<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                -----------------

                                    FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998

                         Commission file number 1-13692
                       Commission file number 33-92734-01

                             AMERIGAS PARTNERS, L.P.
                             AMERIGAS FINANCE CORP.
           (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)

            Delaware                                23-2787918
            Delaware                                23-2800532
 (STATE OR OTHER JURISDICTION OF         (I.R.S. EMPLOYER IDENTIFICATION NO.)
  INCORPORATION OR ORGANIZATION)

                 460 North Gulph Road, King of Prussia, PA 19406
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (610) 337-7000
              (REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                               NAME OF EACH EXCHANGE
          TITLE OF CLASS                        ON WHICH REGISTERED

    Common Units representing             New York Stock Exchange, Inc.
    limited partner interests

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:    None

INDICATE BY CHECK MARK WHETHER EACH REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X . NO .

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

The aggregate market value of AmeriGas Partners, L.P. Common Units held by
nonaffiliates of AmeriGas Partners, L.P. on December 1, 1998 was approximately
$413,616,768. At December 1, 1998 there were outstanding 22,105,993 Common Units
and 19,782,146 Subordinated Units, each representing limited partner interests.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the AmeriGas Partners, L.P.
Annual Report for the year ended September 30, 1998 are incorporated by
reference in Part II of this Form 10-K.
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                            <C>                                                                 <C>
PART I                         BUSINESS                                                            PAGE

        Items 1 and 2          Business and Properties................................................. 1

        Item 3                 Legal Proceedings.......................................................11

        Item 4                 Submission of Matters to a Vote of
                               Security Holders........................................................12

PART II                        SECURITIES AND FINANCIAL INFORMATION

        Item 5                 Market for Registrant's Common Equity
                               and Related Security Holder Matters.....................................12

        Item 6                 Selected Financial Data.................................................14

        Item 7                 Management's Discussion and Analysis of Financial
                               Condition and Results of Operations.....................................17

        Item 7A                Quantitative and Qualitative Disclosures About
                               Market Risk.............................................................28

        Item 8                 Financial Statements and Supplementary
                               Data....................................................................28

        Item 9                 Changes in and Disagreements with Accountants
                               on Accounting and Financial Disclosure..................................28

PART III                       MANAGEMENT AND SECURITY HOLDERS

        Item 10                Directors and Executive Officers of the
                               General Partner.........................................................28

        Item 11                Executive Compensation..................................................33

        Item 12                Security Ownership of Certain Beneficial
                               Owners and Management...................................................41

        Item 13                Certain Relationships and Related
                               Transactions............................................................45

PART IV                        ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS

        Item 14                Exhibits, Financial Statement Schedules
                               and Reports on Form 8-K.................................................46

                               Signatures..............................................................51

                               Index to Financial Statements
                               and Financial Statement Schedules......................................F-2
</TABLE>

                                      (i)
<PAGE>   3
PART I:  BUSINESS

ITEMS 1 AND 2.  BUSINESS AND PROPERTIES

GENERAL

         AmeriGas Partners, L.P. ("AmeriGas Partners") is a publicly traded
Delaware limited partnership formed on November 2, 1994. We are the largest
retail propane distributor in the United States based on fiscal year 1998 retail
sales volume of 785 million gallons. We serve approximately 956,000 residential,
commercial, industrial, agricultural and motor fuel customers from approximately
600 district locations in 46 states. Our operations are located primarily in the
Northeast, Southeast, Great Lakes and West Coast regions of the United States.

         We conduct our business principally through our subsidiary, AmeriGas
Propane, L.P. (the "Operating Partnership"), a Delaware limited partnership. On
April 19, 1995, the Operating Partnership acquired the propane distribution
businesses and assets of AmeriGas Propane, Inc., AmeriGas Propane-2, Inc.
(collectively, "AGP") and Petrolane Incorporated ("Petrolane") (collectively,
the "Predecessors"). These acquisitions took place concurrently with the initial
public offering of our common units. The common units, which represent limited
partner interests, are traded on the New York Stock Exchange under the symbol
"APU." Our executive offices are located at 460 North Gulph Road, King of
Prussia, Pennsylvania 19406, and our telephone number is (610) 337-7000. In this
report, the terms "Partnership" and AmeriGas Partners, as well as the terms
"our," "we," and "its," are used sometimes as abbreviated references to AmeriGas
Partners, L.P., itself or AmeriGas Partners, L.P. and its consolidated
subsidiaries, including the Operating Partnership.

         AmeriGas Propane, Inc. is our general partner (the "General Partner").
The General Partner is a wholly owned subsidiary of UGI Corporation ("UGI"), a
public company listed on the New York and Philadelphia Stock Exchanges. Through
various subsidiaries, UGI has been in the propane distribution business for
nearly 40 years. The General Partner and its subsidiary Petrolane own an
aggregate 56.6% limited partner interest in the Partnership. In addition, the
General Partner owns an aggregate 2% general partner interest. The General
Partner is responsible for managing our operations.

         Our subsidiary, AmeriGas Finance Corp. ("AmeriGas Finance"), a Delaware
corporation, was formed on March 13, 1995. It serves as co-obligor for certain
of our senior notes. AmeriGas Finance has nominal assets and does not conduct
any operations. This report contains no discussion of the results of operations,
liquidity or capital resources of AmeriGas Finance. Its executive offices are
located at 460 North Gulph Road, King of Prussia, Pennsylvania 19406, and its
telephone number is (610) 337-7000.

                                      -1-
<PAGE>   4
BUSINESS STRATEGY

         Our strategy is to expand operations and increase market share through
the acquisition of local and regional propane distributors and through internal
growth. Our principal focus will be on acquisitions, because the demand for
propane is expected to remain relatively constant for the foreseeable future,
with year-to-year industry volumes being affected primarily by weather patterns.
Internal growth will include the opening of new district locations known as
"scratch-starts" and expansion of our PPX Prefilled Propane Xchange(TM)
program. Scratch starts are less costly than acquisitions of existing
businesses; however, they typically do not reach target sales and profitability
levels for a number of years. We believe opportunities also exist to grow our
business internally through marketing programs designed to increase consumption
among existing users and through expansion of our customer base as a result of
commercial growth, new construction and propane conversions from electricity or
fuel oil.

         In fiscal year 1998, we acquired a total of ten propane operations with
aggregate annual retail sales of approximately 8.9 million gallons. We also
opened ten scratch-starts and added more than 4,000 PPX(TM) locations. The
increase in the number of publicly traded master limited partnerships engaged in
the propane distribution business has intensified acquisition and expansion
activity in the industry. Although we believe there are numerous potential
acquisition candidates in the industry, there can be no assurance that we will
find attractive candidates in the future, or that we will be able to acquire
such candidates on economically acceptable terms.


HISTORY OF THE PARTNERSHIP'S OPERATIONS

         AmeriGas, Inc. ("AmeriGas"), a wholly owned subsidiary of UGI, began
propane distribution operations in 1959. In the ten fiscal years preceding the
Partnership's formation, AGP, a subsidiary of AmeriGas, experienced significant
growth through the acquisition of over 30 propane companies, including Cal Gas
Corporation ("Cal Gas"), which was a major national propane distributor. In
July, 1993, AmeriGas purchased a significant equity interest in Petrolane. At
the time they were acquired, Cal Gas and Petrolane had annual revenues from
propane sales that were approximately three times and one and one-half times,
respectively, those of AGP.


GENERAL INDUSTRY INFORMATION

         Propane is separated from crude oil during the refining process and
also extracted from natural gas or oil wellhead gas at processing plants.
Propane is normally transported and stored in a liquid state under moderate
pressure or refrigeration for economy and ease of handling in shipping and
distribution. When the pressure is released or the temperature is increased, it
is usable as a flammable gas. Propane is colorless and odorless; an odorant is
added to allow its detection. Propane is clean burning, producing negligible
amounts of pollutants when properly consumed.

                                      -2-
<PAGE>   5
         The primary customers for propane are residential, commercial,
agricultural, engine fuel and industrial users to whom natural gas is not
readily available. Propane is typically more expensive than natural gas,
competitive with fuel oil when operating efficiencies are taken into account
and, in most areas, cheaper than electricity on an equivalent energy basis.
Several states have adopted or are considering proposals that would
substantially deregulate the electric utility industry and thereby permit retail
electric customers to choose their electric supplier. While proponents of
electric utility deregulation believe that competition will ultimately reduce
the cost of electricity, we are unable to predict the extent to which the price
of electricity may drop. Therefore, we cannot predict the ultimate impact that
electric utility deregulation may have on propane's existing competitive price
advantage over electricity.


PRODUCTS, SERVICES AND MARKETING

         As of September 30, 1998, the Partnership distributed propane to
approximately 956,000 customers from approximately 600 district locations in 46
states. The Partnership's operations are located primarily in the Northeast,
Southeast, Great Lakes and West Coast regions of the United States. The
Partnership also sells, installs and services propane appliances, including
heating systems. In certain markets, the Partnership also installs and services
propane fuel systems for motor vehicles. Typically, district locations are found
in suburban and rural areas where natural gas is not available. Districts
generally consist of an office, appliance showroom, warehouse and service
facilities, with one or more 18,000 to 30,000 gallon storage tanks on the
premises. As part of its overall transportation and distribution infrastructure,
the Partnership operates as an interstate carrier in 48 states throughout the
United States. It is also licensed as a carrier in Canada.

         The Partnership sells propane primarily to five markets: residential,
commercial/industrial, motor fuel, agricultural and wholesale. Approximately 79%
of the Partnership's 1998 fiscal year sales (based on gallons sold) were to
retail accounts (32% to residential customers, 29% to industrial/commercial
customers, 11% to motor fuel customers and 7% to agricultural customers), and
approximately 21% were to wholesale customers. Sales to residential customers in
fiscal 1998 represented approximately 40% of retail gallons sold and 51% of the
Partnership's total propane margin. No single customer accounts for 1% or more
of the Partnership's consolidated revenues.

         In the residential market, which includes both conventional and mobile
homes, propane is used primarily for home heating, water heating and cooking
purposes. Commercial users, which include motels, hotels, restaurants and retail
stores, generally use propane for the same purposes as residential customers. As
a motor fuel, propane is burned in internal combustion engines that power
over-the-road vehicles, forklifts and stationary engines. Industrial customers
use propane to fire furnaces, as a cutting gas and in other process
applications. Other industrial customers are large-scale heating accounts and
local gas utility customers who use propane as a supplemental fuel to meet peak
load deliverability requirements. Agricultural uses include tobacco curing and
crop drying.

                                       -3-
<PAGE>   6
         Retail deliveries of propane are usually made to customers by means of
bobtail and rack trucks. Propane is pumped from the bobtail truck, which
generally holds 2,400 to 3,000 gallons of propane, into a stationary storage
tank on the customer's premises. The Partnership owns most of these storage
tanks and leases them to its customers. The capacity of these tanks ranges from
approximately 100 gallons to approximately 1,200 gallons.

         The Partnership also delivers propane to retail customers in portable
cylinders with capacities of 5 to 30 gallons. Some of these deliveries are made
to the customer's location, where empty cylinders are either picked up for
replenishment or filled in place. During fiscal year 1998, the Partnership
expanded its prefilled cylinder exchange program, called PPX Prefilled Propane
Xchange(TM). The PPX(TM) program enables customers to exchange their empty
20-pound propane cylinders at various retail locations. PPX(TM) is available at
over 5,000 retail locations throughout the country. In its wholesale operations,
the Partnership principally sells propane to large industrial end-users and
other propane distributors.


PROPANE SUPPLY AND STORAGE

         Supplies of propane from the Partnership's sources historically have
been readily available. During the year ended September 30, 1998, the
Partnership purchased over 70% of its propane from 10 suppliers, including the
Shell Oil companies (approximately 18%), Dynergy (approximately 17%), and the
Amoco companies (approximately 15%). Management believes that if supplies from
these sources were interrupted, the Partnership would be able to secure adequate
propane supplies from other sources without a material disruption of its
operations; however, the cost of procuring replacement supplies might be
materially higher and, at least on a short-term basis, margins could be
affected. Aside from Shell, Dynergy and Amoco, no single supplier provided more
than 10% of the Partnership's total propane supply in fiscal year 1998. In
certain market areas, however, some suppliers provide 70% to 80% of the
Partnership's requirements. Disruptions in supply in these areas could also have
an adverse impact on the Partnership's margins.

         The Partnership has over 200 sources of supply, and it also makes
purchases on the spot market. The Partnership purchases its propane supplies
from domestic and international suppliers. Approximately 70% of propane
purchases by the Partnership in the 1998 fiscal year were on a contractual basis
under one-year agreements subject to annual renewal. More than half of the
supply contracts provide for pricing based upon posted prices at the time of
delivery or the current prices established at major storage points such as Mont
Belvieu, Texas, or Conway, Kansas. In addition, some agreements provide maximum
and minimum seasonal purchase volume guidelines. The percentage of contract
purchases, and the amount of supply contracted for at fixed prices, will vary
from year to year as determined by the General Partner. The Partnership uses a
number of interstate pipelines, as well as railroad tank cars, delivery trucks
and barges to transport propane from suppliers to storage and distribution
facilities. The Partnership stores propane at facilities in Arizona, Michigan,
Mississippi, Rhode Island, Utah and several other locations.

                                      -4-
<PAGE>   7
         Because the Partnership's profitability is sensitive to changes in
wholesale propane costs, the Partnership generally seeks to pass on increases in
the cost of propane to customers. There is no assurance, however, that the
Partnership will always be able to pass on product cost increases fully,
particularly when product costs rise rapidly. In fiscal year 1997, when the Mont
Belvieu price per gallon of propane more than doubled between April 1, 1996
($.34625) and December 16, 1996 ($.75), the Partnership was able to maintain its
profitability through the use of risk management techniques designed to control
product costs, and by passing product cost increases through to end users.

         The Partnership expects to be able to secure adequate product supply
for its customers during fiscal year 1999. Periods of severe cold weather,
supply interruptions, or other unforeseen events, however, could result in rapid
increases in product cost. The General Partner has adopted supply acquisition
and product price risk management practices to reduce the effect of price
volatility on product costs. Current strategies include the use of summer
storage, prepaid contracts for future product delivery, and derivative commodity
instruments such as options and propane price swaps. See "Management's
Discussion and Analysis of Results of Operations-Market Risk Disclosures."

                                      -5-
<PAGE>   8
         The following graph shows the average prices of propane on the propane
spot market during the last five fiscal years at Mont Belvieu, Texas and Conway,
Kansas, two major storage areas.

                       AVERAGE PROPANE SPOT MARKET PRICES
<TABLE>
<CAPTION>
                                   <S>            <S>
                                   Mont Belvieu    Conway
<C>                      <C>         <C>          <C>
1993 October Avg.        Oct-93      29.566       33.821
1993 November Avg.       Nov-93      27.763       32.138
1993 December Avg.       Dec-93      24.726       25.994
1994 January Avg.        Jan-94      26.613       25.708
1994 February Avg.       Feb-94      29.349       27.724
1994 March Avg.          Mar-94      28.467       26.875
1994 April Avg.          Apr-94      28.819       28.788
1994 May Avg.            May-94      29.619       28.732      
1994 June Avg.           Jun-94      28.790       27.943
1994 July Avg.           Jul-94      29.244       27.981
1994 August Avg.         Aug-94      30.060       29.462
1994 September Avg.      Sep-94      30.113       29.833
1994 October Avg.        Oct-94      32.595       29.530
1994 November Avg.       Nov-94      34.606       30.694
1994 December Avg.       Dec-94      33.435       30.161
1995 January Avg.        Jan-95      32.834       29.551
1995 February Avg.       Feb-95      31.869       28.925
1995 March Avg.          Mar-95      32.837       30.011
1995 April Avg.          Apr-95      32.313       30.041
1995 May Avg.            May-95      32.753       31.229
1995 June Avg.           Jun-95      31.842       31.496
1995 July Avg.           Jul-95      30.811       31.383
1995 August Avg.         Aug-95      31.343       33.172
1995 September Avg.      Sep-95      31.361       32.477
1995 October Avg.        Oct-95      30.946       32.778
1995 November Avg.       Nov-95      30.953       32.741
1995 December Avg.       Dec-95      35.322       38.172
1996 January Avg.        Jan-96      36.000       36.242
1996 February Avg.       Feb-96      40.856       37.769
1996 March Avg.          Mar-96      37.229       36.012
1996 April Avg.          Apr-96      35.574       34.107
1996 May Avg.            May-96      34.923       34.477
1996 June Avg.           Jun-96      34.925       36.353
1996 July Avg.           Jul-96      35.634       37.268
1996 August Avg.         Aug-96      38.440       37.977
1996 September Avg.      Sep-96      47.016       44.784
1996 October Avg.        Oct-96      51.573       51.527
1996 November Avg.       Nov-96      58.049       63.411
1996 December Avg.       Dec-96      61.045       84.292
1997 January Avg.        Jan-97      47.455       63.392
1997 February Avg.       Feb-97      38.711       39.020
1997 March Avg.          Mar-97      38.500       37.256
1997 April Avg.          Apr-97      34.875       35.261
1997 May Avg.            May-97      35.310       36.476
1997 June Avg.           Jun-97      34.429       35.863
1997 July Avg.           Jul-97      34.906       34.628
1997 August Avg.         Aug-97      37.027       36.527
1997 September Avg.      Sep-97      38.679       37.952
1997 October Avg.        Oct-97      39.826       37.321
1997 November Avg.       Nov-97      35.948       35.004      
1997 December Avg.       Dec-97      33.571       31.364
1998 January Avg.        Jan-98      30.066       28.206
1998 February Avg.       Feb-98      29.786       28.324
1998 March Avg.          Mar-98      27.389       27.838
1998 April Avg.          Apr-98      29.057       29.470
1998 May Avg.            May-98      27.419       27.823
1998 June Avg.           Jun-98      24.421       24.841
1998 July Avg.           Jul-98      24.540       24.548
1998 August Avg.         Aug-98      24.116       23.866
1998 September Avg.      Sep-98      24.830       24.042
</TABLE>

COMPETITION

         Propane competes with other sources of energy, some of which are less
costly for equivalent energy value. Propane distributors compete for customers
against suppliers of electricity, fuel oil and natural gas, principally on the
basis of price, service, availability and portability. Electricity is a major
competitor of propane, but propane generally enjoys a competitive price
advantage over electricity for space heating, water heating and cooking. As
previously stated, we are unable to predict the ultimate impact that electric
utility deregulation may have on propane's current competitive price advantage.
Since the 1970s, many new homes have been built to use electrical heating
systems and appliances. Fuel oil is also a major competitor of propane and is
generally less expensive than propane. Operating efficiencies and other factors
such as air quality and environmental advantages, however, generally make
propane competitive with fuel oil as a heating source. Furnaces and appliances
that burn propane will not operate on fuel oil, and vice versa, and, therefore,
a conversion from one fuel to the other requires the installation of new
equipment. Propane serves as an alternative to natural gas in rural and suburban
areas where natural gas is unavailable or portability of product is required.
Natural gas is generally a less expensive source of energy than propane,
although in areas where natural gas is available, propane is used for certain
industrial and commercial applications and as a standby fuel during
interruptions in natural gas service. The gradual expansion of the nation's
natural gas distribution systems has resulted in the availability of natural gas
in some areas that previously

                                      -6-
<PAGE>   9
depended upon propane. However, natural gas pipelines are not present in many
regions of the country where propane is sold for heating and cooking purposes.

