<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, 1997

                         Commission file number 1-13692

                             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:

<TABLE>
<CAPTION>
                                                         NAME OF EACH EXCHANGE
          TITLE OF CLASS                                  ON WHICH REGISTERED
          --------------                                 ---------------------
<S>                                                   <C>
Common Units representing                             New York Stock Exchange,Inc.
   limited partner interests
</TABLE>


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, 1997 was approximately
$460,122,910. At December 1, 1997 there were outstanding 22,060,407 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, 1997 are incorporated by
reference in Part II of this Form 10-K.
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I               BUSINESS                                            PAGE
<S>                  <C>                                                  <C>
     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 8          Financial Statements and Supplementary
                     Data.............................................    29

     Item 9          Changes in and Disagreements with Accountants
                     on Accounting and Financial Disclosure...........    29

PART III             MANAGEMENT AND SECURITY HOLDERS

     Item 10         Directors and Executive Officers of the
                     General Partner..................................    29

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

     Item 12         Security Ownership of Certain Beneficial
                     Owners and Management............................    47

     Item 13         Certain Relationships and Related
                     Transactions.....................................    50

PART IV              ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS

     Item 14         Exhibits, Financial Statement Schedules
                     and Reports on Form 8-K..........................    51

                     Signatures.......................................    58

                     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. AmeriGas Partners
conducts its business principally through its subsidiary, AmeriGas Propane, L.P.
(the "Operating Partnership"), a Delaware limited partnership. AmeriGas Partners
and the Operating Partnership are referred to collectively as the "Partnership."
On April 19, 1995, the Operating Partnership acquired the propane distribution
businesses and assets of AmeriGas Propane, Inc., a Delaware corporation,
AmeriGas Propane-2, Inc. (collectively, "AGP" or "AmeriGas Propane") and
Petrolane Incorporated, a California corporation ("Petrolane," and together with
AGP, the "Predecessors") (the "Partnership Formation") in connection with a
concurrent initial public offering of common units by AmeriGas Partners. Unless
the context otherwise requires, references to "AmeriGas Partners" and the
"Partnership" include the Operating Partnership, its Predecessors and its
subsidiaries.

      AmeriGas Propane, Inc. (the "General Partner"), a Pennsylvania corporation
and an indirect, wholly owned subsidiary of UGI Corporation ("UGI"), serves as
the sole general partner of AmeriGas Partners and the Operating Partnership. In
addition to its aggregate 2% general partner interest in the Partnership, the
General Partner and its affiliates own an aggregate 56.5% limited partner
interest in the Partnership. The General Partner is responsible for managing and
operating the Partnership. The common units of AmeriGas Partners, which
represent limited partner interests, are traded on the New York Stock Exchange
under the symbol "APU. "

      The Partnership is the largest retail propane distributor in the United
States, serving approximately 956,000 residential, commercial, industrial,
agricultural and motor fuel customers from over 600 district locations in 45
states, as of September 30, 1997. The Partnership's operations are located
primarily in the Northeast, Southeast, Great Lakes and West Coast regions of the
United States and are conducted principally under the trade name AmeriGas. The
retail propane sales volume of the Partnership was approximately 807 million
gallons during the twelve months ended September 30, 1997. Based on the most
recent information supplied by the American Petroleum Institute, management
believes that the Partnership's sales volume in fiscal year 1997 constituted
approximately 9% of the domestic retail market for propane (sales for other than
chemical uses). The Partnership's executive offices are located at 460 North
Gulph Road, King of Prussia, Pennsylvania 19406, and its telephone number is
(610) 337-7000.

      AmeriGas Finance Corp. ("AmeriGas Finance"), a Delaware corporation, was
formed on March 13, 1995, and is a wholly owned subsidiary of AmeriGas Partners.
AmeriGas Finance serves as co-obligor for certain debt securities of the
Partnership. It has nominal assets and does not conduct any operations.
Accordingly, a discussion of the results of operations, liquidity and capital
resources of AmeriGas Finance is not presented. Its executive offices are
located at 460


                                      -1-
<PAGE>   4
North Gulph Road, King of Prussia, Pennsylvania 19406, and its telephone number
is (610) 337-7000.

BUSINESS STRATEGY

      The Partnership's strategy is to continue to expand its operations and
increase its market share both through the acquisition of local and regional
propane distributors and through internal growth, including the opening of new
district locations. These new district locations are known as "scratch-starts."
Although less costly than acquisitions of existing businesses, scratch-starts
typically do not reach target sales and profitability levels for a number of
years. Acquisitions will be a principal element of growth for the Partnership,
as 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. According to the American Petroleum Institute, the domestic
retail market for propane (annual sales for other than chemical uses) in 1995
was approximately 9.3 billion gallons. Based on this market estimate, and
information published by LP-Gas Magazine, the General Partner believes there are
numerous potential acquisition candidates because the propane industry is highly
fragmented, with the ten largest retailers comprising approximately 35% of
domestic sales.

      In fiscal year 1997, the Partnership acquired a total of fourteen propane
operations with aggregate annual retail sales of approximately 8.9 million
gallons. It also opened 9 scratch-starts. In October 1997, the Partnership
acquired two propane businesses with combined annual sales volume of
approximately 2.6 million gallons. 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. There can be no
assurance that the Partnership will find attractive acquisition candidates in
the future, or that the Partnership will be able to acquire such candidates on
economically acceptable terms

      Management of the General Partner believes there are opportunities for
limited growth in the Partnership's existing business arising from, among other
things, marketing programs designed to increase propane consumption, new
construction and commercial growth in the territories served by the Partnership,
and conversions to propane by potential customers currently using electricity or
fuel oil.

HISTORY OF THE PARTNERSHIP'S OPERATIONS

      AmeriGas, Inc. ("AmeriGas"), the parent of AGP and a wholly owned
subsidiary of UGI, began propane distribution operations in 1959. In the ten
fiscal years preceding the Partnership's formation, AGP 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.


                                      -2-
<PAGE>   5
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.

      The primary customers for propane are residential, commercial,
agricultural, engine fuel and industrial users to whom natural gas is not
readily available. Customers use propane primarily for home heating, water
heating, cooking, engine fuel and process applications. 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, the Partnership is unable to predict
the extent to which the price of electricity may drop. Therefore, the
Partnership cannot predict the ultimate impact that electric utility
deregulation may have on propane's competitive price advantage over electricity.

PRODUCTS, SERVICES AND MARKETING

      As of September 30, 1997, the Partnership distributed propane to
approximately 956,000 customers from over 600 district locations in 45 states.
The Partnership's operations are located primarily in the Northeast, Southeast,
Great Lakes and West Coast regions of the United States. From many of its
district locations, the Partnership also sells, installs and services equipment
related to its propane distribution business, including heating and cooking
appliances and, at some locations, 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. The Partnership also engages in the
business of delivering liquefied petroleum gases by truck as a common carrier.
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, engine fuel, agricultural and wholesale. Approximately
79% of the Partnership's 1997 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


                                      -3-
<PAGE>   6
in fiscal 1997 represented approximately 41% of retail gallons sold and 53% 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
an engine 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, crop
drying and poultry brooding.

      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 2,600 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, which typically have
a capacity of 5 to 30 gallons. When these cylinders are delivered to customers,
empty cylinders are picked up for replenishment at district locations or are
filled in place. In its wholesale operations, the Partnership principally sells
propane to large industrial end-users and other propane distributors.


                                      -4-
<PAGE>   7
PROPANE SUPPLY AND STORAGE

      Supplies of propane from the Partnership's sources historically have been
readily available. In the year ended September 30, 1997, the Partnership
purchased over half of its propane from 10 suppliers, including the Amoco
companies (Amoco Canada and Amoco Oil Company, approximately 15%) and Warren Gas
Liquids (formerly, Warren Petroleum Company), approximately 11%. Management
believes that if supplies from either source were interrupted, it 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 Amoco and Warren, no single supplier provided more
than 10% of the Partnership's total domestic propane supply in the fiscal year
ended September 30, 1997. 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 300 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 1997 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, Rhode
Island and several other locations.

      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
average 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 hedging techniques designed to
control product costs, as well as by passing on product cost increases. Product
cost declined in 1997 and is now at more normal historic levels.

      The Partnership expects to be able to secure adequate supplies for its
customers during fiscal year 1998, however, periods of severe cold weather,
supply interruptions, or other unforeseen events, could result in rapid
increases in product cost. The General Partner is gradually expanding its
product price risk management activities to reduce the effect of price
volatility on its product costs. Current strategies include the use of summer
storage, prepaid


                                      -5-
<PAGE>   8
contracts for future product delivery and, to some extent, derivative commodity
instruments such as options and propane price swaps.

      The following graph shows the average quarterly 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>
                  Mont Belvieu         Conway
                        (Cents per Gallon)
<S>                  <C>              <C>
Oct-92               35.5455          30.8693
Nov-92               32.6842          33.2171
Dec-92               31.0536          35.8452
Jan-93               33.8875           44.175
Feb-93               33.0921          34.7763
Mar-93               34.4565          34.9185
Apr-93               34.6488          32.9762
May-93               32.7813          32.3635
Jun-93               32.7216          33.9659
Jul-93                31.494          32.6845
Aug-93               30.7727          33.4943
Sep-93               30.1667          34.5179
Oct-93               29.5655          33.8214
Nov-93               27.7625          32.1375
Dec-93               24.7262           25.994
Jan-94               26.6131          25.7083
Feb-94               29.3487          27.7237
Mar-94               28.4674           26.875
Apr-94               28.8188          28.7875
May-94                29.619          28.7321
Jun-94               28.7898          27.9432
Jul-94               29.2438          27.9813
Aug-94               30.0598           29.462
Sep-94               30.1131          29.8333
Oct-94               32.5952          29.5298
Nov-94               34.6063          30.6938
Dec-94               33.4345          30.1607
Jan-95               32.8338           29.551
Feb-95               31.8687          28.9253
Mar-95               32.8372          30.0111
Apr-95               32.3126          30.0405
May-95               32.7534          31.2293
Jun-95                31.842          31.4955
Jul-95               30.8108          31.3834
Aug-95               31.3433          33.1724
Sep-95               31.3608          32.4765
Oct-95                30.946          32.7784
Nov-95               30.9531          32.7406
Dec-95               35.3219          38.1719
Jan-96                    36          36.2415
Feb-96               40.8563          37.7688
Mar-96               37.2292          36.0119
Apr-96               35.5744          34.1071
May-96               34.9233          34.4773
Jun-96                34.925          36.3531
Jul-96               35.6339          37.2679
Aug-96               38.4403          37.9773
Sep-96               47.0156          44.7844
Oct-96               51.5734          51.5272
Nov-96               58.0493          63.4112
Dec-96               61.0446          84.2917
Jan-97               47.4545           63.392
Feb-97               38.7105          39.0197
Mar-97                  38.5          37.2563
Apr-97                34.875          35.2614
May-97               35.3095          36.4762
Jun-97               34.4286          35.8631
Jul-97               34.9063          34.6278
Aug-97               37.0268          36.5268
Sep-97               38.6786          37.9524
</TABLE>



COMPETITION

      Propane is sold in competition 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, 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, the Partnership is unable to predict the ultimate impact that
electric utility deregulation may have on propane's current competitive price
advantage. In the last two decades, many new homes were 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


                                      -6-
<PAGE>   9
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
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. Based on the most recent information supplied by the American
Petroleum Institute, the 1995 domestic retail market for propane (annual sales
for other than chemical uses) was approximately 9.3 billion gallons and, based
on LP-GAS magazine rankings, the ten largest propane companies (including
AmeriGas Partners) comprise approximately 35% of domestic sales. The
Partnership's retail volume of approximately 807 million gallons in fiscal year
1997 represented approximately 9% of 1995 total domestic retail sales. The
ability to compete effectively depends on reliability of service, responsiveness
to customers and maintaining competitive retail prices.

      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 has experienced greater than normal customer losses in
certain years when competitive conditions reflected these factors.

      In the engine fuel market, propane competes with gasoline and diesel fuel.
When gasoline prices are high relative to propane, propane competes effectively.
The wholesale propane business is highly competitive. 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, 1997, the Partnership owned approximately 60% 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. The Partnership leases a 400,000
barrel storage facility in Rhode Island, which is owned by a third party. The
Rhode Island facility is used to import propane.


                                      -7-
<PAGE>   10
      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. The Partnership has a fleet of
approximately 385 transport trucks and 680 railroad tank cars, most of which are
leased. In addition, the Partnership utilizes over 2,300 bobtail and rack
trucks, and over 1,900 other delivery and service vehicles. More than 50% of
these vehicles are owned. As of September 30, 1997, the Partnership owned more
than 800,000 stationary storage tanks with typical capacities of 100 to 1,000
gallons and approximately 900,000 portable propane cylinders with typical
capacities of 5 to 100 gallons. In addition, the Partnership owns over 2,000
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" and
"America's Propane Company" trade name 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 Partnership has
an exclusive (except for use by AmeriGas and the General Partner), royalty-free
license to use these names and trade and service marks. UGI, Petrolane and the
General Partner each have the option to terminate their respective license
agreements on 12 months' prior notice, or 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, UGI, Petrolane and the General
Partner will each have the option to terminate the license agreements
immediately upon payment of a fee equal to the fair market value of the licensed
trade names.

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


SEASONALITY

      The Partnership's retail sales volume is seasonal, with approximately 56%
of the Partnership's fiscal year 1997 retail sales volume and approximately 83%
of its earnings before interest, taxes, depreciation and amortization occurring
during the five-month peak heating season from November through March, because
many customers use propane for heating purposes. As a result of this
seasonality, sales are concentrated in the Partnership's first and second fiscal
quarters


                                      -8-
<PAGE>   11
(October 1 through March 31), and 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.
Long-term, historic weather data from the National Weather Service Climate
Analysis Center indicate that average annual temperatures have remained
relatively constant over the last 30 years with fluctuations occurring on a
year-to-year basis only. Actual weather conditions in the Partnership's various
service territories, however, can vary substantially from historical averages.
For information concerning average annual variations in weather across the
Partnership's service territories, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."


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
without regard to fault or the legality of the original conduct on certain
classes of persons considered to have contributed to the release or threatened
release of a "hazardous substance" into the environment. 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 9 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


                                      -9-
<PAGE>   12
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 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, 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 a final rule which sets forth the
requirements that must be satisfied to continue operating such vehicles. The
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 motive and auxiliary power equipment. The 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 testing a radio-controlled system and plans to equip its bobtail
vehicles with such a system unless the regulation is modified as a result of the
pending administrative and legal proceedings. The Partnership filed an
administrative appeal requesting reconsideration and a partial stay of the final
rule which was denied on December 5, 1997. See "Legal Proceedings. "


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 September 30, 1997, the General
Partner had 5,131 employees, including 303 temporary and part-time employees.
UGI also performs certain financial and administrative services for the General


                                      -10-
<PAGE>   13
Partner on behalf of the Partnership and is reimbursed by the Partnership for
its direct and indirect costs.

      Approximately one percent of the General Partner's employees are
represented by nine local labor unions which are affiliated with the
International Brotherhood of Teamsters (8), and the Warehouse, Processing and
Distribution Workers Union of the International Longshoremen's and
Warehousemen's Union, AFL-CIO (1).


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 and the matter set forth
below.

      U.S. Department of Transportation Administrative Proceeding. On or about
September 17, 1997, the Operating Partnership and five other major interstate
propane marketers jointly filed a Petition for Reconsideration and a Request for
Partial Stay of Final Rule HM-225 (more commonly known as 49 C.F.R. Section
171.5, the "Final Rule") published by the Research and Special Programs
Administration, a division of the U.S. Department of Transportation (the "DOT")
on August 18, 1997. While the other marketers subsequently withdrew their
petition and filed suit in federal court against the DOT, the Operating
Partnership continued its administrative appeal. The appeal relates to the
provisions of the Final Rule requiring passive emergency discharge control
systems on cargo tank motor vehicles (also known as bobtails) or alternatively,
the installation of radio-controlled systems on bobtails or the use of multiple
attendants on such vehicles. On December 5, 1997, the appeal was denied.
Management of the Operating Partnership is considering an appeal of the DOT
decision.

      The Operating Partnership is also monitoring the pending litigation on the
Final Rule brought by other major marketers and parallel litigation by the
propane industry's national trade association, the National Propane Gas
Association. See "BUSINESS AND PROPERTIES - Government Regulation."


                                      -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 1997 fiscal year.


PART II:    SECURITIES AND FINANCIAL INFORMATION


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

      The common units representing limited partner interests ("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
1997 FISCAL YEAR                     HIGH         LOW           DISTRIBUTION
<S>                                 <C>         <C>             <C>
Fourth Quarter                      $27.250     $24.125           $0.55
Third Quarter                       $24.875     $22.250            0.55
Second Quarter                      $25.000     $22.250            0.55
First Quarter                       $25.125     $20.750            0.55
</TABLE>

<TABLE>
<CAPTION>
                                        PRICE RANGE                 CASH
1996 FISCAL YEAR                      HIGH       LOW            DISTRIBUTION
<S>                                 <C>         <C>             <C>
Fourth Quarter                      $24.875     $22.750           $0.55
Third Quarter                        24.625      22.375            0.55
Second Quarter                       25.250      22.000            0.55
First Quarter                        24.625      22.000            0.55
</TABLE>


      As of December 1, 1997, there were 1,113 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) for
such quarter. Available Cash generally means, with respect to any fiscal quarter
of the


                                      -12-
<PAGE>   15
Partnership, all cash on hand at the end of such quarter, plus all additional
cash on 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 full definition of Available Cash is set forth in the
Amended and Restated Agreement of Limited Partnership of AmeriGas Partners,
L.P., which is filed as an exhibit to this Report. The information concerning
restrictions on distributions required by Item 5 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 Subordinated Unitholders are subject to the prior rights
of the Common Unitholders 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,
                                                           1997               1996                  1995
                                                     -----------------  ------------------    -----------------
<S>                                                  <C>                <C>                   <C>
FOR THE PERIOD:
Income statement data:
      Revenues                                        $     1,077,825       $  1,013,225        $     269,500
      Operating income (loss)                                 110,373             72,866              (20,088)
      Income (loss) before income taxes                        44,715             10,084              (47,400)
      Net income (loss)                                        43,980             10,238              (47,107)
      Limited partners' interest in net income (loss)          43,540             10,136              (46,636)
      Income (loss) per limited partner unit                     1.04                .24                (1.12)
      Cash distributions declared                                2.20               2.20                 .446

AT PERIOD END:
Balance sheet data:
      Current assets                                  $       183,091       $    199,452 (b)    $     199,438 (b)
      Total assets                                          1,318,661          1,360,292 (b)        1,423,615 (b)
      Current liabilities (excluding debt)                    146,449            157,182 (b)          126,270 (b)
      Total debt                                              718,728            707,453              657,726
      Minority interest                                         5,043              5,497                6,704
      Partners' capital                                       397,537            442,236              560,959

OTHER DATA:
      EBITDA  (a)                                     $       172,377       $    134,497        $       6,497
      Capital expenditures                            $        24,470       $     21,908        $      11,282
      Retail propane gallons sold (millions)                    807.4              855.4                243.6
</TABLE>


(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)   Reclassified.


