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                       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, 2004

                         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 OFFICES) (ZIP CODE)

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

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

     TITLE OF CLASS                                    NAME OF EACH EXCHANGE
                                                        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 March 31, 2004 was $1,639,692,923.

At November 1, 2004 there were 51,211,198 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, 2004 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 23, 2005 are incorporated
by reference into Part III of this Form 10-K.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
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                                TABLE OF CONTENTS

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PART I:                          ...................................................................       1

           Items 1. and 2.       Business and Properties............................................       1

           Item 3.               Legal Proceedings..................................................      22

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

PART II:                         ...................................................................      25

           Item 5.               Market for Registrant's Common Equity, Related Stockholder
                                 Matters and Issuer Purchases of Equity Securities..................      25

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

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

           Item 7A.              Quantitative and Qualitative Disclosures About Market Risk.........      28

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

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

           Item 9A.              Controls and Procedures............................................      28

           Item 9B.              Other Information..................................................      29

PART III:                        ...................................................................      30

           Item 10.              Directors and Executive Officers of Registrant.....................      30

           Item 11.              Executive Compensation.............................................      30

           Item 12.              Security Ownership of Certain Beneficial Owners and Management
                                 and Related Stockholder Matters....................................      30

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

           Item 14.              Principal Accountant Fees and Services.............................      31

                                                                                                         PAGE
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PART IV:                         ...................................................................      35

           Item 15.              Exhibits and Financial Statement Schedules.........................      35

                                 Signatures.........................................................      48

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

                                      (ii)

PART I:

ITEMS 1. AND 2. BUSINESS AND PROPERTIES

CORPORATE OVERVIEW

      UGI Corporation is a holding company that distributes and markets energy
products and related services through subsidiaries and joint venture affiliates.
We are a domestic and international distributor of propane and butane, ("LPG");
a provider of natural gas and electric service through regulated local
distribution utilities; a generator of electricity through our ownership
interests in electric generation facilities; a regional marketer of energy
commodities; and a provider of heating and cooling services. Our subsidiaries
operate principally in the following five business segments:

            -     AmeriGas Propane

            -     International Propane

            -     Gas Utility

            -     Electric Utility

            -     Energy Services

      The AmeriGas Propane segment consists of the propane distribution business
of AmeriGas Partners, L.P., ("AmeriGas Partners" or the "Partnership"), which is
the nation's largest retail propane distributor. The Partnership's sole general
partner is our subsidiary, AmeriGas Propane, Inc. ("AmeriGas Propane" or the
"General Partner"). The common units of AmeriGas Partners represent limited
partner interests in a Delaware limited partnership; they trade on the New York
Stock Exchange under the symbol "APU." We have an effective 46% ownership
interest in the Partnership; the remaining interest is publicly held. See Note 1
to the Company's Consolidated Financial Statements.

      The International Propane segment consists of the LPG distribution
businesses of our subsidiaries Antargaz and Flaga, and our joint venture in
China. Antargaz is one of the largest distributors of LPG in France. Flaga is
the largest LPG distributor in Austria and one of the largest suppliers in the
Czech Republic and Slovakia. In China, we participate in an LPG joint venture
business in the Nantong region.

      On March 31, 2004, we purchased the approximate 80.5% interest in Antargaz
which we did not already own. This acquisition significantly increased the
Company's international operations, and beginning in fiscal year 2005, will also
significantly increase the percentage of the Company's earnings derived from LPG
distribution. For more information on the Antargaz acquisition, see Note 3 to
the Company's Consolidated Financial Statements.

      The Gas Utility segment consists of the regulated natural gas distribution
business ("Gas Utility") of our subsidiary UGI Utilities, Inc. ("Utilities"),
serving approximately 300,000 customers in eastern Pennsylvania. The Electric
Utility segment consists of the regulated electric

                                        1

distribution business ("Electric Utility") of Utilities, serving approximately
62,000 customers in northeastern Pennsylvania. Gas Utility and Electric Utility
are regulated by the Pennsylvania Public Utility Commission ("PUC").

      The Energy Services segment consists of non-utility, energy-related
businesses conducted by a number of subsidiaries. These businesses include (i)
marketing of natural gas, oil and electricity in the eastern region of the
United States under the trade names GASMARK(R) and POWERMARK(R), and (ii)
operating electric generation assets and liquefied natural gas and propane
peak-shaving plants in eastern Pennsylvania. In November 2004, Energy Services
acquired a propane import and storage facility in Chesapeake, Virginia.

      We also own and operate a heating, ventilation, air conditioning and
refrigeration service business serving over 100,000 customers in the
Mid-Atlantic region.

BUSINESS STRATEGY

      Since 1999, our strategic direction has focused on growing our propane,
natural gas and electric distribution businesses while seeking additional
related and complementary growth opportunities. We are employing our core
competencies from our existing businesses, as well as using our national scope,
international experience, extensive asset base and access to customers, to
accelerate growth in our existing business, as well as related and complementary
businesses. During fiscal year 2004, we completed a number of transactions in
pursuit of this strategy, most importantly the acquisition of the approximate
80.5% ownership interest in Antargaz which we did not already own.

CORPORATE INFORMATION

      UGI was incorporated in Pennsylvania in 1991. UGI Corporation is not
subject to regulation by the PUC. It is also exempt from registration as a
holding company and not otherwise subject to the Public Utility Holding Company
Act of 1935, except for Section 9(a)(2), which regulates the acquisition of
voting securities of an electric or gas utility company. Our executive offices
are located at 460 North Gulph Road, King of Prussia, Pennsylvania 19406, and
our telephone number is (610) 337-1000. In this report, the terms "Company" and
"UGI," as well as the terms "our," "we," and "its," are sometimes used as
abbreviated references to UGI Corporation or, collectively, UGI Corporation and
its consolidated subsidiaries. Similarly, the terms "AmeriGas Partners" and the
"Partnership" are sometimes used as abbreviated references to AmeriGas Partners,
L.P. or, collectively, AmeriGas Partners, L.P. and its subsidiaries.

      The Company's corporate website can be found at www.ugicorp.com. The
Company makes available free of charge at this website (under the "Investor
Relations and Corporate Governance-SEC filings" caption) copies of its reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, including its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q and its Current Reports on Form 8-K. The Company's Principles of
Corporate Governance, Code of Ethics for the Chief Executive Officer and Senior
Financial Officers, Code of Business Conduct and Ethics for Directors, Officers
and Employees, and charters of the Corporate Governance, Audit and Compensation
and Management Development Committees of the Board of Directors are also
available on the Company's

                                        2

website, under the caption "Investor Relations and Corporate
Governance-Corporate Governance." All of these documents are also available free
of charge by writing to Robert W. Krick, Vice President and Treasurer, UGI
Corporation, P.O. Box 858, Valley Forge, PA 19482.

FORWARD-LOOKING STATEMENTS

      Information contained in this Annual Report on Form 10-K may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
statements use forward-looking words such as "believe," "plan," "anticipate,"
"continue," "estimate," "expect," "may," "will," or other similar words. These
statements discuss plans, strategies, events or developments that we expect or
anticipate will or may occur in the future.

      A forward-looking statement may include a statement of the assumptions or
bases underlying the forward-looking statement. We believe that we have chosen
these assumptions or bases in good faith and that they are reasonable. However,
we caution you that actual results almost always vary from assumed facts or
bases, and the differences between actual results and assumed facts or bases can
be material, depending on the circumstances. When considering forward-looking
statements, you should keep in mind the following important factors which could
affect our future results and could cause those results to differ materially
from those expressed in our forward-looking statements: (1) adverse weather
conditions resulting in reduced demand; (2) cost volatility and availability of
propane, butane, oil, electricity and natural gas and the capacity to transport
them to market areas; (3) changes in domestic and foreign laws and regulations,
including safety, tax and accounting matters; (4) competitive pressures from
alternative energy sources, including alternative energy sources becoming
available through, for example, the extension of natural gas lines; (5) failure
to acquire new customers thereby reducing or limiting an increase in revenues;
(6) liability for environmental claims; (7) customer conservation measures and
improvements in energy efficiency and technology resulting in reduced demand;
(8) adverse labor relations; (9) large customer, counterparty or supplier
defaults; (10) liability in excess of insurance coverage for personal injury and
property damage arising from explosions and other catastrophic events, including
acts of terrorism, resulting from operating hazards and risks incidental to
generating and distributing electricity and transporting, storing and
distributing natural gas, propane and LPG; (11) political, regulatory and
economic conditions in the United States and foreign countries; (12) interest
rate fluctuations and other capital market conditions, including foreign
currency rate fluctuations, particularly in the euro; (13) reduced distributions
from subsidiaries; and (14) the timing and success of the Company's efforts to
develop new business opportunities.

      These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors could also
have material adverse effects on future results. We undertake no obligation to
update publicly any forward-looking statement whether as a result of new
information or future events except as required by the federal securities laws.

                                        3

                                AMERIGAS PROPANE

      Our domestic propane distribution business is conducted through AmeriGas
Partners. As of September 30, 2004, the Partnership operated from approximately
650 district locations in 46 states. AmeriGas Propane manages the Partnership.
Although our consolidated financial statements include 100% of the Partnership's
revenues, assets and liabilities, our net income reflects only our 46% effective
interest in the income or loss of the Partnership, due to the publicly-owned
limited partner interest. See Note 1 to the Company's Consolidated Financial
Statements.

