<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, 1997

                                       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)

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


                               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, 1997, 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. AND SUBSIDIARIES

                                TABLE OF CONTENTS


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

    Item 1. Financial Statements

            Condensed Consolidated Balance Sheets as of June 30, 1997,
                September 30, 1996 and June 30, 1996                              1

            Condensed Consolidated Statements of Income for the
                three, nine and twelve months ended June 30, 1997 and 1996        2

            Condensed Consolidated Statements of Cash Flows for the
                nine and twelve months ended June 30, 1997 and 1996               3

            Notes to Condensed Consolidated Financial Statements                4 - 8

    Item 2. Management's Discussion and Analysis of Financial
                Condition and Results of Operations                            9 - 17


PART II OTHER INFORMATION

    Item 1. Legal Proceedings                                                    17

    Item 6. Exhibits and Reports on Form 8-K                                     18

    Signatures                                                                   19
</TABLE>

                                       -i-
<PAGE>   3
                          PART I FINANCIAL INFORMATION
                      UGI UTILITIES, INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                                   June 30,     September 30,      June 30,
                                                                                     1997           1996             1996
                                                                                   --------     -------------      --------
<S>                                                                                <C>          <C>                <C>     
ASSETS
     Current assets:
         Cash and cash equivalents                                                 $  5,299        $  3,100        $  1,870
         Accounts receivable (less allowances for doubtful accounts
              of $4,152, $3,976 and $5,131, respectively)                            40,463          26,288          48,060
         Accrued utility revenues                                                     6,690           8,612           7,349
         Inventories                                                                 18,337          30,035          17,945
         Deferred income taxes                                                       11,053           6,316          11,454
         Prepaid expenses and other current assets                                    5,778           1,920           4,069
                                                                                   --------        --------        --------
              Total current assets                                                   87,620          76,271          90,747

     Property, plant and equipment, at cost (less accumulated depreciation
         and amortization of $237,402, $222,559 and $218,890, respectively)         518,986         507,300         497,269

     Regulatory income tax asset                                                     43,953          42,908          38,918
     Other assets                                                                    20,587          23,420          21,252
                                                                                   --------        --------        --------
         Total assets                                                              $671,146        $649,899        $648,186
                                                                                   ========        ========        ========


LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
         Current maturities of long-term debt                                      $ 17,143        $ 25,543        $ 25,543
         Bank loans                                                                  43,200          50,500          10,000
         Accounts payable                                                            31,032          39,517          32,254
         Other current liabilities                                                   60,038          41,369          58,781
                                                                                   --------        --------        --------
              Total current liabilities                                             151,413         156,929         126,578

     Long-term debt                                                                 161,126         151,111         158,248
     Deferred income taxes                                                           98,643          95,452          90,205
     Other noncurrent liabilities                                                    20,583          21,779          24,073
     Commitments and contingencies

     Redeemable preferred stock                                                      35,187          35,187          35,187

     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                                                  68,052          68,052          68,052
         Retained earnings                                                           75,883          61,130          85,584
                                                                                   --------        --------        --------
              Total common stockholder's equity                                     204,194         189,441         213,895
                                                                                   --------        --------        --------
         Total liabilities and stockholders' equity                                $671,146        $649,899        $648,186
                                                                                   ========        ========        ========
</TABLE>


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

                                     - 1 -
<PAGE>   4
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                   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,
                                                -----------------------      ------------------------      ------------------------
                                                  1997         1996(a)          1997         1996(a)          1997         1996(a)
                                                --------      ---------      ---------      ---------      ---------      ---------
<S>                                             <C>           <C>            <C>            <C>            <C>            <C>      
Revenues                                        $ 88,208      $  88,860      $ 395,666      $ 392,513      $ 463,649      $ 446,303
                                                --------      ---------      ---------      ---------      ---------      ---------

Costs and expenses:
      Gas, fuel and purchased power               44,174         45,569        207,797        206,017        241,423        227,190
      Operating and administrative expenses       28,995         27,575         88,960         89,748        118,644        116,689
      Operating and administrative expenses
           - related parties                       1,184          1,273          3,830          4,191          3,489          5,660
      Depreciation and amortization                5,606          5,511         16,878         16,184         22,296         21,092
      Miscellaneous income, net                     (728)          (457)        (2,141)        (1,223)        (2,760)        (1,976)
                                                --------      ---------      ---------      ---------      ---------      ---------
                                                  79,231         79,471        315,324        314,917        383,092        368,655
                                                --------      ---------      ---------      ---------      ---------      ---------

Operating income                                   8,977          9,389         80,342         77,596         80,557         77,648
Interest charges                                   4,187          3,855         12,743         12,170         16,667         16,559
                                                --------      ---------      ---------      ---------      ---------      ---------
Income before income taxes                         4,790          5,534         67,599         65,426         63,890         61,089
Income taxes                                       1,820          1,832         25,681         24,639         24,411         18,662
                                                --------      ---------      ---------      ---------      ---------      ---------
Net income                                         2,970          3,702         41,918         40,787         39,479         42,427
Dividends on preferred stock                         691            692          2,073          2,074          2,764          2,765
                                                --------      ---------      ---------      ---------      ---------      ---------
Net income after dividends
      on preferred stock                        $  2,279      $   3,010      $  39,845      $  38,713      $  36,715      $  39,662
                                                ========      =========      =========      =========      =========      =========
</TABLE>


(a)      Revenues (and related cost of sales) have been reclassified to reflect
         revenues from certain Gas Utility sales on a total, rather than net,
         basis.


