1
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

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

                                   FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

                         Commission file number 1-11071

                                UGI CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

        Pennsylvania                                  23-2668356 
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

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

                                 (610) 337-1000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

                                                  NAME OF EACH EXCHANGE
          TITLE OF CLASS                           ON WHICH REGISTERED

Common Stock, without par value              New York Stock Exchange, Inc.
                                             Philadelphia Stock Exchange, Inc.

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 SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.   YES    X       NO            .
                                                --------       --------

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

The aggregate market value of UGI Corporation Common Stock held by
nonaffiliates of the registrant on December 1, 1997 was $913,031,053.

At December 1, 1997 there were 32,909,914 shares of UGI Corporation Common Stock
issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the Annual Report to
Shareholders for the year ended September 30, 1997 are incorporated by
reference into Parts I and II of this Form 10-K.  Portions of the Proxy
Statement for the Annual Meeting of Shareholders to be held on February 24,
1998 are incorporated by reference into Part III of this Form 10-K.

================================================================================

   2

                                TABLE OF CONTENTS

                                                                                 
PART I                    BUSINESS                                                     PAGE

      Items 1 and 2       Business and Properties........................................1
                          General........................................................1
                          Propane Partnership Business...................................2
                          Utility Operations............................................10
                          UGI Enterprises, Inc..........................................19

      Item 3              Legal Proceedings.............................................21

      Item 4              Submission of Matters to a Vote of
                          Security Holders..............................................25

PART II                   SECURITIES AND FINANCIAL INFORMATION

      Item 5              Market for Registrant's Common Equity
                          and Related Stockholder Matters...............................25

      Item 6              Selected Financial Data.......................................27

      Item 7              Management's Discussion and Analysis of
                          Financial Condition and Results of Operations.................28

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

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

PART III                  UGI MANAGEMENT AND SECURITY HOLDERS

      Item 10             Directors and Executive Officers of the Registrant............28

      Item 11             Executive Compensation........................................28

      Item 12             Security Ownership of Certain Beneficial
                          Owners and Management.........................................28

      Item 13             Certain Relationships and Related Transactions................31

PART IV                   ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS

      Item 14             Exhibits, Financial Statement Schedules
                          and Reports on Form 8-K.......................................31

                          Signatures....................................................39

                          Index to Financial Statements and
                          Financial Statement Schedules................................F-2

                                      (i)

   3

PART I: BUSINESS

ITEMS 1 AND 2.  BUSINESS AND PROPERTIES

GENERAL

         UGI Corporation ("UGI" or the "Company") is a holding company with two
principal lines of business: propane distribution and utilities.  The Company's
AmeriGas, Inc. subsidiary ("AmeriGas") conducts the nation's largest retail
propane distribution business through AmeriGas Partners, L.P., a Delaware
limited partnership ("AmeriGas Partners" or the "Partnership") and its 98.99%
owned subsidiary AmeriGas Propane, L.P. (the "Operating Partnership").
AmeriGas Propane, Inc., a Pennsylvania corporation and a wholly owned
subsidiary of AmeriGas, is the Partnership's sole general partner ("AmeriGas
Propane" or the "General Partner").  The common units of AmeriGas Partners,
which represent limited partner interests, are traded on the New York Stock
Exchange under the symbol "APU."  Through its subsidiaries, AmeriGas has a 58.5
combined ownership interest in the Partnership and the Operating Partnership,
and the remaining interest is publicly held.  The Company has been in the
propane distribution business since 1959.  The Company's utility business is
conducted through its subsidiary, UGI Utilities, Inc. ("Utilities"), which owns
and operates natural gas distribution and electric utilities in Pennsylvania.
The Company has been in the utility business for over 100 years and supplies
gas and electric utility services to approximately 252,000 and 61,000
customers, respectively.

         UGI Enterprises, Inc. ("UGI Enterprises"), a wholly owned UGI
subsidiary formed in 1994, conducts retail gas and electric marketing
businesses and evaluates and develops new business opportunities.  Black Sea
LPG, L.P. is Enterprises' first joint venture.  The project will create an
energy import and distribution business in Romania.  Other joint ventures in
international energy markets are being developed.

         UGI was incorporated in Pennsylvania in 1991 as part of the
restructuring of Utilities (formerly, UGI Corporation) into a holding company
system effective April 10, 1992.  UGI is not subject to regulation by the
Pennsylvania Public Utility Commission ("PUC").  UGI is also exempt from
registration as a holding company and not otherwise subject to regulation under
the Public Utility Holding Company Act of 1935, except for Section 9(a)(2)
thereof, which relates to the acquisition of voting securities of an electric
or gas utility company. UGI's executive offices are located at 460 North Gulph
Road, King of Prussia, Pennsylvania 19406, and its telephone number is (610)
337-1000. References to "UGI" or the "Company" include its consolidated
subsidiaries unless the context indicates otherwise. Similarly, references to
"AmeriGas Partners" and the "Partnership" include the Operating Partnership, its
predecessors and its subsidiaries.

                                      -1-
   4
                          PROPANE PARTNERSHIP BUSINESS

         The Company's propane distribution business is conducted through
AmeriGas Partners. The Partnership is the largest retail propane distributor in
the United States, with over 600 district locations in 45 states at September
30, 1997. AmeriGas Propane, Inc., the sole general partner, operates and manages
the Partnership.

BACKGROUND

         On July 15, 1993, AmeriGas acquired a significant equity interest in,
and other UGI subsidiaries assumed management of, Petrolane Incorporated
("Petrolane"). The Petrolane acquisition expanded substantially the size of the
propane distribution network under the Company's management. From July 15, 1993
to April 19, 1995, the Company's investment in Petrolane was accounted for by
the equity method, under which the investment was recorded at cost and adjusted
by the Company's share (originally, approximately 30%) of Petrolane's
undistributed income or loss. On April 19, 1995, Petrolane became a wholly owned
subsidiary of the General Partner, and through a series of related transactions,
all of the propane businesses of AmeriGas, including Petrolane, were transferred
to the Operating Partnership (the "Partnership Formation"). Although the
Company's consolidated financial statements now include 100% of the
Partnership's revenues and assets, the Company's net income reflects only its
58.5% share in the income or loss of the Partnership, due to the public's
limited partner interest.

GENERAL INDUSTRY INFORMATION

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

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

                                      -2-
   5

PRODUCTS, SERVICES AND MARKETING

         As of September 30, 1997, the Partnership distributed propane to
approximately 956,000 customers from over 600 district locations in 45 states.
The Partnership's operations are located primarily in the Northeast, Southeast,
Great Lakes and West Coast regions of the United States. From many of its
district locations, the Partnership also sells, installs and services equipment
related to its propane distribution business, including heating and cooking
appliances and, at some locations, propane fuel systems for motor vehicles.
Typically, district locations are found in suburban and rural areas where
natural gas is not available. Districts generally consist of an office,
appliance showroom, warehouse and service facilities, with one or more 18,000 to
30,000 gallon storage tanks on the premises. The Partnership also engages in the
business of delivering liquefied petroleum gases by truck as a common carrier.
As part of its overall transportation and distribution infrastructure, the
Partnership operates as an interstate carrier in 48 states throughout the United
States. It is also licensed as a carrier in Canada.

         The Partnership sells propane primarily to five markets: residential,
commercial/industrial, engine fuel, agricultural and wholesale. Approximately
79% of the Partnership's 1997 fiscal year sales (based on gallons sold) were to
retail accounts (32% to residential customers, 29% to industrial/commercial
customers, 11% to motor fuel customers and 7% to agricultural customers), and
approximately 21% were to wholesale customers. Sales to residential customers in
fiscal 1997 represented approximately 41% of retail gallons sold and 53% of the
Partnership's total propane margin. No single customer accounts for 1% or more
of the Partnership's consolidated revenues.

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

         Retail deliveries of propane are usually made to customers by means of
bobtail and rack trucks.  Propane is pumped from the bobtail truck, which
generally holds 2,400 to 2,600 gallons of propane, into a stationary storage
tank on the customer's premises.  The Partnership owns most of these storage
tanks and leases them to its customers.  The capacity of these tanks ranges
from approximately 100 gallons to approximately 1,200 gallons.  The Partnership
also delivers propane to retail customers in portable cylinders, which
typically have a capacity of 5 to 30 gallons.  When these cylinders are
delivered to customers, empty cylinders are picked up for replenishment at
district locations or are filled in place.  In its wholesale operations, the
Partnership principally sells propane to large industrial end-users and other
propane distributors.

                                      -3-
   6

PROPANE SUPPLY AND STORAGE

         Supplies of propane from the Partnership's sources historically have
been readily available. In the year ended September 30, 1997, the Partnership
purchased over half of its propane from 10 suppliers, including the Amoco
companies (Amoco Canada and Amoco Oil Company, approximately 15%) and Warren
Gas Liquids (formerly, Warren Petroleum Company), approximately 11%.
Management believes that if supplies from either source were interrupted, it
would be able to secure adequate propane supplies from other sources without a
material disruption of its operations; however, the cost of procuring
replacement supplies might be materially higher, and at least on a short-term
basis, margins could be affected.  Aside from Amoco and Warren, no single
supplier provided more than 10% of the Partnership's total domestic propane
supply in the fiscal year ended September 30, 1997.  In certain market areas,
however, some suppliers provide 70% to 80% of the Partnership's requirements.
Disruptions in supply in these areas could also have an adverse impact on the
Partnership's margins.

         The Partnership has over 300 sources of supply, and it also makes
purchases on the spot market.  The Partnership purchases its propane supplies
from domestic and international suppliers. Approximately 70% of propane
purchases by the Partnership in the 1997 fiscal year were on a contractual
basis under one-year agreements subject to annual renewal.  More than half of
the supply contracts provide for pricing based upon posted prices at the time
of delivery or the current prices established at major storage points such as
Mont Belvieu, Texas, or Conway, Kansas.  In addition, some agreements provide
maximum and minimum seasonal purchase volume guidelines.  The percentage of
contract purchases, and the amount of supply contracted for at fixed prices
will vary from year to year as determined by the General Partner.  The
Partnership uses a number of interstate pipelines, as well as railroad tank
cars, delivery trucks and barges to transport propane from suppliers to storage
and distribution facilities.  The Partnership stores propane at facilities in
Arizona, Rhode Island and several other locations.

         Because the Partnership's profitability is sensitive to changes in
wholesale propane costs, the Partnership generally seeks to pass on increases
in the cost of propane to customers.  There is no assurance, however, that the
Partnership will always be able to pass on product cost increases fully,
particularly when product costs rise rapidly.  In fiscal year 1997, when the
average Mont Belvieu price per gallon of propane more than doubled between
April 1, 1996 ($.34625) and December 16, 1996 ($.75), the Partnership was able
to maintain its profitability through the use of hedging techniques designed to
control product costs, as well as by passing on product cost increases.
Product cost declined in 1997 and is now at more normal historic levels.

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

                                      -4-
   7

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

                       AVERAGE PROPANE SPOT MARKET PRICES

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

COMPETITION

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

                                      -5-
   8

during interruptions in natural gas service. The gradual expansion of the
nation's natural gas distribution systems has resulted in the availability of
natural gas in some areas that previously depended upon propane. However,
natural gas pipelines are not present in many regions of the country where
propane is sold for heating and cooking purposes.

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

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

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

PROPERTIES

         As of September 30, 1997, the Partnership owned approximately 60% of
its district locations.  In addition, the Partnership subleases three
one-million barrel underground storage caverns in Arizona to store propane and
butane for itself and third parties.  The Partnership also leases a 600,000
barrel refrigerated, above-ground storage facility in California, which could
be used in connection with waterborne imports or exports of propane or butane.
The California facility, which the Partnership operates, is currently subleased
to several refiners for the storage of butane.  The Partnership leases a
400,000 barrel storage facility in Rhode Island, which is owned by a third
party.  The Rhode Island facility is used to import propane.

         The transportation of propane requires specialized equipment.  The
trucks and railroad tank cars utilized for this purpose carry specialized steel
tanks that maintain the propane in a liquefied state.  The Partnership has a
fleet of approximately 385 transport trucks and 680 railroad tank cars, most of
which are leased.  In addition, the Partnership utilizes over 2,300 bobtail and
rack trucks, and over 1,900 other delivery and service vehicles.  More than 50%
of these vehicles are owned.  As of September 30, 1997, the Partnership owned
more than 800,000 stationary 

                                      -6-
   9

storage tanks with typical capacities of 100 to 1,000 gallons and approximately
900,000 portable propane cylinders with typical capacities of 5 to 100 gallons.
In addition, the Partnership owns over 2,000 large volume tanks which are used
for its own storage requirements. Most of the Partnership's debt is secured by
liens and mortgages on the Partnership's real and personal property.

TRADE NAMES; TRADE AND SERVICE MARKS

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

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

SEASONALITY

         The Partnership's retail sales volume is seasonal, with approximately
56% of the Partnership's fiscal year 1997 retail sales volume and approximately
83% of its earnings before interest, taxes, depreciation and amortization
occurring during the five-month peak heating season from November through
March, because many customers use propane for heating purposes.  As a result of
this seasonality, sales are concentrated in the Partnership's first and second
fiscal quarters (October 1 through March 31), and cash receipts are greatest
during the second and third fiscal quarters when customers pay for propane
purchased during the winter heating season.

         Sales volume for the Partnership traditionally fluctuates from year to
year in response to variations in weather, prices, competition, customer mix and
other factors, such as conservation efforts and general economic conditions.
Long-term, historic weather data from the National Weather Service Climate
Analysis Center indicate that average annual temperatures have remained
relatively constant over the last 30 years with fluctuations occurring on a
year-to-year basis only. Actual weather conditions in the Partnership's various
service territories, however, can vary substantially from historical averages.
For information concerning average annual variations

                                      -7-
   10

in weather across the Partnership's service territories, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

GOVERNMENT REGULATION

         The Partnership is subject to various federal, state and local
environmental, safety and transportation laws and regulations governing the
storage, distribution and transportation of propane.  These laws include, among
others, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean
Air Act, the Occupational Safety and Health Act, the Emergency Planning and
Community Right to Know Act, the Clean Water Act and comparable state statutes.
CERCLA, also known as the "Superfund" law, imposes joint and several liability
without regard to fault or the legality of the original conduct on certain
classes of persons considered to have contributed to the release or threatened
release of a "hazardous substance" into the environment.  Propane is not a
hazardous substance within the meaning of federal and state environmental laws.
However, the Partnership owns and operates real property where such hazardous
substances may exist.  See Note 11 to the Company's Consolidated Financial
Statements.

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

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

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

                                      -8-
   11

         On December 13, 1996, the Research and Special Programs Administration
("RSPA"), a division of the DOT, issued an advisory notice that alerted persons
involved in the design, manufacture, assembly, maintenance or transportation of
hazardous materials in certain cargo tank motor vehicles, including the type of
vehicles used by the Partnership, of a problem with emergency discharge
systems.  On February 19, 1997, RSPA issued an emergency interim final rule
indicating that the emergency discharge control systems on the affected
vehicles may not function as required by federal regulations under all
operating conditions.  The interim final rule specified the conditions under
which the affected vehicles could continue to be operated.  On August 18, 1997,
after conducting a series of public hearings and workshops, RSPA issued a final
rule which sets forth the requirements that must be satisfied to continue
operating such vehicles.  The final rule requires, among other things, that in
the event of an unintentional release of product, the person attending the
unloading operation must be able to promptly activate the internal self-closing
stop valve on the motor vehicle and shut down all motive and auxiliary power
equipment.  The final rule provides alternative ways to comply with this
requirement and permits the use of radio-controlled systems that are capable of
stopping the transfer of propane by use of a transmitter carried by a qualified
person who also satisfies the attendance requirements contained in the
regulations.  The Partnership is in the process of testing a radio-controlled
system and plans to equip its bobtail vehicles with such a system unless the
regulation is modified as a result of the pending administrative and legal
proceedings.  The Partnership filed an administrative appeal requesting
reconsideration and a partial stay of the final rule which was denied on
December 5, 1997.   See "Legal Proceedings."

EMPLOYEES

         The Partnership does not directly employ any persons responsible for
managing or operating the Partnership. The General Partner provides these
services and is reimbursed for its direct and indirect costs and expenses,
including all compensation and benefit costs. At September 30, 1997, the General
Partner had 5,131 employees, including 303 temporary and part-time employees.
UGI also performs certain financial and administrative services for the General
Partner on behalf of the Partnership and is reimbursed by the Partnership for
its direct and indirect costs.

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

                                      -9-
   12

                               UTILITY OPERATIONS

         The Company's utility business is conducted by Utilities, a wholly
owned subsidiary of the Company.  Utilities operates its utility business
through two divisions, the gas division ("Gas Utility") and the electric
division ("Electric Utility").  The business conducted by each of these
divisions is described below.

DISTRIBUTION OF NATURAL GAS

         Service Area; Revenue Analysis.  Gas Utility distributes natural gas
to approximately 252,000 customers in portions of 14 eastern and southeastern
Pennsylvania counties through its distribution system of approximately 4,200
miles of gas mains.  The service area consists of approximately 3,000 square
miles and includes the cities of Allentown, Bethlehem, Easton, Harrisburg,
Hazleton, Lancaster, Lebanon and Reading, Pennsylvania.  Located in Gas
Utility's service area are major production centers for basic industries such
as steel fabrication.  For the fiscal years ended September 30, 1997, 1996 and
1995, revenues of Gas Utility accounted for approximately 24%, 25% and 33%,
respectively, of UGI's total consolidated revenues.

         System throughput (the total volume of gas sold to or transported for
customers within Gas Utility's distribution system) for the 1997 fiscal year
was approximately 80.2 billion cubic feet ("bcf").  System sales of gas
accounted for approximately 46% of system throughput, while gas transported for
commercial and industrial customers (who buy their gas from others) accounted
for approximately 54% of system throughput.  Based on industry data for 1996,
residential customers account for approximately 38% of total system throughput
by local gas distribution companies in the United States.  By contrast, for the
1997 fiscal year, Gas Utility's residential customers represented 23% of its
total system throughput.

         Sources of Supply and Pipeline Capacity.  Gas Utility meets its
service requirements by utilizing a diverse mix of natural gas purchase
contracts with producers and marketers, storage and transportation services
from pipeline companies, and its own propane-air and liquefied natural gas
peak-shaving facilities.  Purchases of natural gas in the spot market are also
made to reduce costs and manage storage inventory levels.  These arrangements
enable Gas Utility to purchase gas from Gulf Coast, mid-continent, Appalachian
and Canadian sources.  For the transportation and storage function, Utilities
has agreements with a number of pipeline companies, including Texas Eastern
Transmission Corporation, Columbia Gas Transmission Corporation ("Columbia"),
ANR Pipeline Company, Columbia Gulf Transmission Company, CNG Transmission
Corporation, National Fuel Gas Supply Corporation, Transcontinental Gas
Pipeline Corporation, Trunkline Gas Company, Texas Gas Transmission Corporation
and Panhandle Eastern Pipe Line Company.

         Gas Supply Contracts.  During the 1997 fiscal year, Gas Utility
purchased approximately 37.5 bcf of natural gas and sold approximately 36.8 bcf
to customers.  Gas not sold to customers was used by Gas Utility principally
for storage for later sale to customers.  Approximately 31 bcf or 83% of the
volumes purchased were supplied under agreements with six major suppliers of
natural gas.  The remaining 6.5 bcf or 17% of gas purchased was supplied by
producers and 

                                      -10-
   13

marketers under other arrangements, including multi-month agreements at spot
prices. Certain gas supply contracts require minimum gas purchases. Each of
these agreements, however, either terminates in fiscal year 1998, or includes
provisions which entitle Utilities to terminate in the event the agreement is
not market responsive.

         Storage and Peak Shaving.  Gas Utility contracts for 10.8 bcf of
seasonal storage with several interstate pipelines.  Gas is injected in storage
during the summer and delivered during the winter at combined peak day
capacities of approximately .14 bcf.  In Harrisburg, Reading and Bethlehem,
Pennsylvania, Gas Utility operates peak-shaving facilities capable of producing
 .06 bcf of gas per day from propane-air and liquefied natural gas facilities.
These facilities are used to meet winter peak service requirements.

         Seasonal Variation.  Approximately 58% of Gas Utility's system
throughput for the 1997 fiscal year occurred during the winter season from
November 1, 1996 through March 31, 1997, because many of its customers use gas
for heating purposes.

         Competition.  Natural gas is a fuel that competes with electricity and
oil and to a lesser extent with propane and coal.  Competition among these
fuels is primarily a function of their comparative price and the relative cost
and efficiency of fuel utilization equipment.  Electric utilities in Gas
Utility's service area are aggressively seeking new load, primarily in the new
construction market.  Competition with fuel oil dealers is focused on
industrial customers.  Gas Utility responds to this competition with marketing
efforts designed to retain and grow its customer base.

         In substantially all of its service territory, Gas Utility is the only
regulated gas distribution utility having the right, granted by the PUC or by
law, to provide transportation services.  While unregulated gas marketers have
been selling gas to commercial and industrial customers in Gas Utility's
service territory for over 12 years, Gas Utility provides transportation
services for those sales.

         Customers representing approximately 25% of the Company's
non-residential system throughput (11% of non-residential revenues) have the
ability to switch to an alternate fuel at any time, and therefore, are served
under flexible, interruptible rates which are competitively priced with respect
to their alternate fuel. Gas Utility's margins from these customers, therefore,
are affected by the spread between the customers' delivered cost of gas and the
customers' delivered alternate fuel cost. In addition, other customers
representing 30% of non-residential system throughput (8% of non-residential
revenues) have locations which afford them the option of seeking transportation
service directly from interstate pipelines, thereby bypassing Gas Utility,
although none have done so. The majority of these customers are served under
transportation contracts having three- to ten-year terms. Included in these two
groups are the ten Utilities' customers with the highest volume of system
throughput. Three of the top five customers have executed ten-year agreements
with Utilities. No single customer represents, or is anticipated to represent,
more than 5% of the total revenues of Gas Utility.

                                      -11-
   14

         Outlook for Gas Service and Supply.  Gas Utility anticipates having
adequate pipeline capacity and sources of supply available to it to meet the
full requirements of all firm customers on its system at least through fiscal
year 1998.  Supply mix is diversified, market priced, and delivered pursuant to
a number of long and short-term firm transportation and storage arrangements.

         During the 1997 fiscal year, Gas Utility supplied transportation
service to three major cogeneration installations.  Gas Utility continues to
pursue opportunities to supply natural gas to electric generation projects
located in its service territory.  Gas Utility also continues to seek new
residential, commercial and industrial customers for both firm and
interruptible service.  In the residential market sector, Gas Utility connected
6,882 additional residential heating customers during the 1997 fiscal year, an
increase of 8% from the previous year.  Approximately 63% of the additions
represent gas customers from the new construction market.  The remaining 37%
represent customers converting from other energy sources, primarily oil, and
existing non-heating gas customers who have added gas heating systems to
replace other energy sources.  The total number of new commercial and
industrial customers was 1,068, down slightly from 1,122 in fiscal year 1996.

         Utilities continues to monitor and participate extensively in
third-party proceedings before the Federal Energy Regulatory Commission
("FERC") affecting the rates and the terms and conditions under which Gas
Utility transports and stores natural gas.  Among these proceedings are those
arising out of certain FERC orders and/or pipeline filings which relate to (i)
the relative pricing of pipeline services in a competitive energy marketplace;
(ii) the flexibility of the terms and conditions of pipeline service contracts;
and (iii) pipelines' requests to increase their base rates, or change the terms
and conditions of their storage and transportation services.

         Gas Utility continues to take the measures it believes necessary, in
negotiations with interstate pipeline and natural gas suppliers and in cases
before regulatory agencies, to assure availability of supply, transportation and
storage alternatives to serve market requirements at the lowest cost consistent
with security of supply considerations. Those measures include negotiating the
terms of firm transportation capacity from production areas on all pipelines
serving Gas Utility, arranging for appropriate storage and peak-shaving
resources, negotiating with producers for competitively priced secure gas
purchases and aggressively participating in regulatory proceedings related to
transportation rights, costs of service and gas costs.

GENERATION AND DISTRIBUTION OF ELECTRICITY

         ELECTRICITY GENERATION CUSTOMER CHOICE AND COMPETITION ACT

         On January 1, 1997, Pennsylvania's Electricity Generation Customer
Choice and Competition Act (Customer Choice Act) became effective.  The
Customer Choice Act permits all Pennsylvania retail electric customers to
choose their electric generation supplier over a three-year phase-in period
commencing January 1, 1999.  The Customer Choice Act requires all electric
utilities to file restructuring plans with the PUC which, among other things,
include unbundled 

                                      -12-
   15

prices for electric generation, transmission and distribution and a competitive
transition charge (CTC) for the recovery of "stranded costs" which would be paid
by all customers receiving distribution service and certain customers that
increase their own generation of electricity. "Stranded costs" generally are
electric generation-related costs that traditionally would be recoverable in a
regulated environment but may not be recoverable in a competitive electric
generation market. Under the Customer Choice Act, Electric Utility's rates for
transmission and distribution services provided through June 30, 2001 are capped
at levels in effect on January 1, 1997. In addition, Electric Utility generally
may not increase the generation component of prices as long as stranded costs
are being recovered through the CTC. Electric Utility will continue to be the
only regulated electric utility having the right, granted by the PUC or by law,
to distribute electric energy in its service territory.

         Electric Utility has filed its restructuring plan with the PUC
("Restructuring Plan").  The Restructuring Plan includes a claim for the
recovery of $34.4 million for stranded costs during the period January 1, 1999
through December 31, 2002.  The major components of this claim are:  (1) plant
investments in excess of competitive market value and electric generation
facility retirement costs; (2) potential costs associated with existing power
purchase agreements; and (3) regulatory assets (principally income taxes)
recoverable from ratepayers under current regulatory practice.  It also seeks
to establish a recovery mechanism that would permit the recovery of up to an
additional $28 million of costs associated with the buyout or implementation of
a December 1993 agreement with Foster Wheeler Penn Resources, Inc. to purchase
power from a wood-fired generator to be constructed by Foster Wheeler.  The PUC
is expected to take action on Electric Utility's filing in May 1998.

         The Customer Choice Act also authorized the PUC to implement pilot
customer choice programs for up to five percent of the noncoincident peak load
of industrial, commercial and residential customers.  In accordance with PUC
directives, Electric Utility implemented such a pilot program effective
November 1, 1997.  It is anticipated that a full five percent of the
noncoincident peak load of Electric Utility's industrial, commercial and
residential customers will participate in the pilot.

         Given the changing regulatory environment in the electric utility
industry, the Company continues to evaluate its ability to apply the provisions
of SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation"
(SFAS 71), as it relates to its electric generation operation.  SFAS 71 permits
the recording of costs (regulatory assets) that have been, or are expected to
be, allowed in the ratesetting process in a period different from the period in
which such costs would be charged to expense by an unregulated enterprise.  The
Company believes its electric generation assets and related regulatory assets
continue to satisfy the criteria of SFAS 71. If such electric generation assets
no longer meet the criteria of SFAS 71, then any related regulatory assets
would be written-off unless some form of transition cost recovery is
established by the PUC which would meet the requirements under generally
accepted accounting principles for continued accounting as regulatory assets
during such recovery period.  Any generation-related, long-lived fixed and
intangible assets would be evaluated for impairment under the provisions of
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of."

                                      -13-
   16

         Based upon an evaluation of the various factors and conditions
affecting future cost recovery, the Company does not expect the Customer Choice
Act to have a material adverse effect on its financial condition or results of
operations.

         Service Area; Revenue Analysis.  Electric Utility supplies electric
service to approximately 61,000 customers in portions of Luzerne and Wyoming
Counties in northeastern Pennsylvania through a system consisting of
approximately 2,100 miles of transmission and  distribution lines and 14
transmission substations.  For the 1997 fiscal year, about 53% of sales volume
came from residential customers, 34% from commercial customers and 13% from
industrial customers and others.  For the 1997, 1996 and 1995 fiscal years,
revenues of Electric Utility accounted for approximately 4%, 4% and 8%,
respectively, of UGI's total consolidated revenues.

         Sources of Supply. Electric Utility distributes electricity which it
generates or purchases from others. As the provisions of the Customer Choice Act
are implemented, it will also distribute electric power acquired and transmitted
by others. Utilities owns and operates Hunlock generating station located near
Kingston, Pennsylvania ("Hunlock Station"), and has a 1.11% ownership interest
in the Conemaugh generating station located near Johnstown, Pennsylvania
("Conemaugh Station"), which is operated by another utility. These two
coal-fired stations can generate up to 69 megawatts of electric power for
Electric Utility and provided approximately 47% of its energy requirements
during the 1997 fiscal year.

         Utilities has a long-term power supply agreement with Pennsylvania
Power & Light Company ("PP&L").  Under this agreement, PP&L supplies all the
electric power required by Electric Utility above that provided from certain
other sources, including Hunlock Station.  The cost of electricity supplied by
PP&L is based on PP&L's actual system costs.  Utilities estimates that the cost
of electricity supplied by Hunlock is higher than projected market rates, but
lower than the cost of electricity purchased under the PP&L contract.  As a
result of the availability and projected cost of alternative supplies,
Utilities has provided PP&L with notice of its intent to stop purchasing power
under the power supply agreement as of March 2001.  In addition, if certain
conditions occur (i.e., Electric Utilities' demand falls to zero in any
particular billing month), the power supply agreement may terminate at an
earlier date.  There currently is a dispute between Utilities and PP&L over the
effect of customer choice on Utilities' obligations under the PP&L power supply
agreement.  Utilities has filed an action in the Court of Common Pleas of
Luzerne County, Pennsylvania seeking a declaration of the rights and
responsibilities of the parties to the agreement.

         In a regulated utility environment, Hunlock Station could be expected
to operate until the end of its useful life in 2004.  As a result of electric
deregulation, however, Hunlock may cease operations as early as January 1,
1999, depending on a number of factors, including customer load, contract
purchase obligations and the availability and cost of replacement power.  Until
restructuring proceedings under the Customer Choice Act are completed,
Utilities will be unable to predict how long Hunlock Station will operate.

                                      -14-
   17

         Environmental Factors.  The operation of Hunlock Station complies with
the air quality standards of the Pennsylvania Department of Environmental
Resources ("DER") with respect to stack emissions.  Under the Federal Water
Pollution Control Act, Utilities has a permit from the DER to discharge water
from Hunlock Station into the North Branch of the Susquehanna River.

         The Federal Clean Air Act Amendments of 1990 (the "Clean Air Act
Amendments") impose emissions limitations for certain compounds, including
sulfur dioxide and nitrous oxides.  The Conemaugh Station is in compliance with
these standards, and the Hunlock Station is required to meet these emission
standards by 1999.

         In compliance with the Clean Air Act Amendments, the DER issued final
Reasonably Available Control Technology ("RACT") regulations for nitrous oxides
in January 1994. These regulations are applicable to Hunlock and Conemaugh
Stations. Utilities' compliance plans for Hunlock Station and Conemaugh Station
have been approved by the DER. Capital expenditures associated with the RACT
regulations are not expected to be material.

         More stringent regulation of nitrous oxide emissions at both Hunlock
and Conemaugh Stations may be required due to the actions of the Northeast
Ozone Transport Commission.  The Commission was created by the Clean Air Act
Amendments to provide a plan to reduce ground level ozone in the Northeast to a
level acceptable to the U.S. Environmental Protection Agency (the "EPA").
Future actions of the Commission may cause the DER to modify its nitrous oxide
RACT plans and thereby affect the compliance plans of Hunlock and Conemaugh
Stations.

         Seasonality.  Sales of electricity for residential heating purposes
accounted for approximately 23% of the total sales of Electric Utility during
the 1997 fiscal year.  Electricity competes with natural gas, oil, propane and
other heating fuels in this use.  Approximately 54% of sales occurred in the
six coldest months of the 1997 fiscal year, demonstrating modest seasonality
favoring winter due to the use of electricity for residential heating purposes.

PROPERTIES

         Utilities' Mortgage and Deed of Trust constitutes a first lien on
substantially all real and personal property of Utilities.

UTILITY REGULATION AND RATES

         Recent Regulatory Environment.  Since December 1982, Utilities has
provided transportation service for commercial and industrial customers who
purchase their gas from others.  As previously reported, this unbundled service
accounted for approximately 54% of Utilities' system throughput in fiscal year
1997.  Certain states, including Pennsylvania, are considering whether
transportation service options should be extended to residential and small
commercial customers. On March 27, 1997, proposed customer choice legislation
was introduced in the Pennsylvania General Assembly that would, among other
things, extend the availability of gas transportation service to residential and
small 

                                      -15-
   18
commercial customers of local gas distribution companies. It would permit all
customers of natural gas distribution utilities to transport their natural gas
supplies through the distribution systems of Pennsylvania gas utilities by April
1, 1999 and would also require Pennsylvania gas utilities to stop selling
natural gas. Legislative committees have conducted public hearings on the
proposed legislation and Utilities has provided testimony on such issues as the
need for standards to assure reliability of future gas supplies and the recovery
of costs associated with existing gas supply assets. Utilities is considering a
number of options for addressing the provision of unbundled transportation
services to residential and small commercial customers, including the
termination of bundled retail sales services. The Company will continue to
monitor the proposed legislation.

         FERC Orders 888 and 889.  In April 1996, FERC issued Orders No.  888
and 889 which established rules for the use of electric transmission facilities
for wholesale transactions.  FERC has also asserted jurisdiction over the
transmission component of electric retail choice transactions.  In compliance
with these orders, the PJM Interconnection, LLC ("PJM"), of which UGI is a
member, has filed an open access transmission tariff with the FERC establishing
transmission rates and procedures for transmission within the PJM control area.
Under the PJM tariff and associated agreements, Electric Utility is entitled to
receive certain revenues when Utilities' transmission facilities are used by
third parties.

         Pennsylvania Public Utility Commission Jurisdiction.  Utilities' gas
and electric utility operations are subject to regulation by the PUC as to
rates, terms and conditions of service, accounting matters, issuance of
securities, contracts and other arrangements with affiliated entities, and
various other matters.

         Purchased Gas Cost Rates.  Gas Utility's gas service tariff contains
Purchased Gas Cost ("PGC") rates which provide for annual increases or
decreases in the rate per thousand cubic feet ("mcf") which Gas Utility charges
for natural gas sold by it, to reflect Utilities' projected cost of purchased
gas.  In accordance with regulations adopted by the PUC on June 14, 1995, PGC
rates may also be adjusted quarterly to reflect purchased gas costs.  Each
proposed PGC rate is required to be filed with the PUC six months prior to its
effective date.  During this period the PUC holds hearings to determine whether
the proposed rate reflects a least-cost fuel procurement policy consistent with
the obligation to provide safe, adequate and reliable service.  After
completion of these hearings, the PUC issues an order permitting the collection
of gas costs at levels which meet that standard.  The PGC mechanism also
provides for an annual reconciliation.  Utilities has two PGC rates.  PGC (1)
is applicable to small, firm, core market customers consisting of the
residential and small commercial and industrial classes;  PGC (2) is applicable
to firm, contractual, high-load factor customers served on three specific rates
(Rates BD, BD-L and N/CIAC).  In addition, residential customers maintaining a
high load may qualify for the PGC(2) rate.  In accordance with the schedule
established by law and PUC regulations, Gas Utility will file a new PGC tariff
on June 1, 1998, to be effective December 1, 1998.  When filed, the proposed
tariff will reflect estimated PGC over-collections and under-collections
through November 30, 1998.

         Energy Cost Rates.  In accordance with provisions of the Customer
Choice Act, the PUC approved Electric Utility's application to roll its energy
costs rate ("ECR") into its base rates

                                      -16-
   19

effective as of May 2, 1997, at a combined level not to exceed the rate cap
established as of January 1, 1997. Before January 1, 1997, the ECR permitted
Electric Utility to adjust customers' monthly charges to reflect annual changes
in the cost of purchased power, fuel, interchange power and the cost of
transmitting power purchased from external sources. Although Electric Utility
may no longer adjust customer charges to reflect changes in the cost of
purchased power, it will continue to account for such changes in order to
reconcile costs as part of its Restructuring Plan.

         Gas Rate Case.  On January 27, 1995, Gas Utility filed with the PUC
for a $41.3 million increase in base rates.  The PUC approved a $19.5 million
settlement of this proceeding, effective August 31, 1995.

         Electric Rate Case.  On January 26, 1996 Electric Utility filed  with
the PUC for a $6.2 million increase in its base rates, to be effective March
26, 1996.  On July 18, 1996, the PUC approved a settlement of this proceeding
authorizing a $3.1 million increase in annual revenues.  This increase in base
rates became effective on July 19, 1996.

         Deferred Fuel Adjustments.  Gas Utility defers and until January 1,
1997 Electric Utility deferred the difference between the amount of revenue
recognized, and the applicable purchased gas costs and purchased power costs
incurred, until subsequently billed or refunded to customers.

         State Tax Surcharge Clauses.  Utilities' gas and electric service
tariffs contain state tax surcharge clauses.  The surcharges are recomputed
whenever any of the tax rates included in their calculation are changed.  These
clauses protect Utilities from the effect of increases in most of the
Pennsylvania taxes to which it is subject.

UTILITY FRANCHISES

         Utilities holds certificates of public convenience issued by the PUC
and certain "grandfather rights" predating the adoption of the Pennsylvania
Public Utility Code and its predecessor statutes which it believes are adequate
to authorize it to carry on its business in substantially all the territory to
which it now renders gas and electric service.  Under applicable Pennsylvania
law, Utilities also has certain rights of eminent domain as well as the right
to maintain its facilities in streets and highways in its territories.

OTHER GOVERNMENT REGULATION

         In addition to regulation by the PUC, the gas and electric utility
operations of Utilities are subject to various federal, state and local laws
governing environmental matters, occupational health and safety, pipeline safety
and other matters. Certain of Utilities' activities involving the interstate
movement of natural gas, the transmission of electricity, transactions with
non-utility generators of electricity and other matters, are also subject to the
jurisdiction of FERC.

                                      -17-
   20

         Utilities is subject to the requirements of the federal Resource
Conservation and Recovery Act, CERCLA and comparable state statutes with
respect to the release of hazardous substances on property owned or operated by
Utilities.  See ITEM 3.  "LEGAL PROCEEDINGS-Environmental Matters."  The
electric generation activities of Utilities are also subject to the Clean Air
Act Amendments, the Federal Water Pollution Control Act and comparable state
statutes and regulations.  See "UTILITY OPERATIONS - Generation and
Distribution of Electricity-Environmental Factors."

                                      -18-
   21

                             UGI ENTERPRISES, INC.

         UGI Enterprises, Inc. is a wholly owned subsidiary of UGI, formed in
1994.  Through subsidiaries, UGI Enterprises is developing the domestic and
international energy businesses described below.

         In 1995, the gas marketing business previously conducted by a
subsidiary of Utilities was transferred to UGI Energy Services, Inc. ("Energy
Services"), a wholly owned subsidiary of UGI Enterprises.  Energy Services
conducts this business under the trade name GASMARK.  GASMARK sells natural gas
directly to more than 875 commercial and industrial customers in the
Mid-Atlantic region, Massachusetts, New York and Ohio, through the
transportation systems of 15 utility systems.  Another Enterprises subsidiary
has been formed to market electricity under the trade name POWERMARK.

         During 1996, UGI Enterprises formed a joint venture with affiliates of
Energy Transportation Group, Inc. ("ETG") and North American World Trade, Ltd.
to develop, build and operate a liquefied petroleum gas ("LPG") import project
in Romania.  ETG operates a major fleet of liquefied natural gas ("LNG")
vessels, and North American World Trade, Ltd. is a consulting firm with
Romanian expertise.  The joint venture is known as Black Sea LPG, L.P.  The
project will include construction of a 26 million gallon refrigerated marine
LPG import terminal and an LPG pipeline with propane-air mixing plants to
deliver propane to Bucharest, Romania's capital.  UGI has funded the initial
development of the joint venture through UGI Black Sea Enterprises, Inc., a
wholly owned subsidiary of UGI Enterprises.  Black Sea LPG, L.P. will develop
the project and UGI Black Sea Enterprises, Inc. will operate the terminal and
the propane-air plants.  On December 11, 1997, affiliates of UGI Enterprises
and ETG entered into an agreement creating a Romanian joint venture known as
Black Sea LPG Romania S.A. for the purpose of financing and constructing the
project.  The Romanian partners in this venture are Regia Autonoma a Gazelor
Naturale "Romgaz" Medias, the national gas utility; Regia Autonoma de
Electricitate "Renel", the national electric utility; and Rompetrol, S.A., a
privately held energy services company.

         In addition, UGI International Enterprises, Inc., another UGI
Enterprises subsidiary, and ETG have a cooperation agreement with China
National Chemical Supply & Sales Corporation to develop an integrated propane
company, including a propane import and distribution business, to serve Chinese
provinces along the Yangtze River.

                                      -19-
   22

                          BUSINESS SEGMENT INFORMATION

         The table stating the amounts of revenues, operating income (loss) and
identifiable assets attributable to each of UGI's industry segments for the
1997, 1996 and 1995 fiscal years appears on page 20 of UGI's 1997 Annual Report
to Shareholders and is incorporated in this Report by reference.

                                   EMPLOYEES

         At September 30, 1997, UGI and its subsidiaries had 6,437 employees.

                                      -20-
   23

ITEM 3.  LEGAL PROCEEDINGS

         With the exception of the matters set forth below, no material legal
proceedings are pending involving UGI, any of its subsidiaries or any of their
properties, and no such proceedings are known to be contemplated by
governmental authorities.

ENVIRONMENTAL MATTERS - MANUFACTURED GAS PLANTS

         Prior to the general availability of natural gas, in the 1800s through
the mid-1900s, manufactured gas was a chief source of gas for lighting and
heating nationwide.  The process involved heating certain combustibles such as
coal, oil and coke in a low-oxygen atmosphere.  Methods of production included
coal carbonization, carbureted water gas and catalytic cracking.  These methods
were employed at many different sites throughout the country.  The residue from
gas manufacturing, including coal tar, was typically stored on site, burned in
the gas plant, or sold for commercial use.  Some constituents of coal tars
produced from the manufactured gas process are today considered hazardous
substances under the Superfund Law.

         The gas distribution business has been one of Utilities' principal
lines of business since its inception in 1882.  One of the ways Utilities
initially expanded its business in its early years was by entering into
agreements with other gas companies to operate their businesses.  After 1888,
the principal means by which Utilities expanded its gas business was to acquire
all or a portion of the stock of companies engaged in this business.  Utilities
also provided management and administrative services to some of these
companies.  Utilities grew rapidly by means of stock acquisitions and became
one of the largest public utility holding companies in the country.  Pursuant
to the requirements of the Public Utility Holding Company Act of 1935,
Utilities divested all of its utility operations other than those which now
constitute the Gas Utility and the Electric Utility.