         The domestic propane retail distribution business is highly
competitive. The Partnership competes in this business with other large propane
marketers, including other full-service marketers, and thousands of small
independent operators. In recent years, some rural electric cooperatives and
fuel oil distributors have expanded their businesses to include propane
distribution and the Partnership competes with them as well. Based on the most
recent annual survey by the American Petroleum Institute, the 1996 domestic
retail market for propane (annual sales for other than chemical uses) was
approximately 10.4 billion gallons and, based on LP-GAS magazine rankings, 1997
sales volume of the ten largest propane companies (including AmeriGas Partners)
represented approximately 40% of domestic sales. The Partnership's retail volume
of 785 million gallons in fiscal 1998 represented approximately 8% of the 1996
domestic retail market. The ability to compete effectively depends on supplying
customer service, maintaining competitive retail prices and controlling
operating expenses.

         Competition can intensify in response to a variety of factors,
including significantly warmer-than-normal weather, higher prices resulting from
extraordinary increases in the cost of propane, and recessionary economic
factors. The Partnership may experience greater than normal customer losses in
certain years when competitive conditions reflect any of these factors.

         In the motor fuel market, propane competes with gasoline and diesel
fuel. When gasoline prices are high relative to propane, propane competes
effectively. Wholesale propane distribution is a highly competitive, low margin
business. Propane sales to other retail distributors and large-volume,
direct-shipment industrial end users are price sensitive and frequently involve
a competitive bidding process.


PROPERTIES

         As of September 30, 1998, the Partnership owned approximately 76% of
its district locations. In addition, the Partnership subleases three one-million
barrel underground storage caverns in Arizona to store propane and butane for
itself and third parties. The Partnership also leases a 600,000 barrel
refrigerated, above-ground storage facility in California, which could be used
in connection with waterborne imports or exports of propane or butane. The
California facility, which the Partnership operates, is currently subleased to
several refiners for the storage of butane. In Rhode Island, the Partnership
leases storage with a 400,000 barrel capacity.

         The transportation of propane requires specialized equipment. The
trucks and railroad tank cars utilized for this purpose carry specialized steel
tanks that maintain the propane in a liquefied state. As of September 30, 1998,
the Partnership owned a fleet of approximately 150 transport trucks; it leased
approximately 350 transport trailers and 500 railroad tank cars. In addition,
the Partnership fleet included over 2,400 bobtail and rack trucks, and over
1,900 other delivery and service vehicles. Approximately 46% of these vehicles
were owned. The Partnership owned more than 800,000 stationary storage tanks
with typical capacities of 100 to 1,000 gallons

                                      -7-
<PAGE>   10
and over 1,000,000 portable propane cylinders with typical capacities of 5 to
100 gallons. The Partnership also owns more than 2,100 large volume tanks which
are used for its own storage requirements. Most of the Partnership's debt is
secured by liens and mortgages on the Partnership's real and personal property.


TRADE NAMES, TRADE AND SERVICE MARKS

         The Partnership markets propane principally under the "AmeriGas,"
"America's Propane Company" and "PPX Prefilled Propane Xchange(TM)" trade names
and related service marks. UGI owns, directly or indirectly, all the right,
title and interest in the "AmeriGas" and "Petrolane" trade names and related
trade and service marks. The General Partner owns all right, title and interest
in the "America's Propane Company" trade name and related service mark. The
Partnership has an exclusive (except for use by AmeriGas, Inc. and the General
Partner), royalty-free license to use these names and trade and service marks.
UGI, Petrolane Incorporated and the General Partner each has the option to
terminate its respective license agreement on 12 months prior notice
(immediately in the case of the General Partner), without penalty, if the
General Partner is removed as general partner of the Partnership other than for
cause. If the General Partner ceases to serve as the general partner of the
Partnership for cause, Petrolane and the General Partner each has the option to
terminate its license agreement upon payment of a fee equal to the fair market
value of the licensed trade names. UGI has a similar termination option,
however, UGI must provide 12 months prior notice in addition to paying the fee.

         The General Partner has discontinued widespread use of the "Petrolane"
trade name and conducts Partnership operations almost exclusively under the
"AmeriGas," "America's Propane Company" and "PPX Prefilled Propane Xchange(TM)"
trade names and related service marks. The General Partner has filed
applications with the United States Patent and Trademark Office to register the
mark "PPX Prefilled Propane Xchange(TM)" for use in connection with the
Partnership's cylinder exchange business.


SEASONALITY

         Because many customers use propane for heating purposes, the
Partnership's retail sales volume is seasonal, with approximately 57% of the
Partnership's fiscal year 1998 retail sales volume and approximately 82% of its
earnings before interest expense, income taxes, depreciation and amortization
occurring during the five-month peak heating season from November through March.
As a result of this seasonality, sales are concentrated in the Partnership's
first and second fiscal quarters (October 1 through March 31). Cash receipts are
greatest during the second and third fiscal quarters when customers pay for
propane purchased during the winter heating season.

         Sales volume for the Partnership traditionally fluctuates from
year-to-year in response to variations in weather, prices, competition, customer
mix and other factors, such as conservation efforts and general economic
conditions. For historical information on national weather statistics, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                                      -8-
<PAGE>   11
GOVERNMENT REGULATION

         The Partnership is subject to various federal, state and local
environmental, safety and transportation laws and regulations governing the
storage, distribution and transportation of propane. These laws include, among
others, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Air
Act, the Occupational Safety and Health Act, the Emergency Planning and
Community Right to Know Act, the Clean Water Act and comparable state statutes.
CERCLA, also known as the "Superfund" law, imposes joint and several liability
on certain classes of persons considered to have contributed to the release or
threatened release of a "hazardous substance" into the environment without
regard to fault or the legality of the original conduct. Propane is not a
hazardous substance within the meaning of federal and state environmental laws.
However, the Partnership owns and operates real property where such hazardous
substances may exist. See Note 2 to the Partnership's Consolidated Financial
Statements.

         All states in which the Partnership operates have adopted fire safety
codes that regulate the storage and distribution of propane. In some states
these laws are administered by state agencies, and in others they are
administered on a municipal level. The Partnership conducts training programs to
help ensure that its operations are in compliance with applicable governmental
regulations. The Partnership maintains various permits under environmental laws
that are necessary to operate certain of its facilities, some of which may be
material to the operations of the Partnership. Management believes that the
procedures currently in effect at all of its facilities for the handling,
storage and distribution of propane are consistent with industry standards and
are in compliance in all material respects with applicable environmental, health
and safety laws.

         With respect to the transportation of propane by truck, the Partnership
is subject to regulations promulgated under the Federal Motor Carrier Safety
Act. These regulations cover the transportation of hazardous materials and are
administered by the United States Department of Transportation ("DOT"). With
respect to general operations, National Fire Protection Association Pamphlets
No. 54 and No. 58, which establish a set of rules and procedures governing the
safe handling of propane, or comparable regulations, have been adopted as the
industry standard in a majority of the states in which the Partnership operates.

         The Natural Gas Safety Act of 1968 required the DOT to develop and
enforce minimum safety regulations for the transportation of gases by pipeline.
The DOT's pipeline safety code applies to, among other things, a propane gas
system which supplies 10 or more customers from a single source and a propane
gas system, any portion of which is located in a public place. The code requires
operators of all gas systems to provide training and written instructions for
employees, establish written procedures to minimize the hazards resulting from
gas pipeline emergencies, and keep records of inspections and testing.

         On December 13, 1996, the Research and Special Programs Administration
("RSPA"), a division of the DOT, issued an advisory notice that alerted persons
involved in the design,

                                      -9-
<PAGE>   12
manufacture, assembly, maintenance or transportation of hazardous materials in
certain cargo tank motor vehicles, including the type of vehicles used by the
Partnership, of a problem with emergency discharge systems. On February 19,
1997, RSPA issued an emergency interim final rule indicating that the emergency
discharge control systems on the affected vehicles may not function as required
by federal regulations under all operating conditions. The interim final rule
specified the conditions under which the affected vehicles could continue to be
operated. On August 18, 1997, after conducting a series of public hearings and
workshops, RSPA issued an interim final rule which sets forth the requirements
that must be satisfied to continue operating such vehicles. The interim final
rule requires, among other things, that in the event of an unintentional release
of product, the person attending the unloading operation must be able to
promptly activate the internal self-closing stop valve on the motor vehicle and
shut down all power equipment. The interim final rule provides alternative ways
to comply with this requirement and permits the use of radio-controlled systems
that are capable of stopping the transfer of propane by use of a transmitter
carried by a qualified person who also satisfies the attendance requirements
contained in the regulations. The Partnership is in the process of installing a
radio-controlled emergency shut-down system on its bobtail vehicles.

         As a result of a civil action filed by five major multi-state propane
marketers (not including the Partnership), the U.S. District Court for the
Western District of Missouri issued a preliminary injunction against the DOT,
staying and postponing certain provisions of the interim final rule. In
addition, a parallel civil action brought by the propane industry's trade
association, the National Propane Gas Association ("NPGA"), is pending in Texas.

         In June 1998, RSPA responded to these actions by beginning a Negotiated
Rulemaking Proceeding under the Negotiated Rulemaking Act of 1990. In such a
negotiated rulemaking proceeding, representatives of interests that will be
affected by a regulation meet to discuss the safety issues and to identify
potential solutions. In this particular proceeding, the group must reach
unanimity on the proposed solution and prepare a notice of proposed rulemaking
for publication by the agency in early 1999.

         The goal of the proceeding is to develop a regulatory framework
relating to the safe unloading of propane from cargo tank motor vehicles. The
General Partner is participating in the process and believes that the
radio-controlled shut-off systems which it is installing on its bobtail trucks
will be part of the final solution to the safety issues presented in the civil
actions and the Negotiated Rulemaking with respect to these delivery vehicles.
As to the Partnership's large vehicles known as transports, the General Partner
is waiting for DOT to approve a final rule relating to emergency shutdown
requirements. In the interim, the General Partner plans to investigate and test
several different transport systems.


EMPLOYEES

         The Partnership does not directly employ any persons responsible for
managing or operating the Partnership. The General Partner provides these
services and is reimbursed for its direct and indirect costs and expenses,
including all compensation and benefit costs. At

                                      -10-
<PAGE>   13
September 30, 1998, the General Partner had 5,107 employees, including 287
temporary and part-time employees. UGI also performs certain financial and
administrative services for the General Partner on behalf of the Partnership and
is reimbursed by the Partnership for its direct and indirect costs and expenses.




ITEM 3.  LEGAL PROCEEDINGS

         There are no material legal proceedings pending involving the
Partnership, any of its subsidiaries or any of their properties, and no such
proceedings are known to be contemplated by governmental authorities other than
claims arising in the ordinary course of the Partnership's business.

                                      -11-
<PAGE>   14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of security holders during the last
fiscal quarter of the 1998 fiscal year.


PART II: SECURITIES AND FINANCIAL INFORMATION


ITEM 5.  MARKET FOR REGISTRANT'S COMMON UNITS
         AND RELATED SECURITY HOLDER MATTERS

         Each common unit ("Common Unit") represents a limited partner interest.
The Common Units are listed on the New York Stock Exchange, which is the
principal trading market for such securities, under the symbol "APU." The
following table sets forth, for the periods indicated, the high and low sale
prices per Common Unit, as reported on the New York Stock Exchange Composite
Transactions tape, and the amount of cash distributions paid per Common Unit.


<TABLE>
<CAPTION>
                                                             PRICE RANGE                         CASH
1998 FISCAL YEAR                                         HIGH              LOW                DISTRIBUTION
<S>                                                    <C>              <C>                   <C>
Fourth Quarter                                         $25.0625         $21.0000                 $0.55
Third Quarter                                           26.4375          22.7500                  0.55
Second Quarter                                          27.0000          24.3750                  0.55
First Quarter                                           27.2500          23.3750                  0.55


                                                             PRICE RANGE                         CASH
<CAPTION>
1997 FISCAL YEAR                                         HIGH              LOW                DISTRIBUTION

Fourth Quarter                                         $27.2500         $24.1250                 $0.55
Third Quarter                                           24.8750          22.2500                  0.55
Second Quarter                                          25.0000          22.2500                  0.55
First Quarter                                           25.1250          20.7500                  0.55
</TABLE>

------------------------------------------------------------------------------

         As of December 1, 1998, there were 1,195 record holders of the
Partnership's Common Units. There is no established public trading market for
the Partnership's subordinated units, representing limited partner interests
("Subordinated Units"). The Partnership makes quarterly distributions to its
partners in an aggregate amount equal to its Available Cash, as defined in the
Amended and Restated Agreement of Limited Partnership of AmeriGas Partners,
L.P., which is filed as an exhibit to this report. Available Cash generally
means, with respect to any fiscal quarter of the Partnership, all cash on hand
at the end of such quarter, plus all additional cash on

                                      -12-
<PAGE>   15
hand as of the date of determination resulting from borrowings subsequent to the
end of such quarter, less the amount of cash reserves established by the General
Partner in its reasonable discretion for future cash requirements. Certain
reserves are maintained to provide for the payment of principal and interest
under the terms of the Partnership's debt agreements and other reserves may be
maintained to provide for the proper conduct of the Partnership's business, and
to provide funds for distribution during the next four fiscal quarters. The
information concerning restrictions on distributions required by Item 5 of this
report is incorporated herein by reference to Notes 3 and 4 to the Partnership's
Consolidated Financial Statements which are incorporated herein by reference.
Distributions of Available Cash to the holders of Subordinated Units are subject
to the prior rights of holders of the Common Units to receive the Minimum
Quarterly Distribution ("MQD") for each quarter during the subordination period,
and to receive any arrearages in the distribution of the MQD on the Common Units
for prior quarters during the subordination period. The subordination period
will not end earlier than April 1, 2000. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

                                      -13-
<PAGE>   16
ITEM 6.  SELECTED FINANCIAL DATA


      The following tables provide selected financial data for AmeriGas Partners
and the Predecessors.

                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
                     (Thousands of dollars, except per unit)

<TABLE>
<CAPTION>
                                                                     Year Ended                              April 19
                                                                     September 30,                              to
                                                   -------------------------------------------------      September 30,
                                                       1998               1997               1996              1995
                                                   -----------        -----------        -----------       -----------
<S>                                                <C>                <C>                <C>               <C>        
FOR  THE  PERIOD:
Income statement data:

      Revenues                                     $   914,378        $ 1,077,825        $ 1,013,225       $   269,500
      Operating income (loss)                           87,918            110,373             72,866           (20,088)
      Income (loss) before income taxes                 21,729             44,715             10,084           (47,400)
      Net income (loss)                                 21,402             43,980             10,238           (47,107)
      Limited partners' interest
         in net income (loss)                           21,188             43,540             10,136           (46,636)
      Income (loss) per limited partner unit               .51               1.04                .24             (1.12)
      Cash distributions declared                         2.20               2.20               2.20              .446

AT  PERIOD  END:
Balance sheet data:

      Current assets                               $   133,346        $   183,091        $   199,452       $   199,438
      Total assets                                   1,217,216          1,318,661          1,360,292         1,423,615
      Current liabilities (excluding debt)             144,229            146,449            157,182           126,270
      Total debt                                       718,994            718,728            707,453           657,726
      Minority interest                                  4,049              5,043              5,497             6,704
      Partners' capital                                299,875            397,537            442,236           560,959

OTHER DATA:

      EBITDA  (a)                                  $   151,143        $   172,377        $   134,497       $     6,497
      Capital expenditures                         $    31,577        $    24,470        $    21,908       $    11,282
      Retail propane gallons sold (millions)             785.3              807.4              855.4             243.6
      Degree days - % (warmer) colder
           than normal (b)                                (8.7)              (1.2)               1.7              N.M.
</TABLE>

      N.M. - Not Meaningful.

