunlock Creek generating station and
certain related assets totaling $4.2 million (see "Formation of Hunlock Creek
Energy Ventures" below).

FINANCING ACTIVITIES. During the 2001 and 2000 nine-month periods, we paid
dividends of $26.8 million and $36.0 million, respectively, to UGI. We also paid
dividends on our redeemable preferred stock totaling $1.2 million in both
periods. During the 2001 nine-month period, we issued an aggregate $50 million
face value of five-year notes under our Medium-Term Note program. We used the
proceeds for working capital purposes and to repay $15 million of maturing
long-term debt. As a result of issuing this long-term debt, we were able to
reduce our bank loans $47.1 million in the 2001 nine-month period
notwithstanding the need to fund a significant increase in operating working
capital. During the 2001 nine-month period, UGI made a capital contribution of
$4.0 million to fund a portion of the Company's investment in Energy Ventures.


                                      -16-
<PAGE>   19

                               UGI UTILITIES, INC.


ADOPTION OF NEW ACCOUNTING STANDARDS

Effective October 1, 2000, we adopted the provisions of SFAS 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS 133, as amended by SFAS
Nos. 137 and 138, establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that all derivative
instruments be recognized as either assets or liabilities and measured at fair
value. The accounting for changes in fair value depends upon the purpose of the
derivative instrument and whether it is designated and qualifies for hedge
accounting.

On occasion we use a managed program of derivative instruments including natural
gas and oil futures contracts to preserve forecasted gross margin associated
with certain of our natural gas customers. These contracts are generally
designated as cash flow hedges. We are also a party to a number of contracts
that have elements of a derivative instrument. These contracts include, among
others, binding purchase orders, contracts which provide for the delivery of
natural gas, and service contracts that require the counterparty to provide
commodity storage, transportation or capacity service to meet our normal sales
commitments. Although many of these contracts have the requisite elements of a
derivative instrument, these contracts are not subject to the accounting
requirements of SFAS 133 because they provide for the delivery of products or
services in quantities that are expected to be used in the normal course of
operating our business. Other contracts do not meet the definition of a
derivative instrument because they represent requirements-based commitments.
Although the adoption of SFAS 133 did not materially impact our results of
operations or financial position during the three and nine months ended June 30,
2001, it may impact future results of operations or financial position depending
upon the extent to which we use derivative instruments and their designation and
effectiveness as hedges of market risk.

FORMATION OF HUNLOCK CREEK ENERGY VENTURES

On December 8, 2000, our wholly owned subsidiary, UGI Development Company,
contributed its coal-fired Hunlock Creek generating station ("Hunlock") and
certain related assets having a net book value of $4.2 million, and $6 million
in cash, to Hunlock Creek Energy Ventures ("Energy Ventures"), a general
partnership jointly owned by the Company and a subsidiary of Allegheny Energy,
Inc. ("Allegheny"). Also on December 8, 2000, Allegheny contributed a newly
constructed, gas-fired combustion turbine generator to be operated at the
Hunlock site. Under the joint-venture agreement, each partner is entitled to
purchase 50% of the output of the joint venture at cost. The Company's
investment in Energy Ventures is being accounted for under the equity method of
accounting. The joint venture's results did not materially impact the Company's
results of operations during the three and nine months ended June 30, 2001.

IMPACT OF GAS RESTRUCTURING ORDER

On June 29, 2000, the Pennsylvania Public Utility Commission ("PUC") issued its
order ("Gas Restructuring Order") approving Gas Utility's restructuring plan
filed by Gas Utility pursuant to Pennsylvania's Natural Gas Choice and
Competition Act. Among other things, the implementation of the Gas Restructuring
Order resulted in an increase in Gas Utility base rates effective October 1,
2000. This base rate increase is designed to generate approximately $16.7
million in additional annual revenues. The Gas Restructuring Order also provides
that effective October 1, 2000, Gas Utility must reduce its PGC rates by an
amount sufficient to result in a total



                                      -17-
<PAGE>   20

                               UGI UTILITIES, INC.


reduction in PGC revenues of $16.7 million in the first year of the base rate
increase. As a result of the increase in base rates and the PGC refund mechanism
described above, Gas Utility's operating results are more sensitive to the
effects of heating-season weather beginning in fiscal 2001.