         The manufactured gas process was once used by Utilities in connection
with providing gas service to its customers. In addition, virtually all of the
gas companies that Utilities operated or to which it provided services, or in
which Utilities held stock, utilized a manufactured gas process. Utilities has
been notified of several sites outside Pennsylvania on which (i) gas plants were
formerly operated by it or owned or operated by its former subsidiaries and (ii)
either environmental agencies or private parties are investigating the extent of
environmental contamination and the necessity of environmental remediation.
Utilities is currently litigating a claim against it relating to an out-of-state
site. If Utilities were found liable as a "responsible party" as defined in the
Superfund Law (or comparable state statutes) with respect to this site, it would
have joint and several liability with other responsible parties for the full
amount of the cleanup costs. A "responsible party" under that statute includes
(i) the current owner of the affected property and (ii) each owner or operator
of a facility during the time when hazardous substances were released on the
property.

         Management believes that Utilities should not have significant
liability in those instances in which a former subsidiary operated a
manufactured gas plant because Utilities generally is not 

                                      -21-
   24

legally liable for the obligations of its subsidiaries. Under certain
circumstances, however, courts have found parent companies liable for
environmental damage caused by subsidiary companies when the parent company
exercised such substantial control over the subsidiary that the court concluded
that the parent company either (i) itself operated the facility causing the
environmental damage or (ii) otherwise so controlled the subsidiary that the
subsidiary's separate corporate form should be disregarded. There could be,
therefore, significant future costs of an uncertain amount associated with
environmental damage caused by manufactured gas plants that Utilities owned or
directly operated, or that were owned or operated by former subsidiaries of
Utilities, if a court were to conclude that the level of control exercised by
Utilities over the subsidiary satisfies the standard described above.

         Utilities believes that there are approximately 40 manufactured gas
plant sites in Pennsylvania where either (i) Utilities formerly operated the
plant or (ii) Utilities owns or at one time owned the site.  Most of the sites
are no longer owned by Utilities and the gas plants formerly operated at these
40 sites have all been out of operation since at least the early 1950s.
Utilities or other parties are currently conducting investigative or remedial
activities at nine of the 40 sites.  Based on the 1995 settlement agreement
with the PUC relating to Gas Utilities' 1995 base rate increase filing, rate
relief will be permitted for certain remediation expenditures on
environmentally contaminated sites located in Pennsylvania.  Because of this,
Utilities does not expect its costs for Pennsylvania sites to be material to
its results of operations.

         The following is a short description of the status of certain matters
involving Utilities related to manufactured gas plants located in other states.
See also Note 11 to the Company's Consolidated Financial Statements which
appears on pages 35 and 36 of its 1997 Annual Report to Shareholders.

OUT OF STATE GAS PLANT SITES

         1. Halladay Street, Jersey City, New Jersey. By letter dated April 12,
1993, Public Service Electric and Gas Company ("PSE&G") informed Utilities that
PSE&G had been named as a defendant in a civil action pending in the United
States District Court of the District of New Jersey, seeking damages as a result
of contamination relating to the former manufactured gas plant operations at
Halladay Street in Jersey City, New Jersey. The Halladay Street gas plant
operated from approximately 1884 until 1950. PSE&G asserted that Utilities is
liable for that portion of the costs associated with operations of the plant
between 1886 and 1899. PPG Industries, Inc. has also been named as a defendant
in the action for costs associated with chemical contamination at the site
unrelated to gas plant operations. In July 1993, PSE&G served Utilities with a
complaint naming Utilities as a third-party defendant in this civil action.
PSE&G subsequently amended the complaint to allege additional theories of
liability for the period from 1899 to 1940. To date, that action has focused on
the chemical contamination allegedly associated with PPG Industries' activities
and there have been no developments concerning liability for gas plant related
contamination. Management is currently investigating Utilities' involvement in
operations of the site and evaluating its defenses. Investigations of the site
conducted to date are insufficient to establish the extent of environmental
remediation necessary, 

                                      -22-
   25

if any. Hence, Utilities is unable to estimate the total cost of cleanup
associated with manufactured gas plant wastes at this site.

         2.  Burlington, Vermont.  By letter dated November 24, 1992, the EPA
notified Utilities of potential liability with respect to contamination at the
Pine Street Canal Superfund Site, Burlington, Vermont.  The EPA has also
identified eighteen other "potentially responsible parties."  Utilities has
responded to the EPA letter and denied liability for any contamination caused
by the former operator of the gas plant.  Management believes that Utilities
has substantial defenses to any claim that may be made for investigative or
remedial costs because, among other things, the plant was operated by a
subsidiary of a predecessor company.

         The site is the location of a former manufactured gas plant owned and
operated by Burlington Gas Light Company ("BGLC") and Burlington Light and
Power Company ("BLPC"). The EPA contends that Utilities is potentially liable
because it assumed the liabilities of American Gas Company of New Jersey, a
one-time parent of BGLC and BLPC.  In 1985, the EPA removed approximately
15,000 tons of coal tar contaminated material from a portion of the site.  From
1986 through 1992, the EPA conducted investigations and developed potential
remedial actions at the site.  The results of EPA's investigations show that
coal gasification wastes, particularly polynuclear aromatic hydrocarbons and
coal tar, are present in surface and subsurface soils as well as groundwater.
The contamination also extends to wetlands adjacent to the site.

         In November 1992, the EPA proposed a cleanup of the site that, among
other actions, would consist of on-site containment, dredging and excavation,
dewatering and consolidation of contaminated soils, treatment of groundwater and
restoration of wetlands. The estimated cost of the proposed plan would have been
approximately $50 million. In May 1993, after reviewing extensive public comment
concerning the proposed plan of remediation, the EPA withdrew the proposed plan
and announced that it would work with a coordinating council consisting of
community groups, potentially responsible parties ("PRPs") and others to develop
an alternative plan.

         In September 1997, the coordinating council proposed a remedial plan
calling for capping of the site at an estimated cost of $6 million to $10
million.  In addition, the coordinating council and EPA may have spent an
additional $10 million in studying the site.  In December 1997, Green Mountain
Power Company, the lead PRP, agreed in principle to indemnify and release
Utilities from any further liability at the site on terms and conditions which
are not material to the results of operations of Utilities.

         3.  Savannah, Georgia.  On March 2, 1992, Atlanta Gas Light Company
("AGL") informed Utilities that it was investigating contamination that appears
to be related to manufactured gas plant operations at a site owned by AGL in
Savannah, Georgia.  AGL believes that Utilities may be liable for investigative
and remedial costs as a result of having operated the gas plant through a
subsidiary company in the early 1900s.  AGL has stated its intention to bring
suit against Utilities.  AGL estimates that total costs to remediate the site
may exceed $5 million.  Management believes that Utilities has substantial
defenses to any action that may arise out of the activities of its former
subsidiary at this site.

                                      -23-
   26

         4.  Concord, New Hampshire.  By letter dated October 18, 1993,
EnergyNorth Natural Gas, Inc. ("EnergyNorth") informed Utilities that the New
Hampshire Department of Environmental Services ("NHDES") has alleged that there
is environmental contamination on property in Concord, N.H., where a
manufactured gas plant was once located.   EnergyNorth requested that
Utilities, as a former operator of the plant, participate in investigation of
the site.  Because this gas plant appears to have been operated almost
exclusively by former subsidiary companies of Utilities, Utilities declined to
participate.  On September 17, 1995 EnergyNorth filed suit against Utilities
alone in federal District Court in New Hampshire, seeking Utilities' allocable
share of response costs associated with remediating gas plant related
contamination at that site.  The complaint alleges that EnergyNorth has spent
$3.5 million to remove contaminants from a gas holder at the site and will be
required to spend an unknown amount in the future.  As a result of
investigations of gas plant related contamination in a nearby pond completed in
1996, EnergyNorth recommended to NHDES a remedial plan that would cost
approximately $4 million. In November 1997, Utilities settled this litigation
on terms which are not material to the results of operations of Utilities.

OTHER MATTERS

         1. Foster Wheeler Penn Resources, Inc. v. UGI Utilities, Inc. Civil
Action No. 97CV4592. On July 14, 1997, Foster Wheeler Penn Resources, Inc. filed
suit against UGI Utilities, Inc. in United States District Court for the Eastern
District of Pennsylvania alleging, among other things, that UGI Utilities
breached an Agreement for the Sale and Purchase of Net Electrical Energy under
which UGI Utilities had agreed to purchase electricity from a generating
facility yet to be built by Foster Wheeler. In its suit Foster Wheeler seeks,
among other things, a declaration that the Sale and Purchase Agreement remains
in effect or in the alternative that Foster Wheeler be awarded damages in excess
of $20 million. Management believes that it has defenses to Foster Wheeler's
claims.

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

         The Operating Partnership is also monitoring the pending litigation on
the Final Rule brought by other major marketers and parallel litigation by the
propane industry's national trade

                                      -24-
   27

association, the National Propane Gas Association. See "BUSINESS AND PROPERTIES
- - PROPANE PARTNERSHIP BUSINESS - Government Regulation."

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

         No matter was submitted to a vote of security holders during the last
fiscal quarter of the 1997 fiscal year.

                            UGI'S EXECUTIVE OFFICERS

         Information regarding UGI's executive officers is included in Part III
of this Report and is incorporated in Part I by reference.

PART II:  SECURITIES AND FINANCIAL INFORMATION

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY
         AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         The Company's Common Stock is traded on the New York and Philadelphia
Stock Exchanges under the symbol "UGI".  The following table sets forth the
high and low sales prices for the Company's Common Stock on the New York Stock
Exchange Composite Transactions tape as reported in The Wall Street Journal for
each full quarterly period within the two most recent fiscal years:

         1997 FISCAL YEAR          HIGH                LOW

         4th Quarter            $28.000            $22.125
         3rd Quarter             24.375             21.625
         2nd Quarter             25.375             21.750
         1st Quarter             24.125             20.875

         1996 FISCAL YEAR          HIGH                LOW

         4th Quarter            $24.875            $21.875
         3rd Quarter             24.875             20.000
         2nd Quarter             22.750             20.125
         1st Quarter             21.875             19.750

                                      -25-
   28

DIVIDENDS

         Quarterly dividends on UGI Common Stock were paid in the 1997 and 1996
fiscal years as follows:

         1997 FISCAL YEAR                 AMOUNT

         4th Quarter                    $.36
         3rd Quarter                     .35 1/2
         2nd Quarter                     .35 1/2
         1st Quarter                     .35 1/2

         1996 FISCAL YEAR                 AMOUNT

         4th Quarter                 $.35 1/2
         3rd Quarter                  .35
         2nd Quarter                  .35
         1st Quarter                  .35

HOLDERS

         On December 1, 1997, UGI had 13,732 holders of record of Common Stock.

         The information concerning restrictions on dividends required by Item
5 is incorporated in this Report by reference to Note 4 to the Company's
Consolidated Financial Statements which appears on pages 29 through 30 of its
1997 Annual Report to Shareholders.

                                      -26-
   29

ITEM 6.  SELECTED FINANCIAL DATA

                                                                Year Ended                       Nine Months Ended
                                                               September 30,                       September 30,
                                              ---------------------------------------------    --------------------
                                                1997        1996        1995         1994        1993        1992
                                              --------    --------    --------     --------    --------    --------
                                                                                                          (Unaudited)
                                                   (Millions of dollars, except per share amounts)
                                                                                              
FOR THE PERIOD:
Income statement data:
Revenues                                      $1,642.0    $1,557.6    $  877.6     $  762.2    $  509.5    $  486.8
                                              ========    ========    ========     ========    ========    ========

Income (loss) from:
     Continuing operations                    $   52.1    $   39.5    $    7.9     $   37.4    $   12.6    $   15.3
     Discontinued operations                        --          --          --          7.6          --         1.7
                                              --------    --------    --------     --------    --------    --------
Income before extraordinary loss
     and change in accounting                     52.1        39.5         7.9         45.0        12.6        17.0
Extraordinary loss - debt restructuring             --          --       (13.2)          --          --          --
Change in accounting for
     postemployment benefits                        --          --        (3.1)          --          --          --
                                              --------    --------    --------     --------    --------    --------

Net income (loss)                             $   52.1    $   39.5    $   (8.4)    $   45.0    $   12.6    $   17.0
                                              ========    ========    ========     ========    ========    ========

Earnings from continuing operations           $   1.57    $   1.19    $   0.24     $   1.16    $   0.41    $   0.57
Earnings from discontinued operations               --          --          --         0.23          --        0.06
                                              --------    --------    --------     --------    --------    --------
Earnings before extraordinary loss
     and change in accounting                     1.57        1.19        0.24         1.39        0.41        0.63
Extraordinary loss - debt restructuring             --          --       (0.40)          --          --          --
Change in accounting for
     postemployment benefits                        --          --       (0.10)          --          --          --
                                              --------    --------    --------     --------    --------    --------

Net earnings (loss)                           $   1.57    $   1.19    $  (0.26)    $   1.39    $   0.41    $   0.63
                                              ========    ========    ========     ========    ========    ========

Cash dividends declared                       $   1.43    $   1.41    $   1.39     $   1.36    $   0.99    $   0.96
                                              ========    ========    ========     ========    ========    ========

Total assets                                  $2,151.7    $2,133.0    $2,152.3     $1,182.2    $1,211.4    $1,076.3
                                              ========    ========    ========     ========    ========    ========

Capitalization:
    Debt:
      Bank loans - Propane                    $   28.0    $   15.0    $     --     $     --    $     --    $     --
      Bank loans - Utilities                      67.0        50.5        42.0         17.0          --          --
      Long-term debt
       (including current maturities):
           Propane                               691.1       692.5       658.5        210.3       210.2       211.0
           Utilities                             169.3       174.8       206.3        175.6       200.4       196.2
           Other                                   8.6         9.0         9.3          9.6         9.9          --
                                              --------    --------    --------     --------    --------    --------
     Total Debt                                  964.0       941.8       916.1        412.5       420.5       407.2
                                              ========    ========    ========     ========    ========    ========

     Minority interest in AmeriGas Partners      266.5       284.4       318.9           --          --          --
     UGI Utilities preferred stock subject
         to mandatory redemption                  35.2        35.2        35.2         35.2        33.2        35.2
     Common stockholders' equity                 376.1       377.6       380.5        424.3       414.5       375.5
                                              --------    --------    --------     --------    --------    --------
Total capitalization                          $1,641.8    $1,639.0    $1,650.7     $  872.0    $  868.2    $  817.9
                                              ========    ========    ========     ========    ========    ========

Ratio of capitalization:
      Total debt                                  58.7%       57.5%       55.5%        47.3%       48.4%       49.8%
      Minority interest                           16.3%       17.4%       19.3%          --          --          --
      UGI Utilities preferred stock                2.1%        2.1%        2.1%         4.0%        3.8%        4.3%
      Common stockholders' equity                 22.9%       23.0%       23.1%        48.7%       47.8%       45.9%
                                              --------    --------    --------     --------    --------    --------
                                                 100.0%      100.0%      100.0%       100.0%      100.0%      100.0%
                                              ========    ========    ========     ========    ========    ========

                                      -27-
   30

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

         Management's Discussion and Analysis of Financial Condition and
Results of Operations, entitled "Financial Review" and contained on pages 10
through 18 of UGI's 1997 Annual Report to Shareholders, is incorporated in this
Report by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Financial Statements and Financial Statement Schedules referred to
in the Index contained on pages F-2 and F-3 of this Report are incorporated
herein by reference.

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

         During fiscal year 1997, UGI engaged a new independent auditor, Arthur
Andersen LLP.  The information required by Item 9 is incorporated in this
Report by reference to UGI's Amendment No. 1 on Form 8-K/A to its Current
Report on Form 8-K dated July 11, 1997.

PART III:   UGI MANAGEMENT AND SECURITY HOLDERS

ITEMS 10 THROUGH 12.

         In accordance with General Instruction G(3), and except as set forth
below, the information required by Items 10, 11 and 12 is incorporated in this
Report by reference to the following portions of UGI's Proxy Statement, which
will be filed with the Securities and Exchange Commission by January 28, 1998:

                                            CAPTIONS OF PROXY STATEMENT
         INFORMATION                         INCORPORATED BY REFERENCE   
         -----------                       ------------------------------
                                       
Item 10.  Directors and Executive         Election of Directors - Nominees
           Officers of Registrant.

Item 11.  Executive Compensation.         Compensation of Executive Officers
                                          Compensation of Directors

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

                                      -28-
   31

         The information concerning the Company's executive officers
required by Item 10 is set forth below.

                               EXECUTIVE OFFICERS

               NAME               AGE             POSITION
               ----               ---             --------
                                    
         Lon R. Greenberg         47      Chairman, Director, President
                                             and Chief Executive Officer

         Charles L. Ladner        59      Senior Vice President - Finance
                                             and Chief Financial Officer

         Brendan P. Bovaird       49      Vice President and General Counsel

         Michael J. Cuzzolina     52      Vice President - Accounting
                                             and Financial Control

         Bradley C. Hall          44      Vice President - New Business Development

         Richard L. Bunn          61      President and Chief Executive
                                             Officer, UGI Utilities, Inc.

         All officers are elected for a one-year term at the organizational
meetings of the respective Boards of Directors held each year.

         There are no family relationships between any of the officers or
between any of the officers and any of the directors.

         The following is a summary of the business experience of the executive
officers listed above during at least the last five years.  For purposes of the
summary of business experience set forth below, references to "the Company,"
"UGI" and "the Board" prior to February 19, 1992 refer to Utilities (formerly,
UGI Corporation) or the Board of Directors of Utilities, respectively.

Lon R. Greenberg

         Mr. Greenberg was elected Chairman of UGI effective August 1, 1996,
having been elected Chief Executive Officer effective August 1, 1995.  He was
elected Director and President of UGI and a Director of UGI Utilities in July
1994.  Mr. Greenberg was Senior Vice President - Legal and Corporate
Development (1989 to 1994), and also served as Vice President - Legal and
Corporate Development (1987 to 1989).  Previously, he was Vice President -
Legal (1984 to 1987), General Counsel (1983 to 1994) and Secretary (1982 to
1988).  He joined the Company in 1980 as Corporate Development Counsel.  Mr.
Greenberg is also a director on the Mellon PSFS Advisory Board.

                                      -29-
   32

Charles L. Ladner

         Mr. Ladner is Senior Vice President - Finance (since 1978).  Since
April 1997, Mr. Ladner has also served as Vice President - Finance and
Accounting of AmeriGas Propane, Inc.  He joined the Company in August 1973 as
Vice President - Finance.

Brendan P. Bovaird

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

Michael J. Cuzzolina

         Mr. Cuzzolina is Vice President - Accounting and Financial  Control of
the Company (since 1984) and Treasurer of AmeriGas Propane, Inc. (since 1995).
He joined the Company in 1974 and has previously served as Treasurer and
Assistant Controller of the Company and as Vice President - Finance of
AmeriGas.

Bradley C. Hall

         Mr. Hall was elected Vice President - New Business Development on
October 25, 1994, having been Vice President - Marketing and Rates, UGI
Utilities, Inc. Gas Division.  He also serves as President of UGI Enterprises,
Inc. (since 1994).  He joined the Company in 1982 and held various positions in
the Gas Division.

Richard L. Bunn

         Mr. Bunn is President and Chief Executive Officer of UGI Utilities,
Inc., (since May 1992).  Mr. Bunn began his career with UGI as an engineer in
the Electric Utility Division (1958).

                                      -30-
   33

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.

PART IV:  ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS

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

         (a) DOCUMENTS FILED AS PART OF THIS REPORT:

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

                 (3) LIST OF EXHIBITS:

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

                                      -31-
   34

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT            FILING           EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
                                                                                        
     3.1     (Second) Amended and Restated Articles of         UGI          Amendment No. 1 on      3.(3)(a)
             Incorporation of the Company                                   Form 8 to Form 8-B
                                                                                (4/10/92)

     3.2     Bylaws of UGI as in effect since October          UGI         Form 10-K (9/30/95)         3.2
             31, 1995.
- ------------------------------------------------------------------------------------------------------------------
     4       Instruments defining the rights of
             security holders, including indentures.
             (The Company agrees to furnish to the
             Commission upon request a copy of any
             instrument defining the rights of holders
             of its long-term debt not required to be
             filed pursuant to Item 601(b)(4) of
             Regulation S-K)

     4.1     Rights Agreement, as amended as of April          UGI               Form 8-K              4.1
             17, 1996, between the Company and Mellon                           (4/17/96)
             Bank, N.A., successor to Mellon Bank
             (East) N.A., as Rights Agent, and
             Assumption Agreement dated April 7, 1992

     4.2     The description of the Company's Common           UGI              Form 8-B/A           3.(4)
             Stock contained in the Company's                                   (4/17/96)
             registration statement filed under the
             Securities Exchange Act of 1934, as
             amended

     4.3     UGI's (Second) Amended and Restated
             Articles of Incorporation and Bylaws
             referred to in 3.1 and 3.2 above.

     4.4     Utilities' Articles of Incorporation           Utilities            Form 8-K             4(a)
                                                                                (9/22/94)
- ------------------------------------------------------------------------------------------------------------------

                                      -32-
   35

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT          FILING          EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
                                                                                    
     4.5     Note Agreement dated as of April 12, 1995       AmeriGas          Form 10-Q          10.8
             among The Prudential Insurance Company of       Partners, L.P.    (3/31/95)
             America, Metropolitan Life Insurance
             Company, and certain other institutional
             investors and AmeriGas Propane, L.P., New
             AmeriGas Propane, Inc. and Petrolane
             Incorporated

     4.6     First Amendment dated as of September 12,       AmeriGas          Form 10-K          4.5
             1997 to Note Agreement dated as of April        Partners, L.P.    (9/30/97)
             12, 1995

- ------------------------------------------------------------------------------------------------------------------
    10.1     Service Agreement (Rate FSS) dated as of        UGI               Form 10-K          10.5
             November 1, 1989 between Utilities and                            (9/30/95)
             Columbia, as modified pursuant to the
             orders of the Federal Energy Regulatory
             Commission at Docket No. RS92-5-000
             reported at Columbia Gas Transmission
             Corp., 64 FERC Paragraph 61,060 (1993), order
             on rehearing, 64 FERC Paragraph 61,365 (1993)

    10.2     Service Agreement (Rate FTS) dated June         Utilities          Form 10-K         (10)o.
             1, 1987 between Utilities and Columbia,                          (12/31/90)
             as modified by Supplement No. 1 dated
             October 1, 1988; Supplement No. 2 dated
             November 1, 1989; Supplement No. 3 dated
             November 1, 1990; Supplement No. 4 dated
             November 1, 1990; and Supplement No. 5
             dated January 1, 1991, as further
             modified pursuant to the orders of the
             Federal Energy Regulatory Commission at
             Docket No. RS92-5-000 reported at
             Columbia Gas Transmission Corp., 64 FERC
             Paragraph 61,060 (1993), order on rehearing, 64
             FERC Paragraph 61,365 (1993)
- ------------------------------------------------------------------------------------------------------------------

                                      -33-
   36

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT          FILING          EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
                                                                                    
    10.3     Transportation Service Agreement (Rate         Utilities          Form 10-K         (10)p.
             FTS-1) dated November 1, 1989 between                            (12/31/90)
             Utilities and Columbia Gulf Transmission
             Company, as modified pursuant to the
             orders of the Federal Energy Regulatory
             Commission in Docket No. RP93-6-000
             reported at Columbia Gulf Transmission
             Co., 64 FERC Paragraph 61,060 (1993), order 
             on rehearing, 64 FERC Paragraph 61,365 (1993)

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

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

   10.6**    UGI Corporation Directors Deferred                UGI             Form 10-K         10.39
             Compensation Plan dated August 26, 1993                           (9/30/94)
- ------------------------------------------------------------------------------------------------------------------

                                      -34-
   37

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT          FILING          EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
                                                                                    
   10.7**    UGI Corporation 1992 Stock Option and             UGI             Form 10-Q         (10)ee
             Dividend Equivalent Plan, as amended May                          (6/30/92)
             19, 1992

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

   10.9**    UGI Corporation Directors' Equity                 UGI             Form 10-Q         10.1
             Compensation Plan                                                 (3/31/97)

   10.10**   UGI Corporation 1997 Stock Option and             UGI             Form 10-Q         10.2
             Dividend Equivalent Plan                                          (3/31/97)

   10.11**   UGI Corporation 1992 Directors' Stock             UGI             Form 10-Q         (10)ff
             Plan                                                              (6/30/92)

  *10.12**   UGI Corporation Senior Executive Employee
             Severance Pay Plan effective January 1, 1997

  *10.13**   Change of Control Agreement between UGI
             Corporation and Lon R. Greenberg

  *10.14**   Form of Change of Control Agreement 
             between UGI Corporation and each of 
             Messrs. Bunn and Ladner

  *10.15**   Form of Change of Control Agreement
             between UGI Corporation and each of
             Messrs. Bovaird, Cuzzolina and Hall

  *10.16**   1997 Stock Purchase Loan Plan
- ------------------------------------------------------------------------------------------------------------------

                                      -35-
   38

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT          FILING          EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
                                                                                    
    10.17    Amended and Restated Credit Agreement           AmeriGas        Form 10-K          10.1
             dated as of September 15, 1997 among            Partners, L.P.  (9/30/97)
             AmeriGas Propane, L.P., AmeriGas Propane,
             Inc., Petrolane Incorporated, Bank of
             America National Trust and Savings
             Association, as Agent, First Union
             National Bank, as Syndication Agent 
             and certain banks

    10.18    Intercreditor and Agency Agreement dated        AmeriGas        Form 10-Q          10.2
             as of April 19, 1995 among AmeriGas             Partners, L.P.  (3/31/95)
             Propane, Inc., Petrolane Incorporated,
             AmeriGas Propane, L.P.,  Bank of America
             National Trust and Savings Association
             ("Bank of America") as Agent, Mellon
             Bank, N.A. as Cash Collateral Sub-Agent,
             Bank of America as Collateral Agent and
             certain creditors of AmeriGas Propane,
             L.P.

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

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

                                      -36-
   39

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT          FILING          EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
                                                                                    
    10.21    Restricted Subsidiary Guarantee dated as        AmeriGas          Form 10-Q          10.5
             of April 19, 1995 by AmeriGas Propane,          Partners, L.P.    (3/31/95)
             L.P. for the benefit of Bank of America
             National Trust and Savings Association,
             as Collateral Agent

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

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

    10.24    Agreement dated as of May 1, 1996 between       AmeriGas          Form 10-K          10.2
             TE Products Pipeline Company, L.P. and          Partners, L.P.    (9/30/97)
             AmeriGas Propane, L.P.
- ------------------------------------------------------------------------------------------------------------------
     *11     Statement re:  Computation of Per Share
             Earnings
- ------------------------------------------------------------------------------------------------------------------
   *13.1     Pages 10 through 39 of 1997 Annual Report
             to Shareholders

   *13.2     Amendment No. 1 on Form 8-K/A to Form 8-K
             dated July 11, 1997
- ------------------------------------------------------------------------------------------------------------------
     *21     Subsidiaries of the Registrant
- ------------------------------------------------------------------------------------------------------------------
   *23.1     Consent of Arthur Andersen LLP
             re:  Financial Statements of UGI
             Corporation

   *23.2     Consent of Arthur  Andersen LLP
             re:  Financial Statements of AmeriGas
             Propane, Inc.

   *23.3     Consent of Coopers & Lybrand L.L.P.
- ------------------------------------------------------------------------------------------------------------------

                                      -37-
   40

- --------------------------------------------------------------------------------
                           INCORPORATION BY REFERENCE

- ------------------------------------------------------------------------------------------------------------------
   EXHIBIT NO.                 EXHIBIT                      REGISTRANT          FILING          EXHIBIT
- ------------------------------------------------------------------------------------------------------------------
          
     *27     Financial Data Schedule
- ------------------------------------------------------------------------------------------------------------------
     *99     Cautionary Statements Affecting
             Forward-looking Information
- ------------------------------------------------------------------------------------------------------------------

     *        Filed herewith.

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

     (b)      Reports on Form 8-K:

              During the last quarter of the 1997 fiscal year, the Company
                  filed a Current Report on Form 8-K dated July 11, 1997,
                  consisting of Items 4 and 7; and Amendment No. 1 on Form 8-K/A
                  to the Current Report on Form 8-K dated July 11, 1997,
                  consisting of Items 4 and 7.

                                      -38-
   41

                                   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.

                               UGI CORPORATION

Date:  December 16, 1997       By:  Charles L. Ladner  
                                    -------------------------------
                                    Charles L. Ladner
                                    Senior Vice President - Finance
                                    and Chief Financial Officer
                               
         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 16, 1997, by the following persons
on behalf of the Registrant in the capacities indicated.

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

Charles L. Ladner                          Senior Vice President -
- ---------------------------                Finance and Chief Financial
Charles L. Ladner                          Officer (Principal         
                                           Financial Officer)         

Michael J. Cuzzolina                       Vice President -
- --------------------------                 Accounting and       
Michael J. Cuzzolina                       Financial Control    
                                           (Principal Accounting
                                           Officer)             

Stephen D. Ban                             Director
- ----------------------------                       
Stephen D. Ban

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

                                      -39-
   42

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

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

                                           Director
- -----------------------------------                
Anne Pol

Quentin I. Smith, Jr.                      Director
- ----------------------------                       
Quentin I. Smith, Jr.

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

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

                                      -40-
   43

             EXHIBIT INDEX

EXHIBIT NO.  DESCRIPTION
- -----------  -----------
          
10.12        UGI Corporation Senior Executive Employee Severance Pay Plan           
                                                                                    
10.13        Change of Control Agreement between UGI Corporation and Lon R.         
             Greenberg                                                              
                                                                                    
10.14        Form of Change of Control Agreement between UGI Corporation and each of 
             Messrs. Bunn and Ladner                                                        
                                                                                    
10.15        Form of Change of Control Agreement between UGI Corporation and each of
             Messrs. Bovaird, Cuzzolina and Hall                                    
                                                                                    
10.16        1997 Stock Purchase Loan Plan                                          
                                                                                    
11           Statement re: Computation of Per Share Earnings                        
                                                                                    
13.1         Pages 10 to 39 of 1997 Annual Report to Shareholders                   
                                                                                    
13.2         Amendment No. 1 on Form 8-K/A to Form 8-K dated July 11, 1997          
                                                                                    
21           Subsidiaries of the Registrant                                         
                                                                                    
23.1         Consent of Arthur Andersen LLP re: Financial Statements of UGI         
             Corporation                                                            
                                                                                    
23.2         Consent of Arthur Andersen LLP re: Financial Statements of AmeriGas    
             Propane, Inc.                                                          
                                                                                    
23.3         Consent of Coopers & Lybrand L.L.P.                                    
                                                                                    
27           Financial Data Schedule                                                
                                                                                    
99           Cautionary Statements Affecting Forward-looking Information            

                                      -41-
   44

                        UGI CORPORATION AND SUBSIDIARIES

                              FINANCIAL INFORMATION

                   FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K

                          YEAR ENDED SEPTEMBER 30, 1997

                                      F-1

   45

                        UGI CORPORATION AND SUBSIDIARIES

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The consolidated financial statements and supplementary data of UGI Corporation
and subsidiaries, together with the reports thereon of Arthur Andersen LLP dated
November 14, 1997 and Coopers & Lybrand L.L.P. dated November 22, 1996, listed
in the following index, are included in UGI's 1997 Annual Report to Shareholders
and are incorporated in this Form 10-K Annual Report by reference. With the
exception of the pages listed in this index and information incorporated in
Items 1, 2, 5, 7 and 8, the 1997 Annual Report to Shareholders is not to be
deemed filed as part of this Report.

                                                                                         Reference
                                                                         -------------------------------------------
                                                                                                     Annual
                                                                                                    Report to
                                                                             Form 10-K            Shareholders
                                                                                (page)                (page)
                                                                                ------                ------
                                                                                            
Reports of Independent Public Accountants:

   On Consolidated Financial Statements                                                                39

   On Financial Statement Schedules                                          F-4 to F-5

Report of Independent Public Accountants on the Consolidated Financial
   Statements of AmeriGas Propane, Inc. and subsidiaries for the
   fiscal year ended September 30, 1996 and the period April 19, 1995
   to September 30, 1995                                                         F-6

Financial Statements:

   Consolidated Balance Sheets, September 30,
        1997 and 1996                                                                               22 to 23

    For the years ended September 30, 1997, 1996 and 1995:

        Consolidated Statements of Income                                                              21

        Consolidated Statements of Cash Flows                                                          24

        Consolidated Statements of Stockholders'
           Equity                                                                                      25

                                      F-2

   46

                        UGI CORPORATION AND SUBSIDIARIES

  INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)

                                                                                         Reference
                                                                         -------------------------------------------
                                                                                                     Annual
                                                                                                    Report to
                                                                             Form 10-K            Shareholders
                                                                                (page)                (page)
                                                                                ------                ------
                                                                                            
        Notes to Consolidated Financial
           Statements                                                                               26 to 38

Supplementary Data (unaudited):

    Quarterly Data for the years ended
        September 30, 1997 and 1996                                                                    38

Financial Statement Schedules:

    For the years ended September 30, 1997, 1996 and 1995:

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

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

Annual Reports on Form 10-K/A

         Annual Reports on Form 10-K/A for the UGI Utilities, Inc. and AmeriGas
         Propane, Inc. savings plans will be filed by amendment within the time
         period specified by Rule 15d-21(b).

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

                                      F-3

   47

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in UGI Corporation's annual report to
shareholders for the year ended September 30, 1997, incorporated by reference in
this Form 10-K, and have issued our report thereon dated November 14, 1997. Our
audit was made for the purpose of forming an opinion on those consolidated
financial statements taken as a whole. The schedules listed in the Index on
pages F-2 and F-3 are the responsibility of UGI Corporation's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. The
information for the year ended September 30, 1997 included on these schedules
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Chicago, Illinois
November 14, 1997

                                       F-4

   48

                        REPORT OF INDEPENDENT ACCOUNTANTS

To The Board of Directors
  and Stockholders
UGI Corporation

Our report on the consolidated financial statements of UGI Corporation and
subsidiaries, which includes an explanatory paragraph regarding the Company's
change in its method of accounting for postemployment benefits in 1995, has been
incorporated by reference in this Form 10-K from page 39 of the 1997 Annual
Report to Shareholders of UGI Corporation and subsidiaries. In connection with
our audits of such financial statements, we have also audited the financial
statement schedules for the years ended September 30, 1996 and 1995 listed in
the index on pages F-2 and F-3 inclusive, of this Form 10-K.

In our opinion, the financial statement schedules (pages S-1 to S-5, inclusive)
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
required to be included therein.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 22, 1996

                                       F-5

   49

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of AmeriGas Propane, Inc.:

We have audited the consolidated balance sheets of AmeriGas Propane, Inc. (a
Pennsylvania corporation and a wholly owned subsidiary of AmeriGas, Inc.) and
subsidiaries as of September 30, 1996 and 1995, and the related consolidated
statements of operations, stockholder's equity and cash flows for the year ended
September 30, 1996 and the period April 19, 1995 to September 30, 1995 (not
presented herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
AmeriGas Propane, Inc. and subsidiaries as of September 30, 1996 and 1995 and
the results of their operations and their cash flows for the year ended
September 30, 1996 and the period April 19, 1995 to September 30, 1995, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
November 22, 1996

                                       F-6

   50

                        UGI CORPORATION AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                                 BALANCE SHEETS
                              (Millions of dollars)

                                                                              September 30,
                                                                            1997        1996
                                                                           ------      ------
                                                                                    
ASSETS

Current assets:
     Cash and cash equivalents                                             $ 20.1      $ 51.4
     Short-term investments                                                    --        23.1
     Accounts receivable                                                      0.5         0.4
     Deferred income taxes                                                    0.2         0.2
     Prepaid expenses and other current assets                                0.1         0.2
                                                                           ------      ------
        Total current assets                                                 20.9        75.3

Investments in subsidiaries                                                 376.2       326.5

Other assets                                                                  4.0         1.0
                                                                           ------      ------

        Total assets                                                       $401.1      $402.8
                                                                           ======      ======

LIABILITIES AND COMMON STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts and notes payable                                            $ 10.3      $ 12.2
     Accrued liabilities                                                     13.2        11.7
                                                                           ------      ------
        Total current liabilities                                            23.5        23.9

Noncurrent liabilities                                                        1.5         1.3

Common stockholders' equity:
     Common Stock, without par value (authorized - 100,000,000 shares;
        issued - 33,198,731 shares)                                         393.7       392.0
     Accumulated deficit                                                     (9.2)      (12.9)
                                                                           ------      ------
                                                                            384.5       379.1
        Less treasury stock, at cost                                          8.4         1.5
                                                                           ------      ------
          Total common stockholders' equity                                 376.1       377.6
                                                                           ------      ------

          Total liabilities and common stockholders' equity                $401.1      $402.8
                                                                           ======      ======

                                      S-1

   51

                        UGI CORPORATION AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                              STATEMENTS OF INCOME
                 (Millions of dollars, except per share amounts)

                                                                                  Year Ended
                                                                                 September 30,
                                                                        ------------------------------
                                                                          1997       1996        1995
                                                                        ------      ------      ------
                                                                                          
Revenues                                                                $   --      $   --      $   --

Costs and expenses:
    Operating and administrative expenses                                 12.2        10.1        16.4
    Petrolane management fee income                                         --          --        (6.8)
    Miscellaneous income, net                                            (14.8)      (13.4)      (16.7)
                                                                        ------      ------      ------
                                                                          (2.6)       (3.3)       (7.1)
                                                                        ------      ------      ------

Operating income                                                           2.6         3.3         7.1
Interest income                                                             --         0.1         0.2
                                                                        ------      ------      ------

Income before income taxes                                                 2.6         3.4         7.3
Income taxes                                                               1.1         1.4         3.2
                                                                        ------      ------      ------

Income before equity in income
    of unconsolidated subsidiaries
    and equity investees                                                   1.5         2.0         4.1
Equity in continuing operations
    of unconsolidated subsidiaries                                        50.6        37.5         3.7
Equity in Petrolane                                                         --          --         0.1
                                                                        ------      ------      ------

Income before extraordinary loss and change
     in accounting for postemployment benefits                            52.1        39.5         7.9
Extraordinary loss - debt restructuring - subsidiaries                      --          --       (13.2)
Change in accounting for postemployment benefits - subsidiaries             --          --        (3.1)
                                                                        ------      ------      ------

Net income (loss)                                                       $ 52.1      $ 39.5      $ (8.4)
                                                                        ======      ======      ======

Earnings per common share:
    Earnings before extraordinary loss and change
        in accounting for postemployment benefits                       $ 1.57      $ 1.19      $ 0.24
    Extraordinary loss - debt restructuring - subsidiaries                  --          --       (0.40)
    Change in accounting for postemployment benefits - subsidiaries         --          --       (0.10)
                                                                        ------      ------      ------

    Net earnings (loss)                                                 $ 1.57      $ 1.19      $(0.26)
                                                                        ======      ======      ======

                                       S-2

   52

                        UGI CORPORATION AND SUBSIDIARIES
   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

                            STATEMENTS OF CASH FLOWS
                              (Millions of dollars)

                                                                  Year Ended
                                                                September 30,
                                                         ----------------------------
                                                          1997       1996       1995
                                                         ------     ------     ------
                                                                        
NET CASH PROVIDED BY OPERATING
     ACTIVITIES (a)                                      $ 77.5     $ 96.6     $ 25.0

CASH  FLOWS  FROM  INVESTING  ACTIVITIES:
     Expenditures for property, plant and equipment          --         --       (0.2)
     Net repayments from unconsolidated subsidiaries         --         --        0.5
     Investments in unconsolidated subsidiaries           (74.6)      (1.1)      (0.6)
     Other                                                 20.6      (21.1)      (2.0)
                                                         ------     ------     ------
        Net cash used by investing activities             (54.0)     (22.2)      (2.3)

CASH  FLOWS  FROM  FINANCING  ACTIVITIES:
     Payment of dividends on Common Stock                 (47.2)     (46.4)     (45.2)
     Issuance of Common Stock                              11.7       11.3       10.1
     Purchase of Common Stock                             (19.2)      (7.1)        --
                                                         ------     ------     ------
        Net cash used by financing activities             (54.7)     (42.2)     (35.1)
                                                         ------     ------     ------

Cash and cash equivalents increase (decrease)            $(31.2)    $ 32.2     $(12.4)
                                                         ======     ======     ======

Cash and cash equivalents:
     End of period                                       $ 20.1     $ 51.3     $ 19.1
     Beginning of period                                   51.3       19.1       31.5
                                                         ------     ------     ------
        Increase (decrease)                              $(31.2)    $ 32.2     $(12.4)
                                                         ======     ======     ======

(a)  Includes dividends received from unconsolidated subsidiaries of $75.8,
     $95.2 and $22.1, respectively, for the years ended September 30, 1997, 1996
     and 1995.

Supplemental disclosure of non-cash investing activities:
     During the year ended September 30, 1995, UGI Corporation contributed a $10
     noninterest bearing demand note to its wholly owned subsidiary, AmeriGas,
     Inc. During the year ended September 30, 1996, the note was contributed to
     AmeriGas Propane, Inc., a subsidiary of AmeriGas, Inc.