(a)   EBITDA (earnings before interest expense, income taxes, depreciation and
      amortization) should not be considered as an alternative to net income
      (loss) (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 generally accepted accounting principles.

(b)   Based upon national weather statistics provided by the National Oceanic
      and Atmospheric Administration (NOAA) for 335 airports in the continental
      U.S.

                                      -14-
<PAGE>   17
                   ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
                    AMERIGAS PROPANE / AGP - 2 (PREDECESSOR)

                             (Thousands of dollars)

<TABLE>
<CAPTION>
                                                     September 24,            Year
                                                        1994 to               Ended
                                                        April 19,          September 23,
                                                          1995                 1994
                                                       ---------             ---------
<S>                                                  <C>                   <C>      
INCOME STATEMENT DATA (FOR THE PERIOD):

     Revenues                                          $ 242,185             $ 367,120

     Operating income                                     32,382                46,433

     Income before extraordinary loss and

          accounting change                                2,922                 9,659

     Net income (loss)                                   (10,620)                9,659


BALANCE SHEET DATA (AT PERIOD END):

     Current assets                                        $ (x)             $ 103,825
     Total assets                                            (x)               510,981
     Current liabilities (excluding debt)                    (x)                63,292
     Total debt                                              (x)               210,272
     Common stockholders' equity                             (x)               186,599


OTHER DATA:

     EBITDA (a)                                        $  45,971             $  69,521
     Capital expenditures (b)                          $   5,605             $   8,948
     Retail propane gallons sold (millions)                225.0                 332.4
</TABLE>

     ----------------------------------------

(a)   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 generally
      accepted accounting principles.

(b)   Excludes capital lease obligations. 

(x)   Not applicable.

                                      -15-
<PAGE>   18
                   ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
                             PETROLANE (PREDECESSOR)
                    (Thousands of dollars, except per share)

<TABLE>
<CAPTION>
                                                                             September 24,            Year
                                                                                1994 to               Ended
                                                                                April 19,         September 23,
                                                                                  1995                 1994
                                                                               ---------            ---------
<S>                                                                          <C>                  <C>      
INCOME STATEMENT DATA (FOR THE PERIOD):

      Revenues                                                                 $ 372,088            $ 589,709

      Operating income                                                            41,469               56,887

      Income (loss) before extraordinary item and accounting change                1,390               (2,309)

      Net income (loss)                                                              485               (2,309)

      Income (loss) per common share                                                 .05                 (.22)

BALANCE SHEET DATA (AT PERIOD END):

      Current assets                                                                $(x)            $ 126,436
      Total assets                                                                   (x)              914,212
      Current liabilities (excluding debt)                                           (x)              114,518
      Total debt                                                                     (x)              625,883
      Common stockholders' equity                                                    (x)               93,113

OTHER DATA:

      EBITDA (a)                                                               $  68,867            $ 102,922
      Capital expenditures (b)                                                 $   7,291            $  22,077
      Retail propane gallons sold (millions)                                       319.4                496.9
</TABLE>

      ---------------------------------------------------


(a)   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 generally
      accepted accounting principles.

(b)   Excludes capital lease obligations. 

(x)   Not applicable.

                                      -16-
<PAGE>   19
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


ANALYSIS OF RESULTS OF OPERATIONS

The following analysis compares the Partnership's results of operations for (1)
the year ended September 30, 1998 ("Fiscal 1998") with the year ended September
30, 1997 ("Fiscal 1997") and (2) Fiscal 1997 with the year ended September 30,
1996 ("Fiscal 1996").

                                      -17-
<PAGE>   20
The following table provides gallon, weather and certain financial information
for the Partnership:


                             AmeriGas Partners, L.P.
                  (Millions, except per gallon and percentages)



<TABLE>
<CAPTION>
                                               Year Ended September 30,
                                        1998             1997            1996
                                        ----             ----            ----
<S>                                   <C>             <C>             <C>
Gallons sold:
       Retail                             785.3           807.4           855.4
       Wholesale                          205.1           218.6           309.7
                                     ----------      ----------      ----------
                                          990.4         1,026.0         1,165.1
                                     ==========      ==========      ==========

Revenues:
       Retail propane                $    746.1      $    868.2      $    786.9
       Wholesale propane                   88.5           126.0           137.9
       Other                               79.8            83.6            88.4
                                     ----------      ----------      ----------
                                     $    914.4      $  1,077.8      $  1,013.2
                                     ==========      ==========      ==========


Total propane margin (a)             $    423.9      $    430.2      $    398.6
Total margin (a)                     $    470.6      $    477.4      $    443.5
EBITDA (b)                           $    151.1      $    172.4      $    134.5
Operating income                     $     87.9      $    110.4      $     72.9
Degree days - % (warmer) colder
       than normal (c)                     (8.7)%          (1.2)%           1.7%
</TABLE>



(a)  Revenues less related cost of sales.
(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 service debt obligations) and is
     not a measure of performance or financial condition under generally
     accepted accounting principles.
(c)  Based upon national weather statistics provided by the National Oceanic and
     Atmospheric Administration (NOAA) for 335 airports in the continental U.S.

                                      -18-
<PAGE>   21
PARTNERSHIP RESULTS OF OPERATIONS

FISCAL 1998 COMPARED WITH FISCAL 1997

Retail and wholesale volumes sold in Fiscal 1998 were lower than in Fiscal 1997
due to warmer heating-season weather. Because many of our customers use propane
for heating purposes, our sales are affected by temperatures during the heating
season. Based upon degree day information obtained from the National Oceanic and
Atmospheric Administration (NOAA), weather in Fiscal 1998 was 8.7% warmer than
normal compared to weather that was 1.2% warmer than normal in Fiscal 1997. In
particular, the critical heating-season period of January and February was the
warmest in more than 100 years.

Total revenues from retail propane sales were $746.1 million in Fiscal 1998, a
decrease of $122.1 million from Fiscal 1997. The decrease includes $98.3 million
from a reduction in average selling prices and $23.8 million from the lower
retail volumes sold. Our wholesale propane revenues in Fiscal 1998 decreased
$37.5 million to $88.5 million due to lower Fiscal 1998 selling prices and lower
volumes. The lower average retail and wholesale selling prices were due to
significantly lower propane product costs. Other revenues were $79.8 million in
Fiscal 1998, a decrease of $3.8 million, due in large part to reduced terminal
and storage revenues and lower appliance sales revenues.

Total margin, representing total revenues less cost of sales, declined $6.8
million in Fiscal 1998 due to the lower retail volumes sold. The decline in
Fiscal 1998 total margin resulting from the lower sales was partially offset by
slightly higher average retail margin per gallon, or unit margin. The higher
average unit margin in Fiscal 1998 principally resulted from the lower propane
product costs.

The decrease in Fiscal 1998 operating income and EBITDA reflects (1) lower other
income, (2) a decrease in total propane margin, and (3) slightly higher
operating expenses. Other income, net, in Fiscal 1998 includes a $4.0 million
loss from two interest rate protection agreements. We entered into these
agreements to reduce interest rate exposure associated with an anticipated
refinancing of the Operating Partnership's Acquisition Facility in late Fiscal
1998. Like many companies planning debt refinancings, we postponed our
refinancing in response to volatility in the corporate debt markets during the
fourth quarter of fiscal 1998. The Partnership's strong cash flows in 1998, due
in large part to improved working capital management and lower propane product
costs, gave us the flexibility needed to delay the refinancing. When we
postponed the refinancing we recorded a loss on the interest rate protection
agreements because they no longer qualified for hedge accounting treatment. We
expect the corporate debt markets to stabilize which should result in lower
future interest expense when the refinancing occurs. Other income in Fiscal 1997
includes (1) $4.7 million from the sale of the Partnership's 50% interest in
Atlantic Energy, Inc. (Atlantic Energy), (2) higher customer finance charges,
and (3) higher interest income. We sold our interest in Atlantic Energy in
Fiscal 1997 after determining that its storage terminal facilities in
Chesapeake, Virginia were not strategic to our business. Operating expenses were
$320.2 million in Fiscal 1998 compared to $316.4 million in Fiscal 1997.
Operating expenses in Fiscal 1998 include the benefit of (1) $2.7 million from
lower required accruals for

                                      -19-
<PAGE>   22
environmental matters and (2) $2.0 million from lower required accruals for
property taxes. Excluding these items, operating expenses in 1998 were $8.5
million higher, an increase of 2.7%, primarily due to incremental expenses
associated with (1) acquisitions and (2) new business activities including
start-up locations and our PPX Prefilled Propane Xchange(TM) program. Excluding
the impact of these new business activities, our base business total expenses
were essentially unchanged.

FISCAL 1997 COMPARED WITH FISCAL 1996

We sold fewer retail gallons of propane in Fiscal 1997 due in part to warmer
heating-season weather. Weather in the continental U.S. during Fiscal 1997 as
determined by NOAA averaged 1.2% warmer than normal compared to weather that was
1.7% colder than normal in Fiscal 1996. In addition, significantly higher and
more volatile propane market prices during the first half of the Fiscal 1997
heating season encouraged customers to conserve. Wholesale volumes of propane
sold decreased 91.1 million gallons to 218.6 million gallons in Fiscal 1997
principally due to reduced low-margin sales of storage inventories.

Total Fiscal 1997 revenues from our retail propane sales increased $81.3 million
to $868.2 million. The increase includes a $125.5 million increase from higher
average selling prices partially offset by a $44.2 million decrease from the
lower retail volumes sold. The higher average prices resulted from significantly
higher propane product costs early in Fiscal 1997. Our wholesale propane
revenues in Fiscal 1997 decreased $11.9 million to $126.0 million reflecting the
lower wholesale volumes sold partially offset by higher average wholesale
prices. Other revenues declined $4.8 million to $83.6 million due to lower
hauling, appliance and service revenues.

Total propane margin was greater in Fiscal 1997 because of higher average retail
unit margins. Although our propane product costs were significantly higher in
Fiscal 1997, we benefitted from favorable fixed-price supply arrangements and
derivative commodity contracts entered into as part of our Fiscal 1997 propane
supply strategy. The higher Fiscal 1997 average retail unit margin also reflects
the fact that our retail unit margins in the prior-year period were adversely
impacted by certain sales and marketing programs.

The increase in our Fiscal 1997 operating income and EBITDA is the result of (1)
the higher total margin, (2) greater other income, and (3) a decrease in
operating expenses. Total operating expenses were $316.4 million in Fiscal 1997
compared with $317.4 million in Fiscal 1996. The Fiscal 1996 operating expenses,
however, are net of (1) $4.4 million from a refund of insurance premium deposits
and (2) $3.3 million from a reduction in accrued environmental costs. Excluding
the impact of these items on Fiscal 1996 operating expenses, operating expenses
in Fiscal 1997 declined $8.7 million mainly reflecting (1) lower expenses
related to sales and marketing programs and (2) lower required accruals for
general and automobile liability and workers' compensation costs. Other income
increased $2.9 million in Fiscal 1997 reflecting a pre-tax gain of $4.7 million
from the sale of the Partnership's 50% interest in Atlantic Energy.

                                      -20-
<PAGE>   23
FINANCIAL CONDITION AND LIQUIDITY

CAPITALIZATION AND LIQUIDITY


The Operating Partnership's primary cash sources have been (1) cash generated by
operations and (2) borrowings under its Bank Credit Agreement.

The Operating Partnership's Bank Credit Agreement consists of (1) a Revolving
Credit Facility and (2) an Acquisition Facility. The Operating Partnership may
borrow up to $100 million (including $35 million for letters of credit) under
the Revolving Credit Facility. The Revolving Credit Facility may be used for (1)
working capital, (2) capital expenditures, and (3) interest and distribution
payments. Revolving Credit Facility loans were $10 million at September 30, 1998
and $28 million at September 30, 1997. The Operating Partnership's borrowing
needs are typically greatest during the fall and early winter months due to the
need to fund working capital. The Operating Partnership may borrow up to $75
million under its Acquisition Facility to finance the purchase of propane
businesses or propane business assets. The Acquisition Facility operates like a
revolving facility until September 15, 2000. At that time, the total amount
outstanding converts to a quarterly amortizing four-year term loan. Acquisition
Facility loans were $60 million at September 30, 1998 and $37 million at
September 30, 1997.

The Partnership must maintain certain financial ratios in order to borrow under
the Bank Credit Agreement. These include a minimum interest coverage ratio and a
maximum debt to EBITDA ratio, each as defined in the Bank Credit Agreement. The
Partnership's ratios calculated as of September 30, 1998 permit it to borrow up
to the maximum amount available.

The Operating Partnership also has a credit agreement with the General Partner.
The Operating Partnership may borrow up to $20 million from the General Partner
to fund (1) working capital, (2) capital expenditures, and (3) interest and
distribution payments. The terms of this facility are generally comparable to
those of the Revolving Credit Facility. The major difference, however, is that
borrowings from the General Partner are unsecured and subordinated to all senior
debt of the Operating Partnership. UGI has agreed to contribute up to $20
million to the General Partner to fund such borrowings. The Operating
Partnership did not borrow under this facility in Fiscal 1998.

The Partnership's management believes that, given near normal weather, its cash
flow from operations and its credit facility borrowings will satisfy its
liquidity needs, including paying the minimum quarterly distribution of $.55
(MQD) to all unitholders, for the foreseeable future.

In June 1998, we revised our estimate of the tax basis of certain assets
contributed to the Partnership in conjunction with the Partnership's formation.
The change in estimate resulted in the following adjustments to the Consolidated
Balance Sheet: (1) a $27.2 million decrease in partners' capital; (2) a $.3
million decrease in minority interest; (3) a $17.9 million decrease in goodwill;
and (4) a $9.6 million decrease in excess reorganization value.

                                      -21-
<PAGE>   24
PARTNERSHIP DISTRIBUTIONS

Since our formation in 1995, we have paid the MQD on all limited partner units
outstanding. The amount of Available Cash needed in Fiscal 1998 to pay the MQD
on all units as well as the 2% general partner interest was approximately $94
million ($48.6 million for the Common Units; $43.5 million for the Subordinated
Units; and $1.9 million for the general partner interests). The amount of cash
available for distribution that is generated by the Partnership can be estimated
by subtracting (1) cash interest expense and (2) capital expenditures needed to
maintain operating capacity, from the Partnership's EBITDA. Distributable cash
as calculated for Fiscal 1998, Fiscal 1997 and Fiscal 1996 is as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Year Ended September 30,                                       1998              1997            1996
----------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>                <C>
(Millions of dollars)

EBITDA                                                    $  151.1          $  172.4           $ 134.5
Cash interest expense(a)                                     (67.6)            (66.8)            (63.6)
Maintenance capital expenditures                             (10.3)             (7.9)             (7.2)
----------------------------------------------------------------------------------------------------------
Distributable cash flow                                   $   73.2          $   97.7           $  63.7
----------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Interest expense adjusted for noncash items.

Although distributable cash is a reasonable estimate of the amount of cash
generated by the Partnership, it does not reflect changes in working capital
which can significantly affect cash available for distribution. Distributable
cash is not a measure of performance or financial condition under generally
accepted accounting principles. Although the level of distributable cash in
Fiscal 1998 was less than the full MQD, the additional cash generated from
changes in the Partnership's working capital was more than sufficient to permit
the Partnership to pay the full MQD. The ability of the Partnership to pay the
MQD on all units depends upon a number of factors. These factors include (1) the
level of Partnership earnings, (2) the cash needs of the Partnership's
operations (including cash needed for maintaining and growing operating
capacity), (3) changes in operating working capital, and (4) the Partnership's
ability to borrow. Some of these factors are affected by conditions beyond our
control including weather, competition in markets we serve, and the cost of
propane.

CONVERSION OF SUBORDINATED UNITS

As more fully described in Note 3 to Consolidated Financial Statements, the
subordination period applicable to the Subordinated Units will extend until the
first day of any quarter beginning on or after April 1, 2000 in which certain
cash performance and distribution requirements are met. However, 4,945,537
Subordinated Units may convert into Common Units on the first day after the
record date for distributions based upon any quarter ending on or after March
31, 1998, and an additional 4,945,537 may convert on the first day after the
record date for distributions based upon any quarter ending on or after March
31, 1999, if certain cash performance and distribution

                                      -22-
<PAGE>   25
requirements are met. The cash performance requirements for conversion have not
been met to date. They are dependent upon many factors including highly seasonal
operating results, changes in working capital, asset sales and debt
refinancings. Management believes, however, that it is reasonably possible that
9,891,074 Subordinated Units will convert into Common Units during fiscal 1999.

CASH FLOWS

OPERATING ACTIVITIES. Although the Partnership's operating results were lower in
Fiscal 1998, the Partnership's cash flow from operations increased $22.5
million. Included in the Fiscal 1998 amount is $51.1 million of cash generated
from changes in operating working capital (which consists of customer accounts
receivable, inventories, accounts payable and other current assets and
liabilities used in the operations of our business). Changes in operating
working capital in Fiscal 1997 contributed only $.2 million. The change in
working capital during Fiscal 1998 was primarily due to a $36.8 million decrease
in inventories and prepaid propane purchases and a $15.9 million decrease in
accounts receivable. These decreases were a result of improved working capital
management and lower propane product costs.

