<PAGE>
________________________________________________________________________________

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                            ------------------------
                                   FORM 10-K

[x]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
           FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
                                  OR
[ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 16 OF THE
           SECURITIES EXCHANGE ACT OF 1934
           FOR THE TRANSITION PERIOD FROM                          TO

                        COMMISSION FILE NUMBER: 1-11867

                                ---------------
                        NATIONAL PROPANE PARTNERS, L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                ---------------


<TABLE>
<S>                                                       <C>
                   DELAWARE                                       42-1453040
       (STATE OR OTHER JURISDICTION OF                         (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)

                 SUITE 1700, IES TOWER                           52401-1409
                  200 1ST STREET S.E.                            (ZIP CODE)
                    CEDAR RAPIDS, IA
        (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
</TABLE>

      (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE): (319) 365-1550

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

<TABLE>
<CAPTION>
TITLE OF EACH
     CLASS        NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------    -------------------------------------------
<S>              <C>
Common Units               New York Stock Exchange
</TABLE>

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

     Indicate  by check  mark whether the  Registrant (1) has  filed all reports
required to be filed by Sections 13  or 15(d) of the Securities Exchange Act  of
1934  during  the preceding  12  months (or  for  each shorter  period  that the
Registrant was required to file such reports), and (2) had been subject to  such
filing requirements for the past 90 days. Yes [x] No [ ]

     Indicate  by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge, in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K [ ].

     The  aggregate market value as of March 27, 1997 of the Registrant's Common
Units held by non-affiliates  of the Registrant, based  on the reported  closing
price  of  such  units  on  the  New  York  Stock  Exchange  on  such  date, was
approximately $134,031,000. At March 27,  1997 there were outstanding  6,701,550
Common Units and 4,533,638 Subordinated Units.

                            ------------------------
                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None

________________________________________________________________________________



<PAGE>
                        NATIONAL PROPANE PARTNERS, L.P.
                             INDEX TO ANNUAL REPORT
                                  ON FORM 10-K

                                     PART 1

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>        <C>                                                                                                <C>
Item  1.   Business........................................................................................     2
Item  2.   Properties......................................................................................    11
Item  3.   Legal Proceedings...............................................................................    12
Item  4.   Submission of Matters to a Vote of Security Holders.............................................    12

                                                     PART II
Item  5.   Market for the Registrant's Units and Related Unitholder Matters................................    13
Item  6.   Selected Historical Consolidated Financial and Operating Data...................................    14
Item  7.   Management's Discussion and Analysis of Financial Condition and Results of Operations...........    16
Item  8.   Financial Statements and Supplementary Data.....................................................    24
Item  9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............    49

                                                     PART III
Item 10.   Directors and Executive Officers of the Registrant..............................................    49
Item 11.   Executive Compensation..........................................................................    52
Item 12.   Security Ownership of Certain Beneficial Owners and Management..................................    57
Item 13.   Certain Relationships and Related Transactions..................................................    60

                                                     PART IV
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................    63
Signatures.................................................................................................    65
</TABLE>



<PAGE>
                                    PART I.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain  statements in this Annual Report  on Form 10-K (this 'Form 10-K'),
including  statements  under  'Item  1.  Business'  and  'Item  7.  Management's
Discussion  and Analysis of Financial Condition  and Results of Operations', and
elsewhere in this Form 10-K  constitute 'forward-looking statements' within  the
meaning  of the  Private Securities Litigation  Reform Act of  1995 (the 'Reform
Act') concerning, among other things,  the prospects, developments and  business
strategies  of  National  Propane  Partners, L.P.  (the  'Partnership')  for its
operations,  all  of  which  are  subject  to  risks  and  uncertainties.  These
forward-looking  statements are identified  by their use of  forms of such terms
and phrases as 'intends', 'goals', 'estimates', 'expects', 'projects',  'plans',
'anticipates',   'should',   'future',  'believes'   and  'scheduled'.   When  a
forward-looking statement  includes  a statement  of  the assumptions  or  basis
underlying  the forward-looking statement, the  Partnership cautions that, while
it believes such assumptions or  basis to be reasonable  and makes them in  good
faith,  assumed facts or basis  almost always vary from  actual results, and the
differences between assumed facts or basis  and actual results can be  material,
depending  upon the circumstances. Where,  in any forward-looking statement, the
Partnership or its management  expresses an expectation or  belief as to  future
results,  such expectation or belief is expressed  in good faith and believed to
have a reasonable basis,  but there can  be no assurance  that the statement  of
expectation  or  belief  will  result  or  be  achieved  or  accomplished.  Such
forward-looking statements involve  known and unknown  risks, uncertainties  and
other factors which may cause the actual results, performance or achievements of
the  Partnership to be materially different from any future results, performance
or achievements expressed  or implied by  such forward-looking statements.  Such
factors   with  respect  to  the  Partnership  include,  among  others,  weather
conditions, which affect the  demand for propane;  changes in wholesale  propane
prices,  which may affect the Partnership's gross profits and the demand for the
Partnership's products;  competition from  others  in the  propane  distribution
industry and from alternative energy sources, which may affect the Partnership's
ability  to generate revenues; the mature  nature of the retail propane industry
and the national trend toward increased conservation and technological advances,
which may affect demand  for the Partnership's  products; the Partnership  being
subject to the operating hazards and risks associated with handling, storing and
delivering   combustible  liquids  such  as   propane,  which  may  subject  the
Partnership to claims for  which the Partnership is  not insured; the amount  of
the  Partnership's available cash  being dependent on a  number of factors which
may be beyond  the control  of the Partnership,  including, without  limitation,
that  a  portion  of the  Partnership's  annual  cash receipts  is  derived from
interest payments from Triarc Companies,  Inc. ('Triarc'), which may affect  the
amount   of  the   Partnership's  cash  distributions;   the  Partnership  being
significantly leveraged, which may limit the Partnership's ability to make  cash
distributions  and  may  affect  the Partnership's  results  of  operations; the
Partnership's assumptions concerning  future operations  and weather  conditions
may  not be  realized, which  may affect  the amount  of the  Partnership's cash
distributions and results  of operations; the  Partnership's reimbursements  and
funds  due to  its managing  general partner  National Propane  Corporation (the
'Managing General Partner') may be  substantial, which may adversely affect  the
Partnership's  ability to make cash distributions; changes in business strategy,
which may,  among  other  things, prolong  the  time  it takes  to  achieve  the
performance  results included herein; changes in, or the failure to comply with,
government regulations; the Partnership may  be unsuccessful in its attempts  to
acquire  other  business in  the industry;  and  other risks,  uncertainties and
factors referenced  in this  Form  10-K and  in  the Partnership's  current  and
periodic filings with the Securities and Exchange Commission.

                                       1



<PAGE>
ITEM 1. BUSINESS

INTRODUCTION

     National   Propane  Partners,  L.P.,  a  master  limited  partnership  (the
'Partnership' or the 'MLP'), is a  Delaware limited partnership formed in  March
1996  to acquire, own  and operate the  business and assets  of National Propane
Corporation ('National Propane') through National Propane, L.P. (the  'Operating
Partnership'),  and is engaged primarily in  (i) the retail marketing of propane
to residential, commercial  and industrial,  and agricultural  customers and  to
dealers that resell propane to residential and commercial customers and (ii) the
retail  marketing of propane-related supplies  and equipment, including home and
commercial appliances. The Partnership believes  it is the sixth largest  retail
marketer  of  propane  in  terms  of  volume  in  the  United  States, supplying
approximately 250,000 active retail and wholesale customers in 25 states through
its 166 service centers located in  24 states. The Partnership's operations  are
concentrated  in the Midwest, Northeast, Southeast  and Southwest regions of the
United  States.  The  retail  propane  sales  volume  of  the  Partnership   was
approximately 160.5 million gallons in 1996. In 1996, approximately 45.6% of the
Partnership's  retail sales  volume was to  residential customers,  36.2% was to
commercial and industrial  customers, 7.7%  was to  agricultural customers,  and
10.5%  was  to dealers.  Sales to  residential customers  in 1996  accounted for
approximately 64% of the Partnership's gross profit on propane sales, reflecting
the higher-margin nature of this segment of the market.

ACQUISITION BY TRIARC

     National Propane was incorporated in  1953 under the name Conservative  Gas
Corporation.  During  the period  that National  Propane  was controlled  by DWG
Corporation, Triarc's  predecessor, National  Propane's business  was  conducted
through   nine  regionally  branded  companies  without  central  management  or
coordinated pricing or  distribution strategies. In  April 1993, a  partnership,
the  sole general partners of which are  Nelson Peltz and Peter W. May, acquired
approximately 28.6% of the then outstanding shares of Triarc's common stock (the
'Acquisition'). Since the  Acquisition, the Partnership's  new management  team,
headed  by Ronald D. Paliughi, who  became President and Chief Executive Officer
of National Propane in April 1993, has implemented an operating plan designed to
make the Partnership more efficient, profitable and competitive.

     Since 1993,  National  Propane's  management  has:  (i)  consolidated  nine
separately  branded businesses into a single  company with a new, national brand
and  logo;  (ii)   consolidated  eight  regional   offices  into  one   national
headquarters;  (iii)  installed  a  system-wide  data  processing  system;  (iv)
implemented system-wide pricing,  marketing and  purchasing strategies,  thereby
reducing   the  cost  duplication  and  purchasing  and  pricing  inefficiencies
associated with the  formerly decentralized structure;  and (v) centralized  and
standardized  accounting,  administrative  and other  corporate  services.  As a
result of  these initiatives,  National Propane  has become  more efficient  and
competitive,  and believes it  is now positioned  to capitalize on opportunities
for business growth, both internally and through acquisitions.

INITIAL PUBLIC OFFERING

     In July 1996 the MLP  completed  an initial public offering (the 'IPO')  of
approximately  6.3 million  common units representing  limited partner interests
(together with subsequently issued common units the 'Common Units') and received
therefrom net proceeds aggregating approximately $117.4 million.

     Concurrently with  the  closing  of  the IPO,  both  National  Propane  and
National  Propane SGP Inc. ('SGP') contributed substantially all of their assets
to the  Operating  Partnership  (the  'Partnership  Conveyance')  as  a  capital
contribution  and the Operating  Partnership assumed substantially  all of their
liabilities. National  Propane  and  SGP then  conveyed  their  limited  partner
interests  in the Operating Partnership to the  Partnership. As a result of such
contributions, each of  National Propane  and SGP  have a  1.0% general  partner
interest  in  the Partnership  and  a 1.0101%  general  partner interest  in the
Operating Partnership. In  addition, National Propane  received in exchange  for
its   contribution  to   the  Partnership  4,533,638   subordinated  units  (the
'Subordinated Units') and the right to receive certain incentive distributions.

                                       2



<PAGE>
     Also immediately prior to the closing  of the IPO, National Propane  issued
$125  million aggregate principal amount of  8.54% first mortgage notes due 2010
(the 'First Mortgage  Notes') to  certain institutional investors  in a  private
placement  (the  'Private Placement').  Approximately $59.3  million of  the net
proceeds from the sale of the First  Mortgage Notes (the entire net proceeds  of
which  were approximately $118.4 million) were used by National Propane to pay a
dividend to Triarc Companies,  Inc. The remainder of  the net proceeds from  the
sale  of the First Mortgage Notes (approximately $59.1 million) were contributed
by National Propane to the Operating Partnership to repay a portion of  National
Propane's then existing bank debt and other indebtedness of National Propane and
certain of its subsidiaries.

     After  the repayment of the indebtedness  described above, the net proceeds
of the  IPO  were contributed  to  the  Operating Partnership  which  used  such
proceeds  to  repay all  remaining  indebtedness under  National  Propane's then
existing bank debt,  to make a  $40.7 million loan  to Triarc (the  'Partnership
Loan')  and to pay certain accrued management  fees and tax sharing payments due
to Triarc from National Propane.

     Concurrently with the closing  of the IPO,  the Operating Partnership  also
entered  into a  bank credit  facility, which  includes a  $15 million revolving
credit facility to  be used for  working capital and  other general  partnership
purposes and a $40 million acquisition facility.

     On  November 7, 1996, the Partnership issued and sold an additional 400,000
common units in a private placement resulting in net proceeds of $7.4 million.

BUSINESS STRATEGY

     The  Partnership's  operating  strategy  is  to  increase  its  efficiency,
profitability  and  competitiveness,  while  better  serving  its  customers, by
building on the efforts it has already undertaken to improve pricing management,
marketing and  purchasing and  to consolidate  its operations.  During 1996  the
Partnership  continued to develop its $1.4 million pricing system which provides
central management and local managers  with current, system-wide supply,  demand
and  competitive  pricing  information.  The  Partnership  also  began equipping
several of  its  delivery  personnel  with  hand-held  computer  terminals  that
simplify customer billing and the collection of price and volume information.

     The  Partnership  continued to  look for  opportunities to  consolidate its
operations, reducing its workforce by approximately 15%, from 1,228 in July 1993
to 1,045 full-time employees as of December 31, 1996.

     The Partnership's strategies  for growth involve  expanding its  operations
and  increasing  its market  share through  strategic acquisitions  and internal
growth, including the opening of new service centers. The Partnership intends to
increase its  revenues by  acquiring smaller,  independent competitors,  funding
such  acquisitions by either drawing on  its $40 million acquisition facility or
issuing additional Common Units. The Partnership intends to take two  approaches
to  acquisitions:  (i)  primarily, to  build  on  its broad  geographic  base by
acquiring smaller, independent competitors that operate within the Partnership's
existing  geographic  areas  and  incorporating  them  into  the   Partnership's
distribution  network and  (ii) to  acquire propane  businesses in  areas in the
United States outside of its current geographic base where it believes there  is
growth  potential  and  where an  attractive  return  on its  investment  can be
achieved. The Partnership continues to evaluate a number of propane distribution
companies, including  regional  and  national  firms, as  part  of  its  ongoing
acquisition  program,  and as  of March  15, 1997,  the Partnership  has present
agreements or commitments  with respect to  purchasing three propane  businesses
for  an aggregate purchase price of approximately $7.1 million. During 1996, the
Partnership acquired the assets of five smaller retail propane marketers for  an
aggregate  purchase price  of approximately $2.0  million. In  January 1997, the
Partnership acquired the assets of another  small retail propane marketer for  a
purchase price of approximately $1.0 million.

     In  addition to  pursuing expansion  through acquisitions,  the Partnership
intends to pursue internal growth at its existing service centers and to  expand
its  business by opening  new service centers. The  Partnership has attempted to
leverage its position as a reliable, full service propane company to attract new
customers, particularly  in  those  locations  where  the  Partnership  competes
against  smaller,  independent distributors.  In  addition, the  Partnership has
marketing programs such as its Water Heater

                                       3



<PAGE>
Program pursuant to which  the Partnership offers to  users of electric or  fuel
oil water heaters a free propane water heater (excluding installation) in return
for signing a five-year propane purchase agreement. Furthermore, the Partnership
operates  in  several  growth  areas of  the  United  States,  including western
Colorado, a rapidly growing market in  which the Partnership believes it is  one
of  the  leading retail  marketers, and  in  central Arizona,  an area  that has
experienced a significant rate of population growth in recent years.

     The Partnership also intends to continue to expand its business by  opening
new  service  centers,  known  as  'scratch-starts,'  in  areas  where  there is
relatively little competition. Scratch starts  are newly opened service  centers
generally  staffed with  one or two  employees, which  typically involve minimal
start up costs because the infrastructure of the new service center is developed
as the customer  base expands and  the Partnership can,  in many  circumstances,
transfer existing assets, such as storage tanks and vehicles, to the new service
center.  Under its 'scratch-start' program, the  Partnership intends to open new
service  centers  in  specific  types  of  markets,  such  as  resorts  and  new
residential developments, which have been targeted because of the unavailability
of  natural gas, the limited  number of competitors and  the potential number of
relatively high margin residential accounts. Under this program, by December 31,
1996 the Partnership had opened three new service centers in California and  one
in  each of  Idaho, Georgia  and South  Carolina. The  Partnership is developing
plans for several new 'scratch-starts' in 1997.

INDUSTRY BACKGROUND

     Propane, a by-product of natural gas processing and petroleum refining,  is
a  clean-burning energy source  recognized for its  transportability and ease of
use relative to  alternative stand-alone  energy sources.  Propane is  extracted
from  natural gas  or oil  wellhead gas at  processing plants  or separated from
crude oil  during the  refining  process. Propane  is normally  transported  and
stored  in a liquid  state under moderate pressure  or refrigeration for economy
and ease of handling in shipping and distribution. When the pressure is released
or the temperature is increased,  it is useable as  a flammable gas. Propane  is
colorless  and odorless; an odorant is added  to allow its detection. Propane is
clean-burning, producing negligible amounts of pollutants when consumed.

     The  Partnership's  retail  customers  fall  into  four  broad  categories:
residential   customers,  commercial  and   industrial  customers,  agricultural
customers  and  dealers  that  resell  propane  to  residential  and  commercial
customers.  Residential customers use propane primarily for space heating, water
heating, cooking and  clothes drying.  Commercial and  industrial customers  use
propane  for  commercial applications  such as  cooking  and clothes  drying and
industrial uses such as fueling over-the-road vehicles, forklifts and stationary
engines, firing furnaces, as  a cutting gas and  in other process  applications.
Agricultural  customers  use propane  for tobacco  curing, crop  drying, poultry
brooding and week control.

     Based  upon  information  provided  by  the  NPGA,  propane  accounts   for
approximately  3.0% to 4.0% of total energy consumption in the United States, an
average level that has remained relatively  constant for the past ten years.  In
addition,  propane  is now  the world's  most widely  used alternative  fuel for
automobiles with  approximately  350,000 and  3.5  million vehicles  running  on
propane  in  the United  States and  worldwide,  respectively (according  to the
NPGA). The  Partnership  believes,  based on  industry  publications,  that  the
domestic  retail  market  for  propane  is  approximately  9.4  billion  gallons
annually.

PRODUCTS, SERVICES AND MARKETING

     The Partnership distributes its  propane through a nationwide  distribution
network  integrating  166  service  centers  in  24  states.  The  Partnership's
operations are  located  primarily  in the  Midwest,  Northeast,  Southeast  and
Southwest  regions of the United States. Typically, service centers are found in
suburban and rural areas where natural gas is not readily available.  Generally,
such  locations consist of an office and  a warehouse and service facility, with
one or more 18,000 to 30,000 gallon storage tanks on the premises. Each  service
center  is managed by a  district manager and also  typically employs a customer
service representative, a service technician and one or two bulk truck  drivers.
However, new

                                       4



<PAGE>
service  centers  established under  the  Partnership's 'scratch  start' program
generally do  not  have  offices,  warehouses  or  service  facilities  and  are
typically staffed initially by one or two employees.

     In  1996 the Partnership served  approximately 250,000 active customers. No
single customer accounted for 10% or more of the Partnership's revenues in  1995
or 1996. Generally, the number of customers increases during the fall and winter
and  decreases during the spring and  summer. Historically, approximately 67% of
the Partnership's  retail propane  volume  has been  sold during  the  six-month
season  from October  through March, as  many customers use  propane for heating
purposes. Consequently, sales, gross profits and cash flows from operations  are
concentrated in the Partnership's first and fourth fiscal quarters.

     Year-to-year demand for propane is affected by the relative severity of the
winter and other climatic conditions. For example, while the frigid temperatures
that  were experienced  by the  United States  in January  and February  of 1994
significantly increased the overall demand for propane, the warm weather  during
the  winter of  1994 - 1995  significantly reduced such  demand. The Partnership
believes, however,  that the  geographic diversity  of its  areas of  operations
helps  to reduce its exposure to  regional weather patterns. In addition, retail
sales to  the commercial  and  industrial markets,  while affected  by  economic
patterns,  are not as sensitive to variations  in weather conditions as sales to
residential and agricultural markets.  For information on  the impact of  annual
variations  in  weather  on  the  operations of  the  Partnership,  see  Item 7.
'Management's Discussion  and Analysis  of Financial  Condition and  Results  of
Operations -- General'.

     Retail  deliveries of  propane are  usually made  to customers  by means of
bobtail and  rack  trucks. Propane  is  pumped  from the  bobtail  truck,  which
generally  holds 2,800 gallons of propane, into a stationary storage tank on the
customer's  premises.  The   capacity  of  these   tanks  usually  ranges   from
approximately  50 to approximately  1,000 gallons, with a  typical tank having a
capacity of 250 to  500 gallons. Typically, service  centers deliver propane  to
most  of their residential customers at regular intervals, based on estimates of
such  customers'  usage,  thereby  eliminating  the  customers'  need  to   make
affirmative  purchase decisions. The Partnership also delivers propane to retail
customers in  portable  cylinders,  which  typically have  a  capacity  of  23.5
gallons.  When these cylinders  are delivered to  customers, empty cylinders are
picked up for replenishment at  the Partnership's distribution locations or  are
refilled in place. The Partnership also delivers propane to certain other retail
customers,  primarily dealers  and large  commercial accounts,  in larger trucks
known as  transports, which  have  an average  capacity of  approximately  9,000
gallons.  Propane is  generally transported from  refineries, pipeline terminals
and  storage  facilities  (including   the  Partnership's  underground   storage
facilities   in  Hutchinson,  Kansas   and  Loco  Hills,   New  Mexico)  to  the
Partnership's bulk plants by a combination of common carriers,  owner-operators,
railroad  tank cars and, in certain circumstances, the Partnership's own highway
transport fleet.

     The Partnership also sells,  leases and services  equipment related to  its
propane  distribution business. In the residential market, the Partnership sells
household appliances  such  as cooking  ranges,  water heaters,  space  heaters,
central  furnaces and clothes dryers, as  well as less traditional products such
as barbecue equipment and  gas logs. In the  industrial market, the  Partnership
sells  or leases specialized equipment for the use of propane as fork lift truck
fuel, in metal  cutting and atmospheric  furnaces and for  portable heating  for
construction.  In the  agricultural market,  specialized equipment  is leased or
sold for the use  of propane as  engine fuel and for  chicken brooding and  crop
drying.  The sale  of specialized  equipment, service  income and  rental income
represented less than 10% of the Partnership's operating revenues during  fiscal
1996.  Parts  and  appliance  sales,  installation  and  service  activities are
conducted through  National  Sales  & Service,  Inc.  ('NSSI'),  a  wholly-owned
corporate subsidiary of the Operating Partnership.

PROPANE SUPPLY AND STORAGE

     The  profitability  of  the Partnership  is  dependent upon  the  price and
availability of propane as well as seasonal and climatic factors. Contracts  for
propane are typically made on a year-to-year basis, but the price of the propane
to  be  delivered  depends  upon  market conditions  at  the  time  of delivery.
Worldwide availability of both gas liquids and oil affects the supply of propane
in domestic markets,  and from time  to time  the ability to  obtain propane  at
attractive    prices    may    be    limited    as    a    result    of   market

                                       5



<PAGE>
conditions,  thus  affecting  price  levels  to  all  distributors  of  propane.
Generally, when the wholesale cost of propane declines, the Partnership believes
that  its margins on  its retail propane distribution  business will increase in
the short-term because retail prices tend to change less rapidly than  wholesale
prices.  Conversely,  when  the  wholesale  cost  of  propane  increases, retail
marketing profitability will likely be reduced at least for the short-term until
retail prices can be increased.  Except for occasional opportunistic buying  and
storage  of propane, the Partnership has  not engaged in any significant hedging
activities with respect to its propane  supply requirements, although it may  do
so  from time to  time in the  future. See 'Item  7. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- General'.

     The Partnership  purchased  propane  from over  35  domestic  and  Canadian
suppliers  during 1996, primarily major  oil companies and independent producers
of both gas liquids and oil, and  it also purchased propane on the spot  market.
In  1996, the  Partnership purchased  approximately 82%  and 18%  of its propane
supplies from domestic and  Canadian suppliers, respectively. Approximately  95%
of  propane purchases  by the  Partnership in 1996  were on  a contractual basis
(generally, under  one  year agreements  subject  to annual  renewal),  but  the
percentage of contract purchases may vary from year to year as determined by the
Managing  General Partner. Supply contracts generally  do not lock in prices but
rather provide  for pricing  in accordance  with posted  prices at  the time  of
delivery or the current prices established at major storage points, such as Mont
Belvieu,  Texas and Conway, Kansas. The Partnership  is not currently a party to
any supply contracts containing 'take or pay' provisions.

     Warren Petroleum  Company  ('Warren')  supplied approximately  16%  of  the
Partnership's  propane in 1996 and Amoco  and Conoco each supplied approximately
10%. The Partnership believes that if supplies from Warren, Amoco or Conoco were
interrupted, it would  be able to  secure adequate propane  supplies from  other
sources   without  a  material  disruption   of  its  operations;  however,  the
Partnership believes that the  cost of procuring  replacement supplies might  be
significantly  higher,  at least  on a  short-term basis, which could negatively
affect the  Partnership's margins. No  other single supplier provided  more than
10%  of  the  Partnership's  total  propane  supply  during  1996.  Although the
Partnership has long-standing relations with a number of its important suppliers
and has generally  been able to secure sufficient propane to meet its customers'
needs,  no  assurance  can  be  given  that  supplies of propane will be readily
available in the future. The Partnership expects a sufficient supply to continue
to be available during  1997. However,  increased  demand for propane in periods
of severe cold  weather,  or  otherwise,  could  cause   future  propane  supply
interruptions or significant volatility  in the price of  propane. See 'Item  7.
Management's  Discussion  and Analysis  of Financial  Conditions and  Results of
Operations -- General'.

     The Partnership owns underground  storage facilities in Hutchinson,  Kansas
and  Loco Hills, New Mexico, leases  above ground storage facilities in Crandon,
Wisconsin and Orlando, Florida, and owns or leases smaller storage facilities in
other locations  throughout the  United States.  As of  December 31,  1996,  the
Partnership's  total  storage capacity  was  approximately 33.1  million gallons
(including approximately  one  million  gallons of  storage  capacity  currently
leased to third parties).

PRICING POLICY

     The Partnership believes that its pricing policy is an essential element in
the  marketing of propane. The pricing  system installed in substantially all of
the Partnership's  service centers  provides  central management  with  current,
system-wide  supply, demand and  competitive pricing information.  Based on that
information, pricing managers located in  Cedar Rapids, Iowa monitor the  prices
to  be charged to the Partnership's existing residential customers. With respect
to  commercial  and  industrial   customers,  agricultural  customers  and   new
residential customers, management and managers work together to determine prices
based  on recommendations from management  and local conditions. The Partnership
believes that  this  flexible,  joint  pricing  management  system  enables  the
Partnership  to react more effectively to cost increases, and will permit it, in
most situations, to respond to changes in supply costs in a manner that protects
its gross margins, to the extent possible.

     To further enhance its price management, the Partnership is in the  process
of  equipping its delivery personnel  with hand-held computer terminals ('HHTs')
that simplify customer billing  and the collection  of customer data,  including
price   and   volume   information.   The   HHTs   are   also   able   to  print

                                       6



<PAGE>
accurate customer delivery statements  that can be provided  to the customer  by
the  Partnership's delivery personnel. The Partnership began testing the HHTs in
a limited number of service centers in the Midwest in March 1996. The results of
these tests have been successful to date, and the Partnership deployed the  HHTs
at eight additional locations during 1996.

