<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report

CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)

<TABLE>
<CAPTION>
                                                                                         September 30,
                                                                                   --------------------------
                                                                                         2002            2001
=============================================================================================================
<S>                                                                                <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                       $   47,400     $    32,489
   Accounts receivable (less allowances for doubtful accounts of $7,588
      and $10,792, respectively)                                                       83,274         102,392
   Accounts receivable - related parties                                                6,862           3,352
   Inventories                                                                         62,496          73,072
   Prepaid expenses and other current assets                                           31,238          18,955
-------------------------------------------------------------------------------------------------------------
      Total current assets                                                            231,270         230,260

Property, plant and equipment (less accumulated depreciation and
   amortization of $408,590 and $347,898, respectively)                               611,550         627,640
Goodwill and excess reorganization value                                              589,923         589,878
Intangible assets (less accumulated amortization
      of $8,651 and $5,364, respectively)                                              22,586          26,870
Other assets                                                                           17,289          21,774
-------------------------------------------------------------------------------------------------------------
      Total assets                                                                 $1,472,618     $ 1,496,422
=============================================================================================================

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
   Current maturities of long-term debt                                            $   60,398     $    87,178
   Bank loans                                                                          10,000              --
   Accounts payable - trade                                                            81,891          73,692
   Accounts payable - related parties                                                   5,003           3,623
   Employee compensation and benefits accrued                                          22,390          27,834
   Interest accrued                                                                    34,492          32,854
   Customer deposits and advances                                                      53,177          48,540
   Other current liabilities                                                           40,473          51,969
-------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                       307,824         325,690

Long-term debt                                                                        885,386         918,726
Other noncurrent liabilities                                                           44,810          42,860

Commitments and contingencies (note 11)

Minority interests                                                                      6,232           5,641

Partners' capital:
   Common unitholders (units issued - 39,541,286 and 36,761,239, respectively)        201,660         187,001
   Subordinated unitholders (units issued - 9,891,072)                                 17,846          28,513
   General partner                                                                      2,214           2,174
   Accumulated other comprehensive income (loss)                                        6,646         (14,183)
-------------------------------------------------------------------------------------------------------------
      Total partners' capital                                                         228,366         203,505
-------------------------------------------------------------------------------------------------------------
      Total liabilities and partners' capital                                      $1,472,618     $ 1,496,422
=============================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       10
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report

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

<TABLE>
<CAPTION>
                                                                    Year Ended September 30,
                                                         ---------------------------------------------
                                                                2002             2001             2000
======================================================================================================
<S>                                                      <C>              <C>              <C>
Revenues:
   Propane                                               $ 1,191,649      $ 1,322,934      $ 1,022,967
   Other                                                     116,231           95,430           97,089
------------------------------------------------------------------------------------------------------
                                                           1,307,880        1,418,364        1,120,056
------------------------------------------------------------------------------------------------------

Costs and expenses:
   Cost of sales - propane                                   584,687          798,166          586,905
   Cost of sales - other                                      47,383           37,809           41,376
   Operating and administrative expenses                     468,817          379,993          342,720
   Depreciation and amortization                              66,104           74,760           67,381
   Equity investee (income)                                     (288)              --               --
   Other (income), net                                        (3,363)          (6,154)          (8,533)
------------------------------------------------------------------------------------------------------
                                                           1,163,340        1,284,574        1,029,849
------------------------------------------------------------------------------------------------------

Operating income                                             144,540          133,790           90,207
Interest expense                                             (87,839)         (80,396)         (74,764)
------------------------------------------------------------------------------------------------------
Income before income taxes                                    56,701           53,394           15,443
Income tax (expense) benefit                                    (340)             327               15
Minority interests                                              (995)            (706)            (262)
------------------------------------------------------------------------------------------------------
Income before accounting changes                              55,366           53,015           15,196
Cumulative effect of accounting changes                           --           12,494               --
------------------------------------------------------------------------------------------------------

Net income                                               $    55,366      $    65,509      $    15,196
======================================================================================================

General partner's interest in net income                 $       554      $       655      $       152
======================================================================================================

Limited partners' interest in net income                 $    54,812      $    64,854      $    15,044
======================================================================================================

Income per limited partner unit - basic and diluted:
   Income before accounting changes                      $      1.12      $      1.18      $      0.36
   Cumulative effect of accounting changes                        --             0.28               --
------------------------------------------------------------------------------------------------------
   Net income per limited partner unit                   $      1.12      $      1.46      $      0.36
======================================================================================================

Average limited partner units outstanding:
   Basic                                                      48,909           44,453           41,969
======================================================================================================
   Diluted                                                    48,932           44,453           41,969
======================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       11
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)

<TABLE>
<CAPTION>
                                                                    Year Ended September 30,
                                                           ---------------------------------------
                                                                2002           2001           2000
==================================================================================================
<S>                                                        <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                                 $  55,366      $  65,509      $  15,196
Adjustments to reconcile net income to net
   cash provided by operating activities:
      Cumulative effect of accounting changes                     --        (12,494)            --
      Depreciation and amortization                           66,104         74,760         67,381
      Other, net                                               7,748          2,920         (1,857)
      Net change in:
         Accounts receivable                                   8,717          4,893        (33,839)
         Inventories                                          10,576          3,638         (7,775)
         Accounts payable                                      9,579         (5,511)        25,906
         Other current assets and liabilities                  1,430         19,296         (3,502)
--------------------------------------------------------------------------------------------------
      Net cash provided by operating activities              159,520        153,011         61,510
--------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Expenditures for property, plant and equipment            (53,472)       (37,890)       (30,427)
   Proceeds from disposals of assets                           9,849          5,347          7,404
   Acquisitions of businesses, net of cash acquired             (736)      (205,571)       (55,640)
--------------------------------------------------------------------------------------------------
      Net cash used by investing activities                  (44,359)      (238,114)       (78,663)
--------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Distributions                                            (108,504)       (98,435)       (93,266)
   Minority interest activity                                   (624)         2,374         (1,055)
   Increase (decrease) in bank loans                          10,000        (30,000)         8,000
   Issuance of long-term debt                                 40,900        252,833        196,000
   Repayment of long-term debt                               (99,149)      (110,767)       (82,121)
   Proceeds from issuance of Common Units                     56,556         39,836             --
   Proceeds from sale of AmeriGas OLPinterest                     --         50,000             --
   Capital contributions from General Partner                    571            956             --
--------------------------------------------------------------------------------------------------
      Net cash provided (used) by financing activities      (100,250)       106,797         27,558
--------------------------------------------------------------------------------------------------
Cash and cash equivalents increase                         $  14,911      $  21,694      $  10,405
==================================================================================================

CASH AND CASH EQUIVALENTS
   End of year                                             $  47,400      $  32,489      $  10,795
   Beginning of year                                          32,489         10,795            390
--------------------------------------------------------------------------------------------------
      Increase                                             $  14,911      $  21,694      $  10,405
==================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       12
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report