Beginning in fiscal 2002, Gas Utility is required to reduce its PGC rates by an
amount equal to the revenues it receives from customers served under
interruptible rates who do not obtain their own pipeline capacity. As a result,
Gas Utility expects that beginning in fiscal 2002 operating results will be less
sensitive to the market prices of alternative fuels than in prior fiscal years.

On May 24, 2001, the PUC approved Gas Utility's application for approval to
transfer its liquefied natural gas ("LNG") and propane air ("LP") facilities,
along with related assets, to an unregulated affiliate, UGI Energy Services,
Inc., a second-tier, wholly owned subsidiary of UGI. The associated reduction in
Gas Utility's base rates, adjusted for the impact of the transfer on net
operating expenses, is not expected to have a material effect on Gas Utility's
results of operations. Gas Utility expects to transfer the LNG and LP assets,
which are not material to its total assets, on or about September 30, 2001. The
PUC's May 24 order also finalizes certain provisions of Gas Utility's gas
restructuring proceeding relating to customer choice settlement provisions,
including expanding Gas Utility's customer assistance program ("CAP Program").
The May 24, 2001 order authorizes Gas Utility to transfer certain excess
recoveries of costs determined under SFAS 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions" as credits against CAP Program
costs.

ACCOUNTING PRINCIPLES NOT YET ADOPTED

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations" ("SFAS 141") and SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142").

Under the provisions of SFAS 141, all business combinations initiated after June
30, 2001 are required to be accounted for using the purchase method of
accounting. SFAS 141 also establishes specific criteria for the recognition of
intangible assets separate from goodwill acquired in a purchase business
combination.

SFAS 142 addresses the financial accounting and reporting for acquired goodwill
and other intangible assets. SFAS 142 addresses the financial accounting and
reporting for intangible assets acquired individually or with a group of other
assets (excluding those acquired in a business combination) at acquisition, and
also addresses the financial accounting and reporting for goodwill and other
intangible assets subsequent to their acquisition. Under SFAS 142, a recognized
intangible asset will be amortized



                                      -18-
<PAGE>   21

                               UGI UTILITIES, INC.


over its useful life unless that life is determined to be indefinite. Goodwill,
and intangible assets determined to have an indefinite useful life, will no
longer be amortized. SFAS 142 also establishes a new method of testing goodwill
for impairment. Goodwill will be tested for impairment at least annually. Other
intangible assets with indefinite lives will also be tested for impairment at
least annually by comparing the fair values of those assets with their recorded
amounts. The provisions of SFAS 142 are required to be applied to all goodwill
and other intangible assets recognized in an entity's statement of financial
position in fiscal years beginning after December 15, 2001. Early application is
permitted for entities with fiscal years beginning after March 15, 2001. The
provisions of SFAS 142 will be initially applied at the beginning of a fiscal
year.

The Company plans to adopt the provisions of SFAS 142 effective October 1, 2001.
Because the Company does not currently have significant intangible assets
resulting from prior business acquisitions, the Company does not expect the
adoption of SFAS 142 will have a material impact on its results of operations or
financial position.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the information previously reported
under Item 7A of the Company's 2000 Annual Report.



                                      -19-
<PAGE>   22

                               UGI UTILITIES, INC.


                            PART II OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)      List of Exhibits:

             12.1     Computation of ratio of earnings to fixed charges.

             12.2     Computation of ratio of earnings to combined fixed charges
                      and preferred stock dividends.

    (b)      The Company did not file any Current Reports on Form 8-K during the
             fiscal quarter ended June 30, 2001.



                                      -20-
<PAGE>   23


                                   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.




                                      UGI Utilities, Inc.
                                      -------------------
                                         (Registrant)








Date:  August 14, 2001                By:      /s/ J.C. Barney
----------------------                ------------------------------------------
                                      J. C. Barney, Senior Vice President -
                                      Finance
                                      (Principal Financial Officer)



                                      -21-
<PAGE>   24


                                 EXHIBIT INDEX

         Exhibit No.                Description
         -----------                -----------

               12.1    Computation of ratio of earnings to fixed charges

               12.2    Computation of ratio of earnings to combined fixed
                       charges and preferred stock dividends