INVESTING ACTIVITIES. We spent $31.6 million for property, plant and equipment
in Fiscal 1998, (including maintenance capital expenditures of $10.3 million).
Included in this amount is $4.5 million relating to the design and installation
of a new integrated financial system. The first phase of the integrated
financial system installation is scheduled to be completed during the first half
of Fiscal 1999. Capital expenditures in Fiscal 1997 were $24.5 million
(including maintenance capital expenditures of $7.9 million). During Fiscal
1998, we paid $8.1 million for propane business acquisitions compared to $11.6
million in Fiscal 1997. Proceeds from disposals of assets totaled $5.2 million
in Fiscal 1998 compared with $10.6 million in Fiscal 1997. The Fiscal 1997
amount includes proceeds from the sale of Atlantic Energy.

FINANCING ACTIVITIES. We paid the MQD on all Common Units and Subordinated
Units, as well as the general partner interests, totaling $94.1 million in
Fiscal 1998. During Fiscal 1997 we paid $93.9 million in such distributions. Due
to our strong Fiscal 1998 cash flows, we were able to reduce the amount
outstanding under our revolving credit facility by $18 million. This compares
with net borrowings of $6 million in Fiscal 1997. During Fiscal 1998, the
Operating Partnership borrowed $23 million under its Acquisition Facility
compared to $7 million in Fiscal 1997.

YEAR 2000 MATTERS

The Year 2000 ("Y2K") issue is a result of computer programs being written using
two digits (rather than four) to identify and process a year in a date field.
Computer programs having date sensitive software may recognize date fields using
"00" as the year 1900 rather than the year 2000. If uncorrected, miscalculations
and possible computer-based system failures could result which might disrupt
business operations. We are designating the following information as our "Year
2000 Readiness Disclosure."

                                      -23-
<PAGE>   26
Recognizing the potential business consequences of the Y2K issue, we are using
internal and external resources to conduct a detailed assessment of critical,
date sensitive computer-based systems and to identify and modify systems which
are not Y2K compliant. The scope of such efforts includes (1) our information
technology ("IT") systems such as computer hardware and software we use in the
operation of our business; (2) non-IT systems that contain embedded computer
technology such as micro-controllers contained in various equipment, facilities
and vehicles; and (3) the readiness of third parties, including our suppliers
and key vendors, and certain of our customers. We have directed our Y2K
compliance efforts toward ensuring that we will be able to continue to perform
three critical operating functions: (1) obtain products to sell; (2) provide
service to our customers; and (3) bill customers and pay our vendors and
employees. We have completed the assessment of our IT and non-IT systems.

We have successfully modified all of our critical IT systems that are not in the
process of being replaced. The modified systems include our customer information
and data systems and our financial systems including payroll and the fuel
accounting supply and transportation system. We are in the process of installing
integrated financial system software that is already Y2K compliant. We
anticipate that the installation of this software, as well as any modification
of our critical non-IT systems, will be completed by March 31, 1999.

In addition to internal Y2K remediation activities, we are in the process of
assessing the readiness of our key suppliers and third-party providers. Although
none of our products or services are directly date sensitive, as a company with
operations throughout the United States we are dependent upon other companies
whose IT and non-IT systems may not be Y2K compliant. We rely on these companies
for the supply and transportation of propane. Additionally, we depend on other
companies to supply us with propane tanks and cylinders, fuel for our vehicles,
as well as other products and services we need to operate our businesses. If key
third parties cannot provide products or services because of their own Y2K
problems, it could have a material adverse impact on our operations. The extent
of such impact would depend upon the duration of disruption and our costs to
find alternative sources of products and services, among others. We expect to
complete our evaluation of key supplier and third-party provider Y2K readiness
by March 31, 1999.

We are in the process of developing contingency plans to address, to the extent
reasonably possible, disruptions arising from Y2K related failures of key
suppliers and third-party providers. We anticipate the major elements of these
contingency plans will be based upon the use of manual back-up systems,
alternative supply sources, higher critical inventory levels, and additional
staffing. These contingency plans attempt to mitigate the impact of third-party
Y2K noncompliance. However, they cannot assure that business disruptions caused
by key suppliers or third-party providers will not have a material adverse
impact on our operations. We anticipate the business contingency plans will be
completed by June 30, 1999. In addition to the business risks noted above, there
are other Y2K risks which are beyond our control, any of which could have a
material adverse impact on our operations. Such risks include the failure of
utility and telecommunications companies to provide service and the failure of
financial institutions to process transactions.

                                      -24-
<PAGE>   27
Incremental costs associated with our Y2K efforts have not had a material effect
on our results of operations. Estimated future costs to modify existing IT and
non-IT systems are expected to be less than $0.5 million and will be financed
through internally generated funds. We expense Y2K costs as incurred. Costs
associated with information system improvement initiatives are expensed or
capitalized in accordance with our accounting policy for software development
costs.

IMPACT OF INFLATION

Inflation affects the prices the Partnership pays for operating and
administrative services and, to some extent, propane gas. Competitive pressures
may limit the Partnership's ability to recover fully propane product cost
increases. The Partnership attempts to limit the effects of inflation on its
results of operations through cost control efforts and productivity
improvements.

MARKET RISK DISCLOSURES

Our primary market risk exposures are market prices for propane and changes in
long-term interest rates.

Price risk associated with fluctuations in the prices we pay for propane is
principally a result of market forces reflecting changes in supply and demand.
The Partnership's profitability is sensitive to changes in propane supply costs
and the Partnership generally seeks to pass on increases in such costs to
customers. There is no assurance, however, that the Partnership will be able to
do so. In order to manage propane market price risk, we use contracts for the
forward purchase of propane, propane fixed-price supply agreements, and
derivative commodity instruments such as price swap and option contracts.
Although we use derivative financial and commodity instruments to reduce market
price risk associated with forecasted transactions, we do not use derivative
financial and commodity instruments for trading purposes.

We use long-term debt as a primary source of capital. These debt instruments are
typically issued at fixed interest rates. When these debt instruments mature, we
refinance such debt at then-existing market interest rates which may be more or
less than the interest rates on the maturing debt. In addition, we may attempt
to reduce interest rate risk associated with a forecasted issuance of new debt.
In order to reduce interest rate risk associated with these transactions, we
occasionally enter into interest rate protection agreements.

                                      -25-
<PAGE>   28
The following table summarizes the fair value of our market risk sensitive
instruments by market risk at September 30, 1998. It also includes the change in
fair value that would result if (1) the market price of propane declined 5 cents
a gallon and (2) interest rates on ten-year U.S. treasury notes declined 50
basis points:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
September 30, 1998                                        Fair Value       Change in Fair Value
-------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>      
(Millions of dollars)

Propane commodity price risk                                 $    (.6)               $   (3.8)
Interest rate risk                                           $   (2.4)               $   (2.0)
-------------------------------------------------------------------------------------------------------
</TABLE>

We expect that any losses from market risk sensitive instruments used to manage
propane price or interest rate market risk would be substantially offset by
gains on the associated underlying transactions.

ACCOUNTING PRINCIPLES NOT YET ADOPTED

In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income" (SFAS 130), and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information" (SFAS 131). SFAS 130 establishes standards
for reporting and displaying comprehensive income and its components in
financial statements. Comprehensive income includes net income and all other
nonowner changes in equity. SFAS 131 establishes standards for reporting
information about operating segments as well as related disclosures about
products and services, geographic areas, and major customers. We will adopt SFAS
130 and SFAS 131 in fiscal 1999. In addition, in March 1998 the American
Institute of Certified Public Accountants issued Statement of Position No. 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" (SOP 98-1). SOP 98-1 requires companies to capitalize the cost of
computer software developed or obtained for internal use once certain criteria
have been met. We will adopt SOP 98-1 in fiscal 2000. We do not expect the
adoptions of SFAS 130 and SOP 98-1 will have a material effect on our financial
position or results of operations. In addition, we do not expect the initial
application of SFAS 131 will affect the operating segments we disclose.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivative instruments as either assets or
liabilities and measure them 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. To the extent derivative
instruments qualify and are designated as hedges of forecasted transactions,
changes in fair value will generally be reported as a component of other
comprehensive income and be reclassified into net income when the forecasted
transaction affects earnings. To the extent such derivative instrument qualifies
as a hedge of a firm

                                      -26-
<PAGE>   29
commitment, any gain or loss would generally be recognized in earnings when the
firm commitment affects earnings. We will adopt SFAS 133 in fiscal 2000.

We are currently evaluating the potential impact of SFAS 133 on our future
financial condition and results of operations. The impact of SFAS 133 will
likely depend upon the extent to which we use derivative instruments and their
designation and effectiveness as hedges of market risk.

FORWARD-LOOKING STATEMENTS

Information contained above in this Management's Discussion and Analysis and
elsewhere in this Report on Form 10-K with respect to expected financial results
and future events is forward-looking, based on our estimates and assumptions and
subject to risk and uncertainties. For those statements, we claim the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.

The following important factors could affect our future results and could cause
those results to differ materially from those expressed in our forward-looking
statements: (1) adverse weather conditions resulting in reduced demand; (2)
price volatility and availability of propane, and the capacity to transport to
market areas; (3) changes in laws and regulations, including safety, tax and
accounting matters; (4) competitive pressures from the same and alternative
energy sources; (5) liability for environmental claims; (6) improvements in
energy efficiency and technology resulting in reduced demand; (7) labor
relations; (8) inability to make business acquisitions on economically
acceptable terms; (9) operating hazards and risks incidental to transporting,
storing and distributing propane, butane and ammonia including the risk of
explosions and fires resulting in personal injury and property damage; (10)
regional economic conditions; (11) the success of the Partnership and its
suppliers in achieving Year 2000 compliance; and (12) interest rate fluctuations
and other capital market conditions.

These factors are not necessarily all of the important factors that could cause
actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors could also
have material adverse effects on future results. We undertake no obligation to
update publicly any forward-looking statement whether as a result of new
information or future events.

                                      -27-
<PAGE>   30
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

         Quantitative and Qualitative Disclosure about market risk is contained
in Management's Discussion and Analysis of Financial Condition and Results of
Operations under the caption "Market Risk Disclosures" and is incorporated here
by reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and financial statement schedules referred to
in the index contained on pages F-2 and F-3 of this report are incorporated
herein by reference.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

         None.


PART III:  MANAGEMENT AND SECURITY HOLDERS


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER

         We do not directly employ any persons responsible for managing or
operating the Partnership. The General Partner and UGI provide such services and
are reimbursed for direct and indirect costs and expenses including all
compensation and benefit costs. See "Certain Relationships and Related
Transactions" and Note 10 to the Partnership's Consolidated Financial
Statements.

         The Board of Directors of the General Partner established a committee
(the "Audit Committee") consisting of two individuals, currently, Messrs. Van
Dyck and Vincent, who are neither officers nor employees of the General Partner
or any affiliate of the General Partner. The Audit Committee has the authority
to review, at the request of the General Partner, specific matters as to which
the General Partner believes there may be a conflict of interest, in order to
determine if the resolution of such conflict is fair and reasonable to the
Partnership. In addition, the Audit Committee has the authority and
responsibility for selecting the Partnership's independent public accountants,
reviewing the Partnership's annual audit, and resolving accounting policy
questions.

                                      -28-
<PAGE>   31
DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER

         The following table sets forth certain information with respect to the
directors and executive officers of the General Partner. Directors are elected
annually by AmeriGas, Inc. as the sole shareholder of the General Partner.
AmeriGas, Inc. is a wholly owned subsidiary of UGI. Executive officers are
elected for one-year terms. There are no family relationships between any of the
directors or any of the executive officers or between any of the executive
officers and any of the directors.

<TABLE>
<CAPTION>
         NAME                      AGE               POSITION WITH THE GENERAL PARTNER
<S>                                <C>               <C>
         Lon R. Greenberg           48               Chairman, Director, President and
                                                      Chief Executive Officer

         Thomas F. Donovan          65               Director

         Richard C. Gozon           60               Director

         James W. Stratton          62               Director

         Stephen A. Van Dyck        55               Director

         Roger B. Vincent           53               Director

         David I. J. Wang           66               Director

         Martha B. Lindsay          46               Vice President-Finance
                                                      and Chief Financial Officer

         Brendan P. Bovaird         50               Vice President and General Counsel

         Eugene V. N. Bissell       45               Vice President-Sales and Operations

         Diane L. Carter            50               Vice President-Human Resources

         Richard R. Eynon           51               Controller and Chief Accounting Officer

         R. Paul Grady              45               Vice President-Sales and Operations

         William D. Katz            45               Vice President-Corporate Development

         Robert H. Knauss           45               Vice President-Law and
                                                      Associate General Counsel and
                                                      Corporate Secretary
</TABLE>

                                      -29-
<PAGE>   32
<TABLE>
<CAPTION>
<S>                                 <C>              <C>
         Gordon E. Regan, Jr.       46               Vice President-Purchasing and
                                                      Transportation
</TABLE>


         Mr. Greenberg is a Director (since 1994) and Chairman, President and
Chief Executive Officer (since 1996) of the General Partner. He is also a
Director (since 1994) and Chairman (since 1996), Chief Executive Officer (since
1995), and President (since 1994) of UGI, having been Senior Vice President -
Legal and Corporate Development of UGI (1989 to 1994). Mr. Greenberg previously
served as Vice President and General Counsel of AmeriGas, Inc. (1984 to 1994).
He also serves as a Director of UGI Utilities, Inc. and Mellon PSFS Advisory
Board.

         Mr. Donovan was elected a Director of the General Partner on April 25,
1995. He retired as Vice Chairman of Mellon Bank on December 31, 1996, a
position held since 1988. He continues to serve as an advisory board member to
Mellon Bank Corp. He also serves as a Director of UGI Corporation, UGI
Utilities, Inc., Nuclear Electric Insurance Co. and Merrill Lynch International
Bank, Ltd.

         Mr. Gozon was elected a director of the General Partner on February 24,
1998. He is Executive Vice President of Weyerhaeuser Company (an integrated
forest products company), a position he has held since 1994. Mr. Gozon was
formerly Director (1984 to 1993), President and Chief Operating Officer of Alco
Standard Corporation (a provider of paper and office products) (1988 to 1993);
Executive Vice President and Chief Operating Officer (1987); Vice President
(1982 to 1988); and President (1979 to 1987) of Paper Corporation of America. He
also serves as a Director of UGI Corporation, UGI Utilities, Inc., AmeriSource
Health Corporation, and Triumph Group, Inc.

         Mr. Stratton was elected a Director of the General Partner on April 25,
1995. He is President and Chief Executive Officer of Stratton Management Company
(investment advisory and financial consulting firm) since 1972, and Chairman and
Chief Executive Officer of FinDaTex (financial services firm). Mr. Stratton is a
Director of UGI Corporation, UGI Utilities, Inc., Stratton Growth Fund, Stratton
Monthly Dividend Shares, Inc., Stratton Small-Cap Yield Fund, Teleflex, Inc. and
Unisource Worldwide, Inc.

         Mr. Van Dyck was elected a Director of the General Partner on June 15,
1995. He is Chairman of the Board and Chief Executive Officer of Maritrans Inc.
(since 1987), the nations largest independent marine transporter of petroleum.
He also serves as Chairman of the Board of West of England Mutual Insurance
Association, and as a Director of Mellon PSFS Advisory Board.

         Mr. Vincent was elected a Director of the General Partner on January 8,
1998. He is President of Springwell Corporation, a corporate finance advisory
firm (since 1989). Mr. Vincent served in various capacities at Bankers Trust
Company (1971 to 1989), including managing director (1984 to 1989). He is also a
Director of Tatham Offshore, Inc.

                                      -30-
<PAGE>   33
         Mr. Wang was elected a Director of the General Partner on April 25,
1995. Mr. Wang is retired, having formerly served as Executive Vice President -
Timber and Specialty Products and a Director of International Paper Company
(1987 to 1991). He is also a Director of UGI Corporation and UGI Utilities, Inc.

         Ms. Lindsay was elected Vice President - Finance and Chief Financial
Officer of the General Partner on January 5, 1998. She previously served as Vice
President and Treasurer (1994 to 1997) and as Treasurer (1994) of Tambrands
Inc., a manufacturer of personal products. Prior to 1994, Ms. Lindsay held the
positions of Director of Business Development (1987 to 1989) and Assistant
Treasurer (1990 to 1993) at Tambrands Inc.

         Mr. Bovaird is Vice President and General Counsel of the General
Partner (since 1995). He is also Vice President and General Counsel of UGI
Corporation, UGI Utilities, Inc. and AmeriGas, Inc. (since 1995). Mr. Bovaird
previously served as Division Counsel and Member of the Executive and Operations
Committees of Wyeth-Ayerst International Inc. (1992 to 1995) and Senior Vice
President, General Counsel and Secretary of Orion Pictures Corporation (1990 to
1991). Mr. Bovaird also engaged in private practice from 1991 to 1992.

         Mr. Bissell is Vice President - Sales and Operations (since 1995) of
the General Partner. Previously, he was Vice President - Distributors and
Fabrication, BOC Gases (1995), having been Vice President - National Sales (1993
to 1995) and Regional Vice President Southern Region for Distributor and
Cylinder Gases Division, BOC Gases (1989 to 1993).

         Ms. Carter is Vice President - Human Resources of the General Partner
effective (since 1996). Previously she was Vice President - Human Resources of
Sisters of Mercy Health System, St. Louis, Missouri (1994 to 1996) and President
and founding principal of the Touchstone Partnership, Ltd., an organization and
management consulting firm based in Philadelphia (1991 to 1994).