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

<TABLE>
<CAPTION>
                                                                                                 Accumulated
                                      Number of units                                                   other       Total
                                 -------------------------                             General  comprehensive   partners'
                                     Common   Subordinated    Common    Subordinated   partner  income (loss)     capital
--------------------------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>           <C>         <C>            <C>      <C>             <C>
Balance September 30, 1999       32,078,293      9,891,072  $177,947       $  53,756    $2,338       $     --    $234,041
Net income                                                    11,498           3,546       152                     15,196

Distributions                                                (70,573)        (21,760)     (933)                   (93,266)
--------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2000       32,078,293      9,891,072   118,872          35,542     1,557             --     155,971
--------------------------------------------------------------------------------------------------------------------------
Net income                                                    50,123          14,731       655                     65,509

Cumulative effect of change
   in accounting principle -
   SFAS No. 133                                                                                         8,921       8,921

Net gains on derivative
   instruments                                                                                            276         276

Reclassification of net gains
   on derivative instruments                                                                          (23,380)    (23,380)
                                  ----------------------------------------------------------------------------------------
Comprehensive income                                          50,123          14,731       655        (14,183)     51,326

Distributions                                                (75,691)        (21,760)     (984)                   (98,435)

Common Units issued in
   connection with acquisitions   2,382,946                   53,861                       544                     54,405

Common Units issued in
   connection with public
   offering                       2,300,000                   39,836                       402                     40,238
--------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2001       36,761,239      9,891,072   187,001          28,513     2,174        (14,183)    203,505
--------------------------------------------------------------------------------------------------------------------------
Net income                                                    43,719          11,093       554                     55,366

Net losses on derivative
   instruments                                                                                        (10,664)    (10,664)

Reclassification of net losses
   on derivative instruments                                                                           31,493      31,493
                                 -----------------------------------------------------------------------------------------
Comprehensive income                                          43,719          11,093       554         20,829      76,195

Distributions                                                (85,659)        (21,760)   (1,085)                  (108,504)

Common Units issued in
   connection with executive
   compensation plan                  2,000                       43                                                   43

Common Units issued in
   connection with public
   offering                       2,428,047                   49,623                       501                     50,124

Common Units sold to
   General Partner                  350,000                    6,933                        70                      7,003
--------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2002       39,541,286      9,891,072  $201,660       $  17,846    $2,214       $  6,646    $228,366
==========================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)


NOTE 1 - PARTNERSHIP ORGANIZATION AND FORMATION

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

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

      At September 30, 2002, AmeriGas Propane, Inc. (the "General Partner"), an
indirect wholly owned subsidiary of UGI Corporation ("UGI"), held a 1% general
partner interest in AmeriGas Partners and a 1.01% general partner interest in
AmeriGas OLP. The General Partner and its wholly owned subsidiary Petrolane
Incorporated ("Petrolane," a predecessor company of the Partnership) also owned
9,891,072 Subordinated Units and 14,633,932 Common Units of AmeriGas Partners.
The remaining 24,907,354 Common Units are publicly held. These Common and
Subordinated units represent limited partner interests in AmeriGas Partners.
Effective November 18, 2002, the 9,891,072 Subordinated Units held by the
General Partner as of September 30, 2002 were converted to Common Units (see
Note 17).

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

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

REVENUE RECOGNITION. We recognize revenue from the sale of propane principally
as product is delivered to customers. Revenue from the sale of appliances and
equipment is recognized at the time of sale or installation. Revenue from
repairs and maintenance is recognized upon completion of the service.

      Effective October 1, 2000, we applied the guidance of Securities and
Exchange Commission ("SEC") Staff Accounting Bulletin No. 101 entitled "Revenue
Recognition" ("SAB 101") with respect to annually billed nonrefundable tank
fees. Under the new accounting method, revenues from such fees are recorded on a
straight-line basis over one year. Prior to the change in accounting, such
revenues were recorded when billed. For a detailed description of this change in
accounting and its impact on our results, see Note 4.

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


                                       14
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION. We record property,
plant and equipment at cost. The amounts we assign to property, plant and
equipment of businesses we acquire are based upon estimated fair value at date
of acquisition. We compute depreciation expense on plant and equipment using the
straight-line method over estimated service lives generally ranging from 15 to
40 years for buildings and improvements; 7 to 30 years for storage and customer
tanks and cylinders; and 2 to 10 years for vehicles, equipment, and office
furniture and fixtures. Depreciation expense was $61,993 in 2002, $48,169 in
2001 and $41,452 in 2000.

      Effective October 1, 2000, we changed our method of accounting for costs
to install Partnership-owned tanks at customer locations. Under the new
accounting method, all costs to install such tanks, net of amounts billed to
customers, are capitalized and amortized over the estimated period of benefit
not exceeding ten years. For a detailed description of this change in accounting
and its impact on our results, see Note 4.

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

<TABLE>
<CAPTION>
                                                              2002         2001
--------------------------------------------------------------------------------
<S>                                                      <C>           <C>
SUBJECT TO AMORTIZATION:
   Customer relationships and
      noncompete agreements                              $  31,237     $ 32,234
   Accumulated amortization                                 (8,651)      (5,364)
--------------------------------------------------------------------------------
                                                         $  22,586     $ 26,870
--------------------------------------------------------------------------------
NOT SUBJECT TO AMORTIZATION:
   Goodwill                                              $ 496,603     $496,558
   Excess reorganization value                              93,320       93,320
--------------------------------------------------------------------------------
                                                         $ 589,923     $589,878
--------------------------------------------------------------------------------
</TABLE>

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

      We amortize customer relationship and noncompete agreement intangibles
over their estimated periods of benefit which do not exceed 15 years. Prior to
the adoption of SFAS 142, we amortized goodwill resulting from purchase business
combinations over 40 years, and excess reorganization value (resulting from
Petrolane's July 1993 reorganization under Chapter 11 of the U.S. Bankruptcy
Code) on a straight-line basis over 20 years. Amortization expense of intangible
assets was $3,287 in 2002. Amortization expense of intangible assets in 2001 and
2000, which includes amortization of goodwill and excess reorganization value
prior to the adoption of SFAS 142, was $25,767 and $25,007, respectively.
Estimated amortization expense of intangible assets during the next five fiscal
years is as follows: Fiscal 2003 - $2,902; Fiscal 2004 - $2,772; Fiscal 2005 -
$2,469; Fiscal 2006 - $1,937; Fiscal 2007 - $1,382.