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

                                     - 2 -
<PAGE>   5
                      UGI UTILITIES, INC. AND SUBSIDIARIES

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


<TABLE>
<CAPTION>
                                                                     Nine Months Ended         Twelve Months Ended
                                                                         June 30,                    June 30,
                                                                  ----------------------      ----------------------
                                                                    1997          1996          1997          1996
                                                                  --------      --------      --------      --------
<S>                                                               <C>           <C>           <C>           <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                    $ 41,918      $ 40,787      $ 39,479      $ 42,427
    Adjustments to reconcile net income to net cash provided
       by operating activities:
          Depreciation and amortization                             16,878        16,184        22,296        21,092
          Deferred income taxes, net                                (3,688)        2,249         1,544         3,673
          Other, net                                                 1,776         4,665         1,340         5,122
                                                                  --------      --------      --------      --------
                                                                    56,884        63,885        64,659        72,314
          Net change in:
             Accounts receivable and accrued utility revenues      (15,676)      (29,285)        4,165       (29,263)
             Inventories                                            11,698         5,482          (392)         (846)
             Deferred fuel adjustments                              12,996           464         1,801        (9,810)
             Pipeline transition and producer settlement
                recoveries (costs), net                             (1,652)        1,131        (1,709)         (714)
             Accounts payable                                       (8,485)       (1,369)       (1,222)       11,728
             Other current assets and liabilities                    6,511        11,767           (72)        7,745
                                                                  --------      --------      --------      --------
          Net cash provided  by operating activities                62,276        52,075        67,230        51,154
                                                                  --------      --------      --------      --------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Expenditures for property, plant and equipment                 (28,251)      (24,983)      (42,927)      (41,924)
    Net costs of property, plant and equipment disposals              (493)         (784)         (898)       (1,257)
    Other, net                                                         500           725           515           725
                                                                  --------      --------      --------      --------
       Net cash used by investing activities                       (28,244)      (25,042)      (43,310)      (42,456)
                                                                  --------      --------      --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payment of dividends                                           (26,133)      (13,634)      (48,148)      (14,325)
    Issuance of long-term debt                                      20,000        20,000        20,000        68,000
    Repayment of long-term debt                                    (18,400)      (47,685)      (25,543)      (54,833)
    Bank loans increase (decrease)                                  (7,300)      (32,000)       33,200       (25,500)
    Redemption of Series Preferred Stock                              --             (15)         --             (15)
                                                                  --------      --------      --------      --------
       Net cash used by financing activities                       (31,833)      (73,334)      (20,491)      (26,673)
                                                                  --------      --------      --------      --------

    Cash and cash equivalents increase (decrease)                 $  2,199      $(46,301)     $  3,429      $(17,975)
                                                                  ========      ========      ========      ========

CASH AND CASH EQUIVALENTS:
    End of period                                                 $  5,299      $  1,870      $  5,299      $  1,870
    Beginning of period                                              3,100        48,171         1,870        19,845
                                                                  --------      --------      --------      --------
       Increase (decrease)                                        $  2,199      $(46,301)     $  3,429      $(17,975)
                                                                  ========      ========      ========      ========
</TABLE>


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

                                     - 3 -
<PAGE>   6
                      UGI UTILITIES, INC. AND SUBSIDIARIES

              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
         subsidiaries (collectively, "the Company"). All significant
         intercompany accounts and transactions have been eliminated in
         consolidation. UGI Utilities is a wholly owned subsidiary of UGI
         Corporation (UGI) and operates a natural gas distribution utility (Gas
         Utility) and an electric utility (Electric Utility) in 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 the Company considers 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 notes thereto included in the
         Company's Annual Report on Form 10-K for the year ended September 30,
         1996. Due to the seasonal nature of the Company's businesses, the
         results of operations for interim periods are not necessarily
         indicative of the results to be expected for a full year.

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities, the disclosure of contingent assets and liabilities at the
         date of the financial statements, and revenues and expenses during the
         reporting period. Actual results could differ from these estimates.

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


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


2.  SEGMENT INFORMATION
    Information on revenues, operating income (loss), depreciation and
    amortization, identifiable assets and certain operating statistics by
    business segment for the periods presented follows:


<TABLE>
<CAPTION>
                                                       Three Months Ended            Nine Months Ended           
                                                            June 30,                      June 30,               
                                                    ------------------------      ------------------------
                                                       1997           1996           1997           1996         
                                                    ---------      ---------      ---------      ---------
<S>                                                 <C>            <C>            <C>            <C>      
REVENUES
    Gas utility                                     $  71,638      $  72,724      $ 340,733      $ 340,046
    Electric utility                                   16,570         16,136         54,933         52,467
                                                    ---------      ---------      ---------      ---------
      Total                                         $  88,208      $  88,860      $ 395,666      $ 392,513
                                                    =========      =========      =========      =========


OPERATING INCOME (LOSS)
    Gas utility                                     $   7,951      $   9,098      $  75,466      $  75,259
    Electric utility                                    2,186          1,544          8,511          6,455
    Other                                                  24             20            195             73
    Corporate general                                  (1,184)        (1,273)        (3,830)        (4,191)
                                                    ---------      ---------      ---------      ---------
      Total                                         $   8,977      $   9,389      $  80,342      $  77,596
                                                    =========      =========      =========      =========