         Mr. Eynon was elected Controller and Chief Accounting Officer of the
General Partner on January 5, 1998. Prior to his election, Mr. Eynon was
Controller of the General Partner (March 1997 to January 1998) and Assistant
Controller of UGI Corporation (1985 to 1997). Previously, he was a Senior
Manager with Price Waterhouse & Co.

         Mr. Grady is Vice President - Sales and Operations (since 1995) of the
General Partner. He was Vice President - Corporate Development of UGI (1994 to
1995), having been Director, Corporate Development (1990 to 1994). Previously,
Mr. Grady was Director, Corporate Development Services of Campbell Soup Company
(1985 to 1990).

         Mr. Katz is Vice President - Corporate Development of the General
Partner (since 1996). He was previously Vice President - Corporate Development
of UGI (1995 to 1996). Prior to joining UGI, Mr. Katz was Director of Corporate
Development with Campbell Soup Company for over five years. He also practiced
law for approximately 10 years, first with the firm of Jones, Day Reavis &
Pogue, and later in the Legal Department at Campbell Soup Company.

                                      -31-
<PAGE>   34
         Mr. Knauss is Vice President - Law and Associate General Counsel of the
General Partner (since 1996), having served as Corporate Secretary (since 1994)
and Group Counsel - Propane (1989 to 1996) of UGI. He joined UGI as Associate
Counsel in 1985. Before joining UGI, Mr. Knauss was an associate at the firm of
Ballard, Spahr, Andrews & Ingersoll in Philadelphia.

         Mr. Regan is Vice President-Purchasing and Transportation of the
General Partner (since May 1996). Prior to joining the General Partner, Mr.
Regan was President of the Chemical Division of DSI Transports, Inc. (1995 to
1996). Previously, he served Conoco, Inc. for approximately 20 years, most
recently as General Manager Business Support, Downstream-North America.

                                      -32-
<PAGE>   35
ITEM 11.  EXECUTIVE COMPENSATION


         The following table shows cash and other compensation paid or accrued
to the General Partner's Chief Executive Officer and each of its four other most
highly compensated executive officers, (collectively, the "Named Executives")
for the last three fiscal years.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                       LONG-TERM COMPENSATION
                                                                                 -------------------------------- 
                                              ANNUAL COMPENSATION                   AWARDS          PAYOUTS
                              ------------------------------------------------   ------------      ----------

                                                                     OTHER        SECURITIES
        NAME AND                                                     ANNUAL       UNDERLYING       LONG-TERM         ALL OTHER 
        PRINCIPAL                                   BONUS         COMPENSATION   OPTIONS/SARS      INCENTIVE       COMPENSATION
        POSITION              YEAR      SALARY       (1)               (2)        GRANTED (#)       PAYOUTS             (3)
        --------              ----      ------       ---               ---             ---           -------             ---
<S>                           <C>      <C>          <C>           <C>            <C>                <C>             <C>
Lon R. Greenberg (4)          1998     $559,616     $225,000         $ 8,209             0             $0             $  22,154
   President, Chairman,       1997     $509,827     $425,000         $ 7,671       200,000  (5)        $0             $  14,233
   and Chief Executive        1996     $465,000     $122,760         $ 7,359             0             $0             $  10,462
   Officer

Eugene V.N. Bissell (7)       1998     $179,728     $40,545          $ 2,069             0             $0             $  19,175
   Vice President-Sales       1997     $169,931     $74,812          $50,027             0             $0             $  21,876
   and Operations             1996     $123,750     $     0          $     0         5,000  (6)        $0             $       0

R. Paul Grady (7)             1998     $174,622     $43,750          $ 3,724             0             $0             $  20,231
   Vice President-Sales       1997     $166,603     $73,353          $ 3,281             0             $0             $  23,544
   and Operations             1996     $158,704     $     0          $ 7,508             0             $0             $  14,292

Brendan P. Bovaird (4)        1998     $176,677     $42,188          $ 4,075             0             $0             $   5,425
   Vice President and         1997     $164,653     $64,449          $ 3,769        30,000  (5)        $0             $   4,196
   General Counsel            1996     $149,999     $21,853          $ 1,299             0             $0             $   1,363

Robert H. Knauss
   Vice President-Law,
   Associate General          1998     $149,835     $50,405          $ 2,081             0             $0             $  17,715
   Counsel and                1997     $136,950     $48,820          $     0         7,000             $0             $  18,175
   Corporate Secretary        1996     $132,550     $5,000           $     0             0             $0             $   3,375
</TABLE>


(1)  Messrs. Greenberg and Bovaird participate in the UGI Annual Bonus Plan. All
     other Named Executives participate in the AmeriGas Partners Annual Bonus
     Plan. Awards under both Plans are for the year reported, regardless of the
     year paid. Awards under both Plans are based on the achievement of
     pre-determined business and/or financial performance objectives which
     support business plans and goals. Bonus opportunities vary by position and
     currently range from 0% to 148% of base salary for Mr. Greenberg and 0% to
     65% of base salary for Mr. Bovaird. For the other Named Executives, bonus
     opportunities are limited only by the level of the Partnership's
     profitability.

(2)  Amounts represent tax payment reimbursements for certain benefits, except
     for Mr. Bissell. In 1997, Mr. Bissell received a tax payment reimbursement
     of $7,563, reimbursement of relocation expenses in the amount of $39,765,
     and other perquisites available to executive officers generally.

(3)  The amounts represent contributions by the General Partner or UGI in
     accordance with the provisions of the AmeriGas Propane, Inc. Employee
     Savings Plan (the "AmeriGas Employee Savings Plan"), the UGI Utilities,
     Inc. Employee Savings Plan (the "UGI Employee Savings Plan"), allocations
     under the UGI Corporation Senior Executive Retirement Plan (the "UGI
     Executive Retirement Plan"), and/or allocations under the AmeriGas Propane,
     Inc. Supplemental Executive Retirement Plan (the "AmeriGas Executive
     Retirement

                                      -33-
<PAGE>   36
     Plan"). During fiscal years 1998, 1997 and 1996, the following
     contributions were made to the Named Executives: (i) under the AmeriGas
     Employee Savings Plan: Mr. Bissell, $5,148, $4,902, $0; Mr. Grady, $6,394,
     $7,048, and $458; and Mr. Knauss, $5,691, $7,098 and $0; (ii) under the UGI
     Employee Savings Plan: Mr. Greenberg, $3,600, $3,375 and $3,375; and Mr.
     Bovaird, $3,600, $3,375, and $1,363; (iii) under the UGI Executive
     Retirement Plan: Mr. Greenberg, $18,554, $10,858, and $7,087; Mr. Grady,
     $0, $0, and $2,427; and Mr. Bovaird, $1,852, $821 and $0; (iv) under the
     AmeriGas Executive Retirement Plan: Mr. Bissell, $14,027, $16,974, and $0;
     Mr. Grady, $13,837, $16,496, and $0; and Mr. Knauss, $12,024, $11,077 and
     $3,375.

(4)  Compensation reported for Messrs. Greenberg and Bovaird is attributable to
     their respective positions of Chairman, President and Chief Executive
     Officer, and Vice President and General Counsel of UGI Corporation.
     Compensation for these individuals is also reported in the UGI Proxy
     Statement for the 1999 Annual Meeting of Shareholders and is not additive.
     The General Partner does not compensate Mr. Greenberg or Mr. Bovaird.

(5)  Non-qualified stock options granted under the UGI Corporation 1997 Stock
     Option and Dividend Equivalent Plan. The 1997 Plan provides non-qualified
     stock option grants and the opportunity for participants to earn an amount
     equivalent to the dividends paid on shares covered by options, subject to a
     comparison of the total return realizable on a share of UGI Common Stock (
     the "UGI Return") with the total return achieved by each member of a group
     of comparable peer companies ( the "SODEP Peer Group") over a three-year
     period beginning January 1, 1997 and ending December 31, 1999. Total return
     encompasses both changes in the per share market price and dividends paid
     on a share of UGI Common Stock.

(6)  Non-qualified stock options granted under the UGI Corporation 1992
     Non-Qualified Stock Option Plan.

(7)  Effective October 1, 1996, the General Partner made grants to Messrs.
     Bissell, Grady and Knauss under the AmeriGas Propane, Inc. Long-Term
     Incentive Plan ("LTIP"). Each grant represents the right to receive a like
     number of Common Units of the Partnership or their cash equivalent, in the
     discretion of the Compensation/Pension Committee of the Board of Directors,
     together with a cash payment equal to the distributions which would have
     been paid on a Common Unit during the performance period if a performance
     contingency is met. The performance contingency is Partnership financial
     and operating performance over a minimum of twelve consecutive calendar
     quarters ending no later than September 30, 2001, such that the
     Partnership's Subordinated Units convert to Common Units in accordance with
     the Partnership Agreement. See Note 3 to the Partnership's Consolidated
     Financial Statements for a summary of the conditions necessary for
     conversion of the Subordinated Units. No portion of any grant will be paid
     if the performance contingency is not met by September 30, 2001. Depending
     on the date of achievement of the contingency, payouts will range from 50%
     to 150% of the size of the awards shown above. In the event of a change of
     control, a portion of the grants may become payable pursuant to Agreements
     between the General Partner and Messrs.
     Bissell, Grady and Knauss.

     As of September 30, 1998, the Long-Term Incentive Plan ("LTIP") grant for
     each of Mr. Bissell and Mr. Grady represented 10,000 Common Units with a
     market value of $238,750. Mr. Knauss's LTIP grant represented 7,000 Common
     Units with a market value of $167,125. Market values are based on the
     September 30, 1998 closing price for the Common Units on the New York Stock
     Exchange.

                                      -34-
<PAGE>   37
                      OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                                NUMBER OF SECURITIES
                                                               UNDERLYING UNEXERCISED                  VALUE OF UNEXERCISED
                                                                     OPTIONS AT                        IN-THE-MONEY OPTIONS   
                                                                 FISCAL YEAR END (#)                    AT FISCAL YEAR END
                         SHARES
                        ACQUIRED
                          ON                 VALUE
   NAME                EXERCISE (#)         REALIZED         EXERCISABLE    UNEXERCISABLE          EXERCISABLE      UNEXERCISABLE
   ----                ------------         --------         -----------    -------------          -----------      -------------
<S>                    <C>                  <C>              <C>            <C>                    <C>              <C>
Lon R. Greenberg         50,000             $393,750          93,959 (1)           0               $281,877 (2)         $    0
                                                             200,000 (3)           0               $100,000 (4)         $    0
                                                                                                                       
Eugene V.N. Bissell           0             $      0           2,000 (5)       3,000 (5)           $5,000 (6)           $7,500 (6)
                                                                                                                       
R. Paul Grady                                                 17,000 (1)           0               $51,000 (2)          $    0
                              0             $      0           2,000 (5)           0               $6,000 (7)           $    0
                                                                                                                       
Brendan P. Bovaird                                             5,007 (1)                           $15,021 (2)          $    0
                          4,993             $ 37,448          30,000 (3)           0               $15,000 (4)          $    0
                                                                                                                       
Robert H. Knauss              0             $      0           1,000 (5)           0               $3,000               $    0
</TABLE>


(1)  Options granted under the 1992 Stock Option and Dividend Equivalent Plan.

(2)  Value based on comparison of price per share at September 30, 1998 (fair
     market value $23.125) to 1992 Stock Option and Dividend Equivalent Plan
     option price ($20.125).

(3)  Options granted under the 1997 Stock Option and Dividend Equivalent Plan.

(4)  Value based on comparison of price per share at September 30, 1998 (fair
     market value $23.125) to 1997 Stock Option and Dividend Equivalent Plan
     option price ($22.625).

(5)  Options granted under the 1992 Non-Qualified Stock Option Plan.

(6)  Value based on comparison of price per share at September 30, 1998 (fair
     market value $23.125) to option grant price at December 18, 1995 (fair
     market value $20.625) under the terms of the 1992 Non-Qualified Stock
     Option Plan.

(7)  Value based on comparison of price per share at September 30, 1998 (fair
     market value $23.125) to option grant price at January 2, 1992 (fair market
     value $20.125) under the terms of the 1992 Non-Qualified Stock Option Plan.

                                      -35-
<PAGE>   38
RETIREMENT BENEFITS

         The following table shows the annual benefits payable upon retirement
to Messrs. Greenberg and Bovaird under the Retirement Income Plan for Employees
of UGI Utilities, Inc. and participating employers (the "UGI Retirement Plan")
and the UGI Supplemental Executive Retirement Plan. The amounts shown assume the
executive retires in 1998 at age 65, and that the aggregate benefits are not
subject to statutory maximums.


                           PENSION PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
   FINAL 5-YEAR                     ANNUAL BENEFIT FOR YEARS OF CREDITED SERVICE SHOWN (1)
      AVERAGE            ------------------------------------------------------------------------------
ANNUAL EARNINGS (2)      15 YEARS      20 YEARS      25 YEARS      30 YEARS     35 YEARS       40 YEARS
-------------------      --------      --------      --------      --------     --------       --------
<S>                      <C>           <C>           <C>           <C>          <C>           <C>
      $200,000            $57,000       $76,000       $95,000      $114,000     $133,000      $136,800(3)
                      
      $300,000            $85,500      $114,000      $142,500      $171,000     $199,500      $205,200(3)
                      
      $400,000           $114,000      $152,000      $190,000      $228,000     $266,000      $273,600(3)
                      
      $500,000           $142,500      $190,000      $237,500      $285,000     $332,500      $342,000(3)
                      
      $600,000           $171,000      $228,000      $285,000      $342,000     $399,000      $410,400(3)
                      
      $700,000           $199,500      $266,000      $332,500      $399,000     $465,500      $478,800(3)
                      
      $800,000           $228,000      $304,000      $380,000      $456,000     $532,000      $547,200(3)
                      
      $900,000           $256,500      $342,000      $427,500      $513,000     $598,500      $615,600(3)
                      
    $1,000,000           $285,000      $380,000      $475,000      $570,000     $665,000      $684,000(3)
                      
    $1,200,000           $342,000      $456,000      $570,000      $684,000     $798,000      $820,800(3)
                      
    $1,400,000           $399,000      $532,000      $665,000      $798,000     $931,000      $957,600(3)
</TABLE>

      (1)  Annual benefits are computed on the basis of straight life annuity
           amounts. These amounts include pension benefits, if any, to which a
           participant may be entitled as a result of participation in a pension
           plan of a UGI subsidiary during previous periods of employment. The
           amounts shown do not take into account exclusion of up to 35% of the
           estimated primary Social Security benefit. The UGI Retirement Plan
           provides a minimum benefit equal to 25% of a participant's final 12
           months' earnings, reduced proportionately for less than 15 years of
           credited service at retirement. The minimum UGI Retirement Plan
           Benefit is not subject to Social Security offset. Messrs. Greenberg
           and Bovaird had 18 and 3 years of estimated credited service,
           respectively, at September 30, 1998. Mr. Grady previously accumulated
           more than 4 years of credited service in the UGI Retirement Plan
           before joining the General Partner in 1995. Mr. Knauss previously
           accumulated more than 11 years of credited service in the UGI
           Retirement Plan before joining the General Partner in 1996. Mr.
           Bissell previously accumulated more than 5 years of credited service
           with UGI and its subsidiaries before joining the General Partner in
           1995.

      (2)  Consists of (i) base salary, commissions and cash payments under the
           UGI Annual Bonus Plan, and (ii) deferrals thereof permitted under the
           Internal Revenue Code.

      (3)  The maximum benefit under the UGI Retirement Plan and the UGI
           Supplemental Executive Retirement Plan is equal to 60% of a
           participant's highest consecutive 12 months' earnings during the last
           120 months.

                                      -36-
<PAGE>   39
SEVERANCE PAY PLAN FOR SENIOR EXECUTIVE EMPLOYEES

         Named Executives Employed by UGI Corporation. The UGI Corporation
Senior Executive Employee Severance Pay Plan (the "UGI Severance Plan") assists
certain senior level employees of UGI, including Messrs. Greenberg and Bovaird,
in the event their employment is terminated without fault on their part.
Benefits are payable to a senior executive covered by the UGI Severance Plan if
the senior executive's employment is involuntarily terminated for any reason
other than for cause or as a result of the senior executive's death or
disability.

         The UGI Severance Plan provides for cash payments equal to a
participant's compensation for a period of time ranging from 3 months to 15
months (30 months in the case of Mr. Greenberg), depending on length of service.
In addition, a participant receives the cash equivalent of his or her target
bonus under the Annual Bonus Plan, pro-rated for the number of months served in
the fiscal year. However, if the termination occurs in the last two months of
the fiscal year, the Chief Executive Officer has the discretion to determine
whether the participant will receive a pro-rated target bonus, or the actual
annual bonus which would have been paid after the end of the fiscal year,
assuming that the participant's entire bonus was contingent on meeting the
applicable financial performance goal. The Plan also provides for separation pay
equal to one day's pay per month of service, not to exceed 12 months'
compensation. Certain employee benefits are continued under the Plan for a
period of up to 15 months (30 months in the case of Mr. Greenberg). UGI has the
option to pay a participant the cash equivalent of those employee benefits.

         In order to receive benefits under the UGI Severance Plan, a senior
executive is required to execute a release which discharges UGI and its
subsidiaries from liability for any claims the senior executive may have against
any of them, other than claims for amounts or benefits due to the executive
under any plan, program or contract provided by or entered into with UGI or its
subsidiaries. The senior executive is also required to cooperate in attending to
matters pending at the time of his or her termination of employment.