      The following table provides reconciliations of reported and adjusted net
income and diluted net income per limited partner unit as if SFAS 142 had been
adopted as of October 1, 2000:

<TABLE>
<CAPTION>
                                                Year Ended September 30,
                                      ------------------------------------------
                                            2002            2001            2000
================================================================================
<S>                                   <C>             <C>             <C>
NET INCOME:
   Reported income before
      accounting changes              $   55,366      $   53,015      $   15,196
   Add back goodwill and
      excess reorganization
      value amortization,
      net of adjustment to
      minority interests                      --          23,570          23,117
--------------------------------------------------------------------------------
   Adjusted income before
      accounting changes                  55,366          76,585          38,313
   Cumulative effect of
      accounting changes                      --          12,494              --
--------------------------------------------------------------------------------
   Adjusted net income                $   55,366      $   89,079      $   38,313
--------------------------------------------------------------------------------
DILUTED INCOME PER
   LIMITED PARTNER UNIT:
   Reported income before
      accounting changes              $     1.12      $     1.18      $     0.36
   Add back goodwill and
      excess reorganization
      value amortization,
      net of adjustment to
      minority interests                      --            0.53            0.54
--------------------------------------------------------------------------------
   Adjusted income per unit
      before accounting
      changes                               1.12            1.71            0.90
   Cumulative effect of
      accounting changes                      --            0.27              --
--------------------------------------------------------------------------------
   Adjusted net income
      per unit                        $     1.12      $     1.98      $     0.90
--------------------------------------------------------------------------------
</TABLE>


                                       15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)

      In accordance with the provisions of SFAS 142, we were required to perform
a transitional goodwill impairment test by March 31, 2002. In addition, SFAS 142
requires that we perform an impairment test annually or more frequently if
events or circumstances indicate that the value of goodwill might be impaired.
No impairment to goodwill was recorded as a result of our SFAS 142 transitional
impairment test or our annual impairment test completed during the fourth fiscal
quarter of 2002.

OTHER ASSETS. Included in other assets are net deferred debt issuance costs of
$13,673 and $14,811 at September 30, 2002 and 2001, respectively. We are
amortizing these costs over the term of the related debt.

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

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

ENVIRONMENTAL LIABILITIES. We accrue environmental investigation and clean-up
costs when it is probable that a liability exists and the amount or range of
amounts can be reasonably estimated. Our estimated liability for environmental
contamination is reduced to reflect anticipated participation of other
responsible parties but is not reduced for possible recovery from insurance
carriers. We do not discount to present value the costs of future expenditures
for environmental liabilities.

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

UNIT-BASED COMPENSATION. As permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), we apply the provisions of APB Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), in recording
compensation expense for grants of equity instruments to employees. Our
compensation expense under the provisions of APB 25 for all periods presented
was not materially different from amounts determined under the provisions of
SFAS 123. For a description of unit-based compensation and related disclosure,
see Note 10.

NET INCOME PER UNIT. Net income per unit is computed by dividing net income,
after deducting the General Partner's 1% interest, by the weighted average
number of Common and Subordinated units outstanding. Potentially dilutive Common
Units totaling 23,000 in 2002 result principally from Common Unit awards issued
under AmeriGas Propane, Inc. incentive compensation plans. There were no
potentially dilutive securities in 2001 and 2000.

DERIVATIVE INSTRUMENTS. Effective October 1, 2000, we adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS 133, as amended, establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that all
derivative instruments be recognized as either assets or liabilities and
measured at fair value. The accounting for changes in fair value depends upon
the purpose of the derivative instrument and whether it is designated and
qualifies for hedge accounting. To the extent a derivative instrument qualifies
and is designated as a hedge of the variability of cash flows associated with a
forecasted transaction ("cash flow hedge"), the effective portion of the gain or
loss on such derivative instrument is generally reported in other comprehensive
income and the ineffective portion, if any, is reported in net income. Such
amounts reported in other comprehensive income are reclassified into net income
when the forecasted transaction affects earnings. If a cash flow hedge is
discontinued because it is probable that the forecasted transaction will not
occur, the net gain or loss is immediately reclassified into earnings. To the
extent derivative instruments qualify and are designated as hedges of changes in
the fair value of an existing asset, liability or firm commitment ("fair value
hedge"), the gain or loss on the hedging instrument is recognized in earnings
along with changes in the fair value of the hedged asset, liability or firm
commitment attributable to the hedged risk.


                                       16
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


      The adoption of SFAS 133 resulted in a cumulative effect charge to net
income of $736 and a cumulative effect increase to accumulated other
comprehensive income of $8,921. The increase in accumulated other comprehensive
income is attributable to net gains on derivative instruments designated and
qualifying as cash flow hedges on October 1, 2000.

      Prior to the adoption of SFAS 133, gains or losses on derivative
instruments associated with forecasted transactions generally were recorded in
net income when the forecasted transactions affected earnings. If it became
probable that the original forecasted transactions would not occur, we
immediately recognized in net income any gains or losses on the derivative
instruments.

      For a detailed description of the derivative instruments we use, our
objectives for using them, and related supplemental information required by SFAS
133, see Note 14.

CONSOLIDATED STATEMENTS OF CASH FLOWS. We define cash equivalents as all highly
liquid investments with maturities of three months or less when purchased. We
record cash equivalents at cost plus accrued interest, which approximates market
value. We paid interest totaling $86,556 in 2002, $79,302 in 2001, and $75,317
in 2000.

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

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards
Board ("FASB") recently issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"); SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"); SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" ("SFAS 145"); and SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146").

      SFAS 143 addresses financial accounting and reporting for legal
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. SFAS 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred with a corresponding increase in the carrying value of the
related asset. Entities shall subsequently charge the retirement cost to expense
using a systematic and rational method over the related asset's useful life and
adjust the fair value of the liability resulting from the passage of time
through charges to operating expense. We adopted SFAS 143 effective October 1,
2002. The adoption of SFAS 143 did not have a material effect on our financial
position or results of operations.

      SFAS 144 supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"), and
the accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," as it relates to the disposal of a segment of a business. SFAS
144 establishes a single accounting model for long-lived assets to be disposed
of based upon the framework of SFAS 121, and resolves significant implementation
issues of SFAS 121. The Partnership adopted SFAS 144 effective October 1, 2002.
The adoption of SFAS 144 did not affect our financial position or results of
operations.

      SFAS 145 rescinded SFAS No. 4, "Reporting Gains and Losses from
Extinguishment of Debt" (an amendment of APB Opinion No. 30) ("SFAS 4"),
effective for fiscal years beginning after May 15, 2002. SFAS 4 had required
that material gains and losses on extinguishment of debt be classified as an
extraordinary item. Under SFAS 145, it is less likely that a gain or loss on
extinguishment of debt would be classified as an extraordinary item in the
Consolidated Statement of Income. Among other things, SFAS 145 also amends SFAS
No. 13, "Accounting for Leases," to require that certain lease modifications
that have economic effects similar to sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions. The provisions of SFAS
145 relating to leases were effective for transactions occurring after May 15,
2002. The application of SFAS 145 did not affect our financial position or
results of operations during 2002.

      SFAS 146 addresses accounting for costs associated with exit or disposal
activities and replaces the guidance in Emerging Issues Task Force ("EITF") No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity." Generally, SFAS 146 requires that a liability for
costs associated with an exit or disposal activity, including contract
termination costs, employee termination benefits and other associated costs, be
recognized when the liability is incurred. Under EITF No. 94-3, a liability was
recognized at the date an entity committed to an exit plan. SFAS 146 will be
effective for disposal activities initiated after December 31, 2002.