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, motor fuel and industrial users to whom natural gas is not readily
available. 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.

PRODUCTS, SERVICES AND MARKETING

      As of September 30, 2004, the Partnership distributed propane to
approximately 1.3 million customers from locations in 46 states. The Partnership
also sells, installs and services propane appliances, including heating systems.
In certain markets, the Partnership also installs and services 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. 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, motor fuel, agricultural and wholesale. Approximately 82%
of the Partnership's fiscal year 2004 sales (based on gallons sold) were to
retail accounts and approximately 18% were to wholesale customers. Sales to
residential customers in fiscal 2004 represented approximately 42% of retail
gallons sold; industrial/commercial customers 33%; motor fuel customers 12%; and
agricultural customers 7%. Transport gallons, which are large-scale deliveries
to retail customers other than residential, accounted for 6% of 2004 retail
gallons. No single customer represents, or is anticipated to represent, more
than 5% of the Partnership's consolidated revenues.

                                        4

      The Partnership continues to expand its PPX Prefilled Propane Xchange
program ("PPX (R)"). At September 30, 2004, PPX was available at approximately
21,800 retail locations throughout the United States. Sales of our PPX grill
cylinders to retailers are included in the commercial/industrial market. The PPX
program enables consumers to exchange their empty 20-pound propane grill
cylinders for filled cylinders at various retail locations such as home centers,
mass merchandisers and grocery and convenience stores.

      In the residential market, which includes both conventional and
manufactured housing, 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. 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. As a motor
fuel, propane is burned in internal combustion engines that power over-the-road
vehicles, forklifts and stationary engines. Agricultural uses include tobacco
curing, chicken brooding and crop drying. In its wholesale operations, the
Partnership principally sells propane to large industrial end-users and other
propane distributors.

      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 3,000 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 120 gallons to approximately 1,200 gallons. The Partnership also
delivers propane to retail customers in portable cylinders with capacities of 4
to 24 gallons. Some of these deliveries are made to the customer's location,
where empty cylinders are either picked up for replenishment or filled in place.

PROPANE SUPPLY AND STORAGE

      The Partnership has over 200 domestic and international sources of supply,
including the spot market. Supplies of propane from the Partnership's sources
historically have been readily available. During the year ended September 30,
2004, over 90% of the Partnership's propane supply was purchased under supply
agreements with terms of 1 to 3 years. Approximately 83% of the volumes
purchased under those agreements were from 10 suppliers, including BP Products
North America Inc. and its affiliate BP Marketing Inc. (approximately 28%);
Dynegy Midstream Services (approximately 17%); and Enterprise Products Operating
LP and its affiliate Canadian Enterprises Gas Products Ltd. (approximately 14%).
The availability of propane supply is dependent upon, among other things, the
severity of winter weather, the price and availability of competing fuels such
as natural gas and crude oil, and the availability of imported supply. Although
no assurance can be given that supplies of propane will be readily available in
the future, management currently expects to be able to secure adequate supplies
during fiscal year 2005. If supply from major sources were interrupted, however,
the cost of procuring replacement supplies and transporting those supplies from
alternative locations might be materially higher and, at least on a short-term
basis, margins could be affected. Aside from BP, Dynegy and Enterprise Products,
no single supplier provided more than 10% of the Partnership's total propane
supply in fiscal year 2004. In certain market areas, however, some suppliers
provide

                                        5

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.

      During fiscal year 2004, 92% of the Partnership's supply contracts
provided for pricing based upon (i) index formulas using the current prices
established at major storage points such as Mont Belvieu, Texas, or Conway,
Kansas, or (ii) posted prices at the time of delivery. In addition, some
agreements provided 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 large storage
facilities in Arizona, Pennsylvania and Virginia, as well as at smaller
facilities in several other states.

      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. Product cost increases can be
triggered by periods of severe cold weather, supply interruptions, increases in
the prices of base commodities such as crude oil and natural gas, or other
unforeseen events. The General Partner has adopted supply acquisition and
product cost risk management practices to reduce the effect of volatility on
selling prices. These practices currently include the use of summer storage,
forward purchases and derivative commodity instruments such as options and
propane price swaps. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Market Risk Disclosures."

                                        6

      The following graph shows the average 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

                      [AVERAGE PROPANE SPOT PRICES CHART]

         Mont Belvieu   Conway
                 
Oct-99     45.4550     43.3900
Nov-99     43.4410     38.7780
Dec-99     42.9532     35.2314
Jan-00     56.1090     42.2140
Feb-00     59.7500     47.2630
Mar-00     51.1820     47.8180
Apr-00       46.88       43.64
May-00       51.31       50.81
Jun-00       55.47       56.22
Jul-00       54.88       56.29
Aug-00       58.54       63.52
Sep-00       64.21       70.95
Oct-00       61.82       64.05
Nov-00       60.71       60.45
Dec-00       77.63       79.75
Jan-01       77.27       83.03
Feb-01       59.39       63.03
Mar-01       54.94       57.12
Apr-01       54.37       60.26
May-01       51.20       56.90
Jun-01       43.17       47.70
Jul-01       38.87       43.27
Aug-01       41.54       45.71
Sep-01       41.67       46.53
Oct-01       39.48       44.19
Nov-01       33.04       35.19
Dec-01       30.43       30.34
Jan-02       29.05       26.60
Feb-02       31.20       27.92
Mar-02       37.95       35.93
Apr-02       41.52       40.07
May-02       40.69       38.09
Jun-02       37.51       35.25
Jul-02       37.19       35.47
Aug-02       41.49       41.53
Sep-02       47.17       45.93
Oct-02       47.95       47.12
Nov-02       47.26       48.01
Dec-02       52.40       52.32
Jan-03       60.38       57.70
Feb-03       77.30       73.03
Mar-03       62.77       57.09
Apr-03       50.42       50.28
May-03       54.09       55.41
Jun-03       55.98       59.71
Jul-03       53.01       58.90
Aug-03       54.84       63.63
Sep-03       52.00       59.44
Oct-03       55.44       65.21
Nov-03       54.66       58.12
Dec-03       62.87       64.15
Jan-04       74.35       67.56
Feb-04       69.98       61.99
Mar-04       58.64       56.35
Apr-04       60.62       58.55
May-04       67.65       64.37
Jun-04       67.12       64.27
Jul-04       74.21       71.65
Aug-04       83.84       86.44
Sep-04       80.18       81.98

COMPETITION

      Propane competes 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, service, 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. 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,

                                        7

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

      In the motor fuel market, propane competes with gasoline and diesel fuel
as well as electric batteries and fuel cells. Wholesale propane distribution is
a highly competitive, low margin business. Propane sales to other retail
distributors and large-volume, direct-shipment industrial end-users are price
sensitive and frequently involve a competitive bidding process.

      The retail propane industry is mature, with only modest growth in total
demand for the product foreseen. Therefore, the Partnership's ability to grow
within the industry is dependent on its ability to acquire other retail
distributors and to achieve internal growth, which includes expansion of the PPX
program (through which consumers can exchange an empty propane grill cylinder
for a filled one) and Strategic Accounts program (through which the Partnership
encourages large, multi-location propane users to enter into a supply agreement
with it rather than with many small suppliers), as well as the success of its
sales and marketing programs designed to attract and retain customers. The
failure of the Partnership to retain and grow its customer base would have an
adverse effect on its results.

      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. In recent years, some rural electric cooperatives and fuel oil
distributors have expanded their businesses to include propane distribution and
the Partnership competes with them as well. The ability to compete effectively
depends on providing high quality customer service, maintaining competitive
retail prices and controlling operating expenses.

      Based on the most recent annual survey by the American Petroleum
Institute, the 2002 domestic retail market for propane (annual sales for other
than chemical uses) was approximately 11.9 billion gallons and, based on LP-GAS
magazine rankings, 2003 sales volume of the ten largest propane companies
(including AmeriGas Partners) represented approximately 36% of domestic retail
sales. Management believes the Partnership's 2004 retail volume represents 9% of
the domestic retail market.

PROPERTIES

      As of September 30, 2004, the Partnership owned approximately 89% 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 owns a 600,000 barrel
refrigerated, above-ground storage facility located on leased property in
California. The California facility, which the Partnership operates, is
currently leased to several refiners for the storage of butane.

                                        8

      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. As of September 30, 2004, the
Partnership operated a transportation fleet with the following assets:

APPROXIMATE QUANTITY & EQUIPMENT TYPE               % OWNED          % LEASED
                                                               
         430      Trailers                             94                6
         240      Tractors                             39               61
         180      Railroad tank cars                    0              100
       2,600      Bobtail trucks                       19               81
         350      Rack trucks                          20               80
       2,150      Service and delivery trucks          21               79

Other assets owned at September 30, 2004 included approximately 900,000
stationary storage tanks with typical capacities of 121 to 2,000 gallons and
approximately 2.3 million portable propane cylinders with typical capacities of
1 to 120 gallons. The Partnership also owned approximately 5,300 large volume
tanks which are used for its own storage requirements. The Partnership's
subsidiary, AmeriGas Propane, L.P. ("AmeriGas OLP") has debt secured by liens
and mortgages on its real and personal property. AmeriGas OLP owns approximately
67% of the Partnership's property, plant and equipment.