DEPRECIATION AND AMORTIZATION
    Gas utility                                     $   4,597      $   4,505      $  13,827      $  13,161
    Electric utility                                    1,009          1,006          3,051          3,021
    Corporate general and other                          --             --             --                2
                                                    ---------      ---------      ---------      ---------
      Total                                         $   5,606      $   5,511      $  16,878      $  16,184
                                                    =========      =========      =========      =========



IDENTIFIABLE ASSETS
    (at period end)
    Gas utility                                     $ 582,387      $ 560,223      $ 582,387      $ 560,223
    Electric utility                                   85,614         83,932         85,614         83,932
    Corporate general and other                         3,145          4,031          3,145          4,031
                                                    ---------      ---------      ---------      ---------
      Total                                         $ 671,146      $ 648,186      $ 671,146      $ 648,186
                                                    =========      =========      =========      =========


OPERATING STATISTICS
    Natural gas system throughput -
      billions of cubic feet                             15.9           16.9           68.4           72.3
    Electric sales - millions of kilowatt hours         195.0          198.2          667.3          683.8
</TABLE>

<TABLE>
<CAPTION>
                                                       Twelve Months Ended      
                                                            June 30,           
                                                    ------------------------
                                                      1997           1996     
                                                    ---------      ---------
<S>                                                 <C>            <C>      
REVENUES
    Gas utility                                     $ 391,681      $ 377,194
    Electric utility                                   71,968         69,109
                                                    ---------      ---------
      Total                                         $ 463,649      $ 446,303
                                                    =========      =========


OPERATING INCOME (LOSS)
    Gas utility                                     $  73,144      $  74,552
    Electric utility                                   10,678          8,350
    Other                                                 224            406
    Corporate general                                  (3,489)        (5,660)
                                                    ---------      ---------
      Total                                         $  80,557      $  77,648
                                                    =========      =========



DEPRECIATION AND AMORTIZATION
    Gas utility                                     $  18,242      $  17,178
    Electric utility                                    4,054          3,911
    Corporate general and other                          --                3
                                                    ---------      ---------
      Total                                         $  22,296      $  21,092
                                                    =========      =========



IDENTIFIABLE ASSETS
    (at period end)
    Gas utility                                     $ 582,387      $ 560,223
    Electric utility                                   85,614         83,932
    Corporate general and other                         3,145          4,031
                                                    ---------      ---------
      Total                                         $ 671,146      $ 648,186
                                                    =========      =========


OPERATING STATISTICS
    Natural gas system throughput -
      billions of cubic feet                             81.4           86.5
    Electric sales - millions of kilowatt hours         868.2          892.9
</TABLE>

                                     - 5 -
<PAGE>   8
                      UGI UTILITIES, INC. AND SUBSIDIARIES


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


3.       ELECTRICITY GENERATION CUSTOMER CHOICE AND COMPETITION ACT

         On January 1, 1997, the Electricity Generation Customer Choice and
         Competition Act (Customer Choice Act) became effective. The Customer
         Choice Act permits all Pennsylvania retail electric customers to choose
         their electric generation supplier over a three-year phase-in period
         commencing January 1, 1999. The Customer Choice Act requires all
         electric utilities to file restructuring plans with the Pennsylvania
         Public Utility Commission (PUC) which, among other things, include
         unbundled prices for electric generation, transmission and distribution
         and a competitive transition charge (CTC) for the recovery of "stranded
         costs" which would be paid by all customers receiving transmission and
         distribution service. "Stranded costs" generally are electric
         generation-related costs that traditionally would be recoverable in a
         regulated environment but may not be recoverable in a competitive
         electric generation market. Under the Customer Choice Act, Electric
         Utility's rates for transmission and distribution services provided
         through June 30, 2001 are capped at levels in effect on January 1,
         1997. In addition, Electric Utility generally may not increase the
         generation component of prices as long as stranded costs are being
         recovered through the CTC. Electric Utility will continue to be the
         only regulated electric utility having the right, granted by the PUC or
         by law, to transmit and distribute electric energy in its service
         territory.

         On August 7, 1997, Electric Utility filed its restructuring plan with
         the PUC. The restructuring plan includes a claim for the recovery of
         $34.4 million for stranded costs during the period January 1, 1999
         through December 31, 2002. The claim is primarily for the recovery of:
         (1) plant investments in excess of market and electric generation
         facility retirement costs; (2) potential costs associated with existing
         power purchase agreements; and (3) regulatory assets (principally
         income taxes) recoverable from ratepayers under current regulatory
         practice. The PUC has nine months to take action on Electric Utility's
         filing.

         Given the changing regulatory environment in the electric utility
         industry, the Company continues to evaluate its ability to apply the
         provisions of SFAS No. 71 "Accounting for the Effects of Certain Types
         of Regulation" (SFAS 71) as it relates to its electric generation
         operations. SFAS 71 permits the recording of costs (regulatory assets)
         that have been, or are expected to be, allowed in the ratesetting
         process in a period different from the period in which such costs would
         be charged to expense by an unregulated enterprise. The Company
         believes its electric generation assets and related regulatory assets
         continue to satisfy the criteria of SFAS 71. If and when such electric
         generation assets no longer meet the criteria of SFAS 71, any related
         regulatory assets would be written-off unless the PUC authorizes the
         recovery of such costs through the CTC and any generation-related
         long-lived fixed and intangible assets would be evaluated for

                                     - 6 -
<PAGE>   9
                      UGI UTILITIES, INC. AND SUBSIDIARIES


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


         impairment under the provisions of SFAS 121, "Accounting for the
         Impairment of Long-Lived Assets and for Long-Lived Assets to be
         Disposed Of."