                                       17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)


NOTE 3 - ACQUISITIONS

On August 21, 2001, AmeriGas Partners, through AmeriGas OLP, acquired the
propane distribution businesses of Columbia Energy Group ("Columbia Propane
Businesses") in a series of equity and asset purchases pursuant to the terms of
the Purchase Agreement dated January 30, 2001, and Amended and Restated August
7, 2001 ("Columbia Purchase Agreement") by and among Columbia Energy Group
("CEG"), Columbia Propane Corporation ("Columbia Propane"), Columbia Propane,
L.P. ("CPLP"), CP Holdings, Inc. ("CPH"), AmeriGas Partners, AmeriGas OLP, and
the General Partner. The acquired businesses comprised the seventh largest
retail marketer of propane in the United States with annual sales of over 300
million gallons from locations in 29 states. The acquired businesses were
principally conducted through Columbia Propane and its approximate 99% owned
subsidiary, CPLP (referred to after the acquisition as "Eagle OLP"). AmeriGas
OLP acquired substantially all of the assets of Columbia Propane, including an
indirect 1% general partner interest and an approximate 99% limited partnership
interest in Eagle OLP.

      The purchase price of the Columbia Propane Businesses consisted of
$201,750 in cash. In addition, AmeriGas OLP agreed to pay CEG for the amount of
working capital, as defined, in excess of $23,000. In April 2002, the
Partnership's management and CEG agreed upon the amount of working capital
acquired by AmeriGas OLP and AmeriGas OLP made an additional payment for working
capital and other adjustments totaling $736. The Columbia Purchase Agreement
also provided for the purchase by CEG of limited partnership interests in
AmeriGas OLP valued at $50,000 for $50,000 in cash, which interests were
exchanged for 2,356,953 Common Units of AmeriGas Partners having an estimated
fair value of $54,422. Concurrently with the acquisition, AmeriGas Partners
issued $200,000 of 8.875% Senior Notes due May 2011, the net proceeds of which
were contributed to AmeriGas OLP to finance the acquisition of the Columbia
Propane Businesses, to fund related fees and expenses, and to repay debt
outstanding under AmeriGas OLP's Bank Credit Agreement.

      The operating results of the Columbia Propane Businesses are included in
our consolidated results from August 21, 2001.

      The following table identifies the components of the purchase price:

<TABLE>
<S>                                                                   <C>
================================================================================
Cash paid                                                             $ 202,486
Cash received from sale of AmeriGas OLP
   limited partner interests                                            (50,000)
Fair value of AmeriGas Partners' Common Units
   issued in exchange for the AmeriGas OLP
   limited partner interests                                             54,422
Transaction costs and expenses                                            8,140
Involuntary employee termination benefits and
   relocation costs                                                       2,618
Other liabilities and obligations incurred                                1,031
--------------------------------------------------------------------------------
Total                                                                 $ 218,697
================================================================================
</TABLE>

      As of September 30, 2002, substantially all involuntary employee
termination benefits and relocation costs had been paid.

      The purchase price of the Columbia Propane Businesses has been allocated
to the assets and liabilities acquired as follows:

<TABLE>
<S>                                                                   <C>
================================================================================
Net current assets                                                    $  16,741
Property, plant and equipment                                           182,761
Customer relationships and noncompete agreement
   (estimated useful life of 15 and 5 years, respectively)               19,878
Other assets and liabilities                                               (683)
--------------------------------------------------------------------------------
Total                                                                 $ 218,697
================================================================================
</TABLE>

      The following table presents unaudited pro forma income statement and per
unit data for 2001 and 2000 as if the acquisition of the Columbia Propane
Businesses had occurred as of the beginning of those years:

<TABLE>
<CAPTION>
                                                          2001             2000
================================================================================
<S>                                                 <C>             <C>
Revenues                                            $1,788,567      $ 1,428,147
Income (loss) before accounting changes             $   51,637      $       (53)
Net income (loss)                                   $   64,131      $       (53)
Income per limited partner unit -
   basic and diluted:
      Income before accounting changes              $     1.10      $        --
      Net income                                    $     1.36      $        --
================================================================================
</TABLE>

   The pro forma results of operations reflect the Columbia Propane Businesses'
historical operating results after giving effect to adjustments directly
attributable to the transaction that are expected to have a continuing impact.
They are not adjusted for, among other things, the impact of normal weather
conditions, operating synergies and anticipated cost savings. In our opinion,
the unaudited pro forma results are not necessarily indicative of the actual
results that


                                       18
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


would have occurred had the acquisition of the Columbia Propane Businesses
occurred as of the beginning of the years presented or of future operating
results under our management.

      During 2001, in addition to the acquisition of the Columbia Propane
Businesses, we acquired several other small propane distribution businesses for
$147 in cash and 25,993 Common Units. During 2000, we acquired four retail
propane businesses, including the West Coast propane operations of All Star Gas
Corporation, for total cash consideration of $55,640. The excess of the purchase
price over the fair value of net assets acquired for the 2000 acquisitions was
approximately $38,000. In conjunction with these acquisitions, liabilities in
the amount of $2,861 were assumed. The pro forma effect of these transactions
was not material to the Partnership's results of operations in 2001 and 2000.

      All of our business acquisitions have been accounted for using the
purchase method of accounting. Their results of operations are included in our
consolidated results of operations from their respective dates of acquisition.

NOTE 4 - CHANGES IN ACCOUNTING

TANK FEE REVENUE RECOGNITION. In order to apply the guidance of SAB 101,
effective October 1, 2000, we changed our method of accounting for annually
billed nonrefundable tank fees. Prior to the change in accounting, nonrefundable
tank fees for installed Partnership-owned tanks were recorded as revenue when
billed. Under the new accounting method, revenues from such fees are being
recorded on a straight-line basis over one year. As a result of this change in
accounting, on October 1, 2000, we recorded a charge of $5,984 representing the
cumulative effect of the change in accounting on prior years. The change in
accounting for nonrefundable tank fees did not have a material impact on
reported revenues in 2002 and 2001, and would not have had a material impact on
reported revenues in 2000. At September 30, 2002 and 2001, deferred revenues
relating to nonrefundable tank fees were $6,755 and $6,153, respectively.

ACCOUNTING FOR TANK INSTALLATION COSTS. Effective October 1, 2000, we changed
our method of accounting for tank installation costs which are not billed to
customers. Prior to the change in accounting, costs to install Partnership-owned
tanks at a customer location were expensed as incurred. Under the new accounting
method, all such costs, net of amounts billed to customers, are capitalized in
property, plant and equipment and amortized over the estimated period of benefit
not exceeding ten years. We believe that the new accounting method better
matches the costs of installing Partnership-owned tanks with the periods
benefited. As a result of this change in accounting, on October 1, 2000, we
recorded an increase of $19,214 in net income representing the cumulative effect
of the change in accounting on prior years. The change in accounting for tank
installation costs did not have a material effect on 2001 net income.

