<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                      EXHIBIT 13


                                      AmeriGas Partners, L.P. 2004 Annual Report

CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)

<TABLE>
<CAPTION>
                                                                                                September 30,
                                                                                                -------------
                                                                                         2004                 2003
                                                                                      ----------           ----------
<S>                                                                                   <C>                  <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                           $   40,583           $   45,872
  Accounts receivable (less allowances for doubtful accounts of $11,964 and
     $9,192, respectively)                                                               141,709              114,082
  Accounts receivable - related parties                                                    5,137                2,915
  Inventories                                                                             84,753               70,171
  Prepaid expenses and other current assets                                               25,934               17,204
                                                                                      ----------           ----------
    Total current assets                                                                 298,116              250,244

Property, plant and equipment (less accumulated depreciation and
  amortization of $520,447 and $473,090, respectively)                                   592,353              594,604
Goodwill and excess reorganization value                                                 609,058              602,475
Intangible assets (less accumulated amortization
  of $16,158 and $11,934, respectively)                                                   28,612               27,032
Other assets                                                                              22,088               21,733
                                                                                      ----------           ----------
     Total assets                                                                     $1,550,227           $1,496,088
                                                                                      ==========           ==========

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
  Current maturities of long-term debt                                                $   60,068           $   58,705
  Accounts payable - trade                                                               112,315               87,352
  Accounts payable - related parties                                                       1,309                  930
  Employee compensation and benefits accrued                                              30,023               26,307
  Interest accrued                                                                        30,675               31,987
  Customer deposits and advances                                                          78,907               66,683
  Other current liabilities                                                               39,173               39,996
                                                                                      ----------           ----------
     Total current liabilities                                                           352,470              311,960

Long-term debt                                                                           841,283              868,581
Other noncurrent liabilities                                                              59,687               54,859

Commitments and contingencies (note 10)

Minority interests                                                                         7,749                7,005

Partners' capital:
  Common unitholders (units issued - 54,473,272 and 52,333,208, respectively)            276,887              255,423
  General partner                                                                          2,783                2,577
  Accumulated other comprehensive income (loss)                                            9,368               (4,317)
                                                                                      ----------           ----------
     Total partners' capital                                                             289,038              253,683
                                                                                      ----------           ----------
     Total liabilities and partners' capital                                          $1,550,227           $1,496,088
                                                                                      ==========           ==========
</TABLE>

See accompanying notes to consolidated financial statements.

10
<PAGE>

                                      AmeriGas Partners, L.P. 2004 Annual Report

CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per unit)

<TABLE>
<CAPTION>
                                                                      Year Ended September 30,
                                                           ---------------------------------------------
                                                              2004              2003            2002
                                                           -----------      -----------      -----------
<S>                                                        <C>              <C>              <C>
Revenues:
  Propane                                                  $ 1,639,700      $ 1,502,564      $ 1,191,649
  Other                                                        136,200          125,860          116,231
                                                           -----------      -----------      -----------
                                                             1,775,900        1,628,424        1,307,880
                                                           -----------      -----------      -----------

Costs and expenses:
  Cost of sales - propane                                      972,302          856,883          605,695
  Cost of sales - other                                         56,937           53,452           47,383
  Operating and administrative expenses                        501,073          488,434          447,809
  Depreciation and amortization                                 80,612           74,625           66,104
  Other income, net                                            (11,744)          (8,960)          (4,403)
                                                           -----------      -----------      -----------
                                                             1,599,180        1,464,434        1,162,588
                                                           -----------      -----------      -----------

Operating income                                               176,720          163,990          145,292
Loss on extinguishments of debt                                      -           (3,023)            (752)
Interest expense                                               (83,175)         (87,195)         (87,839)
                                                           -----------      -----------      -----------
Income before income taxes                                      93,545           73,772           56,701
Income tax expense                                                (269)            (586)            (340)
Minority interests                                              (1,422)          (1,228)            (995)
                                                           -----------      -----------      -----------
Net income                                                 $    91,854      $    71,958      $    55,366
                                                           ===========      ===========      ===========

General partner's interest in net income                   $       919      $       720      $       554
                                                           ===========      ===========      ===========

Limited partners' interest in net income                   $    90,935      $    71,238      $    54,812
                                                           ===========      ===========      ===========

Income per limited partner unit - basic and diluted        $      1.71      $      1.42      $      1.12

Average limited partner units outstanding (thousands):
  Basic                                                         53,097           50,267           48,909
                                                           ===========      ===========      ===========
  Diluted                                                       53,172           50,337           48,932
                                                           ===========      ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                                                              11
<PAGE>

                                      AmeriGas Partners, L.P. 2004 Annual Report

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)

<TABLE>
<CAPTION>
                                                                   Year Ended September 30.
                                                         -------------------------------------------
                                                            2004             2003             2002
                                                         ---------        ---------        ---------
<S>                                                      <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                             $  91,854        $  71,958        $  55,366
  Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                        80,612           74,625           66,104
       Other, net                                            7,466            6,747            1,321
       Net change in:
       Accounts receivable                                 (34,460)         (20,281)           6,834
       Inventories                                         (11,157)          (7,510)          10,576
       Accounts payable                                     22,000            1,389            9,579
       Other current assets and liabilities                 21,344           12,375            9,740
                                                         ---------        ---------        ---------
       Net cash provided by operating activities           177,659          139,303          159,520
                                                         ---------        ---------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for property, plant and equipment           (61,656)         (52,933)         (53,472)
  Proceeds from disposals of assets                         13,726            7,408            9,849
  Acquisitions of businesses, net of cash acquired         (42,593)         (27,000)            (736)
                                                         ---------        ---------        ---------
       Net cash used by investing activities               (90,523)         (72,525)         (44,359)
                                                         ---------        ---------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions                                           (117,537)        (111,462)        (108,504)
  Minority interest activity                                (1,059)            (686)            (624)
  (Decrease) increase in bank loans                              -          (10,000)          10,000
  Issuance of long-term debt                                30,135          122,780           40,900
  Repayment of long-term debt                              (55,678)        (144,701)         (99,149)
  Proceeds from issuance of Common Units                    51,197           75,005           56,556
  Capital contributions from General Partner                   517              758              571
                                                         ---------        ---------        ---------
        Net cash used by financing activities              (92,425)         (68,306)        (100,250)
                                                         ---------        ---------        ---------
Cash and cash equivalents (decrease) increase            $  (5,289)       $  (1,528)       $  14,911
                                                         =========        =========        =========

CASH AND CASH EQUIVALENTS
  End of year                                               40,583        $  45,872        $  47,400
  Beginning of year                                         45,872           47,400           32,489
                                                         ---------        ---------        ---------
     (Decrease) increase                                 $  (5,289)       $  (1,528)       $  14,911
                                                         =========        =========        =========
</TABLE>

See accompanying notes to consolidated financial statements.