         Based upon an evaluation of the various factors and conditions
         affecting future cost recovery , the Company does not expect the
         Customer Choice Act to have a material adverse effect on its financial
         condition or results of operations.

4.       COMMITMENTS AND CONTINGENCIES

         UGI Utilities, along with other companies, has been named as a
         potentially responsible party in several administrative proceedings for
         the cleanup of various waste sites, including some Superfund sites.
         Also, certain private parties have filed, or threatened to file, suit
         against UGI Utilities to recover costs of investigation and, as
         appropriate, remediation of several waste sites. In addition, UGI
         Utilities has identified environmental contamination at several of its
         properties and has voluntarily undertaken investigation and, as
         appropriate, remediation of these sites in cooperation with appropriate
         environmental agencies or private parties.

         At a manufactured gas plant site in Burlington, Vermont, the United
         States Environmental Protection Agency (EPA) has named nineteen
         parties, including UGI Utilities, as potentially responsible parties
         for gas plant contamination that resulted from the operations of a
         former subsidiary of UGI Utilities. In May 1993, after receiving and
         reviewing extensive public comment, EPA withdrew a proposed plan of
         remediation that would have cost an estimated $50,000. EPA is now
         working with community groups and potentially responsible parties to
         develop a revised remediation plan. These groups continue to study the
         site and evaluate the effect of the contamination on the environment.
         UGI Utilities cannot estimate the cost associated with any revised
         plan, but it does not believe such cost will exceed the estimated cost
         of the originally proposed plan.

         With respect to a manufactured gas plant site in Concord, New
         Hampshire, EnergyNorth Natural Gas, Inc. (EnergyNorth) has filed suit
         against UGI Utilities alone seeking UGI Utilities' purportedly
         allocable share of response costs associated with remediating gas plant
         related contaminants at that site. EnergyNorth alleges that to date it
         has spent $3,500 to remediate part of the site and that it will be
         required to spend an unknown amount in the future to complete
         remediation.

         At Burlington, Concord and other sites, management believes that UGI
         Utilities should not have significant liability in those instances in
         which a former subsidiary operated a manufactured gas plant because UGI
         Utilities generally is not legally liable for the obligations of its
         subsidiaries. Under certain circumstances, however, courts have found

                                     - 7 -
<PAGE>   10
                      UGI UTILITIES, INC. AND SUBSIDIARIES


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


         parent companies liable for environmental damage caused by subsidiary
         companies when the parent company exercised such substantial control
         over the subsidiary that the court concluded that the parent company
         either (i) itself operated the facility causing the environmental
         damage or (ii) otherwise so controlled the subsidiary that the
         subsidiary's separate corporate form should be disregarded. There could
         be, therefore, significant future costs of an uncertain amount
         associated with environmental damage caused by manufactured gas plants
         that UGI Utilities owned or directly operated or that were owned or
         operated by former subsidiaries of UGI Utilities, if a court were to
         conclude that the level of control exercised by UGI Utilities over the
         subsidiary satisfies the standard described above. In many
         circumstances where UGI Utilities may be liable, expenditures may not
         be reasonably quantifiable because of a number of factors including
         various costs associated with potential remedial alternatives, the
         unknown number of other potentially responsible parties involved and
         their ability to contribute to the costs of investigation and
         remediation, and changing environmental laws and regulations.

         The Company's policy is to accrue environmental investigation and
         cleanup costs when it is probable that a liability exists and the
         amount or range of amounts can be reasonably estimated. The Company
         intends to pursue recovery of any incurred costs through all
         appropriate means, including regulatory relief, although such recovery
         cannot be assured.

         Under the terms of the August 31, 1995 Gas Utility base rate
         settlement, Gas Utility is permitted to amortize as removal costs
         site-specific environmental investigation and remediation costs, net of
         related third-party payments, associated with Pennsylvania sites. Gas
         Utility will be permitted to include in rates through future base rate
         proceedings, a five-year average of such prudently incurred removal
         costs.

         In addition to these environmental matters, there are various other
         pending claims and legal actions arising out of the normal conduct of
         the Company's businesses. The final results of environmental and other
         matters cannot be predicted with certainty. However, it is reasonably
         possible that some of them could be resolved unfavorably to the
         Company. Management believes, after consultation with counsel, that
         damages or settlements, if any, recovered by the plaintiffs in such
         claims or actions will not have a material adverse effect on the
         Company's financial position but could be material to operating results
         or cash flows in future periods depending on the nature and timing of
         future developments with respect to these matters and the amounts of
         future operating results and cash flows.

                                     - 8 -
<PAGE>   11
                      UGI UTILITIES, INC. AND SUBSIDIARIES

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


                        ANALYSIS OF RESULTS OF OPERATIONS

The following analyses of the Company's results of operations should be read in
conjunction with the segment information included in Note 2 to the Condensed
Consolidated Financial Statements. Due to the seasonal nature of the Company's
businesses, the results of operations for interim periods are not necessarily
indicative of the results to be expected for a full year.