CUMULATIVE EFFECT OF ACCOUNTING CHANGES AND PRO FORMA DISCLOSURE. The cumulative
effect and related per limited partner unit amounts reflected on the 2001
Consolidated Statement of Income resulting from the above changes in accounting
principles, as well as the cumulative effect resulting from the adoption of SFAS
133 (see Note 2), comprise the following:

<TABLE>
<CAPTION>
                                                                      Cumulative
                                                                      Effect Per
                                                     Cumulative          Limited
                                                         Effect     Partner Unit
================================================================================
<S>                                                  <C>            <C>
Tank fees                                             $ (5,984)         $ (0.13)
Tank installation costs                                 19,214             0.43
SFAS 133                                                  (736)           (0.02)
--------------------------------------------------------------------------------
Total                                                 $ 12,494          $  0.28
================================================================================
</TABLE>

      The following table reflects unaudited pro forma net income and income per
unit after applying retroactively the changes in accounting for tank
installation costs and nonrefundable tank fees:

<TABLE>
<CAPTION>
                                                      As Reported    As Adjusted
================================================================================
<S>                                                   <C>            <C>
Year Ended September 30, 2000:
   Net income                                             $15,196        $14,989
   Net income per unit - basic and diluted                $  0.36        $  0.35
================================================================================
</TABLE>

NOTE 5 - QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH

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

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

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

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

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

      Distributions of Available Cash have generally been made 98% to Common and
Subordinated unitholders and 2% to the General Partner. The Partnership may pay
an incentive distribution if Available Cash exceeds the Minimum Quarterly
Distribution of $0.55 ("MQD") on all units. If there was sufficient Available
Cash, holders of Common Units had the right to receive the MQD, plus any
arrearages, before the distribution of Available Cash to holders of Subordinated
Units. Common Units will not accrue arrearages for any quarter after all the
remaining Subordinated Units have been converted to Common Units pursuant to the
terms of the Partnership Agreement. Effective November 18, 2002, the remaining
Subordinated Units held by the General Partner as of September 30, 2002 were
converted to Common Units (see Note 17).


                                       19
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report

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


NOTE 6 - DEBT

Long-term debt comprises the following at September 30:

<TABLE>
<CAPTION>
                                                          2002             2001
================================================================================
<S>                                                  <C>            <C>
AmeriGas Partners Senior Notes:
   8.875%, due May 2011 (of which $40,000
      in 2002 includes unamortized premium
      of $1,550, effective rate - 8.25%)             $ 241,550      $   200,000
   10%, due April 2006 (less unamortized
      discount of $223 and $271,
      respectively, effective rate - 10.125%)           59,777           59,729
   10.125%, due April 2007                              85,000          100,000
AmeriGas OLP First Mortgage Notes:
   Series A, 9.34% - 11.71%, due
      April 2001 through April 2009
      (including unamortized premium
      of $7,884 and $9,214, respectively,
      effective rate - 8.91%)                          167,884          189,214
   Series B, 10.07%, due April 2001
      through April 2005 (including
      unamortized premium of $2,304
      and $3,931, respectively, effective
      rate - 8.74%)                                    122,304          163,931
   Series C, 8.83%, due April 2003
      through April 2010                               110,000          110,000
   Series D, 7.11%, due March 2009
      (including unamortized premium of
      $2,168 and $2,427, respectively,
      effective rate - 6.52%)                           72,168           72,427
   Series E, 8.50%, due July 2010 (including
      unamortized premium of $149 and $161,
      respectively, effective rate - 8.47%)             80,149           80,161
AmeriGas OLP Acquisition Facility                           --           20,000
Other                                                    6,952           10,442
--------------------------------------------------------------------------------
Total long-term debt                                   945,784        1,005,904
Less current maturities (including net
   unamortized premium of $2,887
   and $3,181, respectively)                           (60,398)         (87,178)
--------------------------------------------------------------------------------
Total long-term debt due after one year              $ 885,386      $   918,726
================================================================================
</TABLE>

      Scheduled principal repayments of long-term debt for each of the next five
fiscal years ending September 30 are as follows: 2003 - $57,511; 2004 - $55,063;
2005 - $54,889; 2006 - $113,247; 2007 - $138,750.

AMERIGAS PARTNERS SENIOR NOTES. The 8.875% Senior Notes generally cannot be
redeemed at our option prior to May 20, 2006. A redemption premium applies
thereafter through May 19, 2009. However, prior to May 20, 2004, AmeriGas
Partners may use the proceeds of a public offering of Common Units to redeem up
to 33% of the 8.875% Senior Notes at 108.875% plus accrued and unpaid interest.
The 10% Senior Notes generally cannot be redeemed at our option prior to their
maturity. The 10.125% Senior Notes are redeemable prior to their maturity date.
A redemption premium applies until April 15, 2004. In November 2001, AmeriGas
Partners prepaid $15,000 of 10.125% Senior Notes at a redemption price of
103.375%. AmeriGas Partners may, under certain circumstances following the
disposition of assets or a change of control, be required to offer to prepay the
Senior Notes.

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

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

      Under the Revolving Credit Facility, AmeriGas OLP may borrow up to
$100,000 (including a $35,000 sublimit for letters of credit) subject to
restrictions in the AmeriGas Partners Senior Notes indentures (see "Restrictive
Covenants" below). The Revolving Credit Facility may be used for working capital
and general purposes of AmeriGas OLP. The Revolving Credit Facility expires
October 1, 2003, but may be extended for additional one-year periods with the
consent of the participating banks representing at least 80% of the commitments
thereunder. AmeriGas OLP had borrowings under the Revolving Credit Facility
totaling $10,000 at September 30, 2002, which we classify as bank loans. There
were no borrowings outstanding under the Revolving Credit Facility at September
30, 2001. Issued and outstanding letters of credit, which reduce available
borrowings under the Revolving Credit Facility, totaled $19,781 at September 30,
2002 and $9,500 at September 30, 2001.


                                       20
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


      The Acquisition Facility provides AmeriGas OLP with the ability to borrow
up to $75,000 to finance the purchase of propane businesses or propane business
assets. In addition, up to $30,000 of the Acquisition Facility may be used for
working capital purposes. The Acquisition Facility operates as a revolving
facility through October 1, 2003, at which time amounts then outstanding will be
immediately due and payable.

      The Revolving Credit Facility and the Acquisition Facility permit AmeriGas
OLP to borrow at prevailing interest rates, including the base rate, defined as
the higher of the Federal Funds rate plus 0.50% or the agent bank's prime rate
(4.75% at September 30, 2002), or at two-week, one-, two-, three-, or six-month
Eurodollar Rate, as defined in the Bank Credit Agreement, plus a margin. The
margin on Eurodollar Rate borrowings (which ranges from 1.00% to 2.25%), and the
Bank Credit Agreement commitment fee rate (which ranges from 0.25% to 0.50%) are
dependent upon AmeriGas OLP's ratio of funded debt to earnings before interest
expense, income taxes, depreciation and amortization ("EBITDA"), each as defined
in the Bank Credit Agreement. The weighted-average interest rate on Revolving
Credit Facility borrowings at September 30, 2002 was 4.75%. There were no
borrowings outstanding under the Acquisition Facility at September 30, 2002. The
weighted-average interest rate on Acquisition Facility loans outstanding at
September 30, 2001 was 4.08%. AmeriGas OLP had the ability to borrow an
additional $67,658 under the Acquisition Facility based upon eligible propane
business and asset expenditures made through September 30, 2002.