TRADE NAMES, TRADE AND SERVICE MARKS

      The Partnership markets propane principally under the "AmeriGas(R),"
"America's Propane Company(R)" and "PPX Prefilled Propane Xchange(R)" trade
names and related service marks. UGI owns, directly or indirectly, all the
right, title and interest in the "AmeriGas" and related trade and service marks.
The General Partner owns all right, title and interest in the "America's Propane
Company" and "PPX Prefilled Propane Xchange" trade names and related service
marks. The Partnership has an exclusive (except for use by UGI, AmeriGas, Inc.
and the General Partner), royalty-free license to use these names and trade and
service marks. UGI and the General Partner each have the option to terminate its
respective license agreement (on 12 months prior notice in the case of UGI),
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, the General Partner has the option
to terminate its license agreement upon payment of a fee equal to the fair
market value of the licensed trade names. UGI has a similar termination option,
however, UGI must provide 12 months prior notice in addition to paying the fee.

SEASONALITY

      Because many customers use propane for heating purposes, the Partnership's
retail sales volume is seasonal, with approximately 59% of the Partnership's
fiscal year 2004 retail sales volume occurring during the five-month peak
heating season from November through March. As a result of this seasonality,
sales are higher in the Partnership's first and second fiscal quarters

                                        9

(October 1 through March 31). 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. For historical information on national weather statistics, 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 and the operation of bulk
storage LPG terminals. These laws include, among others, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or, the "Superfund Law"), the Clean Air
Act, the Occupational Safety and Health Act, the Homeland Security Act of 2002,
the Emergency Planning and Community Right to Know Act, the Clean Water Act and
comparable state statutes. CERCLA imposes joint and several liability on certain
classes of persons considered to have contributed to the release or threatened
release of a "hazardous substance" into the environment without regard to fault
or the legality of the original conduct. 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 Notes 1 and 12 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. With respect to general operations, National Fire Protection
Association ("NFPA") 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 latest version of NFPA Pamphlet
No. 58, adopted by a number of states, requires certain stationary cylinders
that are filled in place to be re-qualified periodically. Management believes
that the policies and 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
and the Homeland Security Act of 2002. These regulations cover the security of
and transportation of hazardous materials and are administered by the United
States Department of Transportation ("DOT"). 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 gas 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

                                       10

written procedures to minimize the hazards resulting from gas pipeline
emergencies, and keep records of inspections and testing. Operators are subject
to the Pipeline Safety Improvement Act of 2002, which, among other things,
protects from adverse employment actions employees who provide information to
their employers or to the federal government as to pipeline safety.

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, 2004, the General
Partner had approximately 6,100 employees, including approximately 330 temporary
and part-time employees, working on behalf of the Partnership. UGI also performs
certain financial and administrative services for the General Partner on behalf
of the Partnership and is reimbursed by the Partnership.

                              INTERNATIONAL PROPANE

      We conduct our international LPG distribution business principally in
Europe through our wholly owned subsidiaries Antargaz and Flaga. In March 2004,
we purchased the remaining approximate 80.5% equity interest in Antargaz which
we did not already own. Antargaz operates in France; Flaga operates in Austria,
the Czech Republic and Slovakia. During fiscal year 2004, Antargaz and Flaga
sold approximately 336 million and 35 million gallons of LPG, respectively. Our
joint venture in China sold approximately 22 million gallons of LPG during
fiscal year 2004.

ANTARGAZ

PRODUCTS, SERVICES AND MARKETING

      Antargaz's customer base consists of residential, commercial, agricultural
and motor fuel customer accounts that use LPG for space heating, cooking, water
heating, process heat and transportation. Antargaz sells LPG in cylinders, and
in small, medium and large bulk volumes stored in tanks. Sales of LPG are also
made to service stations to accommodate vehicles that run on LPG ("LPGc").
Antargaz sells LPG in cylinders to approximately 28,000 retail outlets such as
supermarkets, individually owned stores and gas stations. At September 30, 2004,
Antargaz had approximately 211,000 bulk customers and approximately 5 million
cylinders in circulation. Approximately 66% of Antargaz' sales (based on
volumes) for the 12 months ended September 30, 2004 were cylinder and small
bulk, 13% medium bulk, 19% large bulk, and 2% to service stations for
automobiles. Antargaz also engages in wholesale sales of LPG and provides
logistic, storage and other services to third-party LPG distributors. No single
customer represents, or is anticipated to represent, more than 5% of total
revenues for Antargaz.

      Sales to small bulk customers represent the largest segment of Antargaz's
business in terms of volume, revenue and margin. Small bulk customers are
primarily residential and small business users such as restaurants that use LPG
mainly for heating and cooking. Small bulk customers also include
municipalities, which use LPG for heating sports arenas and swimming pools, and
the poultry industry, for use in chicken breeding.

                                       11

      The principal end-users of cylinders are residential customers who use LPG
supplied in this form for domestic applications such as cooking and heating.
Butane-filled cylinders accounted for approximately 62% of LPG cylinders for
fiscal year 2004, with propane-filled cylinders accounting for the remainder.
Propane-filled cylinders are also used to supply fuel for forklift trucks. The
demand for butane-filled cylinders has been declining, due to customers
gradually changing to other household energy sources for heating and cooking,
such as natural gas. Antargaz is seeking to increase demand for propane-filled
cylinders through marketing and product innovations.

      Medium bulk customers use propane only, and consist mainly of large
residential developments such as housing projects, hospitals, municipalities and
medium-sized industrial and agricultural enterprises. Large bulk customers are
primarily companies that use LPG in their industrial processes, and large
agricultural companies.

LPG SUPPLY AND STORAGE

      Antargaz has an agreement with Totalgaz for the supply of butane and
propane, with pricing based on internationally quoted market prices. Under this
agreement, 80% of Antargaz's requirements for butane are guaranteed until June
2006 and 50% of its requirements for propane are guaranteed until June 2007.
Requirements are fixed annually, and Antargaz is free to develop other sources
of supply. For the 2004 fiscal year, Antargaz purchased approximately 95% of its
butane needs and 25% of its propane needs from Totalgaz. Antargaz also purchases
propane on the international market and, to a lesser degree, purchases butane on
the domestic market, under term agreements with international oil and gas
trading companies such as SHV Gas Supply and Trading, Shell International
Trading and Shipping Company Ltd. ("Stasco") and Vitol S.A. In addition,
purchases are made on the spot market from international oil and gas companies
such as Den Norske Stats Oldeselshap ("Statoil") and Sonatrach BV, and to a
lesser extent from domestic refineries, including those operated by BP France
and Esso SAF.

      Antargaz has five primary storage facilities, including three which are
located close to deep sea harbor points, and 26 secondary storage facilities. It
also manages an extensive logistics and transportation network. Access to harbor
points allows Antargaz to diversify its LPG supplies through imports. LPG stored
in primary storage facilities is transported to smaller storage facilities by
rail, sea and road. At the secondary storage facilities, LPG is filled into
cylinders or trucks equipped with tanks and then delivered to customers.

COMPETITION

      The LPG market in France is mature, with limited future growth expected.
Sales volumes are affected principally by the severity of the weather and
customer migration to alternative energy forms, including natural gas and
electricity. Antargaz competes in all product markets on a national level
principally with three LPG distribution companies, Totalgaz (owned by Total
France), Butagaz (owned by Societe des Petroles Shell) and Compagnie des Gaz de
Petrole Primagaz (an independent supplier owned by SHV Holding NV), as well as
with a smaller competitor, Vitogaz. On a regional level, Antargaz competes with
Repsol France S.A., in markets other than LPGc. Antargaz's competitors are
generally affiliates of its LPG suppliers. As a result, its competitors may
obtain product at more competitive prices.

                                       12

SEASONALITY

      Because a significant amount of LPG is used for heating, demand is
typically higher during the colder months of the year. Approximately 65% of
retail sales volume for fiscal year 2004 occurred during the six months of
October through March.

GOVERNMENT REGULATION

      Antargaz's business is subject to various laws and regulations at the
national and European levels with respect to protection of the environment, the
storage and handling of hazardous materials, the discharge of contaminants into
the environment and the safety of persons and property. Following an explosion
in 2001 at Grande Pariosse's chemical factory in Toulouse, France new
regulations were adopted relating to the safety risks of operations such as
Antargaz's, which involve the storage of large amounts of flammable substances.

PROPERTIES

      Antargaz has five primary storage facilities consisting of underground
caverns in geological formations, with the exception of Norgal, which is a
refrigerated facility. The table below sets forth details of each of these
facilities.

                                        Antargaz Storage      Antargaz Storage
                                       Capacity - Propane     Capacity - Butane
                      Ownership %              (m3)                 (m3)
                      -----------      ------------------     -----------------
                                                     
Norgal                   52.7%                22,600                8,900
Geogaz Lavera            16.7                 17,400               32,500
Donges                   50.0(1)              30,000                    0
Geovexin                 44.9                 54,000                    0
Cobogal                  15.0                  1,300                  900

   (1) Pursuant to a contractual arrangement with the owner.