THREE MONTHS ENDED JUNE 30, 1997 (1997 THREE-MONTH PERIOD) COMPARED WITH THREE
MONTHS ENDED JUNE 30, 1996 (1996 THREE-MONTH PERIOD)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                                          Increase
 Three Months Ended June 30,                   1997        1996          (Decrease)
---------------------------------------------------------------------------------------
 (Millions of dollars)
<S>                                          <C>         <C>         <C>        <C>   

GAS UTILITY:
     Natural gas system throughput - bcf         15.9        16.9      (1.0)     (5.9)%
     Degree days - % colder than normal          15.9         2.4         -         -
     Revenues                                $   71.6    $   72.7    $ (1.1)     (1.5)%
     Total margin (a)                        $   32.3    $   32.3    $    -         - %
     Operating income                        $    8.0    $    9.1    $ (1.1)    (12.1)%

ELECTRIC UTILITY:
     Electric sales - gwh                       195.0       198.2      (3.2)     (1.6)%
     Degree days - % colder than normal          27.8        11.8         -         -
     Revenues                                $   16.6    $   16.1    $   .5       3.1 %
     Total margin (a)                        $    8.4    $    7.7    $   .7       9.1 %
     Operating income                        $    2.2    $    1.5    $   .7      46.7 %

CORPORATE GENERAL:
     Corporate general expenses              $   (1.2)   $   (1.3)   $  (.1)     (7.7)%
---------------------------------------------------------------------------------------
</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.

GAS UTILITY. Weather in the Gas Utility service area during the three months
ended June 30, 1997 was 15.9% colder than normal compared with weather that was
2.4% colder than normal in the prior-year period. Although the weather was
colder in the 1997 three-month period, the 

                                     - 9 -
<PAGE>   12
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


correlation of weather and volumes on sales to firm-residential, firm-commercial
and firm-industrial (collectively, "core market") customers is significantly
lower in the third fiscal quarter than in the first and second fiscal quarters.
Total system throughput decreased 5.9% during the 1997 three-month period
principally reflecting a decrease in certain low-margin interruptible delivery
service volumes resulting from the shut-down of a gas-fired cogeneration
facility earlier in the year.

The decrease in Gas Utility's total revenues during the 1997 three-month period
includes a $2.5 million decrease from slightly lower throughput to core market
customers and a $2.0 million decrease in revenues from sales to customers
outside Gas Utility's distribution system (off-system sales). These decreases
were partially offset by a $3.0 million increase from the effects of higher
purchased gas cost (PGC) rates. Cost of gas sold by the Gas Utility was $36.7
million during the 1997 three-month period, a decrease of $1.1 million from the
prior-year period, reflecting lower costs associated with the lower volumes sold
to core market customers and the decrease in off-system sales partially offset
by the effects of higher PGC rates.

Despite the decrease in total throughput, Gas Utility total margin was
essentially unchanged from the prior-year period. Total margin for the three
months ended June 30, 1997 reflects a $.5 million decrease in margin from core
market customers reflecting the effects of lower volumes sold. However, the
decrease in total margin from core market customers was offset by higher total
margin from firm and interruptible delivery service customers.

Gas Utility operating income during the 1997 three-month period decreased $1.1
million principally reflecting an increase in operating expenses. Operating and
administrative expenses during the 1997 three-month period increased $1.3
million primarily from costs associated with environmental matters, distribution
system maintenance, advertising and marketing programs partially offset by lower
accruals for uncollectible accounts.

ELECTRIC UTILITY. Electric Utility sales decreased slightly during the 1997
three-month period principally reflecting a decrease in air conditioning related
sales. Notwithstanding the decline in sales, Electric Utility revenues increased
$.5 million reflecting the effects of an increase in base rates effective July
19, 1996 partially offset by the decrease in sales. Cost of sales decreased $.3
million in the 1997 three-month period reflecting the effects of the lower
sales.

Electric Utility total margin and operating income increased during the 1997
three-month period as a result of the higher base rates. Electric Utility
operating and administrative expenses in the 1997 three-month period were
virtually unchanged from the prior-year period. Pursuant to the provisions of
the Customer Choice Act, Electric Utility's rates have been capped at levels
existing as of January 1, 1997 (see "Electricity Generation Customer Choice and
Competition Act").

CORPORATE GENERAL. Corporate general expenses, which represent an allocated
share of UGI corporate headquarters' expenses, were $1.2 million in the 1997
three-month period compared 

                                     - 10 -
<PAGE>   13
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


with $1.3 million in the 1996 three-month period. The decrease reflects lower
levels of UGI corporate headquarters' expenses.

INTEREST EXPENSE AND INCOME TAXES. Interest expense during the 1997 three-month
period was $4.2 million compared with interest expense of $3.9 million in the
prior-year period. The increase in interest expense reflects higher average bank
loans outstanding partially offset by lower average long-term debt outstanding
at lower average interest rates. The effective income tax rate for the 1997
three-month period was 38.0% compared with a rate of 33.1% in the three months
ended June 30, 1996. The lower rate in the 1996 three-month period resulted from
the use of a slightly lower year-to-date effective tax rate in June 1996 than
was used in March 1996.