                                       14


<PAGE>   17


                   ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
                    AMERIGAS PROPANE / AGP - 2 (PREDECESSOR)
                             (Thousands of dollars)

<TABLE>
<CAPTION>
                                                                                                    Twelve               Nine
                                                          September 24,            Year             Months              Months
                                                             1994 to              Ended             Ended               Ended
                                                            April 19,         September 23,      September 23,       September 23,
                                                              1995                 1994              1993              1993 (a)
                                                           -------------      ---------------    -------------       --------------
<S>                                                        <C>                <C>                <C>                 <C>            
INCOME STATEMENT DATA (FOR THE PERIOD):

      Revenues                                                $242,185             $367,120          $376,380         $258,271

      Operating income                                          32,382               46,433            42,729           24,323

      Income (loss) before extraordinary loss and
           accounting change                                     2,922                9,659             5,864              (48)

      Net income (loss)                                        (10,620)               9,659             5,864              (48)


BALANCE SHEET DATA (AT PERIOD END):

      Current assets                                          $     (x)            $103,825          $108,826         $108,826
      Total assets                                                  (x)             510,981           526,717          526,717
      Current liabilities (excluding debt)                          (x)              63,292            69,696           69,696
      Total debt                                                    (x)             210,272           210,177          210,177
      Common stockholders' equity                                   (x)             186,599           195,543          195,543


OTHER DATA:

      EBITDA (b)                                              $ 45,971             $ 69,521          $ 63,977         $ 39,884
      Capital expenditures (c)                                $  5,605             $  8,948          $  6,420         $  5,052
      Retail propane gallons sold (millions)                     225.0                332.4             332.1            231.3
      --------------------------------------------------
</TABLE>



(a)   On April 27, 1993, AmeriGas Propane changed its fiscal year end to
      September 23. Previously, AmeriGas Propane's fiscal year ended December
      23. As a result of the change in fiscal year, the Selected Financial Data
      include data as of and for the nine-month transition period ended
      September 23, 1993.
(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)   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>

                                                                                                                            QFB
                                                                                                                        Partners (b)
                                                                      September 24,        Year                         ------------
                                                                         1994 to           Ended         July 16 to      January 1
                                                                        April 19,      September 23,   September 23,     to July 15,
                                                                          1995             1994           1993 (a)         1993
                                                                      -------------   --------------   --------------   ------------
<S>                                                                   <C>             <C>              <C>              <C>
INCOME STATEMENT DATA (FOR THE PERIOD):
      Revenues                                                         $372,088           $589,709      $ 88,094         $354,116

      Operating income (loss)                                            41,469             56,887        (4,694)         (22,009)

      Income (loss) before extraordinary item and accounting change       1,390             (2,309)      (10,334)         (59,172)

      Net income (loss)                                                     485             (2,309)      (10,334)         328,042

      Income (loss) per common share (c)                                    .05               (.22)         (.98)

BALANCE SHEET DATA (AT PERIOD END):

      Current assets                                                   $     (x)          $126,436      $132,948         $108,791
      Total assets                                                           (x)           914,212       947,669          929,667
      Current liabilities (excluding debt)                                   (x)           114,518        96,699           86,904
      Total debt                                                             (x)           625,883       663,464          640,798
      Common stockholders' equity                                            (x)            93,113        95,422          105,756

OTHER DATA:

      EBITDA (d)                                                       $ 68,867           $102,922      $  3,479         $ 11,639(e)
      Capital expenditures (f)                                         $  7,291           $ 22,077      $  1,719         $  3,480
      Retail propane gallons sold (millions)                              319.4              496.9          72.2            274.6
      --------------------------------------------------
</TABLE>



(a)   On July 26, 1993, Petrolane changed its fiscal year end to September 23.
      Previously, Petrolane's fiscal year ended December 31. As a result of the
      change in fiscal year and the adoption of "Fresh Start Accounting", the
      Selected Financial Data include data for the periods January 1 to July 15,
      1993 and July 16 to September 23, 1993.
(b)   Represents data of QFB Partners prior to its reorganization on July 15,
      1993. Due to the application of "Fresh Start Accounting" effective on July
      15, 1993, the consolidated financial data of Petrolane are generally not
      comparable to those of QFB Partners and are separated by a vertical black
      line. 
(c)   Per share results for periods prior to July 16, 1993 are not presented
      because there were no publicly held shares of stock outstanding.
(d)   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.
(e)   Includes a charge of $16,600,000 related to environmental matters and a
      $5,600,000 charge related to an adjustment of taxes other than income
      taxes associated with prior years. 
(f)   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, 1997 ("Fiscal 1997") with the year ended September
30, 1996 ("Fiscal 1996") and (2) Fiscal 1996 with the 53 weeks ended September
30, 1995 ("Pro Forma Fiscal 1995"). Pro Forma Fiscal 1995 includes an additional
week of results (i.e. the period September 24 to September 30, 1994) due to the
difference in the Partnership's and the Predecessors' year ends.

The Pro Forma Fiscal 1995 statement of operations data was derived from the
historical statements of operations of the Predecessors for the period September
24, 1994 to April 19, 1995 and the statement of operations of the Partnership
from April 19, 1995 to September 30, 1995. The Fiscal 1995 pro forma statement
of operations was prepared to reflect the effects of the Partnership Formation
as if it had been completed as of September 24, 1994.

The Pro Forma Fiscal 1995 statement of operations data do not purport to present
the results of operations of the Partnership had the formation of the
Partnership actually been completed as of September 24, 1994. In addition, the
Pro Forma Fiscal 1995 statement of operations data should be read in conjunction
with the consolidated financial statements of the Partnership, the consolidated
financial statements of Petrolane, and the combined financial statements of
AmeriGas Propane, and the related notes thereto, appearing elsewhere in this
Annual Report on Form 10-K. Significant pro forma adjustments reflected in the
data include (a) the elimination of income taxes as a result of operating in a
partnership structure; (b) an adjustment to interest expense resulting from the
retirement of approximately $377 million of Petrolane term loans, the
restructuring of Petrolane and AmeriGas Propane senior debt, and the issuance of
an aggregate $210 million face value of notes of AmeriGas Partners and the
Operating Partnership; (c) the elimination of management fees previously charged
to Petrolane by UGI; (d) a net reduction in amortization expense resulting from
the longer-term (40-year) amortization of the excess purchase price over fair
value of 65% of the net identifiable assets of Petrolane, compared with the
amortization of 65% of Petrolane's excess reorganization value over 20 years;
and (e) the elimination of intercompany revenues and expenses.


                                      -17-
<PAGE>   20


The following tables provide gallon, weather and certain financial information 
for the Partnership, AmeriGas Propane and Petrolane.


                             AMERIGAS PARTNERS, L.P.
                  (Millions, except per gallon and percentages)


<TABLE>
<CAPTION>
                                                                          Pro
                                                                         Forma
                                              Year         Year        53 Weeks     April 19,
                                             Ended        Ended         Ended        1995 to
                                           Sept. 30,     Sept. 30,     Sept. 30,    Sept. 30,
                                              1997         1996         1995 (a)      1995
                                          -----------  ------------   -----------  -----------
<S>                                       <C>          <C>            <C>          <C>  
Gallons sold:
    Retail                                     807.4         855.4         788.0         243.6
    Wholesale                                  218.6         309.7         198.0          65.6
                                          ----------   -----------    ----------   -----------
                                             1,026.0       1,165.1         986.0         309.2
                                          ==========   ===========    ==========   ===========

Revenues:
    Retail propane                        $    868.2   $     786.9    $    692.7   $     205.7
    Wholesale propane                          126.0         137.9          86.5          27.9
    Other                                       83.6          88.4          99.4          35.9
                                          ----------   -----------    ----------   -----------
                                          $  1,077.8   $   1,013.2    $    878.6   $     269.5
                                          ==========   ===========    ==========   ===========


Total propane margin (b)                  $    430.2   $     398.6    $    373.5   $     110.2
Total margin (b)                          $    477.4   $     443.5    $    419.6   $     127.8
EBITDA (c)                                $    172.4   $     134.5    $    126.0   $       6.5
Operating income (loss)                   $    110.4   $      72.9    $     63.7   $     (20.1)
Degree days - % (warmer) colder
    than normal (d)                             (5.2)%         1.4%        (12.1)%         N.M.
</TABLE>


(a)   Reflects unaudited pro forma information for the Partnership as if the
      Partnership Formation had occurred as of the beginning of the period
      presented.
(b)   Revenues less related cost of sales.
(c)   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.
(d)   Based on the weighted average deviation from average degree days during
      the 30-year period 1961-1990, as contained in the National Weather Service
      Climate Analysis Center database, for geographic areas in which AmeriGas
      Partners operates. Due to the seasonality of the propane business favoring
      the winter heating season, degree days for the period April 19 to
      September 30, 1995 are not meaningful.


                                      -18-
<PAGE>   21


                                AMERIGAS PROPANE
                  (Millions, except per gallon and percentages)

<TABLE>
<CAPTION>
                                                                                         Nine
                                           Sept. 24,      Sept. 24,       Year          Months
                                            1994 to        1993 to        Ended         Ended
                                           April 19,      April 23,      Sept. 23,     Sept. 23,
                                             1995           1994          1994         1993 (a)
                                          -----------    -----------   -----------   -----------
<S>                                       <C>            <C>           <C>           <C>  
Gallons sold:
    Retail                                      225.0          242.4         332.4         231.3
    Wholesale                                    32.5           53.3          74.3          43.6
                                          -----------    -----------   -----------   -----------
                                                257.5          295.7         406.7         274.9
                                          ===========    ===========   ===========   ===========

Revenues:
    Retail propane                        $     203.3    $     222.9   $     302.4   $     217.7
    Wholesale propane                            14.8           20.1          28.1          18.8
    Other                                        24.1           23.4          36.6          21.8
                                          -----------    -----------   -----------   -----------
                                          $     242.2    $     266.4   $     367.1   $     258.3
                                          ===========    ===========   ===========   ===========


Total propane margin (b)                  $     111.5    $     126.5   $     171.7   $     118.5
Total margin (b)                          $     122.9    $     138.3   $     190.3   $     130.7
EBITDA (c)                                $      46.0    $      61.6   $      69.5   $      39.9
Operating income                          $      32.4    $      48.2   $      46.4   $      24.3
Degree days - % (warmer)
    colder than normal (d)                      (12.9)%         (2.9)%        (3.5)%        (6.9)%
</TABLE>


(a)   On April 27, 1993, AmeriGas Propane changed its fiscal year end to
      September 23. Previously, AmeriGas Propane's fiscal year ended on December
      23. As a result of the change in fiscal year, the amounts above include
      data as of and for the nine month transition period ended September 23,
      1993.
(b)   Revenues less related cost of sales.
(c)   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.
(d)   Based on the weighted average deviation from average degree days during
      the 30-year period 1951-1980 for the nine month period ended September 23,
      1993, and the 30-year period 1961-1990 for the twelve month period ended
      September 23, 1994, the period September 24, 1993 to April 23, 1994 and
      the period September 24, 1994 to April 19, 1995, as contained in the
      National Weather Service Climate Analysis Center database, for geographic
      areas in which AmeriGas Propane operates.


                                      -19-
<PAGE>   22


                                    PETROLANE
                  (Millions, except per gallon and percentages)

<TABLE>
<CAPTION>
                                                                             Nine
                                                                            Months
                                 Sept. 24,     Sept. 24,       Year         Ended
                                  1994 to       1993 to       Ended        Sept. 23,
                                 April 19,     April 23,    Sept. 23,        1993
                                    1995         1994         1994       (38 weeks) (a)
                                 ---------    ----------   ----------   ---------------
<S>                              <C>          <C>          <C>          <C>  
Gallons sold:
    Retail                           319.4         356.9        496.9        346.7
    Wholesale                         99.9         132.8        185.5        151.5
                                  --------     ---------   ----------   ----------
                                     419.3         489.7        682.4        498.2
                                  ========     =========   ==========   ==========

Revenues:
    Retail propane                $  283.7     $   317.2   $    437.0   $    314.1
    Wholesale propane                 43.8          53.9         75.1         66.5
    Other                             44.6          49.8         77.6         61.6
                                  --------     ---------   ----------   ----------
                                  $  372.1     $   420.9   $    589.7   $    442.2
                                  ========     =========   ==========   ==========


Total propane margin (b)          $  151.8     $   178.7   $    243.1   $    164.3
Total margin (b)                  $  168.9     $   196.6   $    270.7   $    183.3
EBITDA (c)                        $   68.9     $    89.3   $    102.9   $     15.1 (d)
Operating income (loss)           $   41.5     $    62.5   $     56.9   $    (26.7)(d,e)
Degree days - % (warmer)
    colder than normal (f)           (12.6)%        (4.2)%       (3.2)%       (3.8)%
</TABLE>


(a)   On July 26, 1993, Petrolane changed its fiscal year end to September 23.
      Previously, Petrolane's fiscal year ended December 31. As a result of the
      change in fiscal year, the amounts above include combined amounts for the
      pre-reorganization accounting period January 1 to July 15, 1993 and the
      post-reorganization accounting period July 16 to September 23, 1993.
(b)   Revenues less related cost of sales.
(c)   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.
(d)   Includes a charge of $16.6 million related to environmental matters and a
      charge of $5.6 million related to an adjustment of taxes other than income
      taxes.
(e)   Due to the effects of "Fresh Start Accounting," these amounts are not
      meaningful for comparative purposes.
(f)   Based on the weighted average deviation from average degree days during
      the 30-year period 1951-1980 for the 38 week period ended September 23,
      1993, and the 30-year period 1961-1990, for the twelve month period ended
      September 23, 1994, the period September 24, 1993 to April 23, 1994 and
      the period September 24, 1994 to April 19, 1995, as contained in the
      National Weather Service Climate Analysis Center database, for geographic
      areas in which Petrolane operates.


                                      -20-
<PAGE>   23
PARTNERSHIP RESULTS OF OPERATIONS

FISCAL 1997 COMPARED WITH FISCAL 1996

Retail sales of propane decreased in Fiscal 1997 reflecting, in part, the
effects of warmer heating-season weather. In addition, significantly higher and
more volatile propane market prices during the first half of the Fiscal 1997
heating season resulted in customer conservation efforts. Wholesale volumes of
propane sold were lower in Fiscal 1997 principally due to reduced low-margin
sales of storage inventories.

Total revenues from retail propane sales increased $81.3 million reflecting a
$125.5 million increase as a result of higher average retail propane selling
prices partially offset by a $44.2 million decrease as a result of the lower
volumes sold. The higher prices resulted principally from higher propane product
costs experienced by the Partnership early in Fiscal 1997. The spot price of
propane at Mont Belvieu, Texas, a major U.S. storage and distribution hub,
increased dramatically during much of the last quarter of Fiscal 1996 and the
first quarter of Fiscal 1997, rising to a high of 75 cents a gallon on December
16, 1996. Wholesale propane revenues decreased $11.9 million reflecting the
lower wholesale volumes sold partially offset by higher average wholesale
prices. Other revenues decreased $4.8 million primarily as a result of lower
hauling and appliance sales and service revenues.

Total propane margin was greater in Fiscal 1997 because of higher average retail
unit margins partially offset by lower volumes of propane sold. Although the
Partnership's propane product costs were significantly higher in Fiscal 1997,
the Partnership benefited from favorable fixed-price supply arrangements and, to
a lesser extent, derivative commodity contracts entered into as part of its 1997
propane supply strategy. The higher Fiscal 1997 average retail unit margin also
reflects the fact that retail unit margins in the prior-year period were
adversely impacted by certain sales and marketing programs.

The increase in Fiscal 1997 operating income and earnings before interest
expense, income taxes, depreciation and amortization (EBITDA) is the result of
higher total margin, greater miscellaneous income, and 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 are net
of $4.4 million from a refund of insurance premium deposits and $3.3 million
from a reduction in accrued environmental costs. Excluding the impact of these
items in Fiscal 1996, operating expenses declined $8.7 million reflecting in
large part lower expenses related to sales and marketing programs and lower
required accruals for general and automobile liability and workers' compensation
costs. Miscellaneous income increased $2.9 million in Fiscal 1997 reflecting
$4.7 million of income from the sale of the Partnership's 50% interest in
Atlantic Energy, Inc. (Atlantic Energy), which owns and operates a liquefied
petroleum gas storage terminal in Chesapeake, Virginia. The Partnership sold its
interest in Atlantic Energy after determining that it was not a strategic asset.


                                      -21-
<PAGE>   24
Interest expense was $65.7 million in Fiscal 1997 compared with $62.8 million in
Fiscal 1996 reflecting increased interest expense on the Partnership's Revolving
Credit and Acquisition facilities principally as a result of higher amounts
outstanding.

FISCAL 1996 COMPARED WITH PRO FORMA FISCAL 1995

Retail volumes of propane sold increased 67.4 million gallons in Fiscal 1996
reflecting the effects of colder weather, acquisitions and volume growth.
Regional temperature differences in Fiscal 1996 were significant with the
western U.S. experiencing substantially warmer than normal temperatures and
lower retail sales, and the eastern and midwestern U.S. experiencing colder than
normal temperatures and higher retail sales. Wholesale volumes of propane sold
were significantly higher reflecting an increase in sales of low-margin excess
storage inventories.

Total revenues from retail propane sales increased $94.2 million reflecting a
$59.2 million increase from the greater volumes sold and a $35.0 million
increase as a result of higher average retail propane selling prices. Total cost
of sales increased $110.7 million as a result of the higher volumes of propane
sold and higher average propane product costs. The Partnership's propane product
cost averaged approximately five cents a gallon higher in Fiscal 1996 than in
Pro Forma Fiscal 1995. The spot price of propane at Mont Belvieu, Texas
increased dramatically in August and September 1996, rising to 50.5 cents per
gallon on September 30, 1996 compared to 31.63 cents per gallon a year earlier.