TRADEMARKS AND TRADENAMES

     The  Partnership utilizes  a number of  trademarks and  tradenames which it
owns (including 'National PropaneTM'), some of which have a significant value in
the marketing of its products.

COMPETITION

     Propane competes primarily with natural gas, electricity and fuel oil as an
energy source, principally on the basis of price, availability and  portability.
Propane  serves as  an alternative  to natural gas  in rural  and suburban areas
where natural gas is unavailable or portability of product is required.  Propane
is  generally more  expensive than  natural gas  on an  equivalent BTU  basis in
locations served by natural  gas, although propane  is sold in  such areas as  a
standby  fuel for  use during  peak demand  periods and  during interruptions in
natural gas  service. The  expansion  of natural  gas into  traditional  propane
markets  has historically been inhibited by the capital costs required to expand
distribution and  pipeline  systems.  Although  the  extension  of  natural  gas
pipelines  tends to  displace propane  distribution in  the areas  affected, the
Partnership believes  that new  opportunities for  propane sales  arise as  more
geographically remote neighborhoods are developed.

     Propane  is  generally less  expensive to  use  than electricity  for space
heating, water heating, clothes drying and cooking. Although propane is  similar
to  fuel oil  in certain applications,  as well  as in market  demand and price,
propane and  fuel oil  have generally  developed their  own distinct  geographic
markets,   reducing  competition  between  such   fuels.  Because  furnaces  and
appliances that burn  propane will not  operate on  fuel oil and  vice versa,  a
conversion  from  one  fuel  to  the  other  requires  the  installation  of new
equipment.

     In addition to competing with  alternative energy sources, the  Partnership
competes  with  other  companies  engaged  in  the  retail  propane distribution
business. Competition in the propane industry is highly fragmented and generally
occurs on  a  local basis  with  other large  full-service  multi-state  propane
marketers,   thousands  of   smaller  local   independent  marketers   and  farm
cooperatives. Based on industry publications, the Partnership believes that  the
domestic  retail  market  for  propane  is  approximately  9.4  billion  gallons
annually, that the 10 largest retailers, including the Partnership, account  for
approximately 32% of the total retail sales of propane in the United States, and
that  no single marketer has a greater than 10% share of the total retail market
in the United  States. Most of  the Partnership's service  centers compete  with
several  marketers or  distributors and certain  service centers  compete with a
large number of marketers or distributors.  Each service center operates in  its
own  competitive environment  because retail marketers  tend to  locate in close
proximity to customers  in order  to lower the  cost of  providing service.  The
Partnership's  typical  service  center  has an  effective  marketing  radius of
approximately 50 miles. The  ability to compete  effectively further depends  on
the  reliability  of service,  responsiveness to  customers  and the  ability to
maintain competitive prices.

WORKING CAPITAL

     Working capital requirements for the Operating Partnership fluctuate due to
the seasonal  nature  of its  business.  Typically,  in late  summer  and  fall,
inventories  are built up in anticipation of the heating season and are depleted
over the winter months. During the  spring and early summer, inventories are  at
low  levels due to lower demand.  Accounts receivable reach their highest levels
in the middle of the  winter and are gradually reduced  as the volume of LP  gas
sold  declines during  the spring and  summer. Working  capital requirements are
generally met through cash flow from operations supplemented by advances under a
revolving working capital facility which provides the Operating Partnership with
a $15 million line of credit (of which  $ 8.3 million was available at March  1,
1997). Accounts receivable are generally due within 30 days of delivery.

                                       7



<PAGE>
GOVERNMENT REGULATION

     The   Partnership  is   subject  to   various  federal,   state  and  local
environmental, health and  safety laws  and regulations.  Generally, these  laws
impose  limitations on the  discharge of pollutants  and establish standards for
the handling of  solid and  hazardous wastes.  These laws  include the  Resource
Conservation   and  Recovery  Act,  the  Comprehensive  Environmental  Response,
Compensation and Liability Act ('CERCLA'),  the Clean Air Act, the  Occupational
Safety  and Health Act, the Emergency Planning  and Community Right to Know Act,
the Clean Water  Act and comparable  state statutes. CERCLA,  also known as  the
'Superfund'  law, imposes joint and several liability without regard to fault or
the legality of  the original  conduct on certain  classes of  persons that  are
considered  to  have  contributed to  the  release  or threatened  release  of a
'hazardous substance' into the environment. Propane is not a hazardous substance
within the meaning of CERCLA. However, automotive waste products, such as  waste
oil,  generated  by  the  Partnership's  truck  fleet,  as  well  as  'hazardous
substances'  disposed  of  during  past  operations  by  third  parties  on  the
Partnership's properties, could subject the Partnership to CERCLA. Such laws and
regulations   could  result  in   civil  or  criminal   penalties  in  cases  of
non-compliance or impose  liability for remediation  costs. Also, third  parties
may  make claims against owners or operators of properties for personal injuries
and property damage associated with releases of hazardous or toxic substances.

     National Fire Protection  Association Pamphlets  No. 54 and  No. 58,  which
establish  rules  and  procedures governing  the  safe handling  of  propane, or
comparable regulations, have been adopted as the industry standard in all of the
states in  which  the  Partnership  operates. In  some  states  these  laws  are
administered  by  state  agencies, and  in  others  they are  administered  on a
municipal level. With  respect to the  transportation of propane  by truck,  the
Partnership  is  subject  to  regulations promulgated  under  the  Federal Motor
Carrier Safety  Act. These  regulations cover  the transportation  of  hazardous
materials   and   are  administered   by   the  United   States   Department  of
Transportation. The  Partnership  conducts  ongoing training  programs  to  help
ensure  that its operations  are in compliance  with applicable regulations. The
Partnership maintains various permits that are necessary to operate some of  its
facilities,  some of  which may be  material to its  operations. The Partnership
believes that the procedures  currently in effect at  all of its facilities  for
the  handling, storage and distribution of  propane are consistent with industry
standards and are in  compliance in all material  respects with applicable  laws
and regulations.

     On  February 19, 1997, the U.S.  Department of Transportation published its
Interim Final Rule  for Continued Operation  of Present Propane  Trucks (49  CFR
171.5)  (the 'Interim Rule'). The Interim  Rule is intended to address perceived
risks during  the  transfer  of  propane.  The  Interim  Rule  required  certain
immediate  changes in the Partnership's operating  procedures, and in the next 6
to 12 months may require (1) some or all of the Partnership's cargo tanks to  be
retrofitted  and (2)  some modifications to  the Partnership's  bulk plants. The
Partnership, as well  as the National  Propane Gas Association  and the  propane
industry  in general,  is in the  process of  studying the Interim  Rule and the
appropriate response thereto. At this time, the Partnership is not in a position
to determine what  the ultimate long-term  cost of compliance  with the  Interim
Rule will be.

     In  May 1994, National Propane was informed of coal tar contamination which
was discovered  at one  of  its properties  in Marshfield,  Wisconsin.  National
Propane  purchased the property from a company which had purchased the assets of
a utility that had previously owned the property. National Propane believes that
the contamination occurred during the use of the property as a coal gasification
plant by such utility. In  order to assess the  extent of the problem,  National
Propane  engaged environmental  consultants who  began work  in August  1994. In
December 1994, the environmental consultants issued a report to National Propane
which  estimated  the  range  of  potential  remediation  costs  to  be  between
approximately  $0.4 million and $0.9 million depending upon the actual extent of
impacted soils, the presence  and extent, if any,  of impacted ground water  and
the  remediation method actually  required to be  implemented. In February 1996,
based upon new information National Propane's environmental consultants issued a
second report  which  presented the  two  most likely  remediation  methods  and
revised  estimates of the costs of such  methods. The report estimated the range
of costs  for the  first method,  which involves  treatment of  groundwater  and
excavation, treatment and disposal of contaminated soil, to be from $1.6 million
to    $3.3    million.    The    range   for    the    second    method,   which

                                       8



<PAGE>
involves treatment of  ground water and  building a containment  wall, was  from
$0.4  million  to  $0.8  million.  As  of  March  1,  1997,  National  Propane's
environmental consultants have begun but have not completed additional  testing.
Based  upon the new information compiled to  date, which is not yet complete, it
appears that  the containment  wall remedy  is no  longer appropriate,  and  the
likely remedy will involve treatment of ground water and treatment by soil-vapor
extraction  of certain contaminated  'hot spots' in the  soil, installation of a
soil cap and, if necessary,  excavation, treatment and disposal of  contaminated
soil.  As  a result,  the environmental  consultants have  revised the  range of
estimated costs for  the remediation to  be from $0.8  million to $1.6  million.
Based  on  discussions  with National  Propane's  environmental  consultants, an
acceptable remediation plan should fall within this range. National Propane will
have to agree upon the final plan  with the State of Wisconsin. Since  receiving
notice  of the contamination,  National Propane has engaged  in discussions of a
general nature  concerning  remediation  with  the  State  of  Wisconsin.  These
discussions  are ongoing and there is no indication as yet of the time frame for
a decision by the State of Wisconsin on the method of remediation.  Accordingly,
it  is unknown what  remediation method will  be used. Based  on the preliminary
results of the ongoing investigation, there is a potential that the  contaminant
plume  may extend  to locations  downgradient from the  original site.  If it is
ultimately confirmed that  the contaminant plume  extends under such  properties
and  if such plume is  attributable to the contaminant  plume emanating from the
Marshfield property,  there  is the  potential  for future  third-party  claims.
National Propane is also engaged in ongoing discussions of a general nature with
the  successor to  the utility  that operated a  coal gasification  plant on the
property. The successor has denied any liability for the costs of remediation of
the Marshfield  property  or  of  satisfying  any related  claims.  If  National
Propane  is found liable for any of such  costs, it will attempt to recover them
from the successor owner. National  Propane has notified its insurance  carriers
of the contamination and the likely incurrence of costs to undertake remediation
and  the possibility  of related  claims. Pursuant  to a  lease relating  to the
Marshfield facility, the ownership of which was not transferred to the Operating
Partnership in connection with the  Partnership Conveyance, the Partnership  has
agreed  to be liable for any costs of remediation in excess of amounts recovered
from such successor  or from insurance. Since  no amount  within the  ranges  of
remediation costs could  be determined  to be  a better  estimate, National  had
accrued  $0.8 million at December  31, 1996 in order  to provide for the minimum
costs estimated for the anticipated remediation method, incurred legal fees  and
other  professional costs. See Item 7.  'Management's Discussion and Analysis of
Financial Condition and  Results of Operations  -- Contingencies'. The  ultimate
outcome  of  this  matter  cannot  presently  be  determined  and  the  costs of
remediation and third-party claims, if any,  may have a material adverse  effect
on  the Partnership's  financial position, results  of operations  or ability to
make the  distributions to  the holders  of its  Common Units  and  Subordinated
Units.

EMPLOYEES

     As  of December 31, 1996, the Managing  General Partner had 1,045 full time
employees,  of  whom  85  were  general  and  administrative  (including   fleet
maintenance  personnel),  18 were  sales,  439 were  transportation  and product
supply and 503 were district employees.  In addition, at December 31, 1996,  the
Managing General Partner had 46 temporary and part-time employees. Approximately
172  of such full-time employees are covered by collective bargaining agreements
that expire  on various  dates in  1997, 1998,  and 1999.  The Managing  General
Partner  believes that its relations with both its union and non-union employees
are satisfactory.

     The Partnership has no  employees; however, for  certain purposes, such  as
workers'  compensation claims, employees of the Managing General Partner who are
providing services for the benefit of the Partnership may also be considered  to
be employees of the Partnership under applicable state law. The Managing General
Partner  is reimbursed by  the Partnership entities  at cost for  all direct and
indirect expenses incurred on behalf of the Partnership entities, including  the
costs   of  compensation  and  employee  benefit  plans.  See  Note  21  of  the
Partnership's Consolidated Financial Statements.

                                       9



<PAGE>
ORGANIZATIONAL STRUCTURE

     The  following  chart  depicts  the  organization  and  ownership  of   the
Partnership, the Operating Partnership and the Operating Partnership's corporate
subsidiary.  The  percentages reflected  in  the following  chart  represent the
approximate ownership  interest in  each of  the Partnership  and the  Operating
Partnership, individually, and not on an aggregate basis.

                              [ORGANIZATION CHART]


                                       10



<PAGE>
ITEM 2. PROPERTIES

     The  Partnership maintains a large  number of diverse properties, including
appliance showrooms,  maintenance facilities,  bulk plants,  warehousing  space,
garages,  storage depots or  large gas tanks  and related distribution equipment
and underground  space for  gas  storage. The  Partnership believes  that  these
properties,  taken as  a whole, are  generally well-maintained  and adequate for
current and foreseeable  business needs.  The majority of  these properties  are
owned by the Partnership.

     Certain  information about  the major properties  of the  Partnership as of
December 31, 1996, is set forth in the following table.

<TABLE>
<CAPTION>
                                                                                 NUMBER OF
                        DESCRIPTION OF FACILITIES                                FACILITIES
--------------------------------------------------------------------------   ------------------   STORAGE CAPACITY
                                                                                                  ----------------
                                                                                                   (IN THOUSANDS
                                                                                                    OF GALLONS)
<S>                                                                          <C>         <C>      <C>
Service Centers located throughout the United States(1)...................       127     owned
                                                                                  39     leased
                                                                                 ---
                                                                                 166                    7,678

Remote Storage Facilities.................................................        58     owned
                                                                                  23     leased
                                                                                 ---
                                                                                  81                    2,201
Above Ground Storage Facilities:
     Crandon, Wisconsin(2)................................................         1     leased           241
     Orlando, Florida(3)..................................................         1     leased         1,020
                                                                                 ---                  -------
                                                                                   2                    1,261
Underground Storage Facilities:
     Hutchinson, Kansas(4)................................................         1     owned         12,000
     Loco Hills, New Mexico...............................................         1     owned         10,000
                                                                                 ---                  -------
                                                                                   2                   22,000
                                                                                                      -------
     Total................................................................                             33,140
</TABLE>

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

(1) Includes six service  centers recently established  under the  Partnership's
    'scratch start' program.

(2) The  facility is leased on a year-to-year basis, and the lease is terminable
    by either party upon 30 days' notice.

(3) The Partnership leases the  real property from a  third party pursuant to  a
    ground lease that terminates on October 31, 2006.

    The  Partnership  owns the  storage facility  located  at such  property and
    leases it  to Warren  Petroleum  pursuant to  an agreement  that  terminates
    October 31, 1999 and may be canceled by the Partnership upon 60 days' notice
    under certain circumstances.

(4) The Partnership owns the underground storage facility, which, pursuant to an
    operating  agreement, is operated  by a third party  that owns the equipment
    necessary to use the facility for propane storage. Such operating  agreement
    may  be terminated  by either  party at  the end  of any  calendar year upon
    thirty days' notice.

                            ------------------------
     The transportation of  propane requires specialized  equipment. The  trucks
utilized  for  this  purpose carry  specialized  steel tanks  that  maintain the
propane in a liquefied  state. As of  December 31, 1996,  the Partnership had  a
fleet  of 7 transport truck tractors, all  of which are owned by the Partnership
and approximately 400 bulk delivery trucks and 400 service and light trucks, all
of which are owned by the Partnership. In addition, as of December 31, 1996, the
Partnership had approximately 150 cylinder delivery vehicles and 55 automobiles.
As of December 31,  1996, the Partnership  owned approximately 210,000  customer
storage tanks with typical capacities of 250 to 500 gallons.

     The  Partnership believes that it has satisfactory title to or valid rights
to use all of  its material properties. Substantially  all of the  Partnership's
assets (other than the assets of NSSI) are pledged to

                                       11



<PAGE>
secure the First Mortgage Notes and indebtedness under the Bank Credit Facility.
In addition, some of the Partnership's properties are subject to liabilities and
leases  and immaterial  encumbrances, easements  and restrictions,  although the
Partnership does not  believe that  any such burdens  will materially  interfere
with the continued use by the Partnership of its properties, taken as a whole.

ITEM 3. LEGAL PROCEEDINGS

     There   are  a  number  of  lawsuits  pending  or  threatened  against  the
Partnership and/or National Propane. In  general, these lawsuits have arisen  in
the  ordinary course of the Partnership's business and involve claims for actual
damages, and in some cases punitive damages, arising from the alleged negligence
of the Partnership or as a result of product defects or similar matters. Of  the
pending  or threatened  matters, a number  involve property  damage, and several
involve serious  personal  injuries  or  deaths and  the  claims  made  are  for
relatively large amounts. Although any litigation is inherently uncertain, based
on   past  experience,  the  information  currently  available  to  it  and  the
availability of insurance coverage in certain matters, the Partnership does  not
believe  that the pending  or threatened litigation of  which the Partnership is
aware will have a material  adverse effect on its  results of operations or  its
financial condition. However, any one or all of these matters taken together may
adversely affect the Partnership's quarterly or annual results of operations and
may limit the Partnership's ability to make distributions to its Unitholders.

     In  addition, certain contingent liabilities  related to National Propane's
operations were assumed by  the Partnership in  connection with the  Partnership
Conveyance.   These  contingent  liabilities   include  potential  environmental
remediation costs and related claims (primarily costs and claims related to  the
coal  tar contamination at the  Managing General Partner's Marshfield, Wisconsin
facility). There can  be no assurance  that the ultimate  liability relating  to
this  matter will not  exceed the amount  reserved or that  such matter will not
have a  material adverse  effect  on the  Partnership's results  of  operations,
financial condition or its ability to make distributions to its Unitholders. See
'Item 1. Business -- Government Regulations'.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There  were  no matters  submitted to  a  vote of  security holders  of the
Partnership during the fiscal year ended December 31, 1996.

                                       12



<PAGE>
                                    PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS AND RELATED UNITHOLDER MATTERS

     The   Common  Units,   representing  limited   partner  interests   in  the
Partnership, are listed  and traded  on The New  York Stock  Exchange under  the
symbol  NPL. The  Common Units  began trading  on June  26, 1996,  at an initial
public offering price of $21.00 per Common Unit. As of March 1, 1997 there  were
approximately  10,000  registered Common  Unitholders  of record.  The following
table sets forth, for the  periods indicated, the high  and low sale prices  per
Common  Unit, as reported on The New York Stock Exchange, and the amount of cash
distributions paid per Common Unit.

<TABLE>
<CAPTION>
                                                          COMMON UNIT
                                                          PRICE RANGE
                                                      -------------------
                  1996 FISCAL YEAR                     HIGH         LOW      CASH DISTRIBUTION PAID PER UNIT
----------------------------------------------------  -------     -------    --------------------------------
<S>                                                   <C>         <C>        <C>
Third Quarter (beginning June 26, 1996).............  $21.000     $18.625    $0.525 (paid November 15, 1996)
Fourth Quarter......................................  $20.750     $19.250    $0.525 (paid February 14, 1997)
</TABLE>

     The Partnership has also issued Subordinated  Units, all of which are  held
by the Managing General Partner for which there is no established public trading
market.  The Partnership will  distribute to its partners  on a quarterly basis,
all of  its  Available Cash  in  the  manner described  herein.  Available  Cash
generally  means, with respect  to any quarter  of the Partnership,  all cash on
hand at  the end  of such  quarter less  the amount  of cash  reserves that  are
necessary  or appropriate in  the reasonable discretion  of the Managing General
Partner to (i)  provide for the  proper conduct of  the Partnership's  business,
(ii)  comply with  applicable law  or any  Partnership debt  instrument or other
agreement, or  (iii) provide  funds  for distributions  to Unitholders  and  the
General  Partner  in respect  of  any one  or more  of  the next  four quarters.
Available Cash is more  fully defined in the  Amended and Restated Agreement  of
Limited  Partnership of National Propane Partners,  L.P. listed as an exhibit to
this Report. The Partnership  made a cash distribution  on November 15, 1996  in
respect  to its Common  Units and its  Subordinated Units for  the quarter ended
September 30, 1996 in the  amount of $5.9 million.  The Partnership also made  a
cash  distribution  on February  14, 1997  in  respect to  its Common  Units and
Subordinated Units for the quarter ended December 31, 1996 in the amount of $6.1
million. Both  distributions  represented  a  payment of  $.525  per  Unit.  The
Partnership  Agreement defines Minimum Quarterly Distributions as $.525 per Unit
for each full fiscal quarter. Distributions  of Available Cash to the holder  of
the  Subordinated Units are subject to the prior rights of the holders of Common
Units to receive  Minimum Quarterly  Distributions for each  quarter during  the
subordination  period,  and to  receive any  arrearages  in the  distribution of
Minimum Quarterly Distributions on  the Common Units  for prior quarters  during
the  subordination period.  The subordination period  will not  end earlier than
June 30, 2001. Restrictions on the Partnership's distributions required by  Item
5   is  incorporated  herein  by  reference  to  Note  11  to  the  accompanying
consolidated financial statements, and to  'Item 7. Management's Discussion  and
Analysis  of Financial  Condition and Results  of Operations  -- Descriptions of
Indebtedness'.

                                       13



<PAGE>
ITEM 6. SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

     In connection with the Partnership  Conveyance, the Partnership became  the
successor  to  the  businesses  of  National  Propane.  Because  the Partnership
Conveyance  was  a  transfer  (as  described  in  Note  1  to  the  accompanying
consolidated  financial statements)  of assets  and liabilities  in exchange for
partnership interests  among  a  controlled  group of  companies,  it  has  been
accounted  for in a manner  similar to a pooling  of interests, resulting in the
presentation of the Partnership as the successor to the continuing businesses of
National Propane.  The  entity representative  of  both the  operations  of  (1)
National  Propane prior  to the Partnership  Conveyance and  (2) the Partnership
subsequent to the Partnership Conveyance, is referred to as 'National'.  Further
the  selected financial  data reflect  the effects  of the  June 1995  merger of
Public Gas with and into  National which is further described  in Note 3 to  the
accompanying consolidated financial statements.

<TABLE>
<CAPTION>
                                                FISCAL YEAR      TEN MONTHS
                                                ENDED APRIL        ENDED                YEAR ENDED DECEMBER 31,
                                                    30,         DECEMBER 31,    ---------------------------------------
                                               1993(A)(B)(C)     1993(B)(C)     1994(A)(B)    1995(A)(B)      1996(A)
                                               -------------    ------------    ----------    ----------    -----------
                                                                   (IN THOUSANDS, EXCEPT UNIT DATA)
<S>                                            <C>              <C>             <C>           <C>           <C>
Revenues....................................     $ 151,931        $119,249       $ 151,651     $ 148,983    $   173,260
Operating profit (loss).....................         5,012(d)       (1,467)(d)      18,750        14,501         16,188
Income (loss) before extraordinary charges
  and cumulative effect of change in
  accounting principles.....................         2,876            (347)         12,021          (605)         5,747
Extraordinary charges(e)....................       --               --              (2,116)       --             (2,631)
Cumulative effect of change in accounting
  principles(f).............................         6,259          --              --            --            --
Net income (loss)...........................         9,135            (347)          9,905          (605)         3,116
Income before extraordinary charges per
  Unit(g)...................................                                                                       0.27
Weighted average number of units
  outstanding...............................                                                                 10,954,753
Total assets................................       218,095         191,955         137,581       139,112        196,408
Long-term debt..............................        67,511          51,851          98,711       124,266        128,044
Partners' capital/Stockholders' equity
  (deficit)(h)..............................        88,063          88,971         (19,502)      (48,600)        34,063
Operating Data:
     EBITDA(i)..............................        13,087           5,483          28,774        25,146         27,321
     Capital expenditures(j)................         8,290          11,260          12,593        11,013          7,868
     Retail propane gallons sold............       154,839         117,415         152,335       150,141        160,484
</TABLE>

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

 (a) Reflects  the  results  of National  Propane  Corporation  and subsidiaries
     ('National  Propane')  through  June  30,  1996  and  of  National  Propane
     Partners,  L.P. (the 'Partnership'), National Propane, L.P. and subsidiary,
     as successor to the continuing business of National Propane, thereafter. On
     July 2, 1996 (effective June 30,  1996), National Propane and a  subsidiary
     conveyed  substantially all of their assets and liabilities in exchange for
     partnership interests among a controlled group of companies, which has been
     accounted for in a manner similar to  a pooling of interests. In July  1996
     the  Partnership consummated an initial public offering (the 'Offering') of
     6,301,550 common units  representing limited partnership  interests in  the
     Partnership  (the 'Common Units') and in November 1996 the Partnership sold
     an additional 400,000 Common Units through a private placement (the 'Equity
     Private Placement'). See  Note 1 to  the consolidated financial  statements
     included  elsewhere  herein  for  a  further  discussion  of  the  basis of
     presentation of  the  consolidated financial  statements,  the  Partnership
     Conveyance,  the Offering and  the Equity Private Placement.  See Note 4 to
     the consolidated  financial statements  included elsewhere  herein for  the
     unaudited  proforma operating results for the  year ended December 31, 1996
     adjusted as  if  the  Partnership  had  been  formed  and  the  Partnership
     Conveyance,  the  Offering  and  the  Equity  Private  Placement  had  been
     completed as of January 1, 1996.

                                              (footnotes continued on next page)

                                       14



<PAGE>
(footnotes continued from previous page)

 (b) All of  the  periods presented  above  prior to  June  29, 1995  have  been
     restated  to reflect the effects of the June 29, 1995 merger (the 'Merger')
     of Public Gas Company  with and into National  Propane. Because the  Merger
     was  a transfer of  assets and liabilities  in exchange for  shares among a
     controlled group  of companies,  it  has been  accounted  for in  a  manner
     similar to a pooling of interests.

 (c) In  October 1993 National Propane's fiscal  year ending April 30 and Public
     Gas' fiscal year ending February 28 were changed to a calendar year  ending
     December  31. In  order to  conform the  reporting periods  of the combined
     entities and to select a period deemed to meet the Securities and  Exchange
     Commission  requirement for filing financial statements for a period of one
     year, the ten-month period ending December 31, 1993 ('Transition 1993') has
     been  presented  above  and  in  the  accompanying  consolidated  financial
     statements.  The  selected financial  data as  of and  for the  fiscal year
     ending April  30,  1993  ('Fiscal  1993'),  however,  reflects  the  former
     year-ends  of both  National and Public  Gas. Accordingly,  Fiscal 1993 and
     Transition 1993  each  include the  results  of National  Propane  for  the
     two-month  period ended  April 30,  1993 as  follows: Revenues  -- $28,266;
     Operating loss -- $(5,190); Net loss -- $(3,375) (see Note (d) below).

 (d) Includes  certain  significant  pretax  charges  recorded  in  April   1993
     affecting  Fiscal 1993 and  Transition 1993 operating  profit consisting of
     (i) $8.4  million  of  facilities relocation  and  corporate  restructuring
     charges  ($7.6 million  of which affected  both Fiscal  1993 and Transition
     1993 due to National  Propane's April 1993 being  included in both  periods
     and  $0.8 million  of which  affected only  Transition 1993)  and (ii) $0.5
     million of  allocated  costs of  a  payment  to the  special  committee  of
     Triarc's  Board of  Directors ($0.4 million  of which  affected both Fiscal
     1993 and Transition 1993).

 (e) The extraordinary charges primarily represent the write-off of  unamortized
     deferred  financing costs and original issue discount (in the 1994 period),
     net of income taxes, associated with the early extinguishment of debt.