12
<PAGE>

                                      AmeriGas Partners, L.P. 2004 Annual Report

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Thousands of dollars, except unit data)

<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                                                               other        Total
                                      Number of units                             General  comprehensive  partners'
                                  Common    Subordinated  Common    Subordinated  partner  income (loss)   capital
                                ----------  ------------ ---------  ------------ --------  -------------  ---------
<S>                             <C>         <C>          <C>        <C>          <C>       <C>            <C>
Balance September 30, 2001      36,761,239    9,891,072  $ 187,001  $    28,513  $  2,174  $     (14,183) $ 203,505
Net income                                                  43,719       11,093       554                    55,366
Net losses on derivative
  instruments                                                                                    (10,664)   (10,664)
Reclassification of net losses
  on derivative instruments                                                                       31,493     31,493
                                                         ---------  -----------  --------   -------------  ---------
Comprehensive income                                        43,719       11,093       554         20,829     76,195
Distributions                                              (85,659)     (21,760)   (1,085)                 (108,504)
Common Units issued in
  connection with executive
  compensation plan                  2,000                      43                                               43
Common Units issued in
  connection with public
  offering                       2,428,047                  49,623                    501                    50,124
Common Units sold to
  General Partner                  350,000                   6,933                     70                     7,003
                                ----------  -----------  ---------  -----------  --------  -------------  ---------
Balance September 30, 2002      39,541,286    9,891,072    201,660       17,846     2,214          6,646    228,366
                                ----------  -----------  ---------  -----------  --------  -------------  ---------
Net income                                                  69,859        1,379       720                    71,958
Net gains on derivative
  instruments                                                                                     14,909     14,909
Reclassification of net gains
  on derivative instruments                                                                      (25,872)   (25,872)
                                                         ---------  -----------  --------  -------------  ---------
Comprehensive income                                        69,859        1,379       720        (10,963)    60,995
Distributions                                             (104,907)      (5,440)   (1,115)                 (111,462)
Common Units issued in
  connection with public
  offering                       2,900,000                  75,005                    758                    75,763
Common Units issued in
  connection with executive
  compensation plan                    850                      21                                               21
Conversion of Subordinated
  Units                          9,891,072   (9,891,072)    13,785      (13,785)                                  -
                                ----------  -----------  ---------  -----------  --------  -------------  ---------
Balance September 30, 2003      52,333,208           -     255,423            -     2,577         (4,317)   253,683
                                ----------  -----------  ---------  -----------  --------  -------------  ---------
Net income                                                  90,935                    919                    91,854
Net gains on derivative
  instruments                                                                                     41,094     41,094
Reclassification of net gains
  on derivative instruments                                                                      (27,409)   (27,409)
                                                         ---------               --------  -------------  ---------
Comprehensive income                                        90,935                    919         13,685    105,539
Distributions                                             (116,362)                (1,175)                 (117,537)
Common Units issued in
  connection with public
  offering                       2,100,000                  51,197                    517                    51,714
Common Units issued in
  connection with incentive
  compensation plans                40,064                   1,090                                            1,090
Adjustment to goodwill
  contributed (note 2)                                      (5,396)                   (55)                   (5,451)
                                ----------  -----------  ---------  -----------  --------  -------------  ---------
Balance September 30, 2004      54,473,272            -  $ 276,887  $         -  $  2,783  $       9,368  $ 289,038
                                ----------  -----------  ---------  -----------  --------  -------------  ---------
</TABLE>

See accompanying notes to consolidated financial statements.

                                                                              13
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)

NOTE 1 - PARTNERSHIP ORGANIZATION AND FORMATION

AmeriGas Partners, L.P. ("AmeriGas Partners") was formed on November 2, 1994,
and is a publicly traded limited partnership. AmeriGas Partners conducts a
national propane distribution business through its principal operating
subsidiaries AmeriGas Propane, L.P. ("AmeriGas OLP") and AmeriGas OLP's
subsidiary, AmeriGas Eagle Propane, L.P. ("Eagle OLP"). AmeriGas Partners,
AmeriGas OLP and Eagle OLP are Delaware limited partnerships. AmeriGas OLP and
Eagle OLP are collectively referred to herein as "the Operating Partnerships,"
and AmeriGas Partners, the Operating Partnerships and all of their subsidiaries
are collectively referred to herein as "the Partnership" or "we."

      The Operating Partnerships are engaged in the distribution of propane and
related equipment and supplies. The Operating Partnerships comprise the largest
retail propane distribution business in the United States serving residential,
commercial, industrial, motor fuel and agricultural customers from locations in
46 states, including Alaska and Hawaii.

      At September 30, 2004, AmeriGas Propane, Inc. (the "General Partner"), an
indirect wholly owned subsidiary of UGI Corporation ("UGI"), held a 1% general
partner interest in AmeriGas Partners and a 1.01 % general partner interest in
AmeriGas OLP. The General Partner and its wholly owned subsidiary Petrolane
Incorporated ("Petrolane," a predecessor company of the Partnership) also owned
24,525,004 Common Units of AmeriGas Partners. The remaining 29,948,268 Common
Units are publicly held. The Common Units represent limited partner interests in
AmeriGas Partners.

      AmeriGas Partners holds a 99% limited partner interest in AmeriGas OLP.
AmeriGas OLP, indirectly through subsidiaries, owns an effective 0.1 % general
partner interest and a direct approximate 99.8% limited partner interest in
Eagle OLP. An unrelated third party ("minority partner") holds an approximate
0.1 % limited partner interest in Eagle OLP.

      AmeriGas Partners and the Operating Partnerships have no employees.
Employees of the General Partner conduct, direct and manage our operations. The
General Partner provides management and administrative services to AmeriGas
Eagle Holdings, Inc. ("AEH"), the general partner of Eagle OLP, under a
management services agreement. The General Partner is reimbursed monthly for all
direct and indirect expenses it incurs on our behalf.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION PRINCIPLES. The consolidated financial statements include the
accounts of AmeriGas Partners and its majority-owned subsidiaries. We eliminate
all significant intercompany accounts and transactions when we consolidate. We
account for the General Partner's 1.01 % interest in AmeriGas OLP and the
minority partner's 0.1 % limited partner interest in Eagle OLP as minority
interests in the consolidated financial statements. The Partnership's 50%
ownership interest in Atlantic Energy, Inc. ("Atlantic Energy") was accounted
for by the equity method (see Note 17). Atlantic Energy's principal asset is a
propane storage terminal located in Chesapeake, Virginia.

RECLASSIFICATIONS. We have reclassified certain prior year balances to conform
to the current year presentation.

USE OF ESTIMATES. We make estimates and assumptions when preparing financial
statements in conformity with accounting principles generally accepted in the
United States. These estimates and assumptions affect the reported amounts of
assets and liabilities, revenues and expenses, as well as the disclosure of
contingent assets and liabilities. Actual results could differ from these
estimates.

REVENUE RECOGNITION. We recognize revenue from the sale of propane principally
as product is delivered to customers. Revenue from the sale of appliances and
equipment is recognized at the time of sale or installation. Revenue from
repairs and maintenance is recognized upon completion of the service. Revenues
from annually billed nonrefundable tank fees are recorded on a straight-line
basis over one year.

INVENTORIES. Our inventories are stated at the lower of cost or market. We
determine cost using an average cost method for propane, specific identification
for appliances, and the first-in, first-out ("FIFO") method for all other
inventories.

PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION.

We record property, plant and equipment at cost. The amounts we assign to
property, plant and equipment of businesses we acquire are based upon estimated
fair value at date of acquisition. When plant and equipment are retired or
otherwise disposed of, we remove the cost and accumulated depreciation from the
appropriate accounts and any resulting gain or loss is recognized in "Other
income, net" in the Consolidated Statements of Operations. We compute
depreciation expense on plant and equipment using the straight-line method over
estimated service lives generally ranging from 15 to 40 years for buildings and
improvements; 7 to 30 years for storage and customer tanks and cylinders; and 2
to 10 years for vehicles, equipment, and office furniture and fixtures. Costs to
install Partnership-owned tanks at customer locations, net of amounts billed to
customers, are capitalized and depreciated over the estimated period of benefit
not exceeding ten years. Depreciation expense was $75,468 in 2004, $70,423 in
2003 and $61,993 in 2002.