Total propane margin was higher in Fiscal 1996 as a result of the greater
volumes of propane sold. However, average retail unit margins in Fiscal 1996
were slightly lower than in Pro Forma Fiscal 1995, notwithstanding an increase
in average retail selling price, reflecting the impact of higher average propane
product costs which were not completely passed through to customers.

The increases in Fiscal 1996 operating income and EBITDA reflect principally the
increase in total propane margin partially offset by higher operating and
administrative expenses. Operating expenses in Fiscal 1996 are net of $4.4
million from a refund of insurance premium deposits and $3.3 million from a
reduction in accrued environmental costs recorded in the quarter ended March 31.
Operating expenses in Pro Forma Fiscal 1995 include $4.3 million in accruals for
management reorganization activities. Operating expenses, exclusive of these
items, increased $27.8 million reflecting higher payroll and employee
compensation expenses associated with the Partnership's new management
structure; higher vehicle and distribution expenses due in part to the higher
retail volumes and severe eastern U.S. winter weather; higher expenses
associated with sales and marketing programs; increased customer equipment
repair and maintenance expenses; and incremental costs associated with
acquisitions and new district locations.


                                      -22-
<PAGE>   25
FINANCIAL CONDITION AND LIQUIDITY

CAPITALIZATION AND LIQUIDITY

The Partnership's principal sources of funds are those generated by its
operations and borrowings under the Operating Partnership's Bank Credit
Agreement. Cash generated by operating activities in 1997 was sufficient to fund
maintenance capital expenditures (which represent capital expenditures to
maintain the operating capacity of the capital assets of the Partnership) and
the Minimum Quarterly Distribution (MQD) of $.55 for each quarter on all
Partnership units.

Effective September 15, 1997, the Operating Partnership amended and restated its
Bank Credit Agreement. The Bank Credit Agreement consists of a Revolving Credit
Facility and an Acquisition Facility. Obligations under the Bank Credit
Agreement are collateralized by substantially all of the Operating Partnership's
assets. The Revolving Credit Facility provides for borrowings of up to $100
million (including a $35 million sublimit for letters of credit). The Revolving
Credit Facility may be used to fund working capital, capital expenditures, and
interest and distribution payments. The Revolving Credit Facility expires
September 15, 2002 but may, under certain conditions, be extended. The Operating
Partnership's bank loans outstanding totaled $28 million at September 30, 1997
compared with $15 million at September 30, 1996.

The Bank Credit Agreement also includes a $75 million Acquisition Facility to
finance propane business acquisitions. This facility operates as a revolving
facility through September 15, 2000 at which time amounts then outstanding will
convert to a quarterly amortizing four-year term loan. At September 30, 1997,
borrowings under the Acquisition Facility totaled $37 million.

The ability of the Operating Partnership to borrow under the Bank Credit
Agreement is subject to provisions which require, among other things, minimum
interest coverage and maximum debt to EBITDA ratios, as defined. Based upon the
calculation of such ratios as of September 30, 1997, the Operating Partnership
had the ability to borrow the maximum amount available (See Note 4 to the
Partnership's Consolidated Financial Statements).

The Operating Partnership also has a revolving credit agreement with the General
Partner under which it may borrow up to $20 million to fund working capital,
capital expenditures, and interest and distribution payments. The General
Partner Credit Facility is coterminous with, and generally comparable to, the
Revolving Credit Facility except that borrowings under the General Partner
Facility are unsecured and subordinated to all senior debt of the Operating
Partnership. UGI has agreed to contribute on an as needed basis through its
subsidiaries up to $20 million to the General Partner to fund such borrowings.

Management believes that cash flow from operations as well as available
borrowings under its credit facilities will be sufficient to meet the
Partnership's liquidity needs for the foreseeable future.


                                      -23-
<PAGE>   26
The Partnership has assumed certain lease guarantees and scheduled claim
obligations relating to certain former businesses of Petrolane, a predecessor
company of the Partnership. The Partnership succeeded to Petrolane's agreements
with third parties for payment indemnification relating to such obligations. At
September 30, 1997, the lease guarantee obligations totaled approximately $67
million and scheduled claims of at least $68 million were pending. To date, the
Partnership has not paid any amounts under the lease guarantee and scheduled
claim obligations (See Note 9 to the Partnership's Consolidated Financial
Statements).


                                      -24-
<PAGE>   27
PARTNERSHIP DISTRIBUTIONS

The Partnership makes distributions to its partners approximately 45 days after
the end of each fiscal quarter in an amount equal to its Available Cash (as
defined in the Amended and Restated Agreement of Limited Partnership) for such
quarter, subject to limitations under its loan agreements. (For a description of
Available Cash and the priority of its distribution to unitholders, see Note 3
to the Partnership's Consolidated Financial Statements). During 1997, 1996 and
1995, the Partnership paid the MQD of $.55 on all limited partner units
outstanding. The amount of Available Cash needed during Fiscal 1997 to
distribute the MQD on all such units as well as the 2% general partner interest
was approximately $93.9 million ($48.5 million for the Common Units; $43.5
million for the Subordinated Units; and $1.9 million for the general partner
interests). A reasonable proxy for the amount of distributable cash actually
generated by the Partnership can be determined by subtracting cash interest
expense and maintenance capital expenditures from the Partnership's EBITDA.
Distributable cash as calculated for the Partnership's full fiscal years since
its inception is as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Year Ended September 30,                         1997             1996
-------------------------------------------------------------------------

(Millions of dollars)
<S>                                            <C>               <C>
EBITDA                                         $ 172.4           $134.5
Cash interest expense                            (66.8)           (63.6)
Maintenance capital expenditures                 (10.0)            (7.9)
-------------------------------------------------------------------------
Distributable cash flow                        $  95.6            $63.0
-------------------------------------------------------------------------
</TABLE>

Although the level of distributable cash generated in 1996 was less than the
full MQD, the Partnership had cash and short-term investment balances of $48.6
million at the beginning of the year. Due to the seasonal nature of its
operating cash flows and working capital needs, the Partnership has used the
Revolving Credit Facility on a short-term basis to fund a portion of
distribution payments. The ability of the Partnership to continue to pay the
full MQD on its Subordinated Units will depend upon a number of factors
including the level of Partnership earnings, the cash needs of the Partnership's
operations (including cash needed for maintenance and growth capital), and the
Partnership's ability to finance externally such cash needs. Some of these
factors are affected by conditions such as weather, competition in the markets
served by the Partnership, and the cost of propane, which are beyond the control
of the Partnership.

As further described in Note 3 to the Partnership's Consolidated Financial
Statements, the Subordinated Units' period of subordination will generally
extend until the first day of any quarter beginning on or after April 1, 2000 in
respect of which certain cash performance and distribution measurements are
attained. In addition, if the Partnership attains certain cash performance and
distribution measurements, 4.9 million Subordinated Units may convert to Common
Units on or after March 31, 1998 and an additional 4.9 million Subordinated
Units may convert on or after


                                      -25-
<PAGE>   28
March 31, 1999. Based upon such cash performance measurements to date, it is
unlikely that the cash performance measurements required for conversion will be
attained during fiscal 1998.

CASH FLOWS

OPERATING ACTIVITIES. Cash flow from operating activities was $110.2 million in
Fiscal 1997 compared with $48.4 million in Fiscal 1996. Cash flow from
operations before changes in working capital was $109.9 million in Fiscal 1997
compared with $68.4 million in Fiscal 1996 reflecting a significant improvement
in the Partnership's operating performance. Changes in operating working capital
during Fiscal 1997 provided $.2 million of operating cash flow. During Fiscal
1996, changes in operating working capital required $20.1 million of operating
cash flow principally from an increase in accounts receivable partially offset
by an increase in accounts payable.

INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $24.5 million (including maintenance capital expenditures of $10.0
million) in Fiscal 1997 compared with $21.9 million (including maintenance
capital expenditures of $7.9 million) in Fiscal 1996. Proceeds from disposals of
assets totaled $10.6 million in Fiscal 1997 compared with $5.4 million in Fiscal
1996. Fiscal 1997 proceeds include the sale of the Partnership's 50% interest in
Atlantic Energy. Maturing short-term investments increased cash flows from
investing activities by $9.0 million in Fiscal 1996. During Fiscal 1997, the
Partnership acquired several propane businesses for $11.6 million in cash
compared with $20.9 million for acquisitions in Fiscal 1996. In conjunction with
one acquisition during Fiscal 1997, the Partnership issued 111,135 Common Units
having a fair value of $2.6 million.

FINANCING ACTIVITIES. During Fiscal 1997, the Partnership declared and paid the
MQD on all units and the General Partner's interest totaling $92.9 million. In
addition, during each of Fiscal 1997 and Fiscal 1996, the Operating Partnership
distributed $1.0 million to the General Partner in respect of the General
Partner's 1.0101% interest in the Operating Partnership. During Fiscal 1997, net
borrowings under the Operating Partnership's Revolving Credit Facility totaled
$6 million compared with $15 million in Fiscal 1996. At September 30, 1997, the
Partnership had $72 million available under the Revolving Credit Facility. The
Partnership's cash needs are typically greatest during the first fiscal quarter
due to increased working capital needs and interest and distribution payments.
The Partnership also borrowed $7 million under its Acquisition Facility during
Fiscal 1997. There were borrowings of $30 million under the Acquisition Facility
and $7 million under the Special Purpose Facility during Fiscal 1996. During
Fiscal 1997, the Partnership made long-term debt repayments of $3.0 million
compared with repayments of $10.9 million in Fiscal 1996. Debt repayments in
Fiscal 1996 included $8.4 million associated with UGI's contribution of the net
assets of Oahu Gas Service, Inc.

Cash paid for Partnership formation fees and expenses during Fiscal 1996
represents the reimbursement by the Partnership of fees and expenses previously
paid by AmeriGas, Inc. relating to the formation of the Partnership.


                                      -26-
<PAGE>   29
YEAR 2000 MATTERS

The Partnership has a number of information system improvement initiatives under
way that will require increased expenditures during the next several years.
These initiatives include the modification of certain computer software systems
to be Year 2000 compliant. Although final cost estimates to modify current
systems have yet to be determined, the Partnership does not expect such costs,
which will be expensed when incurred, will have a material effect on the
Partnership's results of operations.

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.

ACCOUNTING PRINCIPLES NOT YET ADOPTED

The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share" (SFAS 128) and SFAS
No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 128 establishes
standards for computing and presenting earnings per share and simplifies the
previous standards for computing earnings per share found in Accounting
Principles Board Opinion No. 15. SFAS 128 is effective for financial statements
issued for periods ending after December 15, 1997. SFAS 130 establishes
standards for reporting and displaying comprehensive income and its components
in financial statements. SFAS 130 is effective for fiscal years beginning after
December 15, 1997. In addition, the American Institute of Certified Public
Accountants issued Statement of Position No. 96-1, "Environmental Remediation
Liabilities" (SOP 96-1) in October 1996. SOP 96-1 provides guidance on the
recognition, measurement, display and disclosure of environmental remediation
liabilities. SOP 96-1 is effective for fiscal years beginning after December 15,
1996. The adoption of these standards is not expected to have a material effect
on the Partnership's financial position or results of operations.


                                      -27-
<PAGE>   30
FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements that are
subject to risks and uncertainties. The factors that could cause actual results
to differ materially include those discussed herein as well as those listed in
Exhibit 99. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Annual
Report on Form 10-K. The General Partner undertakes no obligation to publicly
release any revision to these forward-looking statements to reflect events or
circumstances after the date of this Annual Report on Form 10-K.


                                      -28-
<PAGE>   31
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The financial statements and financial statement schedules referred to in
the index contained on pages F-2 through F-4 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

      The Partnership does 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. Donovan and
Van Dyck, 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.


                                      -29-

<PAGE>   32
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., a wholly owned subsidiary of UGI, as the sole
shareholder of the General Partner. 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                            47                Chairman, Director, President and
                                                                       Chief Executive Officer

         Thomas F. Donovan                           64                Director

         Robert C. Forney                            70                Director

         James W. Stratton                           61                Director

         Stephen A. Van Dyck                         54                Director

         David I. J. Wang                            65                Director

         Brendan P. Bovaird                          49                Vice President and General Counsel

         Eugene V. N. Bissell                        44                Vice President-Sales and Operations

         Diane L. Carter                             49                Vice President-Human Resources

         R. Paul Grady                               44                Vice President-Sales and Operations

         William D. Katz                             44                Vice President-Corporate Development

         Robert H. Knauss                            44                Vice President-Law and
                                                                       Associate General Counsel and
                                                                       Corporate Secretary

         Charles L. Ladner                           59                Vice President-Finance and Accounting

         Gordon E. Regan, Jr.                        45                Vice President-Purchasing and
                                                                       Transportation
</TABLE>

                                      -30-
<PAGE>   33
         Mr. Greenberg is a Director (since October 1994) and Chairman (since
August 1996), and President and Chief Executive Officer (since July 1996) of the
General Partner. Mr. Greenberg is also Director (since 1994), Chairman (since
August 1996), Chief Executive Officer (since August 1995) and President (since
July 1994) of UGI, having been Senior Vice President - Legal and Corporate
Development of UGI (since July 1989). Mr. Greenberg previously served as Vice
President and General Counsel of AmeriGas, Inc. (1984 to 1994). He also serves
as a Director of 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 a consultant and an advisory
board member to Mellon Bank Corp. He also serves as a Director of Nuclear 
Electric Insurance Co. and Merrill Lynch International Bank, Inc. 

         Dr. Forney was elected a Director of the General Partner on April 25,
1995. Dr. Forney is retired, having formerly served as Executive Vice President
(1981 to 1989) and Director (1979 to 1989) of E. I. duPont de Nemours & Co.,
Inc. (chemicals and petroleum products). He is a Director of UGI Corporation,
UGI Utilities, Inc., Wilmington Trust Corporation, Wilmington Trust Company and
Wilmington Trust of Pennsylvania.

         Mr. Stratton was elected a Director of the General Partner on April 25,
1995. He is President and Director 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. 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 a Director of UGI Corporation, UGI Utilities, Inc., and
Weirton Steel Corp.

         Mr. Bissell is Vice President-Sales and Operations (since December
1995) of the General Partner. Previously, Mr. Bissell was Vice President -
Distributors and Fabrication, BOC Gases (August to December 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).

                                      -31-
<PAGE>   34
         Mr. Bovaird is Vice President and General Counsel of the General
Partner (since April 1995). He is also Vice President and General Counsel of UGI
Corporation, UGI Utilities, Inc. and AmeriGas, Inc. (since April 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.

         Ms. Carter was elected Vice President - Human Resources of the General
Partner effective January 15, 1996. Prior to her election, Ms. Carter was Vice
President - Human Resources of Sisters of Mercy Health System, St. Louis,
Missouri (1994 to 1996). Previously, she was President and founding principal of
the Touchstone Partnership, Ltd., an organization and management consulting firm
based in Philadelphia (1991 to 1994).

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

         Mr. Katz was elected Vice President - Corporate Development of the
General Partner effective October 1, 1996. Previously, he served as 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. Previously, he 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.

         Mr. Knauss was elected to the additional position of Vice President-Law
and Associate General Counsel of the General Partner effective October 1, 1996,
having served as Corporate Secretary since 1994. Previously, he served as Group
Counsel - Propane (1989 to 1996) of UGI, having joined UGI as Associate Counsel
in 1985. Before joining UGI, he was an associate at the firm of Ballard, Spahr,
Andrews & Ingersoll in Philadelphia.

         Mr. Ladner was elected Vice President - Finance and Accounting
effective April 28, 1997. He is also Senior Vice President - Finance of UGI
Corporation (since 1978).

         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 over 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.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                            SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                         Long-Term Compensation
                          Annual Compensation
                                                                                        Awards           Payouts
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                      Securities 
                                                                       Other          Underlying           Long-           All
                                                                      Annual         Options/SARs          Term           Other
        Name and             Year       Salary        Bonus        Compensation        Granted           Incentive     Compensation
   Principal Position                     ($)        ($) (1)          ($) (2)            (#)                ($)           ($) (3)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>       <C>           <C>           <C>               <C>                 <C>           <C>
Lon R. Greenberg (4)         1997      $509,827      $425,000         $ 7,671         200,000 (5)           $0           $ 14,233
   President, Chairman,      1996      $465,000      $122,760         $ 7,359               0               $0           $ 10,462
   and Chief Executive       1995      $381,923      $      0         $ 7,365          14,167 (6)           $0           $ 11,439
   Officer
-----------------------------------------------------------------------------------------------------------------------------------
Charles L. Ladner (4)        1997      $254,762      $136,216         $ 8,235          75,000 (5)           $0            $ 6,923
   Vice President-           1996      $245,000      $ 52,920         $ 8,881               0               $0            $ 6,480
   Finance and               1995      $245,000      $ 42,998         $ 8,851               0               $0            $ 8,219
   Accounting
-----------------------------------------------------------------------------------------------------------------------------------
Eugene V.N. Bissell (7)      1997      $169,931      $ 74,812         $50,027               0               $0            $21,876
   Vice President-Sales      1996      $123,750      $      0         $     0           5,000 (6)           $0            $     0
   and Operations
-----------------------------------------------------------------------------------------------------------------------------------
R. Paul Grady (7)            1997      $166,603      $ 73,353         $ 3,281               0               $0            $23,544
   Vice President-Sales      1996      $158,704      $      0         $ 7,508               0               $0            $14,292
   and Operations            1995      $139,174      $ 15,566         $ 5,126               0               $0            $ 5,298

-----------------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird (4)       1997      $164,653      $ 64,449         $ 3,769          30,000 (5)           $0            $ 4,196
   Vice President and        1996      $149,999      $ 21,853         $ 1,299               0               $0            $ 1,363
   General Counsel           1995      $ 66,346      $  8,663         $     0          10,000 (6)           $0            $     0
===================================================================================================================================
</TABLE>


(1)      Messrs. Greenberg, Ladner 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, 0% to 102% of base salary for Mr.
         Ladner, 0% to 65% of base salary for Mr. Bovaird, and for the other
         Named Executives, from 0 to an amount limited only by the Partnership's
         profitability.