 (f) Represents  the  cumulative  effect  of  change  in  accounting  principles
     resulting  from the adoption of Statement of Financial Accounting Standards
     No. 109 'Accounting for Income Taxes' effective May 1, 1992.

 (g) Net income  per  Unit  was  computed  by  dividing  net  income  before  an
     extraordinary  charge for the period  July 1, 1996 (see  Note (e) above) to
     December 31, 1996, after  deducting the general  partners' 4% interest,  by
     the weighted average number of units outstanding.

 (h) In  November, 1994, National  reclassified its receivable  from Triarc as a
     component of stockholders' equity.  Receivables from SEPSCO are  classified
     as  a component of stockholders' equity for all of the above periods except
     for the year  ending December 31,  1996. (See Note  13 to the  accompanying
     consolidated financial statements).

 (i) EBITDA  is  defined  as  operating  profit  (loss)  plus  depreciation  and
     amortization (excluding amortization of  deferred financing costs).  EBITDA
     should  not be considered as an alternative  to net income (as an indicator
     of operating performance) or as an  alternative to cash flow (as a  measure
     of  liquidity or ability to service debt  obligations) and is not a measure
     of performance or financial  condition under generally accepted  accounting
     principles,  but provides additional  information for evaluating National's
     ability to distribute  the Minimum  Quarterly Distribution.  Cash flows  in
     accordance  with generally  accepted accounting principles  consist of cash
     flows from (i)  operating, (ii) investing  and (iii) financing  activities.
     Cash  flows from operating activities  reflect net income (loss) (including
     charges for interest and  income taxes not  reflected in EBITDA),  adjusted
     for  (i) all  non-cash charges  or income  (including, but  not limited to,
     depreciation and amortization)  and (ii)  changes in  operating assets  and
     liabilities  (not reflected in EBITDA).  Further, cash flows from investing
     and financing activities are  not included in EBITDA.  For a discussion  of
     National's  operating  performance and  cash  flows provided  by  (used in)
     operating, investing and financing activities, see 'Management's Discussion
     and Analysis of Financial Condition and Results of Operations.'

                                              (footnotes continued on next page)

                                       15



<PAGE>
(footnotes continued from previous page)

 (j) National's capital expenditures, including  capital leases, fall  generally
     into  three categories: (i) maintenance capital expenditures, which include
     expenditures for replacement of property, plant and equipment, (ii)  growth
     capital  expenditures for  the expansion  of existing  operations and (iii)
     acquisition capital expenditures, which include expenditures related to the
     acquisition of retail propane operations.

     An analysis by  category for the  years ended December  31, 1994, 1995  and
     1996 is as follows:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                               ------------------------------
                                                                1994       1995         1196
                                                               -------    -------      ------
                                                                       (IN THOUSANDS)
<S>                                                            <C>        <C>          <C>
Maintenance(1)..............................................   $ 4,228    $ 4,030      $3,108
Growth......................................................     3,672      4,936       3,922
Acquisition.................................................     4,693      2,047(2)      838
                                                               -------    -------      ------
          Total.............................................   $12,593    $11,013      $7,868
                                                               -------    -------      ------
                                                               -------    -------      ------
</TABLE>

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

         (1) Includes  expenditures not expected to  occur on an annual
             basis as  follows:  1994  --  $1,790  (primarily  computer
             hardware   and   systems  installation);   1995   --  $590
             (primarily the purchase of an airplane).

         (2) Includes $1,864  of assets  purchased and  contributed  by
             Triarc  (see  Note  21  to  the  accompanying consolidated
             financial statements).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     CERTAIN  STATEMENTS  SET   FORTH  BELOW  UNDER   THIS  CAPTION   CONSTITUTE
'FORWARD-LOOKING  STATEMENTS' WITHIN THE MEANING OF THE REFORM ACT. SEE 'SPECIAL
NOTE REGARDING  FORWARD-LOOKING STATEMENTS'  ON PAGE  1 FOR  ADDITIONAL  FACTORS
RELATING TO SUCH STATEMENTS.

     This  'Management's  Discussion  and Analysis  of  Financial  Condition and
Results of Operations' reflects the results of National Propane Corporation  and
subsidiaries  ('National Propane') through June 30, 1996 and of National Propane
Partners, L.P. (the  'Partnership'), a subsidiary  partnership National  Propane
L.P.  (the 'Operating Partnership')  and a subsidiary  National Sales & Service,
Inc. ('NSSI' and together  with the Partnership  and the Operating  Partnership,
the 'Partnership Entities'), as successor to the continuing business of National
Propane,  thereafter. The  Partnership was organized  on March 13,  1996 and was
formed to  acquire, own  and  operate National  Propane's propane  business  and
substantially  all of the related assets  of National Propane. The Partnership's
activities are conducted through the Operating Partnership and NSSI. The  entity
representative  of  both the  operations of  (i) National  Propane prior  to the
Partnership Conveyance  and  (ii) the  Partnership  Entities subsequent  to  the
Partnership  Conveyance is  referred to  herein as  'National'. On  July 2, 1996
(effective  July  1,   1996),  National  Propane   and  a  subsidiary   conveyed
substantially all of their propane  related assets and  liabilities  (other than
amounts due from a parent, deferred financing costs and income tax  liabilities)
to  the Operating Partnership. Because such  conveyance was a transfer of assets
and liabilities in exchange for  partnership interests among a controlled  group
of  companies, it  has been accounted  for in a  manner similar to  a pooling of
interests. Further, results of operations of National Propane prior to June  29,
1995  have been restated to reflect the effects of the June 29, 1995 merger (the
'Merger') of Public Gas Company ('Public  Gas') with and into National  Propane.
Because  the Merger  was a  transfer of assets  and liabilities  in exchange for
shares among a controlled  group of companies,  it has been  accounted for in  a
manner  similar  to a  pooling  of interests.  See  Note 1  to  the consolidated
financial statements included elsewhere herein  for a further discussion of  the
basis   of  presentation  of  the  consolidated  financial  statements  and  the
Partnership Conveyance and see Note  3 to the consolidated financial  statements
for further discussion of the Merger.

                                       16



<PAGE>
GENERAL

     National  is primarily  engaged in (i)  the retail marketing  of propane to
residential  customers,  commercial   and  industrial  customers,   agricultural
customers  and  to dealers  that resell  propane  to residential  and commercial
customers, and  (ii)  the  retail  marketing  of  propane-related  supplies  and
equipment, including home and commercial appliances. National believes it is the
sixth largest retail marketer of propane in terms of retail volume in the United
States, supplying approximately 250,000 active retail and wholesale customers in
25   states  through  its   166  service  centers.   National's  operations  are
concentrated in the Midwest, Northeast,  Southeast and Southwest regions of  the
United States.

     National's  residential and commercial customers  use propane primarily for
space heating,  water heating,  clothes drying  and cooking.  In the  industrial
market propane is used as a motor fuel for over-the-road vehicles, forklifts and
stationary  engines, to  fire furnaces,  as a cutting  gas and  in other process
applications. Agricultural  customers  use  propane  for  tobacco  curing,  crop
drying,  poultry brooding and  weed control. Dealers  re-market propane in small
quantities, primarily in cylinders, for residential and commercial uses.

     The retail propane sales volumes are very dependent on weather  conditions.
National  sells  approximately 67%  of its  retail volume  during the  first and
fourth quarters, which are the winter heating season. As a result, cash flow  is
greatest  during  the  first and  fourth  quarters  as customers  pay  for their
purchases. Propane sales  are also  dependent on climatic  conditions which  may
affect  agricultural regions.  National believes  that its  exposure to regional
weather patterns is lessened because of the geographic diversity of its areas of
operations and through sales to commercial and industrial markets, which are not
as sensitive to variations in weather conditions.

     Gross profit margins are not only affected by weather patterns but also  by
changes  in customer mix. In addition, gross profit margins vary by geographical
region. Accordingly, profit margins could  vary significantly from year to  year
in a period of identical sales volumes.

     National  reports on  a calendar  year basis;  accordingly its  results are
affected by two different  winter heating seasons: the  end of the first  year's
heating season, National's first fiscal quarter, and the beginning of the second
heating season, National's fourth fiscal quarter.

     Profitability  is also affected  by the price  and availability of propane.
Worldwide availability of both gas liquids and oil affects the supply of propane
in domestic markets. National does not believe it is overly dependent on any one
supplier. National primarily  buys propane on  both one year  contracts and  the
spot  market  and generally  does  not enter  into  any fixed  price take-or-pay
contracts. Furthermore,  National  purchases  propane from  a  wide  variety  of
sources. In 1996, no provider supplied over 20% of National's propane needs.

     Based  on demand  and weather  conditions the  price of  propane can change
quickly over a short period of time; in most cases the increased cost of propane
is passed on to the customer. However, in cases where increases cannot be passed
on or when the price of propane escalates faster than the Partnership's  ability
to raise customer prices, margins will be negatively affected.

     The  propane industry is very  competitive. National competes against other
major propane companies as well as local marketers in most of its markets,  with
the most competition in the Midwest United States. Propane also competes against
other energy sources, primarily natural gas, oil and electricity.

     The  following discussion compares  the results of  operations for the year
ended December 31,  1996 with the  year ended  December 31, 1995,  and the  year
ended December 31, 1995 with the year ended December 31, 1994.

RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
COMPARED TO YEAR ENDED DECEMBER 31, 1995

     Revenues.  Revenues increased $24.3 million, or 16.3% to $173.3 million for
the year ended December 31,  1996 as compared with  $149.0 million for the  year
ended  December 31, 1995. This increase consists  of a $25.2 million increase in
propane revenues partially offset  by a $0.9 million  decrease in revenues  from
other  product  lines. Propane  revenues increased  18.5%  to $161.5  million in

                                       17



<PAGE>
1996 as  compared to  $136.3 million  in  1995. The  $25.2 million  increase  in
propane revenues was due to increased selling prices of $15.8 million and volume
increases of $9.4 million. The increase in selling prices consisted of increases
due  to increased costs ($19.0 million), partially  offset by decreases due to a
shift in the  customer mix  toward lower-priced  non-residential accounts  ($3.2
million). The propane sales volume increase reflects an increase of 10.4 million
gallons,  or 6.9% in 1996  to 160.5 million gallons  compared with 150.1 million
gallons in 1995.  The increase in  gallons sold  in 1996 was  primarily to  non-
residential   customers  as  gallons  sold  to  residential  customers  remained
relatively unchanged, in spite  of the fact that  Degree Day data, published  by
the  National  Climatic Data  Center, as  applied to  the geographic  regions of
National's operations, indicated that the year ended December 31, 1996 was  5.2%
colder than 1995.

     Gross  Profit.  Gross  profit increased  $0.7  million, or  1.7%,  to $40.6
million in  1996 compared  with  $39.9 million  in  1995. Higher  propane  sales
volumes  contributed  an  additional  $5.1  million  of  gross  profit  in 1996.
Offsetting the volume increase  was a decrease in  gross profit of $2.5  million
due to a decrease in the average margin per gallon (the spread between the sales
price  and the direct product cost) sold in 1996 to 47.3% as compared with 54.1%
in 1995.  This lower  margin was  due  to (i)  a shift  in customer  mix  toward
lower-priced  non-residential  accounts and  (ii) an  increase in  product costs
which could not be fully  passed on to certain customers  in the form of  higher
selling  prices. During  1996 the average  cost per gallon  of propane increased
over 27% as compared to 1995.  Contributing to this unusual increase in  propane
costs were lower than normal inventories at the beginning of the heating season;
higher than average use for crop drying in 1996; higher exports to Mexico due to
the  shut down of  a major Mexican  gas plant; and  heavy consumption during the
summer of 1996 by chemical companies which use propane as a raw material.  Also,
offsetting  the  increase  in  gross  profit due  to  sales  volume  were higher
operating expenses ($1.2 million) attributable to the cost of fuel (propane) for
delivery vehicles and the costs associated with the start up of six new  propane
plants which began operations during the last quarter of 1995 and the first half
of  1996. These plants had not yet  achieved sufficient sales volumes in 1996 to
make a positive contribution  to gross profit. Gross  profit from other  product
lines also decreased $0.6 million in 1996 as compared to 1995.

     Selling,   General  and  Administrative   Expenses.  Selling,  general  and
administrative expenses increased 2.1% or $0.5 million to $22.9 million in  1996
compared  with $22.4 million in 1995, as increases in the provision for doubtful
accounts,  business  taxes  and  rent  expense  as  well  as  stand-alone  costs
associated  with the Partnership effective July 2, 1996 were partially offset by
decreased training costs associated with a new computer system incurred in  1995
and a decrease in advertising expenses.

     Management  Fees Charged By Parents. Management fees decreased $1.5 million
to $1.5 million in 1996 compared to $3.0 million in 1995 due to management  fees
being  eliminated upon the commencement of the operations of the Partnership and
the Partnership Conveyance on July 2, 1996.

     Interest Expense.  Interest expense  increased $0.4  million, or  3.0%,  to
$12.1 million in 1996 compared with $11.7 million in 1995. This increase was due
to  higher average borrowings  partially offset by  lower average interest rates
and lower amortization of  deferred financing costs, primarily  due to a  longer
commitment period.

     Interest  Income from Triarc. Interest income from Triarc in 1996 is due to
interest on a  $40.7 million loan  to Triarc (the  'Partnership Loan'), made  on
July  2, 1996.  See Note  14 to  the consolidated  financial statements included
elsewhere herein.

     Other Income,  Net. Other  income,  net decreased  $0.1  million due  to  a
decrease in gains on asset sales.

     Provision for Income Taxes. The provision for income taxes in 1996 and 1995
is   related  primarily  to  National's  operations  prior  to  the  Partnership
Conveyance. The  Partnership Entities  are not  tax paying  entities except  for
NSSI.  As such, the 1996  provision for income taxes  decreased since the second
half of  1996  excludes  any tax  provision  relating  to the  earnings  of  the
Partnership  and the Operating Partnership. See Note 12 of notes to consolidated
financial statements included elsewhere herein.

     Extraordinary Charge. The extraordinary charge  of $2.6 million in 1996  is
the   result  of  the  early  extinguishment   of  $128.5  million  of  existing
indebtedness and consists of the write-off of deferred

                                       18



<PAGE>
financing costs of $4.1 million and prepayment penalties of $0.2 million, net of
income tax benefit of $1.7 million.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

     Revenues. Revenues declined  $2.7 million,  or 1.8%, to  $149.0 million  in
1995  compared with $151.7 million in 1994 with propane revenues decreasing $2.3
million, or 1.6%,  to $136.3  million in 1995  compared with  $138.6 million  in
1994. This decrease is principally due to reduced propane sales volume as retail
gallons  sold for 1995 decreased 2.2 million,  or 1.4%, to 150.1 million in 1995
compared with 152.3 million  in 1994. This decrease  in propane sales volume  is
primarily the net effect of an unusually warm winter season in the first quarter
of  1995 partially offset by  (i) the impact of  acquisitions which were made in
the second half of 1994 and the second half of 1995, and (ii) a slightly  colder
fourth  quarter  in  1995.  Based  on  Degree  Days  Data,  as  applied  to  the
geographical regions of  National's operations,  the first quarter  of 1995  was
14.4%  warmer than the first quarter of  1994. During the first quarter of 1995,
excluding the positive impact of increased volumes due to acquisitions, National
sold 8.6 million fewer gallons than  during the same quarter in 1994.  Partially
offsetting  the impact  of the  warmer temperatures was  (i) an  increase of 5.9
million gallons from  businesses acquired during  the second half  of 1994,  and
(ii)  higher volume  resulting from slightly  colder temperatures  in the fourth
quarter of  1995.  A slight  decrease  in  National's other  lines  of  revenue,
primarily  appliance  sales,  accounted for  the  remainder of  the  decrease in
revenues.

     Gross Profit. Gross profit declined $2.0 million, or 4.8%, to $39.9 million
in 1995 compared with  $41.9 million in  1994 due principally  to (i) the  lower
propane  sales volume in 1995 compared with  1994, and (ii) lower profit margins
per gallon (54.1% in 1995 compared with 57.2% in 1994) reflecting higher product
costs. These  higher  product  costs could  be  passed  along only  in  part  to
customers  in the  form of  higher selling prices  and were  partially offset by
lower overhead costs.

     Selling,  General  and  Administrative   Expenses.  Selling,  general   and
administrative  expenses increased $3.8  million, or 20.2%,  to $22.4 million in
1995 compared with $18.6  million in 1994. This  increase reflects higher  costs
for  (i)  medical  benefits,  (ii)  costs  relating  to  new  marketing programs
initiated in  1995 and  (iii)  increased amortization  of 'Goodwill'  and  other
intangibles.  The  increased  amortization  of  Goodwill  and  other intangibles
reflects (i) the full year effects of  acquisitions in 1994 as well as  Goodwill
'pushed  down' to Public Gas  in April 1994 in  connection with the Southeastern
Public  Service  Company  ('SEPSCO')  Merger   discussed  in  Note  15  to   the
accompanying   consolidated  financial   statements  and  (ii)   the  effect  of
acquisitions in 1995.

     Management Fees Charged by Parents. Management fees decreased $1.6  million
to  $3.0  million in  1995 compared  with  $4.6 million  in 1994.  This decrease
resulted from $1.6  million of  management fees charged  in 1994  by SEPSCO  for
services  provided to Public  Gas. No such  fees were charged  in 1995 since the
management services to Public Gas were provided by the management of National.

     Interest Expense. Interest  expense increased  $2.0 million,  or 20.5%,  to
$11.7  million in 1995 compared with $9.7 million in 1994. This increase was due
to higher borrowings under  National's bank facility  repaid in 1996,  including
the  full year  1995 effect  of borrowings  in October  1994 to  finance a $40.0
million dividend to Triarc, partially offset by lower interest rates.

     Interest Income  from  Triarc. The  interest  income from  Triarc  of  $9.8
million  in 1994 did not recur in 1995 due to National's reclassification of its
receivable from Triarc as a component of stockholders' equity in November  1994.
This reclassification occurred because Triarc's liquidity position was no longer
sufficient  to enable it to repay  the receivable and, therefore, the receivable
was no  longer expected  to  be repaid  except  through an  equity  transaction.
Concurrent  with the reclassification, National  ceased accruing interest on the
receivable. See  Note  14  to the  consolidated  financial  statements  included
elsewhere herein.

     Other Income, Net. Other income, net decreased $0.3 million to $0.9 million
in  1995 compared with  $1.2 million in  1994 principally due  to lower interest
income from finance charges on appliance sales.

     Provision for Income Taxes. The provision for income taxes in 1995 and 1994
reflect effective rates  of 116%  and 40%,  respectively. The  higher 1995  rate
reflects  a $2.5 million provision for income tax contingencies in 1995 relating
to  proposed  adjustments  raised  by  the  Internal  Revenue  Service  for  the

                                       19



<PAGE>
tax  years  1989  through  1992  (see  Note  12  of  notes  to  the accompanying
consolidated financial statements included elsewhere herein).

     Extraordinary Charge. In 1994, National recognized an extraordinary  charge
of $2.1 million in connection with the early extinguishment of the $49.0 million
principal  amount of  its existing indebtedness  consisting of  the write-off of
previously unamortized deferred financing costs  of $0.9 million and  previously
unamortized  original issue discount of $2.6 million, less income tax benefit of
$1.4 million.

LIQUIDITY AND CAPITAL RESOURCES

     Cash flows from  operating activities  of $14.3 million  in 1996  consisted
primarily  of net income of $3.1 million plus non-cash charges of $16.7 million,
principally  depreciation  and  amortization  and  the  write-off  of   deferred
financing  costs, offset by a $5.5 million  increase in net working capital. The
increase in working capital is primarily due to higher propane sales volumes and
higher  prices  which  caused  increased  levels  of  accounts  receivable   and
inventories.

     Cash  used in investing activities for 1996 amounted to $8.5 million, which
was  used   for  capital   expenditures  and   business  acquisitions.   Capital
expenditures  amounted to $6.7 million of which  $3.9 million was to support the
growth of operations and $2.8 million  was for recurring maintenance capital  to
support  current  business  levels.  National  expects  to  have  total  capital
expenditures in 1997 of approximately $6.0 million of which $3.5 million are for
maintenance and $2.5 million are projected for growth. Such capital expenditures
will be  funded by  cash flow  from  operations and  existing credit  lines.  At
December  31, 1996 National had outstanding commitments of $0.3 million for such
capital expenditures. During 1996 National  acquired the assets of five  propane
distributors for an aggregate of $2.0 million of cash. In January, 1997 National
acquired  the  assets  of  another  propane  distributor  for  an  aggregate  of
approximately $1.0 million of cash.

     Cash provided by financing activities of $2.6 million for 1996  principally
reflects  $117.4 million  from an  initial public  offering (the  'Offering') of
6,301,550  common  units  representing  limited  partnership  interests  in  the
Partnership  (the 'Common Units') (see further details below), $7.4 million from
the private  placement  sale  of  400,000  common  units  (the  'Equity  Private
Placement')  and $125.0  million from  the private  placement of  First Mortgage
Notes (see further detail  below) substantially offset by  the repayment of  the
previous  debt facilities of $128.5  million and the payment  of a $59.3 million
dividend and $49.2 million of advances and repayments of obligations to Triarc.

     Total partners' capital at December 31, 1996 was $34.1 million as  compared
with a stockholders' deficit of $48.6 million at December 31, 1995. The increase
of  $82.7  million reflects  the  combined $124.8  million  net proceeds  of the
Offering and the Equity Private Placement  together with the retention of  $19.7
million  of net liabilities by  the Managing General Partner,  the net income of
$3.1 million for  1996 and a  $0.3 million capital  contribution by the  General
Partners  partially  offset by  the $59.3  million dividend  to Triarc  and $5.9
million in distributions paid to the partners in the Partnership.

     The Operating Partnership  entered into  a $55 million  bank facility  (the
'1996  Bank Facility'), which includes a $15 million working capital facility to
be used for  working capital and  other general partnership  purposes and a  $40
million  acquisition  facility,  the  use of  which  is  restricted  to business
acquisitions and capital  expenditures for  growth. At December  31, 1996,  $6.0
million and $1.9 million were outstanding under the working capital facility and
the acquisition facility, respectively.

     National's  principal cash  requirements for  1997 are  maintenance capital
expenditures (currently budgeted at  $3.5 million for  the year ending  December
31,  1997), funds  for growth capital  expenditures (currently  budgeted at $2.5
million for the year ending December 31, 1997), business acquisitions (including
approximately $1.0 million paid in January 1997) and principal paydown under the
1996 Bank Facility's working capital facility  which requires that for a  period
of  at least 30 consecutive days in each year between March 1 and August 31, the
principal outstanding  be reduced  to  zero. There  are no  scheduled  principal
repayments  in 1997  with respect to  the First Mortgage  Notes. The Partnership
expects to  meet such  requirements through  a combination  of cash  flows  from
operations,  the  availability under  the 1996  Bank  Facility and  the interest
income on  the  Partnership Loan  ($5.5  million annually,  reflecting  a  13.5%
interest rate).

                                       20



<PAGE>
     The  Partnership will distribute to its  partners on a quarterly basis, all
of its  Available Cash.  Available Cash, which  is  defined in  the  Partnership
Agreement,  generally means, with respect to any quarter of the Partnership, all
cash on hand at the end of such quarter less the amount of cash reserves that is
necessary or appropriate in  the discretion of the  Managing General Partner  to
(i)  provide for the  proper conduct of the  Partnership's business, (ii) comply
with applicable law or  any Partnership debt instrument  or other agreement,  or
(iii) provide funds for distributions to Unitholders and the General Partners in
respect  of any one or more of the next four quarters. On November 14, 1996, the
Partnership paid a quarterly  distribution for the  quarter ended September  30,
1996  of $0.525 per  Common Unit (the 'Minimum  Quarterly Distribution') and per
Subordinated Unit with a proportionate amount for the 4% unsubordinated  general
partner  interest,  or an  aggregate  $5.9 million.  On  February 14,  1997, the
Partnership paid a  quarterly distribution  for the quarter  ended December  31,
1996  of $0.525 per Common and Subordinated Unit with a proportionate amount for
the 4% unsubordinated general  partner interest, or  an aggregate $6.1  million.
Distributions  of Available  Cash to  the holder  of the  Subordinated Units are
subject to the prior rights  of the holders of  Common Units to receive  Minimum
Quarterly  Distributions for  each quarter  during the  subordination period, as
defined, and to receive any arrearages in the distribution of Minimum  Quarterly
Distributions  on the Common  Units for prior  quarters during the subordination
period.  For  a   more  detailed  discussion   regarding  restrictions  on   the
Partnership's distributions see Note 11 to the consolidated financial statements
included elsewhere herein.

INITIAL PUBLIC OFFERING OF COMMON UNITS

     In  July 1996 the Partnership issued  6,301,580 Common Units at an offering
price of $21.00 per Common Unit,  representing limited partner interests in  the
Partnership,   pursuant  to  the  Offering  and  concurrently  issued  4,533,638
Subordinated Units, representing subordinated  general partner interests in  the
Partnership,  as well as an aggregate 4% unsubordinated general partner interest
in the Partnership and  the Operating Partnership, on  a combined basis, to  the
Managing  General Partner and  the Special General Partner.  On November 7, 1996
the Partnership issued and sold an additional 400,000 Common Units in a  private
placement.

ISSUANCE OF INDEBTEDNESS

     First  Mortgage  Notes. Immediately  prior  to the  Offering,  the Managing
General Partner issued $125 million aggregate principal amount of First Mortgage
Notes in a  private placement, which  First Mortgage Notes  were assumed by  the
Operating  Partnership in connection with  the Partnership Conveyance. The First
Mortgage Notes bear interest at 8.54% and require eight equal annual prepayments
of $15,625,000, commencing June 30, 2003 through 2010.

     1996 Bank Facility. Concurrent with the Offering, the Operating Partnership
entered into the 1996 Bank Facility with  a group of commercial banks. The  1996
Bank  Facility consists  of a  $15 million  Working Capital  Facility and  a $40
million Acquisition  Facility,  the  use  of which  is  restricted  to  business
acquisitions  and capital expenditures for growth.  The 1996 Bank Facility bears
interest at a rate based upon, at the Operating Partnership's option, either (i)
the 30, 60, 90 or 180 day London Interbank Offered Rate plus a margin  generally
ranging from 1.00% to 1.75% or (ii) the higher of (a) the prime rate and (b) the
Federal  funds rate  plus 0.5%, in  either case,  plus a margin  generally up to
0.25%. The Working Capital Facility will  mature on June 30, 1999. However,  the
Operating  Partnership  must reduce  the  borrowings under  the  Working Capital
Facility to zero  for a  period of  at least 30  consecutive days  in each  year
between  March 1 and August 31. The Acquisition Facility will revolve until June
30, 1998,  after  which  time  any loans  outstanding  will  amortize  in  equal
quarterly installments until June 30, 2001.

     The Operating Partnership's 1996 Bank Facility and the First Mortgage Notes
contain  certain restrictive covenants  which, among other  matters, (i) require
meeting certain financial amount and ratio  tests, (ii) limit the incurrence  of
certain   other   additional   indebtedness  and   certain   investments,  asset
dispositions and transactions with affiliates other than in the normal course of
business and  (iii)  restrict the  payment  of distributions  by  the  Operating
Partnership. As of December 31, 1996 there were no restrictions on the amount of
partners' capital available for the payment of distributions.