                                       S-3

   53

                        UGI CORPORATION AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                              (Millions of dollars)

                                                                     Charged
                                                       Balance at   (credited)                      Balance at
                                                       beginning   to costs and                       end of
                                                        of year      expenses          Other           year
                                                       ---------   ------------     -----------     ----------
                                                                                          
YEAR ENDED SEPTEMBER 30, 1997
Reserves deducted from assets in
  the consolidated balance sheet:

      Allowance for doubtful accounts                     $10.6        $11.3         $(10.6)(1)       $11.3
                                                          =====                                       =====

      Allowance for amortization of deferred
         financing costs - Propane                        $ 2.2        $ 1.6         $   --           $ 3.8
                                                          =====                                       =====

      Allowance for amortization of
        other deferred costs - Propane                    $ 2.8        $ 1.1         $   --           $ 3.9
                                                          =====                                       =====

Other reserves:

      Self-insured property and casualty liability        $47.7        $11.3         $(10.5)(2)       $48.5
                                                          =====                                       =====

      Insured property and casualty liability             $19.0        $ 3.3         $(20.5)(2)       $ 1.8
                                                          =====                                       =====

      Environmental, litigation and other                 $16.1        $ 7.6         $ (1.1)(2)       $22.6
                                                          =====                                       =====

YEAR ENDED SEPTEMBER 30, 1996
Reserves deducted from assets in
  the consolidated balance sheet:

      Allowance for doubtful accounts                     $ 7.3        $10.5         $ (7.2)(1)       $10.6
                                                          =====                                       =====

      Allowance for amortization of deferred
         financing costs - Propane                        $ 0.7        $ 1.5         $  --            $ 2.2
                                                          =====                                       =====

      Allowance for amortization of
        other deferred costs - Propane                    $ 1.8        $ 1.0         $  --            $ 2.8
                                                          =====                                       =====

Other reserves:

      Self-insured property and casualty liability        $48.5        $14.0         $(14.8)(2)       $47.7
                                                          =====                                       =====

      Insured property and casualty liability             $11.7        $ 6.8         $  0.5 (4)       $19.0
                                                          =====                                       =====

      Environmental, litigation and other                 $26.1        $(7.1)        $ (2.9)(2)       $16.1
                                                          =====                                       =====

                                       S-4

   54

                        UGI CORPORATION AND SUBSIDIARIES
           SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (continued)
                              (Millions of dollars)

                                                                     Charged
                                                       Balance at   (credited)                     Balance at
                                                       beginning   to costs and                      end of
                                                        of year      expenses          Other          year
                                                       ---------   ------------     -----------    ----------
                                                                                         
YEAR ENDED SEPTEMBER 30, 1995
Reserves deducted from assets in
  the consolidated balance sheet:

      Allowance for doubtful accounts                     $ 4.7        $ 5.4        $(7.3)(1)        $ 7.3
                                                          =====                                      =====
                                                                                      4.5 (3)

      Allowance for amortization of deferred
         financing costs - Propane                        $  --        $ 0.7        $  --            $ 0.7
                                                          =====                                      =====

      Allowance for amortization of
        other deferred costs - Propane                    $ 6.3        $ 1.6        $ 0.4 (3)        $ 1.8
                                                          =====                                      =====
                                                                                     (6.5)(4)

Other reserves:

      Self-insured property and casualty liability        $13.6        $11.3        $(9.6)(2)        $48.5
                                                          =====                                      =====
                                                                                     33.0 (3)
                                                                                      0.2 (4)

      Insured property and casualty liability             $  --        $14.9        $(2.1)(2)        $11.7
                                                          =====                                      =====
                                                                                     (1.1)(4)

      Environmental, litigation and other                 $ 0.5        $ 0.2        $32.3 (3)        $26.1
                                                          =====                                      =====
                                                                                     (6.3)(4)
                                                                                     (0.6)(2)

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

                                       S-5

   1
                                                                   EXHIBIT 10.12

                                 UGI CORPORATION
                            SENIOR EXECUTIVE EMPLOYEE
                               SEVERANCE PAY PLAN
   2
                                TABLE OF CONTENTS

Article No.                                                                             Page No.

I.     Background, Purpose and Term of Plan.........................................          1
II.    Definitions..................................................................          2
III.   Participation and Eligibility for Benefits...................................          4
IV.    Benefit......................................................................          5
V.     Method and Duration of Benefit Payments......................................          7
VI.    Administration...............................................................          8
VII.   Amendment and Termination....................................................         10
VIII.  Duties of the Company........................................................         11
IX.    Claims Procedures............................................................         11
X.     Miscellaneous................................................................         12
Signatures..........................................................................         14
Appendix A..........................................................................         A-1

                                      (i)
   3
                                    ARTICLE I

                      BACKGROUND, PURPOSE AND TERM OF PLAN

                    Section 1.01 Background. This Plan was amended and restated
in its entirety on April 30, 1993 to reflect sponsorship by a new entity
following the April 10, 1992 reorganization of UGI Utilities, Inc. (formerly,
UGI Corporation). As of January 1, 1997 the Company adopted the 1997 Stock
Option and Dividend Equivalent Plan. For this reason and others, certain Plan
changes are desirable. Accordingly, pursuant to the authority granted under
Section 7.01, the Plan is amended and restated in its entirety effective as of
January 1, 1997, with all changes effective as of that date.

                    Section 1.02 Purpose of the Plan. The Plan is intended to
alleviate, in part or in full, financial hardships which may be experienced by
certain of those employees of the Company whose employment is terminated without
fault in recognition of their past service to the Company. In essence, benefits
under the Plan are intended to be additional compensation for past services or
for the continuation of specified fringe benefits for a transitional period. The
amount or kind of benefit to be provided is to be based on the Participant's
Compensation, and the fringe benefit programs applicable to him or her, at his
or her Employment Termination Date. The Plan is not intended to be included in
the definitions of "employee pension benefit plan" and "pension plan" set forth
under Section 3(2) of ERISA. Rather, this Plan is intended to meet the
descriptive requirements of a plan constituting a "severance pay plan" within
the meaning of regulations published by the Secretary of Labor at Title 29, Code
of Federal Regulations, Section 2510.3-2(b). Accordingly, the benefits paid by
the Plan are not deferred compensation.

                    Section 1.03 Term of the Plan. This amendment and
restatement is a continuation of the Company's existing Plan. The Plan will
continue until such time as UGI Corporation ("UGI"), acting in its sole
discretion, elects to modify, supersede or terminate it in accordance with the
further provisions hereof.
   4
                                   ARTICLE II

                                   DEFINITIONS

                    Section 2.01 "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.

                    Section 2.02 "Benefit" or "Benefits" shall mean any or all
of the benefits that a Participant is entitled to receive pursuant to Article IV
of the Plan.

                    Section 2.03 "Board of Directors" shall mean the Board of
Directors of UGI Corporation, or any successor thereto.

                    Section 2.04 "Chairman of the Board" shall mean the
individual serving as the Chairman of the Board of Directors of UGI Corporation
as of the date of reference.

                    Section 2.05 "Change of Control" shall mean a change of
control as defined in the form of the UGI Corporation Change of Control
Agreement set forth in Appendix A hereto and as amended.

                    Section 2.06 "Chief Executive Officer" shall mean the
individual serving as the Chief Executive Officer of UGI Corporation as of the
date of reference.

                    Section 2.07 "Committee" shall mean the administrative
committee designated pursuant to Article VI of the Plan to administer the Plan
in accordance with its terms.

                    Section 2.08 "Company" shall mean UGI Corporation, a
Pennsylvania corporation and its subsidiaries and Affiliates, exclusive of
AmeriGas Propane, Inc. The term "Company" shall include any successor to UGI
Corporation or any subsidiary or Affiliate, exclusive of AmeriGas Propane, Inc.,
or a corporation succeeding to the business of UGI Corporation by merger,
consolidation or liquidation or purchase of assets or stock or similar
transaction.

                    Section 2.09 "Compensation" shall mean the Participant's
annual base salary and applicable target annual bonus amount (if any) in effect
on the first day of the calendar quarter immediately preceding the Participant's
Employment Termination Date.

                                      -2-
   5
                    Section 2.10 "Employment Commencement Date" shall mean the
most recent day on which a Participant became an employee of the Company, any
Affiliate of the Company, or any entity whose business or assets have been
acquired by the Company, its Affiliates or by any predecessor of such entities,
unless the Committee determines to give credit for prior service, if any.

                    Section 2.11 "Employment Termination Date" shall mean the
date on which the employment relationship between the Participant and the
Company is terminated.

                    Section 2.12 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.

                    Section 2.13 "Just Cause" shall mean dismissal due to
misappropriation of funds, substance abuse, habitual insobriety, conviction of a
crime involving moral turpitude, or gross negligence in the performance of
duties, which gross negligence has had a material adverse effect on the
business, operations, assets, properties or financial condition of the Company
and its subsidiaries and Affiliates taken as a whole. Disputes with respect to
whether Just Cause exists shall be resolved in accordance with Article IX.

                    Section 2.14 "Participant" shall mean any individual
employed by the Company who has been designated by the Company as a participant
in SODEP.

                    Section 2.15 "Plan" shall mean the UGI Corporation Senior
Executive Employee Severance Pay Plan, as set forth herein, and as the same may
from time to time be amended.

                    Section 2.16 "Plan Year" shall mean each fiscal year of the
Company during which this Plan is in effect.

                    Section 2.17 "Salary Continuation Period" shall equal one
business day for each month which is included in the Participant's Years of
Service plus the number of months of paid notice under Section 4.01(c) to a
maximum of fifteen (15) months (thirty (30) months in the case of the Chief
Executive Officer).

                    Section 2.18 "SODEP" shall mean the Company's 1997 Stock
Option and Dividend Equivalent Plan (or its successor, as applicable).

                    Section 2.19 "Year of Service" shall mean each twelve-month
period (or part thereof) beginning on the Participant's Employment 

                                      -3-
   6
Commencement Date and ending on each anniversary thereof. Additional Years of
Service based on earlier employment with the Company, any Affiliate of the
Company or any entity whose business or assets have been acquired by the
Company, its Affiliates or by any predecessor of such entities, shall be counted
only if permitted by the Committee.

                                   ARTICLE III

                                  PARTICIPATION
                          AND ELIGIBILITY FOR BENEFITS

                    Section 3.01 General Eligibility Requirement. In order to
receive a Benefit under this Plan, a Participant's employment must have been
terminated by the Company other than for Just Cause, death, or continuous
illness, injury or incapacity for a period of six consecutive months.

                    Section 3.02 Substantially Comparable Employment. In the
absence of a Change of Control, notwithstanding anything herein to the contrary,
no Benefits shall be due hereunder in connection with the disposition of a
business or division or Affiliate by the Company or an Affiliate if
substantially comparable terms of employment, as determined by the Committee,
have been offered by the transferee; provided, however, that the Committee, in
such situation, may determine to have the Company provide any of the Benefits.

                                      -4-
   7
                                   ARTICLE IV

                                     BENEFIT

                    Section 4.01 Amount of Immediate Cash Benefit. The cash
amount to be paid to a Participant eligible to receive Benefits under Section
3.01 hereof, shall be paid in a lump sum as provided in Section 5.01 hereof and
shall equal the sum of the following; except that any payment under paragraph
(b) below that is based on annual financial performance will be excluded from
the lump sum payment and paid separately as provided below:

                         (a) An amount equal to the Participant's earned and
                    accrued vacation entitlement, including banked vacation
                    time, and personal holidays through the end of the
                    Participant's Salary Continuation Period;

                         (b) An amount equal to the Participant's annual target
                    bonus amount under the applicable annual bonus plan (or its
                    successor) for the current Plan Year multiplied by the
                    number of months elapsed in the current Plan Year to his or
                    her Employment Termination Date and divided by twelve (12),
                    together with any amounts previously deferred by the
                    Participant under such plan (with interest thereon at the
                    rate prescribed by such plan) as well as any amounts due
                    from the prior year under such plan but not yet paid,
                    provided, however, that if the Employment Termination Date
                    occurs in the last two (2) months of the fiscal year, the
                    amount of the current Plan Year target bonus to be paid
                    pursuant to this paragraph (b) shall be determined and paid
                    after the end of the fiscal year in accordance with the
                    terms and conditions of the applicable annual bonus plan as
                    though the Participant were still an Employee, except that
                    the weighting to be applied to the Participant's
                    business/financial performance goals under the annual bonus
                    plan will be deemed to be 100%; provided further, however,
                    that the Chief Executive Officer may, in his sole
                    discretion, determine that the amount payable pursuant to
                    this paragraph (b) for Employment Termination Dates
                    occurring in the last two (2) months of the fiscal year may
                    be computed in the same manner provided for Employment
                    Termination Dates occurring during the first ten (10) months
                    of the fiscal year;

                         (c) In the case of the Chief Executive Officer, an
                    amount of paid notice equal to eighteen (18) times a
                    fraction the numerator 

                                      -5-
   8
                    of which is his or her Compensation and the denominator of
                    which is twelve (12), and in the case of all other
                    Participants, an amount of paid notice equal to sixty-five
                    (65) times a fraction the numerator of which is the
                    Participant's Compensation and the denominator of which is
                    two-hundred sixty (260); and

                         (d) An amount equal to the number of the Participant's
                    Years of Service multiplied by twelve (12) times a fraction
                    the numerator of which is the Participant's Compensation and
                    the denominator of which is two-hundred sixty (260);
                    provided, however, that such amount shall not exceed 100% of
                    the Participant's Compensation.

                    Section 4.02 Executive Benefits. The Participant shall
continue to be entitled, through the end of the Participant's Salary
Continuation Period, to those employee benefits and executive perquisites listed
below (but only if they are in effect from time to time during the Salary
Continuation Period) based upon the amount of coverage or benefit provided at
the Participant's Employment Termination Date:

                              (a)  Basic Life Insurance;

                              (b)  Supplemental Life Insurance; and

                              (c)  Medical Plan and Dental
                                   Assistance Plan including COBRA
                                   continuation coverage; and

                              (d)  Executive Retirement Plan

In each case, when contributions are required of all executive employees at the
time of the Participant's Employment Termination Date, or thereafter, if
required of all other executive employees, the Participant shall be responsible
for making the required contributions, on an after-tax basis only, during the
Salary Continuation Period in order to be eligible for the coverage. In lieu of
any or all of the coverages provided under any of clauses (a) through (c) above,
the Company may pay to the Participant, at the time payment is otherwise to be
made of cash Benefits pursuant to Section 5.01 hereof, a single lump sum payment
equal to the then present value of the cost of such coverages. Notwithstanding
anything herein to the contrary, any such coverages shall be discontinued if,
and at the time, the Participant obtains other employment and becomes eligible
to participate in the plan of, or is provided similar coverage by, 

                                      -6-
   9
                                                                                
a new employer; provided, however, that the Participant shall not be required to
refund any sum to the Company should a lump sum have been paid pursuant to the
preceding sentence. Any applicable conversion rights shall be provided to the
Participant at the time coverage ceases. The Committee shall determine to what
extent, if any, any other perquisites or benefit coverage such as tax
preparation services, etc. shall continue to be provided during the Salary
Continuation Period and whether the Participant shall be entitled to
outplacement services or to receive title to the Participant's Company-supplied
automobile, if any, in which case the value of the Participant's cash Benefit
under Section 4.01 hereof shall be increased accordingly. The Participant shall
be responsible for the payment of sales tax on such automobile, if any.

                    Section 4.03 Retirement Plans. This Plan shall not govern
and shall in no way affect the Participant's interest in, or entitlement to
benefits under, any of the Company's "qualified" retirement plans and any
payments received under any such plan shall not affect a Participant's right to
any Benefit hereunder.

                    Section 4.04 Effect on Other Benefits. There shall not be
drawn from the continued provision by the Company of any of the aforementioned
Benefits any implication of continued employment or of continued right to
accrual of benefits under the Company's "qualified" retirement plans or the 1997
Stock Option and Dividend Equivalent Plan, and a Terminated Employee shall not,
except as provided in Section 4.01 (a) hereof, accrue vacation days, paid
holidays, paid sick days or other similar benefits normally associated with
employment for any part of the Salary Continuation Period during which benefits
are payable under this Plan. The benefits payable under this Plan shall be in
addition to and not in lieu of any payments or benefits due to the Participant
under any other plan, policy, or program of the Company.

                                    ARTICLE V

                     METHOD AND DURATION OF BENEFIT PAYMENTS

                    Section 5.01 Method of Payment. The cash Benefits to which a
Participant is entitled, as determined pursuant to Article IV hereof, shall be
paid in a lump sum. Payment shall be made by mailing to the last address
provided by the Participant to the Company. Payment shall be made within thirty
(30) days after the Participant's Employment Termination Date, except as
otherwise provided in Section 4.01 (b).

                                      -7-
   10
                    Section 5.02 Conditions to Entitlement to Benefit. In order
to be eligible to receive any Benefits hereunder, after the Participant's
Employment Termination Date, a Participant must be reasonably available to the
Company and cooperate in any reasonable manner (so as not to interfere
unreasonably with subsequent employment) in providing assistance to the Company
in conducting any matters which are pending at such time, and shall execute a
release and discharge of the Company from any and all claims, demands or causes
of action other than as to amounts or benefits due to the Participant under any
plan, program or contract provided by, or entered into with, the Company. Such
release and discharge shall be in such form as is prescribed by the Committee
and counsel for the Company and shall be executed prior to the payment of any
benefits due hereunder. In addition, no benefits due hereunder shall be paid to
a Participant who is required by Company policy or practice to execute an
agreement governing the assignment of patents or a confidentiality or
post-employment agreement unless executed copies of such agreements are on file
with the Company.

                    Section 5.03 Payments to Beneficiary(ies). Each Participant
shall designate a beneficiary(ies) to receive any Benefits due hereunder in the
event of the Participant's death prior to the receipt of all such Benefits. Such
beneficiary designation shall be made in the manner, and at the time, prescribed
by the Committee in its sole discretion. In the absence of an effective
beneficiary designation hereunder, the Participant's estate shall be deemed to
be the Participant's designated beneficiary.

                                   ARTICLE VI

                                 ADMINISTRATION

                    Section 6.01 Appointment. The Committee shall consist of one
(1) or more persons appointed by the Chairman of the Board. Committee members
may be, but need not be, employees of the Company, including the Chairman of the
Board and the Chief Executive Officer, whether or not they are one and the same
person.

                    Section 6.02 Tenure. Committee members shall serve at the
pleasure of the Chairman of the Board. Committee members may resign at any time
on ten (10) days' written notice, and Committee members may be discharged, with
or without cause, at any time by the Chairman of the Board.

                                      -8-
   11
                    Section 6.03 Authority and Duties. It shall be the duty of
the Committee, on the basis of information supplied to it by the Company, to
determine the eligibility of each Participant for Benefits under the Plan, to
determine the amount of Benefit to which each such Participant may be entitled,
and to determine the manner and time of payment of the Benefit consistent with
the provisions hereof. The Company shall make such payments as are certified to
it by the Committee to be due to Participants. The Committee shall have the full
power and authority to construe, interpret and administer the Plan, to correct
deficiencies therein, and to supply omissions. All decisions, actions, and
interpretations of the Committee shall be final, binding, and conclusive upon
the parties.

                    Section 6.04 Action by the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business at a meeting of the Committee. Any action of the Committee may be taken
upon the affirmative vote of a majority of the members of the Committee at a
meeting, or at the direction of the Chairperson, without a meeting, by mail,
telegraph, telephone, or electronic communication device; provided that all of
the members of the Committee are informed of their right to vote on the matter
before the Committee and of the outcome of the vote thereon.

                    Section 6.05 Officers of the Committee. The Chairman of the
Board shall designate one of the members of the Committee to serve as
Chairperson thereof. The Chairman of the Board shall also designate a person to
serve as Secretary of the Committee, which person may be, but need not be, a
member of the Committee.

                    Section 6.06 Compensation of the Committee. Members of the
Committee shall receive no compensation for their services as such. However, all
reasonable expenses of the Committee shall be paid or reimbursed by the Company
upon proper documentation. The Company shall indemnify members of the Committee
against personal liability for actions taken in good faith in the discharge of
their respective duties as members of the Committee.

                    Section 6.07 Records, Reporting, and Disclosure. The
Committee shall keep all individual and group records relating to Participants
and former Participants and all other records necessary for the proper operation
of the Plan. Such records shall be made available to the Company and to each
Participant for examination during business hours except that a Participant
shall examine only such records as pertain exclusively to the examining
Participant and to the Plan. The Committee shall prepare and shall file as
required by law or regulation all reports, forms, documents and other items
required by ERISA, 

                                      -9-
   12
the Internal Revenue Code, and every other relevant statute, each as amended,
and all regulations thereunder (except that UGI Corporation, as payor of the
Benefits, shall prepare and distribute to the proper recipients all forms
relating to withholding of income or wage taxes, Social Security taxes, and
other amounts which may be similarly reportable).

                    Section 6.08 Actions of the Committee. Whenever a
determination is required of the Committee under the Plan, such determination
shall be made solely at the discretion of the Committee. In addition, the
exercise of discretion by the Committee need not be uniformly applied to
similarly situated Participants and shall be final and binding on each
Participant or beneficiary(ies) to whom the determination is directed.

                    Section 6.09 Benefits of the Chief Executive Officer.
Whenever a determination is required of the Chief Executive Officer under the
Plan, the individual then serving as the Chairman of the Compensation and
Management Development Committee of the Board of Directors shall be substituted
for, and shall make the determination with respect to, the Chief Executive
Officer as to any matter that directly pertains to, or affects, the Chief
Executive Officer.

                    Section 6.10 Bonding. The Committee shall arrange any
bonding that may be required by law, but no amount in excess of the amount
required by law (if any) shall be required by the Plan.

                                   ARTICLE VII

                            AMENDMENT AND TERMINATION

                    Section 7.01 Amendment, Suspension and Termination. The
Company retains the right, at any time and from time to time, to amend, suspend
or terminate the Plan in whole or in part, for any reason, and without either
the consent of or the prior notification to any Participant. No such amendment
shall give the Company the right to recover any amount paid to a Participant
prior to the date of such amendment or to cause the cessation and discontinuance
of payments of Benefits to any person or persons under the Plan already
receiving Benefits.

                                      -10-
   13
                                  ARTICLE VIII

                              DUTIES OF THE COMPANY

                    Section 8.01 Records. The Company shall supply to the
Committee all records and information necessary to the performance of the
Committee's duties.

                    Section 8.02 Payment. UGI Corporation shall make payments
from its general assets to Participants in accordance with the terms of the
Plan, as directed by the Committee.

                                   ARTICLE IX

                                CLAIMS PROCEDURES

                    Section 9.01 Application for Benefits. Participants who
believe they are eligible for benefits under this Plan may apply for such
benefits by completing and filing with the Committee an application for
benefits. Before the date on which benefit payments commence, each such
application must be supported by such information as the Committee deems
relevant and appropriate.

                    Section 9.02 Appeals of Denied Claims for Benefits. In the
event that any claim for benefits is denied in whole or in part, the Participant
(or beneficiary, if applicable) whose claim has been so denied shall be notified
of such denial in writing by the Committee. The notice advising of the denial
shall specify the reason or reasons for denial, make specific reference to
pertinent Plan provisions, describe any additional material or information
necessary for the claimant to perfect the claim (explaining why such material or
information is needed), and shall advise the Participant of the procedure for
the appeal of such denial. All appeals shall be made by the following procedure:

                         (a) The Participant whose claim has been denied shall
                    file with the Committee a notice of desire to appeal the
                    denial. Such notice shall be filed within sixty (60) days of
                    notification by the Committee of claim denial, shall be made
                    in writing, and shall 

                                      -11-
   14
                    set forth all of the facts upon which the appeal is based.
                    Appeals not timely filed shall be barred.

                         (b) The Committee shall, within thirty (30) days of
                    receipt of the Participant's notice of appeal, establish a
                    hearing date on which the Participant may make an oral
                    presentation to the Committee in support of the
                    Participant's appeal. The Participant shall be given not
                    fewer than ten (10) days' notice of the date set for the
                    hearing.

                         (c) The Committee shall consider the merits of the
                    claimant's written and oral presentations, the merits of any
                    facts or evidence in support of the denial of benefits, and
                    such other facts and circumstances as the Committee shall
                    deem relevant. If the claimant elects not to make an oral
                    presentation, such election shall not be deemed adverse to
                    the claimant's interest, and the Committee shall proceed as
                    set forth below as though an oral presentation of the
                    contents of the claimant's written presentation had been
                    made.

                         (d) The Committee shall render a determination upon the
                    appealed claim, within sixty (60) days of the hearing date,
                    which determination shall be accompanied by a written
                    statement as to the reasons therefor. The determination so
                    rendered shall be binding upon all parties.

                                    ARTICLE X

                                  MISCELLANEOUS

                    Section 10.01 Nonalienation of Benefits. None of the
payments, benefits or rights of any Participant shall be subject to any claim of
any creditor, and, in particular, to the fullest extent permitted by law, all
such payments, benefits and rights shall be free from attachment, garnishment,
trustee's process, or any other legal or equitable process available to any
creditor of such Participant. No Participant shall have the right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
which the Participant may expect to receive, contingently or otherwise, under
this Plan.

                                      -12-
   15
                    Section 10.02 No Contract of Employment. Neither the
establishment of the Plan, nor any modification thereof, nor the creation of any
fund, trust or account, nor the payment of any benefits shall be construed as
giving any Participant, or any person whosoever, the right to be retained in the
service of the Company, and all Participants shall remain subject to discharge
to the same extent as if the Plan had never been adopted.

                    Section 10.03 Severability of Provisions. If any provision
of this Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been included.

                    Section 10.04 Successors, Heirs, Assigns, and Personal
Representatives. This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties, including each
Participant, present and future. Unless the Committee directs otherwise, UGI
Corporation shall require any successor or successors (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of UGI Corporation, or a
division or Affiliate thereof, (i) to acknowledge expressly that this Plan is
binding upon and enforceable against such successor in accordance with the terms
hereof, (ii) to become jointly and severally obligated with UGI Corporation to
perform the obligations under this Plan, and (iii) to agree not to amend or
terminate the plan for a period of three (3) years after the date of succession
without the consent of the affected Participant.

                    Section 10.05 Headings and Captions. The headings and
captions herein are provided for reference and convenience only, shall not be
considered part of the Plan, and shall not be employed in the construction of
the Plan.

                    Section 10.06 Gender and Number. Except where otherwise
clearly indicated by context, the masculine and the neuter shall include the
feminine and the neuter, the singular shall include the plural, and vice-versa.

                                      -13-
   16
                    Section 10.07 Unfunded Plan. The Plan shall not be funded.
The Company may, but shall not be required to, set aside or designate an amount
necessary to provide the Benefits specified herein (including the establishment
of trusts). In any event, no Participant shall have any right to, or interest
in, any assets of the Company which may be applied by the Company to the payment
of Benefits.

                    Section 10.08 Payments to Incompetent Persons, Etc. Any
benefit payable to or for the benefit of a minor, an incompetent person, or
other person incapable of receipting therefor shall be deemed paid when paid to
such person's guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge the
Company, the Committee and all other parties with respect thereto.

                    Section 10.09 Lost Payees. A benefit shall be deemed
forfeited if the Committee is unable to locate a Participant to whom a Benefit
is due. Such Benefit shall be reinstated if application is made by the
Participant for the forfeited Benefit while this Plan is in operation.

                    Section 10.10 Controlling Law. This Plan shall be construed
and enforced according to the laws of the Commonwealth of Pennsylvania, to the
extent not preempted by Federal law, without giving effect to any Pennsylvania
choice of law provisions.

                    IN WITNESS WHEREOF, UGI Corporation has caused the Plan to
be executed by its duly authorized officer and its corporate seal to be affixed
hereto as of the ____ day of ________, 1997.

                                            UGI CORPORATION
  Attest:                                 

_________________________                   By: _______________________________
Barton D. Whitman                               Brendan P. Bovaird
Secretary                                       Vice President & General Counsel

                                      -14-
   17

                                   APPENDIX A

                                 UGI CORPORATION
                           CHANGE OF CONTROL AGREEMENT

                  Agreement made as of the ____ day of June, 1996, between UGI
Corporation, a Pennsylvania corporation (the "Company"), and (the "Employee").

                  WHEREAS, the Employee is presently employed by the Company, as
its President and Chief Executive Officer; and

                  WHEREAS, the Company considers it essential to foster the
employment of well qualified key management personnel, and, in this regard, the
board of directors of the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control of the
Company may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of key management personnel to the detriment of the Company;

                  WHEREAS, the board of directors of the Company has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction in the face of potentially disturbing

                                      A-1
   18
circumstances arising from the possibility of a change in control of the
Company, although no such change is now contemplated; and

                  WHEREAS, in order to induce the Employee to remain in the
employ of the Company, the Company agrees that the Employee shall receive the
compensation set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto agree as follows:

                  1. Definitions. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:

                  (a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

                  (b) "Base Compensation" shall mean the average of the total
cash remuneration received by the Employee in all capacities with the Company,
and its Subsidiaries or Affiliates, as reported for Federal income tax purposes
on Form 

                                      A-2
   19
W-2, together with any amounts the payment of which has been deferred by
the Employee under any deferred compensation plan of the Company, and its
Subsidiaries or Affiliates, or otherwise and any and all salary reduction
authorized amounts under any of the benefit plans or programs of the Company,
and its Subsidiaries or Affiliates, but excluding any amounts attributable to
the exercise of stock options granted to the Employee under the Company's Stock
Option and Dividend Equivalent Plan or its successor, for the five calendar
years (or such number of actual full calendar years of employment, if less than
five) immediately preceding the calendar year in which occurs a Change of
Control or the Employee's Termination Date, whichever period produces the higher
amount.

                  (c) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such 

                                      A-3
   20
                                                                        
Person's Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange; (ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
without limitation pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of any security under this clause (ii) as a result of an
oral or written agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or (iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the proviso to
clause (ii) above) or disposing of any voting securities of the Company;
provided, however, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of any securities 

                                      A-4
   21
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.

                  (d) "Board" shall mean the board of directors of the Company.

                  (e) "Change of Control" shall mean:

  Any Person (except the Employee, his Affiliates and Associates, the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such employee
benefit plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner in the aggregate of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), in either case unless the members
of the Company's Executive Committee in office immediately prior to such
acquisition determine within five business days of the receipt of actual notice
of such acquisition that the circumstances do not warrant the implementation of
the provisions of this Agreement; or

  Individuals who, as of the beginning of any twenty-four month period,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at 

                                      A-5
   22
least a majority of the Board, provided that any individual becoming a director
subsequent to the beginning of such period whose election or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or

  Consummation by the Company of a reorganization, merger or consolidation (a
"Business Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
Beneficial Owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, Beneficially Own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding 

                                      A-6
   23
Company Common Stock and Company Voting Securities, as the case may be, in any
such case unless the members of the Company's Executive Committee in office
immediately prior to such Business Combination determine at the time of such
Business Combination that the circumstances do not warrant the implementation of
the provisions of this Agreement; or (i) Consummation of a complete liquidation
or dissolution of the Company or (ii) sale or other disposition of all or
substantially all of the assets of the Company other than to a corporation with
respect to which, following such sale or disposition, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the Beneficial Owners, respectively, of the Outstanding Company Common Stock and
Company Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition, in any such case unless the members of the
Company's Executive Committee in office immediately prior to such sale or
disposition determine at the time of such sale or disposition that 

                                      A-7
   24
the circumstances do not warrant the implementation of the provisions of this
Agreement.

                  (f) "Cause" shall mean 1) misappropriation of funds, 2)
habitual insobriety or substance abuse, 3) conviction of a crime involving moral
turpitude, or 4) gross negligence in the performance of duties, which gross
negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company.

                  (g) "Good Reason Termination" shall mean a Termination of
Employment initiated by the Employee upon one or more of the following
occurrences:

                           (i) any failure of the Company to comply with and
satisfy any of the terms of this the Agreement;

                           (ii) any significant involuntary reduction of the
authority, duties or responsibilities held by the Employee immediately prior to
the Change of Control;

                           (iii) any involuntary removal of the Employee from
the employment grade, compensation level or officer positions which the Employee
holds with the Company or, if the Employee is employed by a Subsidiary, with a
Subsidiary, held by him immediately prior to the Change of Control, except in
connection with promotions to higher office;

                                      A-8
   25
                           (iv) any involuntary reduction in the Employee's
target level of annual and long-term compensation as in effect immediately prior
to the Change of Control;

                           (v) any transfer of the Employee, without his express
written consent, to a location which is outside the King of Prussia,
Pennsylvania area (or the general area in which his principal place of business
immediately preceding the Change of Control may be located at such time if other
than King of Prussia, Pennsylvania) by more than fifty miles, other than on a
temporary basis (less than 12 months); and

                           (vi) the Employee being required to undertake
business travel to an extent substantially greater than the Employee's business
travel obligations immediately prior to the Change of Control.

                  (h) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 62nd birthday.

                  (i) "Subsidiary" shall mean any corporation in which the
Company, directly or indirectly, owns at least a 50% interest or an
unincorporated entity of which the Company, directly or indirectly, owns at
least 50% of the profits or capital interests.

                                      A-9
   26
                  (j) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

                  (k) "Termination of Employment" shall mean the termination of
the Employee's actual employment relationship with the Company.

                  2. Notice of Termination. Any Termination of Employment
following a Change of Control shall be communicated by a Notice of Termination
to the other party hereto given in accordance with Section 14 hereof. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific provision in this Agreement relied upon, (ii)
briefly summarizes the facts and circumstances deemed to provide a basis for the
Employee's Termination of Employment under the provision so indicated, and (iii)
if the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days after
the giving of such notice).

                  3. Severance Compensation upon Termination.

                  (a) Subject to the provisions of Section 11 hereof, in the
event of the Employee's involuntary Termination of Employment for any reason
other than Cause or in the event of a Good Reason Termination, in either event
within three years after a Change of Control, the Company shall pay to the
Employee, upon 

                                      A-10
   27
the execution of a release, in the form required by the Company of its
terminating executives prior to the Change of Control, within 15 days after the
Termination Date (or as soon as possible thereafter in the event that the
procedures set forth in Section 11(b) hereof cannot be completed within 15
days), an amount in cash equal to 2.5 times the Employee's Base Compensation,
subject to customary employment taxes and deductions.

                  (b) In the event the Employee's Normal Retirement Date would
occur prior to 30 months after the Termination Date, the aggregate cash amount
determined as set forth in (a) above shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 913 days.

                  4. Other Payments. The payment due under Section 3 hereof
shall be in addition to and not in lieu of any payments or benefits due to the
Employee under any other plan, policy or program of the Company, and its
Subsidiaries or Affiliates.

                  5. Trust Fund. The Company sponsors an irrevocable trust fund
pursuant to a trust agreement to hold assets to satisfy its obligations to
employees under this Agreement. Funding of such trust fund shall be subject to
the 

                                      A-11
   28
discretion of the Company's Executive Committee, as set forth in the agreement
pursuant to which the fund has been established.

                  6. Enforcement.

                  (a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid from the date payment
is required under Section 3 or 4, as appropriate, until paid to the Employee, at
the rate from time to time announced by Mellon Bank, N.A. as its "prime rate"
plus 1%, each change in such rate to take effect on the effective date of the
change in such prime rate.

                  (b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all reasonable expenses (including all attorneys' fees and legal
expenses) incurred 

                                      A-12
   29
by the Employee in enforcing any of the obligations of the Company under this
Agreement.

                  7. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for herein be reduced by any compensation earned by other
employment or otherwise.

                  8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company, or any of its Subsidiaries or Affiliates, and for which the Employee
may qualify.

                  9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others.

                  10. Taxes. Any payment required under this Agreement shall be
subject to all requirements of the law with regard to the withholding of taxes,

                                      A-13
   30
filing, making of reports and the like, and the Company shall use its best
efforts to satisfy promptly all such requirements.

                  11. Certain Reduction of Payments.

                  (a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the aggregate present value of amounts payable or
distributable to or for the benefit of the Employee pursuant to this Agreement
(such payments or distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not below zero) to
the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without
causing any Payment to be subject to the taxation under Section 4999 of the
Code. For purposes of this Section 11, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.

                  (b) All determinations to be made under this Section 11 shall
be made by Coopers & Lybrand (or the Company's independent public accountant

                                      A-14
   31
immediately prior to the Change of Control if other than Coopers & Lybrand (the
"Accounting Firm")), which firm shall provide its determinations and any
supporting calculations both to the Company and the Employee within 10 days of
the Termination Date. Any such determination by the Accounting Firm shall be
binding upon the Company and the Employee. The Employee shall then have the
right to determine which of the Agreement Payments shall be eliminated or
reduced in order to produce the Reduced Amount in accordance with the
requirements of this Section. Within five days after this determination, the
Company shall pay (or cause to be paid) or distribute (or cause to be
distributed) to or for the benefit of the Employee such amounts as are then due
to the Employee under this Agreement.

                  (c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments, as the case
may be, will have been made by the Company which should not have been made
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph and the Company shall cooperate

                                      A-15
   32
and provide all information necessary for such review. In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to the Employee which
the Employee shall repay to the Company together with interest from the date of
payment under this Agreement at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code (the "Federal Rate"); provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent such
payment would not reduce the amount which is subject to taxation under Section
4999 of the Code. In the event that the Accounting Firm determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee together with interest from the
date of payment under this Agreement at the Federal Rate.

                  (d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses resulting
from the gross negligence or willful misconduct of the Accounting Firm.

                                      A-16
   33
                  12. Term of Agreement. The term of this Agreement shall be for
five years from the date hereof and shall be automatically renewed for
successive one-year periods unless the Company notifies the Employee in writing
that this Agreement will not be renewed at least sixty days prior to the end of
the current term; provided, however, that (i) after a Change of Control during
the term of this Agreement, this Agreement shall remain in effect until all of
the obligations of the parties hereunder are satisfied or have expired, and (ii)
this Agreement shall terminate if, prior to a Change of Control, the employment
of the Employee with the Company or any of its Subsidiaries, as the case may be,
shall terminate for any reason.

                  13. Successor Company. The Company shall require any successor
or successors (whether direct or indirect, by purchase, merger or otherwise) to
all or substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to the Employee, to acknowledge
expressly that this Agreement is binding upon and enforceable against the
Company in accordance with the terms hereof, and to become jointly and severally
obligated with the Company to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession or successions had taken place. Failure of the Company to notify the
Employee in writing as to such successorship, to provide the Employee 

                                      A-17
   34
the opportunity to review and agree to the successor's assumption of this
Agreement or to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement. As used in this Agreement, the
Company shall mean the Company as hereinbefore defined and any such successor or
successors to its business and/or assets, jointly and severally.

                  14. Notice. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:

                  If to the Company, to:

                           UGI Corporation
                           460 North Gulph Road
                           King of Prussia, PA 19406
                           Attention:  Corporate Secretary

                  If to the Employee, to:

or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company 

                                      A-18
   35
following a Change of Control, notice at the last address of the Company or to
any successor pursuant to Section 13 hereof shall be deemed sufficient for the
purposes hereof. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit, postage
prepaid, with the U.S. Postal Service in the case of registered or certified
mail, or on the next business day in the case of overnight express courier
service.

                  15. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Pennsylvania without giving
effect to any conflict of laws provisions.

                  16. Contents of Agreement, Amendment and Assignment. This
Agreement supersedes all prior agreements, sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and cannot
be changed, modified, extended or terminated except upon written amendment
executed by the Employee and the Company's Chair of the Executive Committee. The
provisions of this Agreement may require a variance from the terms and
conditions of certain compensation or bonus plans under circumstances where such
plans would not provide for payment thereof in order to obtain the maximum
benefits for the Employee. It is the specific intention of the parties that the
provisions of this Agreement shall supersede any provisions to the contrary in

                                      A-19
   36
such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.

                  17. No Right to Continued Employment. Nothing in this
Agreement shall be construed as giving the Employee any right to be retained in
the employ of the Company.

                  18. Successors and Assigns. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, representatives, successors and assigns of
the parties hereto, except that the duties and responsibilities of the Employee
and the Company hereunder shall not be assignable in whole or in part.

                  19. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.

                  20. Remedies Cumulative; No Waiver. No right conferred upon
the Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising

                                      A-20
   37
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof.

                  21. Miscellaneous. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.

                  22. Arbitration. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the sole relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
King of Prussia, Pennsylvania, in accordance with the commercial arbitration
rules then in effect of the American Arbitration Association, before one
arbitrator who shall be an executive officer or former executive officer of a
publicly traded corporation, selected by the parties. Any award entered by the
arbitrator shall be final, binding and nonappealable and judgment may be entered
thereon by either party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrator shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. The
Company shall be responsible for all of the fees of the American Arbitration
Association and the arbitrator and any expenses 

                                      A-21
   38
relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses).

                                      A-22
   39
                  IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Agreement as of the date first above written.

ATTEST:

    [Seal]                 UGI CORPORATION

_______________________    By_________________________

Secretary

_______________________        __________________________

Witness

                                      A-23

   1
                                                                   EXHIBIT 10.13

                                AMENDED AGREEMENT

            Amended Agreement made as of the 29th day of July, 1997, between UGI
Corporation, a Pennsylvania corporation (the "Company"), and Lon R.
Greenberg (the "Employee").

            WHEREAS, the Company and the Employee entered into an Agreement as
of June 28, 1996, to provide for certain payments to be made to the Employee in
the event of a change of control of the Company; and

            WHEREAS, the Company and the Employee now wish to amend the
Agreement, as permitted by Section 16 of the Agreement, to provide that the
Company will also assist the Employee with taxes that may become due if payments
are made under the Agreement; and

            WHEREAS,  the Employee is presently employed by the Company, as
its President and Chief Executive Officer; and

            WHEREAS, the Company considers it essential to foster the employment
of well qualified key management personnel, and, in this regard, the board of
directors of the Company recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of key management
personnel to the detriment of the Company;

            WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without
   2
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated; and

            WHEREAS, in order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the compensation
set forth in this Agreement in the event his employment with the Company is
terminated subsequent to a "Change of Control" (as defined in Section 1 hereof)
of the Company as a cushion against the financial and career impact on the
Employee of any such Change of Control;

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree that the Amended Agreement shall read as
follows:

            1.    Definitions.  For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:

            (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").

            (b) "Base Compensation" shall mean the average of the total cash
remuneration received by the Employee in all capacities with the Company, and
its Subsidiaries or Affiliates, as reported for Federal income tax purposes on
Form W-2, together with any amounts the payment of which has been deferred by
the Employee under any deferred compensation plan of the Company, and its
Subsidiaries or Affiliates, or otherwise and any and all salary reduction
authorized amounts under any of the benefit plans or programs of the Company,
and its Subsidiaries or Affiliates, but excluding any amounts attributable to
the exercise of stock options granted to the Employee under the Company's Stock
Option and Dividend Equivalent Plan or its 

                                      -2-
   3
successor, for the five calendar years (or such number of actual full calendar
years of employment, if less than five) immediately preceding the calendar year
in which occurs a Change of Control or the Employee's Termination Date,
whichever period produces the higher amount.

            (c) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding (A) arises solely
from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act, and (B) is not then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (iii) that are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates 

                                      -3-
   4
or Associates) has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to clause (ii) above) or disposing
of any voting securities of the Company; provided, however, that nothing in this
Section 1(c) shall cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.

            (d)   "Board" shall mean the board of directors of the Company.

            (e)   "Change of Control" shall mean:

              Any Person (except the Employee, his Affiliates and Associates,
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
employee benefit plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner in the aggregate of 20% or more of either
(i) the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), in either case unless the members
of the Company's Executive Committee in office immediately prior to such
acquisition determine within five business days of the receipt of actual notice
of such acquisition that the circumstances do not warrant the implementation of
the provisions of this Agreement; or

              Individuals who, as of the beginning of any twenty-four month
period, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the 

                                      -4-
   5
Board, provided that any individual becoming a director subsequent to the
beginning of such period whose election or nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or

              Consummation by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
Beneficial Owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, Beneficially Own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Company Voting Securities, as the case may
be, in any such case unless the members of the Company's Executive Committee in
office immediately prior to such Business Combination determine at the time of
such Business Combination that the circumstances do not warrant the
implementation of the provisions of this Agreement; or

            (i) Consummation of a complete liquidation or dissolution of the
Company or (ii) sale or other disposition of all or substantially all of the
assets of the Company other than to a 

                                      -5-
   6
corporation with respect to which, following such sale or disposition, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the Beneficial Owners, respectively, of the Outstanding Company Common Stock and
Company Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition, in any such case unless the members of the
Company's Executive Committee in office immediately prior to such sale or
disposition determine at the time of such sale or disposition that the
circumstances do not warrant the implementation of the provisions of this
Agreement.