                                      -33-
<PAGE>   36
(2)      Amounts represent tax payment reimbursements for certain benefits,
         except for Mr. Bissell. In addition to a tax payment reimbursement of
         $7,563, Mr. Bissell received a $39,765 reimbursement of relocation
         expenses 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. Pension
         Plan ("APIPP"), 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 Plan". During fiscal 1997, 1996 and 1995, the following
         contributions were made to the Named Executives: (i) under the AmeriGas
         Employee Savings Plan: Mr. Bissell, $4,902, $0 and $0; Mr. Grady,
         $7,048, $458 and $0; (ii) under the UGI Employee Savings Plan: Messrs.
         Greenberg and Ladner, $3,375, $3,375 and $3,375; Mr. Grady, $0, $0 and
         $2,962; and Mr. Bovaird, $3,375, $1,363 and $0; (iii) under the APIPP:
         Mr. Grady, $0, $11,875 and $1,526; (iv) under the UGI Executive
         Retirement Plan: Mr. Greenberg, $10,858, $7,087 and $8,064; Mr. Ladner,
         $3,548, $3,105 and $4,844; Mr. Grady, $0, $2,427 and $352; and Mr.
         Bovaird, $821, $0 and $0; (v) under the AmeriGas Executive Retirement
         Plan: Mr. Bissell, $16,974, $0 and $0; and Mr. Grady, $16,496, $0 and
         $0.

(4)      Compensation reported for Messrs. Greenberg, Ladner and Bovaird is
         attributable to their respective positions of Chairman, President and
         Chief Executive Officer, Senior Vice President - Finance, and Vice
         President and General Counsel of UGI Corporation. Compensation for
         these individuals is also reported in the UGI Proxy Statement for the
         1998 Annual Meeting of Shareholders and is not additive. None of them
         receives compensation from the General Partner.

(5)      Non-qualified stock options granted under the UGI Corporation 1997
         Stock Option and Dividend Equivalent Plan. The 1997 Plan consists of
         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.

                                      -34-
<PAGE>   37
(7)      Effective October 1, 1996, the General Partner made grants to Messrs.
         Bissell and Grady 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. No portion of any LTIP
         grant will be paid if the performance contingency is not met by
         September 30, 2001. See the "Long-Term Incentive Plan - Awards in Last
         Fiscal Year" table for a description of the performance contingency. As
         of September 30, 1997, Mr. Bissell's LTIP grant represented 10,000
         Common Units with a market value of $260,000 and Mr. Grady's LTIP grant
         represented 10,000 Common Units with a market value of $260,000. Market
         values are based on the September 30, 1997 closing price for the Common
         Units on the New York Stock Exchange.

                                      -35-
<PAGE>   38
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                          OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------------------------------------------------------------------------------------------------------
                                         Individual Grants
---------------------------------------------------------------------------------------------------------------------------------
                                   Number of           % of Total
                                   Securities           Options
                                   Underlying          Granted to          Exercise or                              Grant Date
                                    Options            Employees           Base Price           Expiration            Present
            Name                  Granted (1)             (2)               ($/Share)              Date              Value (3)
---------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                 <C>                  <C>                  <C>                 <C>
Lon R. Greenberg                    200,000               66%                $22.625             12/9/06             $486,000
---------------------------------------------------------------------------------------------------------------------------------

Charles L. Ladner                    75,000               25%                $22.625             12/9/06             $182,250
---------------------------------------------------------------------------------------------------------------------------------

Eugene V.N. Bissell                    0                   0                    -                   -                    -
---------------------------------------------------------------------------------------------------------------------------------

R. Paul Grady                          0                   0                    -                   -                    -
---------------------------------------------------------------------------------------------------------------------------------

Brendan P. Bovaird                   30,000               10%                $22.625             12/9/06              $72,900
=================================================================================================================================
</TABLE>

(1)      Non-qualified stock options granted on December 10, 1996 under the UGI
         Corporation 1997 Stock Option and Dividend Equivalent Plan (the "1997
         SODEP"). This grant also includes the opportunity to earn an amount
         equivalent to the dividends paid during a three year performance period
         on shares covered by options. The option exercise price is not less
         than the fair market value of UGI's Common Stock on the date of the
         grant. These options were fully vested on the date of grant. Options
         granted under the Plan are nontransferable and are generally
         exercisable only while the optionee is employed by UGI or a subsidiary.
         Options are subject to adjustment in the event of recapitalization,
         stock splits, mergers, and other similar corporate transactions
         affecting UGI's Common Stock.

(2)      A total of 305,000 stock options were granted to employees and
         executive officers of the General Partner during fiscal year 1997 under
         the 1997 SODEP.

                                      -36-
<PAGE>   39
(3)      Based on the Black-Scholes option pricing model. The assumptions used
         in calculating the grant date present value are as follows:

                  o        Three years of closing monthly stock price
                           observations were used to calculate the stock
                           volatility and dividend yield assumptions

                  o        Stock volatility - .1676

                  o        Stock's dividend yield - 6.54%

                  o        Length of option term - 10 years

                  o        Annualized risk-free interest rate - 6.36% 

                  o        Discount for risk of forfeiture - 0%

         All options were granted at fair market value. The actual value, if
         any, the executive may realize will depend on the excess of the stock
         price on the date the option is exercised over the exercise price.
         There is no assurance that the value realized by the executive will be
         at or near the value estimated by the Black-Scholes model.

                                      -37-
<PAGE>   40
<TABLE>
<CAPTION>
==================================================================================================================================

                                              OPTION EXERCISES IN LAST FISCAL YEAR
                                               AND FISCAL YEAR-END OPTION VALUES

----------------------------------------------------------------------------------------------------------------------------------
                                                           Number of Securities                 Value of Unexercised
                                                           Underlying Unexercised           In-The-Money Options at Fiscal
                            Shares                       Options at Fiscal Year End                   Year End ($)
                           Acquired                                (#)
                              on            Value
                         Exercise (#)     Realized
          Name                               ($)        Exercisable       Unexercisable       Exercisable        Unexercisable
----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>              <C>           <C>              <C>                 <C>                 <C>
                                                        143,959 (1)            -0-           $1,079,693 (2)           $0
Lon R. Greenberg             -0-             $0         200,000 (3)            -0-           $1,000,000 (4)           $0
----------------------------------------------------------------------------------------------------------------------------------
                                                                                          
Charles L. Ladner           87,500        $527,595       75,000 (3)            -0-           $  375,000 (4)           $0
----------------------------------------------------------------------------------------------------------------------------------
                                                                                          
Eugene V.N. Bissell          -0-             $0           1,000 (5)          4,000 (5)       $    7,000 (6)           $28,000 (6)
----------------------------------------------------------------------------------------------------------------------------------
                                                         17,000 (1)            -0-           $  127,500 (2)           $0
R. Paul Grady                -0-             $0           2,000 (5)            -0-           $   15,000 (7)           $0
----------------------------------------------------------------------------------------------------------------------------------
                                                         10,000 (1)                          $   75,000 (2)           $0
Brendan P. Bovaird           -0-             $0          30,000 (3)            -0-             $150,000 (4)           $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, 1997
         (fair market value $27.625) 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, 1997
         (fair market value $27.625) 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, 1997
         (fair market value $27.625) 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, 1997
         (fair market value $27.625) to option grant price at January 2, 1992
         (fair market value $20.125) under the terms of the 1992 Non-Qualified
         Stock Option Plan.

                                      -38-
<PAGE>   41
         The General Partner adopted a Long-Term Incentive Plan for key
executives effective October 1, 1996. Grants made under the Plan to the Named
Executives are shown in the table below.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                 LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------------------------------------
                                                                                           Estimated Future Payouts
                                                                                      under Non-Stock Price-Based Plans
                                     Number of               Performance
                                  Shares, Units or         or Other Period
                                    Other Rights           until Maturation            Target (2)              Maximum (3)
            Name                        (1)                   or Payout                (# and $)                (# and $)
----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                     <C>                        <C>                      <C>
Lon R. Greenberg                         0                       N/A                      N/A                      N/A
----------------------------------------------------------------------------------------------------------------------------------
Charles L. Ladner                        0                       N/A                      N/A                      N/A
----------------------------------------------------------------------------------------------------------------------------------
Eugene V. N. Bissell                   10,000                3 to 5 years            11,000 Common            15,000 Common
                                                                                       Units; and              Units; and
                                                                                        $96,800                  $99,000
----------------------------------------------------------------------------------------------------------------------------------
R. Paul Grady                          10,000                3 to 5 years            11,000 Common            15,000 Common
                                                                                       Units; and              Units; and
                                                                                        $96,800                  $99,000
----------------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird                       0                       N/A                      N/A                      N/A
==================================================================================================================================
</TABLE>

(1)      Grants made under the Plan are subject to achievement of a performance
         contingency. Each grant represents the right to receive a like number
         of Common Units of the Partnership (or their cash equivalent, at the
         discretion of the Compensation/Pension Committee of the Board of
         Directors of the General Partner), together with the opportunity to
         receive a cash payment equal to distributions made on an equivalent
         number of Common Units during a performance period of up to five years.
         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 and Grady.

                                      -39-
<PAGE>   42
(2)      Achievement of the performance contingency by September 30, 2000
         results in payment of 110% of the grant.

(3)      Achievement of the performance contingency by September 30, 1999
         results in payment of 150% of the grant.

                                      -40-
<PAGE>   43
RETIREMENT BENEFITS

         The following table shows the annual benefits upon retirement at age 65
in 1997 without regard to statutory maximums, for various combinations of final
average earnings and lengths of service which may be payable to Messrs.
Greenberg, Ladner 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.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                         PENSION PLAN BENEFITS
---------------------------------------------------------------------------------------------------------------------------------
 Final 5-Year
   Average                                Annual Benefit for Years of Credited Service Shown (1)
    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, Ladner and
         Bovaird had 17, 23 and 2 years of estimated credited service,
         respectively, at September 30, 1997. Mr. Grady previously accumulated
         more than 4 years of credited service in the UGI Retirement Plan before
         joining the General Partner in 1995. Mr. Bissell previously

                                      -41-
<PAGE>   44
         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.


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, Bovaird and
Ladner in the event their employment is terminated without fault on their part.
Specified 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.

         Benefits payable include a lump sum cash payment in an amount
approximately equal to the sum of (i) three months of compensation (18 months in
the case of Mr. Greenberg), (ii) a pro rata portion of the senior executive's
annual target bonus under the Annual Bonus Plan for the current year, provided
that the employment termination date occurs during the first ten months of the
fiscal year, or, if the employment termination date occurs during the last two
months of the fiscal year, and the Chief Executive Officer determines not to use
his discretion to pay a pro-rata portion of the executive's annual target bonus,
the full bonus payable after the end of the fiscal year, assuming that (x) the
weighting to be applied to the business/financial performance goals is 100%, and
(y) the employee served the entire fiscal year, and (iii) separation pay
determined in a manner consistent with that payable to employees generally, not
exceeding 12 months of compensation. Certain employee benefits are continued for
a specified period (the "Employee Benefit Period") not exceeding 15 months (30
months in the case of Mr. Greenberg) after termination, or the senior executive
may be paid a lump sum equal to the present value of such 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.

                                      -42-
<PAGE>   45
         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 and Grady 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.

         Benefits payable include a lump sum cash payment in an amount
approximately equal to the sum of (i) three months of compensation (6 months in
the case of the Chief Executive Officer), (ii) a pro rata portion of the senior
executive's annual target bonus under the Annual Bonus Plan for the current
year, provided that the employment termination date occurs during the first ten
months of the fiscal year, or, if the employment termination date occurs during
the last two months of the fiscal year, and the Chief Executive Officer
determines not to use his discretion to pay a pro-rata portion of the
executive's annual target bonus, the full bonus payable after the end of the
fiscal year, assuming that (x) the weighting to be applied to the
business/financial performance goals is 100%, and (y) the employee served the
entire fiscal year, and (iii) separation pay determined in a manner consistent
with that payable to employees generally, not exceeding 12 months of
compensation (including target bonus). Minimum separation pay ranges from six to
twelve month's base salary, depending on the executive's employment grade.
Certain employee benefits are continued for a specified period (the "Employee
Benefit Period") not exceeding 15 months (30 months in the case of the Chief
Executive Officer) after termination, or the senior executive may be paid a lump
sum equal to the present value of such 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, Ladner
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

                                      -43-
<PAGE>   46
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, 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
receive an additional amount, such that the net amount retained after payment of
applicable taxes is equal to the total severance compensation payable.

                                      -44-
<PAGE>   47
         Named Executives Employed by the General Partner. Messrs. Bissell and
Grady 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 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

                                      -45-
<PAGE>   48
executive, would constitute "excess parachute payments," as defined in Section
280G of the Code, the executive will receive an additional amount, such that the
net amount retained after payment of applicable taxes is equal to the total
severance compensation payable.


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
Robert C. Forney (Chairman), Thomas F. Donovan and David I. J. Wang.

                                      -46-
<PAGE>   49
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, 1997. AmeriGas Propane, Inc.
is the sole general partner of the Partnership.

<TABLE>
<CAPTION>
                                                                 AMOUNT AND
                                                                  NATURE OF
                           NAME AND ADDRESS (5)                  BENEFICIAL                      PERCENT
TITLE OF CLASS             OF BENEFICIAL OWNER                    OWNERSHIP                     OF CLASS
--------------             -------------------                    ---------                     --------
<S>                        <C>                                  <C>                             <C>
Common Units               UGI Corporation                      4,347,272 (1)                      19.7%
                           AmeriGas, Inc.                       4,347,272 (2)                      19.7%
                           AmeriGas Propane, Inc.               4,347,272 (3)                      19.7%
                           Petrolane Incorporated               1,407,911 (4)                       6.4%

Subordinated Units         UGI Corporation                      19,782,146 (1)                    100.0%
                           AmeriGas, Inc.                       19,782,146 (2)                    100.0%
                           AmeriGas Propane, Inc.               19,782,146 (6)                    100.0%
                           Petrolane Incorporated                6,432,000 (7)                     33.0%
</TABLE>
----------------------

(1)      Based on the number of units held by its indirect wholly owned
         subsidiaries, Petrolane Incorporated ("Petrolane") and AmeriGas
         Propane, Inc.
(2)      Based on the number of units held by its direct and indirect wholly
         owned subsidiaries mentioned in footnote (1).
(3)      Includes 2,939,361 Common Units for which AmeriGas Propane, Inc. has
         sole voting and investment power, and 1,407,911 Common Units held by
         its subsidiary, Petrolane.
(4)      Petrolane has sole voting and investment power.
(5)      The address of each of UGI, AmeriGas, Inc., AmeriGas Propane, Inc. and
         Petrolane is 460 North Gulph Road, King of Prussia, PA 19406.
(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.

                                      -47-
<PAGE>   50
OWNERSHIP OF PARTNERSHIP COMMON UNITS BY THE DIRECTORS AND EXECUTIVE OFFICERS 
OF THE GENERAL PARTNER

         The table below sets forth as of December 1, 1997 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>
                                                                                     AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER                                                            BENEFICIAL OWNERSHIP(1)
------------------------                                                            -----------------------
<S>                                                                                 <C>
Lon R. Greenberg                                                                           1,500 (2)
Thomas F. Donovan                                                                          1,000
Robert C. Forney                                                                           1,600
James W. Stratton                                                                          1,000
Stephen A. Van Dyck                                                                        1,000
David I. J. Wang                                                                           5,000
Eugene V.N. Bissell                                                                        1,500
Brendan P. Bovaird                                                                           200
Charles L. Ladner                                                                          1,000
R. Paul Grady                                                                              2,300
Directors and executive officers as a group (14 persons)                                  16,100
</TABLE>

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

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

                                      -48-
<PAGE>   51
         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
December 9, 1997, 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. 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 428,959 shares subject to options exercisable
within 60 days), represents approximately 2% of UGI's outstanding shares.

<TABLE>
<CAPTION>
                                                   NUMBER OF
                                                   SHARES AND
                                                    NATURE OF
                                                    BENEFICIAL                  NUMBER
                                                   OWNERSHIP                        OF
                                                    EXCLUDING                     STOCK
NAME OF BENEFICIAL OWNER                         OPTIONS (1)(2)                 OPTIONS                 TOTAL
------------------------                         --------------                 -------                  -----
<S>                                              <C>                           <C>                     <C>
Lon R. Greenberg                                    90,360                       293,959                384,319
Thomas F. Donovan                                        0                             0                      0
Robert C. Forney                                    12,186                         4,000                 16,186
James W. Stratton                                    8,779                         5,000                 13,779
Stephen A. Van Dyck                                      0                             0                      0
David I. J. Wang                                    20,894                         5,000                 25,894
Eugene V.N. Bissell                                  5,397                         1,000                  6,397
Brendan P. Bovaird                                   8,147  (3)                   40,000                 48,147
R. Paul Grady                                        7,373                        19,000                 26,373
Charles L. Ladner                                   47,607  (3)                   50,000                 97,607

Directors and executive officers
        as a group (14 persons)                    219,637  (3)                 428,959                 648,596
</TABLE>

(1)      This column shows shares held in the individual's name individually or
         jointly with others, or in the name of a bank, broker or nominee for
         the individual's account.

(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 common
         stock and paid out to directors upon their retirement or termination of
         service. The number of Units included for the respective directors is
         as follows: Messrs. Stratton (7,351 Units), Forney (7,358 Units) and
         Wang (6,466).

                                      -49-
<PAGE>   52
(3)      Includes the number of shares represented by units held in the UGI
         Stock Fund of the 401(k) Employee Savings Plan based on September 30,
         1997 Savings Plan statements.


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 facility fees for this line of credit are computed on
the same basis as the facility fees under the Revolving Credit Facility, and
totaled $68,800 in fiscal year 1997. Interest rates are based on one-month
offshore interbank borrowing rates. The interest rate for a recent Revolving
Credit Facility borrowing from November 18, 1997 to December 18, 1997 is
6.1875%, representing a 5.6875% one-month Offshore Rate, plus an Applicable
Margin of .50%. 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 1997, the Partnership paid UGI
and its affiliates $12,033,835 for the services and expense reimbursements
referred to in this paragraph.