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

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

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

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

      If the ratio in item 2 above is less than or equal to 1.75-to-1, the
Partnership may make cash distributions in a total amount not to exceed $24,000
less the total amount of distributions made during the immediately preceding 16
fiscal quarters. At September 30, 2002, such ratio was 2.41-to-1.

      The Bank Credit Agreement and the First Mortgage Notes restrict the
incurrence of additional indebtedness and also restrict certain liens,
guarantees, investments, loans and advances, payments, mergers, consolidations,
asset transfers, transactions with affiliates, sales of assets, acquisitions and
other transactions. The Bank Credit Agreement and First Mortgage Notes require
the ratio of total indebtedness, as defined, to EBITDA, as defined (calculated
on a rolling four-quarter basis or eight-quarter basis divided by two), to be
less than or equal to 4.75-to-1 with respect to the Bank Credit Agreement and
5.25-to-1 with respect to the First Mortgage Notes. In addition, the Bank Credit
Agreement requires that AmeriGas OLP maintain a ratio of EBITDA to interest
expense, as defined, of at least 2.25-to-1 on a rolling four-quarter basis.
Generally, as long as no default exists or would result, AmeriGas OLP is
permitted to make cash distributions not more frequently than quarterly in an
amount not to exceed available cash, as defined, for the immediately preceding
calendar quarter. At September 30, 2002, the Partnership was in compliance with
its financial covenants.

NOTE 7 - EMPLOYEE RETIREMENT PLANS

The General Partner sponsors a 401(k) savings plan for eligible employees.
Participants in the savings plan may contribute a portion of their compensation
on a before-tax basis. Generally, employee contributions are matched on a
dollar-for-dollar (100%) basis up to 5% of eligible compensation. In conjunction
with a short-term cost savings program, for the period March 1, 2002 to
September 30, 2002, employee contributions were matched at a rate of 25% up to
5% of eligible compensation. The cost of benefits under our savings plan was
$2,904 in 2002, $4,765 in 2001 and $4,741 in 2000.

NOTE 8 - INVENTORIES

Inventories comprise the following at September 30:

<TABLE>
<CAPTION>
                                                          2002              2001
================================================================================
<S>                                                    <C>               <C>
Propane gas                                            $38,283           $52,527
Materials, supplies and other                           18,586            13,960
Appliances for sale                                      5,627             6,585
--------------------------------------------------------------------------------
Total inventories                                      $62,496           $73,072
================================================================================
</TABLE>

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


                                       21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)


NOTE 9 - PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                           2002            2001
================================================================================
<S>                                                 <C>               <C>
Land                                                $    64,672       $  62,248
Buildings and improvements                               75,949          79,107
Transportation equipment                                 72,300          77,785
Storage facilities                                       83,528          72,764
Equipment, primarily cylinders and tanks                709,308         666,766
Other                                                    14,383          16,868
--------------------------------------------------------------------------------
Gross property, plant and equipment                   1,020,140         975,538
Less accumulated depreciation and
   amortization                                        (408,590)       (347,898)
--------------------------------------------------------------------------------
Net property, plant and equipment                   $   611,550       $ 627,640
================================================================================
</TABLE>

NOTE 10 - PARTNERS' CAPITAL AND INCENTIVE COMPENSATION PLANS

Effective with the conversion of the remaining Subordinated Units on November
18, 2002 (see Note 17), the General Partner may, in its sole discretion, cause
the Partnership to issue an unlimited number of additional Common Units and
other equity securities of the Partnership ranking on a parity with the Common
Units.

      In December 2001 and January 2002, AmeriGas Partners sold an aggregate
2,428,047 Common Units in conjunction with an underwritten public offering at a
public offering price of $21.50 per unit. The net proceeds of the public
offering and the associated capital contributions from the General Partner
totaling $50,635 were contributed to AmeriGas OLP and used to reduce Bank Credit
Agreement borrowings and for working capital. In October 2001, AmeriGas Partners
closed the sale of 350,000 Common Units to the General Partner at the trade-date
market price of $19.81 per unit. The proceeds of this sale and the associated
capital contributions from the General Partner totaling $7,075 were contributed
to AmeriGas OLP which used the proceeds to reduce Bank Credit Agreement
borrowings and for working capital. In October 2000, we sold 2,300,000 Common
Units in conjunction with a public offering at a public offering price of $18.44
per unit. The net proceeds from the Common Unit offering and the associated
capital contributions from the General Partner totaling $40,649 were used to
reduce Bank Credit Agreement indebtedness and for working capital purposes.

      Under the AmeriGas Propane, Inc. 2000 Long-Term Incentive Plan ("2000
Incentive Plan"), the General Partner may grant to key employees the rights to
receive a total of 500,000 Common Units, or cash equivalent to the fair market
value of such Common Units, upon the achievement of performance goals. In
addition, the 2000 Incentive Plan may provide for the crediting of Partnership
distribution equivalents to participants' accounts. Distribution equivalents
will be paid in cash and such payment may, at the participant's request, be
deferred. The actual number of Common Units (or their cash equivalents)
ultimately issued, and the actual amount of distribution equivalents paid, is
dependent upon the achievement of performance goals. Generally, each grant,
unless paid, will terminate when the participant ceases to be employed by the
General Partner. We also have a nonexecutive Common Unit plan under which the
General Partner may grant awards of up to a total of 200,000 Common Units to key
employees who do not participate in the 2000 Incentive Plan. Generally, awards
under the nonexecutive plan vest at the end of a three-year period and will be
paid in Common Units and cash. During 2002 and 2001, the General Partner made
awards under the 2000 Incentive Plan and the nonexecutive plan representing
43,250 and 66,075 Common Units, respectively. We recorded compensation expense
of $1,018 in 2002 and $497 in 2001 relating to these plans. At September 30,
2002 and 2001, awards representing 105,825 and 65,325 Common Units,
respectively, were outstanding.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

We lease various buildings and transportation, computer and office equipment
under operating leases. Certain of the leases contain renewal and purchase
options and also contain escalation clauses. Our aggregate rental expense for
such leases was $41,974 in 2002, $32,709 in 2001 and $28,990 in 2000.

      Minimum future payments under noncancelable operating leases are as
follows:

<TABLE>
<S>                                                                     <C>
================================================================================
Year Ending September 30,
   2003                                                                 $ 36,475
   2004                                                                   30,893
   2005                                                                   26,859
   2006                                                                   22,323
   2007                                                                   18,235
   Thereafter                                                             41,768
--------------------------------------------------------------------------------
Total minimum operating lease payments                                  $176,553
================================================================================
</TABLE>

      The Partnership has succeeded to certain lease guarantee obligations of
Petrolane relating to Petrolane's divestiture of nonpropane operations before
its 1989 acquisition by QFB Partners. Future lease payments under these leases
total approximately $20,000 at September 30, 2002. The leases expire through
2010 and some of them are currently in default. The Partnership has succeeded to
the indemnity agreement of Petrolane by which Texas Eastern Corporation ("Texas
Eastern"), a prior owner of Petrolane, agreed to indemnify Petrolane against any
liabilities arising out of the conduct of businesses that do not relate to, and
are not a part of, the propane business, including lease guarantees. In December
1999, Texas Eastern filed for dissolution under the Delaware General Corporation
Law. In May 2001, Petrolane filed a declaratory judgment action in the Delaware
Chancery Court seeking confirmation of