            (f)   "Cause" shall mean 1) misappropriation of funds, 2)
habitual insobriety or substance abuse, 3) conviction of a crime involving
moral turpitude, or 4) gross negligence in the performance of duties, which
gross negligence has had a material adverse effect on the business,
operations, assets, properties or financial condition of the Company.

            (g) "Good Reason Termination" shall mean a Termination of Employment
initiated by the Employee upon one or more of the following occurrences:

                  (i)   any failure of the Company to comply with and satisfy
            any of the terms of this the Agreement;

                  (ii)  any significant involuntary reduction of the
            authority, duties or responsibilities held by the Employee
            immediately prior to the Change of Control;

                  (iii) any involuntary removal of the Employee from the
            employment grade, compensation level or officer positions which the
            Employee holds with the 

                                      -6-
   7
            Company or, if the Employee is employed by a Subsidiary, with a
            Subsidiary, held by him immediately prior to the Change of Control,
            except in connection with promotions to higher office;

                  (iv) any involuntary reduction in the Employee's target level
            of annual and long-term compensation as in effect immediately prior
            to the Change of Control;

                  (v) any transfer of the Employee, without his express written
            consent, to a location which is outside the King of Prussia,
            Pennsylvania area (or the general area in which his principal place
            of business immediately preceding the Change of Control may be
            located at such time if other than King of Prussia, Pennsylvania) by
            more than fifty miles, other than on a temporary basis (less than 12
            months); and

                  (vi) the Employee being required to undertake business travel
            to an extent substantially greater than the Employee's business
            travel obligations immediately prior to the Change of Control.

            (h) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 62nd birthday.

            (i) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50% interest or an unincorporated entity
of which the Company, directly or indirectly, owns at least 50% of the profits
or capital interests.

            (j) "Termination Date" shall mean the date of receipt of the Notice
of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

            (k) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.

                                      -7-
   8
            2. Notice of Termination. Any Termination of Employment following a
Change of Control shall be communicated by a Notice of Termination to the other
party hereto given in accordance with Section 14 hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific provision in this Agreement relied upon, (ii) briefly summarizes
the facts and circumstances deemed to provide a basis for the Employee's
Termination of Employment under the provision so indicated, and (iii) if the
Termination Date is other than the date of receipt of such notice, specifies the
Termination Date (which date shall not be more than 15 days after the giving of
such notice).

            3.    Severance Compensation upon Termination.

            (a) Subject to the provisions of Section 11 hereof, in the event of
the Employee's involuntary Termination of Employment for any reason other than
Cause or in the event of a Good Reason Termination, in either event within three
years after a Change of Control, the Company shall pay to the Employee, upon the
execution of a release, in the form required by the Company of its terminating
executives prior to the Change of Control, within 15 days after the Termination
Date (or as soon as possible thereafter in the event that the procedures set
forth in Section 11(b) hereof cannot be completed within 15 days), an amount in
cash equal to 2.5 times the Employee's Base Compensation, subject to customary
employment taxes and deductions.

            (b) In the event the Employee's Normal Retirement Date would occur
prior to 30 months after the Termination Date, the aggregate cash amount
determined as set forth in (a) above shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 913 days.

                                      -8-
   9
            4.    Other Payments.  The payment due under Section 3 hereof
shall be in addition to and not in lieu of any payments or benefits due to
the Employee under any other plan, policy or program of the Company, and its
Subsidiaries or Affiliates.

            5. Trust Fund. The Company sponsors an irrevocable trust fund
pursuant to a trust agreement to hold assets to satisfy its obligations to
employees under this Agreement. Funding of such trust fund shall be subject to
the discretion of the Company's Executive Committee, as set forth in the
agreement pursuant to which the fund has been established.

            6.    Enforcement.

            (a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid from the date payment
is required under Section 3 or 4, as appropriate, until paid to the Employee, at
the rate from time to time announced by Mellon Bank, N.A. as its "prime rate"
plus 1%, each change in such rate to take effect on the effective date of the
change in such prime rate.

            (b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all reasonable expenses (including all attorneys' fees and legal
expenses) incurred by the Employee in enforcing any of the obligations of the
Company under this Agreement.

                                      -9-
   10
            7. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.

            8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company, or any of its Subsidiaries or Affiliates, and for which the Employee
may qualify.

            9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others.

            10.   Taxes.  Any payment required under this Agreement shall be
subject to all requirements of the law with regard to the withholding of
taxes, filing, making of reports and the like, and the Company shall use its
best efforts to satisfy promptly all such requirements.

            11.   Certain Increase in Payments.

                  (a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (the "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the Employee shall be paid an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Employee after
deduction of any excise tax imposed under 

                                      -10-
   11
Section 4999 of the Code, and any federal, state and local income and employment
tax and excise tax imposed upon the Gross-Up Payment shall be equal to the
Payment. For purposes of determining the amount of the Gross-Up Payment, the
Employee shall be deemed to pay federal income tax and employment taxes at the
highest marginal rate of federal income and employment taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the
Employee's residence on the Termination Date, net of the maximum reduction in
federal income taxes that may be obtained from the deduction of such state and
local taxes.

                  (b) All determinations to be made under this Section 11 shall
be made by Coopers & Lybrand (or, at the Company's option, the Company's
independent public accountant immediately prior to the Change of Control (the
"Accounting Firm")), which firm shall provide its determinations and any
supporting calculations both to the Company and the Employee within 10 days of
the Termination Date. Any such determination by the Accounting Firm shall be
binding upon the Company and the Employee. Within five days after the Accounting
Firm's determination, the Company shall pay (or cause to be paid) or distribute
(or cause to be distributed) to or for the benefit of the Employee such amounts
as are then due to the Employee under this Agreement.

                  (c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by the Employee, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to the Employee after taking into
account the provisions of Section 4999 of the Code shall reflect the intent of
the parties as expressed in subsection (a) above, in the manner determined by
the Accounting Firm.

                                      -11-
   12
                  (d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses resulting
from the gross negligence or wilful misconduct of the Accounting Firm., which
firm shall provide its determinations and any supporting calculations both to
the Company and the Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the Company and the
Employee.

            12. Term of Agreement. The term of this Agreement shall be for five
years from the date hereof and shall be automatically renewed for successive
one-year periods unless the Company notifies the Employee in writing that this
Agreement will not be renewed at least sixty days prior to the end of the
current term; provided, however, that (i) after a Change of Control during the
term of this Agreement, this Agreement shall remain in effect until all of the
obligations of the parties hereunder are satisfied or have expired, and (ii)
this Agreement shall terminate if, prior to a Change of Control, the employment
of the Employee with the Company or any of its Subsidiaries, as the case may be,
shall terminate for any reason.

            13. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger or otherwise) to all
or substantially all of the business and/or assets of the Company, by agreement
in form and substance satisfactory to the Employee, to acknowledge expressly
that this Agreement is binding upon and enforceable against the Company in
accordance with the terms hereof, and to become jointly and severally obligated
with the Company to perform this Agreement in the same manner and to the same

                                      -12-
   13
extent that the Company would be required to perform if no such succession or
successions had taken place. Failure of the Company to notify the Employee in
writing as to such successorship, to provide the Employee the opportunity to
review and agree to the successor's assumption of this Agreement or to obtain
such agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement. As used in this Agreement, the Company shall mean the
Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.

                                      -13-
   14
            14. Notice. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:

            If to the Company, to:

                  UGI Corporation
                  460 North Gulph Road
                  King of Prussia, PA 19406
                  Attention:  Corporate Secretary

            If to the Employee, to:

                  9147 Green Tree Road
                  Philadelphia, PA  19118

or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company following a Change of Control, notice at the last address of the
Company or to any successor pursuant to Section 13 hereof shall be deemed
sufficient for the purposes hereof. Any such notice shall be deemed delivered
and effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.

            15.   Governing Law.  This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Pennsylvania without giving
effect to any conflict of laws provisions.

            16. Contents of Agreement, Amendment and Assignment. This Agreement
supersedes all prior agreements, sets forth the entire understanding between the
parties hereto 

                                      -14-
   15
with respect to the subject matter hereof and cannot be changed, modified,
extended or terminated except upon written amendment executed by the Employee
and the Company's Chair of the Executive Committee. The provisions of this
Agreement may require a variance from the terms and conditions of certain
compensation or bonus plans under circumstances where such plans would not
provide for payment thereof in order to obtain the maximum benefits for the
Employee. It is the specific intention of the parties that the provisions of
this Agreement shall supersede any provisions to the contrary in such plans, and
such plans shall be deemed to have been amended to correspond with this
Agreement without further action by the Company or the Board.

            17.   No Right to Continued Employment.  Nothing in this
Agreement shall be construed as giving the Employee any right to be retained
in the employ of the Company.

            18. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of the Employee and the
Company hereunder shall not be assignable in whole or in part.

            19. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.

            20. Remedies Cumulative; No Waiver. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every 

                                      -15-
   16
such right or remedy shall be cumulative and shall be in addition to any other
right or remedy given hereunder or now or hereafter existing at law or in
equity. No delay or omission by the Employee in exercising any right, remedy or
power hereunder or existing at law or in equity shall be construed as a waiver
thereof.

            21.   Miscellaneous.  All section headings are for convenience
only.  This Agreement may be executed in several counterparts, each of which
is an original.  It shall not be necessary in making proof of this Agreement
or any counterpart hereof to produce or account for any of the other
counterparts.

            22. Arbitration. In the event of any dispute under the provisions of
this Agreement other than a dispute in which the sole relief sought is an
equitable remedy such as an injunction, the parties shall be required to have
the dispute, controversy or claim settled by arbitration in King of Prussia,
Pennsylvania, in accordance with the commercial arbitration rules then in effect
of the American Arbitration Association, before one arbitrator who shall be an
executive officer or former executive officer of a publicly traded corporation,
selected by the parties. Any award entered by the arbitrator shall be final,
binding and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrator shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. The Company shall be responsible
for all of the fees of the American Arbitration Association and the arbitrator
and any expenses relating to the conduct of the arbitration (including
reasonable attorneys' fees and expenses).

                                      -16-
   17
            IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Amended Agreement as of the date first above written.

ATTEST:

    [Seal]                          UGI CORPORATION

                                    By_______________________________
- -----------------------
Corporate Secretary                 James W. Stratton
                                    Chair of the Executive/Nominating Committee
                                    of the Board of Directors

- -----------------------             ------------------------------
Witness                             Lon R. Greenberg

                                      -17-
   1
                                                                   EXHIBIT 10.14

                                AMENDED AGREEMENT

         Amended Agreement made as of the 29th day of July, 1997, between UGI
Corporation, a Pennsylvania corporation (the "Company"), and Richard L. Bunn
(the "Employee").

         WHEREAS, the Company and the Employee entered into an Agreement as of
June 28, 1996, to provide for certain payments to be made to the Employee in the
event of a change of control of the Company; and

         WHEREAS, the Company and the Employee now wish to amend the Agreement,
as permitted by Section 16 of the Agreement, to provide that the Company will
also assist the Employee with taxes that may become due if payments are made
under the Agreement; and

         WHEREAS, the Employee is presently employed by UGI Utilities, Inc., a
majority owned subsidiary of the Company, as its President and Chief Executive
Officer; and

         WHEREAS, the Company considers it essential to foster the employment of
well qualified key management personnel, and, in this regard, the board of
directors of the Company recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of key management
personnel to the detriment of the Company;

         WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and
   2
dedication of key members of the Company's management to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from the possibility of a change in control of the Company, although no such
change is now contemplated; and

         WHEREAS, in order to induce the Employee to remain in the employ of UGI
Utilities, Inc., the Company agrees that the Employee shall receive the
compensation set forth in this Agreement in the event his employment with UGI
Utilities, Inc. is terminated subsequent to a "Change of Control" (as defined in
Section 1 hereof) of the Company as a cushion against the financial and career
impact on the Employee of any such Change of Control;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree that the Amended Agreement shall read as
follows:

         1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context clearly
otherwise requires:

         (a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").

         (b) "Base Compensation" shall mean the average of the total cash
remuneration received by the Employee in all capacities with the Company, and
its Subsidiaries or Affiliates, as reported for Federal income tax purposes on
Form W-2, together with any amounts the payment of which has been deferred by
the Employee

                                      -2-
   3
under any deferred compensation plan of the Company, and its Subsidiaries or
Affiliates, or otherwise and any and all salary reduction authorized amounts
under any of the benefit plans or programs of the Company, and its Subsidiaries
or Affiliates, but excluding any amounts attributable to the exercise of stock
options granted to the Employee under the Company's Stock Option and Dividend
Equivalent Plan or its successor, for the five calendar years (or such number of
actual full calendar years of employment, if less than five) immediately
preceding the calendar year in which occurs a Change of Control or the
Employee's Termination Date, whichever period produces the higher amount.

         (c) A Person shall be deemed the "Beneficial Owner" of any securities:
(i) that such Person or any of such Person's Affiliates or Associates, directly
or indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such tendered securities
are accepted for payment, purchase or exchange; (ii) that such Person or any of
such Person's Affiliates or Associates, directly or indirectly, has the right to
vote or dispose of or has "beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including without limitation pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement or understanding to

                                      -3-
   4
vote such security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act, and (B) is not then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (iii) that are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to clause (ii) above) or disposing of any voting
securities of the Company; provided, however, that nothing in this Section 1(c)
shall cause a Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.

         (d) "Board" shall mean the board of directors of the Company.

         (e) "Change of Control" shall mean:

         Any Person (except the Employee, his Affiliates and Associates, the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
employee benefit plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner in the aggregate of 20% or more of either
(i) the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the

                                      -4-
   5
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Company Voting
Securities"), in either case unless the members of the Company's Executive
Committee in office immediately prior to such acquisition determine within five
business days of the receipt of actual notice of such acquisition that the
circumstances do not warrant the implementation of the provisions of this
Agreement; or

         Individuals who, as of the beginning of any twenty-four month period,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the beginning of such period whose election or nomination
for election by the Company's stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or

         Consummation by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
Beneficial Owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, Beneficially Own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then

                                      -5-
   6
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination in substantially the same proportion as their ownership immediately
prior to such Business Combination of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, in any such case unless the
members of the Company's Executive Committee in office immediately prior to such
Business Combination determine at the time of such Business Combination that the
circumstances do not warrant the implementation of the provisions of this
Agreement; or

         (i) Consummation of a complete liquidation or dissolution of the
Company or (ii) sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to which,
following such sale or disposition, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such sale or
disposition, in any such case unless the members of the Company's Executive
Committee in office immediately prior to such sale or disposition determine at
the time of such sale or disposition that the circumstances do not warrant the
implementation of the provisions of this Agreement.

                                      -6-
   7
         (f) "Cause" shall mean 1) misappropriation of funds, 2) habitual
insobriety or substance abuse, 3) conviction of a crime involving moral
turpitude, or 4) gross negligence in the performance of duties, which gross
negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company.

         (g) "Good Reason Termination" shall mean a Termination of Employment
initiated by the Employee upon one or more of the following occurrences:

                  (i) any failure of the Company to comply with and satisfy any
         of the terms of this the Agreement;

                  (ii) any significant involuntary reduction of the authority,
         duties or responsibilities held by the Employee immediately prior to
         the Change of Control;

                  (iii) any involuntary removal of the Employee from the
         employment grade, compensation level or officer positions which the
         Employee holds with the Company or, if the Employee is employed by a
         Subsidiary, with a Subsidiary, held by him immediately prior to the
         Change of Control, except in connection with promotions to higher
         office;

                  (iv) any involuntary reduction in the Employee's target level
         of annual and long-term compensation as in effect immediately prior to
         the Change of Control;

                  (v) any transfer of the Employee, without his express written
         consent, to a location which is outside the King of Prussia,
         Pennsylvania area (or the general area in which his principal place of
         business

                                      -7-
   8
         immediately preceding the Change of Control may be located at such time
         if other than King of Prussia, Pennsylvania) by more than fifty miles,
         other than on a temporary basis (less than 12 months); and

                  (vi) the Employee being required to undertake business travel
         to an extent substantially greater than the Employee's business travel
         obligations immediately prior to the Change of Control.

         (h) "Normal Retirement Date" shall mean the first day of the calendar
month coincident with or next following the Employee's 62nd birthday.

         (i) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50% interest or an unincorporated entity
of which the Company, directly or indirectly, owns at least 50% of the profits
or capital interests.

         (j) "Termination Date" shall mean the date of receipt of the Notice of
Termination described in Section 2 hereof or any later date specified therein,
as the case may be.

         (k) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.

         2. Notice of Termination. Any Termination of Employment following a
Change of Control shall be communicated by a Notice of Termination to the other
party hereto given in accordance with Section 14 hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific provision in this Agreement relied upon, (ii) briefly summarizes
the facts and circumstances deemed to provide a basis for the Employee's
Termination of Employment under the provision so indicated, and (iii) if the
Termination Date is other than the date of receipt of such notice,

                                      -8-
   9
specifies the Termination Date (which date shall not be more than 15 days after
the giving of such notice).

         3. Severance Compensation upon Termination.

         (a) Subject to the provisions of Section 11 hereof, in the event of the
Employee's involuntary Termination of Employment for any reason other than Cause
or in the event of a Good Reason Termination, in either event within three years
after a Change of Control, the Company shall pay to the Employee, upon the
execution of a release, in the form required by the Company of its terminating
executives prior to the Change of Control, within 15 days after the Termination
Date (or as soon as possible thereafter in the event that the procedures set
forth in Section 11(b) hereof cannot be completed within 15 days), an amount in
cash equal to 1.5 times the Employee's Base Compensation, subject to customary
employment taxes and deductions.

         (b) In the event the Employee's Normal Retirement Date would occur
prior to 18 months after the Termination Date, the aggregate cash amount
determined as set forth in (a) above shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 548 days.

         4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits due to the Employee
under any other plan, policy or program of the Company, and its Subsidiaries or
Affiliates.

         5. Trust Fund. The Company sponsors an irrevocable trust fund pursuant
to a trust agreement to hold assets to satisfy its obligations to employees
under this Agreement. Funding of such trust fund shall be subject to the
discretion of the Board

                                      -9-
   10
or the Company's Executive Committee, as set forth in the agreement pursuant to
which the fund has been established.

         6. Enforcement.

         (a) In the event that the Company shall fail or refuse to make payment
of any amounts due the Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid from the date payment
is required under Section 3 or 4, as appropriate, until paid to the Employee, at
the rate from time to time announced by Mellon Bank, N.A. as its "prime rate"
plus 1%, each change in such rate to take effect on the effective date of the
change in such prime rate.

         (b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his rights under this
Agreement by arbitration, litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, the Company shall pay the
Employee on demand the amount necessary to reimburse the Employee in full for
all reasonable expenses (including all attorneys' fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Agreement.

         7. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.

                                      -10-
   11
         8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the Company,
or any of its Subsidiaries or Affiliates, and for which the Employee may
qualify.

         9. No Set-Off. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Employee or others.

         10. Taxes. Any payment required under this Agreement shall be subject
to all requirements of the law with regard to the withholding of taxes, filing,
making of reports and the like, and the Company shall use its best efforts to
satisfy promptly all such requirements.

         11. Certain Increase in Payments.

         (a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of the Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the Employee shall be paid an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Employee after deduction of
any excise tax imposed under Section 4999 of the Code, and any federal, state
and local income and employment tax and excise tax imposed upon the Gross-Up

                                      -11-
   12
Payment shall be equal to the Payment. For purposes of determining the amount of
the Gross-Up Payment, the Employee shall be deemed to pay federal income tax and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Employee's residence on the Termination Date, net of
the maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.

         (b) All determinations to be made under this Section 11 shall be made
by Coopers & Lybrand (or, at the Company's option, the Company's independent
public accountant immediately prior to the Change of Control (the "Accounting
Firm")), which firm shall provide its determinations and any supporting
calculations both to the Company and the Employee within 10 days of the
Termination Date. Any such determination by the Accounting Firm shall be binding
upon the Company and the Employee. Within five days after the Accounting Firm's
determination, the Company shall pay (or cause to be paid) or distribute (or
cause to be distributed) to or for the benefit of the Employee such amounts as
are then due to the Employee under this Agreement.

         (c) In the event that upon any audit by the Internal Revenue Service,
or by a state or local taxing authority, of the Payment or Gross-Up Payment, a
change is finally determined to be required in the amount of taxes paid by the
Employee, appropriate adjustments shall be made under this Agreement such that
the net amount which is payable to the Employee after taking into account the
provisions of Section 4999 of the Code shall reflect the intent of the parties
as expressed in subsection (a) above, in the manner determined by the Accounting
Firm.

                                      -12-
   13
         (d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses resulting
from or relating to its determinations pursuant to subsections (b) and (c)
above, except for claims, damages or expenses resulting from the gross
negligence or willful misconduct of the Accounting Firm, which firm shall
provide its determinations and any supporting calculations both to the Company
and the Employee within 10 days of the Termination Date. Any such determination
by the Accounting Firm shall be binding upon the Company and the Employee.

         12. Term of Agreement. The term of this Agreement shall be for five
years from the date hereof and shall be automatically renewed for successive
one-year periods unless the Company notifies the Employee in writing that this
Agreement will not be renewed at least sixty days prior to the end of the
current term; provided, however, that (i) after a Change of Control during the
term of this Agreement, this Agreement shall remain in effect until all of the
obligations of the parties hereunder are satisfied or have expired, and (ii)
this Agreement shall terminate if, prior to a Change of Control, the employment
of the Employee with the Company or any of its Subsidiaries, as the case may be,
shall terminate for any reason.

         13. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger or otherwise) to all
or substantially all of the business and/or assets of the Company, by agreement
in form and substance satisfactory to the Employee, to acknowledge expressly
that this Agreement is

                                      -13-
   14
binding upon and enforceable against the Company in accordance with the terms
hereof, and to become jointly and severally obligated with the Company to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession or successions had
taken place. Failure of the Company to notify the Employee in writing as to such
successorship, to provide the Employee the opportunity to review and agree to
the successor's assumption of this Agreement or to obtain such agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement.
As used in this Agreement, the Company shall mean the Company as hereinbefore
defined and any such successor or successors to its business and/or assets,
jointly and severally.

         14. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

         If to the Company, to:
                  UGI Corporation
                  460 North Gulph Road
                  King of Prussia, PA 19406

                  Attention:  Corporate Secretary

         If to the Employee, to:

                  2077 Fox Creek Road
                  Berwyn, PA  19392

or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company following a Change of

                                      -14-
   15
Control, notice at the last address of the Company or to any successor pursuant
to Section 13 hereof shall be deemed sufficient for the purposes hereof. Any
such notice shall be deemed delivered and effective when received in the case of
personal delivery, five days after deposit, postage prepaid, with the U.S.
Postal Service in the case of registered or certified mail, or on the next
business day in the case of overnight express courier service.

         15. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

         16. Contents of Agreement, Amendment and Assignment. This Agreement
supersedes all prior agreements, sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment executed by the
Employee and the Company's Chair of the Executive Committee. The provisions of
this Agreement may require a variance from the terms and conditions of certain
compensation or bonus plans under circumstances where such plans would not
provide for payment thereof in order to obtain the maximum benefits for the
Employee. It is the specific intention of the parties that the provisions of
this Agreement shall supersede any provisions to the contrary in such plans, and
such plans shall be deemed to have been amended to correspond with this
Agreement without further action by the Company or the Board.

         17. No Right to Continued Employment. Nothing in this Agreement shall
be construed as giving the Employee any right to be retained in the employ of
the Company.

                                      -15-
   16
         18. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of the Employee and the
Company hereunder shall not be assignable in whole or in part.

         19. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.

         20. Remedies Cumulative; No Waiver. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof.

         21. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

         22. Arbitration. In the event of any dispute under the provisions of
this Agreement other than a dispute in which the sole relief sought is an
equitable remedy such as an injunction, the parties shall be required to have
the dispute, controversy or claim

                                      -16-
   17
settled by arbitration in King of Prussia, Pennsylvania, in accordance with the
commercial arbitration rules then in effect of the American Arbitration
Association, before one arbitrator who shall be an executive officer or former
executive officer of a publicly traded corporation, selected by the parties. Any
award entered by the arbitrator shall be final, binding and nonappealable and
judgment may be entered thereon by either party in accordance with applicable
law in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrator shall have no authority to modify any
provision of this Agreement or to award a remedy for a dispute involving this
Agreement other than a benefit specifically provided under or by virtue of the
Agreement. The Company shall be responsible for all of the fees of the American
Arbitration Association and the arbitrator and any expenses relating to the
conduct of the arbitration (including reasonable attorneys' fees and expenses).

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Amended Agreement as of the date first above written.

ATTEST:
    [Seal]                                 UGI CORPORATION

_______________________                    By_________________________
Corporate Secretary                          Lon Greenberg
                                             Chairman, President and
                                             Chief Executive Officer

_______________________                     ___________________________
Witness                                     Richard L. Bunn

                                      -17-
   1
                                                                   EXHIBIT 10.15

                                AMENDED AGREEMENT

                  Amended Agreement made as of the 29th day of July, 1997,
between UGI Corporation, a Pennsylvania corporation (the "Company"), and Brendan
P. Bovaird (the "Employee").

                  WHEREAS, the Company and the Employee entered into an
Agreement as of June 28, 1996, to provide for certain payments to be made to the
Employee in the event of a change of control of the Company; and

                  WHEREAS, the Company and the Employee now wish to amend the
Agreement, as permitted by Section 16 of the Agreement, to provide that the
Company will also assist the Employee with taxes that may become due if payments
are made under the Agreement; and

                  WHEREAS, the Employee is presently employed by the Company, as
its Vice President and General Counsel; and

                  WHEREAS, the Company considers it essential to foster the
employment of well qualified key management personnel, and, in this regard, the
board of directors of the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control of the
Company may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of key management personnel to the detriment of the Company;

                  WHEREAS, the board of directors of the Company has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without
   2
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated; and

                  WHEREAS, in order to induce the Employee to remain in the
employ of the Company, the Company agrees that the Employee shall receive the
compensation set forth in this Agreement in the event his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto agree that the Amended Agreement shall
read as follows:

                  1. Definitions. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:

                  (a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

                  (b) "Base Compensation" shall mean the average of the total
cash remuneration received by the Employee in all capacities with the Company,
and its Subsidiaries or Affiliates, as reported for Federal income tax purposes
on Form W-2, together with any amounts the payment of which has been deferred by
the Employee under any deferred compensation plan of the Company, and its
Subsidiaries or Affiliates, or otherwise and any and all salary reduction
authorized amounts under any of the benefit

                                      -2-
   3
plans or programs of the Company, and its Subsidiaries or Affiliates, but
excluding any amounts attributable to the exercise of stock options granted to
the Employee under the Company's Stock Option and Dividend Equivalent Plan or
its successor, for the five calendar years (or such number of actual full
calendar years of employment, if less than five) immediately preceding the
calendar year in which occurs a Change of Control or the Employee's Termination
Date, whichever period produces the higher amount.

                  (c) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange; (ii) that such Person
or any of such Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause (ii) as a
result of an oral or written agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding (A)arises solely
from

                                      -3-
   4
a revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (iii) that are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to clause (ii) above) or disposing of any voting
securities of the Company; provided, however, that nothing in this Section 1(c)
shall cause a Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.

                  (d)      "Board" shall mean the board of directors of the
Company.

                  (e)      "Change of Control" shall mean:

                    Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such employee benefit plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner in the aggregate of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled

                                      -4-
   5
to vote generally in the election of directors (the "Company Voting
Securities"), in either case unless the members of the Company's Executive
Committee in office immediately prior to such acquisition determine within five
business days of the receipt of actual notice of such acquisition that the
circumstances do not warrant the implementation of the provisions of this
Agreement; or

                    Individuals who, as of the beginning of any twenty-four
month period, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the beginning of such period whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or

                    Consummation by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
Beneficial Owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, Beneficially Own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the

                                      -5-
   6
case may be, of the corporation resulting from such Business Combination
in substantially the same proportion as their ownership immediately prior to
such Business Combination of the Outstanding Company Common Stock and Company
Voting Securities, as the case may be, in any such case unless the members of
the Company's Executive Committee in office immediately prior to such Business
Combination determine at the time of such Business Combination that the
circumstances do not warrant the implementation of the provisions of this
Agreement; or

                    (i) Consummation of a complete liquidation or dissolution of
the Company or (ii) sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to which,
following such sale or disposition, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such sale or
disposition, in any such case unless the members of the Company's Executive
Committee in office immediately prior to such sale or disposition determine at
the time of such sale or disposition that the circumstances do not warrant the
implementation of the provisions of this Agreement.

                                      -6-
   7
                  (f) "Cause" shall mean 1) misappropriation of funds, 2)
habitual insobriety or substance abuse, 3) conviction of a crime involving moral
turpitude, or 4) gross negligence in the performance of duties, which gross
negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company.

                  (g) "Good Reason Termination" shall mean a Termination of
Employment initiated by the Employee upon one or more of the following
occurrences:

                      (i) any failure of the Company to comply with and satisfy
                  any of the terms of this the Agreement;

                      (ii) any significant involuntary reduction of the
                  authority, duties or responsibilities held by the Employee
                  immediately prior to the Change of Control;

                      (iii) any involuntary removal of the Employee from the
                  employment grade, compensation level or officer positions
                  which the Employee holds with the Company or, if the Employee
                  is employed by a Subsidiary, with a Subsidiary, held by him
                  immediately prior to the Change of Control, except in
                  connection with promotions to higher office;

                      (iv) any involuntary reduction in the Employee's target
                  level of annual and long-term compensation as in effect
                  immediately prior to the Change of Control;

                      (v) any transfer of the Employee, without his express
                  written consent, to a location which is outside the King of
                  Prussia, Pennsylvania area (or the general area in which his
                  principal place of business

                                      -7-
   8
                  immediately preceding the Change of Control may be located at
                  such time if other than King of Prussia, Pennsylvania) by more
                  than fifty miles, other than on a temporary basis (less than
                  12 months); and

                      (vi) the Employee being required to undertake business
                  travel to an extent substantially greater than the Employee's
                  business travel obligations immediately prior to the Change of
                  Control.

                  (h) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 62nd birthday.

                  (i) "Subsidiary" shall mean any corporation in which the
Company, directly or indirectly, owns at least a 50% interest or an
unincorporated entity of which the Company, directly or indirectly, owns at
least 50% of the profits or capital interests.

                  (j) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.

                  (k) "Termination of Employment" shall mean the termination of
the Employee's actual employment relationship with the Company.

                  2. Notice of Termination. Any Termination of Employment
following a Change of Control shall be communicated by a Notice of Termination
to the other party hereto given in accordance with Section 14 hereof. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific provision in this Agreement relied upon, (ii)
briefly summarizes the facts and circumstances deemed to provide a basis for the
Employee's Termination of Employment under the provision so indicated, and (iii)
if the Termination Date is other than the date of receipt of such notice,

                                      -8-
   9
specifies the Termination Date (which date shall not be more than 15 days after
the giving of such notice).

                  3.       Severance Compensation upon Termination.

                  (a) Subject to the provisions of Section 11 hereof, in the
event of the Employee's involuntary Termination of Employment for any reason
other than Cause or in the event of a Good Reason Termination, in either event
within three years after a Change of Control, the Company shall pay to the
Employee, upon the execution of a release, in the form required by the Company
of its terminating executives prior to the Change of Control, within 15 days
after the Termination Date (or as soon as possible thereafter in the event that
the procedures set forth in Section 11(b) hereof cannot be completed within 15
days), an amount in cash equal to 1.0 times the Employee's Base Compensation,
subject to customary employment taxes and deductions.

                  (b) In the event the Employee's Normal Retirement Date would
occur prior to 12 months after the Termination Date, the aggregate cash amount
determined as set forth in (a) above shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date and the denominator of
which shall be 365 days.

                  4. Other Payments. The payment due under Section 3 hereof
shall be in addition to and not in lieu of any payments or benefits due to the
Employee under any other plan, policy or program of the Company, and its
Subsidiaries or Affiliates.

                  5. Trust Fund. The Company sponsors an irrevocable trust fund
pursuant to a trust agreement to hold assets to satisfy its obligations to
employees under this Agreement. Funding of such trust fund shall be subject to
the discretion of the

                                      -9-
   10
Company's Executive Committee, as set forth in the agreement pursuant to which 
the fund has been established.

                  6. Enforcement.

                  (a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3 and 4 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid from the date payment
is required under Section 3 or 4, as appropriate, until paid to the Employee, at
the rate from time to time announced by Mellon Bank, N.A. as its "prime rate"
plus 1%, each change in such rate to take effect on the effective date of the
change in such prime rate.

                  (b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all reasonable expenses (including all attorneys' fees and legal
expenses) incurred by the Employee in enforcing any of the obligations of the
Company under this Agreement.

                  7. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for herein be reduced by any compensation earned by other
employment or otherwise.

                                      -10-
   11
                  8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company, or any of its Subsidiaries or Affiliates, and for which the Employee
may qualify.

                  9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others.

                  10. Taxes. Any payment required under this Agreement shall be
subject to all requirements of the law with regard to the withholding of taxes,
filing, making of reports and the like, and the Company shall use its best
efforts to satisfy promptly all such requirements.

                  11. Certain Reduction of Payments.

                  Certain Increase in Payments.

                           (a)      Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (the "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the Employee shall be paid an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Employee after
deduction of any excise tax imposed under Section 4999 of the Code, and

                                      -11-
   12
any federal, state and local income and employment tax and excise tax imposed
upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, the Employee shall be deemed to
pay federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Employee's residence
on the Termination Date, net of the maximum reduction in federal income taxes
that may be obtained from the deduction of such state and local taxes.

                           (b)      All determinations to be made under this
Section 11 shall be made by Coopers & Lybrand (or, at the Company's option, the
Company's independent public accountant immediately prior to the Change of
Control (the "Accounting Firm")), which firm shall provide its determinations
and any supporting calculations both to the Company and the Employee within 10
days of the Termination Date. Any such determination by the Accounting Firm
shall be binding upon the Company and the Employee. Within five days after the
Accounting Firm's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to or for the benefit of the Employee
such amounts as are then due to the Employee under this Agreement.

                           (c)      In the event that upon any audit by the
Internal Revenue Service, or by a state or local taxing authority, of the
Payment or Gross-Up Payment, a change is finally determined to be required in
the amount of taxes paid by the Employee, appropriate adjustments shall be made
under this Agreement such that the net amount which is payable to the Employee
after taking into account the provisions of Section 4999

                                      -12-
   13
of the Code shall reflect the intent of the parties as expressed in subsection
(a) above, in the manner determined by the Accounting Firm.

                           (d)      All of the fees and expenses of the
Accounting Firm in performing the determinations referred to in subsections (b)
and (c) above shall be borne solely by the Company. The Company agrees to
indemnify and hold harmless the Accounting Firm of and from any and all claims,
damages and expenses resulting from or relating to its determinations pursuant
to subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting Firm,
which firm shall provide its determinations and any supporting calculations both
to the Company and the Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the Company and the
Employee.

                  12. Term of Agreement. The term of this Agreement shall be for
five years from the date hereof and shall be automatically renewed for
successive one-year periods unless the Company notifies the Employee in writing
that this Agreement will not be renewed at least sixty days prior to the end of
the current term; provided, however, that (i) after a Change of Control during
the term of this Agreement, this Agreement shall remain in effect until all of
the obligations of the parties hereunder are satisfied or have expired, and (ii)
this Agreement shall terminate if, prior to a Change of Control, the employment
of the Employee with the Company or any of its Subsidiaries, as the case may be,
shall terminate for any reason.

                  13. Successor Company. The Company shall require any successor
or successors (whether direct or indirect, by purchase, merger or otherwise) to
all or

                                      -13-
   14
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Employee, to acknowledge expressly that
this Agreement is binding upon and enforceable against the Company in accordance
with the terms hereof, and to become jointly and severally obligated with the
Company to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession or successions
had taken place. Failure of the Company to notify the Employee in writing as to
such successorship, to provide the Employee the opportunity to review and agree
to the successor's assumption of this Agreement or to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement. As used in this Agreement, the Company shall mean the Company as
hereinbefore defined and any such successor or successors to its business and/or
assets, jointly and severally.

                  14. Notice. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express courier
service, as follows:

                  If to the Company, to:

                           UGI Corporation
                           460 North Gulph Road
                           King of Prussia, PA 19406
                           Attention:  Corporate Secretary

                  If to the Employee, to:

                           637 Dodds Lane
                           Gladwyne, PA  19035

                                      -14-
   15
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company following a Change of Control, notice at the last address of the
Company or to any successor pursuant to Section 13 hereof shall be deemed
sufficient for the purposes hereof. Any such notice shall be deemed delivered
and effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.

                  15. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Pennsylvania without giving
effect to any conflict of laws provisions.

                  16. Contents of Agreement, Amendment and Assignment. This
Agreement supersedes all prior agreements, sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and cannot
be changed, modified, extended or terminated except upon written amendment
executed by the Employee and the Company's Chief Executive Officer. The
provisions of this Agreement may require a variance from the terms and
conditions of certain compensation or bonus plans under circumstances where such
plans would not provide for payment thereof in order to obtain the maximum
benefits for the Employee. It is the specific intention of the parties that the
provisions of this Agreement shall supersede any provisions to the contrary in
such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.

                                      -15-
   16
                  17. No Right to Continued Employment. Nothing in this
Agreement shall be construed as giving the Employee any right to be retained in
the employ of the Company.

                  18. Successors and Assigns. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, representatives, successors and assigns of
the parties hereto, except that the duties and responsibilities of the Employee
and the Company hereunder shall not be assignable in whole or in part.

                  19. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.

                  20. Remedies Cumulative; No Waiver. No right conferred upon
the Employee by this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Employee in exercising
any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof.

                  21. Miscellaneous. All section headings are for convenience
only. This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.

                                      -16-
   17
                  22. Arbitration. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the sole relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
King of Prussia, Pennsylvania, in accordance with the commercial arbitration
rules then in effect of the American Arbitration Association, before one
arbitrator who shall be an executive officer or former executive officer of a
publicly traded corporation, selected by the parties. Any award entered by the
arbitrator shall be final, binding and nonappealable and judgment may be entered
thereon by either party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrator shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. The
Company shall be responsible for all of the fees of the American Arbitration
Association and the arbitrator and any expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses).

                  IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Amended Agreement as of the date first above written.

ATTEST:
    [Seal]                                  UGI CORPORATION

                                          By
- ---------------------------------           ------------------------------------
Corporate Secretary                         Lon R. Greenberg
                                            Chairman, President and
                                            Chief Executive Officer

- ---------------------------------           ------------------------------------
Witness                                     Brendan P. Bovaird

                                      -17-
   1

                                                                   EXHIBIT 10.16

                          1997 STOCK PURCHASE LOAN PLAN

1. PURPOSE

         The purpose of the 1997 Stock Purchase Loan Plan (the "Plan") is to
provide low-interest loans to employees of UGI Corporation ("UGI") and its
subsidiaries (collectively, the "UGI Companies"), who are covered by and subject
to the UGI Stock Ownership Guidelines (respectively, the "Covered Employees" and
the "Guidelines"), in order to assist the Covered Employees in complying with
the applicable stock ownership requirements set forth in the Guidelines. All
loans made pursuant to the Plan shall be used by Covered Employees for the
purpose of purchasing shares of Common Stock of UGI, without par value (the "UGI
Shares"), to comply with the Guidelines.

2. DEFINITIONS

         (a) "Administrative Committee" means those persons designated by the
Plan Lender (as defined below) to administer the Plan.

         (b) "Annual Bonus Plan" means the annual bonus plan covering a Plan
Participant, whether such plan is currently existing or adopted in the future.

         (c) "Current Market Value" means (i) if quotations are available, the
closing sale price of the UGI Shares on the preceding business day, as appearing
in any regularly published reporting or quotation service; or (ii) if there is
no closing sale price, any reasonable estimate of the market value of the UGI
Shares as of the close of business on the preceding business day; or (iii) the
total cost of the purchase of the UGI Shares, which may include commissions.

         (d) "Disability Date" means the date on which an employee would become
eligible for long-term disability benefits under the applicable employee
long-term disability plan.

         (e) "Dividend Reinvestment Plan" means UGI's plan through which
stockholders and employees may purchase UGI Shares with the amount of cash
dividends paid on UGI Shares.

   2

         (f) "Fair Market Value" for any given date (or in the event such date
is not a day on which UGI Shares are traded, the last business day prior to such
date) means the closing sale price of the UGI Shares on such date, as reported
as the New York Stock Exchange Composite Transactions for such day.

         (g) "Loan Period" means the time period specified in a Purchase Note
(as defined below), during which a balance may be outstanding on a Purchase Loan
(as defined below), such period not to exceed ten (10) years.

         (h) "Long-Term Incentive Plan" means the UGI Corporation 1997 Stock
Option and Dividend Equivalent Plan, AmeriGas Propane, Inc. Long-Term Incentive
Plan, or any other long-term incentive plan adopted in the future by UGI or any
of its subsidiaries, which provides for a cash payout.

         (i) "Plan Lender" means UGI Properties, Inc., a wholly-owned subsidiary
of UGI, which shall extend credit to a Plan Participant (as defined below) under
the Plan.

         (j) "Plan Participant" means a Covered Employee who elects to
participate in the Plan.

         (k) "Purchase Date" means the date on which UGI Shares are purchased
under the Plan, either pursuant to the exercise of an option or on the open
market.

         (l) "Purchase Loan" means the extension of credit made by the Plan
Lender to a Plan Participant for the purpose of financing all or any portion of
the purchase of UGI Shares, including the payment of any brokerage commission or
tax liability incurred as a result of the exercise of an option, if such
purchase is for the purpose of compliance by the Plan Participant, in whole or
in part, with the Guidelines. The Purchase Loan shall be evidenced by the
Purchase Note (as defined below) and secured by a pledge of the UGI Shares
purchased with the proceeds of such loan.

         (m) "Purchase Note" means a full recourse promissory note evidencing a
Purchase Loan, executed by a Plan Participant for the benefit of the Plan
Lender.

                                      -2-

   3

         (n) "Required Shares" means the specified number of UGI Shares that a
Covered Employee is required to own in order to comply with the stock ownership
requirements of the Guidelines.

         (o) "Retirement Date" means the last day of a Plan Participant's
employment, when such employment has been voluntarily terminated by the Plan
Participant under the applicable employee retirement plan.

         (p) "Stock Pledge Agreement" means the agreement entered into by the
Plan Lender and a Plan Participant under which a Plan Participant pledges the
UGI Shares purchased under the Plan, as collateral for the Purchase Loan.

         (q) "Stock Power" means the instrument by which a Plan Participant
sells, assigns and transfers to the Plan Lender the UGI Shares that secure the
Purchase Loan.

         (r) "Termination Date" means the last day of a Plan Participant's
employment by any of the UGI Companies, other than in the case of retirement,
death or disability of the Plan Participant.