                                      -50-
<PAGE>   53
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
through F-4 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):

<TABLE>
<CAPTION>
===================================================================================================================================
                       INCORPORATION BY REFERENCE
===================================================================================================================================
   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
===================================================================================================================================
<S>              <C>                                                     <C>                       <C>                     <C>
       2.1       Merger and Contribution Agreement                            AmeriGas               Registration            10.21
                 among AmeriGas Partners, L.P.,                            Partners, L.P.            Statement on
                 AmeriGas Propane, L.P., New AmeriGas                                                  Form S-4
                 Propane, Inc., AmeriGas Propane, Inc.,                                             (No. 33-92734)
                 AmeriGas Propane-2, Inc., Cal Gas
                 Corporation of America, Propane
                 Transport, Inc. and NORCO
                 Transportation Company

       2.2       Conveyance and Contribution Agreement among                  AmeriGas                Registration           10.22
                 AmeriGas Partners, L.P., AmeriGas Propane, L.P.            Partners, L.P.            Statement on
                 and Petrolane Incorporated                                                             Form S-4          
                                                                                                     (No. 33-92734)
===================================================================================================================================
       3.1       Amended and Restated Agreement of Limited                AmeriGas Partners,            Form 10-K             3.1
                 Partnership of AmeriGas Partners, L.P. dated as                 L.P.                   (9/30/95)
                 of September 18, 1995
===================================================================================================================================
</TABLE>

                                  -51-
<PAGE>   54
<TABLE>
<CAPTION>
===================================================================================================================================
                       INCORPORATION BY REFERENCE
===================================================================================================================================

   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
===================================================================================================================================
<S>              <C>                                                     <C>                       <C>                     <C>
       3.2       Certificate of Incorporation of                              AmeriGas               Registration             3.3
                 AmeriGas Finance Corp.                                    Partners, L.P.            Statement on
                                                                                                       Form S-4
                                                                                                    (No. 33-92734)

       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                         AmeriGas                Form 10-Q               4.1
                 among AmeriGas Partners, L.P.,                            Partners, L.P.             (3/31/95)
                 AmeriGas Finance 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                       AmeriGas                Form 10-Q               4.3
                 of April 19, 1995 among Donaldson,                        Partners, L.P.             (3/31/95)
                 Lufkin & Jenrette Securities Corporation,
                 Smith Barney, Inc., AmeriGas Partners,
                 L.P. and AmeriGas Finance Corp.

       4.4       Note Agreement dated as of April 12,                         AmeriGas                Form 10-Q               10.8
                 1995 among The Prudential Insurance                       Partners, L.P.             (3/31/95)
                 Company of 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, 1997 to Note Agreement dated as of
                 April 12, 1995
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -52-
<PAGE>   55
<TABLE>
<CAPTION>
==============================================================================================================================-----
                                               INCORPORATION BY REFERENCE
==============================================================================================================================-----

   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
===================================================================================================================================
<S>              <C>                                                     <C>                       <C>                     <C>
      *10.1      Amended and Restated Credit
                 Agreement dated as of September 15,
                 1997 among AmeriGas 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

      *10.2      Agreement dated as of May 1, 1996 between 
                 TE Products Pipeline Company, L.P., and AmeriGas 
                 Propane, L.P.

       10.3      Intercreditor and Agency Agreement                           AmeriGas                Form 10-Q               10.2
                 dated as of April 19, 1995 among                          Partners, L.P.             (3/31/95)
                 AmeriGas Propane, 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.

       10.4      General Security Agreement dated as of                       AmeriGas                Form 10-Q               10.3
                 April 19, 1995 among AmeriGas                             Partners, L.P.             (3/31/95)
                 Propane, L.P., Bank of America National
                 Trust and Savings Association and
                 Mellon Bank, N.A.

       10.5      Subsidiary Security Agreement dated as                       AmeriGas                Form 10-Q               10.4
                 of April 19, 1995 among AmeriGas                          Partners, L.P.             (3/31/95)
                 Propane, L.P., Bank of America National
                 Trust and Savings Association as
                 Collateral Agent and Mellon Bank, N.A.
                 as Cash Collateral Agent
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -53-
<PAGE>   56
<TABLE>
<CAPTION>
===================================================================================================================================
                                               INCORPORATION BY REFERENCE
===================================================================================================================================

   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
===================================================================================================================================
<S>              <C>                                                     <C>                       <C>                     <C>
       10.6      Restricted Subsidiary Guarantee dated as                     AmeriGas                Form 10-Q               10.5
                 of April 19, 1995 by AmeriGas Propane,                    Partners, L.P.             (3/31/95)
                 L.P. for the benefit of Bank of America
                 National Trust and Savings Association,
                 as Collateral Agent

       10.7      Trademark License Agreement dated                            AmeriGas                Form 10-Q               10.6
                 April 19, 1995 among UGI Corporation,                     Partners, L.P.             (3/31/95)
                 AmeriGas, Inc., AmeriGas Propane, Inc.,
                 AmeriGas Partners, L.P. and AmeriGas
                 Propane, L.P.

       10.8      Trademark License Agreement dated                            AmeriGas                Form 10-Q               10.7
                 April 19, 1995 among AmeriGas                             Partners, L.P.             (3/31/95)
                 Propane, Inc., AmeriGas Partners, L.P.
                 and AmeriGas Propane, L.P.

       10.9      Stock Purchase Agreement dated May                          Petrolane             Registration on          10.16(a)
                 27, 1989, as amended and restated July                    Incorporated/               Form S-1
                 31, 1989, between Texas Eastern                           AmeriGas, Inc.           (No. 33-69450)
                 Corporation and QFB Partners

      10.10      Amended and Restated Sublease                                  UGI                   Form 10-K              10.35
                 Agreement dated April 1, 1988, between                     Corporation               (9/30/94)
                 Southwest Salt Co. and AP Propane, Inc.
                 (the "Southwest Salt Co. Agreement")

      10.11      Letter dated September 26, 1994                                UGI                   Form 10-K              10.36
                 pursuant to Article 1, Section 1.2 of the                  Corporation               (9/30/94)
                 Southwest Salt Co. Agreement re option
                 to renew for period of June 1, 1995 to
                 May 31, 2000

      *10.12     Financing Agreement dated as of
                 November 5, 1997 between AmeriGas
                 Propane, Inc. and AmeriGas Propane,
                 L.P.
===================================================================================================================================
</TABLE>

                                      -54-
<PAGE>   57
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                               INCORPORATION BY REFERENCE
-----------------------------------------------------------------------------------------------------------------------------------

   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
-----------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                                                     <C>                       <C>                     <C>
      10.13      Agreement by Petrolane Incorporated                         Petrolane                Form 10-K              10.13
                 and certain of its subsidiaries parties                    Incorporated              (9/23/94)
                 thereto ("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

     10.14**     UGI Corporation 1992 Stock Option and                          UGI                   Form 10-Q             10(ee.)
                 Dividend Equivalent Plan, as amended                       Corporation               (6/30/92)
                 May 19, 1992

     10.15**     UGI Corporation Annual Bonus Plan                              UGI                   Form 10-Q               10.4
                 dated March 8, 1996                                        Corporation               (6/30/96)

     10.16**     AmeriGas Partners, L.P. Annual Bonus                         AmeriGas                Form 10-Q               10.1
                 Plan dated March 8, 1996                                  Partners, L.P.             (6/30/96)

     10.17**     1997 Stock Purchase Loan Plan                                  UGI                   Form 10-K              10.16
                                                                            Corporation               (9/30/97)

     10.18**     UGI Corporation Senior Executive                               UGI                   Form 10-K              10.12
                 Employee Severance Pay Plan effective                      Corporation               (9/30/97)
                 January 1, 1997

     10.19**     AmeriGas Propane, Inc. Executive                             AmeriGas                Form 10-Q               10.1
                 Employee Severance Pay Plan effective                     Partners, L.P.             (12/31/96)
                 January 1, 1997

     10.20**     UGI Corporation 1992 Non-Qualified                           AmeriGas                Form 10-K              10.19
                 Stock Option Plan                                         Partners, L.P.             (9/30/95)

     10.21**     Amendment No. 1 to the UGI                                UGI Utilities,             Form 10-Q                10
                 Corporation 1992 Non-Qualified Stock                           Inc.                  (6/30/97)
                 Option Plan
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -55-
<PAGE>   58
<TABLE>
<CAPTION>
===================================================================================================================================
                                               INCORPORATION BY REFERENCE
===================================================================================================================================

   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
===================================================================================================================================
<S>              <C>                                                     <C>                       <C>                     <C>
     10.22**     Form of Change of Control Agreement                            UGI                   Form 10-K              10.13
                 between UGI Corporation and                                Corporation               (9/30/97)
                 Lon R. Greenberg

     10.23**     Form of Change of Control Agreement                            UGI                   Form 10-K              10.14
                 between UGI Corporation and                                Corporation               (9/30/97)
                 Charles L. Ladner

     10.24**     Form of Change of Control Agreement                            UGI                   Form 10-K              10.15
                 between UGI Corporation and                                Corporation               (9/30/97)
                 Mr. Bovaird

     *10.25**    Form of Change of Control Agreement
                 between AmeriGas Propane, Inc. and
                 Messrs. Bissell and Grady

     *10.26**    AmeriGas Propane, Inc. 1997 Long-
                 Term Incentive Plan effective October 1,
                 1996

     *10.27**    AmeriGas Propane, Inc. Supplemental
                 Executive Retirement Plan effective
                 October 1, 1996

     10.28**     UGI Corporation 1997 Stock Option and                          UGI                   Form 10-Q               10.2
                 Dividend Equivalent Plan                                   Corporation               (3/31/97)
===================================================================================================================================
</TABLE>

                                      -56-
<PAGE>   59
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                               INCORPORATION BY REFERENCE
-----------------------------------------------------------------------------------------------------------------------------------

   Exhibit No.                         Exhibit                               Registrant                 Filing              Exhibit
-----------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                                                     <C>                       <C>                     <C>
       *13       Pages 10 through 23 of the AmeriGas
                 Partners, L.P. Annual Report for the year
                 ended September 30, 1997

       *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.

       *99       Cautionary Statements Affecting
                 Forward-looking Information
===================================================================================================================================
</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 1997 fiscal year, neither the
Partnership nor AmeriGas Finance Corp. filed any Current Reports on Form 8-K.

                                      -57-
<PAGE>   60
                                   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 15, 1997                   By:   AmeriGas Propane, Inc.
                                                 its General Partner




                                           By:   Charles L. Ladner
                                                 ------------------------------
                                                 Charles L. Ladner
                                                 Vice President -
                                                 Finance and Accounting


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 15, 1997 by the following persons
on behalf of the Registrant and in the capacities with AmeriGas Propane, Inc.,
General Partner, indicated.


<TABLE>
<CAPTION>
      SIGNATURE                                        TITLE
      ---------                                        -----
<S>                                           <C>
Lon R. Greenberg                              President, Chairman and Chief
-----------------------------                 Executive Officer
Lon R. Greenberg                              (Principal Executive
                                              Officer) and Director

Charles L. Ladner                             Vice President -
-----------------------------                 Finance and Accounting
Charles L. Ladner                             (Principal Financial Officer
                                              and Principal Accounting Officer)
</TABLE>

                                      -58-
<PAGE>   61
<TABLE>
<CAPTION>
      SIGNATURE                                        TITLE
      ---------                                        -----
<S>                                           <C>
Thomas F. Donovan                             Director
-----------------------------
Thomas F. Donovan


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


Robert C. Forney                              Director
-----------------------------
Robert C. Forney


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


David I. J. Wang                              Director
-----------------------------
David I. J. Wang
</TABLE>

                                      -59-
<PAGE>   62
                                   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 15, 1997                       By:   Charles L. Ladner
                                                     --------------------------
                                                     Charles L. Ladner
                                                     Vice President -
                                                     Finance and Accounting

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 15, 1997 by the following persons
on behalf of the Registrant and in the capacities indicated.


<TABLE>
<CAPTION>
      Signature                                            Title
      ---------                                            -----
<S>                                               <C>
Lon R. Greenberg                                  President (Principal Executive
------------------------                          Officer) and Director
Lon R. Greenberg                                  


Charles L. Ladner                                 Vice President -
------------------------                          Finance and Accounting
Charles L. Ladner                                 (Principal Financial
                                                  Officer and Principal
                                                  Accounting Officer) and
                                                  Director

Brendan P. Bovaird                                Director
------------------------
Brendan P. Bovaird
</TABLE>

                                      -60-
<PAGE>   63


                             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, 1997





                                       F-1


<PAGE>   64


                    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 dated November
14, 1997, listed in the following index, are included in AmeriGas Partners' 1997
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 1997 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                 23

    Consolidated Balance Sheets as of September 30,
       1997 and 1996                                                               Exhibit 13                 10

    Consolidated Statements of Operations for the years ended 
       September 30, 1997 and 1996 and the period April 19, 
       1995 to September 30, 1995                                                  Exhibit 13                 11 
                                                                                   

    Consolidated Statements of Cash Flows for the years ended 
       September 30, 1997 and 1996 and the period April 19, 
       1995 to September 30, 1995                                                  Exhibit 13                 12

                                                                                   

    Consolidated Statements of Partners' Capital for the years 
       ended September 30, 1997 and 1996 and the period April 
       19, 1995 to September 30, 1995                                              Exhibit 13                 13

    Notes to Consolidated Financial Statements                                     Exhibit 13               14-22

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>   65


                    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-6

         Balance Sheets as of September 30, 1997 and 1996                              F-7

         Statements of Stockholder's Equity for the years ended September 30,
              1997 and 1996 and the period March 13, 1995 to September 30, 1995        F-8

         Note to Financial Statements                                                  F-9

AmeriGas Propane, Inc./AmeriGas Propane-2, Inc. (Predecessor of AmeriGas
------------------------------------------------------------------------
    Partners, L.P.)
-------------------

Financial Statements:

    Report of Independent Public Accountants                                           F-11

    Combined Statement of Income for the period September 24, 1994 to April
         19, 1995                                                                      F-12

    Combined Statement of Cash Flows for the period September 24, 1994 to
         April 19, 1995                                                                F-13

    Combined Statement of Stockholder's Equity for the period September 24,
         1994 to April 19, 1995                                                        F-14

    Notes to Combined Financial Statements                                          F-15 to F-25
</TABLE>


                                      F-3


<PAGE>   66


                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES

   INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (continued)


<TABLE>
<CAPTION>
                                                                                    Form 10-K
                                                                                     (page)
                                                                                     ------
<S>                                                                                 <C>      
Petrolane Incorporated and Subsidiaries (Predecessor of 
-------------------------------------------------------
    AmeriGas Partners, L.P.)
----------------------------

Financial Statements:

         Report of Independent Public Accountants                                    F-27

         Consolidated Statement of Operations for the period 
              September 24, 1994 to April 19, 1995                                   F-28

         Consolidated Statement of Cash Flows for the period 
              September 24, 1994 to April 19, 1995                                   F-29

         Consolidated Statement of Stockholders' Equity for the 
              period September 24, 1994 to April 19, 1995                            F-30

         Notes to Consolidated Financial Statements                               F-31 to F-41
</TABLE>


All other financial statement schedules are omitted because the required
information is not present or not present in amounts sufficient to require
submission of the schedule or because the information required is included
elsewhere in the respective financial statements or notes thereto contained
herein.


                                       F-4


<PAGE>   67




                             AMERIGAS FINANCE CORP.

                              FINANCIAL STATEMENTS
         for the years ended September 30, 1997 and 1996 and the period
                     March 13, 1995 (date of incorporation)
                              to September 30, 1995



                                      F-5



<PAGE>   68



                    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, 1997 and 1996, and the related statements of stockholder's
equity for the years ended September 30, 1997 and 1996 and the period March 13,
1995 to September 30, 1995. 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, 1997 and 1996, in
conformity with generally accepted accounting principles.



ARTHUR ANDERSEN LLP

Chicago, Illinois
November 14, 1997


                                       F-6


<PAGE>   69




                             AMERIGAS FINANCE CORP.
             (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                  September 30,
                                                                                           --------------------------
ASSETS                                                                                        1997            1996
------                                                                                     -----------    -----------
<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-7


<PAGE>   70


                             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 MARCH 13, 1995                              $          --    $           --     $          --
Subscription for AmeriGas Finance
   Corp. Common Stock                                           1               999       
                                                    -------------    --------------    --------------

BALANCE SEPTEMBER 30, 1995                                      1               999                --
                                                    -------------    --------------    --------------
                
BALANCE SEPTEMBER 30, 1996                                      1               999                --
                                                    -------------    --------------    --------------
                
BALANCE SEPTEMBER 30, 1997                          $           1    $          999    $           --
                                                    =============    ==============    ==============
</TABLE>


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



                                      F-8


<PAGE>   71



                             AMERIGAS FINANCE CORP.
             (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)

                          NOTE TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1997 AND 1996

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-9


<PAGE>   72



                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
                    (Predecessor of AmeriGas Partners, L.P.)

                          COMBINED FINANCIAL STATEMENTS
                       for the period September 24, 1994,
                            to April 19, 1995 and the
                          year ended September 23, 1994



                                      F-10



<PAGE>   73



                    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 the accompanying combined statement of income, stockholder's
equity and cash flows of AmeriGas Propane, Inc. and subsidiaries and AmeriGas
Propane-2, Inc. (Predecessor) (collectively, the "Company") for the period
September 24, 1994 to April 19, 1995. These financial statements are the
responsibility of the management of AmeriGas Propane, Inc. Our responsibility is
to express an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
AmeriGas Propane, Inc. and subsidiaries and AmeriGas Propane-2, Inc.
(Predecessor) for the period September 24, 1994 to April 19, 1995, in conformity
with generally accepted accounting principles.

As discussed in Note 4 to the financial statements, effective September 24,
1994, the Company changed its method of accounting for postemployment benefits.