14
<PAGE>
                                      AmeriGas Partners, L.P. 2004 Annual Report


INTANGIBLE ASSETS. The Partnership's intangible assets comprise the following at
September 30:

<TABLE>
<CAPTION>
                                          2004         2003
                                       ---------    ---------
<S>                                    <C>          <C>
SUBJECT TO AMORTIZATION:
  Customer relationships and
     noncompete agreements             $  44,770    $  38,966
  Accumulated amortization               (16,158)     (11,934)
                                       ---------    ---------
                                       $  28,612    $  27,032
                                       ---------    ---------

NOT SUBJECT TO AMORTIZATION:
  Goodwill                               515,738    $ 509,155
  Excess reorganization value             93,320       93,320
                                       ---------    ---------
                                       $ 609,058    $ 602,475
                                       =========    =========
</TABLE>

      The increase in the carrying amounts of goodwill and other intangible
assets during 2004 resulted from Partnership business acquisitions. The increase
in goodwill was partially offset by the settlement of an income tax benefit held
by Petrolane, which related to a period prior to the formation of the
Partnership. The settlement resulted in a reduction to the value of the net
assets contributed to AmeriGas OLP by Petrolane at the Partnership formation
date. The adjustment was recorded by the Partnership during the year ended
September 30, 2004 as a $5,451 reduction in both goodwill and partners' capital.

      We amortize customer relationship and noncompete agreement intangibles
over their estimated periods of benefit which do not exceed 15 years.
Amortization expense of intangible assets was $4,224 in 2004, $3,283 in 2003 and
$3,287 in 2002. Estimated amortization expense of intangible assets during the
next five fiscal years is as follows: Fiscal 2005 - $4,108; Fiscal 2006 -
$3,720; Fiscal 2007 - $3,081; Fiscal 2008 - $2,806; Fiscal 2009 - $2,484.

      Effective October 1, 2001, we early adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 addresses the financial accounting and reporting
for acquired goodwill and other intangible assets and supersedes Accounting
Principles Board ("APB") Opinion No. 17, "Intangible Assets." SFAS 142 addresses
the financial accounting and reporting for intangible assets acquired
individually or with a group of other assets (excluding those acquired in a
business combination) at acquisition and also addresses the financial accounting
and reporting for goodwill and other intangible assets subsequent to their
acquisition. Under SFAS 142, an intangible asset is amortized over its useful
life unless that life is determined to be indefinite. Goodwill, including excess
reorganization value, and other intangible assets with indefinite lives are not
amortized but are subject to tests for impairment at least annually. In
accordance with the provisions of SFAS 142, the Partnership ceased the
amortization of goodwill and excess reorganization value effective October 1,
2001.

      SFAS 142 requires that we perform an impairment test annually or more
frequently if events or circumstances indicate that the value of goodwill might
be impaired. No provisions for goodwill impairments were recorded during 2004,
2003 and 2002.

DEFERRED DEBT ISSUANCE COSTS. Included in other assets are net deferred debt
issuance costs of $12,638 and $14,022 at September 30, 2004 and 2003,
respectively. We are amortizing these costs over the terms of the related debt.

COMPUTER SOFTWARE COSTS. We include in property, plant and equipment costs
associated with computer software we develop or obtain for use in our business.
We amortize computer software costs on a straight-line basis over expected
periods of benefit not exceeding seven years once the installed software is
ready for its intended use.

CUSTOMER DEPOSITS. We offer certain of our customers prepayment programs which
require customers to pay a fixed periodic amount, or to otherwise prepay a
portion of their anticipated propane purchases. Customer prepayments, which
exceed associated billings, are classified as customer deposits and advances on
the Consolidated Balance Sheets.

ENVIRONMENTAL AND OTHER LEGAL MATTERS. We accrue environmental investigation and
clean-up costs when it is probable that a liability exists and the amount or
range of amounts can be reasonably estimated. Amounts accrued generally reflect
our best estimate of costs expected to be incurred or the minimum liability
associated with a range of expected environmental response costs. Our estimated
liability for environmental contamination is reduced to reflect anticipated
participation of other responsible parties but is not reduced for possible
recovery from insurance carriers. Similar to environmental matters, we  accrue
investigation and other legal costs when it is probable that a liability exists
and the amount or range of amounts can be reasonably estimated. We do not
discount to present value the costs of future expenditures for environmental
liabilities.

INCOME TAXES. AmeriGas Partners and the Operating Partnerships are not directly
subject to federal income taxes. Instead, their taxable income or loss is
allocated to their individual partners. The Operating Partnerships have
corporate subsidiaries which are directly subject to federal income taxes.
Accordingly, our Consolidated Financial Statements reflect income taxes related
to these corporate subsidiaries. Net income for financial statement purposes may
differ significantly from taxable income reportable to unitholders. This is a
result of (1) differences between the tax basis and financial reporting basis of
assets and liabilities and (2) the taxable income allocation requirements of the
Third Amended and Restated Agreement of Limited Partnership of AmeriGas
Partners, L.P ("Partnership Agreement") and the Internal Revenue Code.


                                                                              15
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)


UNIT-BASED COMPENSATION. As permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), we apply the provisions of APB Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), in recording
compensation expense for grants of equity instruments to employees. We recorded
unit-based compensation expense of $1,265 in 2004, $2,151 in 2003 and $1,018 in
2002. If we had determined unit-based compensation expense under the fair value
method prescribed by the provisions of SFAS 123, net income and basic and
diluted income per unit would have been as follows:

<TABLE>
<CAPTION>
                                          2004        2003         2002
                                       ---------   ---------    ---------
<S>                                    <C>         <C>          <C>
Net income as reported                 $  91,854   $  71,958    $  55,366
Add: Unit-based employee
   compensation expense
   included in reported net
   income                                  1,265       2,151        1,018
Deduct: Total unit-based
   employee compensation
   expense determined
   under the fair value
   method for all awards                  (1,795)     (2,582)      (1,392)
                                       ---------   ---------    ---------
Pro forma net income                   $  91,324   $  71,527    $  54,992
                                       ---------   ---------    ---------
Basic and diluted income
  per limited partner unit:
    As reported                        $    1.71   $    1.42    $    1.12
    Pro forma                          $    1.70   $    1.41    $    1.11
                                       =========   =========    =========
</TABLE>

For a description of unit-based compensation and related disclosure, see Note 9.

NET INCOME PER UNIT. Net income per unit is computed by dividing net income,
after deducting the General Partner's interest in AmeriGas Partners, by the
weighted average number of limited partner units outstanding.

      Effective April 2004, the Partnership adopted Emerging Issues Task Force
Issue No. 03-6, "Participating Securities and the Two-Class Method under FASB
Statement No. 128" ("EITF 03-6"), which results in the calculation of net income
per limited partner unit for each period according to distributions declared and
participation rights in undistributed earnings, as if all of the earnings for
the period had been distributed. In periods with undistributed earnings above
certain levels, the calculation according to the two-class method results in an
increased allocation of undistributed earnings to the General Partner and a
dilution of the earnings to the limited partners. Due to the seasonality of the
propane business, the dilutive effect of EITF 03-6 on net income per limited
partner unit will typically impact the first three fiscal quarters. EITF 03-6
did not impact net income per limited partner unit for the 2004 fiscal year.

      Potentially dilutive Common Units included in the diluted limited partner
units outstanding computation of 75,000 in 2004, 70,000 in 2003 and 23,000 in
2002 reflect the effects of Common Unit awards issued under AmeriGas Propane,
Inc. incentive compensation plans.

DERIVATIVE INSTRUMENTS. SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133"), as amended, establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that all derivative instruments be recognized as either assets or
liabilities and measured at fair value. The accounting for changes in fair value
depends upon the purpose of the derivative instrument and whether it is
designated and qualifies for hedge accounting. For a detailed description of the
derivative instruments we use, our objectives for using them, and related
supplemental information required by SFAS 133, see Note 13.

CONSOLIDATED STATEMENTS OF CASH FLOWS. We define cash equivalents as all highly
liquid investments with maturities of three months or less when purchased. We
record cash equivalents at cost plus accrued interest, which approximates market
value. We paid interest totaling $84,421 in 2004, $89,157 in 2003 and $86,556 in
2002.