3. STOCK OWNERSHIP GUIDELINES

         The Guidelines require designated employees of the UGI Companies to own
a specified number of UGI Shares. The level of such Required Shares is
calculated according to a schedule based upon the base salary of the Covered
Employee. A Covered Employee shall have, depending on his or her designation
under the Guidelines, a grace period of either three (3) months or three (3)
years from the date of coverage under the Guidelines, during which the Covered
Employee must fully comply with the applicable stock ownership requirements set
forth in the Guidelines. A Covered Employee who has a three (3) year grace
period must own at least one third (1/3) of the Required Shares by the end of
the first year of coverage under the Guidelines, followed by ownership of at
least two thirds (2/3) of the Required Shares by the end of the second year of
coverage, and ownership of one hundred percent (100%) of the Required Shares by
the end of the third year of coverage.

                                      -3-

   4

4. SHARES TO BE PURCHASED UNDER THE PLAN

         Shares purchased under the Plan may be purchased pursuant to the
exercise of options or on the open market. Any UGI Shares purchased on the open
market by a Covered Employee to comply with the Guidelines in accordance with
the three (3) month grace period must be purchased through UGI's Rule 10b-18
program.

5. EFFECTIVE DATE OF THE PLAN; AVAILABILITY OF LOANS

         Both the Guidelines and the Plan are effective as of October 1, 1997.
Purchase Loans shall be offered under the Plan for the entire period of time
during which the Guidelines are in effect, subject to the Plan Lender's right to
interpret, change, amend, modify or terminate the Plan as provided in section 9
herein. No termination date has been established for the Guidelines.

         A Covered Employee may obtain more than one Purchase Loan.

         Notwithstanding the above, the Plan Lender shall not be required to
make a Purchase Loan to a Covered Employee if making such Purchase Loan would
cause the Plan Lender to violate any covenant or other similar provision in any
indenture, loan agreement, or other agreement, or cause the Plan Lender to
violate any applicable federal, state or local law.

6. ELECTION TO PARTICIPATE IN THE PLAN

         A Covered Employee may elect to participate in the Plan in order to
finance all or a portion of the purchase of UGI Shares required to be purchased
by the Covered Employee to comply with the Guidelines. Each Covered Employee who
so elects shall deliver to the Administrative Committee a written notification
of his or her intention to participate in the Plan, not less than five (5)
business days prior to the Purchase Date. The notification shall specify such
information as shall be required by the Administrative Committee, including,
with respect to an 

                                      -4-

   5

open market purchase, the amount of the requested Purchase Loan including
whether the Purchase Loan is to cover any brokerage commission, when the payment
is due, in what form the payment should be made (including any wire transfer
requirements), and to whom the payment should be made; and with respect to an
option exercise, the amount of the requested Purchase Loan including whether the
Purchase Loan is to cover the payment of any tax liability.

         As a condition to receipt of a Purchase Loan, each Plan Participant
shall be required to execute and deliver to the Administrative Committee a
Purchase Note and a Stock Pledge Agreement, together with the certificate(s) for
the UGI Shares purchased under the Plan and a Stock Power in blank.

         A Plan Participant may not participate in the Dividend Reinvestment
Plan with respect to UGI Shares purchased under the Plan.

         All Covered Employees are eligible to become Plan Participants, but
they are not obligated, as a condition of employment or for any other purposes,
to participate in the Plan.

7. LOAN PROVISIONS

     (a) General

         The Plan Lender shall make available to each Covered Employee a
Purchase Loan, with full recourse, payable over a Loan Period of up to ten (10)
years at the option of the Plan Participant, in an amount equal to up to one
hundred percent (100%) of the Current Market Value of the UGI Shares to be
purchased pursuant to the exercise of options or on the open market, in order to
comply with the requirements of the Guidelines. In the event that a Plan
Participant incurs any tax liability as a result of the exercise of an option,
the Purchase Loan may include the amount of such tax liability to the extent
that the amount of the Purchase Loan does not exceed the Current Market Value of
the UGI Shares that are pledged as security for the Purchase Loan on the day the
loan is made.

         In the event that a Plan Participant receives more than one Purchase
Loan, all payments of interest and principal shall be applied to the first
Purchase Loan received and, upon 

                                      -5-

   6

full repayment of such Purchase Loan, applied to each additional Purchase Loan
in order of receipt by the Plan Participant.

     (b) Pledge of Securities

         The Purchase Loan shall be secured by a pledge of all of the UGI Shares
purchased under the Plan. Such UGI Shares shall be registered in the name of the
Plan Participant as sole record owner unless the Administrative Committee
approves co-ownership with a spouse. To pledge the UGI shares, the Plan
Participant shall cause to be delivered to the Plan Lender (i) the
certificate(s) for the UGI Shares purchased under the Plan, accompanied by a
duly executed Stock Power in blank, and (ii) a duly executed Stock Pledge
Agreement. The Plan Lender shall maintain possession of the certificate(s) until
such time as the Purchase Loan is paid in full. Throughout the Loan Period, the
Plan Participant shall have the right to vote the UGI Shares and to receive
dividends which, if paid in cash, shall be applied to the interest and principal
amount due on the Purchase Loan, as provided in section 7(c) herein.

         The Plan Participant shall not assign, pledge, or otherwise transfer
the UGI Shares purchased under the Plan until the Purchase Loan is paid in full,
except as may be authorized by the Plan Lender in its sole discretion, under
circumstances in which a Plan Participant deems it necessary to sell all or a
portion of the UGI Shares purchased under the Plan due to economic hardship, and
such Plan Participant has been released partially or fully from compliance with
the Guidelines.

     (c) Interest Payments

         The Purchase Loan shall bear interest at a rate of four percent (4%)
annually. Interest shall be paid on a quarterly basis subsequent to the receipt
of cash dividends on the UGI Shares purchased under the Plan, in an amount equal
to such cash dividends. To the extent that such dividend payment exceeds the
accrued interest payment due at the time of such dividend payment, the excess
amount shall be applied to principal. The Plan Participant shall make the
required quarterly payment in an amount equal to the dividend payment within ten
(10) days of receipt of such dividend payment.

                                      -6-

   7

     (d) Principal Payments

         (i)   Annual Bonus Plan. In the event a Plan Participant is awarded an
Annual Bonus Plan payment during the Loan Period, the Plan Participant shall
make a Purchase Loan principal payment in the amount of twenty percent (20%) of
the gross amount of the Annual Bonus Plan payment. The Plan Participant shall
make the required principal payment within ten (10) days of receipt of such
Annual Bonus Plan payment.

         (ii)  Long-Term Incentive Plans. In the event a Plan Participant
receives a cash payout under any Long-Term Incentive Plan during the Loan
Period, the Plan Participant shall make a Purchase Loan principal payment in an
amount equal to one third (1/3) of the gross amount of such payout. The Plan
Participant shall make the required principal payment within ten (10) days of
receipt of such Long-Term Incentive Plan payout.

         (iii) Gains. In the event a Plan Participant realizes any gains on the
cashless exercise of UGI Common Stock options during the Loan Period, the Plan
Participant shall make a Purchase Loan principal payment in an amount equal to
the amount of such gains, net of any withholding tax. The Plan Participant shall
make the required principal payment within ten (10) days of realization of such
gains.

         (iv)  Full Payment Upon Maturity of the Purchase Loan. Any outstanding
balance (including accrued and unpaid interest) on the Purchase Loan shall
become due and payable as of the end of the Loan Period.

         Not less than sixty (60) days prior to the end of the Loan Period, a
Plan Participant may request an extension of the Loan Period. Such an extension
may be granted at the sole discretion of the Administrative Committee, on a
case-by-case basis.

     (e) Term of Purchase Loan

         The Purchase Note shall be payable over a Loan Period of up to ten (10)
years, the length of such Loan Period to be determined at the option of the Plan
Participant.

                                      -7-

   8

         THE OBLIGATIONS OF EACH PLAN PARTICIPANT UNDER THE PURCHASE NOTE SHALL
BE UNCONDITIONAL AND ABSOLUTE AND, NOTWITHSTANDING THE GENERALITY OF THE
FOREGOING, SHALL NOT BE RELEASED, DISCHARGED OR OTHERWISE AFFECTED BY ANY CHANGE
IN THE EXISTENCE, STRUCTURE OR OWNERSHIP OF ANY OF THE UGI COMPANIES OR THE PLAN
LENDER, OR ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR OTHER SIMILAR
PROCEEDING AFFECTING ANY OF THE UGI COMPANIES OR THE PLAN LENDER, OR THE ASSETS
THEREOF, OR THE MARKET VALUE OF THE UGI SHARES, OR ANY RESULTING RELEASE OR
DISCHARGE OF ANY OBLIGATION OF ANY OF THE UGI COMPANIES OR THE PLAN LENDER, OR
THE EXISTENCE OF ANY CLAIM, SET-OFF OR OTHER RIGHTS WHICH ANY PLAN PARTICIPANT
MAY HAVE AT ANY TIME AGAINST ANY OF THE UGI COMPANIES OR THE PLAN LENDER, OR ANY
OTHER PERSON, WHETHER IN CONNECTION WITH THE PLAN OR WITH ANY UNRELATED MATTER.

     (f) Acceleration of Purchase Loan Maturity

         (i)  Termination of Employment of a Plan Participant. In the event a
Plan Participant's employment is terminated for cause (misappropriation of
funds, substance abuse, habitual insobriety, conviction of a crime involving
moral turpitude or gross negligence in the performance of duties) during the
Loan Period, any outstanding balance (including accrued and unpaid interest) on
the Purchase Loan shall become due and payable not later than three (3) months
following the Termination Date. In the event a Plan Participant's employment is
terminated either voluntarily or involuntarily (other than for cause) during the
Loan Period, any outstanding balance (including accrued and unpaid interest) on
the Purchase Loan shall become due and payable not later than one (1) year
following the Termination Date.

         (ii) Retirement of a Plan Participant. In the event a Plan Participant
retires under an applicable employee retirement plan during the Loan Period, any
outstanding balance (including accrued and unpaid interest) on the Purchase Loan
shall become due and payable not later than one (1) year following the
Retirement Date.

                                      -8-

   9

         (iii) Death or Disability of a Plan Participant. In the event a Plan
Participant dies or becomes disabled during the Loan Period, any outstanding
balance (including accrued and unpaid interest) on the Purchase Loan shall
become due and payable not later than six (6) months following the date of death
or the Disability Date. No interest shall accrue during such six (6) month
period.

         If the outstanding balance (including accrued and unpaid interest) on
the Purchase Loan is not paid in full within six (6) months following the date
of death or the Disability Date, the Plan Lender shall purchase the UGI Shares
that were purchased under the Plan from the disabled Plan Participant or the
estate of the deceased Plan Participant, for a price that shall be equal to the
higher of the Fair Market Value of the UGI Shares on the date of death or the
Disability Date, or the original amount of the Purchase Loan, less any
outstanding balance (including accrued and unpaid interest). If the outstanding
balance (including accrued and unpaid interest) on the Purchase Loan as of the
date of death or the Disability Date exceeds the higher of the Fair Market Value
of the UGI Shares on the date of death or the Disability Date, or the original
amount of the Purchase Loan, less any outstanding balance (including accrued and
unpaid interest), the Plan Lender shall keep the UGI Shares in full satisfaction
of the Purchase Loan.

     (g) Prepayment of the Purchase Loan

         The Plan Participant shall have the right to voluntarily prepay,
without penalty, all or any portion of the amount due under the Purchase Note,
at any time during the Loan Period. All prepayments shall first be applied to
accrued interest on the Purchase Loan and then to the principal balance due on
the Purchase Loan.

     (h) Event of Default

         The Plan Participant's failure to pay when due any payment of interest
or principal shall be deemed to be an event of default under the Purchase Note.
Upon the occurrence and continuation of such event of default, the Plan Lender
may declare the outstanding balance (including accrued and unpaid interest) to
be immediately due and payable.

                                      -9-

   10

8.  PLAN ADMINISTRATION

         An Administrative Committee consisting of one or more persons shall be
designated by the Plan Lender. The Administrative Committee shall be responsible
for overall administration of the Plan, including recordkeeping and preparation
of Purchase Loan documentation.

9.  CHANGES IN THE GUIDELINES OR THE PLAN

         The UGI Board of Directors' Compensation and Management Development
Committee shall have the right to interpret, change, amend, modify or terminate
the Guidelines at any time. Subject to any required shareholder approval, the
Plan Lender may interpret, change, amend, modify or terminate the Plan at any
time, except that the Plan Lender may not, without the consent of the Plan
Participants, take any action that would adversely affect the rights or the
obligations of the Plan Participants under the Plan in any material respect.

10. MISCELLANEOUS PROVISIONS

     (a) Employment Not Guaranteed

         Nothing contained in the Plan nor any related agreements, nor any
action taken in the administration of the Plan, shall be construed as a contract
of employment or as giving a Plan Participant any right to continued employment
by any of the UGI Companies.

     (b) Applicable Law

         The Plan and related documents including the Purchase Note, Stock
Pledge Agreement and Stock Power, shall be governed by and construed and
enforced in accordance and with the laws of the Commonwealth of Pennsylvania,
without regard to the application of the conflicts of law provisions thereof.

                                      -10-

   11

     (c) Notice

         All notices and other communications required or permitted to be given
under the Plan shall be in writing and shall be deemed to have been duly given
if delivered personally or by inter-office mail as follows: (i) if to the Plan
Lender, to Lynn McCown, Secretary, Administrative Committee, UGI Properties,
Inc., 460 North Gulph Road, King of Prussia, PA 19406; (ii) if to a Plan
Participant, to the last home or business address of the Plan Participant known
to the sender.

                                                                         10/1/97

                                      -11-
   1

UGI CORPORATION AND SUBSIDIARIES                                    Exhibit (11)
COMPUTATION OF EARNINGS PER SHARE                                  (Page 1 of 2)
(Millions, except per share amounts)

                                                                                   Year Ended
                                                                                  September 30,
                                                                        ----------------------------------
                                                                         1997          1996          1995
                                                                        ------        ------        ------
                                                                                              
Primary earnings per share:
     Actual average common shares outstanding                             33.0          33.0          32.7
     Incremental shares issuable upon exercise
         of stock options outstanding                                      0.1           0.1            --
                                                                        ------        ------        ------

         Total average common and common
            equivalent shares outstanding                                 33.1          33.1          32.7
                                                                        ======        ======        ======

     Earnings applicable to common and common equivalent shares:
            Earnings before extraordinary
                 loss and accounting change                             $ 52.1        $ 39.5        $  7.9
            Extraordinary loss - debt restructuring                         --            --         (13.2)
            Change in accounting for
                 postemployment benefits                                    --            --          (3.1)
                                                                        ------        ------        ------
                 Net earnings (loss)                                    $ 52.1        $ 39.5        $ (8.4)
                                                                        ======        ======        ======

     Primary earnings per common and common equivalent share:
            Earnings before extraordinary
                 loss and accounting change                             $ 1.57        $ 1.19        $ 0.24
            Extraordinary loss - debt restructuring                         --            --         (0.40)
            Change in accounting for
                 postemployment benefits                                    --            --         (0.10)
                                                                        ------        ------        ------
                 Net earnings (loss)                                    $ 1.57        $ 1.19        $(0.26)
                                                                        ======        ======        ======

   2

UGI CORPORATION AND SUBSIDIARIES                                    Exhibit (11)
COMPUTATION OF EARNINGS PER SHARE                                  (Page 2 of 2)
(Millions, except per share amounts)

                                                                                    Year Ended
                                                                                   September 30,
                                                                        ----------------------------------
                                                                         1997          1996          1995
                                                                        ------        ------        ------
                                                                                              
Fully diluted earnings per share:
     Actual average common shares outstanding                             33.0          33.1          32.7
     Incremental shares issuable upon exercise
         of stock options outstanding                                      0.2           0.1            --
                                                                        ------        ------        ------

         Total shares for fully diluted computation                       33.2          33.2          32.7
                                                                        ======        ======        ======

     Earnings applicable to common and common equivalent shares:
            Earnings before extraordinary
                 loss and accounting change                             $ 52.1        $ 39.5        $  7.9
            Extraordinary loss - debt restructuring                         --            --         (13.2)
            Change in accounting for
                 postemployment benefits                                    --            --          (3.1)
                                                                        ------        ------        ------
                 Net earnings (loss)                                    $ 52.1        $ 39.5        $ (8.4)
                                                                        ======        ======        ======

     Fully diluted earnings per common share:
            Earnings before extraordinary
                 loss and accounting change                             $ 1.57        $ 1.19        $ 0.24
            Extraordinary loss - debt restructuring                         --            --         (0.40)
            Change in accounting for
                 postemployment benefits                                    --            --         (0.10)
                                                                        ------        ------        ------
                 Net earnings (loss)                                    $ 1.57        $ 1.19        $(0.26)
                                                                        ======        ======        ======

   1
                                                                    EXHIBIT 13.1

FINANCIAL REVIEW

BUSINESS OVERVIEW

PROPANE

The Company's propane business is conducted through AmeriGas Partners, L.P. and
its operating subsidiary, AmeriGas Propane, L.P. (collectively referred to as
"the Partnership"). The Operating Partnership, in which the Company holds a
58.5% equity interest, is the largest retail propane marketer in the U.S. It
serves residential, commercial, industrial, motor fuel and agricultural
customers from locations in 45 states, including Alaska and Hawaii.

UTILITIES

The Company's utility business is conducted through UGI Utilities, Inc. (UGI
Utilities) which operates a natural gas distribution utility in parts of eastern
and southeastern Pennsylvania and an electric utility in northeastern
Pennsylvania (collectively, "Utilities"). Utilities is subject to regulation by
the Pennsylvania Public Utility Commission (PUC) and, with respect to certain
activities including the interstate movement of natural gas, the transmission of
electricity, and transactions with nonutility generators of electricity, the
Federal Energy Regulatory Commission.

      Gas Utility sells gas to residential, commercial and industrial
(collectively, "core market") customers and provides firm transportation service
to large commercial and industrial customers. Gas Utility also sells and
transports gas under interruptible rates to customers who have alternate fuel
capability. Interruptible rates are competitively priced with respect to the
prices of alternative fuels, primarily oil.

      Electric Utility distributes electricity it generates and purchases from
others. The Electricity Generation Customer Choice and Competition Act (the
"Customer Choice Act") became law in early fiscal 1997. The Customer Choice Act
establishes competition and customer choice in the Pennsylvania electric
generation market. Under the Customer Choice Act, local electric utilities will
continue to have exclusive rights to provide distribution services. For a
discussion of the Customer Choice Act's impact on Electric Utility, see
"Customer Choice Act" on page 17.

ENERGY MARKETING

UGI also owns an energy marketing business which is conducted through UGI
Enterprises, Inc. and its principal operating subsidiary, UGI Energy Services,
Inc. (UGI Energy Services). UGI Energy Services sells and manages the delivery
of natural gas to commercial and industrial customers under the tradename
"GASMARK."

               UGI CORPORATION      10      1997 ANNUAL REPORT

   2
GASMARK purchases natural gas for many of Gas Utility's commercial and
industrial customers as well as customers of other gas utilities in the
Mid-Atlantic and Northeast regions. Enterprises' newly formed POWERMARK business
is participating in Pennsylvania's Customer Choice Act pilot program.
Enterprises is also involved in joint venture projects in Romania and China and
is pursuing other joint venture opportunities for providing energy and related
services in developing markets outside the U.S.

RESULTS OF OPERATIONS

GENERAL

All retail propane distribution businesses are affected by a number of common
factors. The retail propane business is very competitive and consists of a
number of large national and regional marketers, and thousands of small
independent marketers. Propane also competes with other sources of energy such
as electricity, fuel oil and natural gas. Weather significantly impacts demand
for propane and profitability because many customers use propane for heating
purposes. Geographic weather variations can significantly affect retail volumes
and profitability because of regional differences in weather-sensitive volumes
and unit margins. Demand for propane can also be affected by regional economic
conditions, particularly in commercial and industrial markets.

      The retail propane business is sensitive to changes in wholesale propane
prices. The cost of propane can change significantly over short periods of time.
It is not always possible to pass on to customers rapid increases in the
wholesale cost of propane due to a number of factors including competitive
market conditions. When increased product costs are not passed on, margins
decline. In order to manage price risk associated with a portion of its propane
supply requirements, the Partnership enters into fixed-price supply arrangements
and, to a lesser extent, derivative commodity instruments. Because the retail
propane industry is relatively mature, low growth in existing markets is
expected for the foreseeable future.

      Gas Utility results, and to a lesser extent Electric Utility results, are
also influenced by weather and economic conditions. Gas Utility's sizable
commercial and industrial throughput is less weather sensitive which helps to
mitigate the effects of weather extremes. However, much of this throughput is to
customers with alternate fuel capability, principally oil, and margins are
affected by differences between the cost of natural gas and the cost of the
alternate fuels.

      GASMARK's results are affected by the volumes of gas sold and the
difference between its selling prices and the costs at which it can purchase and
deliver the supply requirements of its customers. Volumes and margin can be
affected by weather, economic conditions, competition from other marketers and,
with respect to customers having alternate fuel capabilities, the prices of
alternate fuels.

      The following analysis of the results of operations includes the
consolidated results of the Company and each of its principal business segments.
Although the operating income of propane contributed approximately 59% and 51%
of the Company's consolidated operating income in 1997 and 1996, respectively,
its contribution to net income in both years was considerably less due to the
Partnership's significant minority interest, higher relative interest charges
and a higher effective income tax rate associated with the Partnership's pre-tax
income. Comparisons of the Company's 1996 and 1995 propane operating results are
complicated by the April 19, 1995 formation of AmeriGas Partners. In order to
permit a more meaningful analysis, fiscal 1995 propane results are presented on
a pro forma basis as if the formation of AmeriGas Partners had occurred as of
the beginning of the fiscal year.

               UGI Corporation       11       1997 Annual Report
   3
FINANCIAL REVIEW (CONTINUED)

1997 COMPARED WITH 1996

CONSOLIDATED RESULTS
 Year Ended September 30,     1997          1996           Increase
- ---------------------------------------------------------------------------
 (Millions of dollars, except per share)
                                                          
 Revenues                 $ 1,642.0     $ 1,557.6     $    84.4        5.4%
 Total margin             $   684.9     $   652.4     $    32.5        5.0%
 Operating income         $   199.9     $   159.7     $    40.2       25.2%
 Net income               $    52.1     $    39.5     $    12.6       31.9%
 Net income
  per share               $    1.57     $    1.19     $     .38       31.9%

   The Company's results in 1997 reflect a significant improvement in AmeriGas
Partners' performance. In addition, net income in 1997 includes $2.3 million
from the sale of UTI Energy Corp. common stock.

PROPANE

                                                                Increase
 Year Ended September 30,       1997         1996               (Decrease)
- -------------------------------------------------------------------------------
                                                           
 (Millions of dollars)
Retail gallons sold--
 millions                       807.4          855.4         (48.0)       (5.6)%
Degree days--% colder
 (warmer) than normal            (5.2)           1.4            --          --
Revenues                     $1,077.8       $1,013.2      $   64.6         6.4%
Total margin                 $  477.4       $  443.5      $   33.9         7.6%
Operating income             $  117.1       $   80.8      $   36.3        44.9%
EBITDA(1)                    $  181.4       $  144.9      $   36.5        25.2%

(1) EBITDA (earnings before interest expense, income taxes, depreciation and
amortization) should not be considered as an alternative to net income (as an
indicator of operating performance) or as an alternative to cash flow (as a
measure of liquidity or ability to service debt obligations) and is not a
measure of performance or financial condition under generally accepted
accounting principles.

   PROPANE. Retail sales of propane decreased in the year ended September 30,
1997 reflecting, in part, the effects of warmer heating-season weather. In
addition, significantly higher and more volatile propane market prices during
the first half of the fiscal 1997 heating season resulted in customer
conservation efforts. Wholesale volumes of propane sold decreased 91.1 million
gallons to 218.6 million gallons in 1997 principally due to reduced low-margin
sales of storage inventories.

   Total revenues from retail propane sales increased $81.3 million to $868.2
million reflecting a $125.5 million increase as a result of higher average
retail propane selling prices partially offset by a $44.2 million decrease as a
result of the lower volumes sold. The higher prices resulted principally from
higher propane product costs experienced by the Partnership early in fiscal
1997. The spot price of propane at Mont Belvieu, Texas, a major U.S. storage and
distribution hub, increased dramatically during much of the last quarter of
fiscal 1996 and the first quarter of fiscal 1997, rising to a high of 75 cents a
gallon on December 16, 1996. Wholesale propane revenues decreased $11.9 million
to $126.0 million reflecting the lower wholesale volumes sold partially offset
by higher average wholesale prices. Other revenues decreased $4.8 million to
$83.6 million primarily as a result of lower hauling and appliance sales and
service revenues.

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

   The increase in 1997 operating income and EBITDA is the result of higher
total margin, greater miscellaneous income, and a decrease in operating
expenses. Total operating expenses of the Partnership were $316.4 million in
1997 compared with $317.4 million in 1996. The 1996 operating expenses are net
of $4.4 million from a refund of insurance premium deposits and $3.3 million
from a reduction in accrued environmental costs. Excluding the impact of these
items in 1996, operating expenses declined $8.7 million reflecting in large part
lower expenses related to sales and marketing programs and lower required
accruals for general and automobile liability and workers' compensation costs.
Miscellaneous income increased $2.9 million in 1997 reflecting $4.7 million of
income from the sale of the Partnership's 50% interest in Atlantic Energy, Inc.
(Atlantic Energy), which owns and operates a liquefied petroleum gas storage
terminal in Chesapeake, Virginia. The Partnership sold its interest in Atlantic
Energy after determining that it was not a strategic asset.

UTILITIES

                                                              Increase
 Year Ended September 30,        1997         1996            (Decrease)
- ----------------------------------------------------------------------------
                                                           
 (Millions of dollars)
 GAS UTILITY:
 Natural gas system
  throughput--bcf                 80.2         85.4        (5.2)       (6.1)%
 Degree days--% colder
  (warmer) than normal            (4.8)         4.2          --          --
 Revenues                       $389.1       $391.0      $ (1.9)        (.5)%
 Total margin                   $168.7       $169.7      $ (1.0)        (.6)%
 Operating income               $ 74.8       $ 72.9      $  1.9         2.6%

ELECTRIC UTILITY:
 Electric sales--gwh             868.5        884.7       (16.2)       (1.8)%
 Revenues                       $ 72.1       $ 69.5      $  2.6         3.7%
 Total margin                   $ 35.2       $ 33.0      $  2.2         6.7%
 Operating income               $ 10.7       $  8.6      $  2.1        24.4%

bcf-billions of cubic feet. gwh-millions of kilowatt hours. Total margin
represents revenues less cost of sales and revenue-related taxes.

   GAS UTILITY. Weather in Gas Utility's service territory was 4.8% warmer than
normal in 1997 compared to 4.2% colder than normal in 1996. Total system
throughput decreased 6.1% during 1997 principally reflecting the warmer
weather's effect on core market sales as well as a decrease in low-margin
interruptible delivery service volumes associated with the shut-down of a
gas-fired cogeneration facility.

   Gas Utility revenues were $1.9 million lower in 1997 as a $27.2 million
increase in core market revenues principally due to higher average purchased gas
cost (PGC) rates was offset by a $21.2 million decrease in core market revenues
from lower sales and an $8.1 million decrease in revenues from off-system sales.
Cost of gas sold by Gas Utility decreased $1.1 million to $205.2 million
reflecting the lower off-system and core market sales offset by higher average
PGC rates.

                  UGI Corporation      12      1997 Annual Report
   4
   The decrease in Gas Utility total margin principally reflects a $6.3 million
decrease in total margin from core market customers resulting from the warmer
weather partially offset by a $5.5 million increase in total margin from
interruptible customers.

   Although total margin was slightly lower in 1997, Gas Utility operating
income increased $1.9 million principally as a result of a $1.5 million decrease
in operating and administrative expenses and higher miscellaneous income.
Operating and administrative expenses during 1997 decreased $1.5 million
principally as a result of a decrease in distribution system expenses, lower
accruals for uncollectible accounts, and lower general and administrative
expenses partially offset by higher costs associated with environmental matters.

   ELECTRIC UTILITY. Electric Utility sales decreased during 1997 reflecting
weather which was 5.6% warmer than in the prior-year period. Electric Utility
base rate revenues increased $1.7 million as a $2.8 million increase resulting
from higher base rates was partially offset by a $1.1 million decrease resulting
from the lower sales. In addition, Electric Utility revenues include a $.9
million increase in energy cost recoveries. Cost of sales increased to $33.8
million in 1997 from $33.4 million in the prior-year period as a result of the
higher energy cost recoveries partially offset by the lower sales.

   Electric Utility total margin and operating income increased during 1997
principally as a result of the higher base rates. Electric Utility operating and
administrative expenses in 1997 were essentially unchanged from the prior-year
period.

ENERGY MARKETING

                                                                  Increase
Year Ended September 30,          1997         1996              (Decrease)
- -------------------------------------------------------------------------------
(Millions of dollars)
                                                               
Revenues                         $103.0        $ 83.9       $ 19.1          22.8%
Total margin                     $  3.6        $  6.2       $ (2.6)        (41.9)%
Operating income                 $  1.7        $  4.4       $ (2.7)        (61.4)%

   ENERGY MARKETING. Total revenues from energy marketing in 1997 increased
significantly as a result of higher billed volumes principally from increased
sales and higher natural gas prices. Notwithstanding the increase in billed
volumes, total margin for 1997 was lower than in the prior-year period due to
the warmer winter weather's effect on natural gas prices and the value of
pipeline capacity. Operating income from energy marketing was $1.7 million in
1997 compared with $4.4 million in the prior-year period principally as a result
of the lower total margin.

1996 COMPARED WITH 1995

CONSOLIDATED RESULTS
Year Ended September 30,         1996           1995              Increase
- ------------------------------------------------------------------------------------
(Millions of dollars, except per share)
                                                             
Revenues                       $ 1,557.6     $   877.6   $   680.0        77.5%
Total margin                   $   652.4     $   426.1   $   226.3        53.1%
Operating income               $   159.7     $    78.3   $    81.4       104.0%
Income from
 continuing operations         $    39.5     $     7.9   $    31.6       400.0%
Net income (loss)              $    39.5     $    (8.4)  $    47.9       N.M. 
Net income (loss)
 per share                     $    1.19     $    (.26)  $    1.45       N.M. 

 N.M.-Not Meaningful.

   The Company's results in 1996 reflect the full-year consolidation of the
Partnership, colder heating-season weather, and the full-year impact of Gas
Utility's 1995 base rate increase. Results in 1995 include after-tax charges of
$24.9 million associated with the formation of AmeriGas Partners (see Note 14 to
Consolidated Financial Statements) and $3.1 million from a change in accounting
for postemployment benefits (see Note 6 to Consolidated Financial Statements).

PROPANE
Year Ended September 30,          1996          1995             Increase
- --------------------------------------------------------------------------------
 (Millions of dollars)
                                                              
 ACTUAL:
 Retail gallons sold--
  millions                         855.4         468.6        386.8        82.5%
 Revenues                       $1,013.2      $  511.7     $  501.5        98.0%
 Total margin                   $  443.5      $  250.7     $  192.8        76.9%
 Operating income               $   80.8      $   21.8     $   59.0       270.6%
 EBITDA(1)                      $  144.9      $   62.6     $   82.3       131.5%

PRO FORMA:
Retail gallons sold--
  millions                         855.4         788.0         67.4         8.6%
 Degree days--% colder
  (warmer) than normal               1.4         (12.1)          --          --
 Revenues                       $1,013.2      $  878.6     $  134.6        15.3%
 Total margin                   $  443.5      $  419.6     $   23.9         5.7%
 Operating income               $   80.8      $   73.7     $    7.1         9.6%
 EBITDA(1)                      $  144.9      $  138.0     $    6.9         5.0%

(1) EBITDA (earnings before interest expense, income taxes, depreciation and
amortization) should not be considered as an alternative to net income (as an
indicator of operating performance) or as an alternative to cash flow (as a
measure of liquidity or ability to service debt obligations) and is not a
measure of performance or financial condition under generally accepted
accounting principles.

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

   Total revenues from retail propane sales increased $94.2 million to $786.9
million during 1996 reflecting a $59.2 million increase as a result of the
greater volumes sold and a $35.0 million increase as a result of higher average
retail propane selling prices. Total cost of sales increased $110.7 million as a
result of the higher volumes of propane sold and higher average propane product
costs. The Partnership's propane product cost averaged approximately five cents
a gallon higher in 1996 than in pro forma 1995. The spot price of propane at
Mont Belvieu, Texas, increased dramatically in August and September 1996, rising
to 50.5 cents per gallon on September 30, 1996 compared to 31.63 cents per
gallon a year earlier.

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

                 UGI Corporation     13     1997 Annual Report
   5
  FINANCIAL REVIEW (continued)

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

UTILITIES

                                                                  Increase
 Year Ended September 30,          1996        1995              (Decrease)
- -------------------------------------------------------------------------------
                                                               
 (Millions of dollars)
GAS UTILITY:
Natural gas system
 throughput--bcf                      85.4        82.4          3.0         3.6%
Degree days--% colder
 (warmer) than normal                  4.2        (5.4)          --          --
Revenues                            $391.0      $291.3       $ 99.7        34.2%
Total margin                        $169.7      $140.9       $ 28.8        20.4%
Operating income                    $ 72.9      $ 51.9       $ 21.0        40.5%

ELECTRIC UTILITY:
Electric sales--gwh                  884.7       860.9         23.8         2.8%
Revenues                            $ 69.5      $ 66.1       $  3.4         5.1%
Total margin                        $ 33.0      $ 32.1       $   .9         2.8%
Operating income                    $  8.6      $  9.1       $  (.5)       (5.5)%

   GAS UTILITY. Weather in Gas Utility's service territory in 1996 was colder
than normal and also colder than in 1995. The increase in total system
throughput includes a 5.4 bcf increase in sales to core market customers and a
 .7 bcf increase in throughput to interruptible customers. Partially offsetting
these increases was a decrease in firm delivery service volumes as a result of
customer switching to interruptible delivery service.

   The increase in Gas Utility total revenues reflects a $68.4 million increase
in revenues from core market customers (reflecting higher sales and the
full-year effect of higher base rates), greater off-system sales, and lower
refunds of producer settlement charges. Cost of gas sold was $206.3 million
during 1996, an increase of $67.7 million from 1995, reflecting principally the
greater sales to core market customers, higher off-system sales, and lower
refunds of producer settlement charges.

   The increase in Gas Utility total margin in 1996 reflects a $34.5 million
increase in total margin from core market customers as a result of the colder
weather and higher base rates. However, partially offsetting the increase in
core market margin was a decrease in total margin from interruptible customers,
principally as a result of higher 1996 gas costs, and a decrease in total margin
from firm delivery service customers due in large part to the lower volumes.

   Gas Utility operating income in 1996 benefitted from the increase in total
margin. However, the benefit was partially offset by higher operating and
administrative expenses and higher charges for depreciation.

   ELECTRIC UTILITY. Electric Utility sales increased during 1996 principally
from colder heating-season weather. The $3.4 million increase in Electric
Utility revenues reflects a $1.7 million increase in base revenues and a $1.7
million increase in energy cost recoveries. Electric Utility cost of sales was
$33.4 million, an increase of $2.3 million from the prior year. The increase in
the cost of sales resulted from higher sales and higher energy cost recoveries.

   Electric Utility total margin increased as a result of the increased sales
and higher base rates effective in July. However, operating income declined as
the increase in Electric Utility total margin was more than offset by higher
distribution system maintenance expenses, general and administrative expenses,
and depreciation.

 ENERGY MARKETING

Year Ended September 30,            1996         1995              Increase
- -------------------------------------------------------------------------------
 (Millions of dollars)
                                                              
Total margin                       $ 6.2        $ 2.4        $ 3.8        158.3%
Operating income                   $ 4.4        $ 1.8        $ 2.6        144.4%

   ENERGY MARKETING. Total margin and operating income from energy marketing
activities were significantly higher in 1996 reflecting higher billed volumes
from an increase in sales outside the Gas Utility service territory. Unit
margins also were significantly higher in 1996 due to favorable gas supply
purchases.

FINANCIAL CONDITION AND LIQUIDITY

CAPITALIZATION AND LIQUIDITY

The Company's consolidated cash and short-term investments totaled $129.4
million at September 30, 1997 compared with $97.1 million at September 30, 1996.
These amounts include $94.8 million and $74.5 million, respectively, of cash and
short-term investments held by UGI. As a holding company, the sources of UGI's
cash and short-term investment balances are cash dividends from its principal
operating subsidiaries, AmeriGas and UGI Utilities. AmeriGas's ability to pay
dividends is dependent upon distributions paid by the Partnership. During 1997,
1996 and 1995, AmeriGas and UGI Utilities paid cash dividends to UGI as follows:

 Year Ended September 30,1997  1996    1995
- --------------------------------------------------------------------------------
 (Millions of dollars)
                                                                  
 AmeriGas                                    $51.7          $61.9          $ 7.6
 UGI Utilities                                24.1           32.9           14.5
- --------------------------------------------------------------------------------
 Total dividends to UGI                      $75.8          $94.8          $22.1

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

                  UGI Corporation      14       1997 Annual Report
   6

   Effective September 15, 1997, the Operating Partnership amended and restated
its Bank Credit Agreement. The Bank Credit Agreement consists of a Revolving
Credit Facility and an Acquisition Facility. Obligations under the Bank Credit
Agreement are collateralized by substantially all of the Operating Partnership's
assets.

   The Operating Partnership's Revolving Credit Facility provides for borrowings
of up to $100 million (including a $35 million sublimit for letters of credit).
The Revolving Credit Facility may be used to fund working capital, capital
expenditures, and interest and distribution payments. The Revolving Credit
Facility expires September 15, 2002 but may, under certain conditions, be
extended. The Operating Partnership's bank loans outstanding totaled $28 million
at September 30, 1997 compared with $15 million at September 30, 1996. At
September 30, 1997, the Partnership had $72 million available under the
Revolving Credit Facility. The Partnership's cash needs are generally greatest
during the first fiscal quarter due to increased working capital needs and
interest and distribution payments.

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

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

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

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

   The Partnership has assumed certain lease guarantees and scheduled claim
obligations relating to certain former businesses of Petrolane Incorporated
(Petrolane), a predecessor company of the Partnership. The Partnership succeeded
to Petrolane's agreements with third parties for payment indemnification
relating to such obligations. At September 30, 1997, the lease guarantee
obligations totaled approximately $67 million and scheduled claims of at least
$68 million were pending. To date, the Partnership has not paid any amounts
under the lease guarantee and scheduled claim obligations (for a more detailed
description, see Note 11 to Consolidated Financial Statements).

   UGI UTILITIES. UGI Utilities' principal sources of funds are those generated
by its operations and borrowings under its revolving credit agreements. In
addition, UGI Utilities has a shelf registration for the issuance, from time to
time, of up to $75 million of debt securities of which $20 million of 7.17%
ten-year notes was issued during 1997. UGI Utilities' revolving credit
agreements provide for borrowings of up to $82 million under committed lines
through June 30, 2000. At September 30, 1997, borrowings under these credit
agreements totaled $67 million. Certain of UGI Utilities' debt agreements
contain limitations with respect to incurring additional debt, require the
maintenance of consolidated net tangible worth of at least $125 million, and
restrict the amount of payments for investments, redemptions of capital stock,
prepayments of subordinated indebtedness, and dividends.

   Management believes that UGI Utilities' cash flow from operations and
available borrowings under its shelf registration and credit facilities will be
sufficient to meet UGI Utilities' liquidity needs for the foreseeable future.

                 UGI Corporation       15      1997 Annual Report
   7
FINANCIAL REVIEW (continued)

CASH FLOWS

OPERATING ACTIVITIES. Cash flow from operating activities was $172.0 million in
1997 compared with $111.2 million in 1996. Cash flow from operating activities
before changes in operating working capital was $158.4 million in 1997 compared
with $138.3 million in 1996. During 1997, AmeriGas Partners and UGI Utilities
provided $109.9 million and $64.1 million, respectively, of operating cash flow
before changes in working capital compared with $68.4 million and $71.7 million,
respectively, in 1996. The significant increase in AmeriGas Partners' 1997
operating cash flow before changes in working capital reflects the Partnership's
improved results. Changes in operating working capital in 1997 reflect net cash
inflows of $13.6 million principally from an increase in accounts payable and
accrued income taxes partially offset by an increase in inventories and accounts
receivable. In 1996, changes in operating working capital required $27.1 million
in operating cash flows.

   INVESTING ACTIVITIES. Expenditures for property, plant and equipment totaled
$68.8 million in 1997 compared with $62.7 million in 1996. The increase in
capital expenditures reflects a $2.1 million increase in Gas Utility capital
expenditures and a $4.1 million increase in propane capital expenditures. During
1997, the Company paid an aggregate $11.6 million for propane business
acquisitions. The Company also increased its short-term investments $42.3
million in 1997.

   FINANCING ACTIVITIES. During 1997, the Company paid cash dividends of $47.2
million compared with $46.4 million in the prior year. In addition, the
Partnership paid distributions of $38.8 million to public unitholders (and $54.1
million to the General Partner) representing the MQD on all Partnership units.
Net borrowings during 1997 under UGI Utilities' and the Operating Partnership's
working capital facilities were $16.5 million and $6 million, respectively.
During 1997, UGI Utilities issued $20 million of notes under its Series B
Medium-Term Note program and the Partnership borrowed $7 million under its
Acquisition Facility. Pursuant to its stock buy-back program, UGI repurchased
$19.2 million of its Common Stock.

DIVIDENDS AND DISTRIBUTIONS

In April 1997, 1996 and 1995, UGI increased the annual dividend rate on its
Common Stock to $1.44, $1.42 and $1.40, respectively. The ability of UGI to
declare and pay cash dividends is substantially dependent upon its cash balances
and the receipt of cash dividends from its wholly owned operating subsidiaries.