ARTHUR ANDERSEN LLP

Chicago, Illinois
December 4, 1995



                                      F-11


<PAGE>   74


               AMERIGAS PROPANE, INC. / AMERIGAS PROPANE - 2, INC.
                          COMBINED STATEMENT OF INCOME
                             (THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                     September 24,
                                                                        1994 to
                                                                     April 19, 1995
                                                                     --------------
<S>                                                                  <C>    
Revenues (note 1):
  Propane                                                            $ 218,078
  Other                                                                 24,107
                                                                     ---------
                                                                       242,185
                                                                     ---------

Costs and expenses:
  Cost of sales - propane                                              106,596
  Cost of sales - other                                                 12,693
  Operating and administrative expenses                                 62,706
  Operating and administrative expenses - related parties (note 6)      22,440
  Depreciation and amortization (note 1)                                13,589
  Miscellaneous income - related parties (note 6)                       (6,512)
  Miscellaneous income, net (note 7)                                    (1,709)
                                                                     ---------
                                                                       209,803
                                                                     ---------

Operating income                                                        32,382
Interest expense                                                        14,569
                                                                     ---------
Income before income taxes                                              17,813
Income taxes (notes 1 and 3)                                            14,891
                                                                     ---------
Income before extraordinary loss and accounting change                   2,922
Extraordinary loss - debt restructuring (note 2)                       (11,892)
Change in accounting for postemployment benefits (note 4)               (1,650)
                                                                     ---------
Net loss                                                             $ (10,620)
                                                                     =========
</TABLE>




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


                                      F-12


<PAGE>   75



               AMERIGAS PROPANE, INC. / AMERIGAS PROPANE - 2, INC.
                        COMBINED STATEMENT OF CASH FLOWS
                             (THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                              September 24,
                                                                                                 1994 to
                                                                                              April 19, 1995
                                                                                              --------------
<S>                                                                                          <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                                    $    (10,620)
  Adjustments to reconcile net loss to net
    cash provided by continuing operating activities:
      Depreciation and amortization                                                                 13,589
      Deferred income taxes, net                                                                     5,538
      Provision for uncollectible accounts                                                           1,202
      Extraordinary loss - debt restructuring                                                       11,892
      Change in accounting for postemployment benefits                                               1,650
      Gain on sale of property, plant and equipment                                                   (363)
      Other, net                                                                                      (772)
                                                                                              ------------
                                                                                                    22,116
      Net change in:
          Accounts receivable                                                                       (5,998)
          Inventories                                                                                7,152
          Accounts payable                                                                          (3,903)
          Receivable from / payable to related parties, net                                          4,641
          Other current assets and liabilities                                                       5,963
                                                                                              ------------
    Net cash provided by operating activities                                                       29,971
                                                                                              ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for property, plant and equipment                                                    (5,605)
  Proceeds from disposals of property, plant and equipment                                           1,098
  Acquisitions of businesses, net of cash acquired                                                    (156)
                                                                                              ------------
    Net cash used by investing activities                                                           (4,663)
                                                                                              ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of dividends                                                                              (5,286)
  Repayment of long-term debt                                                                         (852)
                                                                                              ------------
    Net cash used by financing activities                                                           (6,138)
                                                                                              ------------

Cash and cash equivalents increase                                                            $     19,170
                                                                                              ============

CASH AND CASH EQUIVALENTS:
  End of period                                                                               $     37,743
  Beginning of period                                                                               18,573
                                                                                              ------------
    Increase                                                                                  $     19,170
                                                                                              ============
</TABLE>

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

                                      F-13


<PAGE>   76




               AMERIGAS PROPANE, INC. / AMERIGAS PROPANE - 2, INC.
                   COMBINED STATEMENT OF STOCKHOLDER'S EQUITY
                             (THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                 Additional
                                                                Common             Paid-in          Accumulated
                                                                 Stock             Capital            Deficit
                                                              ------------       ------------       ------------
    <S>                                                       <C>                <C>                <C>            
    Balance September 23, 1994                                $          -       $    192,794       $     (6,195)

        Net loss                                                                                         (10,620)
        Dividends - cash                                                               (5,286)
                                                              ------------       ------------       ------------

    Balance April 19, 1995                                    $          -       $    187,508       $    (16,815)
                                                              ============       ============       ============
</TABLE>


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


                                      F-14



<PAGE>   77



                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
                     NOTES TO COMBINED FINANCIAL STATEMENTS
                             (Thousands of dollars)

1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

         ORGANIZATION

         AmeriGas Propane, Inc., a Delaware corporation (AmeriGas Propane), and
         AmeriGas Propane-2, Inc., a Pennsylvania corporation incorporated on
         January 5, 1994 ("AGP-2", and together with AmeriGas Propane, "the
         Company"), are wholly owned subsidiaries of AmeriGas, Inc. (AmeriGas)
         engaged in the distribution of propane and related equipment and
         supplies. On April 19, 1995, pursuant to a Merger and Contribution
         Agreement, AmeriGas Propane and certain of its operating subsidiaries,
         and AGP-2 were merged into AmeriGas Propane, L.P., (the "Operating
         Partnership"), a Delaware limited partnership formed to acquire and
         operate the propane business and assets of the Company and Petrolane
         Incorporated (Petrolane) (see Note 2).

         COMBINATION AND CONSOLIDATION PRINCIPLES

         The combined financial statements include the consolidated accounts of
         AmeriGas Propane and its subsidiaries and the accounts of AGP-2. All
         significant intercompany accounts and transactions have been
         eliminated. The combined financial statements include the results of
         operations and cash flows of the Company through April 19, 1995, the
         date of the Merger and Contribution Agreement.

         COMBINED STATEMENTS OF CASH FLOWS

         Cash equivalents include all highly liquid investments with maturities
         of three months or less when purchased and are recorded at cost plus
         accrued interest which approximates market value.

         Interest paid during the period September 24, 1994 to April 19, 1995
         (the 1995 seven-month period) was $14,525. Income taxes paid during the
         1995 seven-month period were $5,341.

         REVENUE RECOGNITION

         Revenues from the sale of propane are recognized principally as product
         is shipped or delivered to customers.


                                      F-15


<PAGE>   78


                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)


         INVENTORIES

         Inventories are stated at the lower of cost or market. Cost is
         determined using an average cost method for propane inventories,
         specific identification for appliances, and the first-in, first-out
         (FIFO) method for all other inventories.

         PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION

         Property, plant and equipment is stated at cost. Amounts assigned to
         property, plant and equipment of acquired businesses are based upon
         estimated fair value at date of acquisition. When plant and equipment
         are retired or otherwise disposed of, any gains or losses are recorded
         in operations.

         Depreciation of property, plant and equipment is computed using the
         straight-line method over estimated service lives ranging from two to
         40 years.

         GOODWILL AND OTHER INTANGIBLES

         Goodwill recognized as a result of business combinations accounted for
         as purchases is amortized on a straight-line basis over 40 years. Other
         intangibles consisting principally of covenants not to compete, are
         amortized over the estimated periods of benefit which do not exceed
         seven years.  Amortization expense during the 1995 seven-month period
         was $5,262.

         It is the Company's policy to review goodwill and other intangible
         assets for possible impairment whenever events or changes in
         circumstances indicate that the carrying amount of such assets may not
         be recoverable. If such a review should indicate that the carrying
         amount of goodwill and other intangible assets is not recoverable, it
         is the Company's policy to reduce the carrying amount of such assets to
         fair value.

         INCOME TAXES

         Income taxes are provided based upon the provisions of Statement of
         Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
         Taxes" (SFAS 109), which requires recognition of deferred income tax
         liabilities and assets for the expected future tax consequences of
         events that have been included in the financial statements or tax
         returns. Under this method, deferred income tax liabilities and assets
         are determined based on the differences between the financial statement
         and tax bases of assets and liabilities using enacted tax rates in
         effect for the year in which the differences are expected to reverse.



                                      F-16


<PAGE>   79


                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)

         The Company joined with AmeriGas and its parent, UGI Corporation (UGI)
         in filing a consolidated federal income tax return. The Company was
         allocated tax assets, liabilities, expense, benefits and credits
         resulting from the effect of its transactions in the consolidated
         income tax provision determined in accordance with SFAS 109, including
         giving effect to all intercompany transactions. The result of this
         allocation was not materially different from income taxes calculated on
         a separate return basis.

2.       MERGER WITH AMERIGAS PROPANE, L.P.

         On April 19, 1995, a subsidiary of AmeriGas acquired by merger (the
         "Petrolane Merger") the approximately 65% of Petrolane common shares
         outstanding not already owned by UGI or AmeriGas. Immediately after the
         Petrolane Merger, AmeriGas Propane and certain of its operating
         subsidiaries, and AGP-2 merged into the Operating Partnership (the
         "Formation Merger"), a subsidiary of AmeriGas Partners, a Delaware
         limited partnership formed to acquire and operate these businesses
         (collectively, "the Partnership"). Also on April 19, 1995, Petrolane
         conveyed substantially all of its assets and liabilities to the
         Operating Partnership. In addition, certain senior indebtedness of
         AmeriGas Propane assumed by the Operating Partnership with a face value
         of $208,000 was exchanged for First Mortgage Notes of the Operating
         Partnership and certain senior indebtedness of Petrolane with a face
         value of $200,000 was also exchanged for such First Mortgage Notes.
         Following these transactions, on April 19, 1995, AmeriGas Partners
         completed its initial public offering of 15,452,000 Common Units.

         As a result of the exchange of certain of the Company's indebtedness
         for First Mortgage Notes of the Operating Partnership, the Company
         recorded an extraordinary loss of $19,673 pre-tax ($11,892 after-tax).
         In addition, the Company expensed $5,916 of deferred tax benefits
         representing the Company's deferred tax benefits no longer realizable
         as a result of the Formation Merger.



                                      F-17


<PAGE>   80


                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)
3.       INCOME TAXES

         The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------------------
                                                                                              September 24, 1994
                                                                                                     to April 19,
                                                                                                            1995
         --------------------------------------------------------------------------------------------------------
         <S>                                                                                  <C>
           Current:
                Federal                                                                                  $ 8,155
                State                                                                                      1,198
         --------------------------------------------------------------------------------------------------------
                                                                                                           9,353

           Deferred                                                                                        5,538
         --------------------------------------------------------------------------------------------------------
           Total income taxes                                                                            $14,891
         --------------------------------------------------------------------------------------------------------
</TABLE>

         A reconciliation from the statutory federal tax rate to the effective
         tax rate is as follows:

<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------------------
                                                                                              September 24, 1994
                                                                                                     to April 19,
                                                                                                            1995

         --------------------------------------------------------------------------------------------------------
         <S>                                                                                  <C> 
           Statutory federal tax rate                                                                       35.0%
           Difference in tax rate due
                to:
                   State income taxes, net of federal 
                    income tax benefit                                                                       5.8
                   Nondeductible amortization of 
                    goodwill                                                                                 9.6
                   Adjustment to deferred taxes as a 
                     result of the Formation Merger                                                         33.2
         ---------------------------------------------------------------------------------------------------------
           Effective tax rate                                                                               83.6%
         ---------------------------------------------------------------------------------------------------------
</TABLE>


4.       PENSION PLAN AND OTHER POSTEMPLOYMENT BENEFITS

         Employees of the Company participated in the AmeriGas Propane, Inc.
         Pension Plan (AmeriGas Propane Plan), a noncontributory defined
         contribution pension plan. Company contributions to the AmeriGas
         Propane Plan represented a percentage of each covered employee's
         salary. AmeriGas Propane also sponsored a 401(k) savings plan, the
         AmeriGas Propane, Inc. Savings Plan (Savings Plan), for its employees.
         Generally, participants could


                                      F-18


<PAGE>   81


                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)


         contribute up to 6% of their compensation on a before-tax basis. The
         Company could, at its discretion, match a portion of employees'
         contributions to the Savings Plan. The cost of benefits under the
         AmeriGas Propane Plan and the Savings Plan for the 1995 seven-month
         period totaled $1,105.

         The Company provided health care benefits to certain retirees and a
         limited number of active employees meeting certain age and service
         requirements as of January 1, 1989. The Company also provided limited
         life insurance benefits to substantially all active and retired
         employees.

         The components of net periodic postretirement benefit cost are as
         follows:

<TABLE>
<CAPTION>
           --------------------------------------------------------------------------------------------------------
                                                                                                 September 24, 1994
                                                                                                        to April 19,
                                                                                                               1995

           --------------------------------------------------------------------------------------------------------
           <S>                                                                                   <C> 
           Service cost-benefits earned during 
              the period                                                                                      $   6
           Interest cost on accumulated
              postretirement benefit 
              obligation                                                                                        153
           Amortization of transition 
              obligation                                                                                        118
           --------------------------------------------------------------------------------------------------------

           Net periodic postretirement benefit 
             cost                                                                                              $277
           --------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-19


<PAGE>   82


                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)


         The major actuarial assumptions used in determining the net periodic
         postretirement benefit cost for the period covered by the financial
         statements is as follows:

<TABLE>
<CAPTION>
         ----------------------------------------------------------------------------------------------------------
                                                                                                 September 24, 1994
                                                                                                       to April 19,
                                                                                                               1995
         ----------------------------------------------------------------------------------------------------------
         <S>                                                                                     <C>
           Discount rate                                                                                        8.7%
           Health care cost trend rate                                                                     10.0-5.5
         ----------------------------------------------------------------------------------------------------------
</TABLE>

         Increasing the health care cost trend rate one percent increases the
         net periodic postretirement benefit cost for the 1995 seven-month
         period by approximately $11.

         Effective September 24, 1994, the Company adopted the provisions of
         Statement of Financial Accounting Standards No. 112, "Employers'
         Accounting for Postemployment Benefits" (SFAS 112). SFAS 112 requires,
         among other things, the accrual of benefits provided to former or
         inactive employees (who are not retirees) and to their beneficiaries
         and covered dependents. Prior to the adoption of SFAS 112, the Company
         accounted for these postemployment benefits on a pay-as-you-go basis.
         The cumulative effect of SFAS 112 on the Company's results of
         operations for periods prior to September 24, 1994 of $2,730 pre-tax
         ($1,650 after-tax) has been reflected in the Combined Statement of
         Income for the 1995 seven-month period as "Change in accounting for
         postemployment benefits".

5.       COMMITMENTS AND CONTINGENCIES

         The Company leased various buildings and transportation, data
         processing and office equipment under operating leases. Certain of the
         leases contained renewal and purchase options and also contained
         escalation clauses. The aggregate rental expense for such leases was
         approximately $7,310 for the 1995 seven-month period.

         Prior to April 19, 1995, the Company was defending various claims and
         legal actions arising in the ordinary course of business the final
         results of which could not be predicted with certainty. However, it is
         reasonably possible that some of them could be resolved unfavorably to
         the Company. Management believes, after consultation with counsel, that
         damages or settlements, if any, recovered by the plaintiffs in such
         claims or actions will not have a material adverse effect on the
         Company's financial position but could be material to operating results
         and 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. As a result of the merger of
         the Company with the Operating 


                                      F-20


<PAGE>   83
                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)


         Partnership on April 19, 1995 pursuant to the Merger and Contribution
         Agreement, these contingent liabilities were assumed by the Operating
         Partnership.

6.       RELATED PARTY TRANSACTIONS

         During the period July 16, 1993 through April 19, 1995, AmeriGas
         Management Company (AMC) and AmeriGas Transportation Management Company
         (ATMC), first-tier subsidiaries of UGI, provided general management,
         supervisory, administrative and transportation services to the Company
         and Petrolane pursuant to management services agreements. As
         consideration for the services provided to the Company under the AMC
         Management Services Agreement (AMC Agreement) and the ATMC Management
         Services Agreement (ATMC Agreement), the Company was charged a monthly
         fee determined by multiplying the overhead expenses of AMC and ATMC by
         a percentage which represented the Company's share of AMC's and ATMC's
         total overhead expenses. The percentage was 55% during the 1995
         seven-month period. For the 1995 seven-month period, the Company
         recorded combined management fee expense of $10,368 pursuant to the AMC
         and ATMC Agreements which amounts are included in operating and
         administrative expenses - related parties.

         Pursuant to the AMC Agreement, AMC arranged for AmeriGas Propane to
         purchase substantially all of Petrolane's propane supply needs for
         which Petrolane was charged AmeriGas Propane's costs. Such costs
         totaled $171,609 during the 1995 seven-month period.

         Effective July 1993 through April 19, 1995, the Company leased and
         subleased certain furniture and equipment to AMC. Income resulting from
         these leases and subleases totaled $1,205 for the 1995 seven-month
         period and is classified as miscellaneous income - related parties.

         In order to achieve cost reductions and operational efficiencies in
         overlapping geographical markets, during the year ended September 23,
         1994 AmeriGas Propane and Petrolane closed certain district locations
         and entered into a customer services agreement (Customer Services
         Agreement). Pursuant to the Customer Services Agreement, AmeriGas
         Propane served customers of closed Petrolane districts, and Petrolane
         served customers of closed AmeriGas Propane districts. Fees under the
         Customer Services Agreement generally represented a percentage, based
         upon retail gallon sales, of district operating expenses. Fees billed
         by Petrolane to AmeriGas Propane under the Customer Services Agreement
         totaled $6,879 for the 1995 seven-month period and are reflected in
         operating and administrative expenses related parties. Fees billed to
         Petrolane under the 




                                      F-21
<PAGE>   84
                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)


         Customer Services Agreement totaled $5,307 for the 1995 seven-month
         period and are reflected in miscellaneous income - related parties.

         Prior to April 19, 1995, UGI provided certain management services to
         the Company for a fee under a management services agreement. The fee
         was based upon a specified rate per retail gallon of propane sold.
         Under this agreement, management fee expense was $5,193 for the 1995
         seven-month period and is included in operating and administrative
         expenses - related parties. The Company also reimbursed AmeriGas and
         UGI for certain costs incurred on its behalf for third party services,
         primarily legal and insurance.