COMPREHENSIVE INCOME. Comprehensive income comprises net income and other
comprehensive income (loss). Other comprehensive income (loss) results from
gains and losses on derivative instruments qualifying as cash flow hedges.

SEGMENT INFORMATION. We have determined that we have a single reportable
operating segment which engages in the distribution of propane and related
equipment and supplies. No single customer represents ten percent or more of
consolidated revenues. In addition, virtually all of our revenues are derived
from sources within the United States and virtually all of our long-lived assets
are located in the United States.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS. In December 2003, the Financial
Accounting Standards Board ("FASB") revised Financial Interpretation No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46"), which was originally
issued in January 2003 and clarifies Accounting Research Bulletin No. 51,
"Consolidated Financial Statements." FIN 46 was effective immediately for
variable interest entities created or obtained after January 31, 2003. For
variable interest entities created or acquired before February 1, 2003, FIN 46
was effective beginning with our interim period ended March 31, 2004. If certain
conditions are met, FIN 46 requires the primary beneficiary to consolidate
certain variable interest entities. The Partnership has not created or obtained
any variable interest entities prior to, or after January 31, 2003. Therefore,
the adoption of FIN 46 did not affect the Partnership's financial position or
results of operations.

NOTE 3 - ACQUISITIONS

During 2004, AmeriGas OLP acquired substantially all of the retail propane
distribution assets and business of Horizon Propane LLC ("Horizon Propane") and
several other retail propane businesses for total cash consideration of $42,593.
In conjunction with these acquisitions, liabilities of $1,561 were incurred. The
operating results of these businesses have been included in our operating
results from their respective dates of acquisition. The total purchase price of
these acquisitions has been allocated to the assets and liabilities acquired as
follows:

<TABLE>
<S>                                                             <C>
Net current assets                                              $   1,958
Property, plant and equipment                                      24,431
Goodwill                                                           11,977
Customer relationships and noncompete agreements
  (estimated useful life of 10 and 5 years, respectively)           5,788
                                                                ---------
Total                                                           $  44,154
                                                                =========
</TABLE>

      The pro forma effect of all of these transactions was not material to the
Partnership's operations.

      During 2003, AmeriGas OLP acquired several retail propane distribution
businesses for total cash consideration of $27,000. In conjunction with these
acquisitions, liabilities of $1,469 were incurred. The operating results of
these businesses have been included in our operating results from their
respective dates of acquisition. The total purchase price of these acquisitions
has been allocated to the assets and liabilities acquired as follows:

<TABLE>
<S>                                                             <C>
Net current assets                                              $   2,260
Property, plant and equipment                                       6,095
Goodwill                                                           12,552
Customer relationships and noncompete agreements
  (estimated useful life of 15 and 5 years, respectively)           7,729
Other assets and liabilities                                         (167)
                                                                ---------
Total                                                           $  28,469
                                                                =========
</TABLE>

      The pro forma effect of all of these transactions was not material to the
Partnership's results of operations.

NOTE 4 - QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH

The Partnership makes distributions to its partners approximately 45 days after
the end of each fiscal quarter in a total amount equal to its Available Cash for
such quarter. Available Cash generally means:

      1.    all cash on hand at the end of such quarter,

      2.    plus all additional cash on hand as of the date of determination
            resulting from borrowings after the end of such quarter,

      3.    less the amount of cash reserves established by the General Partner
            in its reasonable discretion.

16
<PAGE>

                                      AmeriGas Partners, L.P. 2004 Annual Report

      The General Partner may establish reserves for the proper conduct of the
Partnership's business and for distributions during the next four quarters. In
addition, certain of the Partnership's debt agreements require reserves be
established for the payment of debt principal and interest.

      Distributions of Available Cash are made 98% to limited partners and 2% to
the General Partner. The Partnership may pay an incentive distribution if
Available Cash exceeds the Minimum Quarterly Distribution of $0.55 ("MQD") on
all units.

Note 5 - Debt

Long-term debt comprises the September following at 30:

<TABLE>
<CAPTION>
                                                  2004          2003
                                               ----------    ----------
<S>                                            <C>           <C>
AmeriGas Partners Senior Notes:
  8.875%, due May 2011 (including
     unamortized premium of $8,301
     and $6,426, respectively,
     effective rate - 8.46%)                   $  396,301    $  366,426
  10%, due April 2006 (less
     unamortized discount of $107
     and $167, respectively, effective
     rate - 10.125%)                               59,893        59,833
AmeriGas OLP First Mortgage Notes:
  Series A, 9.34% - 11.71%, due
     April 2005 through April 2009
     (including unamortized premium
     of $5,159 and $6,581,
     respectively, effective rate - 8.91%)        165,159       166,581
  Series B, 10.07%, due April 2005 (including
     unamortized premium of $301 and $1,082,
     respectively, effective rate - 8.74%)         40,301        81,082
  Series C, 8.83%, due April 2005
     through April 2010                            82,500        96,250
  Series D, 7.11%, due March 2009
     (including unamortized premium of
     $1,595 and $1,890, respectively,
     effective rate - 6.52%)                       71,595        71,890
  Series E, 8.50%, due July 2010
     (including unamortized premium of
     $124 and $137, respectively, effective
     rate - 8.47%)                                 80,124        80,137
Other                                               5,478         5,087
                                               ----------    ----------
Total long-term debt                              901,351       927,286
Less current maturities (including net
  unamortized premium of $3,104
  and $3,082, respectively)                       (60,068)      (58,705)
                                               ----------    ----------
Total long-term debt due after one year        $  841,283    $  868,581
                                               ==========    ==========
</TABLE>

      Scheduled principal repayments of long-term debt for each of the next five
fiscal years ending September 30 are as follows: 2005 - $56,964; 2006 -
$114,854; 2007 - $54,283; 2008 - $54,044; 2009-$123,911.

AMERIGAS PARTNERS SENIOR NOTES. The 8.875% Senior Notes generally cannot be
redeemed at our option prior to May 20, 2006. A redemption premium applies
thereafter through May 19, 2009. The 10% Senior Notes generally cannot be
redeemed at our option prior to their maturity. AmeriGas Partners prepaid
$15,000 of 10.125% Senior Notes in November 2001 at a redemption price of
103.375% and the remaining $85,000 of 10.125% Senior Notes in January 2003 at a
redemption price of 102.25%, in each instance, including accrued interest.
AmeriGas Partners recognized losses of $3,023 and $752 associated with these
prepayments which amounts are reflected in "Loss on extinguishments of debt" in
the 2003 and 2002 Consolidated Statements of Operations, respectively. AmeriGas
Partners may, under certain circumstances following the disposition of assets or
a change of control, be required to offer to prepay the Senior Notes.

AMERIGAS OLP FIRST MORTGAGE NOTES. AmeriGas OLP's First Mortgage Notes are
collateralized by substantially all of its assets. The General Partner and
Petrolane are co-obligors of the Series A, B, and C First Mortgage Notes, and
the General Partner is co-obligor of the Series D and E First Mortgage Notes.
AmeriGas OLP may prepay the First Mortgage Notes, in whole or in part. These
prepayments include a make whole premium. Following the disposition of assets or
a change of control, AmeriGas OLP may be required to offer to prepay the First
Mortgage Notes, in whole or in part.

AMERIGAS OLP CREDIT AGREEMENT. AmeriGas OLP's Credit Agreement ("Credit
Agreement") consists of (1) a Revolving Credit Facility and (2) an Acquisition
Facility. AmeriGas OLP's obligations under the Credit Agreement are
collateralized by substantially all of its assets. The General Partner and
Petrolane are guarantors of amounts outstanding under the Credit Agreement.