NINE MONTHS ENDED JUNE 30, 1997 (1997 NINE-MONTH PERIOD) COMPARED WITH NINE
MONTHS ENDED JUNE 30, 1996 (1996 NINE-MONTH PERIOD)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                                          Increase
 Nine Months Ended June 30,                                   1997         1996          (Decrease)
--------------------------------------------------------------------------------------------------------
 (Millions of dollars)
<S>                                                         <C>         <C>         <C>          <C>   
GAS UTILITY:
     Natural gas system throughput - bcf                        68.4        72.3       (3.9)      (5.4)%
     Degree days - % colder (warmer)
         than normal                                            (4.7)        4.7          -          -
     Revenues                                               $  340.7    $  340.0    $    .7         .2 %
     Total margin (a)                                       $  145.2    $  146.0    $   (.8)       (.5)%
     Operating income                                       $   75.5    $   75.3    $    .2         .3 %

ELECTRIC UTILITY:
     Electric sales - gwh                                      667.3       683.8      (16.5)      (2.4)%
     Degree days - % colder than normal                          2.4         8.3          -          -
     Revenues                                               $   54.9    $   52.5    $   2.4        4.6 %
     Total margin (a)                                       $   26.6    $   24.6    $   2.0        8.1 %
     Operating income                                       $    8.5    $    6.5    $   2.0       30.8 %

CORPORATE GENERAL AND OTHER:
     Corporate general expenses                             $   (3.8)   $   (4.2)   $   (.4)      (9.5)%
     Other operating income                                 $     .2    $     .1    $    .1      100.0 %
--------------------------------------------------------------------------------------------------------
</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.

                                     - 11 -
<PAGE>   14
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


GAS UTILITY. Weather in Gas Utility's service territory in the 1997 nine-month
period was 4.7% warmer than normal and 9.3% warmer than the 1996 nine-month
period. Total system throughput decreased 5.4% during the 1997 nine-month period
principally reflecting the warmer weather's effect on core market sales as well
as a decrease in low-margin interruptible delivery service volumes associated
with the shut-down of a gas-fired cogeneration facility.

Gas Utility revenues were virtually unchanged in the 1997 nine-month period as a
$23.1 million increase in revenues from higher average PGC rates was offset
principally by a $19.6 million decrease in revenues from lower sales to core
market customers and lower off-system sales. Notwithstanding the lower core
market and off-system sales, cost of gas sold by Gas Utility increased $1.4
million to $181.9 million reflecting higher average PGC rates.

The decrease in Gas Utility total margin principally reflects a $5.9 million
decrease in total margin from core market customers resulting from the warmer
weather partially offset by an increase in total margin from interruptible
customers.

Although total margin was slightly lower in the 1997 nine-month period, Gas
Utility operating income increased $.2 million principally as a result of lower
operating and administrative expenses. Operating and administrative expenses
during the 1997 nine-month period decreased $.9 million principally as a result
of a decrease in distribution system expenses, lower accruals for uncollectible
accounts, and lower general and administrative expenses partially offset by
higher costs associated with environmental matters.

ELECTRIC UTILITY. Electric Utility sales decreased during the 1997 nine-month
period reflecting weather which was 5.5% warmer than in the prior-year period.
Electric Utility revenues increased $2.4 million, notwithstanding the lower
sales, reflecting a $1.5 million increase in base rate revenues resulting from
the July 19, 1996 base rate increase and a $.9 million increase in energy cost
rate (ECR) revenues reflecting a higher average ECR. Cost of sales increased to
$25.9 million in the 1997 nine-month period from $25.5 million in the prior-year
period as a result of the higher average ECR partially offset by the lower
sales.

Electric Utility total margin and operating income increased during the nine
months ended June 30, 1997 principally as a result of the higher base rates.
Electric Utility operating and administrative expenses in the 1997 nine-month
period were essentially unchanged from the prior-year period.

CORPORATE GENERAL AND OTHER. Corporate general expenses were $3.8 million in the
1997 nine-month period compared with $4.2 million in the 1996 nine-month period.
The decrease is a result of lower levels of UGI corporate headquarters'
expenses.

INTEREST EXPENSE AND INCOME TAXES. Interest expense was $12.7 million during the
1997 nine-month period compared with $12.2 million in the 1996 nine-month
period. The increase in 

                                     - 12 -
<PAGE>   15
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


interest expense reflects higher average bank loans outstanding partially offset
by lower average long-term debt outstanding. The effective income tax rate for
the 1997 nine-month period was 38.0% compared with 37.7% for the nine months
ended June 30, 1996.

TWELVE MONTHS ENDED JUNE 30, 1997 (1997 TWELVE-MONTH PERIOD) COMPARED WITH
TWELVE MONTHS ENDED JUNE 30, 1996 (1996 TWELVE-MONTH PERIOD)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                                                         Increase
 Twelve Months Ended June 30,                                 1997         1996         (Decrease)
-------------------------------------------------------------------------------------------------------
 (Millions of dollars)
<S>                                                         <C>         <C>         <C>         <C>  
GAS UTILITY:
     Natural gas system throughput - bcf                        81.4        86.5       (5.1)     (5.9)%
     Degree days - % colder (warmer)
         than normal                                            (4.9)        4.4          -         -
     Revenues                                               $  391.7    $  377.2    $  14.5       3.8 %
     Total margin (a)                                       $  168.8    $  168.4    $    .4        .2 %
     Operating income                                       $   73.1    $   74.6    $  (1.5)     (2.0)%

ELECTRIC UTILITY:
     Electric sales - gwh                                      868.2       892.9      (24.7)     (2.8)%
     Degree days - % colder than normal                          2.4         7.8          -         -
     Revenues                                               $   72.0    $   69.1    $   2.9       4.2 %
     Total margin (a)                                       $   35.0    $   32.9    $   2.1       6.4 %
     Operating income                                       $   10.7    $    8.4    $   2.3      27.4 %

CORPORATE GENERAL AND OTHER:
     Corporate general expenses                             $   (3.5)   $   (5.7)   $  (2.2)    (38.6)%
     Other operating income                                 $     .2    $     .4    $   (.2)    (50.0)%
-------------------------------------------------------------------------------------------------------
</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.