Antargaz has 26 secondary storage facilities, 14 of which are wholly-owned. The
others are partially-owned, through joint ventures.

EMPLOYEES

      At September 30, 2004, Antargaz had approximately 1,200 employees.

FLAGA

      FLAGA distributes LPG principally in Austria, the Czech Republic and
Slovakia for residential, commercial, industrial and autogas applications.
During fiscal year 2004, FLAGA distributed approximately 33 million gallons of
LPG. FLAGA operates from 5 distribution

                                       13

locations in Austria, 2 in the Czech Republic and 2 in Slovakia. In addition,
FLAGA has 6 sales offices in the Czech Republic. As of September 30, 2004, FLAGA
had a total of 359 employees.

      FLAGA is the market leader for propane distribution in Austria with an
estimated 28% overall market share, serving residential, commercial and
industrial customers. The retail propane industry in Austria is mature, with
slight declines in overall demand in recent years, due primarily to the
expansion of natural gas. Competition for renewals and for new customer
installations is based on the terms and conditions of tank leases as well as on
product prices. Much of FLAGA's Austrian cylinder business is conducted through
approximately 600 neighborhood resellers with whom FLAGA has a long business
relationship. FLAGA competes with other propane marketers, including competitors
located in other eastern European countries. FLAGA also competes with providers
of other sources of energy, principally natural gas and wood.

      The market in the Czech Republic for LPG represents approximately 30% of
FLAGA's total volume. FLAGA entered the Czech market in 1994 when it purchased a
portion of the formerly state-run LPG company from the Czech government as part
of its privatization plan. FLAGA's main facility in the Czech Republic is its
bulk storage and cylinder filling and repair plant in Hustopece, located in the
southeast quadrant of the Czech Republic. Effective September 1, 2004, FLAGA
acquired the LPG business of BP in the Czech Republic. Giving effect to this
acquisition, FLAGA expects to be the market leader in the Czech Republic with
approximately 24% market share. FLAGA estimates that its share of the LPG market
in Slovakia is 24%, ranking it second in the country. During fiscal year 2004,
FLAGA expanded its LPG cylinder business to Switzerland.

                                   GAS UTILITY

SERVICE AREA; REVENUE ANALYSIS

      Gas Utility distributes natural gas to approximately 300,000 customers in
portions of 14 eastern and southeastern Pennsylvania counties through its
distribution system of approximately 4,900 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 specialty metals, aluminum and
glass.

      System throughput (the total volume of gas sold to or transported for
customers within Gas Utility's distribution system) for the 2004 fiscal year was
approximately 82.2 billion cubic feet ("bcf"). System sales of gas to
firm-residential, commercial and industrial ("retail core-market") customers
accounted for approximately 42% of system throughput, while gas delivery service
(gas transported for residential, commercial and industrial customers who bought
their gas from others) accounted for approximately 58% of system throughput.
Based on the most recent available industry data (2002), residential customers
account for approximately 35% of total system throughput by natural gas
distribution companies in the United States. By contrast,

                                       14

for the 2004 fiscal year, Gas Utility's residential customers represented 26% 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, and storage and
transportation service contracts. These arrangements enable Gas Utility to
purchase gas from Gulf Coast, Mid-Continent, Appalachian and Canadian sources.
For the transportation and storage function, Gas Utility has agreements with a
number of pipeline companies, including Texas Eastern Transmission Corporation,
Columbia Gas Transmission Corporation and Transcontinental Gas Pipeline
Corporation.

GAS SUPPLY CONTRACTS

      During fiscal year 2004, Gas Utility purchased approximately 50 bcf of
natural gas for sale to retail core market and off-system sales customers.
Approximately 77% of the volumes purchased were supplied under agreements with
ten major suppliers. The remaining 23% of gas purchased was supplied by
approximately 20 different producers and marketers. Gas supply contracts are
generally no longer than one year.

SEASONAL VARIATION

      Because many of its customers use gas for heating purposes, Gas Utility
sales are seasonal. Approximately 59% of fiscal year 2004 throughput occurred
during the winter season from November through March.

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 perceived reliability, comparative price, and the relative
cost and efficiency of fuel utilization equipment. Electric utilities in Gas
Utility's service area are seeking new load, primarily in the new construction
market. Fuel oil dealers compete for customers in all categories, including
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, Utilities is the only
regulated gas distribution utility having the right, granted by the PUC or by
law, to provide gas distribution services. Since the 1980s, larger commercial
and industrial customers have been able to purchase gas supplies from entities
other than Gas Utility. As a result of Pennsylvania's Natural Gas Choice and
Competition Act ("Gas Competition Act"), which became effective July 1, 1999,
all of Gas Utility's customers, including residential and smaller commercial and
industrial customers, have been afforded this opportunity.

      A number of Gas Utility's commercial and industrial customers have the
ability to switch to an alternate fuel at any time and, therefore, are served on
an interruptible basis under rates which are competitively priced with respect
to their alternate fuel. Profitability from these

                                       15

customers, therefore, is affected by the difference, or "spread," between the
customers' delivered cost of gas and the customers' delivered alternate fuel
cost, and the frequency and duration of interruptions. See "Gas Utility and
Electric Utility Regulation and Rates - Gas Utility Rates." Commercial and
industrial customers representing 22% of total system throughput have locations
which afford them the opportunity, although none have exercised it, of seeking
transportation service directly from interstate pipelines, thereby bypassing Gas
Utility. The majority of customers in this group are served under transportation
contracts having three- to twenty-year terms. Included in these two groups are
Gas Utility's ten largest customers in terms of annual volume. All of these
customers have contracts, eight of which extend beyond fiscal year 2005. No
single customer represents, or is anticipated to represent, more than 5% of the
total revenues of Gas Utility.

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 through fiscal year 2005. Supply mix is diversified, market priced,
and delivered pursuant to a number of long- and short-term firm transportation
and storage arrangements, including transportation contracts held by some of Gas
Utility's larger customers.

      During fiscal year 2004, Gas Utility supplied transportation service to
two major cogeneration installations and three electric generation facilities.
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
approximately 10,600 new residential heating customers during fiscal year 2004,
which represented a record annual increase. Of those new customers, new home
construction accounted for over 8,000 heating customers. Customers converting
from other energy sources, primarily oil and electricity, and existing
non-heating gas customers who have added gas heating systems to replace other
energy sources, accounted for the balance of the additions. The number of new
commercial and industrial customers was approximately 1,200.

      Gas Utility continues to monitor and participate extensively in rulemaking
and individual rate and tariff 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 pricing of pipeline services in a competitive energy marketplace; (ii) the
flexibility of the terms and conditions of pipeline service tariffs and
contracts; and (iii) pipelines' requests to increase their base rates, or change
the terms and conditions of their storage and transportation services.

      Gas Utility's objective in negotiations with interstate pipeline and
natural gas suppliers, and in proceedings before regulatory agencies, is to
assure availability of supply, transportation and storage alternatives to serve
market requirements at the lowest cost achievable for reliable and secure
supplies. Consistent with that objective, Gas Utility negotiates the terms of
firm transportation capacity on all pipelines serving it, arranges for
appropriate storage and peak-shaving resources, negotiates with producers for
competitively priced gas purchases and

                                       16

aggressively participates in regulatory proceedings related to transportation
rights and costs of service.

                                ELECTRIC UTILITY

SERVICE AREA; SALES ANALYSIS

      Electric Utility supplies electric service to approximately 62,000
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 fiscal
year 2004, about 53% of sales volume came from residential customers, 35% from
commercial customers and 12% from industrial customers. Electricity transported
for customers who purchased their power from other suppliers represented less
than 1% of fiscal year 2004 sales volume.

SOURCES OF SUPPLY

      Electric Utility has third-party generation supply contracts in place for
substantially all of its expected energy requirements for fiscal year 2005.
Electric Utility distributes both electricity that it purchases from others and
electricity that customers purchase from other suppliers. At September 30, 2004,
alternate suppliers served customers representing less than 1% of system load.
Electric Utility expects to continue to provide energy to the great majority of
its distribution customers for the foreseeable future.

COMPETITION

      As a result of the Electricity Generation Customer Choice and Competition
Act ("ECC Act") that became effective in 1997, all Pennsylvania retail electric
customers have the ability to choose their electric generation supplier. Under
the ECC Act, Electric Utility remains the provider of last resort ("POLR") for
its customers who do not choose an alternate electric generation supplier. The
terms and conditions under which Electric Utility provides POLR service, and
rules governing the rates that may be charged for such service, have been
established in a series of PUC-approved settlements, the most recent of which
became effective in June 2004 (collectively, the "POLR Settlement.") Consistent
with the terms of the POLR Settlement, Electric Utility's POLR rates will
increase beginning January 2005 and Electric Utility is permitted, but not
required, to further increase its POLR rates in January 2006. Electric Utility
is the only regulated electric utility having the right, granted by the PUC or
by law, to distribute electricity in its service territory. Sales of electricity
for residential heating purposes accounted for approximately 20% of total sales
of electricity during the 2004 fiscal year. Electricity competes with natural
gas, oil, propane and other heating fuels for this use.