      Under the Revolving Credit Facility, AmeriGas OLP may borrow up to
$100,000 (including a $100,000 sublimit for letters of credit) subject to
restrictions in the AmeriGas Partners Senior Notes indentures (see "Restrictive
Covenants" below). The Revolving Credit Facility may be used for working capital
and general purposes of AmeriGas OLP. The Revolving Credit Facility expires on
October 15, 2008, but may be extended for additional one-year periods with the
consent of the participating banks representing at least 80% of the commitments
thereunder. There were no borrowings outstanding under AmeriGas OLP's Revolving
Credit Facility at September 30, 2004 and 2003. Issued and outstanding letters
of credit, which reduce available borrowings under the Revolving Credit
Facility, totaled $45,938 and $33,363 at September 30, 2004 and 2003,
respectively.

      The Acquisition Facility provides AmeriGas OLP with the ability to borrow
up to $75,000 to finance the purchase of propane businesses or propane business
assets or, to the extent it is not so used, for working capital and general
purposes, subject to restrictions in the AmeriGas Partners Senior Notes
indentures. The Acquisition Facility operates as a revolving facility through
October 15, 2008, at which time amounts then outstanding will be immediately due
and payable. There were no amounts outstanding under the Acquisition Facility at
September 30, 2004 and 2003.

      The Revolving Credit Facility and the Acquisition Facility permit AmeriGas
OLP to borrow at prevailing interest rates, including the base rate, defined as
the higher of the Federal Funds rate plus 0.50% or the agent bank's prime rate
(4.75% at September 30,

                                                                              17
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)

2004), or at a two-week, one-, two-, three-, or six-month Eurodollar Rate, as
defined in the Credit Agreement, plus a margin. The margin on Eurodollar Rate
borrowings (which ranges from 1.00% to 2.25%), and the Credit Agreement facility
fee rate (which ranges from 0.25% to 0.50%) are dependent upon AmeriGas OLP's
ratio of funded debt to earnings before interest expense, income taxes,
depreciation and amortization ("EBITDA"), each as defined in the Credit
Agreement.

GENERAL PARTNER FACILITY. AmeriGas OLP also has a Revolving Credit Agreement
with the General Partner under which it may borrow up to $20,000 for working
capital and general purposes. This agreement is coterminous with, and generally
comparable to, AmeriGas OLP's Revolving Credit Facility except that borrowings
under the General Partner Facility are unsecured and subordinated to all senior
debt of AmeriGas OLP. Interest rates on borrowings are based upon one-month
offshore interbank offering rates. Facility fees are determined in the same
manner as fees under the Revolving Credit Facility. UGI has agreed to contribute
up to $20,000 to the General Partner to fund such borrowings.

RESTRICTIVE COVENANTS. The Senior Notes of AmeriGas Partners restrict the
ability of the Partnership to, among other things, incur additional
indebtedness, make investments, incur liens, issue preferred interests, prepay
subordinated indebtedness, and effect mergers, consolidations and sales of
assets. Under the Senior Notes indentures, AmeriGas Partners is generally
permitted to make cash distributions equal to available cash, as defined, as of
the end of the immediately preceding quarter, if certain conditions are met.
These conditions include:

      1.    no event of default exists or would exist upon making such
            distributions and

      2.    the Partnership's consolidated fixed charge coverage ratio, as
            defined, is greater than 1.75-to-1.

      If the ratio in item 2 above is less than or equal to 1.75-to-1, the
Partnership may make cash distributions in a total amount not to exceed $24,000
less the total amount of distributions made during the immediately preceding 16
fiscal quarters. At September 30, 2004, such ratio was 3.14-to-1.

      The Credit Agreement and the First Mortgage Notes restrict the incurrence
of additional indebtedness and also restrict certain liens, guarantees,
investments, loans and advances, payments, mergers, consolidations, asset
transfers, transactions with affiliates, sales of assets, acquisitions and other
transactions. The Credit Agreement and First Mortgage Notes require the ratio of
total indebtedness, as defined, to EBITDA, as defined (calculated on a rolling
four-quarter basis or eight-quarter basis divided by two), to be less than or
equal to 4.75-to-1 with respect to the Credit Agreement and 5.25-to-1 with
respect to the First Mortgage Notes. In addition, the Credit Agreement requires
that AmeriGas OLP maintain a ratio of EBITDA to interest expense, as defined, of
at least 2.25-to-1 on a rolling four-quarter basis. Generally, as long as no
default exists or would result, AmeriGas OLP is permitted to make cash
distributions not more frequently than quarterly in an amount not to exceed
available cash, as defined, for the immediately preceding calendar quarter. At
September 30, 2004, the Partnership was in compliance with its financial
covenants.

NOTE 6 - EMPLOYEE RETIREMENT PLANS

The General Partner sponsors a 401 (k) savings plan for eligible employees.
Participants in the savings plan may contribute a portion of their compensation
on a before-tax basis. Generally, employee contributions are matched on a
dollar-for-dollar (100%) basis up to 5% of eligible compensation. In conjunction
with a short-term cost savings program, for the period March 1, 2002 to
September 30, 2002, employee contributions were matched at a rate of 25% up to
5% of eligible compensation. The cost of benefits under our savings plan was
$6,397 in 2004, $5,555 in 2003 and $2,904 in 2002.

NOTE 7 - INVENTORIES

Inventories comprise the following at September 30:

<TABLE>
<CAPTION>
                                          2004         2003
                                      ----------    ----------
<S>                                   <C>           <C>
Propane gas
Materials, supplies and other         $   65,938    $   51,691
Appliances for sale                       13,120        13,199
                                           5,695         5,281
                                      ----------    ----------
Total inventories                     $   84,753    $   70,171
                                      ==========    ==========
</TABLE>

      In addition to inventories on hand, we also enter into contracts to
purchase propane to meet a portion of our supply requirements. Generally, these
contracts are one- to three-year agreements subject to annual review and call
for payment based on either market prices at date of delivery or fixed prices.

18
<PAGE>
                                      AmeriGas Partners, L.P. 2004 Annual Report


NOTE 8 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprise the following at September 30:

<TABLE>
<CAPTION>
                                         2004          2003
                                      ----------    ----------
<S>                                   <C>           <C>
Land                                  $   60,833    $   62,419
Buildings and improvements                81,817        78,729
Transportation equipment                  69,130        80,668
Storage facilities                        91,779        88,472
Equipment, primarily cylinders
   and tanks                             796,131       749,867
Other                                     13,110         7,539
                                      ----------    ----------
Gross property, plant and equipment    1,112,800     1,067,694
Less accumulated depreciation and
   amortization                         (520,447)     (473,090)
                                      ----------    ----------
Net property, plant and equipment     $  592,353    $  594,604
                                      ==========    ==========
</TABLE>

NOTE 9 - PARTNERS' CAPITAL AND INCENTIVE COMPENSATION PLANS

In accordance with the Partnership Agreement, the General Partner may, in its
sole discretion, cause the Partnership to issue an unlimited number of
additional Common Units and other equity securities of the Partnership ranking
on a parity with the Common Units.

      In May 2004, AmeriGas Partners sold 2,000,000 Common Units in an
underwritten public offering at a public offering price of $25.61 per unit. In
June 2004, the underwriters partially exercised their overallotment option in
the amount of 100,000 Common Units. The net proceeds of the public offering
totaling $51,197 and the associated capital contributions from the General
Partner totaling $1,045 were contributed to AmeriGas OLP and used to reduce
indebtedness under its bank credit agreement and for general partnership
purposes.

      In June 2003, AmeriGas Partners sold 2,900,000 Common Units in an
underwritten public offering at a public offering price of $27.12 per unit. The
net proceeds of the public offering totaling $75,005 and the associated capital
contributions from the General Partner totaling $1,531 were contributed to
AmeriGas OLP and used to reduce indebtedness under its bank credit agreement and
for general partnership purposes.