                                       21



<PAGE>
     The Operating Partnership's obligations under both the First Mortgage Notes
and  the  1996  Bank Facility  are  secured on  an  equal and  ratable  basis by
substantially all of the assets of the Operating Partnership and are  guaranteed
by the Managing General Partner.

CONTINGENCIES

     In  May 1994, National Propane was informed of coal tar contamination which
was discovered  at one  of  its properties  in Marshfield,  Wisconsin.  National
Propane  purchased the property from a company which had purchased the assets of
a utility that had previously owned the property. National Propane believes that
the contamination occurred during the use of the property as a coal gasification
plant by such utility. In  order to assess the  extent of the problem,  National
Propane  engaged environmental  consultants who  began work  in August  1994. In
December 1994, the environmental consultants issued a report to National Propane
which  estimated  the  range  of  potential  remediation  costs  to  be  between
approximately  $0.4 million and $0.9 million depending upon the actual extent of
impacted soils, the presence  and extent, if any,  of impacted ground water  and
the  remediation method actually  required to be  implemented. In February 1996,
based upon new information National Propane's environmental consultants issued a
second report  which  presented the  two  most likely  remediation  methods  and
revised  estimates of the costs of such  methods. The report estimated the range
of costs  for the  first method,  which involves  treatment of  groundwater  and
excavation, treatment and disposal of contaminated soil, to be from $1.6 million
to  $3.3 million. The range for the second method, which involves only treatment
of ground water and building a soil  containment wall, was from $0.4 million  to
$0.8  million. As of March 1, 1997, National Propane's environmental consultants
have  begun,  but  not  completed,  additional  testing.  Based  upon  the   new
information  compiled to date,  which is not  yet complete, it  appears that the
containment wall remedy  is no longer  appropriate, and the  likely remedy  will
involve  treatment of  ground water  and treatment  by soil-vapor  extraction of
certain contaminated 'hot spots' in the soil, installation of a soil cap and, if
necessary, excavation, treatment and disposal of contaminated soil. As a result,
the environmental consultants have revised the range of estimated costs for  the
remediation  to be from $0.8 million to  $1.6 million. Based on discussions with
National Propane's  environmental consultants,  an acceptable  remediation  plan
should  fall within  this range.  National Propane will  have to  agree upon the
final  plan  with  the  State  of  Wisconsin.  Since  receiving  notice  of  the
contamination,  National Propane has engaged in  discussions of a general nature
concerning remediation  with  the  State of  Wisconsin.  These  discussions  are
ongoing  and there is no indication  as yet of the time  frame for a decision by
the State of Wisconsin on the method of remediation. Accordingly, it is  unknown
what  remediation method will be  used. Based on the  preliminary results of the
ongoing investigation,  there is  a  potential that  the contaminant  plume  may
extend  to locations  downgradient from  the orginal  site. If  it is ultimately
confirmed that the contaminant plume extends  under such properties and if  such
plume  is attributable  to the contaminant  plume emanating  from the Marshfield
property, there is the potential for future third-party claims. National Propane
is also engaged in ongoing discussions of a general nature with the successor to
the utility  that  operated a  coal  gasification  plant on  the  property.  The
successor  has  denied  any  liability  for  the  costs  of  remediation  of the
Marshfield property or of satisfying any related claims. If National Propane  is
found  liable for any  of such costs, it  will attempt to  recover them from the
successor owner. National  Propane has  notified its insurance  carriers of  the
contamination  and the likely  incurrence of costs  to undertake remediation and
the possibility  of  related  claims.  Pursuant  to  a  lease  relating  to  the
Marshfield facility, the ownership of which was not transferred to the Operating
Partnership  in connection with the  Partnership Conveyance, the Partnership has
agreed to be liable for any costs of remediation in excess of amounts  recovered
from  such successor  or from insurance. Since  no amount  within the  ranges of
remediation  costs could  be determined  to be  a better  estimate, National had
accrued $0.8 million at December  31, 1996 in order  to provide for the  minimum
costs  estimated for the anticipated remediation method, incurred legal fees and
other professional costs. The ultimate  outcome of this matter cannot  presently
be  determined and the cost  of remediation and third-party  claims, if any, may
have a material adverse effect on the Partnership's financial position,  results
of  operations or ability to make the distributions to the holders of its Common
Units and Subordinated Units.

                                       22



<PAGE>
     There  are  a  number  of  lawsuits  pending  or  threatened  against   the
Partnership  and/or  National. In  general, these  lawsuits  have arisen  in the
ordinary course  of the  Partnership's business  and involve  claims for  actual
damages, and in some cases punitive damages, arising from the alleged negligence
of  the Partnership or as a result of product defects of similar matters. Of the
pending or threatened  matters, a  number involve property  damage, and  several
involve  serious  personal  injuries  or  deaths  and  the  claims  made are for
relatively large amounts. Although any litigation is inherently uncertain, based
on  past  experience,  the  information  currently  available  to  it  and   the
availability  of insurance coverage in certain matters, the Partnership does not
believe that the pending  or threatened litigation of  which the Partnership  is
aware  will have a material  adverse effect on its  results of operations or its
financial condition. However, any one or all of these matters taken together may
adversely affect the Partnership's quarterly or annual results of operations and
may limit the Partnership's ability to make distributions to its Unitholders.

EFFECTS OF INFLATION

     In general, inflation  has not had  any significant impact  on National  in
recent  years and changes in propane  prices, in particular, have been dependent
on factors  generally  more significant  than  inflation, such  as  weather  and
availability  of supply.  However, to the  extent inflation  affects the amounts
National pays  for propane  as well  as operating  and administrative  expenses,
National  attempts to limit the effects  of inflation through passing on propane
cost increases to customers in the form  of higher selling prices to the  extent
it  can do so as  well as cost controls  and productivity improvements. As such,
inflation has not had a material adverse effect on National's profitability  and
National  does not  believe normal inflationary  pressures will  have a material
adverse effect on future results of operations of National.

                                       23



<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
Independent Auditors' Report...............................................................................    25
Consolidated Balance Sheets -- December 31, 1995 and 1996..................................................    26
Consolidated Statements of Operations -- Years ended December 31, 1994,
  1995 and 1996............................................................................................    27
Consolidated Statements of Partners' Capital/Stockholders' Deficit -- Years ended
  December 31, 1994, 1995 and 1996.........................................................................    28
Consolidated Statements of Cash Flows -- Years ended December 31, 1994,
  1995 and 1996............................................................................................    29
Notes to Consolidated Financial Statements.................................................................    31
</TABLE>

                                       24



<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Partners of
NATIONAL PROPANE PARTNERS, L.P.:

     We  have audited the  accompanying consolidated balance  sheets of National
Propane  Partners,  L.P.  and   subsidiaries  (successor  to  National   Propane
Corporation  and subsidiaries) as of December 31, 1995 and 1996, and the related
consolidated statements of  operations, partners' capital/stockholders'  deficit
and  cash flows  for each of  the three years  in the period  ended December 31,
1996. These  financial  statements are  the  responsibility of  management.  Our
responsibility  is to express an opinion  on these financial statements based on
our audits. The consolidated financial statements give retroactive effect to the
merger of Public Gas Company, which has  been accounted for as a combination  of
entities  under common control in a manner  similar to a pooling of interests as
described in Notes 1 and 3 to the consolidated financial statements.

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

     In our opinion, such consolidated  financial statements present fairly,  in
all material respects, the financial position of National Propane Partners, L.P.
and subsidiaries (successor to National Propane Corporation and subsidiaries) at
December  31, 1995 and 1996, and the  results of their operations and their cash
flows for each  of the  three years  in the period  ended December  31, 1996  in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Cedar Rapids, Iowa
March 14, 1997

                                       25



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                             --------------------
                                                                                               1995        1996
                                                                                             --------    --------
                                                                                                (IN THOUSANDS)
<S>                                                                                          <C>         <C>
                                          ASSETS
Current assets (Note 11):
     Cash and cash equivalents............................................................   $  2,825    $ 11,187
     Receivables, net (Notes 6 and 21)....................................................     16,391      24,217
     Finished goods inventories...........................................................     10,543      14,130
     Other current assets (Note 12).......................................................      4,340       2,268
                                                                                             --------    --------
          Total current assets............................................................     34,099      51,802
Due from Triarc Companies, Inc. (Notes 11 and 14).........................................      --         40,700
Properties, net (Notes 7, 11 and 15)......................................................     83,214      80,634
Unamortized costs in excess of net assets of acquired companies
  (Notes 8, 13, 15, 20 and 21)............................................................     15,161      14,601
Other assets (Notes 9 and 11).............................................................      6,638       8,671
                                                                                             --------    --------
                                                                                             $139,112    $196,408
                                                                                             --------    --------
                                                                                             --------    --------
                                LIABILITIES AND PARTNERS'
                              CAPITAL/STOCKHOLDERS' DEFICIT
Current liabilities:
     Current portion of long-term debt (Note 11)..........................................   $ 11,278    $  6,312
     Accounts payable.....................................................................      7,836      15,859
     Due to Triarc Companies, Inc. and another affiliate (Note 12)........................      9,972       --
     Accrued expenses (Note 10)...........................................................      9,370      10,103
                                                                                             --------    --------
          Total current liabilities.......................................................     38,456      32,274
Long-term debt (Note 11)..................................................................    124,266     128,044
Deferred income taxes (Notes 12 and 15)...................................................     22,878       --
Customer deposits.........................................................................      2,112       2,027
Commitments and contingencies (Notes 2, 5, 12, 17, 18 and 19)
Partners' capital/Stockholders' deficit (Notes 5 and 11):
    Stockholders' deficit.................................................................    (48,600)      --
     Common partners' capital (6,701,550 units outstanding in 1996).......................      --         22,165
     General partners' capital (including 4,533,638 subordinated
       units outstanding in 1996).........................................................      --         11,898
                                                                                             --------    --------
          Total partners' capital/stockholders' deficit...................................    (48,600)     34,063
                                                                                             --------    --------
                                                                                             $139,112    $196,408
                                                                                             --------    --------
                                                                                             --------    --------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       26



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                             -----------------------------------
                                                                               1994        1995         1996
                                                                             --------    --------    -----------
                                                                             (IN THOUSANDS EXCEPT FOR UNIT DATA)
<S>                                                                          <C>         <C>         <C>
Revenues..................................................................   $151,651    $148,983    $   173,260
                                                                             --------    --------    -----------
Cost of sales:
     Cost of product -- propane and appliances............................     62,653      65,563         87,973
     Other operating expenses applicable to revenues......................     47,030      43,496         44,705
                                                                             --------    --------    -----------
                                                                              109,683     109,059        132,678
                                                                             --------    --------    -----------
          Gross profit....................................................     41,968      39,924         40,582

Selling, general and administrative expenses..............................     18,657      22,423         22,894
Management fees (Note 21).................................................      4,561       3,000          1,500
                                                                             --------    --------    -----------
          Operating income................................................     18,750      14,501         16,188
                                                                             --------    --------    -----------

Other income (expense):
     Interest expense.....................................................     (9,726)    (11,719)       (12,076)
     Interest income from Triarc Companies, Inc. (Note 14)................      9,751       --             2,755
     Other income, net....................................................      1,169         904            817
                                                                             --------    --------    -----------
                                                                                1,194     (10,815)        (8,504)
                                                                             --------    --------    -----------
          Income before income taxes and extraordinary charges............     19,944       3,686          7,684
Provision for income taxes (Note 12)......................................      7,923       4,291          1,937
                                                                             --------    --------    -----------
          Income (loss) before extraordinary charges......................     12,021        (605)         5,747
Extraordinary charges (Note 16)...........................................     (2,116)      --            (2,631)
                                                                             --------    --------    -----------
     Net income (loss)....................................................   $  9,905    $   (605)   $     3,116
                                                                             --------    --------    -----------
                                                                             --------    --------    -----------
General partners' interest in:
     Income before extraordinary charge...................................                           $     2,751
     Extraordinary charge.................................................                                (2,631)
                                                                                                     -----------
          Net income......................................................                           $       120
                                                                                                     -----------
                                                                                                     -----------
Unitholders' interest (common and subordinated) in net income.............                           $     2,996
                                                                                                     -----------
                                                                                                     -----------
Net income per unit.......................................................                           $       .27
                                                                                                     -----------
                                                                                                     -----------

Weighted average number of units outstanding..............................                            10,954,753
                                                                                                      ----------
                                                                                                      ----------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       27



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
       CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL/STOCKHOLDERS' DEFICIT
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    RETAINED EARNINGS
                                                                                      (ACCUMULATED                  TOTAL PARTNERS'
                                              ADDITIONAL                            DEFICIT)/GENERAL     COMMON        CAPITAL/
                       PREFERRED    COMMON     PAID-IN      DUE FROM    TREASURY        PARTNERS'        PARTNERS'   STOCKHOLDERS'
                         STOCK      STOCK      CAPITAL      PARENTS      STOCK           CAPITAL         CAPITAL        DEFICIT
                       ---------    ------    ----------    --------    --------    -----------------    -------    ---------------
<S>                    <C>          <C>       <C>           <C>         <C>         <C>                  <C>        <C>
Balance at December
  31, 1993..........    $ 1,250     $   1      $ 23,760     $(29,035)   $  (638 )        $93,633         $ --           $88,971
    Net income......      --         --          --           --          --               9,905           --             9,905
    Dividends paid
      (including
      $40,030 in
      cash).........      --         --          --           --          --             (41,875)          --           (41,875)
    Repurchases of
      preferred
      stock (Note
      13)...........      --         --             (62)      --           (234 )        --                --              (296)
    Cancellation of
      preferred
      stock (Note
      13)...........     (1,250)     --             378       --            872          --                --           --
    Reclassification
      of due from
      Triarc to
      equity (Note
      14)...........      --         --          --         (81,392 )     --             --                --           (81,392)
    Increase in
      SEPSCO's basis
      in Public Gas
      Company
      ('Public Gas')
      resulting from
      the repurchase
      of the 28.9%
      minority
      interest in
      SEPSCO (Note
      15)...........      --         --           8,088       --          --             --                --             8,088
    Increase in due
      from SEPSCO
      classified in
      equity........      --         --          --          (2,903 )     --             --                --            (2,903)
                       ---------    ------    ----------    --------    --------         -------         -------        -------
Balance at December
  31, 1994..........      --            1        32,164     (113,330)     --              61,663           --           (19,502)
    Net loss........      --         --          --           --          --                (605)          --              (605)
    Cash dividends
      paid..........      --         --          --           --          --             (30,000)          --           (30,000)
    Increase in due
      from SEPSCO
      classified in
      equity (Note
      14)...........      --         --          --          (2,599 )     --             --                --            (2,599)
    Dividend of due
      from SEPSCO
      (Note 14).....      --         --          --          34,537       --             (34,537)          --           --
    Capital
      contribution
      (Note 21).....      --         --           4,240       --          --             --                --             4,240
    Repurchase of
      the 0.3%
      minority
      interest in
      Public Gas
      (Note 3)......      --         --            (134)      --          --             --                --              (134)
                       ---------    ------    ----------    --------    --------         -------         -------        -------
Balance at December
  31, 1995..........      --            1        36,270     (81,392 )     --              (3,479)          --           (48,600)
    Net income:
      January 1,
        1996 to June
        30, 1996....      --         --          --           --          --               2,625           --             2,625
      July 1, 1996
        to December
        31, 1996:
          Income
            before
       extraordinary
           charge...      --         --          --           --          --               1,293          1,829           3,122
       Extraordinary
           charge...      --         --          --           --          --              (2,631)          --            (2,631)
Assets/(liabilities)
      retained by
      the Managing
      General
      Partner (Note
      1)............      --           (1 )     (36,270)     81,392       --             (25,413)          --            19,708
    Dividends paid
      (including
      $59,300 in
      cash) (Note
      1)............      --         --          --           --          --             (59,324)          --           (59,324)
    Capital
      contribution
      from General
      Partners......      --         --          --           --          --                 338           --               338
    Net proceeds of
      initial public
      offering (Note
      1)............      --         --          --           --          --             101,105         16,277         117,382
    Net proceeds of
      private
      placement of
      equity (Note
      1)............      --         --          --           --          --             --               7,367           7,367
    Cash
      distributions
      paid (Note
      5)............      --         --          --           --          --              (2,616)        (3,308 )        (5,924)
                       ---------    ------    ----------    --------    --------         -------         -------        -------
Balance at December
  31, 1996..........    $ --        $--        $ --         $ --        $ --             $11,898         $22,165        $34,063
                       ---------    ------    ----------    --------    --------         -------         -------        -------
                       ---------    ------    ----------    --------    --------         -------         -------        -------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       28



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                     ------------------------------
                                                      1994       1995        1996
                                                     -------    -------    --------
                                                             (IN THOUSANDS)
<S>                                                  <C>        <C>        <C>
Cash flows from operating activities:
    Net income (loss).............................   $ 9,905    $  (605)   $  3,116
    Adjustments to reconcile net income (loss) to
     net cash
      and equivalents provided by operating
     activities:
        Depreciation and amortization of
        properties................................     9,427      9,546      10,016
        Amortization of original issue discount
        and deferred
          financing costs.........................     1,077      1,305         841
        Amortization of costs in excess of net
        assets of
          acquired companies......................       261        617         722
        Other amortization........................       336        482         395
        Write-off of deferred financing costs and
        original
          issue discount..........................     3,498      --          4,126
        Interest income from Triarc accrued and
        not collected.............................    (9,751)     --          --
        Provision for (benefit from) deferred
        income taxes..............................     1,773      1,995        (870)
        Provision for doubtful accounts...........       685        848       1,347
        Payments on facilities relocation and
        corporate
          restructuring...........................    (4,115)     --          --
        Other, net................................     2,061        (79)         69
        Changes in operating assets and
        liabilities:
            Increase in accounts receivable.......    (1,305)       (56)     (9,028)
            Increase in inventories...............    (1,229)      (286)     (3,475)
            Increase in other current assets......    (1,278)      (662)     (2,283)
            Increase (decrease) in accounts
            payable and accrued expenses..........      (624)     2,823       9,294
                                                     -------    -------    --------
                Net cash provided by operating
                activities........................    10,721     15,928      14,270
                                                     -------    -------    --------
Cash flows from investing activities:
    Business acquisitions.........................    (5,203)      (373)     (2,046)
    Capital expenditures..........................    (6,436)    (8,082)     (6,740)
    Proceeds from sales of properties.............     1,375        599         317
    Decrease in finance-type lease receivables
     from affiliates..............................     1,458         32       --
    Decrease in due from affiliates...............     7,754      --          --
    Increase in due from parents..................    (6,007)    (1,643)      --
                                                     -------    -------    --------
                Net cash used in investing
                activities........................    (7,059)    (9,467)     (8,469)
                                                     -------    -------    --------
Cash flows from financing activities:
    Proceeds from long-term debt..................   100,781     32,729      12,685
    Repayments of long-term debt..................   (60,678)    (9,532)   (139,114)
    Payments of dividends to Triarc Companies,
     Inc..........................................   (40,030)   (30,000)    (59,300)
    Payment of distributions......................     --         --         (5,924)
    Proceeds of First Mortgage Notes..............     --         --        125,000
    Net proceeds of initial public offering.......     --         --        117,382
    Net proceeds of private placement of equity...     --         --          7,367
    Capital contribution from General Partners....     --         --            338
    Advances to and repayments of obligations to
     Triarc Companies, Inc........................     --         --        (49,246)
    Repurchase of preferred stock.................      (938)     --          --
    Payment of deferred financing costs...........    (5,390)      (816)     (6,600)
    Other.........................................     --         --            (27)
                                                     -------    -------    --------
        Net cash provided by (used in) financing
        activities................................    (6,255)    (7,619)      2,561
                                                     -------    -------    --------

Net increase (decrease) in cash...................    (2,593)    (1,158)      8,362
Cash at beginning of period.......................     6,576      3,983       2,825
                                                     -------    -------    --------
Cash at end of period.............................   $ 3,983    $ 2,825    $ 11,187
                                                     -------    -------    --------
                                                     -------    -------    --------
Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest....................................   $11,110    $11,158    $ 13,337
                                                     -------    -------    --------
                                                     -------    -------    --------
      Income taxes (net of refunds)...............   $ 1,163    $ 1,261    $   (258)
                                                     -------    -------    --------
                                                     -------    -------    --------
Supplemental disclosures of noncash investing and
  financing
  activities:
    Capital expenditures:
        Total capital expenditures................   $ 7,900    $ 8,966    $  6,981
        Amounts representing capitalized leases...    (1,464)      (884)       (241)
                                                     -------    -------    --------
        Capital expenditures paid in cash.........   $ 6,436    $ 8,082    $  6,740
                                                     -------    -------    --------
                                                     -------    -------    --------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       29




<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

     Due  to their non-cash nature, the following  are also not reflected in the
respective consolidated statements of cash flows:

     During the  year ended  December 31,  1994, the  Company offset  'Due  from
Triarc  Companies,  Inc.'  ('Triarc')  with amounts  otherwise  payable  for (i)
$1,845,000 in dividends payable  to Triarc and (ii)  $790,000 in amounts due  to
Triarc under a management services agreement.

     In   April  1994  Triarc  acquired  the  28.9%  minority  interest  in  its
subsidiary, Southeastern  Public Service  Company ('SEPSCO'),  that it  did  not
already  own through the issuance of  its common stock. SEPSCO's increased basis
in  Public  Gas  Company  ('Public  Gas')  (its  then  wholly-owned  subsidiary)
resulting  from this  transaction was 'pushed  down' to Public  Gas resulting in
increases to 'Unamortized costs in excess  of net assets of acquired  companies'
of $5,483,000, 'Properties' of $4,255,000, 'Deferred income taxes' of $1,650,000
with  an offsetting increase to 'Additional  paid-in capital' of $8,088,000. See
Note 15 to the consolidated financial statements for further discussion.

     In connection  with Public  Gas' repurchase  of its  convertible  preferred
stock  in  1994, SEPSCO's  increased  basis in  Public  Gas resulting  from this
transaction was 'pushed down' to Public Gas resulting in an increase of $642,000
in 'Unamortized  costs in  excess of  net assets  of acquired  companies' and  a
charge to 'Additional paid-in capital' of $62,000 with an offsetting increase in
receivables from SEPSCO.

     In  June  1995  aggregate  receivables  from  SEPSCO  of  $34,537,000  were
dividended to SEPSCO  prior to a  merger of  Public Gas with  and into  National
Propane Corporation (see Notes 3 and 14).

     In  September 1995 the stock of a subsidiary of Triarc which held the stock
of two  related entities  engaged in  the liquefied  petroleum gas  distribution
business  was contributed to National Propane Corporation by Triarc resulting in
an increase to 'Additional  paid-in capital' of $4,240,000.  See Note 21 to  the
consolidated financial statements for further discussion.

                                       30



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     National Propane Partners, L.P. (the 'Partnership') was formed on March 13,
1996  as  a Delaware  limited partnership.  The  Partnership and  its subsidiary
partnership National Propane, L.P. (the 'Operating Partnership') were formed  to
acquire,  own and operate the propane  business and substantially all the assets
and liabilities (principally all assets  and liabilities other than amounts  due
from  a parent, deferred financing costs and income tax liabilities) of National
Propane Corporation  and  subsidiaries  ('National  Propane',  and  referred  to
subsequent  to the  initial public offering  (described below)  as the 'Managing
General  Partner'),  a  wholly-owned   subsidiary  of  Triarc  Companies,   Inc.
('Triarc').  In addition, National Sales &  Service, Inc. ('NSSI'), a subsidiary
of the Operating Partnership, was formed to acquire and operate the service work
and appliance and parts sales business of National Propane. The Partnership, the
Operating Partnership and NSSI are  collectively referred to hereinafter as  the
'Partnership  Entities'. The Partnership Entities  consummated in July, 1996, an
initial public offering (the 'Offering') of 6,301,550 common units  representing
limited  partner  interests  in  the Partnership  (the  'Common  Units')  for an
offering price  of  $21.00  per  Common  Unit  aggregating  $132,333,000  before
$14,951,000 of underwriting discounts and commissions and other expenses related
to  the Offering. On November 6, 1996 the Partnership sold an additional 400,000
Common Units through a private placement  (the 'Equity Private Placement') at  a
price of $21.00 per Common Unit aggregating $8,400,000 before $1,033,000 of fees
and  expenses. On July 2, 1996 the  Managing General Partner issued in a private
placement $125,000,000 of  8.54% First  Mortgage Notes  due June  30, 2010  (the
'First  Mortgage Notes'). The Operating Partnership assumed the Managing General
Partner's obligation  under the  First  Mortgage Notes  in connection  with  the
conveyance  on  July  2, 1996  (the  'Partnership Conveyance')  by  the Managing
General Partner and  National Propane  SGP Inc.,  a subsidiary  of the  Managing
General  Partner (the 'Special General Partner'  and, together with the Managing
General Partner, referred to as the 'General Partners'), of substantially all of
their assets  and liabilities  (excluding an  existing $81,392,000  intercompany
note from Triarc, $59,300,000 of the net proceeds from the issuance of the First
Mortgage  Notes  which was  used to  pay a  dividend to  Triarc and  certain net
liabilities of the General Partners).

     The  General  Partners  own  general  partner  interests  representing   an
aggregate  4% unsubordinated general partner interest in the Partnership and the
Operating Partnership on  a combined  basis. In addition,  the Managing  General
Partner   owns   4,533,638   subordinated  units   (the   'Subordinated  Units')
representing a 38.7%  subordinated general partner  interest in the  Partnership
Entities.

BASIS OF PRESENTATION

     The accompanying consolidated financial statements presented herein reflect
the  effects of  the Partnership Conveyance,  in which  the Partnership Entities
became the  successor  to the  businesses  of  National Propane.  As  such,  the
consolidated  financial  statements  represent  National  Propane  prior  to the
Partnership  Conveyance  and   the  Partnership  entities   subsequent  to   the
Partnership  Conveyance. Because  the Partnership  Conveyance was  a transfer of
assets and liabilities in exchange for partnership interests among a  controlled
group  of companies, it has been accounted for  in a manner similar to a pooling
of interests, resulting in the presentation  of the Partnership Entities as  the
successor   to  the  continuing  businesses  of  National  Propane.  The  entity
representative of  both the  operations of  (i) National  Propane prior  to  the
Partnership  Conveyance,  and (ii)  the Partnership  Entities subsequent  to the
Partnership Conveyance, is referred  to herein as  'National'. Those assets  and
liabilities  not  conveyed  to the  Partnership  were retained  by  the Managing
General Partner.  All significant  intercompany balances  and transactions  have
been eliminated in consolidations.

     The  accompanying consolidated financial statements  reflect the effects of
the June 1995 merger  (the 'Merger') of Public  Gas Company ('Public Gas')  with
and into National (see Note 3). Prior thereto

                                       31



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Public Gas was an indirect wholly-owned subsidiary of Triarc. Because the Merger
was  a  transfer  of assets  and  liabilities  in exchange  for  shares  among a
controlled group of companies, it has been accounted for in a manner similar  to
a pooling of interests and, accordingly, all prior periods have been restated to
reflect the Merger.