GAS UTILITY. Weather in Gas Utility's service territory in the 1997 twelve-month
period was warmer than in the 1996 twelve-month period. Total system throughput
declined principally as a result of the effects of the warmer weather as well as
a decrease in low-margin interruptible delivery service volumes associated with
the shut-down of a cogeneration facility.

The increase in Gas Utility total revenues includes a $25.5 million increase
from higher average PGC rates, a $3.7 million increase from off-system sales,
and the full-year effect of Gas Utility's 

                                     - 13 -
<PAGE>   16
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


$19.5 million annual base rate increase which became effective August 31, 1995.
These increases were partially offset by a $19.7 million decrease from lower
sales to core market customers. Cost of gas sold was $207.6 million during the
1997 twelve-month period, an increase of $13.7 million from the same period in
1996, reflecting principally the effects of higher average PGC rates and greater
off-system sales partially offset by the lower sales to core-market customers.

The slight increase in Gas Utility total margin in the twelve months ended June
30, 1997 principally reflects a $4.0 million increase in total margin from
interruptible customers. The increase in total margin from interruptible
customers was partially offset by a $3.6 million decrease in total margin from
core market customers resulting from the warmer 1996/1997 heating-season
weather.

Although Gas Utility operating income during the 1997 twelve-month period
benefitted from the slight increase in total margin, the benefit was more than
offset by an increase in operating expenses including an increase in costs
associated with environmental matters, higher distribution system expenses, and
higher depreciation expense.

ELECTRIC UTILITY. Electric Utility sales were lower during the twelve months
ended June 30, 1997 than in the prior-year period principally as a result of
warmer heating-season weather. The increase in Electric Utility revenues
includes a $1.5 million increase in base rate revenues as a result of higher
base rates subsequent to July 19, 1996 partially offset by the effects of the
lower sales. In addition, ECR revenues increased $1.3 million as a result of a
higher average ECR. Electric Utility cost of sales was $33.8 million, an
increase of $.6 million from the prior-year period. The increase in cost of
sales principally reflects a higher average ECR partially offset by the lower
sales.

Electric Utility total margin during the 1997 twelve-month period increased
principally as a result of the higher base rates effective July 19, 1996.
Operating income benefitted principally from the increase in total margin and
slightly lower general and administrative expenses.

CORPORATE GENERAL AND OTHER. Corporate general expenses were $3.5 million in the
1997 twelve-month period compared with $5.7 million in the 1996 twelve-month
period. The decrease represents lower levels of UGI corporate headquarters'
expenses resulting in part from adjustments to incentive compensation accruals
in September 1996.

INTEREST EXPENSE AND INCOME TAXES. Interest expense was $16.7 million in the
1997 twelve-month period compared with $16.6 million in the 1996 twelve-month
period. The increase in interest expense during the 1997 twelve-month period is
principally due to higher levels of bank loans outstanding at slightly lower
average interest rates partially offset by lower levels of long-term debt
outstanding. The effective income tax rate for the 1997 twelve-month period was
38.2% compared with a rate of 30.5% in the prior-year period. The lower income
tax rate in the 

                                     - 14 -
<PAGE>   17
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


1996 twelve-month period reflects the benefit of a $4.3 million adjustment to
deferred state income taxes recorded in September 1995.


                        FINANCIAL CONDITION AND LIQUIDITY

CAPITAL STRUCTURE

The Company's consolidated debt-to-total-capitalization ratio was 48.1% at June
30, 1997 compared with a ratio of 50.3% at September 30, 1996. The lower ratio
principally reflects a $7.3 million decrease in bank loans and an increase in
common stockholder's equity.

CASH FLOWS

Cash and cash equivalents totaled $5.3 million at June 30, 1997 compared with
$3.1 million at September 30, 1996. 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 typically at their lowest levels during the first and fourth fiscal
quarters. Accordingly, cash flows from operations during the nine months ended
June 30, 1997 are not necessarily indicative of cash flows to be expected for a
full year.

OPERATING ACTIVITIES. Cash provided by operating activities was $62.3 million
during the nine months ended June 30, 1997 compared with $52.1 million in the
comparable prior-year period. Cash flow from operations before changes in
operating working capital totaled $56.9 million during the nine months ended
June 30, 1997 compared with $63.9 million in the prior-year period reflecting in
large part the effects of higher noncash deferred tax benefits in the 1997
nine-month period. Changes in operating working capital during the nine months
ended June 30, 1997 generated $5.4 million of operating cash flow principally
from $13.0 million in purchased gas and power cost overcollections, $11.7
million from a decrease in inventories and $6.5 million from changes in other
current assets and liabilities. These decreases were partially offset by a $15.7
million increase in accounts receivable and an $8.5 million decrease in accounts
payable. In the nine months ended June 30, 1996, changes in operating working
capital required $11.8 million of operating cash flow.

INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $28.3 million in the nine months ended June 30, 1997 compared with $25.0
million in the same period in 1996. The increase reflects greater Gas Utility
capital expenditures.

FINANCING ACTIVITIES. Cash flows from financing activities for the nine months
ended June 30, 1997 and 1996 include dividends to preferred stockholders of $2.1
million. Dividends during the nine months ended June 30, 1997 and 1996 also
include $24.1 million and $11.6 million, respectively, of dividend payments to
UGI.