      In December 2001 and January 2002, AmeriGas Partners sold an aggregate
2,428,047 Common Units in conjunction with an underwritten public offering at a
public offering price of $21.50 per unit. The net proceeds of the public
offering and the associated capital contributions from the General Partner
totaling $50,635 were contributed to AmeriGas OLP and used to reduce
indebtedness under its bank credit agreement and for working capital. In October
2001, AmeriGas Partners closed the sale of 350,000 Common Units to the General
Partner at the trade-date market price of $19.81 per unit. The proceeds of this
sale and the associated capital contributions from the General Partner totaling
$7,075 were contributed to AmeriGas OLP which used the proceeds to reduce
borrowings under its bank credit agreement and for working capital.

      Under the AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan ("2000
Incentive Plan"), the General Partner may grant to key employees the rights to
receive a total of 500,000 Common Units, or cash equivalent to the fair market
value of such Common Units, upon the achievement of performance goals. In
addition, the 2000 Incentive Plan may provide for the crediting of Partnership
distribution equivalents to participants' accounts. Distribution equivalents
will be paid in cash and such payment may, at the participant's request, be
deferred. The actual number of Common Units (or their cash equivalents)
ultimately issued, and the actual amount of distribution equivalents paid, is
dependent upon the achievement of performance goals. Generally, each grant,
unless paid, will terminate when the participant ceases to be employed by the
General Partner. We also have a nonexecutive Common Unit plan under which the
General Partner may grant awards of up to a total of 200,000 Common Units to key
employees who do not participate in the 2000 Incentive Plan. Generally, awards
under the nonexecutive plan vest at the end of a three-year period and will be
paid in Common Units and cash. During 2004, 2003 and 2002, the General Partner
made awards under the 2000 Incentive Plan and the nonexecutive plan representing
51,200, 112,500 and 43,250 Common Units, respectively. We recorded compensation
expense of $1,265 in 2004, $2,151 in 2003 and $1,018 in 2002 relating to these
plans. At September 30, 2004, and 2003, awards representing 142,788 and 209,336
Common Units, respectively, were outstanding.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

We lease various buildings and other facilities and transportation, computer and
office equipment under operating leases. Certain of the leases contain renewal
and purchase options and also contain step-rent provisions. Our aggregate rental
expense for such leases was $45,613 in 2004, $43,179 in 2003 and $41,974 in
2002.

      Minimum future payments under noncancelable operating leases are as
follows:

<TABLE>
<CAPTION>
Year Ending September 30,
<S>                                             <C>
2005                                            $  40,747
2006                                               34,725
2007                                               29,722
2008                                               24,690
2009                                               19,582
Thereafter                                         45,075
                                                ---------
Total minimum operating lease payments          $ 194,541
                                                =========
</TABLE>

      The Partnership enters into fixed price contracts with suppliers to
purchase a portion of its propane supply requirements. These contracts generally
have terms of less than one year. As of September 30, 2004, contractual
obligations under these contracts totaled $12,826.

      The Partnership also enters into contracts to purchase propane to meet
additional supply requirements. Generally, these contracts are one- to
three-year agreements subject to annual review and call for payment based on
either market prices at the date of delivery or fixed prices.

      The Partnership has succeeded to certain lease guarantee obligations of
Petrolane relating to Petrolane's divestiture of non-propane operations before
its 1989 acquisition by QFB Partners. Future lease payments under these leases
total approximately $12,000 at September 30, 2004. The leases expire through
2010 and some of them are currently in default. The Partnership has succeeded to
the indemnity agreement of Petrolane by which Texas Eastern Corporation ("Texas
Eastern"), a prior owner of Petrolane, agreed to indemnify Petrolane against any
liabilities arising out of the conduct of businesses that do not relate to, and
are not a part of, the propane business, including lease guarantees. In December
1999, Texas Eastern filed for dissolution under the Delaware General Corporation
Law. PanEnergy Corporation ("PanEnergy"), Texas Eastern's sole stockholder,
subsequently assumed all of Texas Eastern's liabilities as of December 20, 2002,
to the extent of the value of Texas Eastern's assets transferred to PanEnergy as
of that date (which was estimated to exceed $94,000), and to the extent that
such liabilities arise within ten years from Texas Eastern's date of
dissolution. Notwithstanding the dissolution proceeding, and based on Texas
Eastern previously having satisfied directly defaulted lease obligations without
the Partnership's having to honor its guarantee, we believe that the probability
that the Partnership will be required to directly satisfy the lease obligations
subject to the indemnification agreement is remote.

      On August 21, 2001, AmeriGas Partners, through AmeriGas OLP, acquired the
propane distribution businesses of Columbia Energy Group (the "2001
Acquisition") pursuant to the terms of a purchase agreement (the "2001
Acquisition Agreement") by and among Columbia Energy Group ("CEG"), Columbia
Propane Corporation ("Columbia Propane"), Columbia Propane, L.P. ("CPLP"), CP
Holdings, Inc. ("CPH," and together with Columbia Propane and CPLP, the "Company
Parties"), AmeriGas Partners, AmeriGas OLP and the General Partner (together
with AmeriGas Partners and AmeriGas OLP, the "Buyer Parties"). As a result of
the

                                                                              19
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)

2001 Acquisition, AmeriGas OLP acquired all of the stock of Columbia Propane and
CPH and substantially all of the partnership interests of CPLP. Under the terms
of an earlier acquisition agreement (the "1999 Acquisition Agreement"), the
Company Parties agreed to indemnify the former general partners of National
Propane Partners, L.P. (a predecessor company of the Columbia Propane
businesses) and an affiliate (collectively, "National General Partners") against
certain income tax and other losses that they may sustain as a result of the
1999 acquisition by CPLP of National Propane Partners, L.P. (the "1999
Acquisition") or the operation of the business after the 1999 Acquisition
("National Claims"). At September 30, 2004, the potential amount payable under
this indemnity by the Company Parties was approximately $60,000. These indemnity
obligations will expire on the date that CPH acquires the remaining outstanding
partnership interest of CPLP, which is expected to occur on or after July 19,
2009.

      Under the terms of the 2001 Acquisition Agreement, CEG agreed to indemnify
the Buyer Parties and the Company Parties against any losses that they sustain
under the 1999 Acquisition Agreement and related agreements ("Losses"),
including National Claims, to the extent such claims are based on acts or
omissions of CEG or the Company Parties prior to the 2001 Acquisition. The Buyer
Parties agreed to indemnify CEG against Losses, including National Claims, to
the extent such claims are based on acts or omissions of the Buyer Parties or
the Company Parties after the 2001 Acquisition. CEG and the Buyer Parties have
agreed to apportion certain losses resulting from National Claims to the extent
such losses result from the 2001 Acquisition itself.

      Samuel and Brenda Swiger and their son (the "Swigers") sustained personal
injuries and property damage as a result of a fire that occurred when propane
that leaked from an underground line ignited. In July 1998, the Swigers filed a
class action lawsuit against AmeriGas Propane, L.P. (named incorrectly as
"UGl/AmeriGas, Inc."), in the Circuit Court of Monongalia County, West Virginia,
in which they sought to recover an unspecified amount of compensatory and
punitive damages and attorney's fees, for themselves and on behalf of persons in
West Virginia for whom the defendants had installed propane gas lines, allegedly
resulting from the defendants' failure to install underground propane lines at
depths required by applicable safety standards. The court recently granted the
plaintiff's motion to include customers acquired from Columbia Propane in August
2001 as additional potential class members and to amend their complaint to name
additional parties consistent with such ruling. In 2003, we settled the
individual personal injury and property damage claims of the Swigers. Class
counsel has indicated that the class is seeking compensatory damages in excess
of $12,000 plus punitive damages, civil penalties, and attorneys' fees. We
believe we have good defenses to the claims of the class members and intend to
vigorously defend against the remaining claims in this lawsuit.