REVENUE RECOGNITION

     National   records  sales  of  liquefied  petroleum  gas  ('propane')  when
inventory is delivered to the customer.

CASH EQUIVALENTS

     All highly liquid investments with a maturity of three months or less  when
acquired are considered cash equivalents.

INVENTORIES

     Inventories,  all of which are classified  as finished goods, are stated at
the lower of cost or market using  an average cost basis which approximates  the
first-in, first-out cost basis.

PROPERTIES AND DEPRECIATION

     Properties  are carried at cost less accumulated depreciation. Depreciation
of properties  is computed  on  the straight-line  method over  their  estimated
useful lives of 20 to 45 years for buildings and improvements, 4 to 30 years for
equipment  and customer installation  costs, 3 to 10  years for office furniture
and fixtures  and 3  to 8  years for  automotive and  transportation  equipment.
Leased  assets capitalized  are amortized  over the  shorter of  their estimated
useful lives or  the terms of  the respective leases.  Gains and losses  arising
from disposals are included in current operations.

UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES

     Costs  in excess of  net assets of  acquired companies ('Goodwill') arising
after  November  1,  1970  are  being  amortized  on  the  straight-line   basis
principally  over 15 to 30  years; Goodwill of $3,560,000  arising prior to that
date is not being  amortized. The amount of  impairment, if any, in  unamortized
Goodwill  is measured based  on projected future results  of operations of those
acquired companies to which the goodwill  relates. To the extent future  results
of operations through the period such Goodwill is being amortized are sufficient
to  absorb  the related  amortization, the  Company  has deemed  there to  be no
impairment of Goodwill.

IMPAIRMENT OF LONG-LIVED ASSETS

     National adopted  Statement  of  Financial Accounting  Standards  No.  121,
'Accounting  for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed of' in 1995. This standard requires that long-lived assets and  certain
identifiable  intangibles held and used by  an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The adoption of this standard had no effect  on
National's consolidated results of operations or financial position.

AMORTIZATION OF DEFERRED FINANCING COSTS AND DEBT DISCOUNT

     Deferred financing costs, and original issue debt discount (associated with
debt  repaid in 1994), are being amortized as interest expense over the lives of
the respective debt using the interest rate method.

                                       32



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ACCRUED INSURANCE

     Accrued insurance includes reserves for  incurred but not reported  claims.
Such  reserves are based on actuarial  studies using historical loss experience.
Adjustments  to   estimates  recorded   resulting  from   subsequent   actuarial
evaluations  or ultimate payments are reflected in the operations of the periods
in which such adjustments become known.

INCOME TAXES

     The earnings of the Partnership  and Operating Partnership are included  in
the  Federal  and state  income tax  returns  of the  individual partners.  As a
result, no  income tax  expense has  been reflected  in National's  consolidated
financial  statements relating to the earnings  of the Partnership and Operating
Partnership. Federal  and  state income  taxes  are, however,  provided  on  the
earnings  of NSSI.  The Partnership  entities provide  deferred income  taxes to
recognize the effect of temporary differences between NSSI's basis of assets and
liabilities for tax and financial  statement purposes. Federal and state  income
tax  expense for periods prior to  the Partnership Conveyance relate to National
Propane, which is  included in  the consolidated  Federal income  tax return  of
Triarc,  except that  prior to  April 14,  1994 Public  Gas was  included in the
consolidated Federal income  tax return of  Southeastern Public Service  Company
('SEPSCO'),  a wholly-owned subsidiary of Triarc.  Under a tax sharing agreement
with Triarc, National Propane provided income taxes  on the same basis as if  it
filed  a separate consolidated return. National Propane provided deferred income
taxes to recognize  the effect  of temporary  differences between  the basis  of
assets  and liabilities for tax and  financial statement purposes. In connection
with the Partnership Conveyance, all income tax liabilities of National  Propane
were retained by the Managing General Partner.

NET INCOME PER UNIT

     Net  income  per  unit  was  computed  by  dividing  net  income  before an
extraordinary item for the period from July 1, 1996 to December 31, 1996,  after
deducting  the General Partners' 4% interest,  by the weighted average number of
Common Units  and Subordinated  Units outstanding.  The extraordinary  item  was
allocated entirely to the Managing General Partner.

UNIT OPTIONS

     Statement  of  Financial  Accounting  Standards  No.  123  'Accounting  for
Stock-Based Compensation'  ('SFAS 123')  defines a  fair value  based method  of
accounting  for employee unit-based compensation and encourages adoption of that
method but permits accounting for unit options under the intrinsic value  method
prescribed  by accounting pronouncements prior to SFAS 123. National has not yet
granted any options under its 1996 unit option plan (see Note 22). Upon any such
grant, National  plans to  account for  the options  under the  intrinsic  value
method. As such, compensation cost for unit options granted would be measured as
the excess, if any, of the market price of National's Units at the date of grant
over  the exercise price. Accordingly, if the options are granted at fair market
value, National would not recognize any charge to operations in accordance  with
the intrinsic value method.

(2) SIGNIFICANT RISKS AND UNCERTAINTIES

NATURE OF OPERATIONS

     National  is  engaged  primarily  in the  retail  marketing  of  propane to
residential  customers,  commercial   and  industrial  customers,   agricultural
customers  and  resellers. National  also  markets propane-related  supplies and
equipment including home and commercial appliances. National's

                                       33



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operations are concentrated in the  Midwest, Northeast, Southeast and  Southwest
regions of the United States.

USE OF ESTIMATES

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

SIGNIFICANT ESTIMATES

     National's significant estimates  are for  costs related  to (i)  insurance
loss reserves (see Note 1) and (ii) an environmental contingency (see Note 19).

CERTAIN RISK CONCENTRATIONS

     National's  significant risk  concentration arises  from propane  being its
principal product.  Both sales  levels and  costs of  propane are  sensitive  to
weather  conditions,  particularly  in  the  residential  home  heating  market.
National's profitability depends on the spread between its cost for propane  and
the  selling price. National generally is able  to pass on cost increases to the
customer in the form of higher  selling prices. However, where increases  cannot
be  passed on, margins can  be adversely affected. National  is also impacted by
the competitive nature of the propane  industry, as well as by competition  from
alternative energy sources such as natural gas, oil and electricity.

     Warren   Petroleum   Company  ('Warren')  supplied  approximately  16%   of
National's propane in 1996 and  Amoco  and Conoco  each  supplied  approximately
10%.  National  believes  that if supplies from Warren,  Amoco  or  Conoco  were
interrupted, it would  be able  to secure  adequate propane  supplies from other
sources  without  a  material  disruption  of its  operations; however, National
believes that the cost of procuring  replacement supplies might be significantly
higher, at least on a short-term basis, which could negatively affect National's
margins.  No  other single supplier provided  more than 10%  of National's total
propane supply during 1996.

(3) PUBLIC GAS MERGER

     Effective  June 29, 1995, Public  Gas, previously a wholly-owned subsidiary
of SEPSCO engaged  in the propane  business, was merged  with and into  National
(the  'Merger'),  with  National  continuing as  the  surviving  corporation. In
consideration for their investments in  Public Gas and National Propane,  SEPSCO
received  330 shares of the merged  corporation representing 24.8% of its issued
and  outstanding  common  stock  and  Triarc  continued  to  hold  1,000  shares
representing  75.2% of  the stock  of the  merged corporation  (see Note  21 for
discussion of  subsequent  issuance of  30  shares of  National  Propane).  Such
percentages  were based upon the relative fair values of Public Gas and National
Propane prior  to the  Merger. In  June 1995  prior to  the Merger,  Public  Gas
acquired  the 0.3% of its common stock that SEPSCO did not own for approximately
$134,000.

                                       34



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The  following  sets  forth  summary  operating  results  of  the  combined
entities:

<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                 --------------------------------------------------
                                          1994                       1995
                                 -----------------------    -----------------------
                                                   (IN THOUSANDS)

<S>                              <C>                        <C>
Operating revenues:
     National Propane.........          $ 123,588                  $ 133,456(a)
     Public Gas...............             28,110                     15,542(b)
     Eliminations.............                (47)                       (15)
                                      -----------                -----------
                                        $ 151,651                  $ 148,983
                                      -----------                -----------
                                      -----------                -----------
Income (loss) before
  extraordinary charge:
     National Propane.........          $  10,072                  $  (2,287)(a)
     Public Gas...............              1,949                      1,682(b)
                                      -----------                -----------
                                        $  12,021                  $    (605)
                                      -----------                -----------
                                      -----------                -----------
Net income (loss):
     National Propane.........          $   7,956                  $  (2,287)(a)
     Public Gas...............              1,949                      1,682(b)
                                      -----------                -----------
                                        $   9,905                  $    (605)
                                      -----------                -----------
                                      -----------                -----------
</TABLE>

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

 (a) Reflects  the  results of  National  Propane prior  to  the Merger  and the
     combined company after the Merger.

 (b) Reflects the results of Public Gas prior to the Merger.

(4) UNAUDITED PRO FORMA SUPPLEMENTAL FINANCIAL INFORMATION

     The following unaudited pro  forma supplemental financial information  sets
forth the operating results of National for the year ended December 31, 1996 and
has  been adjusted  as if  the Partnership had  been formed  and the Partnership
Conveyance, the Offering, the Equity Private Placement and related  transactions
had  been completed as of January 1, 1996  to give effect to (i) the elimination
of  management  fees  paid  to  Triarc,  (ii)  the  addition  of  the  estimated
stand-alone   general  and  administrative   costs  associated  with  National's
operation as a partnership, (iii) a net decrease to interest expense to  reflect
the  interest expense associated with the  First Mortgage Notes and to eliminate
interest expense  on  the  refinanced  debt and  (iv)  the  elimination  of  the
provision  for income taxes, as  income taxes will be  borne by the partners and
not the Partnership or  the Operating Partnership,  except for corporate  income
taxes  relative  to  NSSI.  Such  following  pro  forma  supplemental  financial
information does  not  purport  to  be  indicative  of  the  actual  results  of
operations  that would  have resulted  had the  Partnership been  formed and the
Partnership Conveyance, the Offering, the  Equity Private Placement and  related
transactions  been consummated as of January 1, 1996 or of the future results of
operations of National.

                                       35



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                  YEAR ENDED
                                                                                                 DECEMBER 31,
                                                                                                     1996
                                                                                            -----------------------
                                                                                                (IN THOUSANDS,
                                                                                             EXCEPT FOR UNIT DATA)
<S>                                                                                         <C>
Revenues.................................................................................         $   173,260
Operating income.........................................................................              16,938
Income before income taxes and extraordinary charge......................................              11,731
Income before extraordinary charge.......................................................              11,616
General partners' unsubordinated interest in income before extraordinary charge..........                 465
Unitholders' interest in income before extraordinary charge..............................              11,151
Unitholders' income before extraordinary charge per unit.................................                 .99
Weighted average number of units outstanding.............................................          11,235,188
</TABLE>

(5) QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH

     Subsequent to the Offering the Partnership will distribute to its partners,
on a quarterly basis,  all of its 'Available  Cash' which generally means,  with
respect to any fiscal quarter of the Partnership, all cash on hand at the end of
such  quarter less the amount of cash  reserves that is necessary or appropriate
in the discretion of the Managing General Partner to (i) provide for the  proper
conduct  of the Partnership's  business, (ii) comply with  applicable law or any
Partnership debt  instrument or  other  agreement, or  (iii) provide  funds  for
distributions  to Unitholders and the General Partners  in respect of any one or
more of the next four quarters.

     Available Cash  will  generally  be  distributed  96%  to  the  Unitholders
(including the Managing General Partner as the holder of Subordinated Units) and
4%  to the General Partners, pro rata, except that if distributions of Available
Cash exceed target distribution levels,  as defined, above $0.525 quarterly  per
unit  (the 'Minimum Quarterly Distribution'),  the General Partners will receive
an additional percentage of such excess  distributions that will increase to  up
to 50% of the distributions above the highest target distribution level.

     With   respect  to  each  quarter  during  the  subordination  period  (the
'Subordination Period'  -- see  following  paragraph), to  the extent  there  is
sufficient  Available Cash, the holders  of Common Units will  have the right to
receive the Minimum  Quarterly Distribution,  plus any  common unit  arrearages,
prior  to  any distribution  of Available  Cash to  the holders  of Subordinated
Units.  Subordinated  Units  do  not  accrue  any  arrearages  with  respect  to
distributions for any quarter.

     The  Subordination Period will generally extend  until the first day of any
quarter beginning after June 30, 2001  in respect of which (i) distributions  of
Available  Cash from operating surplus on  the Common Units and the Subordinated
Units with respect to  each of the three  consecutive four-quarter periods  (the
'Periods')  immediately preceding such  date equaled or exceeded  the sum of the
Minimum Quarterly  Distribution  on all  of  the outstanding  Common  Units  and
Subordinated  Units  during such  periods, (ii)  the adjusted  operating surplus
generated during the Periods immediately preceding such date equaled or exceeded
the sum of the Minimum Quarterly  Distribution on all of the outstanding  Common
Units and Subordinated Units and the related distribution on the General Partner
Interests  during such  periods and (iii)  there are no  outstanding common unit
arrearages.

     Prior to the end of the Subordination Period, a portion of the Subordinated
Units will convert into  Common Units on  a one-for-one basis  on the first  day
after the record date established for the distribution in respect of any quarter
ending  on or after  (a) June 30,  1999 (with respect  to 1,133,410 Subordinated
Units, subject to adjustment  as discussed below), and  (b) June 30, 2000  (with
respect  to 1,133,410  Subordinated Units,  subject to  adjustments as discussed
below) in respect of  which (i) distributions of  Available Cash from  operating
surplus on the Common Units and the Subordinated

                                       36



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Units  with respect  to the Periods  immediately preceding such  date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all of the outstanding
Common Units  and Subordinated  Units  during such  periods, (ii)  the  adjusted
operating  surplus  generated during  each of  the two  consecutive four-quarter
periods immediately  preceding such  date equaled  or exceeded  the sum  of  the
Minimum  Quarterly  Distribution  on all  of  the outstanding  Common  Units and
Subordinated Units and the related distribution on the General Partner Interests
during such periods, and (iii) there are no outstanding common unit  arrearages;
provided,   however,  that  the  early  conversion  of  the  second  tranche  of
Subordinated Units may  not occur until  at least one  year following the  early
conversion  of the  first tranche  of Subordinated  Units. Such  number of units
eligible for  early conversion  on June  30, 1999  and June  30, 2000  shall  be
subject  to increase in each case by a number of Subordinated Units equal to 25%
of the total Units  issued upon conversion of  the Special General Partner's  2%
General Partner Interest.

     Upon  expiration of  the Subordination  Period, all  remaining Subordinated
Units will convert into Common Units on a one-for-one basis and will  thereafter
participate, pro rata, with the other Common Units in distributions of Available
Cash.  In addition,  if the  Managing General  Partner is  removed as  a general
partner of the  Partnership other than  for cause (i)  the Subordination  Period
will  end and all  outstanding Subordinated Units  will immediately convert into
Common Units on a  one-for-one basis, (ii) any  existing common unit  arrearages
will  be extinguished  and (iii)  the General  Partners will  have the  right to
convert their  remaining General  Partner Interests  (and the  right to  receive
incentive  distributions) into Common  Units or to receive  cash in exchange for
such interests.

     On November 14, 1996 National paid a distribution of $0.525 per Common  and
Subordinated  Unit with a proportionate amount for the 4% unsubordinated General
Partner interest,  or  an  aggregate $5,924,000,  including  $2,616,000  to  the
General Partners.

     On  February 14, 1997 National paid  a quarterly distribution of $0.525 per
Common and Subordinated Unit to Unitholders of record on February 5, 1997,  with
a proportionate amount for the 4% unsubordinated general partner interest, or an
aggregate of $6,143,000, including $2,625,000 to the General Partners related to
the Subordinated Units and the unsubordinated general partner interest.

(6) RECEIVABLES

     The following is a summary of the components of receivables:

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                                     ------------------
                                                                                      1995       1996
                                                                                     -------    -------
                                                                                       (IN THOUSANDS)

<S>                                                                                  <C>        <C>
Receivables:
     Trade........................................................................   $16,939    $25,449
     Other........................................................................       432        205
                                                                                     -------    -------
                                                                                      17,371     25,654
Less allowance for doubtful accounts (trade)......................................       980      1,437
                                                                                     -------    -------
                                                                                     $16,391    $24,217
                                                                                     -------    -------
                                                                                     -------    -------
</TABLE>

                                       37



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following is an analysis of the allowance for doubtful accounts for the
years ended December 31, 1994, 1995 and 1996:

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                              --------------------------
                                                                               1994      1995      1996
                                                                              ------    ------    ------
                                                                                    (IN THOUSANDS)
<S>                                                                           <C>       <C>       <C>
Balance at beginning of year...............................................   $1,343    $1,072    $  980
Provision for doubtful accounts............................................      685       848     1,347
Uncollectible accounts written off.........................................     (956)     (940)     (890)
                                                                              ------    ------    ------
Balance at end of year.....................................................   $1,072    $  980    $1,437
                                                                              ------    ------    ------
                                                                              ------    ------    ------
</TABLE>

(7) PROPERTIES

     The following is a summary of the components of properties:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                   --------------------
                                                                                     1995        1996
                                                                                   --------    --------
                                                                                      (IN THOUSANDS)
<S>                                                                                <C>         <C>
Land............................................................................   $  5,303    $  5,306
Buildings and improvements......................................................     11,760      12,012
Equipment and customer installation costs.......................................    119,614     122,609
Office furniture and fixtures...................................................      4,947       6,991
Automotive and transportation equipment.........................................     21,937      23,806
Leased assets capitalized.......................................................      1,655       --
                                                                                   --------    --------
                                                                                    165,216     170,724
Less accumulated depreciation and amortization..................................     82,002      90,090
                                                                                   --------    --------
                                                                                   $ 83,214    $ 80,634
                                                                                   --------    --------
                                                                                   --------    --------
</TABLE>

(8) UNAMORTIZED COSTS IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES

     The following is a summary of the components of unamortized costs in excess
of net assets of acquired companies:

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                                     ------------------
                                                                                      1995       1996
                                                                                     -------    -------
                                                                                       (IN THOUSANDS)
<S>                                                                                  <C>        <C>
Costs in excess of net assets of acquired companies...............................   $16,712    $16,875
Less accumulated amortization.....................................................     1,551      2,274
                                                                                     -------    -------
                                                                                     $15,161    $14,601
                                                                                     -------    -------
                                                                                     -------    -------
</TABLE>

                                       38



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(9) OTHER ASSETS

     The following is a summary of the components of other assets:

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31,
                                                                                        ----------------
                                                                                         1995      1996
                                                                                        ------    ------
                                                                                         (IN THOUSANDS)
<S>                                                                                     <C>       <C>
Deferred financing costs.............................................................   $6,206    $6,600
Non-compete agreements...............................................................    1,929     2,718
Long-term receivables, net of unearned interest income...............................      300       196
Other................................................................................      544       665
                                                                                        ------    ------
                                                                                         8,979    10,179
                                                                                        ------    ------
Less accumulated amortization:
     Deferred financing costs........................................................    1,509       236
     Non-compete agreements..........................................................      761     1,098
     Other...........................................................................       71       174
                                                                                        ------    ------
                                                                                         2,341     1,508
                                                                                        ------    ------
                                                                                        $6,638    $8,671
                                                                                        ------    ------
                                                                                        ------    ------
</TABLE>

(10) ACCRUED EXPENSES

     The following is a summary of the components of accrued expenses:

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                                      -----------------
                                                                                       1995      1996
                                                                                      ------    -------
                                                                                       (IN THOUSANDS)
<S>                                                                                   <C>       <C>
Accrued insurance..................................................................   $2,961    $ 3,404
Accrued compensation and related benefits..........................................    1,868      1,950
Accrued interest...................................................................    2,233        131
Other accrued expenses.............................................................    2,308      4,618
                                                                                      ------    -------
                                                                                      $9,370    $10,103
                                                                                      ------    -------
                                                                                      ------    -------
</TABLE>

                                       39



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(11) LONG-TERM DEBT

     Long-term debt consisted of the following:

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                             --------------------
                                                                                               1995        1996
                                                                                             --------    --------
                                                                                                (IN THOUSANDS)
<S>                                                                                          <C>         <C>
8.54% First Mortgage Notes, due June 30, 2010 payable in equal annual installments of
  $15,625,000 commencing 2003 through 2010................................................   $  --       $125,000
1996 Bank Facility:
     Working capital facility, interest rate of 8.25% at December 31, 1996, due July,
      1999................................................................................      --          6,000
     Acquisition facility, weighted average interest rate of 7.16% at December 31, 1996,
      due July, 2001......................................................................      --          1,885
1995 Bank Facility:
     Term notes, originally due through 2003, repaid in 1996..............................     84,083       --
     Revolving loans, originally due March 31, 2000, repaid in 1996.......................     43,229       --
Acquisition notes, bearing interest at rates of 6% to 10%, due through 2004...............      4,060       1,424
Equipment notes, originally due through 2002 repaid in 1996...............................      2,917       --
Capital lease obligations.................................................................      1,255          47
                                                                                             --------    --------
     Total debt...........................................................................    135,544     134,356
Less current portion of long-term debt....................................................     11,278       6,312
                                                                                             --------    --------
                                                                                             $124,266    $128,044
                                                                                             --------    --------
                                                                                             --------    --------
</TABLE>

     The  aggregate annual  maturities of  long-term debt  are as  follows as of
December 31, 1996:

<TABLE>
<CAPTION>
                            YEAR ENDING
                            DECEMBER 31,                               (IN THOUSANDS)
--------------------------------------------------------------------
<S>                                                                    <C>
1997................................................................      $  6,312
1998................................................................           720
1999................................................................         1,224
2000................................................................           628
2001................................................................           472
Thereafter..........................................................       125,000
                                                                       --------------
                                                                          $134,356
                                                                       --------------
                                                                       --------------
</TABLE>

     Concurrent with  the Offering,  National entered  into a  $55,000,000  bank
facility  (the  '1996 Bank  Facility')  with a  group  of banks.  The  1996 Bank
Facility includes a $15,000,000 working  capital facility (the 'Working  Capital
Facility')  and a $40,000,000 acquisition facility (the 'Acquisition Facility'),
the use of which is restricted to business acquisitions and capital expenditures
for growth. The  1996 Bank  Facility bears  interest, at  National's option,  at
either (i) the 30, 60, 90 or 180-day London Interbank Offered Rate plus a margin
generally  ranging from 1% to 1.75% or (ii) the higher of (a) the prime rate and
(b) the Federal  funds rate plus  0.5% in either  case, plus a  margin of up  to
0.25%.  Borrowings under  the Working  Capital Facility  mature in  full in July
1999. However, National  must reduce  the borrowings under  the Working  Capital
Facility  to zero  for a  period of at  least 30  consecutive days  in each year
between March 1 and August 31. The Acquisition Facility converts to a term  loan
in  July 1998  and amortizes thereafter  in twelve  equal quarterly installments
through July 2001.

     National's 1996 Bank Facility and the First Mortgage Notes contain  certain
restrictive  covenants which, among  other matters, (i)  require meeting certain
financial amount and  ratio tests, (ii)  limit the incurrence  of certain  other
additional   indebtedness  and  certain   investments,  asset  dispositions  and
transactions with affiliates  other than in  the normal course  of business  and
(iii) restrict the payment of

                                       40



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

distributions  by the Operating Partnership. As  of December 31, 1996 there were
no restrictions on the amount of partners' capital available for the payment  of
distributions.

     National's  obligations under  both the First  Mortgage Notes  and the 1996
Bank Facility are secured on an equal and ratable basis by substantially all  of
the  assets  of the  Operating Partnership  and are  guaranteed by  the Managing
General Partner.

     The fair values of the  revolving loans and the  term loans under the  1996
and  1995  Bank Facilities  at  December 31,  1996  and 1995  approximated their
carrying values due  to their floating  interest rates. The  fair values of  all
other  long-term  debt were  assumed  to reasonably  approximate  their carrying
amounts since the interest rates approximate current levels.

(12) INCOME TAXES

     The provision for (benefit from) income taxes for the years ended  December
31,  1994 and  1995 and  through the  Partnership Conveyance  in 1996  relate to
National Propane and  subsequent to  the Partnership Conveyance  relate only  to
NSSI  since no  taxes are provided  on the  earnings of the  Partnership and the
Operating Partnership.

     The provision for income taxes  before extraordinary charges for the  years
ended December 31, 1994, 1995 and 1996 consists of the following components:

<TABLE>
<CAPTION>
                                                                               YEAR ENDED DECEMBER 31,
                                                                              --------------------------
                                                                               1994      1995      1996
                                                                              ------    ------    ------
                                                                                    (IN THOUSANDS)
<S>                                                                           <C>       <C>       <C>
Current:
     Federal...............................................................   $5,099    $1,890    $2,309
     State.................................................................    1,051       406       498
                                                                              ------    ------    ------
                                                                               6,150     2,296     2,807
                                                                              ------    ------    ------
Deferred:
     Federal...............................................................    1,456     2,114      (716)
     State.................................................................      317      (119)     (154)
                                                                              ------    ------    ------
                                                                               1,773     1,995      (870)
                                                                              ------    ------    ------
                                                                              $7,923    $4,291    $1,937
                                                                              ------    ------    ------
                                                                              ------    ------    ------
</TABLE>

     The  difference  between  the reported  tax  provision and  a  computed tax
provision based on income before income  taxes and extraordinary charges at  the
statutory Federal income tax rate of 35% is reconciled as follows:

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                        --------------------------
                                                                                         1994      1995      1996
                                                                                        ------    ------    ------
                                                                                              (IN THOUSANDS)
<S>                                                                                     <C>       <C>       <C>
Income taxes computed at Federal statutory tax rate..................................   $6,980    $1,290    $2,690
Increase (decrease) in taxes resulting from:
     Partnership income taxable directly to the partners.............................     --        --      (1,085)
     State income taxes, net of Federal income tax benefit...........................      889       187       223
     Amortization of non-deductible Goodwill.........................................       29       126        98
     Provision for income tax contingencies..........................................     --       2,500      --
     Other, net......................................................................       25       188        11
                                                                                        ------    ------    ------
                                                                                        $7,923    $4,291    $1,937
                                                                                        ------    ------    ------
                                                                                        ------    ------    ------
</TABLE>

                                       41



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The  net  current deferred  income tax  asset  (included in  'Other current
assets') and the net noncurrent deferred  income tax liability are comprised  of
the following components:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                    -------------------
                                                                                     1995        1996
                                                                                    -------     -------
                                                                                      (IN THOUSANDS)
<S>                                                                                 <C>         <C>
Allowance for doubtful accounts..................................................   $   384     $     9
Accrued employee benefit costs...................................................       224          23
Accrued interest for income tax matters..........................................       198       --
Accrued environmental costs......................................................       171       --
Casualty insurance loss reserves.................................................       213       --
Other, net.......................................................................       126          36
                                                                                    -------     -------
Net current deferred income tax asset............................................   $ 1,316     $    68
                                                                                    -------     -------
                                                                                    -------     -------
Accelerated depreciation and other properties basis differences..................   $20,546     $ --
Reserve for income tax contingencies.............................................     2,500       --
Other, net.......................................................................      (168)      --
                                                                                    -------     -------
Net noncurrent deferred income tax liability.....................................   $22,878     $ --
                                                                                    -------     -------
                                                                                    -------     -------
</TABLE>

     As  of  December  31,  1995,  accrued income  taxes  payable  to  Triarc of
$3,815,000 was included in 'Due to Triarc Companies, Inc. and another affiliate'
in the accompanying consolidated balance sheet. As of December 31, 1996  accrued
income  taxes  of  $84,000  relating  only to  NSSI,  are  included  in 'Accrued
Expenses'. As indicated above  no income taxes are  provided on the earnings  of
the Partnership and Operating Partnership and in connection with the Partnership
Conveyance,  all income  tax liabilities of  National Propane  payable to Triarc
were retained by the  Managing General Partner. The  deferred income tax  assets
and  liabilities of National  Propane were not conveyed  to the Partnership. The
deferred income tax asset that exists at December 31, 1996 relates to NSSI.