   The Company's 58.5% effective interest in the Partnership comprises 4.3
million Common Units, 19.8 million Subordinated Units and a 2% general partner
interest. The remaining 41.5% effective interest, comprising 17.7 million Common
Units, is publicly held. The Partnership makes distributions to its partners
approximately 45 days after the end of each fiscal quarter in an amount equal to
its Available Cash (as defined in the Amended and Restated Agreement of Limited
Partnership) for such quarter, subject to limitations under its loan agreements.
(For a description of Available Cash and the priority of its distribution to
unitholders, see Note 3 to Consolidated Financial Statements). During 1997, 1996
and 1995, the Partnership paid the MQD on all limited partner units outstanding.
The amount of Available Cash needed during 1997 to distribute the MQD on all
such units as well as the distribution on the 2% general partner interest was
approximately $93.9 million ($48.5 million for the Common Units; $43.5 million
for the Subordinated Units; and $1.9 million for the general partner interests).
A reasonable estimate of the amount of distributable cash actually generated by
the Partnership can be determined by subtracting cash interest expense and
maintenance capital expenditures from the Partnership's EBITDA. Distributable
cash flow is not a measure of performance or financial condition under generally
accepted accounting principles. Distributable cash flow as calculated during the
Partnership's two full fiscal years since its inception is as follows:

 Year Ended September 30,                 1997          1996
- --------------------------------------------------------------
 (Millions of dollars)
                                                 
 EBITDA                                 $172.4         $134.5
 Cash interest expense                   (66.8)         (63.6)
 Maintenance capital expenditures        (10.0)          (7.9)
- --------------------------------------------------------------
 Distributable cash flow                $ 95.6         $ 63.0

   Although the level of distributable cash generated in 1996 was less than the
full MQD, the Partnership had cash and short-term investment balances of $48.6
million at the beginning of the year. Due to the seasonality of its operating
cash flows and working capital needs, the Partnership uses the Revolving Credit
Facility on a short-term basis to fund a portion of distribution payments. The

                 UGI Corporation     16     1997 Annual Report
   8
ability of the Partnership to continue to pay the full MQD on its Subordinated
Units will depend upon a number of factors including the level of Partnership
earnings, the cash needs of the Partnership's operations (including cash needed
for maintenance and growth capital), and the Partnership's ability to finance
externally such cash needs. Some of these factors are affected by conditions
such as weather, competition in the markets served by the Partnership, and the
cost of propane, which are beyond the control of the Partnership.

   As further described in Note 3 to Consolidated Financial Statements, the
Subordinated Units' period of subordination will generally extend until the
first day of any quarter beginning on or after April 1, 2000 in respect of which
certain cash performance and distribution measurements are attained. In
addition, if the Partnership attains certain cash performance and distribution
measurements, 4.9 million Subordinated Units may convert to Common Units on or
after March 31, 1998 and an additional 4.9 million Subordinated Units may
convert on or after March 31, 1999. Based upon such cash performance
measurements to date, it is unlikely that the cash performance measurements
required for conversion will be attained during fiscal 1998.

CAPITAL EXPENDITURES

The following table presents capital expenditures (other than acquisitions) by
business segment for 1997, 1996 and 1995, as well as expected amounts for fiscal
1998. The Company expects to finance 1998 capital expenditures with internally
generated cash and borrowings under UGI Utilities' and the Partnership's credit
facilities.

 Year Ended September 30,   1998        1997          1996         1995
- -----------------------------------------------------------------------
 (Millions of dollars)(estimate)
                                                      
 Propane                   $33.0        $27.0        $22.9        $17.2
 Gas Utility                37.3         36.7         34.6         45.3
 Electric Utility            5.9          5.0          5.0          6.0
 Other                        .6           .1           .2           .3
- -----------------------------------------------------------------------
                           $76.8        $68.8        $62.7        $68.8

YEAR 2000 MATTERS

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

UTILITY BASE RATES

During the three-year period ended September 30, 1997, the following Gas and
Electric utility base rate increases became effective:

                                             Increase in Annual Revenues
                                             ---------------------------
 Division                Effective Date      Requested      Granted
- ------------------------------------------------------------------------
(Millions of dollars)
                                                   
Electric Utility        July 19, 1996          $ 6.2        $ 3.1
Gas Utility             August 31, 1995         41.3         19.5

CUSTOMER CHOICE ACT

On January 1, 1997, the Customer Choice Act became effective. The Customer
Choice Act permits all Pennsylvania retail electric customers to choose their
electric generation supplier over a three-year phase-in period commencing
January 1, 1999. The Customer Choice Act requires all electric utilities to file
restructuring plans with the PUC which, among other things, include unbundled
prices for electric generation, transmission and distribution and a competitive
transition charge (CTC) for the recovery of "stranded costs" which would be paid
by all customers receiving transmission and distribution service. "Stranded
costs" generally are electric generation-related costs that traditionally would
be recoverable in a regulated environment but may not be recoverable in a
competitive electric generation market. Under the Customer Choice Act, Electric
Utility's rates for transmission and distribution services provided through June
30, 2001 are capped at levels in effect on January 1, 1997. In addition,
Electric Utility generally may not increase the generation component of prices
as long as stranded costs are being recovered through the CTC. Electric Utility
will continue to be the only regulated electric utility having the right,
granted by the PUC or by law, to distribute electric energy in its service
territory.

   On August 7, 1997, Electric Utility filed its restructuring plan with the
PUC. The restructuring plan includes a claim for the recovery of $34.4 million
for stranded costs during the period January 1, 1999 through December 31, 2002.
The claim is primarily for the recovery of: (1) plant investments in excess of
estimated competitive market value and electric generation facility retirement
costs; (2) potential costs associated with existing power purchase agreements;
and (3) regulatory assets (principally income taxes) recoverable from ratepayers
under current regulatory practice. The claim also seeks to establish a recovery
mechanism that would permit the recovery of up to an additional $28 million of
costs associated with the buyout or implementation of a December 1993 agreement
to purchase power from an independent power producer. The PUC is expected to
take action on Electric Utility's filing in May 1998.

   Given the changing regulatory environment in the electric utility industry,
the Company continues to evaluate its ability to apply the provisions of
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the
Effects of Certain Types of Regulation" (SFAS 71), as it relates to its electric
generation operations. SFAS 71 permits the recording of costs (regulatory
assets) that have been, or are expected to be, allowed in the ratesetting
process in a period different from the period in which such costs would be
charged to expense by an unregulated enterprise. The Company believes its
electric generation assets and related regulatory assets continue to satisfy the
criteria of SFAS 71. If such electric generation assets no longer meet the
criteria of SFAS 71, any related regulatory assets would be written off unless
some form of transition cost recovery is established by the PUC which would meet
the requirements under generally accepted accounting principles for continued
accounting as regulatory assets during such recovery period. Any
generation-related, long-lived fixed and intangible assets would be evaluated
for impairment under the provisions of SFAS 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."

   Based upon an evaluation of the various factors and conditions affecting
future cost recovery, the Company does not expect the Customer Choice Act to
have a material adverse effect on its financial condition or results of
operations.

UGI Corporation                                             1997 Annual Report
                                       17
   9
FINANCIAL REVIEW (continued)

   On March 27, 1997, proposed gas customer choice legislation was introduced in
the Pennsylvania General Assembly that would, among other things, extend the
availability of gas transportation service to residential and small commercial
customers of local gas distribution companies. It would permit all customers of
natural gas distribution utilities to transport their natural gas supplies
through the distribution systems of Pennsylvania gas utilities by April 1, 1999
and would also require Pennsylvania gas utilities to exit the merchant function
of selling natural gas. Legislative committees have conducted public hearings on
the proposed legislation and the Company has provided testimony on such issues
as the recovery of costs associated with its existing gas supply assets and the
need for standards to assure reliability of future gas supplies. The Company
will continue to monitor the proposed legislation.

MANUFACTURED GAS PLANTS

The gas distribution business has been one of UGI Utilities' principal lines of
business since its inception in 1882. Prior to the construction of major natural
gas pipelines in the 1950s, gas for lighting and heating was produced at
manufactured gas plants (MGPs) from processes involving coal, coke or oil. Some
constituents of coal tars produced from the manufactured gas process are today
considered hazardous substances under the Comprehensive Environmental Response,
Compensation and Liability Act (Superfund Law) and may be located at those
sites.

   One of the ways UGI Utilities initially expanded its business was by entering
into agreements with other gas companies to operate their businesses. After
1888, the principal means by which UGI Utilities expanded its gas business was
to acquire all or a portion of the stock of companies engaged in this business.
UGI Utilities also provided management and administrative services to some of
these companies. UGI Utilities grew to become one of the largest public utility
holding companies in the U.S. Pursuant to the Public Utility Holding Company Act
of 1935, by 1954 UGI Utilities divested all of its utility operations other than
those which now constitute Gas Utility and Electric Utility.

   The Company has been notified of several sites outside Pennsylvania where
MGPs were operated by UGI Utilities or owned or operated by its former
subsidiaries, and environmental agencies or private parties are investigating
the extent of environmental contamination and the necessity of environmental
remediation. If UGI Utilities were found liable as a "responsible party" as
defined in the Superfund Law (or comparable state statutes) with respect to any
of these sites, it would have joint and several liability with other responsible
parties for the full amount of the cleanup costs. A "responsible party" under
that statute includes the current owner of the affected property and each owner
or operator of a facility during the time when hazardous substances were
released on the property.

   Management believes that UGI Utilities should not have significant liability
in those instances in which a former subsidiary operated a MGP because UGI
Utilities generally is not legally liable for the obligations of its
subsidiaries. Under certain circumstances, however, courts have found parent
companies liable for environmental damage caused by subsidiary companies when
the parent company exercised substantial control over the subsidiary. There
could be, therefore, significant future costs of an uncertain amount associated
with environmental damage caused by MGPs that UGI Utilities owned or directly
operated, or that were owned or operated by former subsidiaries of UGI
Utilities, if a court were to conclude that UGI Utilities exercised substantial
control over such subsidiaries.

   Management believes, after consultation with counsel, that future costs of
investigation and remediation, if any, will not have a material adverse effect
on the Company's financial position but could be material to operating results
and cash flows depending on the nature and timing of future developments and the
amounts of future operating results and cash flows. For a more detailed
discussion of environmental matters related to MGP sites, see Note 11 to
Consolidated Financial Statements.

ACCOUNTING PRINCIPLES NOT YET ADOPTED

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

IMPACT OF INFLATION

Inflation impacts the Company's propane operations in the prices it pays for
operating and administrative services and, to some extent, propane gas.
Competitive pressures may limit the Company's ability to recover fully propane
product cost increases.

   Inflation also impacts the Company's gas and electric utility operations
primarily in the prices they pay for labor, materials and services. Because
Electric Utility's base rates are capped and Gas Utility's base rates can be
adjusted only through general rate filings with the PUC, increased costs, absent
timely rate relief, can have a significant impact on the utilities' results.
Under current tariffs, Gas Utility is permitted, after annual PUC review, to
recover certain costs of purchased gas, fuel and power which comprise a
substantial portion of Gas Utility's costs and expenses.

   The Company attempts to limit the effects of inflation on its results of
operations through cost control efforts, productivity improvements and, with
respect to Gas Utility, timely rate relief.

FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements that are subject to risks and
uncertainties. The factors that could cause actual results to differ materially
include those discussed herein as well as those listed in Exhibit 99 to the
Company's Annual Report on Form 10-K for the year ended September 30, 1997.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Report. The Company
undertakes no obligation to publicly release any revision to these
forward-looking statements to reflect events or circumstances after the date of
this Report.

               UGI Corporation       18       1997 Annual Report
   10
REPORT OF MANAGEMENT

The Company's consolidated financial statements and other financial information
contained in this Annual Report are prepared by management, which is responsible
for their fairness, integrity and objectivity. The consolidated financial
statements and related information were prepared in accordance with generally
accepted accounting principles and include amounts that are based on
management's best judgments and estimates.

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

   The Audit Committee of the Board of Directors is composed of three members,
none of whom is an employee of the Company. This Committee is responsible for
reviewing the adequacy of corporate financial reporting and accounting systems
and controls, for overseeing the external and internal auditing functions and
for recommending to the Board of Directors the independent accountants to
conduct the annual audit of the Company's consolidated financial statements. The
Committee maintains direct channels of communication between the Board of
Directors and both the independent accountants and internal auditors.

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

/s/ Lon R. Greenberg       /s/ Charles L. Ladner       /s/ Michael J. Cuzzolina
- -----------------------    -----------------------     -------------------------
Lon R. Greenberg           Charles L. Ladner           Michael J. Cuzzolina
Chief Executive Officer    Chief Financial Officer     Chief Accounting Officer

INDEX TO FINANCIAL AND OTHER INFORMATION
UGI CORPORATION AND SUBSIDIARIES
                                            
REPORT OF MANAGEMENT .....................     19
SEGMENT INFORMATION ......................     20
CONSOLIDATED STATEMENTS OF INCOME ........     21
CONSOLIDATED BALANCE SHEETS ..............     22
CONSOLIDATED STATEMENTS OF CASH FLOWS ....     24
CONSOLIDATED STATEMENTS OF
  STOCKHOLDERS' EQUITY ...................     25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     26
REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS      39
FINANCIAL STATISTICS .....................     40
OPERATING STATISTICS .....................     42
SHAREHOLDER INFORMATION ..................     44

               UGI Corporation       19       1997 Annual Report
   11
SEGMENT INFORMATION
(Millions of dollars)
UGI CORPORATION AND SUBSIDIARIES

                                                             Year Ended
                                                            September 30,
- -------------------------------------------------------------------------------------
                                                   1997           1996          1995
- -------------------------------------------------------------------------------------
                                                                          
REVENUES      Propane                            $  1,077.8   $  1,013.2   $    511.7    
              Gas utility                             389.1        391.0        291.3
              Electric utility                         72.1         69.5         66.1
              Energy marketing (a)                    103.0         83.9          8.5
- ------------------------------------------------------------------------------------- 
                Total consolidated operations    $  1,642.0   $  1,557.6   $    877.6
              Petrolane (b)                            --           --          372.1
- ------------------------------------------------------------------------------------- 
OPERATING     Propane                            $    117.1   $     80.8   $     21.8
INCOME        Gas utility                              74.8         72.9         51.9
(LOSS)        Electric utility                         10.7          8.6          9.1
              Energy marketing                          1.7          4.4          1.8
              Petrolane management fee                 --           --            6.8
              Corporate general and other              (4.4)        (7.0)       (13.1)
- ------------------------------------------------------------------------------------- 
                Total consolidated operations    $    199.9   $    159.7   $     78.3
              Petrolane (b)                            --           --           41.5
- -------------------------------------------------------------------------------------  
IDENTIFIABLE  Propane                            $  1,335.6   $  1,388.3   $  1,446.1
ASSETS        Gas utility                             593.7        561.1        553.7
              Electric utility                         86.2         83.9         86.6
              Energy marketing                         10.0         13.5          6.2
              Corporate general and other             126.2         86.2         59.7
- ------------------------------------------------------------------------------------- 
                Total consolidated operations    $  2,151.7   $  2,133.0   $  2,152.3
- -------------------------------------------------------------------------------------  
DEPRECIATION  Propane -- depreciation            $     38.6   $     38.3   $     23.8
AND           Propane -- amortization                  25.7         25.8         17.0
AMORTIZATION  Gas utility                              17.1         17.6         16.1
              Electric utility                          4.3          4.0          3.7
              Corporate general and other                .4           .3           .3
- ------------------------------------------------------------------------------------- 
                Total consolidated operations    $     86.1   $     86.0   $     60.9
              Petrolane -- depreciation (b)            --           --           13.1
              Petrolane -- amortization (b)            --           --           14.3
- -------------------------------------------------------------------------------------  
CAPITAL       Propane                            $     27.0   $     22.9   $     17.2
EXPENDITURES  Gas utility                              36.7         34.6         45.3
              Electric utility                          5.0          5.0          6.0
              Corporate general and other                .1           .2           .3
- ------------------------------------------------------------------------------------- 
                Total consolidated operations    $     68.8   $     62.7   $     68.8
              Petrolane (b)                            --           --            7.3
- -------------------------------------------------------------------------------------  

            (a) Subsequent to July 31, 1995, the Company's energy marketing
                business records separately the revenues and related cost of
                sales associated with its billed volumes. Prior to August 1,
                1995, net margin from the Company's energy marketing business
                was reflected as a component of miscellaneous income.

            (b) Includes 100% of amounts for Petrolane through April 19, 1995.
                The results of operations of Petrolane are reflected in the
                consolidated financial statements on the equity method of
                accounting through April 19, 1995.

               UGI Corporation       20       1997 Annual Report
   12
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share amounts)
UGI CORPORATION AND SUBSIDIARIES

                                                                                       Year Ended
                                                                                      September 30,
- --------------------------------------------------------------------------------------------------------------
                                                                            1997           1996           1995
- --------------------------------------------------------------------------------------------------------------
                                                                                                    
REVENUES    Propane                                                      $ 1,077.8     $ 1,013.2     $   511.7     
(note 1)    Utilities                                                        461.2         460.5         357.4
            Energy marketing                                                 103.0          83.9           8.5
- --------------------------------------------------------------------------------------------------------------
                                                                           1,642.0       1,557.6         877.6
- --------------------------------------------------------------------------------------------------------------
COSTS AND   Propane cost of sales                                            600.4         569.7         261.0
EXPENSES    Utilities -- gas, fuel and purchased power (note 1)              239.0         239.7         169.7
            Energy marketing cost of sales                                    99.4          77.7           8.0
            Operating and administrative expenses                            439.8         437.5         331.6
            Depreciation and amortization (note 1)                            86.1          86.0          60.9
            Petrolane fee income (note 15)                                      --            --         (20.5)
            Miscellaneous income, net (note 13)                              (22.6)        (12.7)        (11.4)
- --------------------------------------------------------------------------------------------------------------
                                                                           1,442.1       1,397.9         799.3
- --------------------------------------------------------------------------------------------------------------
            OPERATING INCOME                                                 199.9         159.7          78.3
            Interest expense                                                 (83.1)        (79.5)        (59.3)
            Minority interest in AmeriGas Partners (note 1)                  (18.3)         (4.3)         19.7
- --------------------------------------------------------------------------------------------------------------
            INCOME BEFORE INCOME TAXES, SUBSIDIARY PREFERRED             
              STOCK DIVIDENDS AND EQUITY IN PETROLANE                         98.5          75.9          38.7
            Income taxes (notes 1, 5 and 14)                                 (43.6)        (33.6)        (22.7)
            Dividends on UGI Utilities Series Preferred Stock                 (2.8)         (2.8)         (2.8)
            Equity in Petrolane (notes 1, 14 and 15)                            --            --          (5.3)
- --------------------------------------------------------------------------------------------------------------
            INCOME BEFORE EXTRAORDINARY LOSS                             
              AND ACCOUNTING CHANGE                                           52.1          39.5           7.9
            Extraordinary loss -- propane debt restructuring (note 14)          --            --         (13.2)
            Change in accounting for postemployment                      
              benefits (note 6)                                                 --            --          (3.1)
- --------------------------------------------------------------------------------------------------------------
            Net Income (Loss)                                            $    52.1     $    39.5     $    (8.4)
- --------------------------------------------------------------------------------------------------------------
EARNINGS 
(LOSS)      Earnings before extraordinary loss                        
PER COMMON    and accounting change                                      $    1.57     $    1.19     $     .24
SHARE       Extraordinary loss -- propane debt restructuring                    --            --          (.40)
            Change in accounting for postemployment benefits                    --            --          (.10)
- --------------------------------------------------------------------------------------------------------------
            Net earnings (loss)                                          $    1.57     $    1.19     $    (.26)
- --------------------------------------------------------------------------------------------------------------

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

               UGI Corporation       21       1997 Annual Report
   13
  CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
UGI CORPORATION AND SUBSIDIARIES

ASSETS                                                                                  September 30,
                                                                             -------------------------------
                                                                                1997                   1996   
- ------------------------------------------------------------------------------------------------------------
                                                                                                
CURRENT     Cash and cash equivalents (note 1)                                 $64.0                $   74.0
ASSETS      Short-term investments, at cost which approximates market value     65.4                    23.1
            Accounts receivable (less allowances for
              doubtful accounts of $11.3 and $10.6, respectively)              110.6                   113.3
            Accrued utility revenues (note 1)                                    7.7                     8.6
            Inventories (notes 1 and 7)                                         95.6                    99.9
            Prepaid propane purchases (note 1)                                  21.7                    13.3
            Deferred income taxes (notes 1 and 5)                               20.3                    17.4
            Insurance indemnification receivable                                 2.4                    19.0
            Prepaid expenses and other current assets                           16.2                    12.1
- ------------------------------------------------------------------------------------------------------------
              Total current assets                                             403.9                   380.7
- ------------------------------------------------------------------------------------------------------------  
PROPERTY,   Propane                                                            620.6                   602.0
PLANT AND   Utilities                                                          765.6                   729.9
EQUIPMENT   Other                                                               11.1                    10.9
            ------------------------------------------------------------------------------------------------
(notes 1 
 and 4)                                                                      1,397.3                 1,342.8
            Less accumulated depreciation and amortization                     410.1                   368.2
            ------------------------------------------------------------------------------------------------
              Net property, plant and equipment                                987.2                   974.6
- ------------------------------------------------------------------------------------------------------------  

OTHER       Intangible assets (less accumulated amortization  
ASSETS        of $116.7 and $94.9, respectively) (note 1)                      677.9                   692.5
            Regulatory income tax asset (notes 1 and 5)                         44.4                    42.9
            Other assets (note 1)                                               38.3                    42.3
- ------------------------------------------------------------------------------------------------------------
              Total assets                                                  $2,151.7                $2,133.0
- ------------------------------------------------------------------------------------------------------------  

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

                  UGI Corporation    22    1997 Annual Report
   14

LIABILITIES AND STOCKHOLDERS' EQUITY                                                         September 30,
- -------------------------------------------------------------------------------------------------------------
                                                                                          1997           1996   
- -------------------------------------------------------------------------------------------------------------
                                                                                           
CURRENT        Current maturities of long-term debt -- Propane (note 4)             $      6.7     $      5.2  
LIABILITIES    Current maturities of long-term debt -- Utilities (note 4)                 17.1           25.5
               Current maturities of long-term debt -- other (note 4)                       .4             .4
               Current portion of UGI Utilities Series Preferred Stock (note 8)            3.0           -- 
               Bank loans -- Propane (note 4)                                             28.0           15.0
               Bank loans -- Utilities (note 4)                                           67.0           50.5
               Accounts payable                                                          103.2           94.7
               Employee compensation and benefits accrued                                 27.8           32.4
               Dividends and interest accrued                                             43.2           44.8
               Income taxes accrued                                                       27.4           14.4
               Insured property and casualty liability                                     1.0           19.0
               Refunds and deposits                                                       24.0           17.7
               Other current liabilities                                                  55.7           48.7
- -------------------------------------------------------------------------------------------------------------
                 Total current liabilities                                               404.5          368.3
- -------------------------------------------------------------------------------------------------------------
DEBT AND       Long-term debt -- Propane (note 4)                                        684.4          687.3
OTHER          Long-term debt -- Utilities (note 4)                                      152.2          149.3
LIABILITIES    Long-term debt -- other (note 4)                                            8.2            8.6
               Deferred income taxes (notes 1 and 5)                                     152.5          148.6
               Deferred investment tax credits (notes 1 and 5)                            10.4           10.8
               Other noncurrent liabilities                                               64.7           62.9
               Commitments and contingencies (note 11)                                            
- -------------------------------------------------------------------------------------------------------------
MINORITY                                                                                       
INTEREST       Minority interest in AmeriGas Partners (note 1)                           266.5          284.4
- -------------------------------------------------------------------------------------------------------------
PREFERRED 
AND            UGI Utilities Series Preferred Stock Subject to                                  
PREFERENCE       Mandatory Redemption, without par value (note 8)                         32.2           35.2
STOCK          Preference Stock, without par value (note 9)                                       
                 (authorized -- 5,000,000 shares)                                           --             --
- -------------------------------------------------------------------------------------------------------------
COMMON         Common Stock, without par value (notes 9 and 10)                                   
STOCKHOLDERS'    (authorized -- 100,000,000 shares; issued -- 33,198,731 shares)         393.7          391.9
EQUITY         Accumulated deficit                                                        (9.2)         (12.8)
               ----------------------------------------------------------------------------------------------
                                                                                         384.5          379.1
               Less treasury stock, at cost (note 10)                                      8.4            1.5
- -------------------------------------------------------------------------------------------------------------
                 Total common stockholders' equity                                       376.1          377.6
- -------------------------------------------------------------------------------------------------------------
                 Total liabilities and stockholders' equity                         $  2,151.7     $  2,133.0
- -------------------------------------------------------------------------------------------------------------

                                                                             
                       UGI Corporation    23    1997 Annual Report
   15
  CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
UGI CORPORATION AND SUBSIDIARIES

                                                                                      Year Ended
                                                                                      September 30,
                                                                      -------------------------------------
                                                                           1997          1996          1995
- -----------------------------------------------------------------------------------------------------------
                                                                                                 
CASH FLOWS  Net income (loss)                                          $   52.1      $   39.5      $   (8.4) 
FROM        Reconcile to net cash provided by operating activities:                                
OPERATING       Depreciation and amortization                              86.1          86.0          60.9
ACTIVITIES      Minority interest in AmeriGas Partners                     18.3           4.3         (19.7)
                Deferred income taxes, net                                 (2.2)         12.0           5.1
                Extraordinary loss                                         --            --            13.2
                Change in accounting                                       --            --             3.1
                Equity in Petrolane                                        --            --             5.3
                Other, net                                                  4.1          (3.5)          7.4
            -----------------------------------------------------------------------------------------------
                                                                          158.4         138.3          66.9
                Net change in:                                                                     
                  Receivables and accrued utility revenues                 (6.8)        (37.1)          7.1
                  Inventories and prepaid propane purchases                (3.6)        (10.2)        (14.3)
                  Deferred fuel adjustments                                 4.6         (10.7)          (.1)
                  Pipeline transition and producer settlement                                      
                    recoveries (costs), net                                (1.8)          1.1          (7.6)
                  Accounts payable                                          8.5          25.1           2.6
                  Other current assets and liabilities                     12.7           4.7          22.2
            -----------------------------------------------------------------------------------------------
                Net cash provided by operating activities                 172.0         111.2          76.8
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS  Expenditures for property, plant and equipment                (68.8)        (62.7)        (68.8)
FROM        Acquisitions of businesses, net of cash acquired              (11.6)        (28.0)         (4.1)
INVESTING   Acquisitions of Petrolane Class B shares,                                              
ACTIVITIES    net of $18.7 of cash acquired                                --            --           (90.9)
            Short-term investments increase                               (42.3)        (12.1)        (11.0)
            Proceeds from disposals of assets                              14.4           4.2           1.6
            Other, net                                                     (2.2)          (.3)          1.0
            -----------------------------------------------------------------------------------------------
                Net cash used by investing activities                    (110.5)        (98.9)       (172.2)
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS  Dividends on Common Stock                                     (47.2)        (46.4)        (45.2)
FROM        Distributions on Partnership public Common Units              (38.8)        (38.7)         (7.9)
FINANCING   Issuance of long-term debt                                     28.9          57.1          48.0
ACTIVITIES  Repayment of long-term debt                                   (29.4)        (59.7)        (20.0)
            Propane bank loans increase                                     6.0          15.0          --
            Utilities bank loans increase                                  16.5           8.5          25.0
            Issuance of Common Stock                                       11.7          11.3          10.1
            Repurchases of Common Stock                                   (19.2)         (7.1)         --
            Issuance of AmeriGas Partners Common Units                     --            --           346.4
            Issuance of long-term debt associated with                                             
              Partnership Formation                                        --            --           208.5
            Repayment of long-term debt and related interest                                       
              associated with Partnership Formation                        --            --          (408.9)
            Partnership Formation fees and expenses                        --            --           (16.3)
            -----------------------------------------------------------------------------------------------
                Net cash provided (used) by financing activities          (71.5)        (60.0)        139.7
            -----------------------------------------------------------------------------------------------
            Cash and cash equivalents increase (decrease)              $  (10.0)     $  (47.7)     $   44.3
===========================================================================================================
CASH AND    End of period                                              $   64.0      $   74.0      $  121.7
CASH        Beginning of period                                            74.0         121.7          77.4
EQUIVALENTS -----------------------------------------------------------------------------------------------
                Increase (decrease)                                    $  (10.0)     $  (47.7)     $   44.3
=========================================================================================================== 

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

                   UGI Corporation   24   1997 Annual Report
   16
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Millions of dollars, except per share amounts)
UGI CORPORATION AND SUBSIDIARIES

                                                                    Retained
                                                                    Earnings
                                                     Common       (Accumulated    Treasury
                                                      Stock          Deficit)       Stock
- ------------------------------------------------------------------------------------------
                                                                               
YEAR ENDED    Balance September 30, 1994              $  376.0       $  48.4       $  (.1)  
SEPTEMBER 30, Net loss                                                  (8.4)
1995          Cash dividends on Common Stock          
                ($1.39 per share)                                      (45.5)
              Common Stock issued (note 10):          
                Employee and director plans                 .8
                Dividend reinvestment plan                 9.3
- ------------------------------------------------------------------------------------------
YEAR ENDED    Balance September 30, 1995                 386.1          (5.5)         (.1)
SEPTEMBER 30, Net income                                                39.5
1996          Cash dividends on Common Stock          
                ($1.41 per share)                                      (46.7)
              Common Stock issued (note 10):          
                Employee and director plans                3.6           (.1)         3.1
                Dividend reinvestment plan                 2.2                        2.6
              Common Stock repurchased                                               (7.1)
- ------------------------------------------------------------------------------------------
YEAR ENDED    Balance September 30, 1996                 391.9         (12.8)        (1.5)
SEPTEMBER 30, Net income                                                52.1
1997          Cash dividends on Common Stock          
                ($1.43 per share)                                      (47.3)
              Common Stock issued (note 10):          
                Employee and director plans                 .7          (1.2)         9.2
                Dividend reinvestment plan                                            3.1
              Stock-based compensation expense             1.1                                                      
              Common Stock repurchased                                              (19.2)
- ------------------------------------------------------------------------------------------
              Balance September 30, 1997              $  393.7       $  (9.2)      $ (8.4)
- ------------------------------------------------------------------------------------------ 

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

                   UGI Corporation   25   1997 Annual Report
   17
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts and where indicated otherwise)

UGI CORPORATION AND SUBSIDIARIES

 NOTE 1.  ORGANIZATION AND SIGNIFICANT
          ACCOUNTING POLICIES................26
 NOTE 2.  UTILITY REGULATORY MATTERS.........28
 NOTE 3.  PARTNERSHIP DISTRIBUTIONS..........29
 NOTE 4.  DEBT...............................29
 NOTE 5.  INCOME TAXES.......................31
 NOTE 6.  PENSION PLANS AND OTHER
          POSTEMPLOYMENT BENEFITS............31
 NOTE 7.  INVENTORIES........................33
 NOTE 8.  SERIES PREFERRED STOCK.............33
 NOTE 9.  PREFERENCE STOCK PURCHASE RIGHTS...33
 NOTE 10. COMMON STOCK AND INCENTIVE
          STOCK AWARD PLANS..................34
 NOTE 11. COMMITMENTS AND CONTINGENCIES......35
 NOTE 12. FINANCIAL INSTRUMENTS..............36
 NOTE 13. MISCELLANEOUS INCOME...............37
 NOTE 14. FORMATION OF AMERIGAS PARTNERS.....37
 NOTE 15. INVESTMENT IN PETROLANE............37
 NOTE 16. SEGMENT INFORMATION................38
 NOTE 17. QUARTERLY DATA (UNAUDITED).........38

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION. UGI Corporation (UGI) is a holding company with two principal
businesses. UGI's utility business is conducted through a wholly owned
subsidiary, UGI Utilities, Inc. (UGI Utilities), which owns and operates a
natural gas distribution utility (Gas Utility) in parts of eastern and
southeastern Pennsylvania and an electric utility (Electric Utility) in
northeastern Pennsylvania (together referred to herein as "Utilities").
Commencing with the April 19, 1995 Partnership Formation (see Note 14), UGI
conducts a national propane distribution business through AmeriGas Partners,
L.P. (AmeriGas Partners) and its operating subsidiary, AmeriGas Propane, L.P.
(the "Operating Partnership"), both of which are Delaware limited partnerships.
The Operating Partnership is the largest retail propane distributor in the
United States serving residential, commercial, industrial, motor fuel and
agricultural customers from locations in 45 states, including Alaska and Hawaii.
UGI also conducts an energy marketing business principally through its wholly
owned subsidiary, UGI Energy Services, Inc. (UGI Energy Services).

  At September 30, 1997, UGI, through wholly owned subsidiaries, held an
effective 2% general partner interest and a 56.5% limited partnership interest
in the Operating Partnership. This limited partner interest is evidenced by
AmeriGas Partners Common Units (Common Units) and AmeriGas Partners Subordinated
Units (Subordinated Units) representing limited partner interests in AmeriGas
Partners. The remaining 41.5% effective interest in the Operating Partnership
comprises publicly held Common Units. AmeriGas Partners and the Operating
Partnership are collectively referred to as "the Partnership." A wholly owned
second-tier subsidiary of UGI (the "General Partner") serves as the general
partner of AmeriGas Partners and the Operating Partnership. The Company does not
receive management fees or other compensation in connection with its management
of the Partnership but is reimbursed at cost for direct and indirect expenses
incurred on behalf of the Partnership, including a portion of UGI employee
compensation and overhead costs. Although operating income of the Partnership
comprised more than half of UGI's fiscal 1997 consolidated operating income, its
impact on consolidated net income was considerably less due to the Partnership's
significant minority interest, higher relative interest charges and a higher
effective income tax rate associated with the Partnership's pre-tax income.

  Prior to the Partnership Formation, UGI's AmeriGas, Inc. subsidiary (AmeriGas)
conducted a national propane distribution business principally through its
wholly owned subsidiaries AmeriGas Propane, Inc. and AmeriGas Propane-2, Inc.
(collectively, "AmeriGas Propane") and its 35%-owned equity investee Petrolane
Incorporated (Petrolane).

  UGI is exempt from registration as a holding company and is not otherwise
subject to regulation under the Public Utility Holding Company Act of 1935
except for acquisitions under Section 9(a)(2). UGI is not subject to regulation
by the Pennsylvania Public Utility Commission (PUC).

  CONSOLIDATION PRINCIPLES. The consolidated financial statements include the
accounts of UGI and its majority-owned subsidiaries (collectively, the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation. The public unitholders' interest in AmeriGas
Partners is reflected as minority interest in the consolidated financial
statements. The Company's investment in Petrolane through April 19, 1995 was
accounted for by the equity method. The Company's consolidated propane
operations are hereinafter referred to as Propane.

  RECLASSIFICATIONS.  Certain prior-period balances have been reclassified to
conform with the current period presentation.

  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, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the reporting period. Actual
results could differ from these estimates.

  REGULATED UTILITY OPERATIONS. Gas Utility and Electric Utility are subject to
regulation by the PUC. Gas Utility and Electric Utility account for their
regulated operations in accordance with Statement of Financial Accounting
Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of
Regulation" (SFAS 71), as amended and supplemented by subsequently issued
standards. SFAS 71, as amended and supplemented, requires, among other things,
that financial statements of a regulated enterprise reflect the actions of
regulators, where appropriate. The economic effects of regulation can result in
regulated enterprises recording costs that have been or are expected to be
allowed in the ratesetting process in a period different from the period in
which the costs would be charged to expense by an unregulated enterprise. When
this occurs, costs are deferred as assets in the balance sheet (regulatory
assets) and recorded as expenses as those amounts are reflected in rates.
Additionally, regulators can impose liabilities upon a regulated enterprise for
amounts previously collected from customers and for recovery of costs that are
expected to be incurred in the future (regulatory liabilities). The Company
continually monitors the regulatory and competitive environments in which it
operates to determine that its regulatory assets are probable of recovery.

  Given the changing regulatory environment in the electric utility industry
(see Note 2), the Company continues to evaluate its ability to apply the
provisions of SFAS 71 as it relates to its electric generation operations. The
Company believes its electric generation assets and related regulatory assets
continue to satisfy the criteria of SFAS 71. If 

                   UGI Corporation    26   1997 Annual Report
   18
such electric generation assets no longer meet the criteria of SFAS 71, any
related regulatory assets would be written off unless some form of transition
cost recovery is established by the PUC which would meet the requirements under
generally accepted accounting principles for continued accounting as regulatory
assets during such recovery period. Any generation-related, long-lived fixed and
intangible assets would be evaluated for impairment under the provisions of SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" (SFAS 121).

  DERIVATIVE INSTRUMENTS. The Company utilizes derivative commodity instruments,
including futures contracts, to reduce market risk associated with fluctuations
in the price of natural gas sold under firm commitments with certain of its
customers. The Company also utilizes derivative commodity instruments including
price swap agreements, call and put option contracts and futures contracts, to
manage market risk associated with a portion of its anticipated propane supply
requirements. Additionally, the Company, from time to time, utilizes a managed
program of derivative instruments including natural gas and oil futures
contracts to preserve margin associated with certain of the Company's customer
segments, which margin otherwise could be affected by major commodity price
movements.

  Gains or losses on derivative commodity instruments associated with firm
commitments are recognized as an adjustment to cost of sales when the associated
transactions affect earnings. Gains or losses on derivative instruments
associated with forecasted transactions are recognized when such forecasted
transactions affect earnings. If a derivative instrument is terminated early
because it is probable that a transaction or forecasted transaction will not
occur, any gain or loss as of such date is immediately recognized in earnings.
If such derivative instrument is terminated early for other economic reasons,
any gain or loss as of the termination date is deferred and recorded when the
associated transaction or forecasted transaction affects earnings.

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

  Interest paid during 1997, 1996 and 1995 was $85.3 million, $79.8 million and
$39.4 million, respectively. Income taxes paid during 1997, 1996 and 1995 were
$32.0 million, $20.3 million and $22.0 million, respectively. On April 19, 1995,
the Company acquired the approximately 65% of Petrolane common shares it did not
already own for $109.6 million. In conjunction with this acquisition,
proportionate liabilities in the amount of $535.1 million were assumed.

  REVENUE RECOGNITION. Revenues from the sale of propane are recognized
principally as product is shipped or delivered to customers. Utilities' revenues
are recorded for service provided to the end of each month but not yet billed.
Rate increases or decreases are reflected in revenues from effective dates
permitted by the PUC. Subsequent to July 31, 1995, the Company's energy
marketing business is conducted by UGI Energy Services which records separately
the revenues and related cost of sales associated with its billed volumes. Prior
to August 1, 1995, net margin from energy marketing activities, which were
conducted by a subsidiary of UGI Utilities, was reflected as miscellaneous
income.

  INVENTORIES AND PREPAID PROPANE PURCHASES. Inventories are stated at the lower
of cost or market. Cost is determined principally on an average or first-in,
first-out (FIFO) method except for appliances for which the specific
identification method is used.

  The Partnership also enters into contracts with certain of its suppliers under
which it prepays the purchase price of a fixed volume of propane for future
delivery. The amount of such prepayments is included in the consolidated balance
sheets as "prepaid propane purchases."

  INCOME TAXES. AmeriGas Partners and the Operating Partnership are not directly
subject to federal and state income taxes. Instead, their taxable income or loss
is allocated to the individual partners, including the Company. The Operating
Partnership does, however, have certain subsidiaries which operate in corporate
form and are subject to federal and state income taxes.

  Deferred income tax provisions of UGI Utilities resulting from the use of
accelerated depreciation methods are recorded in the Consolidated Statements of
Income based upon amounts recognized for ratemaking purposes. UGI Utilities also
recognizes a deferred tax liability for tax benefits that are flowed through to
ratepayers when temporary differences originate and establishes a corresponding
regulatory asset (regulatory income tax asset) for the probable increase in
future revenues that will result when the temporary differences reverse.

  Investment tax credits related to UGI Utilities' plant additions have been
deferred and are being amortized over the service lives of the related property.
UGI Utilities reduces its deferred tax liability for the future tax benefits
that will occur when the deferred investment tax credits, which are not taxable,
are amortized, and also reduces the regulatory asset for the probable reduction
in future revenues that will result when such deferred investment tax credits
amortize.

  EARNINGS (LOSS) PER COMMON SHARE. Primary earnings (loss) per common share are
computed by dividing net income (loss) by the weighted average number of common
and dilutive common equivalent shares outstanding during each period. Common
equivalent shares included in the computations represent shares issuable upon
assumed exercise of stock options. Shares used in the earnings (loss) per common
share computations were 33,132,000, 33,142,000 and 32,710,000 for 1997, 1996 and
1995, respectively. Fully diluted earnings (loss) per share are not materially
different from primary earnings (loss) per share and therefore are not
presented.

  In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" (SFAS 128). SFAS 128 establishes standards for
computing and presenting earnings per share and simplifies the previous
standards for computing earnings per share found in Accounting Principles Board
(APB) Opinion No. 15. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997. After the effective date, prior-period
earnings per share data presented must be restated. The adoption of SFAS 128 is
not expected to have a material effect on the Company's computation of earnings
per share.

  PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION. Property, plant and
equipment is stated at cost. Amounts assigned to property, plant and equipment
of acquired businesses are based upon estimated fair value at date of
acquisition. The original cost of UGI Utilities' retired plant, together with
the net cost of removal, is charged to accumulated depreciation for financial
accounting purposes. Removal costs of UGI Utilities' plant and equipment are
deducted currently for income tax purposes. When plant and equipment other than
UGI Utilities' plant and equipment are retired or otherwise disposed of, the
cost and accumulated depreciation are removed from the accounts and any gains or
losses are reflected in current operations.

  Depreciation of Utilities' plant and equipment is computed using the
straight-line method over the estimated average remaining lives of the various
classes of depreciable property. Depreciation as a percentage of the related
average depreciable base for 1997, 1996 and 1995 was 2.7%, 2.9% and 2.8%; and
3.6%, 3.6% and 3.4%, for Gas Utility and Electric Utility, respectively.
Depreciation of Propane plant and equipment is computed using the straight-line
method over estimated service lives ranging from two to 40 years.

  Depreciation expense during 1997, 1996 and 1995 was $59.8 million, $59.4
million and $43.1 million, respectively.

                   UGI Corporation    27   1997 Annual Report
   19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Millions of dollars, except per share amounts and where indicated otherwise)

  INTANGIBLE ASSETS.  Intangible assets comprise the following at September 30:

- ------------------------------------------------------------------------------
                                                              1997       1996
- ------------------------------------------------------------------------------
                                                                  
Goodwill (less accumulated amortization of
 $79.4 million and $64.1 million, respectively)             $538.2      $546.2
Excess reorganization value (less accumulated
 amortization of $35.9 million and
 $27.4 million, respectively)                                135.1       143.4
Other (less accumulated amortization of
 $1.4 million and $3.4 million, respectively)                  4.6         2.9
- ------------------------------------------------------------------------------
Total intangible assets                                     $677.9      $692.5
- ------------------------------------------------------------------------------

  Goodwill recognized as a result of business combinations accounted for as
purchases is being amortized on a straight-line basis over 40 years. Excess
reorganization value (which represents reorganization value in excess of amounts
allocable to identifiable assets of Petrolane resulting from Petrolane's July
15, 1993 reorganization under Chapter 11 of the United States Bankruptcy Code)
is being amortized on a straight-line basis over the 20-year period commencing
July 15, 1993. Other intangible assets are being amortized over the estimated
periods of benefit which do not exceed ten years. Amortization expense of
intangible assets during 1997, 1996 and 1995 was $24.5 million, $24.6 million
and $16.1 million, respectively.

  The Company evaluates the impairment of long-lived assets, including
intangibles, whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. Recoverability is
evaluated based upon undiscounted future cash flows expected to be generated by
such assets.