                                       22
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


      Texas Eastern's indemnification obligations and judicial supervision of
Texas Eastern's dissolution to ensure that its indemnification obligations to
Petrolane are paid or adequately provided for in accordance with law. Those
proceedings are pending. In a Liquidation and Winding Up Agreement dated
September 17, 2002, PanEnergy Corporation ("PanEnergy"), Texas Eastern's sole
stockholder, agreed to assume all of Texas Eastern's liabilities as of December
20, 2002, to the extent of the value of Texas Eastern's assets transferred to
PanEnergy as of that date (which is expected to exceed $94 million), and to the
extent that such liabilities arise within ten years from Texas Eastern's date of
dissolution. Notwithstanding the dissolution proceeding, and based on Texas
Eastern previously having satisfied directly defaulted lease obligations without
the Partnership's having to honor its guarantee, we believe that the probability
that the Partnership will be required to directly satisfy the lease obligations
subject to the indemnification agreement is remote.

      Columbia Propane, CPLP, and CPH (collectively, the "Company Parties")
agreed to indemnify the former general partners of National Propane Partners,
L.P. and certain of their affiliates (collectively, "National General Partners")
against certain income tax and other losses that the National General Partners
may sustain as a result of the 1999 acquisition by CPLP of the National Propane
business (the "1999 Acquisition") or its operation of the business after the
1999 Acquisition.

      CEG has agreed to indemnify AmeriGas Partners, AmeriGas OLP, the General
Partner (collectively, the "Buyer Parties") and the Company Parties against any
losses that they sustain under the 1999 Acquisition Agreement and related
agreements ("Losses"), including claims asserted by the National General
Partners ("National Claims"), to the extent such claims are based on acts or
omissions of CEG or the Company Parties prior to the acquisition of the Columbia
Propane Businesses by AmeriGas OLP on August 21, 2001 (the "2001 Acquisition").
The Buyer Parties have agreed to indemnify CEG against Losses, including
National Claims, to the extent such claims are based on acts or omissions of the
Buyer Parties or the Company Parties after the 2001 Acquisition. The Seller and
Buyer Parties have agreed to apportion certain losses resulting from a National
Claim to the extent such losses result from the 2001 Acquisition itself.

      We also have other contingent liabilities, pending claims and legal
actions arising in the normal course of our business. We cannot predict with
certainty the final results of these matters. However, it is reasonably possible
that some of them could be resolved unfavorably to us. 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 our financial position but could be material to our operating results
or cash flows in future periods depending on the nature and timing of future
developments with respect to these matters and the amounts of future operating
results and cash flows.

NOTE 12 - RELATED PARTY TRANSACTIONS

Pursuant to the Partnership Agreement and a Management Services Agreement among
AEH, the general partner of Eagle OLP, and the General Partner, the General
Partner is entitled to reimbursement for all direct and indirect expenses
incurred or payments it makes on behalf of the Partnership. These costs, which
totaled $262,398 in 2002, $208,910 in 2001 and $192,910 in 2000, include
employee compensation and benefit expenses of employees of the General Partner
and general and administrative expenses.

      UGI provides certain financial and administrative services to the General
Partner. UGI bills the General Partner for these direct and indirect corporate
expenses and the General Partner is reimbursed by the Partnership for these
expenses. Such corporate expenses totaled $6,341 in 2002, $5,276 in 2001 and
$3,985 in 2000. In addition, UGI and certain of its subsidiaries provide office
space and automobile liability insurance to the Partnership. These expenses
totaled $1,502 in 2002, $1,348 in 2001 and $1,155 in 2000.

      Subsequent to the Columbia Propane acquisition, the Partnership purchases
propane on behalf of Atlantic Energy. Atlantic Energy reimburses AmeriGas OLP
for its purchases plus interest as Atlantic Energy sells such propane to third
parties or to the Partnership itself. The total dollar value of propane
purchased on behalf of Atlantic Energy was $11,370 and $1,875 in 2002 and 2001,
respectively. Purchases of propane by AmeriGas OLP from Atlantic Energy during
2002 and 2001 totaled $12,131 and $1,132, respectively.

      AmeriGas OLP also provides other services to Atlantic Energy including
accounting, insurance and other administrative services and is reimbursed for
the related costs. Such costs were not material during 2002 or 2001. In
addition, AmeriGas OLP enters into product cost hedging contracts on behalf of
Atlantic Energy. When these contracts are settled, AmeriGas OLP is reimbursed
the cost of any losses, or distributes the proceeds of any gains, to Atlantic
Energy.

      Amounts due from Atlantic Energy at September 30, 2002 and 2001 totaled
$5,243 and $2,867, respectively, which amounts are included in accounts
receivable - related parties in the Consolidated Balance Sheets.


                                       23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Thousands of dollars, except per unit amounts)


NOTE 13 - OTHER CURRENT LIABILITIES

Other current liabilities comprise the following at September 30:

<TABLE>
<CAPTION>
                                                                2002        2001
--------------------------------------------------------------------------------
<S>                                                          <C>         <C>
Self-insured property and casualty liability                 $11,658     $ 8,516
Taxes other than income taxes                                  5,344       6,922
Fair value of derivative instruments                           3,330      12,958
Propane exchange liability                                     4,627       8,131
Deferred tank fee revenue                                      6,755       6,153
Other                                                          8,759       9,289
--------------------------------------------------------------------------------
Total other current liabilities                              $40,473     $51,969
================================================================================
</TABLE>

NOTE 14 - FINANCIAL INSTRUMENTS

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

      We use fixed-rate long-term debt as a source of capital. When these
long-term debt issues mature, we often refinance them with fixed-rate debt
bearing then-existing market interest rates. On occasion, we enter into interest
rate protection agreements ("IRPAs") to reduce market interest rate risk
associated with these forecasted debt issuances. We designate these IRPAs as
cash flow hedges. Gains or losses on IRPAs are included in other comprehensive
income and are reclassified to interest expense as the interest expense on the
associated debt issue affects earnings.

      During the years ended September 30, 2002 and 2001, the net loss
recognized in earnings representing cash flow hedge ineffectiveness was $2,123
and $326, respectively. Gains and losses included in accumulated other
comprehensive income at September 30, 2002 relating to cash flow hedges will be
reclassified into (1) cost of sales when the forecasted purchase of propane
subject to the hedges impacts net income and (2) interest expense when interest
on anticipated issuances of fixed-rate long-term debt is reflected in net
income. Included in accumulated other comprehensive income at September 30, 2002
are net losses of approximately $3,014 from IRPAs associated with forecasted
issuances of ten-year debt generally anticipated to occur during the next two
years. The amount of net loss which is expected to be reclassified into net
income during the next twelve months is not material. The remaining net gain on
derivative instruments included in accumulated other comprehensive income at
September 30, 2002 of $9,660 is principally associated with future purchases of
propane generally anticipated to occur during the next twelve months. The actual
amount of gains or losses on unsettled derivative instruments that ultimately is
reclassified into net income will depend upon the value of such derivative
contracts when settled. The fair value of derivative instruments is included in
other current assets, other current liabilities and other noncurrent liabilities
in the Consolidated Balance Sheets.