                                     - 15 -
<PAGE>   18
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Net repayments under UGI Utilities' revolving credit agreements totaled $7.3
million in the 1997 nine-month period compared with $32.0 million in repayments
in the prior-year period. During both the 1997 and 1996 nine-month periods, the
Company issued $20 million of notes under its Medium-Term Note program. During
the nine months ended June 30, 1997, UGI Utilities repaid $8.4 million of its
7.85% Series First Mortgage Bonds and $10.0 million of its 8.70% Notes. During
the prior-year period, UGI Utilities redeemed $45.9 million face value of its 9%
First Mortgage Bonds principally from existing cash balances.

ELECTRICITY GENERATION CUSTOMER CHOICE AND COMPETITION ACT

On January 1, 1997, the Electricity Generation Customer Choice and Competition
Act (Customer Choice Act) became effective. The Customer Choice Act permits all
Pennsylvania retail electric customers to choose their electric generation
supplier over a three-year phase-in period commencing January 1, 1999. The
Customer Choice Act requires all electric utilities to file restructuring plans
with the PUC which, among other things, include unbundled prices for electric
generation, transmission and distribution and a competitive transition charge
(CTC) for the recovery of "stranded costs" which would be paid by all customers
receiving transmission and distribution service. "Stranded costs" generally are
electric generation-related costs that traditionally would be recoverable in a
regulated environment but may not be recoverable in a competitive electric
generation market. Under the Customer Choice Act, Electric Utility's rates for
transmission and distribution services provided through June 30, 2001 are capped
at levels in effect on January 1, 1997. In addition, Electric Utility generally
may not increase the generation component of prices as long as stranded costs
are being recovered through the CTC. Electric Utility will continue to be the
only regulated electric utility having the right, granted by the PUC or by law,
to transmit and distribute electric energy in its service territory.

On August 7, 1997, Electric Utility filed its restructuring plan with the PUC.
The restructuring plan includes a claim for the recovery of $34.4 million for
stranded costs during the period January 1, 1999 through December 31, 2002. The
claim is primarily for the recovery of: (1) plant investments in excess of
market and electric generation facility retirement costs; (2) potential costs
associated with existing power purchase agreements; and (3) regulatory assets
(principally income taxes) recoverable from ratepayers under current regulatory
practice. The PUC has nine months to take action on Electric Utility's filing.

Given the changing regulatory environment in the electric utility industry, the
Company continues to evaluate its ability to apply the provisions of SFAS No. 71
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71) as it
relates to its electric generation operations. SFAS 71 permits the recording of
costs (regulatory assets) that have been, or are expected to be, allowed in the
ratesetting process in a period different from the period in which such costs
would be charged to expense by an unregulated enterprise. The Company believes
its electric generation assets and related regulatory assets continue to satisfy
the criteria of SFAS 71. If and when such electric generation assets no longer
meet the criteria of SFAS 71, any related 

                                     - 16 -
<PAGE>   19
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


regulatory assets would be written-off unless the PUC authorizes the recovery of
such costs through the CTC and any generation-related long-lived fixed and
intangible assets would be evaluated for impairment under the provisions of SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of."

Based upon an evaluation of the various factors and conditions affecting future
cost recovery , the Company does not expect the Customer Choice Act to have a
material adverse effect on its financial condition or results of operations.

On March 27, 1997, proposed customer choice legislation was introduced in the
Pennsylvania General Assembly that would, among other things, extend the
availability of gas transportation service to residential and small commercial
customers of local gas distribution companies. It would permit all customers of
natural gas distribution utilities to transport their natural gas supplies
through the distribution systems of Pennsylvania gas utilities by April 1, 1999
and would also require Pennsylvania gas utilities to exit the merchant function
of selling natural gas. The Company will continue to monitor developments with
regard to the proposed legislation.


                            PART II OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

FOSTER WHEELER PENN RESOURCES, INC. V. UGI UTILITIES, INC. CIVIL ACTION NO.
97CV4592

         The Company has been informed that on July 14, 1997, Foster Wheeler
Penn Resources, Inc. filed suit against UGI Utilities, Inc. in United States
District Court for the Eastern District of Pennsylvania alleging, among other
things, that UGI Utilities breached an Agreement for the Sale and Purchase of
Net Electrical Energy under which UGI Utilities had agreed to purchase
electricity from a generating facility yet to be built by Foster Wheeler. In its
suit Foster Wheeler seeks, among other things, a declaration that the Sale and
Purchase Agreement remains in effect or in the alternative that Foster Wheeler
be awarded damages in excess of $20 million. Management believes that it has
defenses to Foster Wheeler's claims and will file an appropriate response.

                                     - 17 -
<PAGE>   20
                      UGI UTILITIES, INC. AND SUBSIDIARIES



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      List of Exhibits:

                  10       Amendment No. 1 to UGI Corporation 1992 Non-Qualified
                           Stock Option Plan

                  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

                  27       Financial Data Schedule

         (b)      The Company did not file any Current Reports on Form 8-K
                  during the fiscal quarter ended June 30, 1997.

                                     - 18 -
<PAGE>   21
                                   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 13, 1997                        By:  J. C. Barney
----------------------                        ------------------------------
                                              J. C. Barney, Vice President -
                                              Finance and Accounting
                                              (Principal Financial Officer)

                                     - 19 -
<PAGE>   22
                      UGI UTILITIES, INC. AND SUBSIDIARIES

                                  EXHIBIT INDEX





10       Amendment No. 1 to UGI Corporation 1992 Non-Qualified Stock Option Plan


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


27       Financial Data Schedule