              GAS UTILITY AND ELECTRIC UTILITY REGULATION AND RATES

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.

                                       17

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 Utilities is a member, has filed an open
access transmission tariff with 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 its transmission facilities are used by third parties.

GAS UTILITY RATES

      Effective October 1, 2000, Gas Utility increased its base rates for retail
core-market customers and implemented a credit to its purchased gas cost rates
(described below). Since December 1, 2001, Gas Utility has reduced its purchased
gas cost rates to retail core-market customers by an amount equal to the margin
it receives from customers served under interruptible rates to the extent they
use capacity contracted for by Gas Utility for retail core-market customers. As
a result of these changes in its regulated rates, since December 1, 2001, Gas
Utility's operating results have been more sensitive to heating season weather
and less sensitive to competition from alternative fuels in commercial and
industrial markets.

      Gas Utility's gas service tariff contains purchased gas cost ("PGC") rates
that provide for annual increases or decreases in the rate per thousand cubic
feet ("mcf") that Gas Utility charges for natural gas sold by it, to reflect Gas
Utility's projected cost of purchased gas. PGC rates may also be adjusted
quarterly, or, under certain conditions monthly, to reflect the actual cost of
gas. Each proposed annual 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. Gas Utility has two PGC
rates. PGC (1) is applicable to small, firm, retail 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 separate rates. In addition, residential customers maintaining a high load
factor may qualify for the PGC (2) rate. As described above, Gas Utility's PGC
rates are adjusted to reflect margins, if any, from interruptible rate customers
who do not obtain their own pipeline capacity.

ELECTRIC UTILITY RATES

      Electric Utility's POLR rates will increase beginning January 2005 and
Electric Utility is permitted, but not required, to further increase its POLR
rates in January 2006. Pursuant to the requirements of the ECC Act, the PUC is
currently developing POLR regulations that are expected to further define POLR
service obligations and pricing. As of September 30, 2004, fewer than 1% of
Electric Utility's customers have chosen an alternative electricity generation
supplier.

                                       18

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 effects
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.

      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-Manufactured
Gas Plants."

EMPLOYEES

      At September 30, 2004, Utilities had approximately 1,000 employees.

                                       19

                                 ENERGY SERVICES

      We operate the non-utility, energy-related businesses described below
through various subsidiaries.

NATURAL GAS AND ELECTRICITY MARKETING

      UGI Energy Services, Inc. ("ESI") conducts our non-utility energy
marketing business under the trade names GASMARK(R) and POWERMARK(R). GASMARK(R)
sells natural gas directly to approximately 5,400 commercial and industrial
customers in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, New York,
Ohio, North Carolina and the District of Columbia through the use of the
transportation systems of 32 utility systems. Energy Services also sells fuel
oil, electricity and LPG to commercial and industrial customers in Pennsylvania,
New Jersey and Maryland. During fiscal year 2003, ESI significantly increased
its size by acquiring the northeastern gas marketing operations of a subsidiary
of TXU Corp. This acquisition added approximately 1,000 customers to ESI's
customer base and increased its natural gas sales volume approximately 60%.

      The gas marketing business is a high revenue, low margin business. A
majority of GASMARK(R)'s commodity sales are made under fixed price agreements.
ESI manages supply cost volatility related to these agreements by entering into
exchange-traded natural gas futures contracts and fixed-price supply
arrangements with a diverse group of natural gas producers and holders of
interstate pipeline capacity. Exchange-traded natural gas futures contracts are
guaranteed by the New York Mercantile Exchange ("NYMEX") and have nominal credit
risk. ESI also bears the risk for balancing and delivering natural gas to its
customers under various pipelines and utility company tariffs.

      Credit is another risk factor in the commodity marketing business. ESI
bears the risks of customer defaults and supplier non-performance on commodity
and pipeline capacity contracts. ESI seeks to mitigate risk of supplier defaults
by diversifying its supply and pipeline transportation purchases across a number
of suppliers. ESI uses credit insurance to mitigate a portion of the risk of
customer defaults. ESI also requires credit support from certain customers in
higher-risk transactions. This credit support can take the form of prepayments,
bonds and letters of credit. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Market Risk Disclosures."

      ESI also operates a natural gas liquefaction, storage and vaporization
facility in Temple, Pennsylvania and propane storage and propane-air mixing
stations in Bethlehem, Reading and Steelton, Pennsylvania. In November 2004, ESI
purchased a propane import and storage facility located in Chesapeake, Virginia.

ELECTRIC GENERATION

      In June 2003, we increased our ownership interest in the Conemaugh
generating station ("Conemaugh") from 1.11% to approximately 6% (102 megawatts).
Conemaugh is a 1,711 megawatt, coal-fired generation station located near
Johnstown, Pennsylvania. It is owned by a consortium of energy companies and
operated by a unit of Reliant Resources, Inc. In addition, we are a 50% owner of
Hunlock Creek Energy Ventures ("Energy Ventures"). The generation

                                       20

assets of Energy Ventures consist of the 48 megawatt, coal-fired Hunlock
generating station, located near Kingston, Pennsylvania, and a 44 megawatt,
gas-fired turbine generator at the same site. We operate these generation
assets. A subsidiary of Allegheny Energy, Inc. is the other general partner in
Energy Ventures. Under the joint venture agreement, we have the right to
purchase one-half the output of Energy Ventures' generation at cost. We also
have the right to require an affiliate of Allegheny Energy, Inc. ("Allegheny")
to purchase our ownership interest in Energy Ventures. Allegheny has a
corresponding call right on our interest in Energy Ventures. These "put" and
"call" rights are effective for a 90-day period commencing January 1, 2006. The
output from these generation assets is sold by our subsidiary UGI Development
Company ("UGID") on the spot market and under fixed-term contracts. UGID has
FERC authority to sell power at market-based rates.

ENVIRONMENTAL FACTORS

      The operation of Hunlock Station complies with the air quality standards
of the Pennsylvania Department of Environmental Protection ("DEP") with respect
to stack emissions. Under the Federal Water Pollution Control Act, Hunlock
station has a permit from the DEP to discharge water 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. Both the Conemaugh Station and the
Hunlock Station are in material compliance with these emission standards.

                                     HVAC/R

      We conduct a heating, ventilation, air-conditioning and refrigeration
service business ("HVAC/R") serving portions of Utilities' gas service area and
adjacent Mid-Atlantic region market areas, including Philadelphia suburbs and
portions of New Jersey and northern Delaware. This business serves more than
100,000 customers in residential, commercial, industrial and new construction
markets. During fiscal year 2004, HVAC/R generated approximately $58 million in
revenues and employed approximately 400 people.

                          BUSINESS SEGMENT INFORMATION

      The table stating the amounts of revenues, operating income (loss) and
identifiable assets attributable to each of UGI's reportable business segments,
and to the geographic areas in which we operate, for the 2004, 2003 and 2002
fiscal years appears in Note 19 to the Consolidated Financial Statements
contained in our 2004 Annual Report to Shareholders and is incorporated in this
Report by reference.

                                    EMPLOYEES

      At September 30, 2004, UGI and its subsidiaries had approximately 9,300
employees.

                                       21

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 other than claims arising in the ordinary course of business.

ENVIRONMENTAL MATTERS - MANUFACTURED GAS PLANTS

      From the late 1800s through the mid-1900s, Utilities and its former
subsidiaries owned and operated a number of manufactured gas plants ("MGPs")
prior to the general availability of natural gas. Some constituents of coal tars
and other residues of the manufactured gas process are today considered
hazardous substances under the Superfund Law and may be present on the sites of
former MGPs. Between 1882 and 1953, Utilities owned the stock of subsidiary gas
companies in Pennsylvania and elsewhere and also operated the business of some
gas companies under agreement. 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 Gas Utility and Electric
Utility.

      Utilities does not expect its costs for investigation and remediation of
hazardous substances at Pennsylvania MGP sites to be material to its results of
operations because Utilities is currently permitted to include in rates, through
future base rate proceedings, prudently incurred remediation costs associated
with such sites. Utilities has been notified of several sites outside
Pennsylvania on which private parties allege MGPs were formerly owned or
operated by Utilities or owned or operated by its former subsidiaries. Such
parties are investigating the extent of environmental contamination or
performing environmental remediation. Utilities is currently litigating three
claims against it relating to out-of-state sites.

      Consolidated Edison Company of New York v. UGI Utilities, Inc. On
September 20, 2001, Consolidated Edison Company of New York ("ConEd") filed suit
against Utilities in the United States District Court for the Southern District
of New York, seeking contribution from Utilities for an allocated share of
response costs associated with investigating and assessing gas plant related
contamination at former MGP sites in Westchester County, New York. The complaint
alleges that Utilities "owned and operated" the MGPs prior to 1904. The
complaint also seeks a declaration that Utilities is responsible for an
allocated percentage of future investigative and remedial costs at the sites.
ConEd believes that the cost of remediation for all of the sites could exceed
$70 million.

      By orders issued in November 2003 and March 2004, the court granted
Utilities' motion for summary judgment and dismissed ConEd's complaint. ConEd
has appealed.