     The Internal Revenue  Service is  currently finalizing  its examination  of
Triarc's  Federal income tax returns for the tax years 1989 through 1992 and has
issued to date  notices of  proposed adjustments  increasing National  Propane's
taxable income by approximately $22,500,000, the tax effect of which has not yet
been  determined. During 1995  National Propane provided  $2,500,000 included in
'Provision  for  income  taxes',  relating  to  the  proposed  adjustments.   In
connection  with the  formation of  the Partnership,  the tax  sharing agreement
between Triarc and National Propane was amended to provide that Triarc would  be
responsible  for any Federal  income tax liability with  respect to the proposed
adjustments and in  connection with the  Partnership Conveyance, the  $2,500,000
reserve  for  the settlement  of the  proposed adjustments  was retained  by the
Managing General Partner.

(13) PREFERRED STOCK

NATIONAL

     On June 20, 1994  National repurchased for treasury  stock 9,206 shares  of
its  $21 par value preferred  stock (the 'Preferred Stock')  and 1,637 shares of
its $25 par value Second Preferred  Stock (the 'Second Preferred Stock') at  par
value  aggregating  $234,000  representing  all  of  the  remaining  issued  and
outstanding preferred shares. Such  preferred shares were subsequently  canceled
resulting in an increase to 'Additional paid-in capital' of $378,000.

                                       42



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A  summary of the changes for 1994 in the aggregate number of issued shares
of Preferred Stock and Second Preferred Stock and the number of such shares held
in treasury is as follows:

<TABLE>
<CAPTION>
                                                                                      ISSUED     TREASURY
                                                                                      -------    --------
<S>                                                                                   <C>        <C>
Number of shares at beginning of year..............................................    58,623      47,780
Repurchase of preferred stock......................................................     --         10,843
Cancellation of preferred stock....................................................   (58,623)    (58,623)
                                                                                      -------    --------
Number of shares at end of year....................................................     --          --
                                                                                      -------    --------
                                                                                      -------    --------
</TABLE>

PUBLIC GAS

     On June 21,  1994 Public  Gas repurchased 70,369  shares of  its $1.00  par
value   convertible  preferred   stock  (the  'Public   Gas  Preferred  Stock'),
representing all of the then issued  and outstanding preferred shares of  Public
Gas,  for $704,000.  The carrying  value of  the Public  Gas Preferred  Stock of
$62,000 was charged to 'Additional paid-in  capital' and the $642,000 excess  of
the  purchase price over  the carrying value represented  the reacquisition of a
minority interest in Public  Gas at SEPSCO  and, as such,  was 'pushed down'  to
Public  Gas  and recorded  as  'Unamortized costs  in  excess of  net  assets of
acquired companies' in the accompanying consolidated balance sheets.

(14) DUE FROM PARENTS

     Concurrent with  the  closing  of  the Offering,  the  Partnership  made  a
$40,700,000  loan  to  Triarc.  The  loan bears  interest  at  13.5%  per annum,
amortizes $5,087,500 per  year commencing  2003 and is  secured by  a pledge  by
Triarc  of all the shares of capital  stock of the Managing General Partner that
are owned by Triarc. Interest is  payable semi-annually on June 30 and  December
30.

     At December 31, 1994 and 1995 due from Parents, which has been reflected as
a component of stockholders' deficit, consisted of the following:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                    -------------------
                                                                                      1994       1995
                                                                                    --------    -------
                                                                                      (IN THOUSANDS)
<S>                                                                                 <C>         <C>
Interest-bearing advances to Triarc..............................................   $ 81,392    $81,392
Noninterest-bearing advances to SEPSCO...........................................     31,938      --
                                                                                    --------    -------
                                                                                    $113,330    $81,392
                                                                                    --------    -------
                                                                                    --------    -------
</TABLE>

     The  receivables from Triarc  and SEPSCO were classified  as a component of
stockholders' equity because they were not expected to be repaid except  through
equity  transactions and with respect to  Triarc, its liquidity position was not
sufficient to  enable it  to  repay the  advances.  The receivable  from  SEPSCO
(including  additional  advances during  1995 of  $2,599,000) was  dividended to
SEPSCO prior  to  the  Merger (see  Note  3).  The receivable  from  Triarc  was
reclassified  to a  component of  stockholders' equity  at November  30, 1994 at
which time it was  determined Triarc's liquidity position  may not enable it  to
repay  the  advances.  Concurrent with  the  reclassification,  National Propane
ceased accruing interest on the receivable.

     Prior to November 30, 1994 interest income was recorded on the advances  at
8.9%  for periods subsequent to October 6, 1994 and at 16.5% prior thereto. Such
interest rates represented  National Propane's  cost of  debt capital.  Interest
income  on such advances  aggregated $9,751,000 during  1994. In connection with
the  Partnership  Conveyance,  the   Managing  General  Partner  retained   this
$81,392,000 receivable from Triarc (See Note 1).

                                       43



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(15) SEPSCO MERGER

     On  April 14,  1994, SEPSCO's  shareholders other  than Triarc  approved an
agreement and plan  of merger between  Triarc and SEPSCO  (the 'SEPSCO  Merger')
pursuant  to which on  that date a  subsidiary of Triarc  was merged into SEPSCO
whereby each  holder of  shares of  SEPSCO's common  stock (the  'SEPSCO  Common
Stock')  other than  Triarc, aggregating  a 28.9%  minority interest  in SEPSCO,
received in  exchange for  each share  of  SEPSCO common  stock, 0.8  shares  of
Triarc's class A common stock or an aggregate of 2,691,824 shares. Following the
SEPSCO  Merger,  SEPSCO  became  a wholly-owned  subsidiary  of  Triarc  and its
subsidiaries.

     The fair value as  of April 14,  1994 of the  2,691,824 shares of  Triarc's
class  A common stock issued in the SEPSCO Merger, net of certain related costs,
aggregated $52,105,000 (the  'Merger Consideration').  Triarc had  an excess  of
$23,888,000  of Merger Consideration over  Triarc's minority interest in SEPSCO.
The SEPSCO Merger has been accounted for by Triarc and SEPSCO in accordance with
the 'pushdown' method of accounting and in accordance therewith, $17,004,000  of
such  $23,888,000 excess was  'pushed down' to  SEPSCO (the remaining $6,884,000
was 'pushed down'  to an  affiliated subsidiary)  reflecting Triarc's  increased
basis  in SEPSCO. SEPSCO, in turn, 'pushed  down' $8,088,000 to Public Gas as an
increase in SEPSCO's basis in Public Gas. Such amount increased the  'Additional
paid-in capital' of National reflecting Triarc's and SEPSCO's increased bases in
Public Gas and was assigned as follows:

<TABLE>
<CAPTION>
                                                                                           (IN THOUSANDS)
<S>                                                                                        <C>
Goodwill................................................................................      $  5,483
Properties..............................................................................         4,255
Deferred income taxes...................................................................        (1,650)
                                                                                           --------------
Additional paid-in capital..............................................................      $  8,088
                                                                                           --------------
                                                                                           --------------
</TABLE>

(16) EXTRAORDINARY CHARGES

     In  connection with  the early  extinguishment of  debt in  the years ended
December 31, 1994 and 1996, National recognized extraordinary charges consisting
of the following:

<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31,
                                                                             --------------------------------------------------
                                                                                      1994                       1996
                                                                             -----------------------    -----------------------
                                                                                               (IN THOUSANDS)
<S>                                                                          <C>                        <C>
Write-off of unamortized deferred financing costs.........................           $   875                    $ 4,126
Write-off of unamortized original issue discount..........................             2,623                  --
Prepayment penalties and fees.............................................         --                               225
                                                                                    --------                   --------
                                                                                       3,498                      4,351
Income tax benefit........................................................            (1,382)                    (1,720)
                                                                                    --------                   --------
                                                                                     $ 2,116                    $ 2,631
                                                                                    --------                   --------
                                                                                    --------                   --------
</TABLE>

     In accordance  with  the  Partnership Conveyance,  the  1996  extraordinary
charge was allocated entirely to the General Partners.

(17) RETIREMENT PLANS

     As  discussed  in Note  21, following  the  Partnership Conveyance  and the
Offering, the management and  employees of the  Managing General Partner  manage
and  operate the  propane business  and assets  owned by  National. The Managing
General Partner is reimbursed for all such costs incurred on behalf of  National
including the cost of retirement plans.

                                       44



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The  Managing General Partner maintains  a 401(k) defined contribution plan
(the  'Plan')   which  covers   all   employees  meeting   certain   eligibility
requirements.  The Plan  allows eligible  employees to  contribute up  to 15% of
their compensation and the Managing General Partner makes matching contributions
of  25%  of  employee  contributions  up  to  the  first  5%  of  an  employee's
contribution.  The Managing  General Partner  also makes  an annual contribution
equal to 1/4 of 1% of employee's compensation. In connection with these employer
contributions, National provided $157,000, $142,000  and $143,000 in 1994,  1995
and 1996, respectively.

     Under  certain union contracts, the Managing General Partner is required to
make payments  to the  unions' pension  funds  based upon  hours worked  by  the
eligible  employees.  In connection  with these  union plans,  National provided
$726,000,  $669,000  and  $669,000  in   1994,  1995  and  1996,   respectively.
Information  from  the administrators  of the  union plans  is not  available to
permit  National  to  determine  its  proportionate  share  of  unfunded  vested
benefits, if any.

(18) LEASE COMMITMENTS

     National has entered into certain operating leases for office space, trucks
and other equipment.

     The  future minimum rental commitments at December 31, 1996 under operating
leases having an initial  or remaining noncancellable term  of one year or  more
are as follows:

<TABLE>
<CAPTION>
                                                                                           (IN THOUSANDS)
<S>                                                                                        <C>
1997....................................................................................       $  922
1998....................................................................................          402
1999....................................................................................          355
2000....................................................................................          156
2001....................................................................................           43
Thereafter..............................................................................           62
                                                                                              -------
Total minimum lease payments............................................................       $1,940
                                                                                              -------
                                                                                              -------
</TABLE>

     National incurred rent expense under operating leases of $638,000, $669,000
and $935,000 in 1994, 1995 and 1996, respectively.

(19) LEGAL MATTERS

     In  May 1994, National Propane was informed of coal tar contamination which
was discovered  at one  of  its properties  in Marshfield,  Wisconsin.  National
Propane  purchased the property from a company which had purchased the assets of
a  utility  that  had  previously owned  the property. National Propane believes
that  the contamination  occurred during  the use of  the  property  as  a  coal
gasification plant by such utility.  In  order  to  assess  the  extent  of  the
problem,  National Propane engaged  environmental consultants  who began work in
August  1994. In December 1994, the environmental consultants issued a report to
National Propane which  estimated the  range  of potential  remediation costs to
be between approximately $415,000 and $925,000 depending upon  the actual extent
of  impacted soils, the  presence and extent,  if any, of impacted ground  water
and the remediation method actually required  to  be  implemented.  In  February
1996,  based  upon  new information National Propane's environmental consultants
issued a second report which presented  the two  most likely remediation methods
and revised  estimates of the costs of such methods.  The report  estimated  the
range  of costs for  the first method,  which involves  treatment of groundwater
and  excavation,  treatment  and  disposal  of  contaminated soil,  to  be  from
$1,600,000 to $3,300,000. The range for the second method, which  involves  only
treatment  of  ground  water  and  building  a  soil  containment wall, was from
$432,000  to $750,000.  As of March 1, 1997,  National  Propane's  environmental
consultants have begun but not completed  additional testing. Based upon the new
information  compiled  to date,  which  is not yet complete, it appears that the
containment wall remedy is

                                       45



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

no  longer appropriate, and  the likely remedy will  involve treatment of ground
water and treatment by soil-vapor extraction of certain contaminated 'hot spots'
in the soil, installation of a soil cap and, if necessary, excavation, treatment
and disposal of contaminated  soil. As a  result, the environmental  consultants
have  revised  the range  of  estimated costs  for  the remediation  to  be from
$764,000  to   $1,600,000.  Based  on   discussions   with   National  Propane's
environmental consultants,  an  acceptable remediation  plan  should fall within
this range. National Propane will have to  agree upon the  final plan  with  the
State  of  Wisconsin.  Since receiving notice  of  the  contamination,  National
Propane has engaged in discussions of  a general nature  concerning  remediation
with the  State of Wisconsin. These discussions are  ongoing  and  there  is  no
indication as yet of the time frame for a  decision by the State of Wisconsin on
the method of remediation. Accordingly, it is unknown  what  remediation  method
will be used.  Based on the  preliminary results of  the  ongoing investigation,
there  is   a  potential  that  the  contamination plume may extend to locations
downgradient from the original site.  If  it is  ultimately  confirmed that  the
contaminant  plume  extends  under   such  properties   and  if  such  plume  is
attributable  to contaminants emanating  from the  Marshfield property, there is
the potential for future third-party claims. National Propane is also engaged in
ongoing discussions  of a general  nature with the successor to the utility that
operated a coal  gasification  plant  on  the property. The successor has denied
any liability for the costs of  remediation  of  the  Mashfield  property or  of
satisfying any related claims.  If National Propane is found liable for  any  of
such costs, it will attempt to recover them  from the successor  owner. National
Propane has notified its insurance carriers of the contamination and  the likely
incurrence  of  costs  to  undertake  remediation and the possibility of related
claims. Pursuant to a lease related to the Marshfield facility, the ownership of
which was  not transferred  to the  Operating Partnership  at the closing of the
IPO,  the Partnership has  agreed to be liable  for any costs  of remediation in
excess  of  amounts  recovered from such successor or from insurance.  Since  no
amount within the ranges of remediation costs could be determined to be a better
estimate, National had accrued $764,000 at December 31, 1996 in order to provide
for the minimum costs estimated for the anticipated remediation method, incurred
legal fees and  other professional costs.  The ultimate outcome  of this  matter
cannot  presently be  determined and  the costs  of remediation  and third-party
claims, if  any,  may  have  a material  adverse  effect  on  the  Partnership's
financial  position, results of  operations or ability  to make distributions to
the holders of its Common Units and Subordinated Units.

     There  are  a  number  of  lawsuits  pending  or  threatened  against   the
Partnership  and/or  National. In  general, these  lawsuits  have arisen  in the
ordinary course  of the  Partnership's business  and involve  claims for  actual
damages, and in some cases punitive damages, arising from the alleged negligence
of  the Partnership or as a result of product defects of similar matters. Of the
pending or threatened  matters, a  number involve property  damage, and  several
involve  serious  personal  injuries  or  deaths and  the  claims  made  are for
relatively large amounts. Although any litigation is inherently uncertain, based
on  past  experience,  the  information  currently  available  to  it  and   the
availability  of insurance coverage in certain matters, the Partnership does not
believe that the pending  or threatened litigation of  which the Partnership  is
aware  will have a material  adverse effect on its  results of operations or its
financial condition. However, any one or all of these matters taken together may
adversely affect the Partnership's quarterly or annual results of operations and
may limit the Partnership's ability to make distributions to its Unitholders.

(20) ACQUISITIONS

     During 1994, 1995 and 1996  National acquired several companies engaged  in
the sale of propane and related merchandise. The purchase prices (including debt
issued  and assumed) aggregated $8,967,000, $373,000 and $2,045,000 and resulted
in increases in Goodwill of $3,096,000, $116,000 and $162,000 in 1994, 1995  and
1996,  respectively. (See Note 21 for discussion of Triarc's 1995 acquisition on
behalf of National).

                                       46



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(21) TRANSACTIONS WITH AFFILIATES

     In August 1995 Triarc, through a  wholly owned subsidiary, acquired all  of
the  outstanding  stock of  two companies  engaged  in the  propane distribution
business. The aggregate purchase price was $4,240,000 (including the  assumption
of certain existing indebtedness). In September 1995 the stock of the subsidiary
which  acquired the  two companies  was contributed  by Triarc  to NPC Holdings,
Inc., a wholly-owned subsidiary of Triarc, which in turn contributed such  stock
to  National. Such contribution resulted  in increases in National's 'Additional
paid-in capital' of  $4,240,000 and 'Goodwill'  of $2,181,000. In  consideration
for  such  contribution, Triarc  received an  additional  30 shares  of National
Propane's common stock, increasing  its ownership of  National Propane to  75.7%
from 75.2%.

     In  the  fourth  quarter of  1995  National  sold certain  of  its accounts
receivable to  Triarc  for cash  of  $3,809,000. Collections  received  on  such
receivables  by National  were remitted  to Triarc  on a  periodic basis.  As of
December 31, 1996 all remittances had been made.

     Following the Partnership Conveyance and  the Offering, the management  and
employees  of  the  Managing  General Partner  manage  and  operate  the propane
business and assets owned by the Partnership Entities. The Partnership  Entities
do not have any officers or employees of their own. The Managing General Partner
is  reimbursed by the Partnership  Entities at cost for  all direct and indirect
expenses incurred on behalf of the Partnership Entities, including the costs  of
compensation  and  employee benefit  plans  described herein  that  are properly
allocable to  the Partnership  Entities,  and all  other expenses  necessary  or
appropriate to the conduct of the business of, and allocable to, the Partnership
Entities.  The Partnership Agreement provides  that the Managing General Partner
will determine the expenses  that are allocable to  the Partnership Entities  in
any  reasonable manner  determined by the  Managing General Partner  in its sole
discretion. The  Partnership Entities  reimbursed the  Managing General  Partner
$15,429,000  during the period from  the Partnership Conveyance through December
31, 1996.  Affiliates of  the General  Partners (including  Triarc) may  provide
administrative  services for the  General Partners on  behalf of the Partnership
Entities and  will  be  reimbursed  for  all  expenses  incurred  in  connection
therewith.  In addition,  the General  Partners and  their Affiliates (including
Triarc) may provide additional services  to the Partnership Entities, for  which
National  will be charged reasonable fees  as determined by the Managing General
Partner.

     Prior to  the Partnership  Conveyance and  the Offering,  National  Propane
received  from Triarc  certain management services  including legal, accounting,
tax, insurance,  financial and  other management  services. Under  a  management
services  agreement such costs were allocated based  upon the greater of (i) the
sum of earnings before income taxes, depreciation and amortization and (ii)  10%
of  revenues,  as a  percentage of  Triarc's corresponding  consolidated amount.
Prior to  the  Merger, Public  Gas  received from  SEPSCO  operating  management
services,  the costs of which  were charged to Public  Gas based on the relative
portion of Public Gas' revenues  to SEPSCO's consolidated revenues (the  'SEPSCO
Allocation Method'). Management of National believes that the allocation methods
referred  to  above are  reasonable. National  understands  Triarc is  a holding
company with no independent operations of  its own and substantially all of  the
expenses  it incurs are for services on  behalf of its affiliated companies and,
accordingly, are  chargeable to  such companies  in accordance  with  management
services  agreements. However, National believes  that the costs allocated prior
to the Partnership  Conveyance and the  Offering exceed those  which would  have
been,  and are expected to be, incurred  by National on a standalone basis. Such
costs for  services provided  by  Triarc (including  a  portion of  the  charges
allocated  by Triarc to  SEPSCO and, in  turn, from SEPSCO  to National Propane)
would have  approximated amounts  not in  excess of  $1,500,000, $1,500,000  and
$750,000   for  1994,  1995  and  for  the  six  months  ended  June  30,  1996,
respectively. It  is  not  practicable,  however, to  estimate  the  costs  that

                                       47



<PAGE>
                NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
          (SUCCESSOR TO NATIONAL PROPANE CORPORATION AND SUBSIDIARIES)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Public  Gas would have incurred  on a standalone basis  for services provided by
SEPSCO in 1994. A summary of the costs charged to National under the  management
services agreements is as follows:

<TABLE>
<CAPTION>
                                                                               YEAR ENDED DECEMBER 31,
                                                                              --------------------------
                                                                               1994      1995      1996
                                                                              ------    ------    ------
                                                                                    (IN THOUSANDS)
<S>                                                                           <C>       <C>       <C>
Costs of management services allocated by Triarc to National...............   $3,000    $3,000    $1,500
Costs of management services allocated by SEPSCO to Public Gas.............    1,561      --        --
                                                                              ------    ------    ------
                                                                              $4,561    $3,000    $1,500
                                                                              ------    ------    ------
                                                                              ------    ------    ------
</TABLE>

     See  also Notes  1, 3, 5,  11, 12,  13, 14 and  15 for  discussion of other
transactions with related parties.

(22) UNIT OPTION PLAN

     Effective July 2, 1996, the  Managing General Partner adopted the  National
Propane Corporation 1996 Unit Option Plan (the 'Option Plan'), which permits the
grant  of options to purchase Common Units  and Subordinated Units and the grant
of Unit appreciation rights  ('UARs'). As of December  31, 1996 an aggregate  of
1,317,015  Common Units  and Subordinated Units  are available for  grant and no
options or UARS have  been granted. Any expenses  recognized resulting from  the
Unit  Option Plan  will be  allocated to the  Partnership in  accordance with an
agreement between the Managing General Partner and the Partnership.

                                       48



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

     None

                                   PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

PARTNERSHIP MANAGEMENT

     The  Managing General Partner manages  and operates the business activities
of the Partnership. Unitholders do not directly or indirectly participate in the
management or  operation of  the  Partnership and  have  no actual  or  apparent
authority  to  enter into  contracts on  behalf  of, or  to otherwise  bind, the
Partnership.  The  Managing  General  Partner  owes  a  fiduciary  duty  to  the
Unitholders.  Notwithstanding  any  limitation  on  obligations  or  duties, the
Managing General Partner  and the  Special General  Partner are  liable, as  the
general  partners of the Partnership,  for all debts of  the Partnership (to the
extent not paid by the Partnership),  except to the extent that indebtedness  or
other obligations incurred by the Partnership are made specifically non-recourse
to  either  or both  of the  General Partners.  Whenever possible,  the Managing
General Partner  intends to  make  any such  indebtedness or  other  obligations
non-recourse  to it and  the Special General Partner.  However, if the Operating
Partnership defaults under the First Mortgage Notes or the Bank Credit Facility,
the Managing General Partner will be  liable for any deficiency remaining  after
foreclosure on the Operating Partnership's assets.

     The  Managing General Partner appointed Frederick W. McCarthy and Willis G.
Ryckman III, who are neither officers  nor employees of the General Partners  or
any affiliate of the General Partners, to its Board of Directors. Such directors
serve on the Audit Committee with the authority to review, at the request of the
Managing  General Partner,  specific matters  as to  which the  Managing General
Partner believes there may be  a conflict of interest  in order to determine  if
the resolution of such conflict proposed by the Managing General Partner is fair
and  reasonable to the Partnership. Absent specific delegation from the Board of
Directors of the Managing General Partner, determinations of the Audit Committee
are advisory and do not bind the Managing General Partner. Any matters  approved
by  the Audit Committee will be conclusively deemed to be fair and reasonable to
the Partnership, approved by all partners of the Partnership and not a breach by
the Managing General Partner  of any duties  it may owe  the Partnership or  the
Unitholders.  In  addition,  the  Audit  Committee  reviews  external  financial
reporting  of  the  Partnership,  recommends  engagement  of  the  Partnership's
independent  accountants and  reviews the Partnership's  procedures for internal
auditing and the  adequacy of  the Partnership's  internal accounting  controls.
With  respect to such additional matters, the Audit Committee may act on its own
initiative to question the Managing  General Partner and, absent the  delegation
of specific authority by the entire Board of Directors, its recommendations will
be advisory.

     The  Special General  Partner, a  wholly owned  subsidiary of  the Managing
General Partner, is a  non-managing general partner of  the Partnership and  the
Operating  Partnership with  no operations  or business  other than  acting as a
general partner of the Partnership and  the Operating Partnership. In the  event
that  the Managing  General Partner  is merged with  and into  Triarc, the Audit
Committee of the Special  General Partner will  perform the functions  described
above  previously  performed  by the  Audit  Committee of  the  Managing General
Partner. The Audit Committee of the  Special General Partner is composed of  the
same  directors  that  serve on  the  Audit  Committee of  the  Managing General
Partner. In addition, if following a merger of the Managing General Partner with
and into Triarc, a bankruptcy event involving Triarc occurs, the Special General
Partner will become the  managing general partner  of the Partnership,  continue
the business of the Partnership and have all the rights, authority and powers of
the Managing General Partner described in the partnership agreement.

     As  is commonly  the case  with publicly  traded limited  partnerships, the
Partnership does not directly employ any of the persons responsible for managing
or operating the  Partnership. In  general, the management  of National  Propane
continues  to  manage and  operate the  Partnership's  business as  officers and
employees of  the Managing  General  Partner and  its  affiliates. See  Item  1.
'Business -- Employees'.

                                       49



<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE MANAGING GENERAL PARTNER

     The  following table  sets forth  certain information  with respect  to the
current directors and executive officers of the Managing General Partner.

<TABLE>
<CAPTION>
             NAME                AGE              POSITION WITH THE MANAGING GENERAL PARTNER
------------------------------   ---   -----------------------------------------------------------------

<S>                              <C>   <C>
Nelson Peltz..................   54    Director
Peter W. May..................   54    Director
Frederick W. McCarthy.........   55    Director
Willis G. Ryckman III.........   52    Director
Ronald D. Paliughi............   53    President, Chief Executive Officer and Director
Ronald R. Rominiecki..........   43    Senior Vice President and Chief Financial Officer
C. David Watson...............   38    Senior Vice President, Administration, General Counsel and
                                         Assistant Secretary
</TABLE>

     Nelson Peltz has  been a  director of the  Managing General  Partner and  a
director  and  Chairman  of the  Board  and  Chief Executive  Officer  of Triarc
Companies, Inc. since April 23,  1993. Since then, he  has also been a  director
and  Chairman of the  Board and Chief  Executive Officer of  certain of Triarc's
other subsidiaries,  including RC/Arby's  Corporation  formerly known  as  Royal
Crown  Corporation ('RCAC').  He is  also a  general partner  of DWG Acquisition
Group, L.P.  ('DWG  Acquisition'),  whose principal  business  is  ownership  of
securities  of Triarc. From its formation in  January 1989 until April 23, 1993,
Mr. Peltz  was Chairman  and Chief  Executive Officer  of Trian  Group,  Limited
Partnership ('Trian'), which provided investment banking and management services
for entities controlled by Mr. Peltz and Mr. May. From 1983 to December 1988, he
was  Chairman and Chief Executive Officer and a director of Triangle Industries,
Inc. ('Triangle'), which, through wholly-owned subsidiaries, was, at that  time,
a manufacturer of packaging products, copper electrical wire and cable and steel
conduit  and currency and coin handling products. From November 1989 through May
1992, Mr. Peltz was director of Mountleigh Group plc, a British property trading
and retailing company ('Mountleigh'). He served in various executive capacities,
including Executive Chairman,  of Mountleigh  from November  1989 until  October
1991.