         Named Executives Employed by AmeriGas Propane. The AmeriGas Propane,
Inc. Executive Employee Severance Pay Plan (the "AmeriGas Severance Plan")
assists certain senior level employees of the General Partner including Messrs.
Bissell, Grady and Knauss in the event their employment is terminated without
fault on their part. Specified benefits are payable to a senior executive
covered by the AmeriGas Severance Plan if the senior executive's employment is
involuntarily terminated for any reason other than for cause or as a result of
the senior executive's death or disability.

         The AmeriGas Severance Plan provides for cash payments equal to a
participant's compensation for three months (6 months in the case of the Chief
Executive Officer). In addition, a participant receives the cash equivalent of
his or her target bonus under the Annual Bonus Plan, pro-rated for the number of
months served in the fiscal year. However, if the termination occurs in the last
two months of the fiscal year, the Chief Executive Officer has the discretion to
determine whether the participant will receive a pro-rated target bonus, or the
actual annual bonus which would have been paid after the end of the fiscal year,
assuming that the participant's entire

                                      -37-
<PAGE>   40
bonus was contingent on meeting the applicable financial performance goal. The
Plan also provides for separation pay equal to one day's pay per month of
service, not to exceed 12 months' compensation. Minimum separation pay ranges
from six to twelve months' base salary, depending on the executive's employment
grade. Certain employee benefits are continued under the Plan for a period not
exceeding 15 months (30 months in the case of the Chief Executive Officer). This
period is called the "Employee Benefit Period." The General Partner has the
option to pay a participant the cash equivalent of those employee benefits. The
AmeriGas Severance Plan also provides for payment in cash of an amount
approximately equal to all distribution equivalents credited (including those
that would be credited during the Employee Benefit Period) under the AmeriGas
Propane, Inc. 1997 Long-Term Incentive Plan and successor plans.

         In order to receive benefits under the AmeriGas Severance Plan, a
senior executive is required to execute a release which discharges the General
Partner and its affiliates from liability for any claims the senior executive
may have against any of them, other than claims for amounts or benefits due to
the executive under any plan, program or contract provided by or entered into
with the General Partner or its affiliates. The senior executive is also
required to cooperate in attending to matters pending at the time of his or her
termination of employment.


CHANGE OF CONTROL ARRANGEMENTS
         Named Executives Employed By UGI Corporation. Messrs. Greenberg and
Bovaird each have an agreement with UGI Corporation (the "Agreement") which
provides certain benefits in the event of a change of control. The Agreements
operate independently of the UGI Severance Plan, continue through July 2002, and
are automatically extended in one-year increments thereafter unless, prior to a
change of control, UGI terminates an Agreement. In the absence of a change of
control, each Agreement will terminate when, for any reason, the executive
terminates his employment with UGI or its subsidiaries.

         A change of control is generally deemed to occur if: (i) any person
(other than the executive, his affiliates and associates, UGI or any of its
subsidiaries, any employee benefit plan of UGI or any of its subsidiaries, or
any person or entity organized, appointed, or established by UGI or its
subsidiaries for or pursuant to the terms of any such employee benefit plan),
together with all affiliates and associates of such person, acquires securities
representing 20% or more of either (x) the then outstanding shares of common
stock of UGI or (y) the combined voting power of UGI's then outstanding voting
securities, in either case unless the members of the Executive Committee of the
Board of Directors in office immediately prior to such acquisition (the
"Executive Committee") determine that the circumstances do not warrant the
implementation of the provisions of the Agreement; (ii) individuals who at the
beginning of any 24-month period constitute the Board of Directors (the
"Incumbent Board") and any new director whose election by the Board, or
nomination for election by UGI's shareholders, was approved by a vote of at
least a majority of the Incumbent Board, cease for any reason to constitute a
majority thereof; (iii) UGI is reorganized, merged or consolidated with or into,
or sells all or substantially all of its assets to, another corporation in a
transaction in which former shareholders of UGI do not own more than 50% of the
outstanding common stock and the combined voting power, respectively,

                                      -38-
<PAGE>   41
of the then outstanding voting securities of the surviving or acquiring
corporation after the transaction, in any such case, unless the Executive
Committee determines at the time of such transaction that the circumstances do
not warrant the implementation of the provisions of the Agreement; or (iv) UGI
is liquidated or dissolved.

         Severance benefits are payable under the Agreements if there is a
termination of the executive's employment without cause at any time within three
years after a change of control. In addition, following a change of control, the
executive may elect to terminate his or her employment without loss of severance
benefits in certain specified contingencies, including termination of officer
status; a significant adverse change in authority, duties, responsibilities or
compensation; the failure of UGI to comply with and satisfy any of the terms of
the Agreement; or a substantial relocation or excessive travel requirements.

         An executive who is terminated with rights to severance compensation
under an Agreement will be entitled to receive an amount equal to 1.0 or 1.5
(2.5 in the case of Mr. Greenberg) times his average total cash remuneration for
the preceding five calendar years. If the severance compensation payable under
the Agreement, either alone or together with other payments to an executive,
would constitute "excess parachute payments," as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), the executive will also
receive an amount to satisfy the executive's additional tax burden.

         Named Executives Employed by the General Partner. Messrs. Bissell,
Grady and Knauss each have an agreement with the General Partner (the
"Agreement") which provides certain benefits in the event of a change of
control. The Agreements operate independently of the AmeriGas Severance Plan,
continue through July 2002, and are automatically extended in one-year
increments thereafter unless, prior to a change of control, the General Partner
terminates an Agreement. In the absence of a change of control, each Agreement
will terminate when, for any reason, the executive terminates his employment
with the General Partner or any of its subsidiaries.

         A change of control is generally deemed to occur if : (i) a change of
control of UGI, as defined above, occurs, (ii) the General Partner, AmeriGas
Partners or the Operating Partnership is reorganized, merged or consolidated
with or into, or sells all or substantially all of its assets to, another
corporation or partnership in a transaction in which the former shareholders of
the General Partner, or former limited partners, as the case may be, do not own
more than 50% of the outstanding common stock and combined voting power, or the
outstanding common units of such partnership, after the transaction, unless the
Executive Committee of the Board of Directors of the General Partner determines
at the time of such transaction that the circumstances do not warrant the
implementation of the provisions of the Agreement, (iii) the General Partner,
AmeriGas Partners or the Operating Partnership is liquidated or dissolved, (iv)
UGI and its subsidiaries fail to own fifty-one percent (51%) of the general
partnership interests of AmeriGas Partners or the Operating Partnership, (unless
the Executive Committee determines otherwise), (v) UGI and its subsidiaries fail
to own fifty-one percent (51%) of the combined voting power of the General
Partner's then outstanding voting securities, (unless the Executive Committee
determines otherwise), (vi) AmeriGas Propane, Inc. is removed as the general
partner of

                                      -39-
<PAGE>   42
AmeriGas Partners by vote of the limited partners, or AmeriGas Propane, Inc. is
removed as the general partner of AmeriGas Partners or the Operating Partnership
as a result of judicial or administrative proceedings.

         Severance benefits are payable under the Agreements if there is a
termination of the executive's employment without cause at any time within three
years after a change of control. In addition, following a change of control, the
executive may elect to terminate his or her employment without loss of severance
benefits in certain specified contingencies, including termination of officer
status; a significant adverse change in authority, duties, responsibilities or
compensation; the failure of the General Partner to comply with and satisfy any
of the terms of the Agreement; or a substantial relocation or excessive travel
requirements.

         An executive who is terminated with rights to severance compensation
under an Agreement will be entitled to receive an amount equal to 1.0 times his
average total cash remuneration for the preceding five calendar years, and,
unless payment shall already have been made pursuant to the AmeriGas Propane,
Inc. 1997 Long-Term Incentive Plan ("LTIP"), an additional amount representing
up to 110% (based on length of service) of the fair market value of the Common
Units underlying grants made to the executive under the LTIP. If the severance
compensation payable under the Agreement, either alone or together with other
payments to an executive, would constitute "excess parachute payments," as
defined in Section 280G of the Code, the executive will also receive an amount
to satisfy the executive's additional tax burden.


BOARD OF DIRECTORS

         Officers of the General Partner receive no additional compensation for
service on the Board of Directors or on any Committee of the Board. The General
Partner pays an annual retainer of $22,000 to all other directors and an
attendance fee of $1,000 for each Board meeting. For service on Committees, the
General Partner pays an annual retainer of $2,000 to each Committee Chairman and
an attendance fee of $1,000 for each Committee meeting attended. The General
Partner reimburses directors for expenses incurred by them (such as travel
expenses) in serving on the Board and Committees. The General Partner determines
all expenses allocable to the Partnership, including expenses allocable to the
services of directors.


COMPENSATION/PENSION COMMITTEE

         The members of the General Partner's Compensation/Pension Committee are
Richard C. Gozon (Chairman), Thomas F. Donovan and David I. J. Wang.

                                      -40-
<PAGE>   43
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN
          BENEFICIAL OWNERS AND MANAGEMENT

OWNERSHIP OF LIMITED PARTNERSHIP UNITS BY CERTAIN BENEFICIAL OWNERS

         The following table sets forth certain information regarding each
person known by the Partnership to have been the beneficial owner of more than
5% of the Partnership's voting securities representing limited partner interests
as of December 1, 1998. AmeriGas Propane, Inc. is the sole general partner of
the Partnership.

<TABLE>
<CAPTION>
                                                                         AMOUNT AND
                                                                         NATURE OF
                                NAME AND ADDRESS (1)                     BENEFICIAL                 PERCENT
TITLE OF CLASS                  OF BENEFICIAL OWNER                      OWNERSHIP                  OF CLASS
--------------                  -------------------                      ---------                  --------
<S>                            <C>                                     <C>                          <C>
Common Units                   UGI Corporation                          4,392,858 (2)                19.9%
                               AmeriGas, Inc.                           4,392,858 (3)                19.9%
                               AmeriGas Propane, Inc.                   4,392,858 (4)                19.9%
                               Petrolane Incorporated                   1,407,911 (5)                 6.4%

Subordinated Units             UGI Corporation                         19,782,146 (2)               100.0%
                               AmeriGas, Inc.                          19,782,146 (3)               100.0%
                               AmeriGas Propane, Inc.                  19,782,146 (6)               100.0%
                               Petrolane Incorporated                   6,432,000 (7)                33.0%
</TABLE>


(1)   The address of each of UGI, AmeriGas, Inc., AmeriGas Propane, Inc. and
      Petrolane is 460 North Gulph Road, King of Prussia, PA 19406.

(2)   Based on the number of units held by its indirect wholly owned
      subsidiaries, Petrolane Incorporated ("Petrolane") and AmeriGas Propane,
      Inc.

(3)   Based on the number of units held by its direct and indirect wholly owned
      subsidiaries, AmeriGas Propane, Inc. and Petrolane.

(4)   Includes 2,984,947 Common Units for which AmeriGas Propane, Inc. has sole
      voting and investment power, and 1,407,911 Common Units held by its
      subsidiary, Petrolane.

(5)   Petrolane has sole voting and investment power.

(6)   Includes 13,350,146 Subordinated Units for which AmeriGas Propane, Inc.
      has sole voting and investment power, and 6,432,000 Subordinated Units
      held by its subsidiary, Petrolane.

(7)   Petrolane has sole voting and investment power.

                                      -41-
<PAGE>   44
OWNERSHIP OF PARTNERSHIP COMMON UNITS BY THE DIRECTORS AND EXECUTIVE OFFICERS OF
THE GENERAL PARTNER

         The table below sets forth as of October 31, 1998 the beneficial
ownership of Partnership Common Units by each director and each of the Named
Executives currently serving the General Partner, as well as by the directors
and all of the executive officers of the General Partner as a group. No
director, Named Executive or executive officer beneficially owns (i) any
Subordinated Units, or (ii) more than 1% of the Partnership's Common Units. The
total number of Common Units beneficially owned by the directors and executive
officers of the General Partner as a group represents less than 1% of the
Partnership's outstanding Common Units.

<TABLE>
<CAPTION>
                      NAME OF                                   AMOUNT AND NATURE OF
                  BENEFICIAL OWNER                             BENEFICIAL OWNERSHIP(1)
                  ----------------                             -----------------------
<S>                                                            <C>
   Lon R. Greenberg                                                      4,500  (2)

   Thomas F. Donovan                                                     1,000

   Richard C. Gozon                                                          0

   James W. Stratton                                                     1,000

   Stephen A. Van Dyck                                                   1,000

   Roger B. Vincent                                                      1,000

   David I. J. Wang                                                      5,000

   Eugene V.N. Bissell                                                   1,500  (3)

   Brendan P. Bovaird                                                      400  (4)

   R. Paul Grady                                                         2,300

   Robert H. Knauss                                                          0

   Directors and executive officers as a group (16
   persons)                                                             18,300
</TABLE>

(1)  Sole voting and investment power unless otherwise specified.

(2)  3,000 Units are owned by Mr. Greenberg's adult children; 1,500 Units are
     held by Mr. Greenberg as custodian for a dependent child.

(3)  Mr. Bissell's Units are held jointly with his spouse. 

(4)  Mr. Bovaird's Units are held jointly with his spouse.

                                      -42-
<PAGE>   45
         The General Partner is a wholly owned subsidiary of AmeriGas, Inc.
which is a wholly owned subsidiary of UGI. The table below sets forth, as of
October 31, 1998, the beneficial ownership of UGI Common Stock by each director
and each of the Named Executives, as well as by the directors and the executive
officers of the General Partner as a group. Including the number of shares of
stock underlying exercisable options, Mr. Greenberg is the beneficial owner of
approximately 1.2% of UGI's Common Stock. All other directors, Named Executives
and executive officers own less than 1% of UGI's outstanding shares. The total
number of shares beneficially owned by the directors and executive officers as a
group (including 385,466 shares subject to exercisable options), represents
approximately 1.8% of UGI's outstanding shares.

<TABLE>
<CAPTION>
                                                    NUMBER OF SHARES
                                                     AND NATURE OF
                                                  BENEFICIAL OWNERSHIP
                 NAME OF                                EXCLUDING                NUMBER OF
            BENEFICIAL OWNER                          OPTIONS (1)(2)            STOCK OPTIONS             TOTAL
            ----------------                          --------------            -------------             -----
<S>                                               <C>                           <C>                    <C>
Lon R. Greenberg                                         90,360 (3)                293,959               384,319

Thomas F. Donovan                                         1,647                          0                 1,647

Richard C. Gozon                                         14,184                      5,000                19,184

James W. Stratton                                         9,880                      5,000                14,880

Stephen A. Van Dyck                                           0                          0                     0

Roger B. Vincent                                          1,000                          0                 1,000

David I. J. Wang                                         21,952                      5,000                26,952

Eugene V.N. Bissell                                       5,815 (4)                  2,000                 7,815

Brendan P. Bovaird                                       13,498 (5)(6)              35,007                48,505

R. Paul Grady                                             8,893                     19,000                27,893

Robert H. Knauss                                          4,504                      1,000                 5,504

Directors and executive officers as a
group (16 persons)                                      195,648 (6)                385,466               581,114
</TABLE>


(1)  Sole voting and investment power unless otherwise specified.

(2)  Included in the number of shares shown above are Deferred Units ("Units")
     acquired through the UGI Corporation 1997 Directors' Equity Compensation
     Plan. Units are neither actual shares nor other securities, but each Unit
     will be converted to one share of UGI common stock and paid out to
     directors upon their retirement or termination of service. The number of
     Units included for the directors is as follows: Messrs. Donovan (630),
     Gozon (7,639), Stratton (8,335) and Wang (7,407).

(3)  Mr. Greenberg's beneficial ownership includes 88,220 shares that he holds
     jointly with his spouse.

(4)  Mr. Bissell's beneficial ownership includes 5,353 shares that he holds
     jointly with his spouse.

(5)  Mr. Bovaird's beneficial ownership includes 12,993 shares that he holds
     jointly with his spouse.

                                      -43-
<PAGE>   46
(6) Includes the number of shares represented by units held in the UGI Stock
    Fund of the UGI Utilities, Inc. and AmeriGas Propane, Inc. 401(k) Employee
    Savings Plans based on September 30, 1998 Savings Plan statements.

                                      -44-
<PAGE>   47
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The General Partner employs persons responsible for managing and
operating the Partnership. The Partnership reimburses the General Partner for
the direct and indirect costs of providing these services, including all
compensation and benefit costs.

         The Operating Partnership has a revolving line of credit up to a
maximum of $20 million from the General Partner available until September 15,
2002, the termination date of the Revolving Credit Facility. Any loans under
this agreement will be unsecured and subordinated to all senior debt of the
Operating Partnership. The commitment fees for this line of credit are computed
on the same basis as the facility fees under the Revolving Credit Facility, and
totaled $70,973 in fiscal year 1998. Interest rates are based on one-month
offshore interbank borrowing rates. The interest rate for a recent Credit
Facility borrowing from October 3, 1998 to November 23, 1998 was 5.875%,
representing a 5.25% one-month Offshore Rate, plus an Applicable Margin of
 .625%. See Note 4 to the Partnership's Consolidated Financial Statements, which
are filed as an exhibit to this report.