      City of Bangor, Maine v. Citizens Communications Co. In April 2003,
Citizens Communications Company ("Citizens") served a complaint naming Utilities
as a third-party defendant in a civil action pending in United States District
Court for the District of Maine. In that action, the plaintiff, City of Bangor,
Maine ("City"), sued Citizens to recover environmental response costs associated
with MGP wastes generated at a plant allegedly operated by Citizens'
predecessors at a site on the Penobscot River. Citizens subsequently joined
Utilities and ten other

                                       22

third-party defendants alleging that the third-party defendants are responsible
for an equitable share of costs Citizens may be required to pay to the City for
cleaning up tar deposits in the Penobscot River. Citizens alleges that Utilities
and its predecessors owned and operated the plant from 1901 to 1928. The City
believes that it could cost as much as $50 million to clean up the river.
Utilities believes that it has good defenses to the claim and is defending the
suit.

      Atlanta Gas Light Company v. UGI Utilities, Inc. By letter dated July 29,
2003, Atlanta Gas Light Company ("AGL") served Utilities with a complaint filed
in the United States District Court for the Middle District of Florida in which
AGL alleges that Utilities is responsible for 20% of approximately $8 million
incurred by AGL in the investigation and remediation of a former MGP site in St.
Augustine, Florida. Utilities formerly owned stock of the St. Augustine Gas
Company, the owner and operator of the MGP. Utilities believes that it has good
defenses to the claim and is defending the suit.

      Savannah, Georgia Matter. AGL previously informed Utilities that it was
investigating contamination that appeared to be related to MGP operations at a
site owned by AGL in Savannah, Georgia. A former subsidiary of Utilities
operated the MGP in the early 1900s. AGL has recently informed Utilities that it
has begun remediation of MGP wastes at the site and believes that the total cost
of remediation could be as high as $55 million. AGL has not filed suit against
Utilities for a share of these costs. Utilities believes that it will have good
defenses to any action that may arise out of this site.

      Sag Harbor, New York Matter. By letter dated June 24, 2004, KeySpan Energy
("KeySpan") informed Utilities that KeySpan has spent $2.3 million and expects
to spend another $11 million to clean up an MGP site it owns in Sag Harbor, New
York. KeySpan believes that Utilities is responsible for approximately 50% of
these costs as a result of Utilities' alleged direct ownership and operation of
the plant from 1885 to 1902. Utilities is in the process of reviewing the
information provided by KeySpan and is investigating this claim.

      Connecticut Gas Plants Matter. By letter dated August 5, 2004, Yankee Gas
Services Company and Connecticut Light and Power Company, subsidiaries of
Northeast Utilities, (together the "Northeast Companies"), demanded contribution
from Utilities for past and future remediation costs related to MGP operations
on thirteen sites owned by the Northeast Companies in nine cities in the State
of Connecticut. The Northeast Companies allege that Utilities controlled
operations of the plants from 1883 to 1941. According to the letter,
investigation and remedial costs at the sites to date total approximately $10
million and complete remediation costs for all sites could total $182 million.
The Northeast Companies seek an unspecified fair and equitable allocation of
these costs to Utilities. Utilities is in the process of reviewing the
information provided by Northeast Companies and is investigating this claim.

RELATED MATTER

      UGI Utilities, Inc. v. Insurance Co. of North America, et al. On February
11, 1999, Utilities filed suit in the Court of Common Pleas of Montgomery
County, Pennsylvania against more than fifty insurance companies, including
Insurance Services, Ltd. (AEGIS). The complaint alleges that the defendants
breached contracts of insurance by failing to indemnify Utilities for certain
environmental costs. Utilities has now settled with all known solvent defendants
and the suit has been dismissed.

                                       23

OTHER

      Swiger, et al. v. UGI/AmeriGas, Inc. et al. Plaintiffs Samuel and Brenda
Swiger and their son (the "Swigers") sustained personal injuries and property
damage as a result of a fire that occurred when propane that leaked from an
underground line ignited. In July 1998, the Swigers filed a class action lawsuit
against AmeriGas Propane, L.P. (named incorrectly as "UGI/AmeriGas, Inc."), in
the Circuit Court of Monongalia County, West Virginia (Civil Action No.
98-C-298), in which they sought to recover an unspecified amount of compensatory
and punitive damages and attorney's fees, for themselves and on behalf of
persons in West Virginia for whom the defendants had installed propane gas
lines, allegedly resulting from the defendants' failure to install underground
propane lines at depths required by applicable safety standards. The court
recently granted the plaintiffs' motion to include customers acquired from
Columbia Propane in August 2001 as additional potential class members, and to
amend their complaint to name additional parties consistent with such ruling. In
2003, the defendants settled the individual personal injury and property damage
claims of the Swigers. Class counsel has indicated that the class is seeking
compensatory damages in excess of $12 million plus punitive damages, civil
penalties and attorneys' fees. The defendants believe they have good defenses to
the claims of the class members and intend to vigorously defend against the
remaining claims in this lawsuit.

                                       24

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 fiscal year 2004.

                               EXECUTIVE OFFICERS

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

PART II:

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

      Our 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 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:

2004 FISCAL YEAR                        HIGH                                LOW
                                                                   
4th Quarter                           $37.35                             $30.46
3rd Quarter                            33.40                              29.85
2nd Quarter                            34.35                              31.40
1st Quarter                            34.20                              28.85

2003 FISCAL YEAR                       HIGH                                LOW
                                                                   
4th Quarter                           $33.45                             $28.86
3rd Quarter                            35.05                              29.00
2nd Quarter                            30.57                              24.93
1st Quarter                            26.99                              23.27

                                       25

DIVIDENDS

      Quarterly dividends on our Common Stock were paid in the 2004 and 2003
fiscal years as follows:

2004 FISCAL YEAR                                        AMOUNT
                                                    
4th Quarter                                            $0.3125
3rd Quarter                                              0.285
2nd Quarter                                              0.285
1st Quarter                                              0.285

2003 FISCAL YEAR                                        AMOUNT
                                                     
4th Quarter                                             $0.285
3rd Quarter                                              0.285
2nd Quarter                                              0.275
1st Quarter                                              0.275

HOLDERS

      On November 1, 2004, UGI had 9,479 holders of record of Common Stock.

                                       26

ITEM 6.  SELECTED FINANCIAL DATA

                                                                                      Year Ended
                                                                                     September 30,
                                                          -------------------------------------------------------------------
                                                              2004         2003          2002        2001 (a)      2000 (a)
                                                          -----------  -----------  ------------  ------------  -------------
                                                                     (Millions of dollars, except per share amounts)
                                                                                                 
FOR THE PERIOD:
INCOME STATEMENT DATA:

 Revenues                                                 $   3,784.7  $   3,026.1  $    2,213.7  $    2,468.1  $    1,761.7
                                                          ===========  ===========  ============  ============  ============
 Income before accounting changes                         $     111.6  $      98.9  $       75.5  $       52.0  $       44.7
 Cumulative effect of accounting changes (b)                        -            -             -           4.5             -
                                                          -----------  -----------  ------------  ------------  ------------
 Net income (c)                                           $     111.6  $      98.9  $       75.5  $       56.5  $       44.7
                                                          ===========  ===========  ============  ============  ============
 Earnings per common share - basic
      Income before accounting changes                    $      2.36  $      2.34  $       1.83  $       1.28  $       1.09
      Cumulative effect of accouting changes, net                   -            -             -          0.11             -
                                                          -----------  -----------  ------------  ------------  ------------
      Net income - basic                                  $      2.36  $      2.34  $       1.83  $       1.39  $       1.09
                                                          ===========  ===========  ============  ============  ============

 Earnings per common share - diluted
      Income before accounting changes                    $      2.31  $      2.29  $       1.80  $       1.27  $       1.09
      Cumulative effect of accouting changes, net                   -            -             -          0.11             -
                                                          -----------  -----------  ------------  ------------  ------------
      Net income - diluted (c) (d)                        $      2.31  $      2.29  $       1.80  $       1.38  $       1.09
                                                          ===========  ===========  ============  ============  ============

 Cash dividends declared per common share                 $      1.17  $      1.13  $      1.083  $      1.050  $      1.017
                                                          ===========  ===========  ============  ============  ============
AT PERIOD END:
BALANCE SHEET DATA:
 Total assets                                             $   4,235.4  $   2,795.2  $    2,628.0  $    2,561.9  $    2,284.3
                                                          ===========  ===========  ============  ============  ============
 Capitalization:
     Debt:
       Bank loans - AmeriGas Propane                      $         -  $         -  $       10.0  $          -  $       30.0
       Bank loans - UGI Utilities                                60.9         40.7          37.2          57.8         100.4
       Bank loans - other                                        17.2         15.9           8.6          10.0           4.3
       Long-term debt  (including current maturities):
            AmeriGas Propane                                    901.4        927.3         945.8       1,005.9         857.2
            Antargaz                                            474.5            -             -             -             -
            UGI Utilities                                       217.2        217.3         248.4         208.4         172.9
            Other                                                76.9         78.9          81.5          80.9          85.5
                                                          -----------  -----------  ------------  ------------  ------------
      Total debt                                              1,748.1      1,280.1       1,331.5       1,363.0       1,250.3
                                                          -----------  -----------  ------------  ------------  ------------
      Minority interests, principally in AmeriGas
          Partners                                              178.4        134.6         276.0         246.2         177.1
      UGI Utilities preferred shares subject
          to mandatory redemption                                20.0         20.0          20.0          20.0          20.0
      Common stockholders' equity                               834.1        498.7         313.8         251.0         242.0
                                                          -----------  -----------  ------------  ------------  ------------
 Total capitalization                                     $   2,780.6  $   1,933.4  $    1,941.3  $    1,880.2  $    1,689.4
                                                          ===========  ===========  ============  ============  ============

RATIO OF CAPITALIZATION:
 Total debt                                                      62.9%        66.2%         68.6%         72.5%         74.0%
 Minority interests, principally in AmeriGas Partners             6.4%         7.0%         14.2%         13.1%         10.5%
 UGI Utilities preferred shares subject
          to mandatory redemption                                 0.7%         1.0%          1.0%          1.1%          1.2%
 Common stockholders' equity                                     30.0%        25.8%         16.2%         13.3%         14.3%
                                                          -----------  -----------  ------------  ------------  ------------
                                                                100.0%       100.0%        100.0%        100.0%        100.0%
                                                          ===========  ===========  ============  ============  ============

(a)  Arthur Andersen LLP audited our consolidated financial statements for 2001
     and 2000.