                                      F-22
<PAGE>   85
                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)



7.       MISCELLANEOUS INCOME

         Miscellaneous income comprises the following:

<TABLE>
<CAPTION>

         ----------------------------------------------------------------------
                                                      September 24, 1994
                                                            to April 19,
                                                                    1995
         ----------------------------------------------------------------------
           <S>                                        <C>
           Interest income                                        $  509
           Gain on sale of fixed assets                              363
           Finance charges                                           564
           Rental income                                              97
           Other                                                     176
         ----------------------------------------------------------------------

                                                                  $1,709
         ----------------------------------------------------------------------
</TABLE>




                                      F-23
<PAGE>   86
                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)




8.       SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

         In order to provide comparative financial information, the following
         table includes unaudited results of operations and cash flows for the
         period September 24, 1993 to April 23, 1994:


<TABLE>
<CAPTION>
                                                    September 24, 1993
                                                                    to
                                                        April 23, 1994
                                                    ------------------
                                                           (Unaudited)
<S>                                                 <C>
Statement of Income

Revenues:                                                     
    Propane                                                   $242,973
    Other                                                       23,443
                                                              --------
                                                               266,416
                                                              --------

Costs and expenses:
    Cost of sales - propane                                    116,491
    Cost of sales - other                                       11,639
    Operating and administrative expenses                       83,992
    Depreciation and amortization                               13,491
    Miscellaneous (income)                                      (7,348)
                                                              --------
                                                               218,265
                                                              --------

    Operating income                                            48,151
    Interest expense                                            15,067
    Income taxes                                                16,363
                                                              --------

    Net income                                                $ 16,721
                                                              ========
</TABLE>


                                      F-24
<PAGE>   87


                 AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
                             (Thousands of dollars)



<TABLE>
<CAPTION>
                                                                       September 24, 1993
                                                                                       to
                                                                          April 23,  1994
                                                                       ------------------
                                                                              (Unaudited)
<S>                                                                    <C>     
STATEMENT OF CASH FLOWS


Cash Flows From Operating Activities:
   Net income                                                                    $ 16,721
   Adjustments to reconcile to cash provided by operating 
       activities:
       Depreciation and amortization                                               13,491
       Deferred income taxes                                                       (2,216)
       Other                                                                          313
       Change in operating working capital                                          2,006
                                                                                 --------
       Net cash provided by operating activities                                   30,315
                                                                                 --------

Cash Flows From Investing Activities:
   Expenditures for property, plant and equipment                                  (4,336)
   Acquisitions of businesses                                                      (4,300)
   Other                                                                            1,214
                                                                                 --------
       Net cash used by investing activities                                       (7,422)
                                                                                 --------

Cash Flows From Financing Activities:
   Payment of dividends                                                           (12,987)
   Repayment of long-term debt                                                       (574)
   Capital contribution from AmeriGas                                               5,001
                                                                                 --------
       Net cash used by financing activities                                       (8,560)
                                                                                 --------

Cash and cash equivalents increase                                               $ 14,333
                                                                                 ========
</TABLE>



                                      F-25
<PAGE>   88
                     PETROLANE INCORPORATED AND SUBSIDIARIES
                    (Predecessor of AmeriGas Partners, L.P.)



                        CONSOLIDATED FINANCIAL STATEMENTS
                        for the period September 24, 1994
                                to April 19, 1995











                                      F-26
<PAGE>   89


                    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 the accompanying consolidated statement of operations,
stockholders' equity and cash flows of Petrolane Incorporated (Predecessor) and
subsidiaries for the period September 24, 1994 to April 19, 1995. These
financial statements are the responsibility of the management of AmeriGas
Propane, Inc. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Petrolane Incorporated (Predecessor) and subsidiaries for the period September
24, 1994 to April 19, 1995, in conformity with generally accepted accounting
principles.

As discussed in Note 4 to the consolidated financial statements, effective
September 24, 1994, the Company changed its method of accounting for
postemployment benefits.


ARTHUR ANDERSEN LLP

Chicago, Illinois
December 4, 1995


                                      F-27
<PAGE>   90

                     PETROLANE INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (THOUSANDS OF DOLLARS, EXCEPT PER SHARE)



<TABLE>
<CAPTION>

                                                                                                   September 24,
                                                                                                      1994 to
                                                                                                   April 19, 1995
                                                                                                   ---------------
      <S>                                                                                          <C>
      Revenues (note 2):
         Propane                                                                                   $      327,479
         Other                                                                                             44,609
                                                                                                   --------------
                                                                                                          372,088
                                                                                                   --------------

      Costs and expenses:
        Cost of sales - propane (note 6)                                                                  175,690
        Cost of sales - other                                                                              27,463
        Selling, general and administrative expenses                                                       79,838
        Selling, general and administrative
            expenses - related parties (note 6)                                                            20,469
        Depreciation and amortization (note 2)                                                             27,398
        Taxes - other than income taxes                                                                     8,491
        Miscellaneous (income) - related parties (note 6)                                                  (6,879)
        Miscellaneous (income) expense, net                                                                (1,851)
                                                                                                   --------------
                                                                                                          330,619
                                                                                                   --------------

      Operating income                                                                                     41,469
      Interest expense                                                                                     29,966
                                                                                                   --------------

      Income before income taxes and change in accounting                                                  11,503
      Income taxes (note 3)                                                                                10,113
                                                                                                   --------------
      Income before change in accounting                                                                    1,390
      Change in accounting for postemployment benefits (note 4)                                              (905)
                                                                                                   --------------
      Net income                                                                                   $          485
                                                                                                   ==============


      Earnings per common share (note 2):
         Earnings before accounting change                                                         $         0.13
         Change in accounting for postemployment benefits                                                    (.08)
                                                                                                   --------------
         Net income per share                                                                      $         0.05
                                                                                                   ==============

      Average shares outstanding (thousands)                                                               10,501
                                                                                                   ==============


</TABLE>




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


                                        
                                      F-28
<PAGE>   91

                     PETROLANE INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (THOUSANDS OF DOLLARS)




<TABLE>
<CAPTION>
                                                                                              September 24,                       
                                                                                                 1994 to                          
                                                                                              April 19, 1995                      
                                                                                              --------------                      
<S>                                                                                           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                      
      Net income                                                                                 $    485                         
      Adjustments to reconcile net income to net                                                                                  
          cash provided by operating activities:                                                                                  
            Depreciation and amortization                                                          27,398                         
            Deferred income taxes                                                                   6,610                         
            Amortization of debt premium and interest                                                                             
                 rate swap premiums                                                                (3,035)                        
            Provision for uncollectible accounts                                                    1,876                         
            Other, net                                                                             (1,942)                        
                                                                                                 --------                         
                                                                                                   31,392                         
            Net change in:                                                                                                        
                Accounts receivable                                                                   431                         
                Inventories                                                                         6,851                         
                Prepayments and other current assets                                                2,878                         
                Accounts payable and other current liabilities                                    (19,597)                        
                                                                                                 --------                         
          Net cash provided by operating activities                                                21,955                         
                                                                                                 --------                         
                                                                                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                         
      Expenditures for property, plant and equipment                                               (7,291)                        
      Proceeds from disposals of property, plant and equipment                                      2,881                         
      Acquisitions of businesses, net of cash acquired                                             (2,840)                        
                                                                                                 --------                         
          Net cash used by investing activities                                                    (7,250)                        
                                                                                                 --------                         
                                                                                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                         
      Repayment of long-term debt                                                                 (12,507)                        
      Increase in working capital loans                                                             7,000                         
      Other                                                                                        (1,304)                        
                                                                                                 --------                         
          Net cash used by financing activities                                                    (6,811)                        
                                                                                                 --------                         
                                                                                                                                  
Cash and cash equivalents increase                                                               $  7,894                         
                                                                                                 ========                         
CASH AND CASH EQUIVALENTS:
      End of period                                                                              $ 18,671                         
      Beginning of period                                                                          10,777                         
                                                                                                 --------                         
          Increase                                                                               $  7,894                         
                                                                                                 ========                         
</TABLE>
                                                                
The accompanying notes are an integral part of these financial statements.
                                                                          
                                                                          
                                      F-29                                
                                                                          
<PAGE>   92

                     PETROLANE INCORPORATED AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                             (THOUSANDS OF DOLLARS)



<TABLE>
<CAPTION>

                                                            Common Stock                      
                                           -----------------------------------------------
                                                 Class A                  Class B             Additional
                                           ----------------------  -----------------------    paid-in       Accumulated      
                                            Shares       Amount      Shares       Amount      capital         deficit
                                           ----------    --------  -----------    --------   -----------  -------------


<S>                                        <C>           <C>       <C>            <C>        <C>          <C>           
Balance - September 23, 1994                3,150,240    $     32    7,350,562    $     74   $  105,650   $     (12,643)

      Net income                                                                                                    485
                                           ----------    --------  -----------    --------   ----------   -------------

Balance - April 19, 1995                    3,150,240    $     32    7,350,562    $     74   $  105,650   $     (12,158)
                                           ==========    ========  ===========    ========   ==========   =============

</TABLE>










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



                                      F-30
<PAGE>   93


                    PETROLANE INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.       ORGANIZATION AND BASIS OF PRESENTATION

         REORGANIZATION AND EMERGENCE FROM CHAPTER 11 BANKRUPTCY

         On May 21, 1993 (Petition Date), QFB Partners (QFB), Petrolane Gas
         Service Limited Partnership (Pet Gas), Petrolane Incorporated
         (Petrolane), Petrolane Finance Corp. (Pet Finance) and certain
         affiliated and related entities (collectively, the "Debtors") commenced
         cases seeking reorganization under Chapter 11 of the United States
         Bankruptcy Code in the United States Bankruptcy Court for the Southern
         District of New York (the "Bankruptcy Court"). On the Petition Date,
         the Debtors also filed a joint plan of reorganization (Plan) for which
         the Debtors had solicited and received prepetition acceptances. The
         Plan was confirmed by the Bankruptcy Court on June 25, 1993 and
         substantially completed (the "Closing") on July 15, 1993 (Closing
         Date). Prior to the substantial completion of the Plan, QFB was owned
         by QJV Corp. (QJV) and FB Pet, L.P. (FB Pet), affiliates of Quantum
         Chemical Corporation (Quantum) and The First Boston Corporation,
         respectively.

         Pursuant to the Plan, on the Closing Date, AmeriGas, Inc. (AmeriGas), a
         Pennsylvania corporation and a wholly owned subsidiary of UGI
         Corporation (UGI), received 1,050,000 shares of Petrolane Class A
         Common Stock (Class A Stock) representing 10% of the outstanding common
         stock of Petrolane and $19.4 million in cash. The holders of Pet Gas's
         $375 million principal amount of 13 1/4 Senior Subordinated Debentures
         due 2001 (Old Subordinated Debentures) received, through a series of
         transactions, 9,450,000 shares of Petrolane Class B Common Stock (Class
         B Stock), representing 90% of the common stock of Petrolane, and
         1,250,000 warrants to purchase, in certain circumstances from June 30,
         1996 to March 31, 1998, UGI Common Stock at an exercise price of $24
         per share (UGI Warrants), subject to adjustment. On the Closing Date,
         all of the Old Subordinated Debentures were cancelled. As of December
         23, 1993, AmeriGas had acquired 2,023,530 shares of Class B Stock at a
         price of $24.45 per share pursuant to the exercise of Put Rights issued
         under the Put Rights Agreement (Put Rights Agreement) entered into by
         AmeriGas, Petrolane and Continental Bank (as Put Rights Agent) pursuant
         to the Plan. As provided in Petrolane's Amended and Restated Articles
         of Incorporation, the shares of Class B Stock so acquired by AmeriGas
         were automatically converted into 2,023,530 shares of Class A Stock. In
         addition, pursuant to the exercise of Put Rights, on December 27, 1993,
         AmeriGas acquired an additional 75,908 shares of Class B Stock at a
         price of $24.45 per share (which shares were automatically converted
         into a like number of shares of Class A Stock). Because 562 of the
         2,100,000 Put Rights issued under the Put Rights Agreement were not
         exercised, on January 24, 1994, Petrolane's Board of Directors, acting
         in accordance with the Plan, authorized the issuance and sale of 802
         shares of Class A Stock to AmeriGas.


                                      F-31
<PAGE>   94
                     PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         Holders of Class B Stock were given the right, from January 1, 1997 (or
         earlier in certain circumstances) to December 31, 2001, to exchange all
         or a portion of their Class B Stock for AmeriGas Common Stock
         constituting up to an aggregate of 26% of the shares of AmeriGas Common
         Stock outstanding on the Closing Date, and AmeriGas was given the
         right, from January 1, 1998 to December 31, 2002, to require such
         exchange. Prior to the time the holders of Class B Stock could exchange
         their Class B Stock for AmeriGas Common Stock, they were entitled to
         receive certain payments equal to the difference between (i) the result
         obtained by dividing (x) the amount of the dividend paid by AmeriGas on
         18,690,000 shares of AmeriGas Common Stock by (y) .89, and (ii) the
         amount of the dividends paid by AmeriGas on 18,690,000 shares of
         AmeriGas Common Stock. AmeriGas agreed to finance these payments
         through subordinated loans to Petrolane or, in certain circumstances,
         to make such payments directly.

         Also pursuant to the Plan, the senior secured debt of the Debtors was
         restructured which, among other things, resulted in amendments to the
         amortization schedules and covenants contained in the agreements
         governing such senior debt, and a new revolving credit facility
         (Revolving Credit Agreement) in an initial amount of $73 million was
         made available to Petrolane by certain of its senior secured lenders.
         AmeriGas guaranteed up to $45 million of such senior debt which
         guarantee was, subject to certain conditions, to decrease to $20
         million over time. In addition, on the Closing Date affiliates of
         AmeriGas began providing Petrolane with management and administrative
         services. Petrolane entered into management services agreements with
         UGI and its subsidiaries AmeriGas Management Company (AMC) and AmeriGas
         Transportation Management Company (ATMC).

         ACQUISITION OF 100% OF PETROLANE BY AMERIGAS AND TRANSFER OF ASSETS TO
         MASTER LIMITED PARTNERSHIP

         On April 19, 1995, a subsidiary of AmeriGas acquired by merger (the
         "Petrolane Merger") the approximately 65% of Petrolane common shares
         outstanding not already owned by UGI or AmeriGas and combined the
         propane business and assets of Petrolane, AmeriGas Propane, Inc., a
         Delaware Corporation (AmeriGas Propane), and AmeriGas Propane-2, Inc.
         (the "Partnership Formation"). Under the terms of the Petrolane Merger
         approved by the Company's Class B shareholders (other than UGI) on
         April 12, 1995, 6,850,562 shares of the Company's Class B Common Stock
         not held by UGI were converted into the right to receive $16.00 per
         share in cash and all other rights associated with such shares expired.
         The Petrolane Merger consideration of approximately $109.6 million was
         financed with the proceeds of a private placement of $110 million of
         First Mortgage Notes of the Operating Partnership. Immediately after
         the Petrolane Merger, Petrolane, pursuant to a Conveyance and
         Contribution Agreement, conveyed (the "Petrolane Conveyance")
         substantially all of its assets and liabilities to AmeriGas Propane,
         L.P. (the "Operating Partnership"), a Delaware limited partnership and
         subsidiary of AmeriGas Partners, L.P. (AmeriGas Partners), a Delaware
         limited partnership and AmeriGas Propane and AmeriGas Propane-2, Inc.
         (AGP-2) merged into the Operating Partnership (the 



                                      F-32
<PAGE>   95

                  PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         "Formation Merger"). As a result of the Formation Merger and the
         Petrolane Conveyance, AmeriGas Propane, Inc., a Pennsylvania
         corporation and the general partner of AmeriGas Partners (the "General
         Partner"), and Petrolane each received a limited partner interest in
         the Operating Partnership, and the Operating Partnership received
         substantially all of the assets and assumed substantially all of the
         liabilities of AmeriGas Propane, AmeriGas Propane-2, Inc., Petrolane
         and their respective operating subsidiaries. The net book value of the
         assets contributed by Petrolane to the Operating Partnership exceeded
         the liabilities assumed by $77.4 million. Immediately after the
         Petrolane Conveyance, 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.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CONSOLIDATION PRINCIPLES

         The accompanying consolidated financial statements include the results
         of operations and cash flows of the Company for the period September
         24, 1994 to April 19, 1995 (the 1995 seven-month period). All
         significant intercompany accounts and transactions have been eliminated
         in consolidation.

         FRESH START ACCOUNTING

         Effective with the Closing on July 15, 1993, the Company adopted the
         provisions of the American Institute of Certified Public Accountants'
         Statement of Position 90-7 "Financial Reporting by Entities in
         Reorganization Under the Bankruptcy Code" (Fresh Start Accounting).
         Pursuant to such principles, the Company's assets were stated at
         reorganization value which is generally described as the value of the
         Company before considering liabilities on a going-concern basis
         following the completion of the Plan. The reorganization value of the
         Company was determined by reference to the remaining liabilities plus
         the value of the common shareholders' equity indicated by the
         consideration paid by AmeriGas for 30% of the outstanding shares of the
         Company's common stock. The reorganization value was allocated to the
         assets of the Company in conformity with the procedures specified by
         Accounting Principles Board Opinion No. 16, "Business Combinations",
         for transactions reported on the basis of the purchase method of
         accounting. In this allocation, identifiable assets were valued at
         estimated fair value and the reorganization value in excess of
         identifiable assets was recorded as "reorganization value in excess of
         amounts allocable to identifiable assets" (excess reorganization
         value). Deferred taxes were provided as of the Closing Date in
         accordance with Statement of Financial Accounting Standards (SFAS) No.
         109, "Accounting for Income Taxes" (SFAS 109).



                                      F-33
<PAGE>   96
                  PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         Fresh Start Accounting is applicable because pre-reorganization
         shareholders received less than 50% of the Company's common stock and
         the reorganization value of the Company was less than the total
         postpetition liabilities and allowed claims.

         CONSOLIDATED STATEMENTS OF CASH FLOWS

         Cash equivalents include all highly liquid investments with maturities
         of three months or less when purchased and are recorded at cost plus
         accrued interest which approximates market value.

         Interest paid for the 1995 seven-month period was $33.9 million. Income
         taxes paid for the 1995 seven-month period were $3.6 million.

         REVENUE RECOGNITION

         Revenues from the sale of propane are recognized principally when
         product is shipped or delivered to customers.

         INVENTORIES

         Inventories are stated at the lower of cost or market. Cost is
         determined using an average cost method for propane, specific cost for
         appliances and the first-in, first-out (FIFO) method for parts and
         fittings.

         PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION

         Property, plant and equipment is stated at cost. When plant and
         equipment are retired or otherwise disposed of, any gains or losses are
         reflected in operations.

         Depreciation of property, plant and equipment acquired by the Company
         subsequent to the Closing is computed using the straight-line method
         over estimated service lives ranging from two to 40 years.



                                      F-34
<PAGE>   97
                    PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE 
         ASSETS

         Reorganization value in excess of amounts allocable to identifiable
         assets resulting from the application of Fresh Start Accounting is
         amortized on a straight-line basis over 20 years. Amortization expense
         during the 1995 seven-month period was $14.2 million.

         It is the Company's policy to review intangible assets, including
         excess reorganization value, for impairment whenever events or changes
         in circumstances indicate that the carrying amount of such assets may
         not be recoverable. If such a review should indicate that the carrying
         amount of intangible assets, including excess reorganization value, is
         not recoverable, it is the Company's policy to reduce the carrying
         amount of such assets to fair value.

         INCOME TAXES

         Income taxes for the 1995 seven-month period were provided based upon
         the provisions of SFAS 109. SFAS 109 requires recognition of deferred
         income tax liabilities and assets for the expected future tax
         consequences of events that have been included in the financial
         statements or tax returns. Under this method, deferred income tax
         liabilities and assets are determined based on the differences between
         the financial statement and tax bases of assets and liabilities using
         enacted tax rates in effect for the year in which the differences are
         expected to reverse.