         The Partnership and the General Partner also have extensive, ongoing
relationships with UGI and its affiliates. UGI performs certain financial and
administrative services for the General Partner on behalf of the Partnership.
UGI does not receive a fee for such services, but is reimbursed for all direct
and indirect expenses incurred in connection therewith, including all
compensation and benefit costs. A wholly owned subsidiary of UGI provides the
Partnership with general liability, automobile and workers' compensation
insurance for up to $500,000 over the Partnership's self-insured retention.
Another wholly owned subsidiary of UGI leases office space to the General
Partner for its headquarters staff. In addition, a UGI master policy provides
accidental death and business travel and accident insurance coverage for
employees of the General Partner. The General Partner is billed directly by the
insurer for this coverage. As discussed under "Business -- Trade Names; Trade
and Service Marks," UGI, Petrolane and the General Partner have licensed the
trade names "AmeriGas," "America's Propane Company" and "Petrolane" and the
related service marks and trademark to the Partnership on a royalty-free basis.
Finally, the Partnership obtains management information services from the
General Partner, and reimburses the General Partner for its direct and indirect
expenses related to those services. The rental payments and insurance premiums
charged to the Partnership by UGI and its affiliates are comparable to amounts
charged by unaffiliated parties. In fiscal year 1998, the Partnership paid UGI
and its affiliates $10,573,459 for the services and expense reimbursements
referred to in this paragraph.

                                      -45-
<PAGE>   48
PART IV:  ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                AND REPORTS ON FORM 8-K

(a)  DOCUMENTS FILED AS PART OF THIS REPORT:

         (1) and (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

         The financial statements and financial statement schedules incorporated
         by reference or included in this report are listed in the accompanying
         Index to Financial Statements and Financial Statement Schedules set
         forth on pages F-2 and F-3 of this report, which is incorporated herein
         by reference.

         (3) LIST OF EXHIBITS:

         The exhibits filed as part of this report are as follows (exhibits
incorporated by reference are set forth with the name of the registrant, the
type of report and registration number or last date of the period for which it
was filed, and the exhibit number in such filing):

                           INCORPORATION BY REFERENCE

<TABLE>
<CAPTION>
   EXHIBIT NO.                       EXHIBIT                         REGISTRANT             FILING             EXHIBIT
   -----------                       -------                         ----------             ------             -------
<S>                 <C>                                             <C>                 <C>                    <C>
       2.1          Merger and Contribution Agreement among            AmeriGas          Registration           10.21
                    AmeriGas Partners, L.P., AmeriGas               Partners, L.P.       Statement on       
                    Propane, L.P., New AmeriGas Propane,                                 Form S-4 (No.      
                    Inc., AmeriGas Propane, Inc., AmeriGas                                 33-92734)        
                    Propane-2, Inc., Cal Gas Corporation of                                                 
                    America, Propane Transport, Inc. and                                                    
                    NORCO Transportation Company                                                            
                                                                                                            
        2.2         Conveyance and Contribution Agreement              AmeriGas          Registration           10.22
                    among AmeriGas Partners, L.P., AmeriGas         Partners, L.P.       Statement on       
                    Propane, L.P. and Petrolane Incorporated                             Form S-4 (No.      
                                                                                           33-92734)        
                                                                                                            
        3.1         Amended and Restated Agreement of Limited          AmeriGas            Form 10-K             3.1
                    Partnership of AmeriGas Partners, L.P.          Partners, L.P.         (9/30/95)        
                    dated as of September 18, 1995                                                          
                                                                                                            
        3.2         Certificate of Incorporation of AmeriGas           AmeriGas          Registration           3.3
                    Finance Corp.                                   Partners, L.P.       Statement on       
                                                                                           Form S-4         
                                                                                        (No. 33-92734)
</TABLE>

                                      -46-
<PAGE>   49
                           INCORPORATION BY REFERENCE

<TABLE>
<CAPTION>
   EXHIBIT NO.                       EXHIBIT                         REGISTRANT             FILING             EXHIBIT
   -----------                       -------                         ----------             ------             -------
<S>               <C>                                               <C>                 <C>                    <C>
       3.3        Bylaws of AmeriGas Finance Corp.                     AmeriGas          Registration            3.4
                                                                    Partners, L.P.       Statement on        
                                                                                           Form S-4          
                                                                                        (No. 33-92734)       
                                                                                                             
       4.1        Indenture dated as of April 19, 1995 among           AmeriGas            Form 10-Q             4.1
                  AmeriGas Partners, L.P., AmeriGas Finance         Partners, L.P.          3/31/95          
                  Corp., and first Union National Bank                                                       
                  (formerly, First Fidelity Bank, National                                                   
                  Association) as Trustee                                                                    
                                                                                                             
       4.2        Specimen Certificate of Notes                        AmeriGas            Form 10-Q             4.2
                                                                    Partners, L.P.         (3/31/95)         
                                                                                                             
       4.3        Registration Rights Agreement dated as of            AmeriGas            Form 10-Q             4.3
                  April 19, 1995 among Donaldson, Lufkin &          Partners, L.P.         (3/31/95)         
                  Jenrette Securities Corporation, Smith                                                     
                  Barney, Inc., AmeriGas Partners, L.P. and                                                  
                  AmeriGas Finance Corp.                                                                     
                                                                                                             
       4.4        Note Agreement dated as of April 12, 1995            AmeriGas            Form 10-Q            10.8
                  among The Prudential Insurance Company of         Partners, L.P.         (3/31/95)         
                  America, Metropolitan Life Insurance                                                       
                  Company, and certain other institutional                                                   
                  investors and AmeriGas Propane, L.P., New                                                  
                  AmeriGas Propane, Inc. and Petrolane                                                       
                  Incorporated                                                                               
                                                                                                             
       4.5        First Amendment dated as of September 12,            AmeriGas            Form 10-Q             4.5
                  1997 to Note Agreement dated as of April          Partners, L.P.         (9/30/97)         
                  12, 1995                                                                                   
                                                                                                             
      *4.6        Second Amendment dated as of September 15,                                                 
                  1998 to Note Agreement dated as of April                                                   
                  12, 1995                                                                                   
                                                                                                             
      10.1        Amended and Restated Credit Agreement dated          AmeriGas            Form 10-K            10.1
                  as of September 15, 1997 among AmeriGas           Partners, L.P.         (9/30/97)         
                  Propane, L.P., AmeriGas Propane, Inc.,                                                     
                  Petrolane Incorporated, Bank of America                                                    
                  National Trust and Savings Association, as                                                 
                  Agent, First Union National Bank, as                                                       
                  Syndication Agent and certain banks                                                        
</TABLE>

                                      -47-
<PAGE>   50
                           INCORPORATION BY REFERENCE

<TABLE>
<CAPTION>
   EXHIBIT NO.                       EXHIBIT                         REGISTRANT             FILING             EXHIBIT
   -----------                       -------                         ----------             ------             -------
<S>               <C>                                               <C>                 <C>                    <C>
     *10.2        First Amendment dated as of September 15,                                                  
                  1998 to Amended and Restated Credit Agreement                                              
                                                                                                             
      10.3        Agreement dated as of May 1, 1996 between TE         AmeriGas            Form 10-K            10.2
                  Products Pipeline Company, L.P., and              Partners, L.P.         (9/30/97)         
                  AmeriGas Propane, L.P., effective until                                                    
                  April 1, 2001                                                                              
                                                                                                             
      10.4        Intercreditor and Agency Agreement dated as          AmeriGas            Form 10-Q            10.2
                  of April 19, 1995 among AmeriGas Propane,         Partners, L.P.         (3/31/95)         
                  Inc., Petrolane Incorporated, AmeriGas                                                     
                  Propane, L.P., Bank of America National                                                    
                  Trust and Savings Association ("Bank of                                                    
                  America") as Agent, Mellon Bank, N.A. as                                                   
                  Cash Collateral Sub-Agent, Bank of America                                                 
                  as Collateral Agent and certain creditors of                                               
                  AmeriGas Propane, L.P.                                                                     
                                                                                                             
      10.5        General Security Agreement dated as of April         AmeriGas            Form 10-Q            10.3
                  19, 1995 among AmeriGas Propane, L.P., Bank       Partners, L.P.         (3/31/95)         
                  of America National Trust and Savings                                                      
                  Association and Mellon Bank, N.A.                                                          
                                                                                                             
      10.6        Subsidiary Security Agreement dated as of            AmeriGas            Form 10-Q            10.4
                  April 19, 1995 among AmeriGas Propane, L.P.,      Partners, L.P.         (3/31/95)         
                  Bank of America National Trust and Savings                                                 
                  Association as Collateral Agent and Mellon                                                 
                  Bank, N.A. as Cash Collateral Agent                                                        
                                                                                                             
      10.7        Restricted Subsidiary Guarantee dated as of          AmeriGas            Form 10-Q            10.5
                  April 19, 1995 by AmeriGas Propane, L.P. for      Partners, L.P.         (3/31/95)         
                  the benefit of Bank of America National                                                    
                  Trust and Savings Association, as Collateral                                               
                  Agent                                                                                      

      10.8        Trademark License Agreement dated April 19,          AmeriGas            Form 10-Q            10.6
                  1995 among UGI Corporation, AmeriGas, Inc.,       Partners, L.P.         (3/31/95)         
                  AmeriGas Propane, Inc., AmeriGas Partners,                                                 
                  L.P. and AmeriGas Propane, L.P.                                                            
                                                                                                             
      10.9        Trademark License Agreement dated April 19,          AmeriGas            Form 10-Q            10.7
                  1995 among AmeriGas Propane, Inc., AmeriGas       Partners, L.P.         (3/31/95)         
                  Partners, L.P. and AmeriGas Propane, L.P.                                                  
                                                                                                             
     10.10        Stock Purchase Agreement dated May 27, 1989,         Petrolane         Registration         10.16(a)
                  as amended and restated July 31, 1989,             Incorporated/        on Form S-1        
                  between Texas Eastern Corporation and QFB         AmeriGas, Inc.      (No. 33-69450)       
                  Partners                                                                                   
</TABLE>

                                      -48-
<PAGE>   51
                           INCORPORATION BY REFERENCE

<TABLE>
<CAPTION>
   EXHIBIT NO.                       EXHIBIT                             REGISTRANT             FILING             EXHIBIT
   -----------                       -------                             ----------             ------             -------
<S>               <C>                                                   <C>                 <C>                    <C>
     10.11        Amended and Restated Sublease Agreement               UGI Corporation        Form 10-K            10.35
                  dated April 1, 1988, between Southwest Salt                                  (9/30/94)         
                  Co. and AP Propane, Inc. (the "Southwest                                                       
                  Salt Co. Agreement")                                                                           
                                                                                                                 
     10.12        Letter dated September 26, 1994 pursuant to           UGI Corporation        Form 10-K            10.36
                  Article 1, Section 1.2 of the Southwest Salt                                 (9/30/94)         
                  Co. Agreement re option to renew for period                                                    
                  of June 1, 1995 to May 31, 2000                                                                
                                                                                                                 
     10.13        Financing Agreement dated as of November 5,              AmeriGas            Form 10-K            10.12
                  1997 between AmeriGas Propane, Inc. and               Partners, L.P.         (9/30/97)         
                  AmeriGas Propane, L.P.                                                                         
                                                                                                                 
     10.14        Agreement by Petrolane Incorporated and                  Petrolane           Form 10-K            10.13
                  certain of its subsidiaries parties thereto            Incorporated          (9/23/94)         
                  ("Subsidiaries") for the Sale of the Subsidiaries'                              
                  Inventory and Assets to the Goodyear Tire & Rubber                              
                  Company and D.C.H., Inc., as Purchaser, dated as of                                               
                  December 18, 1985                                                                                  
                                                                                                                 
    10.15**       UGI Corporation 1992 Stock Option and                 UGI Corporation        Form 10-Q           10(ee.)
                  Dividend Equivalent Plan, as amended May 19,                                 (6/30/92)         
                  1992                                                                                           
                                                                                                                 
    10.16**       UGI Corporation Annual Bonus Plan dated               UGI Corporation        Form 10-Q             10.4
                  March 8, 1996                                                                (6/30/96)         
                                                                                                                 
    10.17**       AmeriGas Partners, L.P. Annual Bonus Plan                AmeriGas            Form 10-Q             10.1
                  dated March 8, 1996                                   Partners, L.P.         (6/30/96)         
                                                                                                                 
    10.18**       1997 Stock Purchase Loan Plan                         UGI Corporation        Form 10-K            10.16
                                                                                               (9/30/97)         
                                                                                                                 
    10.19**       UGI Corporation Senior Executive Employee             UGI Corporation        Form 10-K            10.12
                  Severance Pay Plan effective January 1, 1997                                 (9/30/97)         
                                                                                                                 
    10.20**       AmeriGas Propane, Inc. Executive Employee                AmeriGas            Form 10-Q             10.1
                  Severance Pay Plan effective January 1, 1997          Partners, L.P.        (12/31/96)         
                                                                                                                 
    10.21**       Amendment No. 1 to AmeriGas Propane, Inc.                AmeriGas            Form 10-Q              10
                  Executive Employee Severance Pay Plan                 Partners, L.P.         (6/30/98)         
                                                                                                                 
    10.22**       UGI Corporation 1992 Non-Qualified Stock                 AmeriGas            Form 10-K            10.19
                  Option Plan                                           Partners, L.P.         (9/30/95)         
                                                                                                                 
    10.23**       Amendment No. 1 to the UGI Corporation 1992           UGI Utilities,         Form 10-Q              10
                  Non-Qualified Stock Option Plan                            Inc.              (6/30/97)         
</TABLE>

                                      -49-
<PAGE>   52
                           INCORPORATION BY REFERENCE

<TABLE>
<CAPTION>
   EXHIBIT NO.                       EXHIBIT                          REGISTRANT              FILING              EXHIBIT
   -----------                       -------                          ----------              ------              -------
<S>               <C>                                                <C>                  <C>                     <C>
    10.24**       Form of Change of Control Agreement between       UGI Corporation          Form 10-K             10.13
                  UGI Corporation and Lon R. Greenberg                                       (9/30/97)         
                                                                                                               
    10.25**       Form of Change of Control Agreement between       UGI Corporation          Form 10-K             10.15
                  UGI Corporation and Brendan P. Bovaird                                     (9/30/97)         
                                                                                                               
    10.26**       Form of Change of Control Agreement between           AmeriGas             Form 10-K             10.25
                  AmeriGas Propane, Inc. and Messrs. Bissell,        Partners, L.P.          (9/30/97)         
                  Grady and Knauss                                                                             
                                                                                                               
    10.27**       AmeriGas Propane, Inc. 1997 Long-Term                 AmeriGas             Form 10-K             10.26
                  Incentive Plan effective October 1, 1996           Partners, L.P.          (9/30/97)         
                                                                                                               
    10.28**       AmeriGas Propane, Inc. Supplemental                   AmeriGas             Form 10-K             10.27
                  Executive Retirement Plan effective October        Partners, L.P.          (9/30/97)         
                  1, 1996                                                                                      
                                                                                                               
    10.29**       UGI Corporation 1997 Stock Option and             UGI Corporation          Form 10-Q             10.2
                  Dividend Equivalent Plan                                                   (3/31/97)         
                                                                                                               
    10.30**       UGI Corporation Supplemental Executive            UGI Corporation          Form 10-Q              10
                  Retirement Plan Amended and Restated                                       (6/30/98)         
                  effective October 1, 1996                                                                    
                                                                                                               
      *13         Pages 2 through 15 of the AmeriGas                                                           
                  Partners, L.P. Annual Report for the year                                                    
                  ended September 30, 1998                                                                     
                                                                                                               
      *21         Subsidiaries of AmeriGas Partners, L.P.                                                      
                                                                                                               
     *27.1        Financial Data Schedule of AmeriGas                                                          
                  Partners, L.P.                                                                               
                                                                                                               
     *27.2        Financial Data Schedule of AmeriGas Finance
                  Corp.
</TABLE>

*    Filed herewith.

**   As required by Item 14(a)(3), this exhibit is identified as a compensatory
     plan or arrangement.

(b)      Reports on Form 8-K.

         During the last quarter of the 1998 fiscal year, neither the
Partnership nor AmeriGas Finance Corp. filed any Current Reports on Form 8-K.

                                      -50-
<PAGE>   53
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                       AMERIGAS PARTNERS, L.P.


Date:  December 14, 1998               By:   AmeriGas Propane, Inc.
                                             its General Partner




                                       By:   Martha B. Lindsay
                                             ----------------------------------
                                             Martha B. Lindsay
                                             Vice President - Finance
                                             and Chief Financial Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 14, 1998 by the following persons
on behalf of the Registrant and in the capacities with AmeriGas Propane, Inc.,
General Partner, indicated.


         SIGNATURE                                   TITLE
         ---------                                   -----



Lon R. Greenberg                                  President, Chairman and Chief
-----------------------------                     Executive Officer
Lon R. Greenberg                                  (Principal Executive Officer)
                                                  and Director

Martha B. Lindsay                                 Vice President - Finance
-----------------------------                     and Chief Financial Officer
Martha B. Lindsay                                 (Principal Financial Officer)

Richard R. Eynon                                  Controller and
-----------------------------                     Chief Accounting Officer
Richard R. Eynon                                  (Principal Accounting Officer)

                                      -51-
<PAGE>   54
         SIGNATURE                                            TITLE
         ---------                                            -----


Thomas F. Donovan                                             Director
-----------------------------
Thomas F. Donovan

Richard C. Gozon                                              Director
-----------------------------
Richard C. Gozon


James W. Stratton                                             Director
-----------------------------
James W. Stratton


Stephen A. Van Dyck                                           Director
-----------------------------
Stephen A. Van Dyck


Roger B. Vincent                                              Director
-----------------------------
Roger B. Vincent


David I. J. Wang                                              Director
-----------------------------
David I. J. Wang

                                      -52-
<PAGE>   55
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                       AMERIGAS FINANCE CORP.