  STOCK-BASED COMPENSATION. The Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123) in 1997. SFAS 123 encourages, but does not
require, companies to recognize compensation expense for grants of stock, stock
options, and other equity instruments to employees based upon fair value.
Alternatively, it permits them to continue to apply the existing accounting
rules contained in APB No. 25, "Accounting for Stock Issued to Employees" (APB
25). Companies choosing not to adopt the expense recognition provisions of SFAS
123 are required to disclose certain pro forma net income and earnings per share
data as if such provisions had been applied (see Note 10). The Company has
elected to continue to account for stock-based compensation in accordance with
APB 25.

  OTHER ASSETS. Included in other assets at September 30, 1997 and 1996 are net
deferred financing costs of $13.7 million and $15.0 million, respectively. These
costs are being amortized over the term of the related debt.

  DEFERRED FUEL ADJUSTMENTS. Gas Utility's tariffs contain, and prior to January
1, 1997, Electric Utility's tariffs contained, clauses which permit recovery of
certain gas, fuel and purchased power costs in excess of the level of such costs
included in base rates. The clauses provide for a periodic adjustment for the
difference between the total amount collected under each clause and the
recoverable costs incurred. Accordingly, the difference between amounts
recognized in revenues and the applicable gas, fuel and purchased power costs
incurred is deferred until subsequently billed or refunded to customers.

  In accordance with the provisions of the Customer Choice Act (see Note 2), the
rates Electric Utility can charge its customers, including amounts pertaining to
the recovery of fuel and purchased power costs, were capped effective January 1,
1997. The difference between amounts collected and costs actually incurred as of
January 1, 1997 is being considered by the PUC in conjunction with Electric
Utility's Customer Choice Act restructuring plan. Such amount was not material.

2. UTILITY REGULATORY MATTERS

ELECTRICITY GENERATION CUSTOMER CHOICE AND COMPETITION ACT. On January 1, 1997,
the Electricity Generation Customer Choice and Competition Act (Customer Choice
Act) became effective. The Customer Choice Act permits all Pennsylvania retail
electric customers to choose their electric generation supplier over a
three-year phase-in period commencing January 1, 1999. The Customer Choice Act
requires all electric utilities to file restructuring plans with the PUC which,
among other things, include unbundled prices for electric generation,
transmission and distribution and a competitive transition charge (CTC) for the
recovery of stranded costs which would be paid by all customers receiving
transmission and distribution service. Stranded costs generally are electric
generation-related costs that traditionally would be recoverable in a regulated
environment but may not be recoverable in a competitive electric generation
market. Under the Customer Choice Act, Electric Utility's rates for transmission
and distribution services provided through June 30, 2001 are capped at levels in
effect on January 1, 1997. In addition, Electric Utility generally may not
increase the generation component of prices as long as stranded costs are being
recovered through the CTC. Electric Utility will continue to be the only
regulated electric utility having the right, granted by the PUC or by law, to
distribute electric energy in its service territory.

  On August 7, 1997, Electric Utility filed its restructuring plan with the PUC.
The restructuring plan includes a claim for the recovery of $34.4 million for
stranded costs during the period January 1, 1999 through December 31, 2002. The
claim is primarily for the recovery of: (1) plant investments in excess of
estimated competitive market value and electric generation facility retirement
costs; (2) potential costs associated with existing power purchase agreements;
and (3) regulatory assets (principally income taxes) recoverable from ratepayers
under current regulatory practice. The claim also seeks to establish a recovery
mechanism that would permit the recovery of up to an additional $28 million of
costs associated with the buyout or implementation of a December 1993 agreement
to purchase power from an independent power producer. The PUC is expected to
take action on Electric Utility's filing in May 1998.

  Based upon an evaluation of the various factors and conditions affecting
future cost recovery, the Company does not expect the Customer Choice Act to
have a material adverse effect on its financial condition or results of
operations.

  BASE RATE CASES. On January 27, 1995, Gas Utility filed with the PUC for a
$41.3 million increase in base rates to be effective March 28, 1995. In
accordance with normal PUC practice, the effective date was suspended pending
further investigation. On August 31, 1995, the PUC approved a settlement of this
proceeding (Gas Utility Base Rate Settlement) authorizing a $19.5 million
increase in annual revenues. The increase in base rates became effective on
August 31, 1995.

  On January 26, 1996, Electric Utility filed with the PUC for a $6.2 million
increase in base rates. On July 18, 1996, the PUC approved a settlement of this
proceeding authorizing a $3.1 million increase in annual revenues, effective
July 19, 1996.

 REGULATORY ASSETS (LIABILITIES).  The following regulatory assets (liabilities)
are included in the accompanying balance sheets at September 30:

- -------------------------------------------------------------------
                                                   1997        1996 
- -------------------------------------------------------------------
                                                        
Regulatory income tax asset                       $44.4       $42.9 
Other postretirement benefits                       3.8         4.3 
Refundable state taxes                             (3.1)       (4.2)
Deferred fuel costs (recoveries)                   (3.6)        1.1 
Deferred producer settlement and
 pipeline transition recoveries                    (3.8)       (5.9)
Deferred environmental costs                         .7          .7 
- -------------------------------------------------------------------

               UGI Corporation       28       1997 Annual Report
   20
3. PARTNERSHIP DISTRIBUTIONS

The Partnership makes distributions to its partners approximately 45 days after
the end of each fiscal quarter in an aggregate amount equal to its Available
Cash for such quarter. Available Cash generally means, with respect to any
fiscal quarter of the Partnership, all cash on hand at the end of such quarter
plus all additional cash on hand as of the date of determination resulting from
borrowings after the end of such quarter less the amount of cash reserves
established by the General Partner in its reasonable discretion. These reserves
may be retained for the proper conduct of the Partnership's business and for
distributions during the next four quarters. In addition, reserves for the
payment of debt principal and interest are required under the provisions of
certain of the Partnership's debt agreements.

  Distributions in an amount equal to 100% of the Partnership's Available Cash
will generally be made 98% to the Common and Subordinated unitholders, including
such units held by the Company, and 2% to the General Partner, subject to the
payment of incentive distributions in the event Available Cash exceeds the
Minimum Quarterly Distribution (MQD) of $.55 on all units. To the extent there
is sufficient Available Cash, the holders of Common Units have the right to
receive the MQD, plus any arrearages, prior to the distribution of Available
Cash to holders of Subordinated Units. Common Units will not accrue arrearages
for any quarter after the Subordination Period (as defined below), and
Subordinated Units will not accrue any arrearages for any quarter.

  The Subordination Period will generally extend until the first day of any
quarter beginning on or after April 1, 2000 in respect of which (a)
distributions of Available Cash from Operating Surplus (generally defined as $40
million plus $42.9 million of cash on hand as of April 19, 1995 plus all
operating cash receipts less all operating cash expenditures and cash reserves)
equal or exceed the MQD on each of the outstanding Common and Subordinated units
for each of the four consecutive four-quarter periods immediately preceding such
date; (b) the Adjusted Operating Surplus (generally defined as Operating Surplus
adjusted to exclude working capital borrowings, reductions in cash reserves and
$40 million plus $42.9 million of cash on hand as of April 19, 1995 and to
include increases in reserves to provide for distributions resulting from
Operating Surplus generated during such period) generated during both (i) each
of the two immediately preceding four-quarter periods and (ii) the immediately
preceding sixteen-quarter period, equals or exceeds the MQD on each of the
Common and Subordinated units outstanding during those periods; and (c) there
are no arrearages on the Common Units.

  Prior to the end of the Subordination Period but not before March 31, 1998,
4,945,537 Subordinated Units will convert into Common Units for any quarter
ending on or after March 31, 1998, and an additional 4,945,537 Subordinated
Units will convert into Common Units for any quarter ending on or after March
31, 1999, if (a) distributions of Available Cash from Operating Surplus on each
of the outstanding Common and Subordinated units equal or exceed the MQD for
each of the three consecutive four-quarter periods immediately preceding such
date; (b) the Adjusted Operating Surplus generated during the immediately
preceding twelve-quarter period equals or exceeds the MQD on all of the Common
and Subordinated units outstanding during that period; (c) the General Partner
makes a good faith determination that the Partnership will, with respect to the
four-quarter period commencing with such date, generate Adjusted Operating
Surplus in an amount equal to or exceeding the MQD on all of the outstanding
Common and Subordinated units; and (d) there are no arrearages on the Common
Units.

4. DEBT

Long-term debt comprises the following at September 30:

- ----------------------------------------------------------------------------
                                                         1997          1996 
- ----------------------------------------------------------------------------
                                                                
Propane:
 First Mortgage Notes:
   Series A, 9.34%-11.71%, due April 2000 
    through April 2009 (including unamortized 
    premium of $14.8 and $16.0, respectively,
    calculated at an 8.91% effective rate)               $222.8       $224.0 
   Series B, 10.07%, due April 2001 through 
    April 2005 (including unamortized
    premium of $11.5 and $13.1, respectively, 
    calculated at an 8.74% effective rate)                211.5        213.1
   Series C, 8.83%, due April 2003
    through April 2010                                    110.0        110.0 
 AmeriGas Partners Senior Notes,
    10.125%, due April 2007                               100.0        100.0 
 Acquisition Facility                                      37.0         30.0 
 Special Purpose Facility                                     -          7.0 
 Other                                                      9.8          8.4 
- ----------------------------------------------------------------------------
   Total Propane                                          691.1        692.5 
- ----------------------------------------------------------------------------
Utilities:
 First Mortgage Bonds:
   7.85% Series due November 1996                             -          8.4 
 Other long-term debt:
   7.17% Series B Medium-Term Notes, due June 2007         20.0            -  
   7.37% Medium-Term Notes, due October 2015               22.0         22.0 
   6.73% Medium-Term Notes, due October 2002               26.0         26.0 
   6.62% Medium-Term Notes, due May 2005                   20.0         20.0 
   6.50% Senior Notes, due August 2003
    (less unamortized discount of
    $.1 and $.2, respectively)                             49.9         49.8 
   8.70% Notes, due March 1997 and 1998 in
    annual installments of $10.0                           10.0         20.0 
   9.71% Notes, due through September 2000
    in annual installments of $7.1                         21.4         28.6 
- ----------------------------------------------------------------------------
   Total Utilities                                        169.3        174.8 
- ----------------------------------------------------------------------------
Other:
 7.83% Senior Secured Notes,
   due through March 2008                                   8.6          9.0 
- ----------------------------------------------------------------------------
Total long-term debt                                      869.0        876.3 
Less current maturities                                   (24.2)       (31.1)
- ----------------------------------------------------------------------------
Total long-term debt due after one year                  $844.8       $845.2 
- ----------------------------------------------------------------------------

  Long-term debt maturities during the fiscal years 1998 to 2002 follow:

- --------------------------------------------------------------------
                1998        1999        2000        2001        2002
- --------------------------------------------------------------------
                                                
Propane        $ 6.7       $ 5.6       $16.6       $71.2       $72.6 
Utilities       17.1         7.1         7.1          -           -
Other             .4          .4          .5          .5          .5
- --------------------------------------------------------------------
 Total         $24.2       $13.1       $24.2       $71.7       $73.1
- --------------------------------------------------------------------

PROPANE                                                  

AMERIGAS PARTNERS' SENIOR NOTES. The 10.125% Senior Notes of AmeriGas Partners
contain covenants which restrict the ability of the Partnership to, among other
things, incur additional indebtedness, incur liens, issue preferred interests,
and effect mergers, consolidations and sales of assets. The Senior Notes are not
redeemable prior to April 15, 2000. Thereafter, AmeriGas Partners has the option
to redeem the Senior Notes, in whole or in part, at a premium. In addition,
AmeriGas Partners may, under certain circumstances following the disposition of
assets, be required to prepay the Senior Notes. Pursuant to the Indenture under
which the Senior Notes were issued, AmeriGas 

               UGI Corporation       29       1997 Annual Report
   21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Millions of dollars, except per share amounts and where indicated otherwise)

Partners is generally permitted to make cash distributions in an amount equal to
available cash, as defined, as of the end of the immediately preceding quarter,
as long as no event of default exists or would exist upon making such
distributions and if the Partnership's consolidated fixed charge coverage ratio,
as defined, is at least 1.75-to-1. If such ratio is not met, cash distributions
may be made in an aggregate amount not to exceed $24 million less the aggregate
of all distributions made during the immediately preceding 16 fiscal quarters.
At September 30, 1997, such ratio was 2.57-to-1.

   FIRST MORTGAGE NOTES. The Operating Partnership's obligations under the First
Mortgage Notes, as amended, are collateralized by substantially all of its
assets. The General Partner and Petrolane are co-obligors of the First Mortgage
Notes. The Operating Partnership may, at its option, and under certain
circumstances following the disposition of assets be required to, prepay the
First Mortgage Notes, in whole or in part. Certain of these prepayments will be
at a premium.

   BANK CREDIT AGREEMENT. Effective September 15, 1997, the Operating
Partnership amended and restated its bank credit agreement (Bank Credit
Agreement). At September 30, 1997, the credit facilities under the Bank Credit
Agreement consist of a Revolving Credit Facility and an Acquisition Facility.
The Operating Partnership's obligations under the Bank Credit Agreement are
collateralized by substantially all of its assets. The General Partner and
Petrolane are co-obligors of the bank credit facilities.

   The Revolving Credit Facility provides for borrowings of up to $100 million
(including a $35 million sublimit for letters of credit). The Revolving Credit
Facility expires September 15, 2002, but may be extended, upon timely notice,
for additional one-year periods with the consent of the participating banks
representing at least 80% of the commitments thereunder. The Revolving Credit
Facility permits the Operating Partnership to borrow at the Base Rate, defined
as the higher of the Federal Funds Rate plus .50% per annum or the agent bank's
reference rate (6.31% and 8.50%, respectively, at September 30, 1997), or at
prevailing one-, two-, three-, or six-month offshore interbank borrowing rates,
plus a margin (.50% per annum as of September 30, 1997). The applicable margin
on such offshore interbank borrowing rates, and the Revolving Credit Facility
commitment fee rate (.20% per annum as of September 30, 1997), are dependent
upon the Operating Partnership's ratio of funded debt to earnings before
interest, income taxes, depreciation and amortization (EBITDA), each as defined
in the Bank Credit Agreement. The Operating Partnership is also required to pay
letter of credit fees on the undrawn amount of outstanding letters of credit
equal to the applicable margin on offshore interbank borrowings under the
Revolving Credit Facility and on the face amount of outstanding letters of
credit equal to .125% per annum. At September 30, 1997 and 1996, borrowings
under the Revolving Credit Facility totaled $28 million and $15 million,
respectively, and are classified as bank loans. The weighted-average interest
rates on the Operating Partnership's bank loans outstanding as of September 30,
1997 and 1996 were 6.44% and 6.00%, respectively. Issued outstanding letters of
credit under the Revolving Credit Facility totaled $2.3 million at September 30,
1996. There were no issued outstanding letters of credit under the Revolving
Credit Facility at September 30, 1997.

   The Acquisition Facility provides the Operating Partnership with the ability
to borrow up to $75 million to finance propane business acquisitions. The
Acquisition Facility operates as a revolving facility through September 15, 2000
at which time any amount then outstanding will convert to a quarterly amortizing
four-year term loan. The Acquisition Facility permits the Operating Partnership
to borrow at the Base Rate or prevailing one-, two-, three-, or six-month
offshore interbank borrowing rates, plus a margin (.50% as of September 30,
1997). The applicable margin on such offshore interbank borrowing rates, and the
Acquisition Facility commitment fee rate (.20% per annum at September 30, 1997),
are dependent upon the Operating Partnership's ratio of funded debt to EBITDA,
as defined. The weighted-average interest rates on the Operating Partnership's
Acquisition loans outstanding as of September 30, 1997 and 1996 were 6.32% and
6.34%, respectively.

   Prior to September 15, 1997, the Bank Credit Agreement included a Special
Purpose Facility comprising a $30 million nonrevolving line of credit to be used
for the payment of certain liabilities of the Operating Partnership. On
September 15, 1997, borrowings under the Special Purpose Facility of $7 million
were converted to borrowings under the Revolving Credit Facility.

   RESTRICTIVE COVENANTS. The Bank Credit Agreement and the First Mortgage Notes
contain restrictive covenants which include restrictions on the incurrence of
additional indebtedness and restrictions on certain liens, guarantees, loans and
advances, payments, mergers, consolidations, sales of assets and other
transactions. They also require the ratio of total indebtedness, as defined, to
EBITDA, as defined (and as calculated on a rolling four-quarter basis or
eight-quarter basis divided by two), to be less than or equal to 5.25-to-1. In
addition, the Bank Credit Agreement requires that the Operating Partnership
maintain a ratio of EBITDA to interest expense, as defined, of at least
2.25-to-1 on a rolling four-quarter basis. Generally, as long as no default
exists or would result, the Operating Partnership is permitted to make cash
distributions not more frequently than quarterly in an amount not to exceed
available cash, as defined, for the immediately preceding calendar quarter.

   GENERAL PARTNER FACILITY. The Operating Partnership also has a revolving
credit agreement with the General Partner under which it may borrow up to $20
million to fund working capital, capital expenditures, and interest and
distribution payments. This agreement is coterminous with, and generally
comparable to, the Operating Partnership's Revolving Credit Facility except that
borrowings under the General Partner Facility are unsecured and subordinated to
all senior debt of the Partnership. Interest rates on borrowings are based upon
one-month offshore interbank borrowing rates. Facility fees are determined in
the same manner as fees under the Revolving Credit Facility. UGI has agreed to
contribute on an as needed basis through its subsidiaries up to $20 million to
the General Partner to fund such borrowings.

UTILITIES
REVOLVING CREDIT AGREEMENTS. At September 30, 1997, UGI Utilities had revolving
credit agreements with five banks providing for borrowings of up to $102 million
through December 1997 and $82 million through June 2000. The commitments
expiring in June 2000 may be extended for one-year periods, upon timely notice,
unless the banks elect not to renew. The agreements provide UGI Utilities with
the option to borrow at various prevailing interest rates, including the prime
rate. A commitment fee at an annual rate of 3/16 of 1% is payable quarterly on
the unused available committed credit lines. At September 30, 1997 and 1996,
borrowings under these agreements totaled $67 million and $50.5 million,
respectively, and are classified as bank loans. The weighted-average interest
rates on UGI Utilities' bank loans at September 30, 1997 and 1996 were 6.26% and
5.93%, respectively.

   RESTRICTIVE COVENANTS. Certain of UGI Utilities' debt agreements contain
limitations with respect to incurring additional debt, require the maintenance
of consolidated tangible net worth of at least $125 million, and restrict the
amount of payments for investments, redemptions of capital stock, prepayments of
subordinated indebtedness and dividends.

   The mortgage collateralizing UGI Utilities First Mortgage Bonds constitutes a
first lien on UGI Utilities' plant.

                    UGI Corporation  30  1997 Annual Report
   22
5. INCOME TAXES

The provisions for income taxes consist of the following:
                                                                            
- ------------------------------------------------------------------------------

                                          1997           1996             1995
- ------------------------------------------------------------------------------
                                                                
Current:
  Federal                               $36.7           $16.6            $14.0
  State                                   9.1             5.0              3.6
- ------------------------------------------------------------------------------
                                         45.8            21.6             17.6
Deferred                                 (1.8)           12.4              5.5
Investment credit amortization            (.4)            (.4)             (.4)
- ------------------------------------------------------------------------------
                                        $43.6           $33.6            $22.7
- ------------------------------------------------------------------------------

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

                                         1997            1996             1995
- ------------------------------------------------------------------------------
                                                                
Statutory federal tax rate               35.0%           35.0%            35.0%
Difference in tax rate due to:
  State income taxes, net of
   federal benefit                        6.1             6.6              8.8
  Nondeductible amortization of
   goodwill                               4.9             6.5              9.7
  Adjustment to Utilities deferred
   state income taxes                      -               -             (11.0)
  Adjustment to deferred tax
   benefits resulting from
   Partnership Formation                   -               -              15.3
  Other, net                             (1.7)           (3.8)              .9
- ------------------------------------------------------------------------------
Effective tax rate                       44.3%           44.3%            58.7%
- ------------------------------------------------------------------------------

   Deferred tax liabilities (assets) comprise the following at September 30:

                                                         1997             1996
- ------------------------------------------------------------------------------
                                                                  
Excess book basis over tax basis of property,
  plant and equipment                                  $158.4           $154.6
Regulatory income tax asset                              18.4             17.8
Other                                                     8.8              9.8
- ------------------------------------------------------------------------------
Gross deferred tax liabilities                          185.6            182.2
- ------------------------------------------------------------------------------
Self-insured property and casualty liability            (11.2)            (8.2)
Employee-related benefits                                (9.3)           (10.6)
Premium on long-term debt                                (6.0)            (6.7)
Deferred investment tax credits                          (4.3)            (4.5)
Environmental accrual                                    (4.0)            (2.8)
Allowance for doubtful accounts                          (3.2)            (3.2)
Other                                                   (15.6)           (15.3)
- ------------------------------------------------------------------------------
Gross deferred tax assets                               (53.6)           (51.3)
- ------------------------------------------------------------------------------
Deferred tax assets valuation allowance                    .2               .3
- ------------------------------------------------------------------------------
Net deferred tax liabilities                           $132.2           $131.2
- ------------------------------------------------------------------------------

   In February 1996, the General Partner completed AmeriGas Partners' and the
Operating Partnership's federal income tax returns for the Partnership's initial
period of operation. As a part of this process, a final determination was made
as to how to allocate the tax basis of certain of the assets contributed to the
Partnership by the General Partner and Petrolane pursuant to the Partnership
Formation. The completion of the allocation process resulted in reductions in
the deferred income tax liabilities of the General Partner and Petrolane
existing at the date of the Partnership Formation which had been recorded in
connection with the Petrolane Merger and the Partnership Formation. As a result,
the Company recorded a $37.0 million reduction in deferred income tax
liabilities and a corresponding reduction in goodwill which adjustments are
reflected in the accompanying Consolidated Balance Sheet at September 30, 1996.
Additional adjustments may be required to reflect the resolution of other tax
issues of Petrolane existing at the date of the Partnership Formation.

   During 1995, UGI Utilities recorded a regulatory income tax asset of $12.6
million related to $11.3 million of existing deferred state income taxes
expected to be recovered in the future through the ratemaking process. Pursuant
to the Gas Utility Base Rate Settlement, UGI Utilities recorded a regulatory
liability of $5.3 million associated with a five-year flowback to ratepayers of
approximately $4.8 million in previously recovered deferred state income taxes.
The net effect of these adjustments increased 1995 income from continuing
operations by $4.3 million or $.13 per share.

   As of September 30, 1997 and 1996, UGI Utilities had recorded approximately
$30.3 million and $29.6 million, respectively, of deferred tax liabilities
pertaining to utility temporary differences, principally a result of accelerated
tax depreciation, the tax benefits of which previously were or will be flowed
through to ratepayers. These deferred tax liabilities have been reduced by
deferred tax assets of $4.3 million and $4.5 million at September 30, 1997 and
1996, respectively, pertaining to utility deferred investment tax credits. As of
September 30, 1997 and 1996, UGI Utilities had recorded a regulatory income tax
asset related to these net deferred taxes of $44.4 million and $42.9 million,
respectively, representing future revenues expected to be recovered through the
ratemaking process. This regulatory income tax asset will be recognized in
deferred tax expense as the corresponding temporary differences reverse and
additional income taxes are incurred.

6. PENSION PLANS AND OTHER POSTEMPLOYMENT BENEFITS

The Retirement Income Plan for Employees of UGI Utilities, Inc. (UGI Utilities
Plan) is a noncontributory defined benefit pension plan covering substantially
all employees of UGI and UGI Utilities. Benefits under the UGI Utilities Plan
are generally based on years of service and employee compensation during the
last years of employment.

   The components of net pension income for the UGI Utilities Plan include the
following:

                                               1997           1996             1995
- -----------------------------------------------------------------------------------
                                                                    
Service cost -- benefits earned
  during the period                         $  2.8          $  3.1           $  2.4
Interest cost on projected
  benefit obligation                          10.6            10.2             10.0
Actual return on plan assets                 (40.3)          (16.3)           (28.1)
Net amortization and deferral                 25.8             2.5             15.3
- -----------------------------------------------------------------------------------
Net pension income                          $ (1.1)         $  (.5)          $  (.4)
- -----------------------------------------------------------------------------------

   The following table sets forth the funded status of the UGI Utilities Plan
and amounts recognized in the consolidated balance sheet at September 30:

                                                      1997            1996
- ---------------------------------------------------------------------------
                                                              
Projected benefit obligation:
  Vested benefits                                   $(118.2)        $(106.9)
  Nonvested benefits                                   (6.7)           (5.9)
- ---------------------------------------------------------------------------
    Accumulated benefit obligation                   (124.9)         (112.8)
  Effect of projected future salary levels            (24.2)          (21.4)
- ---------------------------------------------------------------------------
    Projected benefit obligation                     (149.1)         (134.2)
Plan assets at fair value                             189.5           157.3
- ---------------------------------------------------------------------------
  Excess of plan assets over projected
    benefit obligation                                 40.4            23.1
Unrecognized net gain                                 (26.9)           (9.6)
Unrecognized prior service cost                         6.0             6.7
Unrecognized transition asset                         (11.1)          (12.8)
- ---------------------------------------------------------------------------
Prepaid pension cost                                $   8.4         $   7.4
- ---------------------------------------------------------------------------

                    UGI Corporation  31  1997 Annual Report
   23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Millions of dollars, except per share amounts and where indicated otherwise)

The major actuarial assumptions used in determining the funded status of the UGI
Utilities Plan as of September 30, 1997, 1996 and 1995, and net pension income
for each of the years then ended, are as follows:

                                                1997             1996              1995
- ---------------------------------------------------------------------------------------
                                                                           
Funded status at September 30:
  Discount rate                                 7.4%             8.0%              7.5%
  Rate of increase in salary levels             4.5              4.75               4.5
Net pension income for the year:
  Discount rate                                 8.0              7.5                8.7
  Rate of increase in salary levels             4.75             4.5                5.0
  Expected return on plan assets                9.5              9.5                9.5
- ---------------------------------------------------------------------------------------

   UGI Utilities Plan's assets at September 30, 1997 consist principally of
equity and fixed income mutual funds and investment-grade corporate and U.S.
Government obligations.

   The Company also has unfunded nonqualified retirement benefit plans for
certain key employees. At September 30, 1997 and 1996, the projected benefit
obligations of these nonqualified plans were not material. During 1997, 1996 and
1995, the Company recorded expense for these plans of $1.6 million, $1.1 million
and $1.2 million, respectively.

   During 1997, 1996 and 1995, substantially all employees of Propane were
eligible to participate in 401(k) savings plans (Propane Savings Plans).
Participants in these plans could contribute a portion of their compensation on
a before-tax basis. Effective October 1, 1996, employee contributions are
matched on a dollar-for-dollar basis up to 5% of eligible compensation. Prior to
October 1, 1996, the Company, in its sole discretion, could match a portion of
employees' contributions. In addition, prior to October 1, 1996, substantially
all employees of Propane participated in noncontributory defined contribution
pension plans (Propane Pension Plans). Company contributions to the Propane
Pension Plans represented a percentage of each covered employee's salary.
Effective October 1, 1996, the Company ceased to contribute to the Propane
Pension Plans and the assets were merged into the Propane Savings Plans. UGI
Utilities sponsors a 401(k) savings plan (Utilities Savings Plan) for eligible
employees of UGI Utilities and UGI. Generally, participants in the Utilities
Savings Plan may contribute a portion of their compensation on a before-tax and
after-tax basis. The Company may, at its discretion, match a portion of
participants' contributions to the Utilities Savings Plan. The cost of benefits
under the Propane Pension Plans, the Propane Savings Plans and the Utilities
Savings Plan totaled $5.8 million, $5.9 million and $5.2 million in 1997, 1996
and 1995, respectively.

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

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

                                                  1997          1996           1995
- -----------------------------------------------------------------------------------
                                                                     
Service cost -- benefits earned
  during the period                               $ .1          $ .1          $  .1
Interest cost on accumulated
  postretirement benefit obligation                1.9           2.2            2.1
Actual return on assets                            (.1)           -              -
Net amortization and deferral                      1.2           1.6            1.2
- -----------------------------------------------------------------------------------
Net periodic postretirement
  benefit cost                                     3.1           3.9            3.4
Decrease (increase) in regulatory asset             .5           (.1)          (1.0)
- -----------------------------------------------------------------------------------
Net expense                                       $3.6          $3.8          $ 2.4
- -----------------------------------------------------------------------------------

   The following table sets forth the actuarial present value and funded status
of the Company's postretirement health care and life insurance benefit plans at
September 30:

                                                           1997             1996
- --------------------------------------------------------------------------------
                                                                    
Accumulated postretirement benefit obligation:
  Retirees                                               $(21.0)          $(22.7)
  Fully eligible active participants                       (2.8)            (5.0)
  Other active participants                                (1.9)            (1.6)
- --------------------------------------------------------------------------------
                                                          (25.7)           (29.3)
Plan assets at fair value                                   3.5              1.9
Unrecognized net gain                                      (3.4)            (4.3)
Unrecognized prior service cost                              -               2.2
Unrecognized transition obligation                         19.3             23.1
- --------------------------------------------------------------------------------
Accrued postretirement benefit cost                      $ (6.3)          $ (6.4)
- --------------------------------------------------------------------------------

   The major actuarial assumptions used in determining the funded status of the
Company's postretirement health care and life insurance benefit plans at
September 30, 1997, 1996 and 1995, and net periodic postretirement benefit costs
for the years then ended, are as follows:

                                              1997         1996          1995
- -----------------------------------------------------------------------------
                                                            
Funded status at September 30:
  Discount rate                                7.4%         8.0%          7.5%
  Health care cost trend rate              6.0-5.5      6.5-5.5       7.0-5.5
Net periodic postretirement benefit
   cost for the year:
   Discount rate                               8.0          7.5           8.7
   Health care cost trend rate             6.5-5.5      7.0-5.5      10.0-5.5
- -----------------------------------------------------------------------------

   The ultimate health care cost trend rate of 5.5% in the table above is
assumed for all years after 2007. Increasing the health care cost trend rate one
percent increases the September 30, 1997 and 1996 accumulated postretirement
benefit obligations by $1.8 million and $2.4 million, respectively, and
increases the net periodic postretirement benefit costs for 1997, 1996 and 1995
by $.1 million, $.2 million and $.1 million, respectively.

   UGI Utilities has established an Employee Benefit Trust (VEBA) to pay retiree
health care and life insurance benefits and to fund the UGI Utilities'
postretirement benefit liability. At September 30, 1997, the VEBA balance
totaled $3.5 million and was primarily invested in money market funds.

   Effective August 31, 1995, Gas Utility is permitted to recover in its rates
approximately $2.4 million in ongoing annual costs incurred under the provisions
of SFAS No. 106, "Employers Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). Gas Utility is required to defer the difference between
the amount of SFAS 106 costs included in rates and the actuarially determined
annual SFAS 106 costs for recovery or refund to ratepayers in future rate
proceedings. Also effective August 31, 1995, Gas Utility was permitted the
recovery over 17.25 years of approximately $4.0 million in deferred excess SFAS
106 costs. These deferred costs represent the difference between costs incurred
under SFAS No. 106, comprising principally deferred transition obligation
amortization, and costs incurred on a pay-as-you-go basis for periods prior to
August 31, 1995. Gas Utility's 1995 Base Rate Settlement, however, reserved the
right of any party to challenge the prospective recovery of these deferred
excess SFAS 106 costs in future rate proceedings. The Company continues to
monitor administrative and judicial proceedings involving deferred excess SFAS
106 costs and recognizes that, based on applicable law, it is possible that in
future rate proceedings Utilities could prospectively be denied recovery of some
or all of its deferred excess SFAS 106 costs. Electric Utility's rates generally
permit the recovery of costs determined under the provisions of SFAS 106.

                    UGI Corporation  32  1997 Annual Report
   24
   Effective October 1, 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits" (SFAS 112). SFAS 112 requires, among
other things, the accrual of benefits provided to former or inactive employees
(who are not retirees) and to their beneficiaries and covered dependents. Prior
to the adoption of SFAS 112, the Company accounted for these postemployment
benefits on a pay-as-you-go basis. The cumulative effect of SFAS 112 on the
Company's results of operations for periods prior to October 1, 1994 of $5.2
million pre-tax ($3.1 million after-tax) has been reflected in the 1995
Consolidated Statement of Income as "Change in accounting for postemployment
benefits."

7. INVENTORIES

Inventories comprise the following at September 30:

                                                1997        1996
- ----------------------------------------------------------------
                                                     
Propane gas                                    $47.6       $47.8
Utility fuel and gases                          26.0        26.0
Materials, supplies and other                   15.4        18.4
Appliances for sale                              6.6         7.7
- ----------------------------------------------------------------
                                               $95.6       $99.9
- ----------------------------------------------------------------

8. SERIES PREFERRED STOCK

The UGI Series Preferred Stock, including both series subject to and series not
subject to mandatory redemption, has 5,000,000 shares authorized for issuance.
There were no shares of UGI Series Preferred Stock outstanding at September 30,
1997 or 1996.

   UGI Utilities Series Preferred Stock, including both series subject to and
series not subject to mandatory redemption, has 2,000,000 shares authorized for
issuance. The holders of shares of UGI Utilities Series Preferred Stock have the
right to elect a majority of UGI Utilities' Board of Directors (without
cumulative voting) if dividend payments on any series are in arrears in an
amount equal to four quarterly dividends. This election right continues until
the arrearage has been cured. Cash dividends have been paid at the specified
annual rates on all outstanding UGI Utilities Series Preferred Stock.

   UGI Utilities Series Preferred Stock subject to mandatory redemption
comprises the following at September 30:

                                                                   1997               1996
- ------------------------------------------------------------------------------------------
                                                                              
$1.80 Series, stated at involuntary liquidation
  value of $23.50 per share, cumulative (issued and
  outstanding -- 7,963 shares)                                    $  .2              $  .2

$8.00 Series, stated at involuntary liquidation
  value of $100 per share, cumulative (issued and
  outstanding -- 150,000 shares)                                   15.0               15.0

$7.75 Series, stated at involuntary liquidation
  value of $100 per share, cumulative (issued and
  outstanding -- 200,000 shares)                                   20.0               20.0
- ------------------------------------------------------------------------------------------
Total UGI Utilities Series Preferred Stock
  subject to mandatory redemption                                  35.2               35.2
Less current portion                                               (3.0)                -
- ------------------------------------------------------------------------------------------
Total UGI Utilities Series Preferred Stock due
  after one year                                                  $32.2              $35.2
- ------------------------------------------------------------------------------------------

   UGI Utilities is required to purchase shares of its $1.80 Series Preferred
Stock tendered at a purchase price of $23.50 per share. After January 1, 1998,
UGI Utilities may call any untendered $1.80 Series shares at a redemption price
of $23.50 per share.

   UGI Utilities is required to establish a sinking fund to redeem on April 1 in
each year, commencing April 1, 1998, 30,000 shares of its $8.00 Series Preferred
Stock at a price of $100 per share. The $8.00 Series is redeemable, in whole or
in part, at the option of UGI Utilities at a price of $103.56 per share
commencing April 2, 1997, decreasing by equal amounts on April 2 of each
subsequent year through 2001.

   UGI Utilities is required to establish a sinking fund to redeem on October 1
in each year, commencing October 1, 2004, 10,000 shares of its $7.75 Series
Preferred Stock at a price of $100 per share. The $7.75 Series Preferred Stock
is redeemable, in whole or in part, at the option of UGI Utilities on or after
October 1, 2004, at a price of $100 per share. All outstanding shares of $7.75
Series Preferred Stock are subject to mandatory redemption on October 1, 2009 at
a price of $100 per share.

   Mandatory sinking fund requirements on UGI Utilities Series Preferred Stock
during each of the fiscal years 1998 to 2002 is $3 million.

9. PREFERENCE STOCK PURCHASE RIGHTS

Holders of UGI Common Stock own one-half of one right, as further described, for
each outstanding share of Common Stock. As amended on April 17, 1996, each right
entitles the holder to purchase one one-hundredth of a share of First Series
Preference Stock, without par value, at an exercise price of $120 per one
one-hundredth of a share, subject to adjustment or, under the circumstances
summarized below, to purchase the common stock described in the following
paragraph. The rights are exercisable only if a person or group, other than
certain underwriters, acquires 20% or more of the Company's Common Stock
(Acquiring Person) or announces or commences a tender offer for 30% or more of
the Common Stock. The Company is entitled to redeem the rights at five cents per
right at any time before the earlier of the expiration of the rights in April
2006 or, subject to the concurrence of a majority of continuing directors, ten
days after a person or group has acquired 20% of the Common Stock and in certain
circumstances thereafter.

   If an Acquiring Person merges with the Company or engages in certain other
transactions with the Company, or if a person acquires 40% or more of the Common
Stock, each holder of a right, other than the acquirer, is entitled to purchase,
at the exercise price of the right, Common Stock having a market value of twice
the exercise price of the right. In addition, after the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such, if the Company engages in a merger or other business combination
transaction in which the Company is not the surviving corporation, or in which
the Company is the surviving corporation, but in which its Common Shares are
changed or exchanged, or if 50% or more of the Company's assets or earning power
are sold or transferred, each holder of a right is entitled to purchase, at the
exercise price of the right, common stock of the acquiring company having a
market value of twice the exercise price of the right. The rights have no voting
or dividend rights and, until exercisable, have no dilutive effect on the
earnings of the Company.

                    UGI Corporation  33  1997 Annual Report
   25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Millions of dollars, except per share amounts and where indicated otherwise)

10. COMMON STOCK AND INCENTIVE STOCK AWARD PLANS

Common Stock share activity for 1995, 1996, and 1997 follows:

                                          Issued          Treasury          Outstanding
- ---------------------------------------------------------------------------------------
                                                                  
Balance September 30, 1994            32,397,740            (4,366)          32,393,374

Issued:
  Employee and director plans             41,918                -                41,918
  Dividend reinvestment plan             482,172                -               482,172
- ---------------------------------------------------------------------------------------
Balance September 30, 1995            32,921,830            (4,366)          32,917,464

Issued:
  Employee and director plans            164,961           143,385              308,346
  Dividend reinvestment plan             111,940           120,175              232,115
Reacquired                                    -           (321,700)            (321,700)
- ---------------------------------------------------------------------------------------
Balance September 30, 1996            33,198,731           (62,506)          33,136,225

Issued:
  Employee and director plans                 -            396,378              396,378
  Dividend reinvestment plan                  -            130,313              130,313
Reacquired                                    -           (800,900)            (800,900)
- ---------------------------------------------------------------------------------------
Balance September 30, 1997            33,198,731          (336,715)          32,862,016
- ---------------------------------------------------------------------------------------

   1997 STOCK OPTION AND DIVIDEND EQUIVALENT PLAN (1997 PLAN). On February 25,
1997, the Company's shareholders approved the 1997 Plan, effective December 10,
1996. Under the 1997 Plan, the Company may grant options to acquire shares of
Common Stock to key employees. The number of shares of Common Stock which may be
made the subject of options under the 1997 Plan may not exceed 1,500,000.
Generally, all options are fully vested and immediately exercisable on the date
of grant. Options can be exercised no later than ten years from the date of
grant. The exercise price for options granted under the 1997 Plan may not be
less than the fair market value of the Common Stock on the date of grant. The
1997 Plan will remain in effect until all stock subject to it has been purchased
pursuant to the exercise of options or until all options have terminated without
exercise. No options may be granted after December 31, 2006. At September 30,
1997, 985,000 shares under the 1997 Plan were available for future option
grants. In addition, the 1997 Plan provides for the crediting of dividend
equivalents to optionees' accounts during a specified three-year period. Actual
payment of the dividend equivalents is contingent upon the Company's total
shareholder return as compared to that of a group of peer companies during the
specified three-year period.

   1992 STOCK OPTION AND DIVIDEND EQUIVALENT PLAN (1992 PLAN). As a result of
the adoption of the 1997 Plan, the 1992 Plan was terminated for all purposes
except the exercise of options previously granted. Under the 1992 Plan, the
Company could grant options to acquire shares of Common Stock to key employees.
Upon the completion of one year of service after the date of grant and on each
anniversary of that date, options were exercisable in proportion to the number
of years expired after the date of grant within a specified five-year period.
Options can be exercised no later than ten years from the date of grant. The
exercise price for options granted under the 1992 Plan could be more or less
than the fair market value of the Common Stock on the date of grant. The 1992
Plan also provided for the payment of dividend equivalents to optionees
contingent upon the Company's total shareholder return as compared to that of a
group of peer companies during the five-year period ended December 31, 1996. No
such payments were made pursuant to the 1992 Plan.

   UGI CORPORATION DIRECTORS' EQUITY COMPENSATION PLAN (1997 DIRECTORS' PLAN).
On February 25, 1997, the Company's shareholders approved the 1997 Directors'
Plan, effective January 1, 1997. The 1997 Directors' Plan provides for annual
awards to each of the Company's nonemployee Board Directors of (i) 630 Units,
each representing an interest equivalent to one share of Common Stock, and (ii)
Common Stock in lieu of cash for a portion of their annual retainer fee.
Participants may also elect to receive any portion of their meeting fees and the
cash portion of their annual retainer in the form of Units. Directors with
accrued benefits under the former Retirement Plan for Outside Directors, which
was terminated effective December 31, 1996, were awarded a total of 36,140 Units
on January 1, 1997 equal in value to such accrued benefits. In addition, the
1997 Directors' Plan provides for the crediting of dividend equivalents to Unit
holders' accounts which amounts are converted to Units at the end of each
calendar year based upon the fair market value of Common Stock on that date. All
Units and dividend equivalents are fully vested when credited to a Director's
account. Generally, Units will be converted to shares of Common Stock upon
retirement or termination of service. During 1997, the Company awarded 7,255
Units under the 1997 Directors' Plan relating to annual awards and deferred
compensation.

   1992 DIRECTORS' STOCK PLAN (1992 DIRECTORS' PLAN). The 1992 Directors' Plan
expired December 31, 1996 for all purposes except the exercise of options
previously granted. Under the 1992 Directors' Plan, an option to purchase 1,000
shares of Common Stock was granted to each of the Company's nonemployee Board
Directors during the years 1992 to 1996. The exercise price for options granted
was the fair market value of the Common Stock on the date of grant. Options
expire no later than ten years from the date of grant and may, in certain
circumstances, expire earlier. One-fifth of each Director's options are
exercisable for each full year of service as a Director, whether before, at or
after the date of grant. In addition, Common Stock was paid to nonemployee
Directors in lieu of a portion of their annual retainer fees.

   1992 NON-QUALIFIED STOCK OPTION PLAN (1992 NON-QUALIFIED PLAN). Under the
1992 Non-Qualified Plan, as amended effective December 10, 1996, the Company may
grant options to acquire Common Stock to key employees who do not participate in
the 1992 Plan or the 1997 Plan. The number of shares of Common Stock which may
be made the subject of options under the 1992 Non-Qualified Plan may not exceed
500,000. The exercise price for options granted under the 1992 Non-Qualified
Plan is the fair market value of the Common Stock on the date of grant. For
options granted prior to December 10, 1996, one-fifth of an optionee's options
are exercisable for each full year of service completed after the date of grant.
Generally, options granted on and after December 10, 1996, are fully vested and
immediately exercisable. Options can be exercised no later than ten years from
the date of grant. At September 30, 1997, 136,825 shares of Common Stock were
available for future option grants under the 1992 Non-Qualified Plan.