(b)  Includes cumulative effect of accounting changes associated with (1) the
     Partnership's changes in accounting for tank fee revenue and tank
     installation costs and (2) the Company's adoption of Statement of Financial
     Accounting Standards No. 133, "Accounting for Derivative Instruments and
     Hedging Activities."

(c)  Pro forma net income and diluted earnings per share after applying
     retroactively the Partnership's changes in accounting for tank installation
     costs and tank fee revenue are as follows: 2000 - $44.6 and $1.09,
     respectively.

(d)  SFAS No. 142, "Goodwill and Other Intangible Assets," was adopted effective
     October 1, 2001. Net income and net income per diluted share adjusted to
     reflect the impact of SFAS No. 142 as if it had been adopted at the
     beginning of the periods presented are as follows: 2001 - $70.5 and $1.72;
     2000 - $59.4 and $1.45, respectively.

                                       27

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 13 through 27 of
UGI's 2004 Annual Report to Shareholders, is incorporated in this Report by
reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      "Quantitative and Qualitative Disclosures About Market Risk" are contained
in Management's Discussion and Analysis of Financial Condition and Results of
Operations under the caption "Market Risk Disclosures" on pages 24 and 25 of the
UGI 2004 Annual Report to Shareholders and are 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 in this
Report by reference.

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

      None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of
the Company's disclosure controls and procedures as of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures as of the end of the period covered by this report were designed and
functioning effectively to provide reasonable assurance that the information
required to be disclosed by the Company in reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Included in the Company's evaluation was consideration of the restatement of
previously issued financial statements due to reconsideration of previous
judgments related to the provision of deferred taxes in connection with gains
recorded in fiscal

                                       28

years 2003 and 2004 in accordance with the guidance in SEC Staff Accounting
Bulletin No. 51, "Accounting for Sales of Common Stock by a Subsidiary." The
Company believes that its reconsideration of previous judgments in the
application of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," was not a result of ineffective internal controls or
procedures. The Company believes that a controls system, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of
the controls system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a
company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in the Company's internal control over financial reporting occurred
during the Company's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting.

As described in Note 3 to the Company's Consolidated Financial Statements, on
March 31, 2004, the Company acquired the remaining outstanding 80.5% ownership
in Antargaz that it did not already own. The internal control over financial
reporting of Antargaz is being aligned with that of the Company as part of the
post-acquisition financial integration process. As a result of this continuing
integration process, we have extended internal control procedures over quarterly
financial reporting to include Antargaz.

ITEM 9B. OTHER INFORMATION

Not applicable.

                                       29

PART III:

ITEMS 10 THROUGH 14.

      In accordance with General Instruction G(3), and except as set forth
below, the information required by Items 10, 11, 12, 13 and 14 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,
2005:

                                                                                    CAPTIONS OF PROXY STATEMENT
                                  INFORMATION                                        INCORPORATED BY REFERENCE
                                  -----------                                        -------------------------
                                                                   
Item 10.       Directors and Executive                                   Election of Directors - Nominees; Corporate
               Officers of Registrant                                    Governance;
                                                                         Board Committees and Meeting Attendance;
                                                                         Securities Ownership of Management - Section
                                                                         16(a) - Beneficial Ownership Reporting Compliance

               The Code of Ethics for the Chief Executive
               Officer and Senior Financial Officers of UGI
               Corporation is available on the Company's
               website, www.ugicorp.com or by writing to Robert
               W. Krick, Vice President and Treasurer, UGI
               Corporation, P. O. Box 858, Valley Forge, PA
               19482.

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

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

                                       30

EQUITY COMPENSATION TABLE

      The following table sets forth information as of the end of our 2004
fiscal year with respect to compensation plans under which our equity securities
are authorized for issuance.

                                                                                                     NUMBER OF SECURITIES
                                       NUMBER OF SECURITIES TO BE        WEIGHTED AVERAGE          REMAINING AVAILABLE FOR
                                        ISSUED UPON EXERCISE OF         EXERCISE PRICE OF        FUTURE ISSUANCE UNDER EQUITY
                                          OUTSTANDING OPTIONS,         OUTSTANDING OPTIONS,           COMPENSATION PLANS
                                          WARRANTS AND RIGHTS          WARRANTS AND RIGHTS      (EXCLUDING SECURITIES REFLECTED
           PLAN CATEGORY                          (A)                        (B)                      IN COLUMN (A)) (C)
           -------------               --------------------------      --------------------     -------------------------------
                                                                                       
Equity compensation plans                        2,291,708                   $23.65
approved by security holders (1)                   561,454                   $    0                      2,508,796

Equity compensation plans not                      372,752                   $21.97                              0
approved by security holders (2)                     4,200                   $    0

Total                                            3,230,114                   $23.41                      2,508,796

      (1)   Column (a) represents 2,291,708 stock options under the 1997 Stock
            Option and Dividend Equivalent Plan, the 1992 Directors' Stock Plan,
            the 2000 Directors' Stock Option Plan, the 2000 Stock Incentive Plan
            and the 2004 Omnibus Equity Compensation Plan, and 561,454 phantom
            share units under the 2004 Omnibus Equity Compensation Plan and the
            2000 Stock Incentive Plan.

      (2)   Column (a) represents 372,752 stock options under the 1992 and 2002
            Non-Qualified Stock Option Plans, and 4,200 one-time bonus awards of
            phantom restricted stock. Under the 1992 and 2002 Non-Qualified
            Stock Option Plans, the option exercise price is not less than 100%
            of the fair market value of the Company's common stock on the date
            of grant. Generally, options become exercisable in three equal
            annual installments beginning on the first anniversary of the grant
            date. All options are non-transferable and generally exercisable
            only while the holder is employed by the Company or an affiliate,
            with exceptions for exercise following retirement, disability and
            death. Options are subject to adjustment in the event of
            recapitalization, stock splits, mergers, and other similar corporate
            transactions affecting the Company's common stock. The phantom
            restricted awards represent the right to receive a share of stock or
            an amount based on the value of a share of stock if specified length
            of service requirements are met.

                                                                               CAPTIONS OF PROXY STATEMENT
                                      INFORMATION                               INCORPORATED BY REFERENCE
                                      -----------                               -------------------------
                                                                
Item 13.           Certain Relationships and Related Transactions     Compensation of Executive Officers - Stock
                                                                      Ownership Policy and Indebtedness of Management

Item 14.           Principal Accountant Fees and Services             The Independent Public Accountants

                                       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                  54             Chairman, Director, President
                                                 and Chief Executive Officer

Eugene V.N. Bissell               51             President and Chief Executive
                                                 Officer, AmeriGas Propane, Inc.

Michael J. Cuzzolina              59             Vice President - Accounting and Financial
                                                 Control; Chief Accounting Officer and Chief
                                                 Risk Officer

Bradley C. Hall                   51             Vice President - New Business Development

Robert H. Knauss                  51             Vice President and General Counsel

Anthony J. Mendicino              56             Senior Vice President - Finance
                                                 and Chief Financial Officer

David W. Trego                    46             President and Chief Executive Officer,
                                                 UGI Utilities, Inc.

Francois Varagne                  49             Chairman of the Board and
                                                 Chief Executive Officer of Antargaz

      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.

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. He
was elected a Director of AmeriGas Propane, Inc. in 1994 and has been Chairman
since 1996. He also served as President and Chief Executive Officer of AmeriGas
Propane (1996 to 2000). Mr. Greenberg was Senior Vice President - Legal and
Corporate Development (1989 to 1994). He joined the Company in 1980 as Corporate
Development Counsel.

                                       32

Eugene V.N. Bissell

      Mr. Bissell is President and Chief Executive Officer of AmeriGas Propane,
Inc. (since July 2000), having served as Senior Vice President - Sales and
Marketing (1999 to 2000) and Vice President - Sales and Operations (1995 to
1999). Previously, he was Vice President - Distributors and Fabrication, BOC
Gases (industrial gases) (1995), having been Vice President - National Sales
(1993 to 1995) and Regional Vice President Southern Region for Distributor and
Cylinder Gases Division, BOC Gases (1989 to 1993). From 1981 to 1987, Mr.
Bissell held various positions with the Company and its subsidiaries, including
Director, Corporate Development. Mr. Bissell is a member of the Board of
Directors of the National Propane Gas Association.