     Peter  W. May  has been a  director of  the Managing General  Partner and a
director and President  and Chief Operating  Officer of Triarc  since April  23,
1993.  Since then, he has also been a director and President and Chief Operating
Officer of certain of Triarc's other subsidiaries, including RCAC. He is also  a
general  partner of  DWG Acquisition. From  its formation in  January 1989 until
April 23, 1993, Mr. May was President  and Chief Operating Officer of Trian.  He
was  President and Chief Operating Officer and  a director of Triangle from 1983
until December 1988. From November 1989 through May 1992, Mr. May was a director
of Mountleigh and served as Joint Managing Director of Mountleigh from  November
1989  until October 1991. Mr. May was also named a director on April 29, 1993 of
The Leslie  Fay  Companies, Inc.  following  its filing  on  April 5,  1993  for
protection under Chapter 11 of the United States Bankruptcy Code.

     Frederick  W. McCarthy has been a  director of the Managing General Partner
since September 25,  1996. Mr.  McCarthy has  been Chairman  of Triumph  Capital
Group,  Inc.,  an  investment  management firm,  since  1990.  Mr.  McCarthy was
formerly a Managing  Director of Drexel  Burnham Lambert where  he was  employed
from  1974 until 1990. Mr. McCarthy serves as a director of EnviroWorks, Inc., a
manufacturer of lawn and garden products, and of Paragon Acceptance Corporation,
an automotive finance company.

     Willis G. Ryckman III has been  a director of the Managing General  Partner
since  September 25, 1996.  Mr. Ryckman has  served as the  Chairman of Tri-Tech
Labs, Inc., a holding company, since June 1992, Chairman of Irma Shorell,  Inc.,
a cosmetics company, since April 1993, and Managing Director and Chief Operating
Officer  of Associated Capital, a  hedge fund, since April  1995 and Chairman of
Omni Capital, a finance company, since  January 1996. Mr. Ryckman is a  Director
of Banyan Hotel Management Corporation, Krasdale Foods, Inc. and Panavision Inc.

     Ronald  D. Paliughi has  been President and Chief  Executive Officer of the
Managing General Partner since April 29, 1993. From May 1992 through April 1993,
Mr. Paliughi was a temporary, full time officer in the U.S. Army National Guard,
serving as an Army  Aviator. During 1991,  he served on active  duty as an  Army
Aviator  and commissioned officer in Operation Desert Shield/Storm. From 1987 to
1990, Mr. Paliughi was Senior Vice  President -- Western Operations of  AmeriGas
Propane, Inc. (then

                                       50



<PAGE>
a subsidiary of UGI Corporation), the largest propane company in the U.S. During
1986,  Mr. Paliughi was Director of Retail Operations of CalGas Corporation. For
more  than  14  years  prior,  he  held  various  positions  with  VanGas,  Inc.
('VanGas'),  the western subsidiary of Suburban  Propane Gas (then a division of
Quantum Chemical Corporation), the third  largest U.S. propane company. He  last
served  as Senior Vice  President/General Manager, the  top executive officer at
VanGas.

     Ronald R. Rominiecki  joined the  Managing General Partner  on December  1,
1995  as Senior Vice President  and Chief Financial Officer.  From April 1994 to
November 1995,  he served  as  Vice President  and  Chief Financial  Officer  of
O'Brien Environmental Energy, Inc. ('O'Brien'), a publicly-owned company engaged
in  cogeneration and other energy related  businesses. In September 1994 O'Brien
filed a petition in bankruptcy under Chapter 11 of the United States Code.  From
June 1988 to March 1994, Mr. Rominiecki was Corporate Controller at Westmoreland
Coal Company, a NYSE listed company.

     C.  David Watson  has been  Senior Vice  President, Administration, General
Counsel and Assistant Secretary of  the Managing General Partner since  December
19,  1996.  From  December 2,  1996  to December  18,  1996 he  was  Senior Vice
President. He is responsible for  legal matters, real estate, fleet  management,
plant  engineering,  safety,  risk management,  human  resources,  insurance and
public relations. Prior to his employment with the Managing General Partner,  he
was  with the law firm of Jenner & Block in Chicago, Illinois, as a partner from
January 1, 1993 to  November 30, 1996,  and as an  associate from September  25,
1986 to December 31, 1992.

     Each  director  has  been  elected  to  serve  until  the  Managing General
Partner's  next  annual  meeting  of  stockholders  and  until  such  director's
successor  is  duly elected  and qualified  or until  his death,  resignation or
removal. The term of office of each  executive officer is until the next  annual
meeting  of the Board of Directors of the Managing General Partner and until his
successor is elected and qualified or until his death, resignation or removal.

REIMBURSEMENT OF EXPENSES OF THE MANAGING GENERAL PARTNER

     In general, the management  and employees of  National Propane who  managed
and  operated the propane business  and assets of National  Propane prior to the
IPO continue to manage  and operate the Partnership's  business as officers  and
employees  of the Managing  General Partner and  its Affiliates. The Partnership
does not have any officers or employees of its own. The Operating  Partnership's
corporate  subsidiary, NSSI, does, however, have its own employees to manage and
operate its  business.  The  Managing  General  Partner  does  not  receive  any
management  fee or other  compensation in connection with  its management of the
Partnership, but is  reimbursed at  cost for  all direct  and indirect  expenses
incurred  on behalf of the Partnership,  including the costs of compensation and
employee benefit plans described herein  properly allocable to the  Partnership,
and  all other expenses necessary or appropriate  to the conduct of the business
of, and allocable to, the  Partnership. The Partnership Agreement provides  that
the  Managing General Partner shall determine the expenses that are allocable to
the Partnership  in any  reasonable manner  determined by  the Managing  General
Partner  in  its sole  discretion. Affiliates  of  the Managing  General Partner
(including Triarc) may perform certain administrative services for the  Managing
General Partner on behalf of the Partnership. Such Affiliates will not receive a
fee for such services performed for or on behalf of the Partnership, but will be
reimbursed   for  all  direct  and  indirect  expenses  incurred  in  connection
therewith. In addition, the  General Partners and  their Affiliates may  provide
additional  services  to  the Partnership,  for  which the  Partnership  will be
charged reasonable fees as determined by the Managing General Partner.

     In addition, in  connection with the  Partnership Conveyance, the  Managing
General Partner received an aggregate 2% unsubordinated General Partner Interest
and  a 40.6%  interest (at  that date)  as holder  of the  Subordinated Units as
consideration for its  contribution to  the Partnership of  its limited  partner
interest  in the Operating Partnership, which  was received as consideration for
its contribution  to  the  Operating  Partnership of  the  propane  business  of
National  Propane. Such Subordinated Units  currently represent a 38.7% interest
in  the  Partnership.  The  Managing   General  Partner  will  be  entitled   to
distributions  on such Units, and the  Managing General Partner will be entitled
to incentive distributions as holder of the Incentive Distribution rights.

                                       51



<PAGE>
ITEM 11. EXECUTIVE COMPENSATION

     The following table sets forth the  annual salaries, bonuses and all  other
compensation  awards and  payouts earned  by the  President and  Chief Executive
Officer and by certain named executive officers of the Managing General  Partner
(collectively,  the  'Named Officers')  for  services rendered  to  the Managing
General Partner and its subsidiaries during the fiscal years ended December  31,
1996, 1995 and 1994.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                 ANNUAL
                                                              COMPENSATION
                                                -----------------------------------------
                                                                                OTHER
                                                                                ANNUAL
      NAME AND PRINCIPAL POSITION        YEAR    SALARY($)       BONUS($)    COMPENSATION
---------------------------------------  ----   ------------     -------     ------------
<S>                                      <C>    <C>              <C>         <C>
Ronald D. Paliughi ....................  1996      277,083       500,000(3)      5,621
  President and Chief Executive Officer  1995      250,000         --            2,592
                                         1994      250,000       300,000        --

Ronald R. Rominiecki ..................  1996      165,000       100,000(3)        571
  Senior Vice President and Chief        1995       13,750(7)      --           --
  Financial Officer                      1994       --             --           --

C. David Watson .......................  1996       10,417(9)      --           --
  Senior Vice President,                 1995       --             --           --
  Administration, General Counsel and    1994       --             --           --
  Assistant Secretary

Laurie B. Crawford ....................  1996      122,917       124,500         3,055
  Former Senior Vice President,          1995       88,333         --            1,579
  Administration, General Counsel and    1994       78,472        20,000         1,117
  Assistant Secretary

<CAPTION>
                                                     LONG-TERM COMPENSATION
                                                             AWARDS
                                          ---------------------------------------------
                                                               NUMBER OF
                                            RESTRICTED         SECURITIES        LTIP
                                               STOCK           UNDERLYING       PAYOUTS      ALL OTHER
      NAME AND PRINCIPAL POSITION         AWARD(S)(#)(1)   OPTIONS/SARS(#)(2)     ($)     COMPENSATION($)
---------------------------------------   ---------------  ------------------   -------   ---------------
<S>                                      <C>               <C>                  <C>       <C>
Ronald D. Paliughi ....................       --                --               --           --
  President and Chief Executive Officer       --                 30,000(4)       --           --
                                                5,000            51,000(5)       --            96,178(6)
Ronald R. Rominiecki ..................       --                --               --            54,380(11)
  Senior Vice President and Chief             --                 20,000(4)       --            63,000(8)
  Financial Officer                           --                --               --           --
C. David Watson .......................       --                --               --           --
  Senior Vice President,                      --                --               --           --
  Administration, General Counsel and         --                --               --           --
  Assistant Secretary
Laurie B. Crawford ....................       --                --               --           --
  Former Senior Vice President,               --                  7,500(10)      --           --
  Administration, General Counsel and         --                 10,000(10)      --           --
  Assistant Secretary
</TABLE>

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

 (1) All  restricted stock  awards were  of Triarc's  Class A  Common Stock, par
     value $.10 per share (the 'Class  A Common Stock'), and were made  pursuant
     to  Triarc's 1993 Equity Participation Plan (described below). Restrictions
     on such shares lapsed prior to December 31, 1996.

 (2) All stock  option  grants  were  made  pursuant  to  Triarc's  1993  Equity
     Participation Plan. The option grants are described below under 'Option/SAR
     Grants in Last Fiscal Year, Individual Grants.'

 (3) Paid by Triarc in connection with activities related to the monetization of
     its propane business.

 (4) One-third of the options granted will vest on each of the first, second and
     third  anniversaries  of  the  date  of  grant  and  the  options  will  be
     exercisable at  any  time  between  the  date  of  vesting  and  the  tenth
     anniversary of the date of grant.

 (5) With  respect to 26,000  of the options granted,  one-third of such options
     will vest on each of the first, second and third anniversary of the date of
     grant. With  respect to  the remaining  25,000 options,  one-third of  such
     options will vest on each of the third, fourth and fifth anniversary of the
     date  of grant. All of such options will be exercisable at any time between
     the date of vesting and the tenth anniversary of the date of grant.

 (6) Includes $33,333 for  certain salary allowances  and $60,829 of  reimbursed
     moving  expenses  in connection  with  Mr. Paliughi's  relocation  to Cedar
     Rapids, Iowa.

 (7) Mr. Rominiecki began his  employment with the  Managing General Partner  on
     December  1, 1995.  The amount  reported is  based on  an annual  salary of
     $165,000.

 (8) Represents a one-time  bonus payable  in connection  with Mr.  Rominiecki's
     employment by the Managing General Partner.

 (9) Mr.  Watson  began  his employment  with  the Managing  General  Partner on
     December 2, 1996.  The amount  reported was based  on an  annual salary  of
     $125,000. See ' -- Employment Arrangements with Executive Officers' below.

                                              (footnotes continued on next page)

                                       52



<PAGE>
(footnotes continued from previous page)

(10) In  connection with  the termination  of Ms.  Crawford's employment  by the
     Managing General Partner on December 18, 1996, all of Ms. Crawford's  stock
     options immediately vested and are exercisable until March 18, 1997.

(11) Includes  $54,380  of reimbursed  moving  expenses in  connection  with Mr.
     Rominiecki's relocation to Cedar Rapids, Iowa.

CASH INCENTIVE PLANS

     Triarc has implemented an annual cash incentive plan (the 'Annual Incentive
Plan') for  executive officers  and key  employees of  National Propane  and  is
presently  developing a  mid-term cash  incentive plan  (the 'Mid-Term Incentive
Plan') for executive officers and key employees of National Propane.

     The Annual Incentive Plan is designed to provide annual incentive awards to
participants, 50% of which are based on whether National Propane has met certain
pre-determined goals  and  50% of  which  is based  on  the performance  of  the
participant  during  the  preceding  year.  Under  the  Annual  Incentive  Plan,
participants may receive awards of a specified percentage of their then  current
base salaries, which percentage varies depending upon the level of seniority and
responsibility  of the participant. Such percentage is set by National Propane's
management in consultation with management of Triarc. The Board of Directors  of
National Propane, in consultation with management of Triarc and the Compensation
Committee  of the Triarc Board of  Directors (the 'Compensation Committee'), may
elect to  adjust  awards  on  a discretionary  basis  to  reflect  the  relative
individual  contribution  of  the executive  or  key employee,  to  evaluate the
'quality' of  National  Propane's earnings  or  to take  into  account  external
factors  that affect  performance results.  The Board  of Directors  of National
Propane also may decide that multiple performance objectives related to National
Propane's and/or the individual's  performance may be  appropriate and, in  such
event,  such factors would be  weighted in order to  determine the amount of the
annual incentive awards. The Annual  Incentive Plan is administered by  National
Propane's  Board  of Directors  and Triarc's  management and  may be  amended or
terminated by such Board of Directors and Triarc's management at any time.

     Under the  Mid-Term Incentive  Plan, incentive  awards will  be granted  to
participants  if National  Propane achieves an  agreed upon profit  over a three
year performance cycle.  During each plan  year, an amount  will be accrued  for
each  participant based upon  the amount by which  National Propane's profit for
such  year  exceeds  a  minimum  return  to  be  determined.  A  new  three-year
performance  cycle will  begin each  year, such  that after  the third  year the
annual cash amount paid to participants pursuant to the Mid-Term Incentive  Plan
should  equal  the target  award if  National Propane's  profit goals  have been
achieved for  the full  three-year cycle.  The Board  of Directors  of  National
Propane,  together with  Triarc's management  and the  Compensation Committee of
Triarc's Board of  Directors, may  adjust, upward or  downward, an  individual's
award  based upon  an assessment  of the  individual's relative  contribution to
National Propane's longer-term  profit performance.  The Board  of Directors  of
Triarc  and Triarc's  management may amend  or terminate  the Mid-Term Incentive
Plan at any time.

TRIARC'S 1993 EQUITY PARTICIPATION PLAN

     Certain  executive   officers  of   the  Managing   General  Partner   have
participated  in the Triarc Companies, Inc. 1993 Equity Participation Plan which
was adopted  on April  24, 1993,  and which  provides that  awards may  be  made
thereunder  until April 24, 1998. The plan provides for, among other things, the
grant of options to purchase Triarc's  Class A Common Stock, Stock  Appreciation
Rights  ('SARs')  and  restricted shares  of  Class A  Common  Stock. Directors,
selected officers and key employees of,  and key consultants to, Triarc and  its
subsidiaries,   including  the   Managing  General  Partner,   are  eligible  to
participate in the  plan. The  plan is  being administered  by the  Compensation
Committee  of the Triarc  Board of Directors,  which may determine  from time to
time to grant options, SARs and restricted stock.

                                       53



<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS

     No options to purchase shares of Triarc  Class A Common Stock or SARs  have
been granted to any of the Named Officers in respect of 1996.

OPTION/SAR EXERCISES IN 1996 AND YEAR-END OPTION/SAR VALUES

     The  following table sets  forth certain information  concerning options to
purchase shares of Triarc  Class A Common  Stock, and the values  at the end  of
1996  of unexercised in-the-money  options to purchase shares  of Triarc Class A
Common Stock granted to the Named Officers outstanding as of the end of 1996. No
Named Officer exercised any options to  purchase Triarc Class A Common Stock  in
1996.

<TABLE>
<CAPTION>
                                                                NUMBER OF SECURITIES            VALUE OF UNEXERCISED
                                                               UNDERLYING UNEXERCISED               IN-THE-MONEY
                                                                  OPTIONS/SARS AT                   OPTIONS/SARS
                                                                    FISCAL 1996                    AT FISCAL 1996
                                                                      YEAR-END                      YEAR-END(1)
                                                            ----------------------------    ----------------------------
                          NAME                              EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
---------------------------------------------------------   -----------    -------------    -----------    -------------
<S>                                                         <C>            <C>              <C>            <C>
Ronald D. Paliughi.......................................      40,667          80,333         $26,750         $34,000
Ronald R. Rominiecki.....................................       6,667          13,333           9,167          18,333
C. David Watson..........................................      --              --              --              --
Laurie B. Crawford.......................................      17,500          --              14,063          --
</TABLE>

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

(1) On  December 31, 1996, the last day of Fiscal 1996, the closing price of the
    Triarc Class A Common Stock was $11.50 per share.

UNIT OPTION PLAN

     Effective upon the closing of the IPO, the Managing General Partner adopted
the National  Propane Corporation  1996 Unit  Option Plan  (the 'Option  Plan'),
which  permits the  issuance of  options (the  'Options') and  Unit appreciation
rights ('UARs') to eligible persons. An aggregate of 1,250,000 Common Units  and
Subordinated  Units are initially reserved for  issuance as of the Option Plan's
effective date. Pursuant to the terms  of the Option Plan, an additional  number
of  Units equal to 1% of the number  of Units outstanding as of each December 31
following the Option Plan's effective date will be added to the total number  of
Units  that may be issued  thereafter. Accordingly, as of  December 31, 1996, an
additional 67,015 Units were available for  issuance under the Option Plan.  The
number  of Units available for issuance will  also be increased by the number of
Units received by the Managing General Partner as payment of the exercise  price
of  Options and by the number of Units purchased by the Managing General Partner
from an  amount equal  to the  cash proceeds  received by  the Managing  General
Partner  on the exercise of Options. The  number of Units available for issuance
pursuant to the Option Plan is  subject to adjustment in certain  circumstances.
The  following is  a summary  of the material  terms of  the Option  Plan and is
qualified in its entirety by reference to  the Option Plan, which is an  exhibit
to the Registration Statement of which this Prospectus is a part.

     The   Option  Plan  has  been  designed  to  furnish  additional  incentive
compensation to selected directors, officers,  employees and consultants of  the
Managing  General Partner and its Affiliates  and to increase their personal and
proprietary interest in the future performance of the Partnership. Approximately
1,000 directors,  officers,  employees,  and consultants  will  be  eligible  to
participate  in the Option  Plan. In addition,  in the event  that the provision
relating to disinterested administration in Rule 16b-3 under the 1934 Act (as in
effect on the Option Plan's effective date) becomes inapplicable to the Managing
General Partner and the Partnership, directors who are not employees or officers
of the Managing General Partner will be eligible to receive Options and UARs.

     The  Option  Plan  is  administered  by  the  Managing  General   Partner's
compensation  committee (the 'Committee'). The Committee, in its sole discretion
and authority,  but subject  to the  terms of  the Option  Plan, determines  the
directors,  officers,  employees and  consultants  who are  eligible  to receive
Options and UARs and the date of grant, number of Units, exercise price, vesting
schedule, duration

                                       54



<PAGE>
(not to exceed  ten years)  and other terms  and conditions  applicable to  each
Option  and UAR granted under the Option  Plan. The Committee may accelerate the
exercisability  of  Options  and  UARs.  No  Option  or  UAR  with  respect   to
Subordinated  Units will become exercisable before  the end of the Subordination
Period.

     On a change of control (as defined in the Option Plan), the Committee  will
have  discretion to accelerate the  exercisability (and duration) of outstanding
Options and UARs or cancel outstanding Options and UARs in exchange for cash.

     The exercise price of each  Option may be paid in  the form of cash,  check
acceptable  to the Managing  General Partner, Units held  by the participant for
such period as  may be  required to  avoid a  charge to  earnings for  financial
reporting  purposes,  or  such  other form  of  consideration  permitted  by the
Committee, including by assignment of a portion of the proceeds on sale of Units
deliverable upon exercise or any combination of the foregoing.

     Units delivered by the Managing General Partner on exercise of an Option or
UAR may  consist  of Units  acquired  in the  open  market or  from  any  person
(including  Units newly issued  by the Partnership), Units  already owned by the
Managing General Partner, or any combination of the foregoing. Options and  UARs
are generally nontransferable.

     With  respect to each Unit delivered upon the exercise of an Option (unless
newly issued by the Partnership), the Managing General Partner shall be entitled
to reimbursement by  the Partnership for  the excess,  if any, of  (i) the  fair
market  value of each such Unit (as of  the date of exercise of such Option) or,
in the case of Units  purchased in the open market,  the price actually paid  by
the Managing General Partner therefor over (ii) the exercise price of the Option
relating  to such Unit.  With respect to  the settlement of  a UAR, the Managing
General Partner shall be  entitled to reimbursement by  the Partnership for  (i)
the  amount of cash, if any, paid in connection with such settlement or (ii) the
fair market value of each such Unit delivered in connection with such settlement
(unless such Unit is  newly issued by  the Partnership). Thus,  the cost of  the
Options and UARs will be borne by the Partnership.

     The  Committee may grant UARs in such amounts and subject to such terms and
conditions as the  Committee may determine.  UARs may be  granted in  connection
with  all or  any part  of, or  independently of,  any Option  granted under the
Option Plan. The grantee  of a UAR  has the right to  receive from the  Managing
General  Partner an amount equal to (a) the  excess of (i) the fair market value
of a Unit on the date of exercise of the UAR over (ii) the fair market value  of
a  Unit on the date  of grant (or over  the Option exercise price  if the UAR is
granted in connection  with an Option),  multiplied by (b)  the number of  Units
with respect to which the UAR is exercised. Payment to the grantee upon exercise
of  a UAR will be in cash or in  Units (valued at their fair market value on the
date of exercise of the  UAR) or both, all as  the Committee shall determine  in
its  sole discretion. Upon the  exercise of a UAR  granted in connection with an
Option, the number of Units  subject to the related  Option shall be reduced  by
the  number  of Units  with  respect to  which the  UAR  is exercised.  Upon the
exercise of an  Option in  connection with  which a  UAR has  been granted,  the
number  of Units subject  to the related UAR  shall be reduced  by the number of
Units with respect to which the Option is exercised.

     The Board of Directors  of the Managing General  Partner in its  discretion
may  terminate the Option Plan at any time with respect to any Units for which a
grant has not theretofore been made. The  Board of Directors will also have  the
right  to alter or amend the Option Plan,  any award made thereunder or any part
thereof from time to  time; provided, that no  change in any previously  granted
Option  or UAR may be made which would  impair the rights of the grantee without
the consent of such grantee; and provided further, that to the extent  necessary
to  comply with Rule 16b-3  under the 1934 Act,  no such amendment or alteration
will, without  the  requisite consent  under  such Rule  16b-3:  (i)  materially
increase  the total  number of  Units available for  Options and  UARs under the
Option  Plan,  subject  to  certain  exceptions;  (ii)  materially  modify   the
requirements  as  to eligibility  for participation  in  the Option  Plan; (iii)
extend the maximum period during which Options and UARs may be granted under the
Option Plan; or (iv) materially  increase the benefits accruing to  participants
under the Option Plan.

                                       55



<PAGE>
     Generally,  no tax is imposed on the grantee upon the grant of an Option or
UAR under the Plan and neither the Partnership nor the Managing General  Partner
will  be entitled to a tax deduction by  reason of such a grant. Generally, upon
the exercise of an Option,  the optionee will be  taxable on ordinary income  in
the  year of exercise in an amount equal  to the excess of the fair market value
of the Units  on the date  of exercise over  the Option exercise  price and  the
employer  will be entitled to  a deduction in an  equivalent amount. In general,
upon exercising a UAR, the amount of any cash received and the fair market value
on the exercise date of any Units or other property received are taxable to  the
recipient  as ordinary  income and  deductible by  the employer.  Insofar as the
Partnership will  reimburse  the Managing  General  Partner for  the  difference
between  the cost incurred by the Managing General Partner in acquiring Units to
deliver to  the  optionee or  holder  of UARs  upon  exercise and  the  proceeds
received  by the Managing  General Partner from the  optionee in connection with
such exercise,  the  Managing  General  Partner will  generally  be  treated  as
receiving  income in  the amount of  such reimbursement and  the Partnership may
claim a deduction for such payment.  Upon a subsequent disposition of the  Units
received  upon exercise of an Option or  UAR, any appreciation after the date of
exercise will generally qualify as capital gain. If the Units received upon  the
exercise  of an Option or UAR are transferred to the optionee subject to certain
restrictions, then  the taxable  income  realized by  the optionee,  unless  the
optionee  elects otherwise,  and the  corresponding tax  deduction (assuming any
federal income tax  withholding requirements are  satisfied) should be  deferred
and  should be measured  at the fair market  value of the Units  at the time the
restrictions lapse. The restrictions imposed  on certain individuals by  Section
16(b)  of the  1934 Act  may constitute such  a transfer  restriction during the
period prescribed thereby with respect to  Options or UARs exercised within  six
months of the grant date thereof.

     No Options or UARs have been granted as of March 20, 1997.

COMPENSATION OF DIRECTORS

     The  Managing  General  Partner  pays  no  additional  remuneration  to its
employees (or employees of any of its Affiliates) for serving as directors or to
directors who are not employees  of the Managing General  Partner or any of  its
Affiliates.  The Managing General Partner may  in the future pay remuneration to
its directors. In addition, the  Partnership anticipates that directors who  are
not  employees  of  the  Managing  General Partner  or  its  Affiliates  will be
compensated for serving as such,  will be reimbursed for out-of-pocket  expenses
and  will be  eligible to participate  in the Partnership's  or Managing General
Partner's Unit purchase or option plans, if any.

EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS

     Mr. Paliughi has an employment contract with the Managing General  Partner,
effective  as of April 24, 1993, as  amended, pursuant to which (i) the Managing
General Partner agrees to employ Mr.  Paliughi as President and Chief  Executive
Officer  through January 2,  1998, (ii) Mr.  Paliughi receives a  base salary of
$300,000 per annum during his employment (subject to increase at the  discretion
of the Board of Directors), (iii) Mr. Paliughi is eligible to participate in the
Annual Incentive Plan, enabling him to receive an annual cash bonus of up to 75%
of  his  base  salary  based  upon the  achievement  of  certain  individual and
Partnership performance objectives, (iv) Mr. Paliughi is eligible to participate
in the Mid-Term Incentive Plan, enabling him to receive an annual bonus award at
least equal  to  75% of  his  base salary  based  upon the  achievement  by  the
Partnership  of  certain  financial  performance  objectives  over  a three-year
performance cycle, (v) Mr. Paliughi is entitled to severance benefits  generally
equal  to two  years base salary  and bonuses (approximately  $1,050,000 if such
termination occurred on December  31, 1996) and  certain relocation payments  in
the event he is terminated other than for cause (as defined), or if his existing
employment  agreement is not renewed or  extended on substantially similar terms
and (vi) Mr. Paliughi  is entitled to participate  in other generally  available
compensation  plans and receives various  other benefits including reimbursement
of certain expenses. The  agreement also restricts  Mr. Paliughi from  competing
with the General Partner for 24 months after the termination of the agreement if
such  termination  results  from  Mr. Paliughi's  voluntary  resignation  or the
Managing General Partner's  termination of Mr.  Paliughi's employment for  cause
(as defined in the agreement).