      We also have other contingent liabilities, pending claims and legal
actions arising in the normal course of our business. We cannot predict with
certainty the final results of these and the aforementioned matters. However, it
is reasonably possible that some of them could be resolved unfavorably to us.
Although management currently believes, after consultation with counsel, that
damages or settlements, if any, recovered by the plaintiffs in such claims or
actions will not have a material adverse effect on our financial position,
damages or settlements could be material to our operating results or cash flows
in future periods depending on the nature and timing of future developments with
respect to these matters and the amounts of future operating results and cash
flows.

NOTE 11 - RELATED PARTY TRANSACTIONS

Pursuant to the Partnership Agreement and a Management Services Agreement among
AEH, the general partner of Eagle OLP, and the General Partner, the General
Partner is entitled to reimbursement for all direct and indirect expenses
incurred or payments it makes on behalf of the Partnership. These costs, which
totaled $304,575 in 2004, $284,266 in 2003 and $262,398 in 2002, include
employee compensation and benefit expenses of employees of the General Partner
and general and administrative expenses.

      UGI provides certain financial and administrative services to the General
Partner. UGI bills the General Partner for all direct and indirect corporate
expenses incurred in connection with providing these services and the General
Partner is reimbursed by the Partnership for these expenses. Such corporate
expenses totaled $11,307 in 2004, $8,295 in 2003 and $6,341 in 2002. In
addition, UGI and certain of its subsidiaries provide office space and
automobile liability insurance to the Partnership. These expenses totaled $2,679
in 2004, $1,683 in 2003 and $1,502 in 2002.

      Subsequent to the Columbia Propane acquisition and prior to the sale of
the Partnership's 50% ownership interest in Atlantic Energy (see Note 17), the
Partnership purchased propane on behalf of Atlantic Energy. Atlantic Energy
reimbursed AmeriGas OLP for its purchases plus interest as Atlantic Energy sold
such propane to third parties or to AmeriGas OLP itself. The total dollar value
of propane purchased on behalf of Atlantic Energy was $30,034, $17,225 and
$11,370 in 2004, 2003 and 2002, respectively. Purchases of propane by AmeriGas
OLP from Atlantic Energy during 2004, 2003 and 2002 totaled $29,279, $23,940 and
$12,131, respectively.

      In November 2004, in conjunction with the Partnership's sale of its 50%
ownership interest in Atlantic Energy, UGI Asset Management, Inc. ("UGI Asset
Management") and AmeriGas OLP entered into a Product Sales Agreement whereby UGI
Asset Management has agreed to sell and AmeriGas OLP has agreed to purchase a
minimum of 25 million gallons of propane annually at the Atlantic Energy
terminal in Chesapeake, Virginia. The Product Sales Agreement will take effect
on April 1, 2005 and continue for a primary term of five years with an option to
extend the agreement for up to an additional five years. The price to be paid
for product purchased under the agreement will be determined annually using a
contractual formula that takes into account published index prices and the
locational value of deliveries at the Atlantic Energy terminal.

      Prior to the sale of Atlantic Energy, the General Partner provided it with
other services including accounting, insurance and other administrative services
and was reimbursed for the related costs. Such costs were not material during
2004, 2003 or 2002. In addition, AmeriGas OLP entered into product cost hedging
contracts on behalf of Atlantic Energy. When these contracts were settled,
AmeriGas OLP was reimbursed the cost of any losses, or distributed the proceeds
of any gains, to Atlantic Energy.

20
<PAGE>

                                      AmeriGas Partners, L.P. 2004 Annual Report

      Amounts due from Atlantic Energy at September 30, 2004 and 2003 totaled
$2,906 and $2,042, respectively, which amounts are included in accounts
receivable - related parties in the Consolidated Balance Sheets.

NOTE 12- OTHER CURRENT LIABILITIES

Other current liabilities comprise the following at September 30:

<TABLE>
<CAPTION>
                                                  2004          2003
                                                ---------     ---------
<S>                                             <C>           <C>
Self-insured property and casualty liability    $  15,824     $  12,672
Taxes other than income taxes                       5,564         4,994
Fair value of derivative instruments                    -         2,970
Propane exchange liability                          6,587         8,689
Deferred tank fee revenue                           7,787         7,563
Other                                               3,411         3,108
                                                ---------     ---------
Total other current liabilities                 $  39,173     $  39,996
                                                =========     =========
</TABLE>

NOTE 13 - FINANCIAL INSTRUMENTS

In accordance with its propane price risk management policy, the Partnership
uses derivative instruments, including price swap and option contracts and
contracts for the forward sale of propane, to manage the cost of a portion of
its forecasted purchases of propane and to manage market risk associated with
propane storage inventories. These derivative instruments have been designated
by the Partnership as cash flow or fair value hedges under SFAS 133. The fair
values of these derivative instruments are affected by changes in propane
product prices. In addition to these derivative instruments, the Partnership may
also enter into contracts for the forward purchase of propane as well as fixed
price supply agreements to manage propane market price risk. These contracts
generally qualify for the normal purchases and normal sales exception of SFAS
133 and therefore are not adjusted to fair value.

      On occasion, we enter into interest rate protection agreements ("IRPAs")
designed to manage interest rate risk associated with planned issuances of
fixed-rate long-term debt. We designate these IRPAs as cash flow hedges. Gains
or losses on IRPAs are included in other comprehensive income and are
reclassified to interest expense as the interest expense on the associated debt
issue affects earnings.

      During the years ended September 30, 2004, 2003 and 2002, the net loss
recognized in earnings representing cash flow hedge ineffectiveness was $1,534,
$3,146 and $2,123, respectively. Gains and losses included in accumulated other
comprehensive income at September 30, 2004 relating to cash flow hedges will be
reclassified into (1) cost of sales when the forecasted purchase of propane
subject to the hedges impacts net income and (2) interest expense when interest
on anticipated issuances of fixed-rate long-term debt is reflected in net
income. Included in accumulated other comprehensive income at September 30, 2004
are net losses of approximately $1,716 from IRPAs associated with forecasted
issuances of ten-year debt generally anticipated to occur during the next two
years. The amount of net loss which is expected to be reclassified into net
income during the next twelve months is not material. The remaining net gain on
derivative instruments included in accumulated other comprehensive income at
September 30,2004 of $12,046 is principally associated with future purchases of
propane generally anticipated to occur during the next twelve months. The actual
amount of gains or losses on unsettled derivative instruments that ultimately is
reclassified into net income will depend upon the value of such derivative
contracts when settled. The fair value of derivative instruments is included in
other current assets, other current liabilities and other noncurrent liabilities
in the Consolidated Balance Sheets.

      The carrying amounts of financial instruments included in current assets
and current liabilities (excluding unsettled derivative instruments and current
maturities of long-term debt) approximate their fair values because of their
short-term nature. The carrying amounts and estimated fair values of our
remaining financial instruments (including unsettled derivative instruments) at
September 30 are as follows:

<TABLE>
<CAPTION>
                                                Carrying    Estimated
                                                 Amount     Fair Value
                                                --------    ----------
<S>                                             <C>         <C>
2004:
  Propane swap and option contracts             $ 13,139    $   13,139
  Interest rate protection agreements             (1,734)       (1,734)
  Long-term debt                                 901,351       959,355
2003:
  Propane swap and option contracts             $   (637)   $     (637)
  Interest rate protection agreements               (188)         (188)
  Long-term debt                                 927,286     1,024,717
                                                ========    ==========
</TABLE>

      We estimate the fair value of long-term debt by using current market
prices and by discounting future cash flows using rates available for similar
type debt. Fair values of derivative instruments reflect the estimated amounts
that we would receive or (pay) to terminate the contracts at the reporting date
based upon quoted market prices of comparable contracts.