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

<TABLE>
<CAPTION>
                                                      Carrying        Estimated
                                                        Amount       Fair Value
================================================================================
<S>                                                 <C>              <C>
2002:
   Propane swap and option contracts                $    9,771       $    9,771
   Interest rate protection agreements                  (2,758)          (2,758)
   Long-term debt                                      945,784          982,869
2001:
   Propane swap, option and forward
      sales contracts                               $  (10,529)      $  (10,529)
   Interest rate protection agreements                  (3,029)          (3,029)
   Long-term debt                                    1,005,904        1,081,698
================================================================================
</TABLE>

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

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

NOTE 15 - OTHER INCOME, NET

Other income, net, comprises the following:

<TABLE>
<CAPTION>
                                                 2002         2001         2000
================================================================================
<S>                                           <C>          <C>          <C>
Gain on sales of fixed assets                 $(1,719)     $(2,413)     $(3,577)
Finance charges                                (2,169)      (2,435)      (1,889)
Derivative loss                                 2,123          326            -
Other                                          (1,598)      (1,632)      (3,067)
--------------------------------------------------------------------------------
Total other income, net                       $(3,363)     $(6,154)     $(8,533)
================================================================================
</TABLE>


                                       24
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


NOTE 16 - QUARTERLY DATA (UNAUDITED)

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

<TABLE>
<CAPTION>
                                 December 31,                March 31,                  June 30,                September 30,
                                2001          2000         2002          2001         2002          2001         2002          2001
====================================================================================================================================
<S>                        <C>           <C>          <C>           <C>          <C>           <C>          <C>           <C>
Revenues                   $ 371,385     $ 432,468    $ 460,122     $ 557,452    $ 254,469     $ 219,164    $ 221,904     $ 209,280
Operating income (loss)    $  41,980     $  56,841    $ 104,644     $  94,680    $  11,769     $  (5,707)   $ (13,853)    $ (12,024)
Income (loss) before
 changes in accounting     $  18,397     $  36,400    $  81,989     $  74,497    $  (9,945)    $ (24,346)   $ (35,075)    $ (33,536)
Changes in accounting            --         12,494           --            --           --            --           --            --
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss)          $  18,397     $  48,894    $  81,989     $  74,497    $  (9,945)    $ (24,346)   $ (35,075)    $ (33,536)
------------------------------------------------------------------------------------------------------------------------------------

Net income (loss) per
 limited partner
 unit - basic and
 diluted:
  Income (loss) before
   accounting changes      $    0.38     $    0.82    $    1.64     $   1.67     $  (0.20)     $   (0.54)   $  (0.70)    $    (0.73)
  Cumulative effect of
   accounting changes             --          0.28           --           --           --             --          --             --
------------------------------------------------------------------------------------------------------------------------------------
 Net income (loss) per
  unit                     $    0.38     $    1.10    $    1.64     $   1.67     $  (0.20)     $   (0.54)   $  (0.70)    $    (0.73)
====================================================================================================================================
</TABLE>

NOTE 17 - SUBSEQUENT EVENT - CONVERSION OF SUBORDINATED UNITS

Pursuant to the Partnership Agreement, the 9,891,072 Subordinated Units
outstanding as of September 30, 2002, all of which are held by the General
Partner, were eligible to convert to Common Units on the first day after the
record date for any quarter ending on or after March 31, 2000 in respect of
which:

      1.    distributions of Available Cash from Operating Surplus (as defined
            in the Partnership Agreement) equal or exceed the MQD on each of the
            outstanding Common and Subordinated units for each of the four
            consecutive nonoverlapping four-quarter periods immediately
            preceding such date,

      2.    the Adjusted Operating Surplus (as defined in the Partnership
            Agreement) generated during both (i) each of the two immediately
            preceding nonoverlapping four-quarter periods and (ii) the
            immediately preceding sixteen-quarter period, equals or exceeds the
            MQD on each of the Common and Subordinated units outstanding during
            those periods, and

      3.    there are no arrearages on the Common Units.

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


                                       25
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report


REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, partners' capital and cash flows present
fairly, in all material respects, the financial position of AmeriGas Partners,
L.P. and its subsidiaries at September 30, 2002 and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of AmeriGas Propane, Inc.; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. The consolidated financial statements of
AmeriGas Partners, L.P. and its subsidiaries as of September 30, 2001, and for
each of the two years in the period ended September 30, 2001, were audited by
other independent accountants who have ceased operations. Those independent
accountants expressed an unqualified opinion on those financial statements in
their report dated November 16, 2001.

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


/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
November 15, 2002,
   except for Note 17 as to which
   the date is December 16, 2002.


________________________________________________________________________________
  THIS REPORT IS A COPY OF THE PREVIOUSLY ISSUED ACCOUNTANT'S REPORT OF ARTHUR
         ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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

We have audited the accompanying consolidated balance sheets of AmeriGas
Partners, L.P. and subsidiaries as of September 30, 2001 and 2000, and the
related consolidated statements of operations, partners' capital and cash flows
for each of the three years in the period ended September 30, 2001. 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 audits.

      We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AmeriGas Partners, L.P. and subsidiaries as of September 30, 2001 and 2000, and
the results of their operations and their cash flows for each of the three years
in the period ended September 30, 2001, in conformity with accounting principles
generally accepted in the United States.

      As explained in Notes 2 and 4 to the financial statements, effective
October 1, 2000, the Partnership changed its methods of accounting for tank
installation costs and nonrefundable tank fees and also adopted the provisions
of SFAS No. 133.


/s/ Arthur Andersen LLP

Philadelphia, Pennsylvania
November 16, 2001


                                       26
<PAGE>
                                      AmeriGas Partners, L.P. 2002 Annual Report

GENERAL PARTNER'S REPORT


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

      The General Partner maintains a system of internal controls. Management of
the General Partner believes the system provides reasonable, but not absolute,
assurance that assets are safeguarded and that transactions are executed in
accordance with management's authorization and are properly recorded to permit
the preparation of reliable financial information. There are limits in all
systems of internal control, based on the recognition that the cost of the
system should not exceed the benefits to be derived. We believe that the
internal control system is cost effective and provides reasonable assurance that
material errors or irregularities will be prevented or detected within a timely
period. The internal control system and compliance therewith are monitored by
UGI Corporation's internal audit staff.

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

      The independent accountants, who are appointed by the Board of Directors
of the General Partner, perform certain procedures, including an evaluation of
internal controls to the extent required by auditing standards generally
accepted in the United States of America, in order to express an opinion on the
consolidated financial statements and to obtain reasonable assurance that such
financial statements are free of material misstatement.


/s/ Eugene V. N. Bissell

Eugene V. N. Bissell
Chief Executive Officer


/s/ Martha B. Lindsay

Martha B. Lindsay
Chief Financial Officer

/s/ Richard R. Eynon

Richard R. Eynon
Chief Accounting Officer


                                       27