   1997 AMERIGAS PROPANE, INC. LONG-TERM INCENTIVE PLAN (1997 PROPANE PLAN). On
October 28, 1996, the General Partner adopted the 1997 Propane Plan, effective
October 1, 1996. Under the 1997 Propane Plan, the General Partner may grant to
key employees the right to receive AmeriGas Partners Common Units, or cash
generally equivalent to the fair market value of such Common Units, on the
payment date. In addition, the 1997 Propane Plan provides for the crediting of
distribution equivalents to participants' accounts from the grant date through
the date of payment. Distribution equivalents will be paid in cash, and such
payment may, at the participant's request, be deferred. The number of Common
Units which may be made the subject of grants under the 1997 Propane Plan may
not exceed 500,000. Generally, each grant, to the extent it has not previously
been paid, will terminate when the participant ceases to be employed by the
General Partner.

                    UGI Corporation  34  1997 Annual Report
   26
   The actual number of Common Units (or their cash equivalent) that may be
delivered pursuant to the 1997 Propane Plan, as well as the amount of the
distribution equivalent, are contingent upon the date on which the requirements
for early conversion of Subordinated Units are met. If the requirements for
early conversion are not met by September 30, 2001, no payments under the 1997
Propane Plan will be made. During 1997, 84,500 Common Units were made the
subject of grants under the 1997 Propane Plan. At September 30, 1997, 415,500
Common Units were available for future grants.

   FAIR VALUE INFORMATION. The per share weighted-average fair value of stock
options granted under all stock plans during fiscal years 1997 and 1996 was
$2.96 and $2.67, respectively. These amounts were determined using the
Black-Scholes option pricing model which values options based on the stock price
at the grant date, the expected life of the option, the estimated volatility of
the stock, expected dividend payments, and the risk free interest rate over the
expected life of the option. The assumptions used for option grants during 1997
and 1996 are as follows:

                                                1997        1996
- ----------------------------------------------------------------
                                                   
Expected life of option                      6 YEARS     6 years
Expected volatility                            16.6%       19.2%
Expected dividend yield                         6.5%        6.3%
Risk free interest rate                         6.0%        5.9%
- ----------------------------------------------------------------

   The Company applies APB 25 and related interpretations in accounting for its
stock-based employee compensation plans. Total stock-based compensation expense
(income) recognized under the provisions of APB 25 was $3.6 million, $(3.7)
million and $1.5 million during 1997, 1996 and 1995, respectively. If
compensation cost had been determined under the fair value method prescribed by
SFAS 123, net income and earnings per share for 1997 and 1996 would have been as
follows:

                                                1997        1996
- ----------------------------------------------------------------
                                                     
Net earnings:
  As reported                                  $52.1       $39.5
  Pro forma                                     51.7        39.5
Earnings per share:
  As reported                                   1.57        1.19
  Pro forma                                     1.56        1.19
- ----------------------------------------------------------------

   STOCK OPTION ACTIVITY. Stock Option transactions under all plans for 1995,
1996, and 1997 follow:

                                      Shares       Average Option Price
- -----------------------------------------------------------------------
                                             
Shares under option --
  September 30, 1994               1,172,534             $20.218
- -----------------------------------------------------------------------
Granted                               62,667              20.317
Exercised                            (16,200)             20.125
Forfeited                             (8,000)             21.125
- -----------------------------------------------------------------------
Shares under option --
  September 30, 1995               1,211,001              20.225
- -----------------------------------------------------------------------
Granted                               31,000              20.673
Exercised                           (274,700)             20.123
Forfeited                            (90,000)             20.125
- -----------------------------------------------------------------------
Shares under option --
  September 30, 1996                 877,301              20.307
- -----------------------------------------------------------------------
Granted                              653,750              22.686
Exercised                           (348,050)             20.131
Forfeited                             (8,000)             21.422
- -----------------------------------------------------------------------
Shares under option --
  September 30, 1997               1,175,001              21.670
- -----------------------------------------------------------------------
Options exercisable 1995             677,980              20.289
Options exercisable 1996             647,868              20.326
Options exercisable 1997           1,140,958              21.432
- -----------------------------------------------------------------------

   For options outstanding as of September 30, 1997, the exercise prices range
from $18.625 to $26.250. The weighted-average remaining contractual life of
these options is 7.3 years.

11. COMMITMENTS AND CONTINGENCIES

The Company leases various buildings and transportation, data processing and
office equipment under operating leases. Certain of the leases contain renewal
and purchase options and also contain escalation clauses. The aggregate rental
expense for such leases was $27.8 million, $27.1 million and $21.9 million
during 1997, 1996 and 1995, respectively.
   Minimum future payments under operating leases having initial or remaining
noncancelable terms in excess of one year are as follows:

                                                                                After
                 1998         1999         2000         2001        2002        2002
- -------------------------------------------------------------------------------------
                                                             
Propane         $20.7        $16.8        $13.0        $10.2        $6.4       $15.3
Utilities         4.2          3.5          2.9          2.4         2.1         1.6
Other              .1           .1           -            -           -           -
- -------------------------------------------------------------------------------------
                $25.0        $20.4        $15.9        $12.6        $8.5       $16.9
- -------------------------------------------------------------------------------------

   Gas Utility has gas supply agreements with producers and marketers that
expire at various dates through 2000 and has agreements for pipeline
transportation and storage capacity that expire at various dates through 2017
and 2014, respectively. In addition, Gas Utility has short-term gas supply
agreements which permit it to purchase certain of its gas supply needs at spot
prices.

   Electric Utility has a power supply agreement with Pennsylvania Power and
Light, Inc. (PP&L) pursuant to which PP&L supplies all the electric power
required by Electric Utility, above that provided from other sources. The cost
of such electricity supplied by PP&L is based on PP&L's actual system costs.
During 1997, 1996 and 1995, approximately 53%, 52% and 50%, respectively, of
Electric Utility's total electric system output was supplied by PP&L. Electric
Utility has provided notice to PP&L of its intention to terminate this agreement
as of March 2001.

   The Partnership enters into contracts to purchase propane and UGI Energy
Services enters into contracts to purchase natural gas to meet a portion of
their supply requirements. Generally, such contracts have terms of less than one
year and call for payment based on either fixed prices or market prices at date
of delivery.

   The Partnership has succeeded to certain lease guarantee obligations of
Petrolane relating to Petrolane's divestiture of nonpropane operations prior to
its 1989 acquisition by QFB Partners. These leases are currently estimated to
aggregate approximately $67.0 million. The leases expire through 2010, and some
of them are currently in default. The Partnership has succeeded to the indemnity
agreement of Petrolane by which Texas Eastern Corporation (Texas Eastern), a
prior owner of Petrolane, agreed to indemnify Petrolane against any liabilities
arising out of the conduct of businesses that do not relate to, and are not a
part of, the propane business, including lease guarantees. To date, Texas
Eastern has directly satisfied defaulted lease obligations without the
Partnership's having to honor its guarantee. The Partnership believes the
probability that it will be required to directly satisfy such lease obligations
is remote.

   In addition, the Partnership has succeeded to Petrolane's agreement to
indemnify Shell Petroleum N.V. (Shell) for various scheduled claims that were
pending against Tropigas de Puerto Rico (Tropigas). This indemnification
agreement had been entered into by Petrolane in conjunction with Petrolane's
sale of the international operations of Tropigas to Shell in 1989. The
Partnership also succeeded to Petrolane's right to seek indemnity on these
claims first from International Controls Corp., which sold Tropigas to
Petrolane, and

                    UGI Corporation  35  1997 Annual Report
   27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Millions of dollars, except per share amounts and where indicated otherwise)

then from Texas Eastern. To date, neither the Partnership nor Petrolane has paid
any sums under this indemnity, but several claims by Shell, including claims
related to certain antitrust actions aggregating at least $68 million, remain
pending.

   The Company, along with other companies, has been named as a potentially
responsible party (PRP) in several administrative proceedings for the cleanup of
various waste sites, including some Superfund sites. Also, certain private
parties have filed, or threatened to file, suit against the Company to recover
costs of investigation and, as appropriate, remediation of several waste sites.
In addition, the Company has identified environmental contamination at several
of its properties and has voluntarily undertaken investigation and, as
appropriate, remediation of these sites in cooperation with appropriate
environmental agencies or private parties.

   With respect to a manufactured gas plant site in Concord, New Hampshire,
EnergyNorth Natural Gas, Inc. (EnergyNorth) filed suit against UGI Utilities
alone seeking UGI Utilities' allocable share of response costs associated with
remediating gas plant related contaminants at that site. In September 1997, UGI
Utilities reached a settlement pursuant to which it agreed to pay EnergyNorth a
portion of its remediation costs. The settlement did not materially affect the
Company's results of operations.

   At a manufactured gas plant site in Burlington, Vermont, the United States
Environmental Protection Agency has named 19 parties, including UGI Utilities,
as PRPs for gas plant contamination that resulted from the operations of a
former subsidiary of UGI Utilities. In September 1997, after several years of
study, a coordinating council of community groups and PRPs recommended a
remedial plan consisting of capping and monitoring the site. In December 1997,
Green Mountain Power Company, the lead PRP at the site, agreed in principle to
relieve UGI Utilities of any liability at the site on terms that would not
materially affect the Company's results of operations.

   At sites in which a former subsidiary of UGI Utilities operated a
manufactured gas plant, UGI Utilities should not have significant liability
because UGI Utilities generally is not legally liable for the obligations of its
subsidiaries. Under certain circumstances, however, courts have found parent
companies liable for environmental damage caused by subsidiary companies when
the parent company exercised such substantial control over the subsidiary that
the court concluded that the parent company either (i) itself operated the
facility causing the environmental damage or (ii) otherwise so controlled the
subsidiary that the subsidiary's separate corporate form should be disregarded.
There could be, therefore, significant future costs of an uncertain amount
associated with environmental damage caused by manufactured gas plants that UGI
Utilities owned or directly operated, or that were owned or operated by former
subsidiaries of UGI Utilities, if a court were to conclude that the level of
control exercised by UGI Utilities over the subsidiary satisfies the standard
described above. In many circumstances where UGI Utilities may be liable,
expenditures may not be reasonably quantifiable because of a number of factors,
including various costs associated with potential remedial alternatives, the
unknown number of other potentially responsible parties involved and their
ability to contribute to the costs of investigation and remediation, and
changing environmental laws and regulations.

   The Company's policy is to accrue environmental investigation and cleanup
costs when it is probable that a liability exists and the amount or range of
amounts can be reasonably estimated. The Company intends to pursue recovery of
any incurred costs through all appropriate means, including regulatory relief,
although such recovery cannot be assured. Under the terms of the Gas Utility
Base Rate Settlement, Gas Utility is permitted to amortize as removal costs
site-specific environmental investigation and remediation costs, net of related
third-party payments, associated with Pennsylvania sites. Gas Utility will be
permitted to include in rates, through future base rate proceedings, a five-year
average of such prudently incurred removal costs.

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

12. FINANCIAL INSTRUMENTS

The carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, short-term investments, accounts receivable, accounts payable
and bank loans approximate fair value because of the immediate or short-term
maturity of these financial instruments. The estimated fair values and related
carrying amounts of the Company's long-term debt and UGI Utilities Series
Preferred Stock at September 30 are as follows:

                                               Carrying         Estimated
                                                Amount          Fair Value
- --------------------------------------------------------------------------
                                                         
1997:
  Long-term debt:
    Propane                                     $691.1            $737.0
    Utilities                                    169.3             173.0
    Other                                          8.6               9.2
  UGI Utilities Series Preferred Stock            35.2              36.0

1996:
  Long-term debt:
    Propane                                     $692.5            $720.0
    Utilities                                    174.8             174.0
    Other                                          9.0               9.0
  UGI Utilities Series Preferred Stock            35.2              37.0
- --------------------------------------------------------------------------

   The estimated fair values of long-term debt included in the table above are
based upon current market prices and discounted present value methods calculated
using borrowing rates available for debt with similar credit ratings, terms and
maturities. The estimated fair values of UGI Utilities Series Preferred Stock
are based upon the fair values of redeemable preferred stock with similar credit
ratings and redemption features.

   Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of short-term investments and trade accounts
receivable. The Company invests available cash in investment-grade commercial
paper of industrial and other companies and in obligations of the U.S.
Government. The risk associated with trade accounts receivable is limited due to
the Company's large customer base and its dispersion across many different U.S.
markets. At September 30, 1997 and 1996, the Company had no significant
concentrations of credit risk.

   UGI Energy Services utilizes natural gas futures contracts to manage price
risk associated with fluctuations in the price of natural gas. At September 30,
1997, UGI Energy Services held futures contracts representing hedges of 6.4
million dekatherms of natural gas sold under firm commitments expiring through
March 1999. The unrealized gain on such contracts totaled $2.1 million at
September 30, 1997.

             UGI Corporation           36           1997 Annual Report
   28
13. MISCELLANEOUS INCOME

Miscellaneous income comprises the following:

                                     1997       1996        1995
- ----------------------------------------------------------------
                                                  
Interest income                     $ 6.3      $ 4.0       $ 5.2
Gain on sales of investments          8.2         -           -
Gain on sales of fixed assets         1.1        1.9          .7
Gas brokerage income                   -          -          1.4
Other                                 7.0        6.8         4.1
- ----------------------------------------------------------------
                                    $22.6      $12.7       $11.4
- ----------------------------------------------------------------

14. FORMATION OF AMERIGAS PARTNERS

On April 19, 1995, a wholly owned subsidiary of AmeriGas acquired by merger (the
"Petrolane Merger") the approximately 65% of Petrolane common shares outstanding
not already owned by UGI and AmeriGas. Under the terms of the Petrolane Merger
approved by Petrolane's Class B Common Stock (Class B Stock) shareholders (other
than UGI), the 6,850,562 shares of Petrolane's Class B Stock not held by UGI
were converted into the right to receive $16 per share in cash. The Petrolane
Merger consideration of approximately $109.6 million was financed with the
proceeds of a private placement of $110 million of First Mortgage Notes of the
Operating Partnership. On April 19, 1995, immediately after the Petrolane
Merger, the Company combined the propane distribution businesses of Petrolane,
AmeriGas Propane and AGP-2 into the Operating Partnership. On April 19, 1995 and
May 17, 1995, as part of an initial public offering, AmeriGas Partners sold to
the public a total of 17,602,000 Common Units at a price of $21.25 a unit.
AmeriGas Partners' capital at September 30, 1997 consists of 22,060,407 Common
Units and 19,782,146 Subordinated Units representing limited partner interests,
and a 1% general partner interest. The Company owns 4,347,272 Common Units, all
19,782,146 Subordinated Units, and an aggregate 2% general partner interest in
the Partnership.

   The net proceeds of approximately $307.0 million from the sale on April 19,
1995 of 15,452,000 Common Units and the net proceeds from the issuance of $100
million face value of AmeriGas Partners' Senior Notes, along with existing cash
balances of AmeriGas Propane and Petrolane, were used to repay Petrolane's
revolving credit loan, term loans and accrued interest and fees which were
assumed by the Operating Partnership. In addition, certain senior indebtedness
of Petrolane and AmeriGas Propane with a combined face value of $408 million was
assumed by the Operating Partnership and immediately exchanged for First
Mortgage Notes. As a result of this exchange, in April 1995 the Company recorded
an extraordinary loss of $21.8 million pre-tax ($13.2 million after-tax). In
addition, the Company expensed $5.9 million of net deferred tax benefits of
AmeriGas Propane and $5.8 million of net deferred tax benefits of Petrolane
(which amount is reflected in "Equity in Petrolane" in the 1995 Consolidated
Statement of Income) representing the Company's share of such tax benefits no
longer realizable by the Company as a result of the sale of Common Units to the
public. The write-off of tax benefits reduced 1995 income from continuing
operations by $11.7 million or $.36 per share.

   The following unaudited pro forma condensed consolidated financial
information of the Company for 1995 was derived from the historical financial
information of the Company and Petrolane and was prepared to reflect the effects
of the Petrolane Merger (which merger was treated as a purchase acquisition by
the Company in the form of a treasury stock acquisition by Petrolane) and the
Partnership Formation as if these transactions had taken place at the beginning
of fiscal 1995. The following unaudited pro forma condensed consolidated
financial information does not purport to present the results of operations of
the Company had the transactions described above actually been completed as of
the beginning of fiscal 1995 nor does it necessarily indicate results to be
expected in the future.

                                                             1995
- ------------------------------------------------------------------
                                                        (Unaudited)
                                                     
Revenues                                                 $1,244.5
Cost of sales                                              (636.7)
Depreciation and amortization                               (84.4)
Other costs and expenses                                   (400.0)
- ------------------------------------------------------------------
Operating income                                            123.4
Interest expense                                            (80.3)
Minority interest in AmeriGas Partners                        (.3)
Income taxes                                                (19.5)
Dividends on UGI Utilities Series Preferred Stock            (2.8)
- ------------------------------------------------------------------
Income from continuing operations                        $   20.5
- ------------------------------------------------------------------
Earnings per share from continuing operations            $    .63
- ------------------------------------------------------------------

   Significant pro forma adjustments reflected in the data above include (a) the
consolidation of the operations of Petrolane for periods prior to April 19, 1995
and the elimination of intercompany revenues and expenses; (b) a net reduction
in amortization expense resulting from the longer-term (40-year) amortization of
the excess purchase price over fair value of 65% of the net identifiable assets
of Petrolane, compared with the amortization of 65% of Petrolane's excess
reorganization value over 20 years; (c) an adjustment to interest expense
resulting from the retirement of approximately $377 million of Petrolane term
loans, the restructuring of Petrolane and AmeriGas Propane senior debt, and the
issuance of an aggregate $210 million face value of notes of AmeriGas Partners
and the Operating Partnership; (d) an adjustment to income taxes to reflect
income taxes on the Company's share of the Partnership's taxable income; and (e)
an adjustment to reflect the public unitholders' interest in the results of the
Partnership as minority interest.

15. INVESTMENT IN PETROLANE

The following table includes summarized condensed consolidated financial
information of Petrolane for the period September 24, 1994 to April 19, 1995:

                                                       September 24, 1994
                                                        to April 19, 1995
- -------------------------------------------------------------------------
                                                    
Revenues                                                    $ 372.1
Cost of sales                                                (203.2)
Depreciation and amortization                                 (27.4)
Other costs and expenses                                     (100.0)
- -------------------------------------------------------------------------
Operating income                                               41.5
Interest expense                                              (30.0)
Income taxes                                                  (10.1)
- -------------------------------------------------------------------------
Income before change in accounting                              1.4
Change in accounting for postemployment benefits                (.9)
- -------------------------------------------------------------------------
Net income                                                  $    .5
- -------------------------------------------------------------------------

              UGI Corporation        37        1997 Annual Report
   29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Millions of dollars, except per share amounts and where indicated otherwise)

   Prior to the Partnership Formation, AmeriGas Propane and Petrolane were
parties to a customer services agreement (Customer Services Agreement) pursuant
to which AmeriGas Propane served customers of closed Petrolane districts and
Petrolane served customers of closed AmeriGas Propane districts. These districts
were closed in order to achieve cost reductions and operational efficiencies in
overlapping geographical markets served by AmeriGas Propane and Petrolane. Fees
billed by Petrolane to AmeriGas Propane under the Customer Services Agreement
totaled $6.9 million in 1995 and are included in operating and administrative
expenses. Fees billed to Petrolane totaled $5.3 million in 1995 and are included
in Petrolane fee income.

   Prior to the Partnership Formation, UGI provided Petrolane with certain
financial, accounting, human resources, risk management, insurance, legal,
corporate communications, investor relations, treasury and corporate development
services. During 1995, UGI recorded management fee income of $6.8 million for
such services which amount is included in Petrolane fee income.

   Prior to the Partnership Formation, AmeriGas Management Company (AMC) and
AmeriGas Transportation Management Company (ATMC), first-tier subsidiaries of
UGI, provided general management, supervisory, administrative and transportation
services to Petrolane and AmeriGas Propane. For such services, AMC and ATMC each
received monthly fees from Petrolane in amounts which, together with fees
received from AmeriGas Propane, effectively reimbursed AMC and ATMC for costs
incurred to provide such services. During 1995, the Company recorded fee income
under these agreements of $8.4 million which amount is included in Petrolane fee
income.

16. SEGMENT INFORMATION

Reference is made to the schedule on page 20 for information on revenues,
operating income, identifiable assets, depreciation and amortization, and
capital expenditures for the Company's business segments for 1997, 1996 and
1995.

17. QUARTERLY DATA (UNAUDITED)

The following quarterly information includes all adjustments (consisting only of
normal recurring adjustments with the exception of those indicated below) which
the Company considers necessary for a fair presentation of such information.
Quarterly results fluctuate because of the seasonal nature of the Company's
businesses.

                                         December 31,               March 31,               June 30,               September 30,
                                       1996        1995        1997(a)    1996(b)      1997(c)     1996         1997(d)    1996(e)
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Revenues                             $529.6      $426.9       $576.4     $582.6       $284.1     $283.9       $251.9      $264.2
Operating income (loss)                89.6        62.7        107.7      111.7         13.1        3.8        (10.5)      (18.5)
Net income (loss)                      27.9        18.2         35.8       37.6         (1.2)      (3.7)       (10.4)      (12.6)
Net income (loss) per share             .84         .55         1.08       1.13         (.04)      (.11)        (.32)       (.38)
- ----------------------------------------------------------------------------------------------------------------------------------

(a)  Includes gain from the sale of the Partnership's 50% equity interest in
     Atlantic Energy, Inc., which owns and operates a liquefied petroleum gas
     storage terminal in Chesapeake, Virginia. The gain increased operating
     income by $4.7 million and net income by $1.6 million or $.05 per share.

(b)  Includes reductions in operating expenses of $4.4 million from the refund
     of insurance premium deposits and $3.3 million from a reduction in accrued
     environmental costs which increased net income by $2.7 million or $.08 per
     share.

(c)  Includes gain from sale of UTI Energy Corp. Common Stock which increased
     operating income by $2.1 million and decreased net loss by $1.4 million or
     $.04 per share.

(d)  Includes gain from sale of UTI Energy Corp. Common Stock which decreased
     operating loss by $1.4 million and net loss by $.9 million or $.03 per
     share.

(e)  Includes income from adjustments to incentive compensation accruals of $4.0
     million which decreased net loss by $2.1 million or $.06 per share.

                 UGI Corporation     38     1997 Annual Report
   30
REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
UGI Corporation

We have audited the accompanying consolidated balance sheet of UGI Corporation
and subsidiaries as of September 30, 1997 and the related consolidated
statements of income, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
UGI Corporation and subsidiaries as of September 30, 1997 and the results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.

[Arthur Anderson LLP LOGO]

Chicago, Illinois
November 14, 1997

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

To the Board of Directors and Stockholders of
UGI Corporation

We have audited the accompanying consolidated balance sheet of UGI Corporation
and subsidiaries as of September 30, 1996 and the related consolidated
statements of income, stockholders' equity and cash flows for the years ended
September 30, 1996 and 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the
consolidated financial statements of AmeriGas Propane, Inc. and subsidiaries, as
of September 30, 1996 and for the year ended September 30, 1996 and the period
from April 19, 1995 to September 30, 1995, which statements reflect total assets
constituting 65 percent, and total revenues constituting 65 and 31 percent,
respectively, of the related consolidated totals. Those statements were audited
by other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for AmeriGas Propane, Inc. and
subsidiaries for those periods, is based solely on the report of the other
auditors.

   We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 and the report of the other auditors provide a
reasonable basis for our opinion.

   In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of UGI Corporation and
subsidiaries as of September 30, 1996 and the consolidated results of their
operations and their cash flows for the years ended September 30, 1996 and 1995,
in conformity with generally accepted accounting principles.

   As discussed in Note 6 to the consolidated financial statements, the Company
changed its method of accounting for postemployment benefits in 1995.

[COOPERS & LYBRAND L.L.P. LOGO]

Philadelphia, Pennsylvania
November 22, 1996

                 UGI Corporation     39     1997 Annual Report
   31

Appendix to Exhibit 13.1 - Description of Graphic Material

Financial Review - page 10

Photograph of Mr. Charles L. Ladner, Senior Vice President Finance, UGI
Corporation.

Financial Review - page 10

Organizational Chart of UGI Corporation and subsidiaries representing UGI
Corporation and its three wholly owned subsidiaries AmeriGas, Inc. (AmeriGas),
UGI Enterprises, Inc. (Enterprises), and UGI Utilities, Inc. (which is
comprised of Gas Utility and Electric Utility).

The chart also reflects AmeriGas' wholly owned subsidiary, AmeriGas Propane,
Inc. (General Partner) and the General Partner's 58% ownership interest in
AmeriGas Partners, L.P. (AmeriGas Partners) the remaining 42% of which is
publicly owned. The General Partner serves as general partner for
AmeriGas Partners.

AmeriGas Partners has a 99% limited partner interest in AmeriGas Propane, L.P.
(Operating Partnership) and the General Partner holds a 1% general partner
interest in the Operating Partnership.

The chart also reflects Enterprises' wholly owned subsidiary, UGI Energy
Services, Inc. (UGI Energy Services).

Financial Review - page 11

Quotation of Mr. Charles L. Ladner
"To best build shareholder value, UGI's historic record of strong cash flows
and dividend growth must be accompanied by increased earnings. This goal was
achieved in 1997--and it remains our focus for the future."

Financial Review - page 15

Pie Chart of AmeriGas Partners capitalization reflecting the following
proportions:

Long-term debt - 61.6% of total capitalization;
Partners' capital - 35.9% of total capitalization;
Bank loans - 2.5% of total capitalization.

Financial Review - page 15

Pie Chart of UGI Utilities capitalization reflecting the following proportions:

Long-term debt - 35.8% of total capitalization;
Common equity - 42.5% of total capitalization;
Bank loans - 14.2% of total capitalization;
Preferred stock - 7.5% of total capitalization.
   32

Financial Review - page 16

Pie Chart of sources of cash for UGI Corporation reflecting in millions:

cash provided by operations of $172.0;
cash provided by debt issue of $51.4;
cash provided by disposals of assets of $14.4;
cash provided by common stock issued of $11.7.

Financial Review - page 16

Pie Chart of uses of cash for UGI Corporation reflecting in millions:

cash used for dividends and distributions of $86.0;
cash used for capital expenditures of $68.8;
cash used for short-term investments of $42.3;
cash used for debt repayments of $29.4;
cash used for common stock repurchased of $19.2;
cash used for acquisitions of $11.6;
cash used for other uses of $2.2.

   1
                                                                    EXHIBIT 13.2

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 8-K/A

                                 AMENDMENT NO. 1 TO
                         CURRENT REPORT DATED JULY 11, 1997

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

                                  JULY 11, 1997
                                (DATE OF REPORT)

                                 UGI CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         PENNSYLVANIA                1-11071              23-2668356
                                                 
(STATE OR OTHER JURISDICTION    (COMMISSION FILE       (I.R.S. EMPLOYER
      OF INCORPORATION)              NUMBER)           IDENTIFICATION NO.)

                                460 N. GULPH ROAD
                       KING OF PRUSSIA, PENNSYLVANIA 19406
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (610) 337-1000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

   2
UGI Corporation                                                      Form 8-K/A
Page 2                                                            July 11, 1997

ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

         In May 1996, Coopers & Lybrand L.L.P. ("C&L") was appointed by the
Audit Committee of the Board of Directors as the Company's independent public
accountants for the year ending September 30, 1997. That appointment was
approved by the Board of Directors and subsequently ratified by the Company's
shareholders at the Annual Meeting of Shareholders on February 25, 1997.

         In May 1997, the staff of the Securities and Exchange Commission (the
"Commission"), notified the Company that for the year ending September 30, 1997,
the Company's principal auditor must audit and assume the responsibility for
reporting on at least 50% of the assets and revenues of the Company on a
consolidated basis. As stated in their reports on the consolidated financial
statements of UGI Corporation and subsidiaries for each of the two most recent
fiscal years, C&L did not audit the consolidated financial statements of
AmeriGas Propane, Inc. and subsidiaries ("AmeriGas Propane") as of September 30,
1996 and 1995 and for the year ended September 30, 1996 and the period from
April 19, 1995 to September 30, 1995, which statements reflected total assets
and revenues constituting 65 and 68 percent, and 65 and 31 percent,
respectively, of the related consolidated totals of the Company. Those AmeriGas
Propane financial statements were audited by Arthur Andersen LLP ("AA"). AA
furnished its reports on those financial statements to C&L. C&L's reports on the
Company's consolidated financial statements for the two most recent fiscal
years, in so far as they relate to amounts included for AmeriGas Propane, are
based solely on the reports of AA. The reports contained no adverse opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles. Relying on the reports of AA, C&L was satisfied that it was
qualified to act as the Company's principal auditor.

In response to the comments of the staff of the Commission, management engaged
AA as the Company's independent public accountant (principal auditor),
effective July 11, 1997, to examine and report on the consolidated financial
statements of the Company for fiscal year 1997, and the prior engagement of C&L
as the Company's independent auditor was terminated. The decision to change
accountants was not recommended or approved by the Audit Committee of
the Board of Directors, however, it was ratified by the Board of Directors at 
the July 29, 1997 Board meeting.

         The Company is not aware of any disagreements with C&L during the
Company's two most recent fiscal years and through the date of this
report on any matters of accounting principles or practices, financial
statement disclosures, or auditing scope and procedures which, if not resolved
to the satisfaction of C&L, would have caused C&L to make reference to the
matters in their reports. 

         During the Company's two most recent fiscal years and through the date
of this report, the Company has had no reportable events as defined in Item 304
(a) (1)(v) of Regulation S-K.
   3
UGI Corporation                                                      Form 8-K/A
Page 3                                                            July 11, 1997

         The Company has requested that C&L furnish it with a letter addressed
to the Securities and Exchange Commission stating whether C&L agrees with the
above statements. A copy of that letter dated August 1, 1997 is filed as Exhibit
16 to this Amendment No. 1 on Form 8-K/A.

         During the Company's two most recent fiscal years ended September 30,
1996 and September 30, 1995 and through the date of engagement of AA, the
Company has not consulted with AA regarding any of the matters specified in Item
304 (a) (2) of Regulation S-K.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
(c)      Exhibits

         (16) Letter to the Securities and Exchange Commission from Coopers &
Lybrand L.L.P., dated August 1, 1997.

   4
UGI Corporation                                                      Form 8-K/A
Page 4                                                            July 11, 1997

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                      UGI CORPORATION
                                      (REGISTRANT)

                                      By: /s/ Brendan P. Bovaird
                                          -------------------------------------
                                          Brendan P. Bovaird
                                          Vice President and General Counsel
Date:  August 4, 1997

   5
                                    EXHIBIT INDEX

Exhibit No.             Description
- -----------             -----------
                     
   (16)                 Letter to the Securities and
                        Exchange Commission from
                        Coopers & Lybrand L.L.P. dated
                        August 1, 1997

                                         A-1
   6
                                                                     EXHIBIT 16

Coopers & Lybrand L.L.P.   101 East Kennedy Boulevard   telephone (813)229-0221
                           Suite 1500
                           Tampa, Florida 33602-5194    facsimile (813)229-3646

a professional services firm

August 1, 1997

Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC  20549

Gentlemen:

We have read the statements made by UGI Corporation (copy attached), which we
understand will be filed with the Commission, pursuant to Item 4 of Form 8-K,
as part of the Company's Report on Form 8-K/A dated July 11, 1997. We agree
with the statements concerning our Firm in such Form 8-K/A.

Very truly yours,

/s/ Coopers & Lybrand L.L.P.
   7
'                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 8-K/A

                                 AMENDMENT NO. 1 TO
                         CURRENT REPORT DATED JULY 11, 1997

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

                                  JULY 11, 1997
                                (DATE OF REPORT)

                                 UGI CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         PENNSYLVANIA                1-11071              23-2668356
                                                 
(STATE OR OTHER JURISDICTION    (COMMISSION FILE       (I.R.S. EMPLOYER
      OF INCORPORATION)              NUMBER)           IDENTIFICATION NO.)

                                460 N. GULPH ROAD
                       KING OF PRUSSIA, PENNSYLVANIA 19406
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (610) 337-1000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

   8
UGI Corporation                                                      Form 8-K/A
Page 2                                                            July 11, 1997

ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

         In May 1996, Coopers & Lybrand L.L.P. ("C&L") was appointed by the
Audit Committee of the Board of Directors as the Company's independent public
accountants for the year ending September 30, 1997. That appointment was
approved by the Board of Directors and subsequently ratified by the Company's
shareholders at the Annual Meeting of Shareholders on February 25, 1997.

         In May 1997, the staff of the Securities and Exchange Commission (the
"Commission"), notified the Company that for the year ending September 30, 1997,
the Company's principal auditor must audit and assume the responsibility for
reporting on at least 50% of the assets and revenues of the Company on a
consolidated basis. As stated in their reports on the consolidated financial
statements of UGI Corporation and subsidiaries for each of the two most recent
fiscal years, C&L did not audit the consolidated financial statements of
AmeriGas Propane, Inc. and subsidiaries ("AmeriGas Propane") as of September 30,
1996 and 1995 and for the year ended September 30, 1996 and the period from
April 19, 1995 to September 30, 1995, which statements reflected total assets
and revenues constituting 65 and 68 percent, and 65 and 31 percent,
respectively, of the related consolidated totals of the Company. Those AmeriGas
Propane financial statements were audited by Arthur Andersen LLP ("AA"). AA
furnished its reports on those financial statements to C&L. C&L's reports on the
Company's consolidated financial statements for the two most recent fiscal
years, in so far as they relate to amounts included for AmeriGas Propane, are
based solely on the reports of AA. The reports contained no adverse opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles. Relying on the reports of AA, C&L was satisfied that it was
qualified to act as the Company's principal auditor.

In response to the comments of the staff of the Commission, management engaged
AA as the Company's independent public accountant (principal auditor),
effective July 11, 1997, to examine and report on the consolidated financial
statements of the Company for fiscal year 1997, and the prior engagement of C&L
as the Company's independent auditor was terminated. The decision to change
accountants was not recommended or approved by the Audit Committee of
the Board of Directors, however, it was ratified by the Board of Directors at 
the July 29, 1997 Board meeting.

         The Company is not aware of any disagreements with C&L during the
Company's two most recent fiscal years and through the date of this
report on any matters of accounting principles or practices, financial
statement disclosures, or auditing scope and procedures which, if not resolved
to the satisfaction of C&L, would have caused C&L to make reference to the
matters in their reports. 

         During the Company's two most recent fiscal years and through the date
of this report, the Company has had no reportable events as defined in Item 304
(a) (1)(v) of Regulation S-K.
   9
UGI Corporation                                                      Form 8-K/A
Page 3                                                            July 11, 1997

         The Company has requested that C&L furnish it with a letter addressed
to the Securities and Exchange Commission stating whether C&L agrees with the
above statements. A copy of that letter dated August 1, 1997 is filed as Exhibit
16 to this Amendment No. 1 on Form 8-K/A.

         During the Company's two most recent fiscal years ended September 30,
1996 and September 30, 1995 and through the date of engagement of AA, the
Company has not consulted with AA regarding any of the matters specified in Item
304 (a) (2) of Regulation S-K.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS
(c)      Exhibits

         (16) Letter to the Securities and Exchange Commission from Coopers &
Lybrand L.L.P., dated August 1, 1997.

   10
UGI Corporation                                                      Form 8-K/A
Page 4                                                            July 11, 1997

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                      UGI CORPORATION
                                      (REGISTRANT)

                                      By: /s/ Brendan P. Bovaird
                                          -------------------------------------
                                          Brendan P. Bovaird
                                          Vice President and General Counsel
Date:  August 4, 1997

   1
                                                                      EXHIBIT 21

                          UGI CORPORATION SUBSIDIARIES

                                                                                STATE OF
                                   SUBSIDIARY                                INCORPORATION                 OWNERSHIP
                                   ----------                                -------------                 ---------
                                                                                                     
          AMERIGAS, INC.                                                           PA                         100%
               FOUR FLAGS DRILLING COMPANY, INC.                                   PA                         100%
                  Four Flags Holding Company                                       DE                         100%
               AMERIGAS PROPANE, INC.(1)                                           PA                         100%
                    AmeriGas Partners, L.P.                                        DE                         (2)
                         AmeriGas Finance Corp.                                    DE                         100%
                    AmeriGas Propane, L.P.                                         DE                         (3)
                         AmeriGas Propane Parts &                                  PA                         100%
                           Service, Inc.
                         Northwest LPG Supply Ltd.                               Canada                       100%
                         Petrolane Offshore Limited                             Bermuda                       100%
                   Petrolane Incorporated                                          PA                         100%
                   AmeriGas Technology Group, Inc.                                 PA                         100%
- ----------------------------------------------------------------------------------------------------------------------
          ASHTOLA PRODUCTION COMPANY                                               PA                         100%
               CRYOTEX, INCORPORATED                                               DE                         100%
               KEYSTONE OILFIELD SUPPLY CO.                                        PA                         100%
               UGI ETHANOL DEVELOPMENT CORPORATION                                 PA                         100%
- ----------------------------------------------------------------------------------------------------------------------
          NORTHFIELD HOLDING COMPANY                                               DE                         100%
- ----------------------------------------------------------------------------------------------------------------------
          UGI ENTERPRISES, INC.                                                    PA                         100%
               UGI ENERGY SERVICES, INC.                                           PA                         100%
                    Energy Services Holding Company                                DE                         100%
               UGI INTERNATIONAL ENTERPRISES, INC.                                 PA                         100%
               UGI BLACK SEA ENTERPRISES, INC.                                     PA                         100%
               UGI POWER SUPPLY, INC.                                              PA                         100%
               UGI INTERNATIONAL (CHINA), INC.                                     DE                         100%
               UGI INTERNATIONAL (ROMANIA), INC.                                   PA                         100%
               UGI ROMANIA, INC.                                                   PA                         100%

   2

                                                                                                     
          UGI PROPERTIES, INC.                                                     PA                         100%
- ----------------------------------------------------------------------------------------------------------------------
          UGI UTILITIES, INC.                                                      PA                         100%
               UGI DEVELOPMENT COMPANY                                             PA                         100%
- ----------------------------------------------------------------------------------------------------------------------
          UNITED VALLEY INSURANCE COMPANY                                          VT                         100%

(1)      General Partner of AmeriGas Partners, L.P. and AmeriGas Propane, L.P.,
         Delaware limited partnerships.

(2)     AmeriGas Propane, Inc. owns 100% of the general partnership interest and
        38.5% of the limited partnership interest in AmeriGas Partners, L.P.;
        Petrolane Incorporated owns 18.5% of the limited partnership interest in
        AmeriGas Partners, L.P.

(3)      AmeriGas Propane, Inc. owns 100% of the general partnership interest in
         AmeriGas Propane, L.P.; AmeriGas Partners, L.P. owns 100% of the
         limited partnership interest in AmeriGas Propane, L.P.
   1

                                                                  EXHIBIT (23.1)

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
reports dated November 14, 1997, on the consolidated financial statements and
financial statement schedules of UGI Corporation and subsidiaries for the year
ended September 30, 1997, included (or incorporated by reference) in UGI
Corporation's Annual Report on Form 10-K for the fiscal year ended September 30,
1997, into UGI Corporation's previously filed S-8 Registration Statement No.
33-47319; Form S-3 Registration Statement No. 33-78776; and Form S-8
Registration Statement Nos. 33-61722, 333-22305 and 333-37093. 

Arthur Andersen LLP
Chicago, Illinois
December 22, 1997

   1

                                                                  EXHIBIT (23.2)

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report dated November 22, 1996, on the consolidated financial statements of
AmeriGas Propane, Inc. and subsidiaries for the fiscal year ended September 30,
1996 and the period April 19, 1995 to September 30, 1995, included in UGI
Corporation's Annual Report on Form 10-K for the fiscal year ended September 30,
1997, into UGI Corporation's previously filed S-8 Registration Statement No.
33-47319; Form S-3 Registration Statement No. 33-78776; and Form S-8
Registration Statement Nos. 33-61722, 333-22305 and 333-37093.

Arthur Andersen LLP
Chicago, Illinois
December 22, 1997

   1

                                                                  EXHIBIT (23.3)

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statements of
UGI Corporation on Form S-8 (File No. 33-47319), Form S-3 (File No. 33-78776),
Form S-8 (File No. 33-61722), Form S-8 (File No. 333-22305) and Form S-8 (File
No. 333-37093) of our reports dated November 22, 1996 on our audits of the
consolidated financial statements and financial statement schedules of UGI
Corporation and subsidiaries for the years ended September 30, 1996 and 1995,
which reports are included (or incorporated by reference) in UGI Corporation's
Annual Report on Form 10-K for the year ended September 30, 1997.

COOPERS & LYBRAND L.L.P

2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 22, 1997

  

 5

THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT OF UGI CORPORATION AND
SUBSIDIARIES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN UGI
CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1997.

 0000884614
 UGI CORPORATION
 1,000

                   12-MOS
                          SEP-30-1997
                             OCT-01-1996
                               SEP-30-1997
                                          64,000
                                    65,400
                                  129,600
                                    11,300
                                     95,600
                               403,900
                                       1,397,300
                                 410,100
                               2,151,700
                          404,500
                                        844,800
                           32,200
                                          0
                                       393,700
                                     (17,600)
                 2,151,700
                                      1,642,000
                             1,642,000
                                          938,800
                                  938,800
                                     0
                                     0
                              83,100
                                 98,500
                                    43,600
                             52,100
                                       0
                                      0
                                            0
                                    52,100
                                     1.57
                                     1.57

   1
                                                                EXHIBIT 99
FORWARD-LOOKING STATEMENTS

         In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, UGI Corporation ("UGI" or the
"Company") is hereby filing cautionary statements identifying important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements of the Company made by or on behalf of
the Company.

RISK FACTORS

         The financial and operating performance of UGI Corporation is subject
to risks and uncertainties, all of which are difficult to predict, and many of
which are beyond the control of the Company's management. Forward-looking
statements concerning the Company's performance may differ materially from
actual results because of these risks and uncertainties. They include, but are
not limited to:

         1. Weather conditions;

         2. price and availability of all energy products, including
            natural gas, propane and oil, and the capacity to transport to
            market areas;

         3. governmental legislation and regulations;

         4. local economic conditions;

         5. labor relations;

         6. environmental claims;

         7. competition from the same and alternative energy sources;

         8. operating hazards and other risks incidental to generating and
            distributing electricity and transporting, storing, and distributing
            natural gas and propane;

         9. energy efficiency and technology trends;

         10. distributions from subsidiaries;

         11. interest rates; and

         12. large customer defaults.