      We have financial instruments such as short-term investments and trade
accounts receivable which could expose us to concentrations of credit risk. We
limit our credit risk from short-term investments by investing only in
investment-grade commercial paper and U.S. Government securities. The credit
risk from trade accounts receivable is limited because we have a large customer
base which extends across many different U.S. markets. We attempt to minimize
our credit risk associated with our derivative financial instruments through the
application of credit policies.

NOTE 14 - OTHER INCOME, NET

Other income, net, comprises the following:

<TABLE>
<CAPTION>
                                   2004        2003        2002
                                 --------    --------    --------
<S>                              <C>         <C>         <C>
Gain on sales of fixed assets    $ (2,306)   $ (2,173)   $ (1,719)
Finance charges                    (6,456)     (3,942)     (2,169)
Derivative loss                         -           -       2,123
Other                              (2,982)     (2,845)     (2,638)
                                 --------    --------    --------
Total other income, net          $(11,744)   $ (8,960)   $ (4,403)
                                 ========    ========    ========
</TABLE>

      Derivative losses of $1,534 and $3,146 are included in "cost of sales -
propane" in the 2004 and 2003 Consolidated Statement of Operations,
respectively.

                                                                              21
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)

NOTE 15 - MANAGEMENT REALIGNMENT

In June 2003, the General Partner announced a plan to realign its management
structure. Pursuant to the plan, the Partnership closed its seven regional
offices located across the country and relocated four regional vice presidents
to its Valley Forge, Pennsylvania headquarters. In addition, the Partnership
reconfigured its eighty geographically-based market areas into approximately
sixty market areas.

      The new management structure further streamlined business processes,
eliminated duplication and reduced overhead expenses. As a result of the
management realignment, the Partnership incurred charges for severance, lease
termination and other expenses totaling $3,756 which are reflected as operating
and administrative expenses in the 2003 Consolidated Statement of Operations. As
of September 30, 2003, $736 of costs associated with the management realignment,
principally comprising employee severance and lease termination costs, were
included in employee compensation and benefits accrued and other current
liabilities in the 2003 Consolidated Balance Sheet.

NOTE 16 - CONVERSION OF SUBORDINATED UNITS

In December 2002, the General Partner determined that the cash-based performance
and distribution requirements for the conversion of the then-remaining 9,891,072
Subordinated Units, all of which were held by the General Partner, had been met
in respect of the quarter ended September 30, 2002. As a result, the
Subordinated Units were converted to an equivalent number of Common Units
effective November 18, 2002. The conversion of the Subordinated Units did not
result in an increase in the total number of AmeriGas Partners limited partner
units outstanding.

NOTE 17- SUBSEQUENT EVENT

In November 2004, the Partnership sold its 50% ownership interest in Atlantic
Energy consisting of 3,500 shares of common stock ("Shares") pursuant to a Stock
Purchase Agreement ("Agreement") by and between AmerE Holdings, Inc. ("AmerE"),
an indirect wholly owned subsidiary of AmeriGas OLP, and UGI Asset Management,
an indirect wholly owned subsidiary of UGI. UGI Asset Management purchased
AmerE's Shares for $11,850 in cash, subject to post-closing adjustments, as
defined in the Agreement.

NOTE 18 - QUARTERLY DATA (UNAUDITED)

The following unaudited quarterly data includes all adjustments (consisting only
of normal recurring adjustments) which we consider necessary for a fair
presentation. Our quarterly results fluctuate because of the seasonal nature of
our propane business.

<TABLE>
<CAPTION>
                              December 31,         March 31,            June 30,         September 30,
                            2003      2002      2004      2003      2004      2003      2004      2003
                          --------  --------  --------  --------  --------  --------  --------  --------
<S>                       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Revenues                  $460,198  $445,031  $687,710  $625,546  $315,107  $287,136  $312,885  $270,711
Operating income (loss)   $ 65,559  $ 64,414  $127,959  $115,547  $ (3,993) $ (6,467) $(12,805) $ (9,504)
Net income (loss)         $ 43,149  $ 40,912  $105,650  $ 89,876  $(24,132) $(27,414) $(32,813) $(31,416)
                          --------  --------  --------  --------  --------  --------  --------  --------
Net income (loss) per
 limited partner unit (a):
    Basic                 $   0.78  $   0.79  $   1.68  $   1.64  $  (0.45) $  (0.54) $  (0.60) $  (0.59)
    Diluted               $   0.77  $   0.79  $   1.68  $   1.64  $  (0.45) $  (0.54) $  (0.60) $  (0.59)
                          --------  --------  --------  --------  --------  --------  --------  --------
</TABLE>

(a)   The Partnership adopted EITF 03-6 effective April 2004 (see Note 2). Basic
      and diluted net income per limited partner unit have been recalculated in
      accordance with EITF 03-6 for the periods presented prior to June 30,
      2004.

22
<PAGE>

                                      AmeriGas Partners, L.P. 2004 Annual Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE PARTNERS OF AMERIGAS PARTNERS, L.P. AND THE BOARD OF DIRECTORS OF
AMERIGAS PROPANE, INC.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of partners' capital and of cash flows
present fairly, in all material respects, the financial position of AmeriGas
Partners, L.P. and its subsidiaries at September 30, 2004 and 2003, and the
results of their operations and their cash flows for each of the three years in
the period ended September 30, 2004 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

      As discussed in Note 2 to the consolidated financial statements, the
Partnership adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" in fiscal 2002.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 6, 2004

GENERAL PARTNER'S REPORT

      The Partnership's consolidated financial statements and other financial
information contained in this Annual Report are prepared by the management of
the General Partner, AmeriGas Propane, Inc., which is responsible for their
fairness, integrity and objectivity. The consolidated financial statements and
related information were prepared in accordance with accounting principles
generally accepted in the United States of America and include amounts that are
based on management's best judgments and estimates.

      The General Partner maintains a system of internal controls. Management of
the General Partner believes the system provides reasonable, but not absolute,
assurance that assets are safeguarded and that transactions are executed in
accordance with management's authorization and are properly recorded to permit
the preparation of reliable financial information. There are limits in all
systems of internal control, based on the recognition that the cost of the
system should not exceed the benefits to be derived. We believe that the
internal control system is cost effective and provides reasonable assurance that
material errors or irregularities will be prevented or detected within a timely
period. The internal control system and compliance therewith are monitored by
UGI Corporation's internal audit staff. However, this report is not the same as
the report of management on the effectiveness of internal control over financial
reporting that will be included in the Partnership's annual report on Form 10-K
for the fiscal year ending September 30, 2005.

      The Audit Committee of the Board of Directors of the General Partner is
composed of three members, none of whom is an employee of the General Partner.
This Committee is responsible for overseeing the financial reporting process and
the adequacy of controls, and for monitoring the independence of the
Partnership's independent accountants and the performance of the independent
accountants and internal audit staff. The Committee appoints the independent
accountants to conduct the annual audit of the Partnership's consolidated
financial statements. The Committee is also responsible for maintaining direct
channels of communication among the Board of Directors, management, and both the
independent accountants and internal auditors.

      The independent accountants perform certain procedures in order to express
an opinion on the consolidated financial statements and to obtain reasonable
assurance that such financial statements are free of material misstatement.

/s/ Eugene V. N. Bissell
Eugene V. N. Bissell
Chief Executive Officer

/s/ Martha B. Lindsay
Martha B. Lindsay
Chief Financial Officer

/s/ William J. Stanczak
William J. Stanczak
Chief Accounting Officer

                                                                              23