         NET EARNINGS PER SHARE

         Net earnings per share for the 1995 seven-month period is based on the
         weighted average number of shares of Class A and Class B common stock
         outstanding during those periods.


                                      F-35
<PAGE>   98
                    PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.       INCOME TAXES

         The Company's provision for income taxes for the 1995 seven-month
         period consists of the following:

<TABLE>
<CAPTION>

         ---------------------------------------------------------------------
                                                            September 24, 1994
                                                                            to
                                                                April 19, 1995
         ---------------------------------------------------------------------
                                                                   (Thousands)
         <S>                                                <C> 
           Current:
               Federal                                                 $ 2,936
               State                                                       567
         ---------------------------------------------------------------------
                                                                         3,503
           Deferred                                                      6,610
         ---------------------------------------------------------------------

           Total income tax expense                                    $10,113
         ---------------------------------------------------------------------
</TABLE>

           A reconciliation from the statutory federal tax rate to the effective
           tax rate is as follows:

<TABLE>
<CAPTION>

         ---------------------------------------------------------------------
                                                            September 24, 1994
                                                                            to
                                                                April 19, 1995
         ---------------------------------------------------------------------
                                                                   (Thousands)
         <S>                                                <C> 

           Statutory federal tax rate                                     35.0%
           Difference in tax rate due to:
               State income taxes, net
                        of federal income tax benefit                      9.3
               Nondeductible
                        amortization of excess
                        reorganization value                              43.4
               Other nondeductible
                    expenses                                                .5
               Other                                                       (.3)
         ---------------------------------------------------------------------

           Effective tax rate                                             87.9%
         ---------------------------------------------------------------------
</TABLE>



                                      F-36
<PAGE>   99

                     PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.       PENSION PLAN AND POSTEMPLOYMENT BENEFITS

         Concurrent with the Partnership Formation, employees of the Company
         became employees of the General Partner and the Partnership assumed the
         Company's employee-related liabilities including liabilities related to
         employee benefit plans. Prior to the Partnership Formation, employees
         of the Company participated in the Petrolane Incorporated Pension Plan
         (Pension Plan), a noncontributory defined contribution pension plan
         established on the Closing Date. Company contributions to the Pension
         Plan represented a percentage of each covered employee's salary. The
         Company also sponsored a 401(k) savings plan, the Petrolane Savings and
         Stock Ownership Plan (Savings Plan), for eligible employees. Under the
         Savings Plan, participants could contribute a percentage of their
         compensation on a before-tax basis. The Savings Plan also provided for
         discretionary employer matching contributions. The combined cost of
         benefits under the Pension Plan and the Savings Plan was $1.7 million
         for the 1995 seven-month period.

         Effective September 24, 1994, the Company adopted the provisions of
         SFAS No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS
         112). SFAS 112 requires, among other things, the accrual of benefits
         provided to former or inactive employees (who are not retirees) and to
         their beneficiaries and covered dependents. Prior to the adoption of
         SFAS 112, the Company accounted for these postemployment benefits on a
         pay-as-you-go basis. The cumulative effect of SFAS 112 on the results
         of operations for periods prior to September 24, 1994 of $1.5 million
         pre-tax ($905,000 after-tax) has been reflected in the Consolidated
         Statement of Operations for the 1995 seven-month period as "Change in
         accounting for postemployment benefits."

5.       COMMITMENTS AND CONTINGENCIES

         The Company utilized leased assets under both capital and operating
         leases. The aggregate operating lease rental expense charged to
         operations for the 1995 seven-month period was $3.2 million.

         Petrolane, in connection with its divestiture of nonpropane operations
         prior to its acquisition by QFB, guaranteed certain lease obligations
         for retail and distribution facilities, which at April 19, 1995 were
         estimated to aggregate approximately $109 million. In addition,
         Petrolane has guaranteed other obligations. Petrolane has been
         indemnified by Texas Eastern 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 these lease guarantees. In a June 15, 1993
         Stipulation and Order entered in Petrolane's bankruptcy, Texas Eastern
         confirmed its obligation to indemnify and hold harmless Petrolane from
         and against certain liabilities and losses of discontinued businesses
         including lease obligations. To date, Texas Eastern has directly
         satisfied defaulted lease obligations without the Company's having to
         honor its guarantee.


                                      F-37
<PAGE>   100
                     PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


         In addition, in connection with its sale of the international
         operations of Tropigas de Puerto Rico (Tropigas) to Shell Petroleum
         N.V. in 1989, Petrolane agreed to indemnify Shell for various scheduled
         claims that were pending against Tropigas. In turn, Petrolane has a
         right to seek indemnity on these claims first from International
         Controls Corp. (ICC), which sold Tropigas to Petrolane, and then from
         Texas Eastern. To date, Petrolane has not paid any sums under this
         indemnity, but several claims by Shell, including claims related to
         certain antitrust actions aggregating at least $68 million, remain
         pending. In the above referenced Stipulation and Order, Texas Eastern
         confirmed its obligation to indemnify and hold harmless Petrolane from
         and against the liabilities discussed in this paragraph, but only to
         the extent that Petrolane, despite the exercise of its best efforts, is
         not indemnified by a third party, including ICC.

         The Company has identified environmental contamination at several
         properties it owned or operated. The Company's policy is to accrue
         environmental investigation and cleanup costs when it is probable that
         a liability exists and the amount can be reasonably estimated. However,
         in many circumstances future expenditures cannot be reasonably
         quantified because of a number of factors, including various costs
         associated with potential remedial alternatives, the unknown number of
         other potentially responsible parties involved and their ability to
         contribute to the costs of investigation and remediation, and changing
         environmental laws and regulations. The Company intends to pursue
         recovery of any incurred costs through all appropriate means.

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

         The commitments and contingencies discussed herein were transferred on
         April 19, 1995, to AmeriGas Propane, L.P. pursuant to the Conveyance
         and Contribution Agreement.


                                      F-38


<PAGE>   101
                     PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



6.       RELATED PARTY TRANSACTIONS

         Pursuant to its management agreement with UGI (UGI Management
         Agreement), UGI provided to the Company certain financial, accounting,
         human resources, risk management, insurance, legal, corporate
         communications, investor relations, treasury and corporate development
         services. For such services, UGI received a quarterly fee from
         Petrolane which was adjusted annually for inflation. During the 1995
         seven-month period, the Company recorded management fee expense under
         the UGI Management Agreement of $6.8 million which is included in
         selling, general and administrative expenses - related parties.

         The Company also entered into a management services agreement with AMC
         (AMC Agreement) and a transportation services agreement with ATMC (ATMC
         Agreement). AMC and ATMC provided general management, supervisory,
         administrative and transportation services to Petrolane and AmeriGas's
         wholly owned subsidiaries, AmeriGas Propane and AGP-2. In consideration
         for such services provided to the Company, the Company paid AMC and
         ATMC monthly fees based upon a percentage of AMC's and ATMC's monthly
         overhead expenses. This percentage generally represented the proportion
         of incremental costs incurred by AMC and ATMC to provide such services
         to the Company and was subject to adjustment under certain
         circumstances. For the 1995 seven-month period, the Company recorded
         total management fee expense under the AMC and ATMC agreements of $8.3
         million which is included in selling, general and administrative
         expenses related parties.

         Pursuant to the AMC Agreement, AMC was required to arrange the supply
         and delivery of the Company's propane requirements on terms that were
         at least as favorable as the arrangements made for AmeriGas Propane in
         the same geographical areas. Subsequent to the Closing, AMC arranged
         for AmeriGas Propane to purchase substantially all of the Company's
         propane requirements from various suppliers and AmeriGas Propane has
         charged the Company for such propane at AmeriGas Propane's cost. Such
         purchases from AmeriGas Propane totaled approximately $171.6 million
         for the 1995 seven-month period.

         In order to achieve cost reductions and operational efficiencies in
         overlapping geographical markets served by the Company and AmeriGas
         Propane, the Company and AmeriGas Propane closed certain district
         locations and entered into a customer services agreement (Customer
         Services Agreement). Pursuant to the Customer Services Agreement, the
         Company served customers of closed AmeriGas Propane districts, and
         AmeriGas Propane served customers of closed Company districts. Fees
         incurred by the Company under the Customer Services Agreement totaled
         $5.3 million for the 1995 seven-month period and are included in
         selling, general and administrative expenses - related parties. Fees
         billed to AmeriGas Propane under the Customer Services Agreement
         totaled $6.9 million for the 1995 seven-month period and are included
         in miscellaneous income - related parties.


                                      F-39
<PAGE>   102
                     PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7.       SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

         In order to provide comparative financial information, the following
         table includes unaudited results of operations and cash flows for the
         period September 24, 1993 to April 23, 1994:

<TABLE>
<CAPTION>

                                                                 September 24, 1993
                                                                       to April 23,
                                                                               1994
                                                                               ----
                                                                         (Thousands)
           Statement of Income
           <S>                                                   <C>
           Revenues:                                                       
               Propane                                                     $371,133
               Other                                                         49,816
                                                                           --------
                                                                            420,949
                                                                           --------

           Costs and expenses:
               Cost of sales - propane                                      192,440
               Cost of sales - other                                         31,862
               Selling, general and administrative expenses                 105,713
               Depreciation and amortization                                 26,814
               Taxes - other than income taxes                                8,349
               Miscellaneous (income)                                        (6,683)
                                                                           --------
                                                                            358,495

               Operating income                                              62,454
               Interest expense                                              26,918
               Income taxes                                                  32,843
                                                                           --------

               Net income                                                  $  2,693
                                                                           ========
</TABLE>


                                      F-40
<PAGE>   103

                     PETROLANE INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


<TABLE>
<CAPTION>

                                                                 September 24, 1993
                                                                       to April 23,
                                                                               1994
                                                                               ----
                                                                        (Thousands)
           <S>                                                   <C>
           STATEMENT OF CASH FLOWS
           Cash Flows From Operating Activities:
               Net income                                                  $  2,693
               Adjustments to reconcile to cash provided by
                   operating activities:
                      Depreciation and amortization                          26,814
                      Deferred income taxes                                  26,222
                      Other                                                  (3,958)
                      Change in operating working capital                     1,870
                                                                           --------
                      Net cash provided by operating activities              53,641
                                                                           --------

           Cash Flows From Investing Activities:
               Expenditures for property, plant and
                   equipment                                                 (6,887)
               Other                                                            439
                                                                           --------
                   Net cash used by investing activities                     (6,448)
                                                                           --------

           Cash Flows From Financing Activities:
               Repayment of long-term debt                                   (7,355)
               Change in working capital loans                              (35,000)
                                                                           --------
                   Net cash used by financing activities                    (42,355)
                                                                           --------

           Cash and cash equivalents increase                              $  4,838
                                                                           ========
</TABLE>


                                      F-41



<PAGE>   104






                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                                 BALANCE SHEETS
                             (Thousands of dollars)




<TABLE>
<CAPTION>

                                                                             September 30,
                                                                       -----------------------
                                                                         1997           1996
                                                                       --------       --------
                <S>                                                    <C>            <C>
                ASSETS

                Accounts receivable                                    $  5,063       $  5,063
                Investment in AmeriGas Propane, L.P.                    494,233        538,664
                Deferred charges                                          2,911          3,217
                                                                       --------       --------

                       Total assets                                    $502,207       $546,944
                                                                       ========       ========



                LIABILITIES AND PARTNERS' CAPITAL

                Accounts payable                                       $     29       $     67
                Accrued interest                                          4,641          4,641
                                                                       --------       --------

                       Total current liabilities                          4,670          4,708

                Long-term debt                                          100,000        100,000

                Partners' capital:
                       Common unitholders                               208,253        230,376
                       Subordinated unitholders                         185,310        207,439
                       General partner                                    3,974          4,421
                                                                       --------       --------

                       Total partners' capital                          397,537        442,236
                                                                       --------       --------

                       Total liabilities and partners' capital         $502,207       $546,944
                                                                       ========       ========
</TABLE>



                                       S-1

<PAGE>   105

                    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               April 19   
                                                                      September 30,             to      
                                                                 ----------------------    September 30,
                                                                   1997          1996          1995
                                                                 --------      --------    -------------

  <S>                                                            <C>           <C>         <C>
  Operating expenses                                             $    (29)     $    (36)     $     --
  Equity in  income (loss) of AmeriGas Propane, L.P.               54,439        20,676       (42,414)
  Interest expense                                                (10,430)      (10,402)       (4,693)
                                                                 --------      --------      --------

  Net income (loss)                                              $ 43,980      $ 10,238      $(47,107)
                                                                 ========      ========      ========

</TABLE>


                                      S-2

<PAGE>   106
                    AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
 CC SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                            STATEMENTS OF CASH FLOWS
                             (Thousands of dollars)


<TABLE>
<CAPTION>

                                                                                  Year                               
                                                                                  Ended                   April 19   
                                                                              September 30,                  to      
                                                                     -----------------------------      September 30,
                                                                         1997              1996             1995
                                                                     --------------    ------------   --------------
 <S>                                                                 <C>               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                                  $  43,980        $  10,238        $  (47,107)
      Reconciliation of net income (loss) to net cash from
        operating activities:
         Equity in (income) loss of AmeriGas Propane, L.P.                 (54,438)         (20,676)           42,414
         Increase in accounts receivable                                        --             (113)               --
         Increase (decrease) in accounts payable                               (37)              35                --
         Increase in accrued interest                                           --               85             4,556
         Amortization of deferred debt issuance costs                          306              305               137
                                                                        ----------        ---------        ----------
           Net cash used by operating activities                           (10,189)         (10,126)               --
                                                                        ----------        ---------        ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Contribution to AmeriGas Propane, L.P.                                   (26)              --          (447,433)
      Distributions from AmeriGas Propane, L.P.                            103,050          102,853            18,797
      Net proceeds from issuance of Common Units                                --               --           349,751
                                                                        ----------        ---------        ----------
           Net cash provided (used) by investing activities                103,024          102,853           (78,885)
                                                                       -----------        ---------        ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Distributions                                                        (92,861)         (92,727)          (18,797)
      Capital contribution from General Partner                                 26               --               432
      Issuance of long-term debt associated with
         Partnership Formation                                                  --               --            97,250
                                                                        ----------         --------       -----------  
           Net cash provided (used) by financing activities                (92,835)         (92,727)           78,885
                                                                        ----------         --------        ----------


Cash and cash equivalents increase                                      $       --         $     --        $       --        
                                                                        ==========         ========        ==========

CASH AND CASH EQUIVALENTS:
      End of period                                                     $       --         $     --                --        
      Beginning of period                                               $       --         $     --        $       --        
                                                                        ----------         --------        ----------
           Increase                                                     $       --         $     --        $       --       
                                                                        ==========         ========        ==========

</TABLE>


Supplemental disclosure of non-cash investing activities:
     Effective April 19, 1995, substantially all of the assets and liabilities
     of AmeriGas Propane, Inc., AmeriGas Propane-2, Inc. and Petrolane 
     Incorporated and their respective operating subsidiaries were contributed 
     at historical cost to AmeriGas Propane, L.P., a subsidiary of AmeriGas 
     Partners, L.P.   The net assets contributed of $286,956 are net of the
     following liabilities:  accounts payable - $40,304; long-term debt - 
     $929,828; other liabilities - $171,667.



                                      S-3
<PAGE>   107
                  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 period     expenses         Other          period
                                                                     ----------  ------------    -----------     ----------
<S>                                                                  <C>         <C>             <C>             <C>
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 (4)

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)(4)
</TABLE>









                                      S-4



<PAGE>   108

                  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 period     expenses      Other          period
                                                                     ---------   ------------  ---------      ----------
<S>                                                                  <C>         <C>           <C>            <C>
APRIL 19, 1995 TO SEPTEMBER 30, 1995

Reserves deducted from assets in the consolidated balance sheet:

     Allowance for doubtful accounts                                 $  7,257      $  778     $(3,388)(1)     $  4,647
                                                                     ========                                 ========
     Allowance for amortization of other
         deferred costs                                              $    417      $  191     $  (534)(4)     $     74
                                                                     ========                                 ========
     Allowance for amortization of deferred
         financing costs                                             $     --      $  690     $    --         $    690
                                                                     ========                                 ========
Other reserves:

     Self-insured property and casualty liability                    $ 43,849      $5,901     $(6,081)(2)     $ 43,908
                                                                     ========                                 ========
                                                                                                  239 (4)



     Insured property and casualty liability                         $  7,800      $6,546     $(2,100)(2)     $ 12,246
                                                                     ========                                 ========

     Environmental and other                                         $ 32,282      $  242     $(3,081)(2)     $ 25,591
                                                                     ========                                 ========
                                                                                               (3,852)(4)

</TABLE>






(1)      Uncollectible accounts written off, net of recoveries.
(2)      Payments.
(3)      Represents amounts for Petrolane Incorporated (Petrolane) as a result
         of the purchase on April 19, 1995 of the 65% of the common stock of
         Petrolane not already owned by UGI or its subsidiary AmeriGas, Inc.
(4)      Other adjustments.











                                      S-5
<PAGE>   109


                       [ARTHUR ANDERSEN LLP LETTERHEAD]
                                      
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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, 1997,
incorporated by reference in this Form 10-K, and have issued our report thereon
dated November 14, 1997. 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 reponsibility 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.



/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP

Chicago, Illinois
November 14, 1997


                                     S-6
<PAGE>   110
                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT NO.                DESCRIPTION
-----------                -----------
<S>                        <C>
4.5                        First Amendment dated as of September 12, 1997 to Note Agreement
                           dated as of April 12, 1995

10.1                       Amended and Restated Credit Agreement dated as of September 15, 1997
                           among AmeriGas 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

10.2                       Agreement dated as of May 1, 1996 between TE Products
                           Pipeline Company, L.P., and AmeriGas Propane, L.P.

10.12                      Financing Agreement dated as of November 5, 1997 between AmeriGas
                           Propane, Inc. and AmeriGas Propane, L.P.

10.25                      Form of Change of Control Agreement between AmeriGas Propane, Inc.
                           and Messrs. Bissell and Grady

10.26                      AmeriGas Propane, Inc. 1997 Long-Term Incentive Plan

10.27                      AmeriGas Propane, Inc. Supplemental Executive Retirement Plan effective
                           October 1, 1996

13                         Pages 10 through 23 of the AmeriGas Partners, L.P. Annual Report for the
                           year ended September 30, 1997.

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.

99                         Cautionary Statements Affecting Forward-looking Information
</TABLE>