                                       56



<PAGE>
     Mr.  Rominiecki has a severance agreement with the Managing General Partner
which provides that Mr. Rominiecki  is entitled to severance benefits  generally
equal  to one  year's base  salary (approximately  $165,000 if  such termination
occurred on January 21, 1997)  and bonuses in the  event he is terminated  other
than for cause (as defined) during the term of his employment agreement.

     Mr.  Watson has an  employment agreement with  the Managing General Partner
pursuant   to   which   (i)   Mr.   Watson   is   employed   as   Senior    Vice
President  -- Administration  and General  Counsel effective  December 19, 1996,
(ii) Mr. Watson receives a base salary  of $125,000 per annum, (iii) Mr.  Watson
is eligible to participate in the Annual Incentive Plan, enabling him to receive
an annual cash bonus of up to 50% of his base salary, based upon the achievement
of certain individual and Partnership performance objectives, (iv) Mr. Watson is
eligible  to participate in the Mid-Term Incentive Plan, enabling him to receive
an annual  bonus  award  equal  to  40% of  his  base  salary,  based  upon  the
achievement  by the Partnership of certain financial performance objectives over
a three-year performance cycle, (v) Mr. Watson is entitled to severance benefits
generally equal  to one  year's  base salary  and bonuses  in  the event  he  is
terminated  other than for cause (as defined)  during the term of his employment
agreement, (vi) Mr.  Watson received  a relocation  allowance equal  to the  net
amount  of  two  months  salary,  which amount  must  be  repaid  if  Mr. Watson
voluntarily separates from the  Managing General Partner  within the first  year
from  his date of hire, and (vii) Mr. Watson is entitled to participate in other
generally available  compensation  plans  and receive  various  other  benefits,
including reimbursement of certain expenses.

     Ms.  Crawford's employment by the  Managing General Partner ended effective
December 18, 1996. In accordance with the terms of her employment agreement with
the Managing General  Partner, Ms. Crawford  receives (i) severance  pay at  the
annual  base salary rate of  $137,500 from January 1,  1997 through December 18,
1998, (ii) $65,625 in the first quarter of 1997 and $68,750 in the first quarter
of 1998 in lieu of bonuses which otherwise would have been paid to Ms.  Crawford
with respect to 1996 and 1997 and (iii) accrued and unpaid vacation time through
the  date of termination. In addition, Ms.  Crawford is eligible to maintain her
current health  and  medical  coverage  for 18  months  following  the  date  of
termination at the cost of the Managing General Partner. In addition, all of Ms.
Crawford's  Triarc stock  options immediately  vested and  are exercisable until
March 18, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

OWNERSHIP OF PARTNERSHIP UNITS BY THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
MANAGING GENERAL PARTNER AND THE SELLING UNITHOLDER

     The table below sets forth the  beneficial ownership as of March 20,  1997,
by  each person known by the Managing General Partner to be the beneficial owner
of more than 5% of any class of Units of the Partnership, including the  Selling
Unitholder,   each   director   and   each  Named   Officer   of   the  Managing

                                       57



<PAGE>
General Partner and the executive officers and directors of the Managing General
Partner as a group.  The Common Units  are traded on the  NYSE under the  symbol
'NPL'.

<TABLE>
<CAPTION>
                                                                                    AMOUNT AND
                                                                      CLASS OF      NATURE OF        PERCENT OF
              NAME AND ADDRESS OF BENEFICIAL OWNER                      UNITS       OWNERSHIP(1)       CLASS
-----------------------------------------------------------------   -------------   ----------       ----------
<S>                                                                 <C>             <C>              <C>
National Propane Corporation ....................................   Subordinated    4,533,638            100%
  IES Tower, Suite 1700
  200 First Street, S.E.
  Cedar Rapids, I.A. 52401
Nelson Peltz ....................................................      Common           1,210 (2)       *
  280 Park Avenue
  New York, N.Y. 10017
Peter W. May ....................................................      Common          30,000           *
  280 Park Avenue
  New York, N.Y. 10017
Frederick W. McCarthy ...........................................      Common          --               *
  222 Lakeview Avenue
  West Palm Beach, FL 33401
Willis G. Ryckman III ...........................................      Common          --               *
  208 Dolphin Court
  Stamford, CT 06902
Ronald D. Paliughi...............................................      Common          --               *
Ronald R. Rominiecki.............................................      Common             200           *
C. David Watson..................................................      Common          --               *
All executive officers and directors as a group (7 persons)......      Common          31,410              *%
</TABLE>

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

*  Less than 1%

(1) Except  as otherwise indicated, each person  has sole voting and dispositive
    power with respect to such Units.

(2) Includes 1,210  Units  owned by  minor  children  of Mr.  Peltz.  Mr.  Peltz
    disclaims beneficial ownership of these Units.

OWNERSHIP OF TRIARC COMMON STOCK BY THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
MANAGING GENERAL PARTNER AND CERTAIN BENEFICIAL OWNERS

     All  of the issued  and outstanding shares  of common stock  of the General
Partner are  indirectly  owned  by  Triarc.  The  table  below  sets  forth  the
beneficial  ownership  as of  December 31,  1996,  by each  person known  by the
Managing General Partner  to be  the beneficial  owner of  more than  5% of  the
outstanding  shares of Triarc Class A  Common Stock (constituting the only class
of voting capital stock of Triarc), each director and each Named Officer of  the
Managing General Partner and the executive

                                       58



<PAGE>
officers  and directors  of the  Managing General  Partner as  a group. Triarc's
Class A Common Stock is traded on the NYSE under the symbol 'TRY'.

<TABLE>
<CAPTION>
                                                                             AMOUNT AND
                                                                               NATURE                   PERCENT OF
                  NAME AND ADDRESS OF BENEFICIAL OWNER                     OF OWNERSHIP(1)                CLASS
------------------------------------------------------------------------   ---------------              ----------
<S>                                                                        <C>                          <C>
Nelson Peltz ...........................................................      6,974,967(2)(3)(4)(5)        28.1%
  280 Park Avenue
  New York, NY 10017
Peter W. May ...........................................................      6,653,000(2)(4)(6)           27.1%
  280 Park Avenue
  New York, NY 10017
DWG Acquisition Group, L.P. ............................................      5,982,867(4)                 25.1%
  1201 North Market Street
  Wilmington, DE 19801
William Ehrman .........................................................      1,460,093(7)(8)               6.1%
  300 Park Avenue
  New York, NY 10022
Frederick Ketcher ......................................................      1,390,493(7)(9)               5.8%
  300 Park Avenue
  New York, NY 10022
Jonas Gerstl ...........................................................      1,376,793(7)(10)              5.8%
  300 Park Avenue
  New York, NY 10022
Frederic Greenberg .....................................................      1,370,793(7)(11)              5.7%
  300 Park Avenue
  New York, NY 10022
James McLaren ..........................................................      1,365,793(7)(12)              5.7%
  300 Park Avenue
  New York, NY 10022
Frederick W. McCarthy...................................................        --                         *
Willis G. Ryckman III...................................................        --                         *
Ronald D. Paliughi......................................................         59,000(13)                *
Ronald R. Rominiecki....................................................          6,667(14)                *
C. David Watson.........................................................        --                         *
All executive officers and directors as a group (7 persons).............      7,710,767                    30.2%
</TABLE>

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

*   Less than 1%.

 (1) Except as otherwise indicated, each person has sole voting and  dispositive
     power with respect to such shares.

 (2) Includes  5,982,867 shares held by DWG  Acquisition, of which Mr. Peltz and
     Mr. May are the sole general partners.

 (3) Includes 200 shares owned by a family trust of which Mr. Peltz is a general
     partner. Mr. Peltz disclaims beneficial ownership of such 200 shares.

 (4) The Partnership is informed that DWG Acquisition has pledged such shares to
     a financial institution on behalf of Messrs. Peltz and May to secure  loans
     made to them.

 (5) Includes  options to purchase 965,000 shares  of Class A Common Stock which
     have vested or will vest within 60 days of December 31, 1996.

 (6) Includes options to purchase 643,333 shares  of Class A Common Stock  which
     have vested or will vest within 60 days of December 31, 1996.

                                              (footnotes continued on next page)

                                       59



<PAGE>
(footnotes continued from previous page)

 (7) The information set forth herein with respect to Messrs. Ehrman, Greenberg,
     Ketcher,  Gerstl and McLaren is based  solely on information contained in a
     Schedule 13D,  dated  July  16,  1996, filed  pursuant  to  the  Securities
     Exchange Act of 1934, as amended.

 (8) Includes  39,150 shares  of Class  A Common Stock  owned by  members of Mr.
     Ehrman's immediate family and an aggregate  of 1,365,793 shares of Class  A
     Common  Stock he may be deemed to  beneficially own as a general partner of
     EGS Associates, L.P.,  a Delaware limited  partnership ('EGS  Associates'),
     EGS   Partners,  L.L.C.,   a  Delaware  limited   liability  company  ('EGS
     Partners'), Bev  Partners,  L.P.,  a  Delaware  limited  partnership  ('Bev
     Partners'),  and  Jonas  Partners,  L.P.,  a  Delaware  limited partnership
     ('Jonas Partners').

 (9) Includes 1,100 shares  of Class A  Common Stock  owned by a  member of  Mr.
     Ketcher's  immediate  family  and  his mother-in-law  and  an  aggregate of
     1,365,793 shares of Class A Common  Stock he may be deemed to  beneficially
     own  as a general partner of EGS Associates, EGS Partners, Bev Partners and
     Jonas Partners.

(10) Includes 8,500 shares  of Class A  Common Stock  owned by a  member of  Mr.
     Gerstl's  immediate family and an aggregate  of 1,365,793 shares of Class A
     Common Stock he may be deemed to  beneficially own as a general partner  of
     EGS Associates, EGS Partners, Bev Partners and Jonas Partners.

(11) Includes  3,000 shares  of Class A  Common Stock  owned by a  member of Mr.
     Greenberg's immediate family and an aggregate of 1,365,793 shares of  Class
     A Common Stock he may be deemed to beneficially own as a general partner of
     EGS Associates, EGS Partners, Bev Partners and Jonas Partners.

(12) Constitutes the shares of Class A Common Stock Mr. McLaren may be deemed to
     beneficially  own as a general partner of EGS Associates, EGS Partners, Bev
     Partners and Jonas Partners.

(13) Includes options to purchase  49,000 shares of Class  A Common Stock  which
     have vested or will vest within 60 days of December 31, 1996.

(14) Represents  options to purchase 6,667 shares  of Class A Common Stock which
     have vested or will vest within 60 days of December 31, 1996.

                            ------------------------
     The  foregoing  table  does  not  include  5,997,622  shares  of   Triarc's
non-voting  Class B Common Stock  owned by Victor Posner  or entities related to
Victor Posner as a result of a certain Settlement Agreement dated on January  9,
1995.  The shares of Class  B Common Stock can  be converted without restriction
into an equal number of shares of Class A Common Stock following a transfer to a
non-affiliate of Victor Posner.  Triarc has certain rights  of first refusal  if
such  shares are proposed to be sold  to an unaffiliated party. If the 5,997,622
currently outstanding shares  of the Class  B Common Stock  were converted  into
shares of Class A Common Stock, such shares would constitute approximately 20.1%
of the then outstanding shares of Class A Common Stock as of December 31, 1996.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RIGHTS OF THE GENERAL PARTNERS

     The  Partnership and  the Managing  General Partner  have extensive ongoing
relationships with Triarc and its Affiliates. Affiliates of the Managing General
Partner, including  Triarc,  perform  certain administrative  services  for  the
Managing  General Partner on  behalf of the Partnership.  Such Affiliates do not
receive a fee for such services, but are reimbursed for all direct and  indirect
expenses incurred in connection therewith. See Item 10. 'Directors and Executive
Officers of the Registrant -- Partnership Management.' In addition, the Managing
General  Partner owns all  of the Subordinated Units,  representing 40.4% of the
outstanding Units. Triarc indirectly owns 100% of the General Partners.  Through
the  Managing  General  Partner's  ability  to  control  the  management  of the
Partnership and its right to vote the Subordinated Units (effectively giving the
Managing General Partner the ability to

                                       60



<PAGE>
veto certain actions of the Partnership),  the Managing General Partner and  its
Affiliates   have  the  ability   to  exercise  substantial   control  over  the
Partnership.

TRANSACTIONS INVOLVING TRIARC AND ITS AFFILIATES

     In January 1996, the Partnership entered into a five-year lease, as lessee,
with Graniteville, then  a wholly owned  subsidiary of Triarc,  as lessor,  with
respect  to certain storage facilities  located in Graniteville, South Carolina.
As consideration for the use of the leased premises, the Partnership is required
to provide  all of  Graniteville's annual  propane requirements  (up to  700,000
gallons  annually) at cost plus delivery  expenses. Pursuant to the Graniteville
Sale, such lease was assigned to Avondale and amended to provide that it may  be
terminated by either party thereto upon six months' notice.

     In  September 1995 Triarc, through a  wholly owned subsidiary, acquired all
of the outstanding  stock of  two related propane  distribution businesses.  The
aggregate   purchase  price  was  approximately   $4.2  million  (including  the
assumption of certain existing indebtedness). In September 1995 the stock of the
subsidiary which acquired  the two companies  was contributed by  Triarc to  NPC
Holdings,  Inc. ('NPC Holdings')  which, in turn, contributed  such stock to the
Managing General Partner. In consideration  for such contribution, NPC  Holdings
received an additional 30 shares of the Managing General Partner's common stock,
increasing its ownership of the Managing General Partner to 75.7% from 75.2%.

     In  December 1995,  National Propane  borrowed $30  million under  its then
existing $150 million credit facility with  the Bank of New York and  dividended
such  amount to subsidiaries of Triarc ($22.7 million) and SEPSCO ($7.3 million)
in proportion to their respective  percentage ownership in National Propane.  On
February  22, 1996,  the 11 7/8%  senior subordinated debentures  of SEPSCO were
redeemed. The cash for such redemption came from the proceeds of the $30 million
of borrowings (which, under the Former  Credit Facility, were restricted to  the
redemption  of the 11 7/8% Debentures), liquidation of marketable securities and
existing cash  balances.  The indebtedness  incurred  in part  to  finance  such
redemption  was assumed  by the Operating  Partnership and  repaid in connection
with the Transactions.

     In  the  fourth  quarter  of  1995,  the  Managing  General  Partner   sold
approximately  $3.9 million face amount of its accounts receivable to Triarc for
approximately $3.8  million.  As collections  on  such accounts  receivable  are
received  by  the Managing  General Partner  they  are remitted  to Triarc  on a
periodic basis. This arrangement terminated on July 2, 1996 with a final payment
to Triarc of approximately $300,000.

     The Managing  General  Partner  receives  from  Triarc  certain  management
services  including  legal,  accounting,  tax,  insurance,  financial  and other
management services.  Effective  April 23,  1993  the Managing  General  Partner
entered  into a management services agreement  with Triarc, which was amended as
of July 2, 1996 (as so  amended, the 'Management Services Agreement'),  pursuant
to which Triarc is entitled to certain management fees from the Managing General
Partner  for services which do  not relate to the  business or operations of the
Partnership or its subsidiaries and to (i) reimbursement of expenses incurred by
it from the  Partnership or the  Operating Partnership regarding  administrative
services performed with respect to the business or operations of the Partnership
and its subsidiaries and (ii) such reasonable fees as may be agreed to by Triarc
and the Partnership for the performance by Triarc of any other services provided
by it that relate to the business of the Partnership and its subsidiaries. Prior
to  April 23, 1993, the costs of management services were allocated by Triarc to
its subsidiaries  under  a former  management  services agreement  (the  'Former
Management Services Agreement') based first directly on the cost of the services
provided  and then, for those costs which could not be directly allocated, based
upon the  relative revenues  and tangible  assets as  a percentage  of  Triarc's
corresponding   consolidated  amounts.  Additionally,  in  Transition  1993  the
Managing General Partner was allocated certain costs representing  uncollectible
amounts  owed to Triarc for similar management services by certain affiliates or
former affiliates. For additional information regarding the Management  Services
Agreement  and  the Former  Management Services  Agreement, see  note 21  to the
accompanying consolidated financial statements.

     Chesapeake Insurance Company Limited ('Chesapeake Insurance'), an  indirect
subsidiary  of Triarc,  provided certain  insurance coverage  and reinsurance of
certain risks to the Managing General  Partner until October 1993 at which  time
Chesapeake Insurance ceased writing all insurance and

                                       61



<PAGE>
reinsurance.  The net premium  expense incurred was  approximately $4 million in
Transition 1993. In  addition, on  April 1,  1995 the  Managing General  Partner
issued  a promissory note to Chesapeake  Insurance for $900,000. $125,000 of the
principal of  such  note was  repaid  on December  31,  1995 and  the  remaining
$775,000 was repaid on June 7, 1996.

     Triarc's   wholly  owned  leasing  subsidiary,   NPC  Leasing  Corp.  ('NPC
Leasing'), leases vehicles  and other equipment  to companies that  are or  were
affiliates  of the Managing  General Partner under  long-term lease obligations.
The Managing General Partner distributed the shares of NPC Leasing to Triarc  as
a  dividend on July  2, 1996. NPC  Leasing had no  billings with the Partnership
since the closing of the IPO.

     The Managing General Partner holds an intercompany note of Triarc's in  the
aggregate  principal amount  of approximately $30.0  million as  of December 31,
1996. Concurrent with the closing of the IPO, the Managing General Partner  made
a  dividend of approximately $51.4 million  aggregate principal amount of a then
outstanding  $81.4  million   intercompany  note  to   Triarc.  For   additional
information  regarding the  intercompany note, see  Note 14  to the consolidated
financial statements of National included elsewhere herein.

                                       62



<PAGE>
                                    PART IV

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

     (A) 1. Financial Statements:

            See Index to Financial Statements (Item 8)

            2. Financial Statement Schedules:

            None  -- all schedules  have been omitted since  they are either not
            applicable or  the  information  is  contained  elsewhere  in  'Item
            8 -- Financial Statements and Supplementary Data.'

          3. Exhibits:

             Copies  of the following exhibits are available at a charge of $.25
        per page upon  written request  to the Assistant  Secretary of  National
        Propane  Corporation at  Suite 1700,  IES Tower,  200 1st  St. SE, Cedar
        Rapids, Iowa 52401-1409.

<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                                    DESCRIPTION
----------  -------------------------------------------------------------------------------------------------------
<C>         <S>
  3.1(1)    -- Amended and Restated Agreement of Limited Partnership of National Propane Partners, L.P. dated as of
               July 2, 1996
  3.2(1)    -- Amended and Restated Agreement of Limited Partnership of National Propane, L.P. dated as of July  2,
               1996
  3.3(3)    -- Amendment No. 1 dated November 1, 1996 to the Amended and Restated Agreement of Limited  Partnership
               of National Propane, L.P. dated as of July 2, 1996
 10.1(3)    -- Purchase Agreement,  dated as  of November  7, 1996,  among National  Propane Corporation,  National
               Propane SGP, Inc., National Propane Partners, L.P., National Propane, L.P. and Merrill Lynch  &  Co.
 10.2(3)    -- Registration Agreement, dated as  of November 7, 1996, between  National Propane Partners,  L.P. and
               Merrill Lynch & Co.
 10.3(1)    -- Credit Agreement, dated as of June 26,  1996, among National Propane, L.P., The First National  Bank
               of Boston, as  administrative agent  and a  lender, Bank of  America NT  & SA,  as a  lender, and BA
               Securities, Inc., as syndication agent
 10.4(1)    -- Note Purchase Agreement, dated  as of June 26,  1996, among National Propane,  L.P.  and each of the
               Purchasers listed in Schedule A thereto relating to $125 million aggregate principal amount of 8.54%
               First Mortgage Notes due June 30, 2010
 10.5(1)    -- Conveyance, Contribution and Assumption Agreement, dated as  of July 2, 1996, by and among  National
               Propane,  L.P., National  Propane Partners, L.P.,  National Propane Corporation and National Propane
               SGP, Inc.
 10.6(1)    -- Contribution and  Assumption Agreement, dated  as of July  2, 1996, by  and among National  Propane,
               L.P., National Propane Corporation, National Propane SGP, Inc. and National Sales  &  Service,  Inc.
 10.7(1)    -- Note,  in the  principal amount  of $40.7  million, issued  by Triarc  Companies, Inc.  to  National
               Propane, L.P.
 10.8(1)    -- National Propane 1996 Unit Option Plan
 10.9(1)    -- Amendment to Employment Agreement of Ronald D. Paliughi, dated as of June 10, 1996
 10.10(2)   -- Employment Agreement, dated as of April 24, 1993, between National Propane Corporation and Ronald D.
               Paliughi (including Amendment No. 1, dated  as of December 7, 1994 and  Amendment No. 2, dated as of
               March 27, 1995)
 10.11(2)   -- Severance Agreement, dated as of December 1,  1995, between National Propane Corporation  and Ronald
               R. Rominiecki
 10.12(2)   -- Severance Agreement, dated as of March 27, 1997, between National Propane Corporation and Laurie  B.
               Crawford
 10.13(4)   -- Employment Agreement, dated  November 20, 1996,  between National Propane  Corporation and  C. David
               Watson
 10.13(2)   -- Triarc's 1993 Equity Participation Plan
 10.14(2)   -- Form of Non-Incentive Stock Option Agreement under Triarc's 1993 Equity Participation Plan
</TABLE>

                                       63



<PAGE>

<TABLE>
<CAPTION>
 EXHIBIT
   NO.                                                    DESCRIPTION
----------  -------------------------------------------------------------------------------------------------------
<C>         <S>
 10.15(6)   -- Consent, waiver and amendment dated November 5, 1996 with respect to (1) the Credit Agreement  dated
               as  of  June  26,  1996  among  National  Propane,  L.P.,  The  First  National  Bank  of Boston, as
               administrative agent and a lender, Bank of America NT & SA, as a lender, and BA Securities, Inc., as
               syndication  agent and (2)  the Note Purchase  Agreement, dated as  of June 26, 1996, among National
               Propane, L.P. and  each of  the Purchasers  listed in  Schedule A  thereto relating to $125  million
               aggregate principal amount of 8.54% First Mortgage Notes due June 30, 2010.
 10.16(6)   -- Second consent, waiver and amendment dated January 14, 1997 with respect to (1) the Credit Agreement
               dated  as of  June 26,  1996 among  National Propane,  L.P., The  First National Bank of  Boston, as
               administrative agent and a lender, Bank of America NT & SA, as a lender, and BA Securities, Inc., as
               syndication  agent and (2)  the Note Purchase  Agreement, dated as of June 26,  1996, among National
               Propane, L.P. and  each of  the Purchasers  listed in  Schedule A  thereto relating  to $125 million
               aggregate principal amount of 8.54% First Mortgage Notes due June 30, 2010.
 10.17(6)   -- First Amendment dated as of March 27, 1997 to  the Credit Agreement dated as of  June 26, 1996 among
               National Propane, L.P., The First National Bank of  Boston, as  administrative  agent and a  lender,
               Bank of America NT & SA, as a lender, and BA Securities, Inc. as syndication agent.
*21.1       -- List of Subsidiaries
*24.1       -- Powers of Attorney (included on signature page)
*27.1       -- Financial Data  Schedule for  the year  ended December  31, 1996,  submitted to  the Securities  and
               Exchange Commission in electronic format.
 99.1(3)    -- National  Propane  Partners,  L.P.  Press Release,  dated  October  22,  1996,  regarding  quarterly
               distribution.
 99.2(3)    -- National Propane  Partners, L.P. Press  Release, dated November  7, 1996 regarding  sale of  400,000
               common units.
 99.3(5)    -- National  Propane  Partners,  L.P.  Press Release,  dated  January  27,  1997,  regarding  quarterly
               distribution
</TABLE>

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

* Filed herewith

(1) Filed with the  Partnership's Current Report  on Form 8-K  dated August  16,
    1996 and incorporated herein by reference.

(2) Filed  with the Partnership's Registration Statement of Form S-1 filed March
    26, 1996 (Registration No. 333-2768) and incorporated herein by reference.

(3) Filed with the Partnership's Current Report  on Form 8-K dated November  14,
    1996 and incorporated herein by reference.

(4) Filed  with  the  Partnership's  Registration Statement  on  Form  S-1 filed
    January 10, 1997  (Registration No.  333-19599) and  incorporated herein  by
    reference.

(5) Filed  with the Partnership's  Current Report on Form  8-K dated January 29,
    1997 and incorporated herein by reference.

(6) Filed with the Partnership's Current Report on Form 8-K dated March 31, 1997
    and incorporated herein by reference.

     (B) 1. Reports on Form 8-K:

          During the  period from  October 1,  1996 to  December 31,  1996,  the
     Registrant filed the following report on Form 8-K:

          The  Registrant filed a report on Form  8-K on November 14, 1996, with
     respect to the Registrant's sale of 400,000 common units.

                                       64



<PAGE>
                                   SIGNATURES

     Pursuant  to  the requirements  of Section  13 or  15(d) of  the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          NATIONAL PROPANE PARTNERS, L.P.

                                          By: National Propane Corporation
                                            as Managing General Partner

                                                By: /s/ RONALD D. PALIUGHI
                                                   .............................
                                                  PRESIDENT AND CHIEF EXECUTIVE
                                                         OFFICER

     Pursuant to the requirements of the  Securities Exchange Act of 1934,  this
Annual  Report has been signed  below by the following  persons on behalf of the
Registrant and in the capacities and on March 28, 1997:

<TABLE>
<CAPTION>
                SIGNATURE                                                  TITLES
------------------------------------------  ---------------------------------------------------------------------
<C>                                         <S>
          /s/ RONALD D. PALIUGHI            President, Chief Executive Officer
 .........................................
           (RONALD D. PALIUGHI)

         /s/ RONALD R. ROMINIECKI           Senior Vice President and Chief Financial Officer (Principal
 .........................................    Financial Officer)
          (RONALD R. ROMINIECKI)

          /s/ R. BROOKS SHERMAN             Controller and Chief Accounting Officer (Principal Accounting
 .........................................    Officer)
           (R. BROOKS SHERMAN)

             /s/ NELSON PELTZ               Director
 .........................................
              (NELSON PELTZ)

             /s/ PETER W. MAY               Director
 .........................................
              (PETER W. MAY)

        /s/ FREDERICK W. MCCARTHY           Director
 .........................................
         (FREDERICK W. MCCARTHY)

        /s/ WILLIS G. RYCKMAN III           Director
 .........................................
         (WILLIS G. RYCKMAN III)
</TABLE>

                                       65