Date:  December 14, 1998               By:   Martha B. Lindsay           
                                             ----------------------------------
                                             Martha B. Lindsay
                                             Vice President - Finance
                                             and Chief Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 14, 1998 by the following persons
on behalf of the Registrant and in the capacities indicated.


         SIGNATURE                                          TITLE



Lon R. Greenberg                                  President (Principal Executive
-----------------------------                     Officer) and Director
Lon R. Greenberg                                  


Martha B. Lindsay                                 Vice President - Finance
-----------------------------                     and Chief Financial Officer
Martha B. Lindsay                                 (Principal Financial Officer)
                                                  and Director

Richard R. Eynon                                  Controller
-----------------------------                     (Principal Accounting Officer)
Richard R. Eynon                                  


Eugene V. N. Bissell                              Director
-----------------------------
Eugene V. N. Bissell


Brendan P. Bovaird                                Director
-----------------------------
Brendan P. Bovaird

                                      -53-
<PAGE>   56
                             AMERIGAS PARTNERS, L.P
                             AMERIGAS FINANCE CORP.





                              FINANCIAL INFORMATION

                        FOR INCLUSION IN ANNUAL REPORT ON

                            FORM 10-K FOR THE FISCAL

                          YEAR ENDED SEPTEMBER 30, 1998

                                       F-1
<PAGE>   57
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES

   INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The consolidated financial statements of AmeriGas Partners, L.P. and
subsidiaries, together with the report thereon of Arthur Andersen LLP dated
November 13, 1998, listed in the following index, are included in AmeriGas
Partners' 1998 Annual Report to Unitholders and are incorporated herein by
reference. With the exception of the pages listed in this index and information
incorporated in Items 5 and 8, the 1998 Annual Report to Unitholders is not to
be deemed filed as part of this Report.

<TABLE>
<CAPTION>
                                                                                                          Annual Report
                                                                                     Form 10-K           to Unitholders
                                                                                       (page)                (page)
                                                                                       ------                ------
<S>                                                                                 <C>                 <C>
AmeriGas Partners, L.P. and Subsidiaries

Financial Statements:

    Report of Independent Public Accountants                                         Exhibit 13                15

    Consolidated Balance Sheets as of September 30,
       1998 and 1997                                                                 Exhibit 13                 2

    Consolidated Statements of Operations for the years ended September 30,
       1998, 1997 and 1996                                                           Exhibit 13                 3

    Consolidated Statements of Cash Flows for the years ended September 30,
       1998, 1997 and 1996                                                           Exhibit 13                 4

    Consolidated Statements of Partners' Capital for the years ended September
       30, 1998, 1997 and 1996                                                       Exhibit 13                 5

    Notes to Consolidated Financial Statements                                       Exhibit 13               6-13

Financial Statement Schedules:

    I -  Condensed Financial Information of Registrant
              (Parent Company)                                                       S-1 to S-3

    II - Valuation and Qualifying Accounts                                           S-4 to S-5

         Report of Independent Public Accountants
              on Financial Statement Schedules                                          S-6
</TABLE>

                                      F-2
<PAGE>   58
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES

   INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (continued)




<TABLE>
<CAPTION>
                                                                                     Form 10-K
                                                                                       (page)
                                                                                       ------
<S>                                                                                 <C>
AmeriGas Finance Corp.


    Financial Statements:

         Report of Independent Public Accountants                                       F-5

         Balance Sheets as of September 30, 1998 and 1997                               F-6

         Statements of Stockholder's Equity for the years ended September 30,
              1998, 1997 and 1996                                                       F-7

         Note to Financial Statements                                                   F-8
</TABLE>



We have omitted all other financial statement schedules because the required
information is either (1) not present; (2) not present in amounts sufficient to
require submission of the schedule; or (3) the information required is included
elsewhere in the financial statements or related notes.

                                      F-3
<PAGE>   59
                             AMERIGAS FINANCE CORP.


                              FINANCIAL STATEMENTS
              for the years ended September 30, 1998, 1997 and 1996

                                      F-4
<PAGE>   60
                             [ARTHUR ANDERSEN LLP]

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To AmeriGas Finance Corp.:


We have audited the accompanying balance sheets of AmeriGas Finance Corp. (a
Delaware corporation and a wholly owned subsidiary of AmeriGas Partners, L.P.)
as of September 30, 1998 and 1997, and the related statements of stockholder's
equity for each of the three years in the period ended September 30, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the balance sheets and statements of stockholder's equity
referred to above present fairly, in all material respects, the financial
position of AmeriGas Finance Corp. as of September 30, 1998 and 1997, in
conformity with generally accepted accounting principles.




ARTHUR ANDERSEN LLP

Chicago, Illinois
November 13, 1998

                                       F-5
<PAGE>   61
                             AMERIGAS FINANCE CORP.
             (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)

                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                     September 30,
                                                                   ----------------
ASSETS                                                             1998        1997
                                                                   ----        ----
<S>                                                               <C>         <C>
        Cash                                                      $1,000      $1,000
                                                                  ------      ------
                Total assets                                      $1,000      $1,000
                                                                  ======      ======


STOCKHOLDER'S  EQUITY

        Common stock, $.01 par value; 100 shares authorized;
                100 shares issued and outstanding                 $    1      $    1
        Additional paid-in capital                                   999         999
                                                                  ------      ------
                Total stockholder's equity                        $1,000      $1,000
                                                                  ======      ======
</TABLE>

The accompanying note is an integral part of these financial statements.

                                      F-6
<PAGE>   62
                             AMERIGAS FINANCE CORP.
             (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)

                       STATEMENTS OF STOCKHOLDER'S EQUITY




<TABLE>
<CAPTION>
                                              Additional
                                   Common       Paid-in       Retained
                                    Stock       Capital       Earnings
                                    -----       -------       --------
<S>                                <C>        <C>             <C>
BALANCE SEPTEMBER 30, 1996          $  1          $999          $--
                                    ----          ----          ---

BALANCE SEPTEMBER 30, 1997             1           999           --
                                    ----          ----          ---

BALANCE SEPTEMBER 30, 1998          $  1          $999          $--
                                    ====          ====          ===
</TABLE>

The accompanying note is an integral part of these financial statements.

                                      F-7
<PAGE>   63
                             AMERIGAS FINANCE CORP.
             (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)

                          NOTE TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1998 AND 1997

AmeriGas Finance Corp. (AmeriGas Finance), a Delaware corporation, was formed on
March 13, 1995 and is a wholly owned subsidiary of AmeriGas Partners, L.P.
(AmeriGas Partners). AmeriGas Partners was formed on November 2, 1994 as a
Delaware limited partnership. AmeriGas Partners was formed to acquire and
operate the propane businesses and assets of AmeriGas Propane, Inc., a Delaware
corporation (AmeriGas Propane), AmeriGas Propane-2, Inc. (AGP-2), and Petrolane
Incorporated (Petrolane) through AmeriGas Propane, L.P. (the "Operating
Partnership"). AmeriGas Partners holds a 98.99% limited partner interest in the
Operating Partnership and AmeriGas Propane, Inc., a Pennsylvania corporation and
the general partner of AmeriGas Partners (the "General Partner"), holds a 1.01%
general partner interest. On April 19, 1995, (i) pursuant to a Merger and
Contribution Agreement dated as of April 19, 1995, AmeriGas Propane and certain
of its operating subsidiaries and AGP-2 merged into the Operating Partnership
(the "Formation Merger"), and (ii) pursuant to a Conveyance and Contribution
Agreement dated as of April 19, 1995, Petrolane conveyed substantially all of
its assets and liabilities to the Operating Partnership (the "Petrolane
Conveyance"). As a result of the Formation Merger and the Petrolane Conveyance,
the General Partner and Petrolane received limited partner interests in the
Operating Partnership and the Operating Partnership owns substantially all of
the assets and assumed substantially all of the liabilities of AmeriGas Propane,
AGP-2 and Petrolane. AmeriGas Propane conveyed its limited partner interest in
the Operating Partnership to AmeriGas Partners in exchange for 2,922,235 Common
Units and 13,350,146 Subordinated Units of AmeriGas Partners and Petrolane
conveyed its limited partner interest in the Operating Partnership to AmeriGas
Partners in exchange for 1,407,911 Common Units and 6,432,000 Subordinated Units
of AmeriGas Partners. Both Common and Subordinated units represent limited
partner interests in AmeriGas Partners.

On April 19, 1995, AmeriGas Partners issued $100,000,000 face value of 10.125%
Senior Notes due April 2007. AmeriGas Finance serves as a co-obligor of these
notes.

AmeriGas Partners owns all 100 shares of AmeriGas Finance common stock
outstanding.

                                      F-8
<PAGE>   64
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                                 BALANCE SHEETS
                             (Thousands of dollars)





<TABLE>
<CAPTION>
                                                            September 30,
                                                         --------------------
                                                         1998            1997
                                                         ----            ----
<S>                                                    <C>             <C>
ASSETS

Accounts receivable                                    $  5,093        $  5,063
Investment in AmeriGas Propane, L.P.                    396,844         494,233
Deferred charges                                          2,609           2,911
                                                       --------        --------

        Total assets                                   $404,546        $502,207
                                                       ========        ========



LIABILITIES  AND  PARTNERS'  CAPITAL

Accounts payable                                       $     30        $     29
Accrued interest                                          4,641           4,641
                                                       --------        --------

        Total current liabilities                         4,671           4,670

Long-term debt                                          100,000         100,000

Partners' capital:
        Common unitholders                              157,866         208,253
        Subordinated unitholders                        139,012         185,310
        General partner                                   2,997           3,974
                                                       --------        --------

        Total partners' capital                         299,875         397,537
                                                       --------        --------

        Total liabilities and partners' capital        $404,546        $502,207
                                                       ========        ========
</TABLE>

                                      S-1
<PAGE>   65
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                            STATEMENTS OF OPERATIONS
                             (Thousands of dollars)



<TABLE>
<CAPTION>
                                                                     Year
                                                                     Ended
                                                                  September 30,
                                                     ---------------------------------------
                                                     1998             1997              1996
                                                     ----             ----              ----
<S>                                                <C>              <C>              <C>
Operating income (expenses)                        $     30         $    (29)        $    (36)
Equity in  income of AmeriGas Propane, L.P.          31,802           54,439           20,676
Interest expense                                    (10,430)         (10,430)         (10,402)
                                                   --------         --------         --------

Net income                                         $ 21,402         $ 43,980         $ 10,238
                                                   ========         ========         ========
</TABLE>

                                      S-2
<PAGE>   66
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                            STATEMENTS OF CASH FLOWS
                             (Thousands of dollars)



<TABLE>
<CAPTION>
                                                                                 Year
                                                                                 Ended
                                                                              September 30,
                                                                 ----------------------------------------
                                                                 1998             1997               1996
                                                                 ----             ----               ----
<S>                                                           <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                                             $  21,402         $  43,980         $  10,238
       Reconciliation of net income to net cash from
         operating activities:
          Equity in income of AmeriGas Propane, L.P.            (31,802)          (54,438)          (20,676)
          Increase in accounts receivable                           (30)             --                (113)
          Increase (decrease) in accounts payable                     1               (37)               35
          Increase in accrued interest                             --                --                  85
          Amortization of deferred debt issuance costs              305               306               305
                                                              ---------         ---------         ---------
            Net cash used by operating activities               (10,124)          (10,189)          (10,126)
                                                              ---------         ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Contribution to AmeriGas Propane, L.P.                       (12)              (26)             --
       Distributions from AmeriGas Propane, L.P.                103,184           103,050           102,853
                                                              ---------         ---------         ---------
            Net cash provided by investing activities           103,172           103,024           102,853
                                                              ---------         ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Distributions                                            (93,060)          (92,861)          (92,727)
       Capital contribution from General Partner                     12                26              --
                                                              ---------         ---------         ---------
            Net cash used by financing activities               (93,048)          (92,835)          (92,727)
                                                              ---------         ---------         ---------



Change in cash and cash equivalents                           $    --           $    --           $    --
                                                              =========         =========         =========

CASH AND CASH EQUIVALENTS:
       End of period                                          $    --           $    --           $    --
       Beginning of period                                         --                --                --
                                                              ---------         ---------         ---------
            Change                                            $    --           $    --           $    --
                                                              =========         =========         =========
</TABLE>

                                      S-3
<PAGE>   67
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                             (Thousands of dollars)






<TABLE>
<CAPTION>
                                                                             Charged
                                                            Balance at     (credited)                            Balance at
                                                            beginning      to costs and                            end of
                                                             of year         expenses           Other               year
                                                             -------         --------           -----               ----
<S>                                                        <C>             <C>                <C>               <C>
YEAR ENDED SEPTEMBER 30, 1998

Reserves deducted from assets in the consolidated 
 balance sheet:

      Allowance for doubtful accounts                        $  7,875        $  4,287         $ (5,730)(1)        $  6,432
                                                             ========                                             ========

      Allowance for amortization of other
          deferred costs                                     $    414        $    170         $   --              $    584
                                                             ========                                             ========

      Allowance for amortization of deferred
          financing costs                                    $  3,791        $  1,616         $   --              $  5,407
                                                             ========                                             ========

Other reserves:

      Self-insured property and casualty liability           $ 41,856        $ 10,606         $(10,620)(2)        $ 41,842
                                                             ========                                             ========


      Insured property and casualty liability                $  1,801        $  2,851         $   (352)(2)        $  4,300
                                                             ========                                             ========

      Environmental and other                                $ 19,133        $ (4,046)        $ (1,920)(2)        $ 13,167
                                                             ========                                             ========


YEAR ENDED SEPTEMBER 30, 1997

Reserves deducted from assets in the consolidated 
 balance sheet:

      Allowance for doubtful accounts                        $  6,579        $  6,986         $ (5,690)(1)        $  7,875
                                                             ========                                             ========

      Allowance for amortization of other
          deferred costs                                     $    244        $    170         $   --              $    414
                                                             ========                                             ========

      Allowance for amortization of deferred
          financing costs                                    $  2,238        $  1,553         $   --              $  3,791
                                                             ========                                             ========

Other reserves:

      Self-insured property and casualty liability           $ 42,332        $  9,421         $ (9,897)(2)        $ 41,856
                                                             ========                                             ========


      Insured property and casualty liability                $ 19,024        $  3,345         $(20,568)(2)        $  1,801
                                                             ========                                             ========

      Environmental and other                                $ 15,629        $  4,565         $ (1,126)(2)        $ 19,133
                                                             ========                                             ========
                                                                                                    65 (3)
</TABLE>

                                      S-4
<PAGE>   68
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES

           SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (CONTINUED)
                             (Thousands of dollars)






<TABLE>
<CAPTION>
                                                                                Charged
                                                               Balance at      (credited)                          Balance at
                                                               beginning      to costs and                           end of
                                                                of year         expenses          Other               year
                                                                -------         --------          -----               ----
<S>                                                            <C>            <C>                <C>               <C>
YEAR ENDED SEPTEMBER 30, 1996

Reserves deducted from assets in the consolidated 
 balance sheet:

      Allowance for doubtful accounts                           $  4,647        $  5,568         $ (3,636)(1)        $  6,579
                                                                ========                                             ========

      Allowance for amortization of other
          deferred costs                                        $     74        $    170         $   --              $    244
                                                                ========                                             ========

      Allowance for amortization of deferred
          financing costs                                       $    690        $  1,548         $   --              $  2,238
                                                                ========                                             ========

Other reserves:

      Self-insured property and casualty liability              $ 43,908        $ 12,401         $(13,977)(2)        $ 42,332
                                                                ========                                             ========

      Insured property and casualty liability                   $ 12,246        $  6,778         $   --              $ 19,024
                                                                ========                                             ========

      Environmental and other                                   $ 25,591        $ (7,127)        $ (2,645)(2)        $ 15,629
                                                                ========                                             ========
                                                                                                     (190)(3)
</TABLE>

(1)   Uncollectible accounts written off, net of recoveries.
(2)   Payments.
(3)   Other adjustments.

                                      S-5
<PAGE>   69
                             [ARTHUR ANDERSEN LLP]




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of AmeriGas Partners, L.P. and the
Board of Directors of AmeriGas Propane, Inc.:


We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in the AmeriGas Partners, L.P. annual
report to unitholders for the year ended September 30, 1998, incorporated by
reference in this Form 10-K, and have issued our report thereon dated November
13, 1998. Our audits were made for the purpose of forming an opinion on those
consolidated financial statements taken as a whole. The schedules listed in the
index on page F-2 are the responsibility of the management of AmeriGas Propane,
Inc. and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.







ARTHUR ANDERSEN LLP

Chicago, Illinois
November 13, 1998

                                       S-6
<PAGE>   70
                                  EXHIBIT INDEX


EXHIBIT NO.                DESCRIPTION


4.6                        Second Amendment dated as of September 15, 1998 to
                           Note Agreement dated as of April 12, 1995

10.2                       First Amendment dated as of September 15, 1998 to
                           Amended and Restated Credit Agreement dated as of
                           September 15, 1997

13                         Pages 2 to 15 of the AmeriGas Partners, L.P. 1998
                           Annual Report

21                         Subsidiaries of AmeriGas Partners, L.P.

27.1                       Financial Data Schedule of AmeriGas Partners, L.P.

27.2                       Financial Data Schedule of AmeriGas Finance Corp.