Michael J. Cuzzolina

      Mr. Cuzzolina was elected Vice President - Accounting and Financial
Control, Principal Accounting Officer and Chief Risk Officer of the Company in
July 2004. He served as President and Chief Operating Officer of Flaga GmbH from
1999 to 2004. Mr. Cuzzolina joined the Company in 1974 and previously served as
Vice President - Accounting and Financial Control (1984 to 1999).

Bradley C. Hall

      Mr. Hall is Vice President - New Business Development (since October
1994). He also serves as President of UGI Enterprises, Inc. (since 1994). He
joined the Company in 1982 and held various positions in UGI Utilities, Inc.,
including Vice President - Marketing and Rates.

Robert H. Knauss

      Mr. Knauss was elected Vice President and General Counsel on September 30,
2003. He previously served as Vice President - Law and Associate General Counsel
of AmeriGas Propane, Inc. (1996 to 2003), and Group Counsel - Propane of UGI
(1989 to 1996). He joined the Company in 1985. Previously, Mr. Knauss was an
associate at the firm of Ballard, Spahr, Andrews & Ingersoll in Philadelphia.

Anthony J. Mendicino

      Mr. Mendicino is Senior Vice President - Finance and Chief Financial
Officer (since December 2002). He previously served as Vice President - Finance
and Chief Financial Officer (September 1998 to December 2002). Mr. Mendicino
served as President and Chief Operating Officer (July 1997 to June 1998) and as
Senior Vice President (January 1997 to June 1997) of Eastwind Group, Inc., a
holding company formed to acquire and consolidate middle-market manufacturing
businesses. Mr. Mendicino was Senior Vice President and Chief Financial Officer
and a director (1987 to 1996) of UTI Energy Corp., a diversified oil field
service company. From 1981 to 1987, Mr. Mendicino held various positions with
UGI, including Treasurer.

                                       33

David W. Trego

      Mr. Trego is President and Chief Executive Officer of UGI Utilities, Inc.
(since October 2004). He previously served as Vice President-Electric
Distribution (2002 to 2004). Prior to that assignment, Mr. Trego served in a
number of capacities in the Gas Utility Division, including marketing,
operations, customer relations and engineering. He joined Utilities in 1987.

Francois Varagne

      Mr. Varagne is Chairman of the Board and Chief Executive Officer of
Antargaz (since 2001), one of the leading LPG distributors in France. Before
joining Antargaz, Mr. Varagne was Chairman of the Board and Chief Executive
Officer of VIA GTI, a common carrier in France (1998-2001). Prior to that, Mr.
Varagne was Chairman of the Board and Chief Executive Officer of Brink's France,
a funds carrier (1997 to 1998).

                                       34

PART IV:

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (a) DOCUMENTS FILED AS PART OF THIS REPORT:

            (1) and (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.

                                       35

(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):

                                               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 amended through September                   UGI        Form 8-K              3.2
             28, 2004                                                                (9/28/04)

  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 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 August                    UGI        Registration          4.3
             18, 2000, between the Company and Mellon                                Statement No.
             Bank, N.A., successor to Mellon Bank (East)                             333-49080
             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

                                       36

                                     INCORPORATION BY REFERENCE
                                     --------------------------
EXHIBIT NO.                  EXHIBIT                         REGISTRANT      FILING     EXHIBIT
- -----------                  -------                         ----------      ------     -------

  4.4        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

  4.5        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 ("1995 Note Agreement")

  4.6        Second Amendment dated as of September 15,       AmeriGas      Form 10-K     4.6
             1998 to 1995 Note Agreement                   Partners, L.P.   (9/30/98)

  4.7        Third Amendment dated as of March 23, 1999       AmeriGas      Form 10-Q    10.2
             to 1995 Note Agreement                        Partners, L.P.   (3/31/99)

  4.8        Fourth Amendment dated as of March 16, 2000      AmeriGas      Form 10-Q    10.2
             to 1995 Note Agreement                        Partners, L.P.   (6/30/00)

  4.9        Fifth Amendment dated as of August 1, 2001       AmeriGas      Form 10-K     4.8
             to 1995 Note Agreement                        Partners, L.P.   (9/30/01)

  4.10       Second Amended and Restated Agreement of         AmeriGas      Form 8-K      3.1
             Limited Partnership of AmeriGas Partners,     Partners, L.P.   (12/1/04)
             L.P. dated as of December 1, 2004

  4.11       Second Amended and Restated Agreement of         AmeriGas      Form 10-K     3.1(a)
             Limited Partnership of AmeriGas Propane,      Partners, L.P.   (9/30/04)
             L.P. dated as of December 1, 2004

  4.12       Amended and Restated Agreement of Limited        AmeriGas      Form 10-K     3.8
             Partnership of AmeriGas Eagle Propane, L.P.   Partners, L.P.   (9/30/01)
             dated July 19, 1999

  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 FERCP. P 61,060 (1993), order
             on rehearing, 64 FERCP. P 61,365 (1993)

*10.2**      UGI Corporation 2004 Omnibus Equity
             Compensation Plan Directors Stock Unit
             Grant Letter dated as of January 8, 2004

                                       37

                                     INCORPORATION BY REFERENCE
                                     --------------------------
EXHIBIT NO.                  EXHIBIT                         REGISTRANT      FILING     EXHIBIT
- -----------                  -------                         ----------      ------     -------
                                                                            
 *10.3**     UGI Corporation 2004 Omnibus Equity
             Compensation Plan Directors Nonqualified
             Stock Option Grant Letter dated as of
             January 8, 2004

 *10.4**     UGI Corporation 2004 Omnibus Equity
             Compensation Plan Utilities Employees
             Performance Unit Grant Letter dated as of
             January 1, 2004

 *10.5**     UGI Corporation 2004 Omnibus Equity
             Compensation Plan UGI Employees Stock Unit
             Grant Letter dated as of January 1, 2004

 10.6**      UGI Corporation Directors Deferred                  UGI        Form 10-K    10.6
             Compensation Plan Amended and Restated as                      (9/30/00)
             of January 1, 2000

 *10.7**     UGI Corporation 2004 Omnibus Equity
             Compensation Plan UGI Employees Performance
             Unit Grant Letter dated as of January 1,
             2004

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

 *10.9**     UGI Corporation 2004 Omnibus Equity
             Compensation Plan AmeriGas Employees
             Nonqualified Stock Option Grant Letter
             dated as of January 1, 2004

 10.10**     UGI Corporation 1997 Stock Option and               UGI        Form 10-Q    10.4
             Dividend Equivalent Plan Amended and                           (3/31/03)
             Restated as of April 29, 2003

 10.11**     UGI Corporation 1992 Directors' Stock Plan          UGI        Form 10-Q    10.2
             Amended and Restated as of April 29, 2003                      (3/31/03)

 *10.12**    UGI Corporation Senior Executive Employee
             Severance Pay Plan as amended December 7,
             2004

 10.12(a)**  AmeriGas Propane, Inc. Executive Employee        AmeriGas      Form 10-K    10.4
             Severance Pay Plan, as amended December 6,    Partners, L.P.   (9/30/04)
             2004.

                                       38

                                     INCORPORATION BY REFERENCE
                                     --------------------------
EXHIBIT NO.                  EXHIBIT                           REGISTRANT      FILING    EXHIBIT
- -----------                  -------                           ----------      ------    -------

  10.13**    UGI Corporation 2000 Directors' Stock                 UGI        Form 10-Q    10.1
             Option Plan Amended and Restated as of                           (3/31/03)
             April 29, 2003

  10.14**    UGI Corporation 2000 Stock Incentive Plan             UGI        Form 10-Q    10.5
             Amended and Restated as of April 29, 2003                        (3/31/03)

  10.15**    1997 Stock Purchase Loan Plan                         UGI        Form 10-K   10.16
                                                                              (9/30/97)

  10.16**    UGI Corporation Supplemental Executive                UGI        Form 10-Q      10
             Retirement Plan Amended and Restated                             (6/30/98)
             effective October 1, 1996

 *10.17**    UGI Corporation 2004 Omnibus Equity
             Compensation Plan, as amended December 7,
             2004

  10.18      Credit Agreement dated as of August 28,            AmeriGas      Form 10-K    10.1
             2003 among AmeriGas Propane, L.P., AmeriGas     Partners, L.P.   (9/30/03)
             Propane, Inc., Petrolane Incorporated,
             Wachovia Bank, National Association, as Agent,
             Issuing Bank and Swing Line Bank, and certain
             banks.

  10.19      Amendment No. 1 dated as of August 30,             AmeriGas      Form 8-K     10.1
             2004, to the Credit Agreement dated as of       Partners, L.P.   (8/30/04)
             August 28, 2003 among AmeriGas Propane,
             L.P., AmeriGas Propane, Inc., Petrolane
             Incorporated, Citicorp USA, Inc., Credit
             Suisse First Boston, Wachovia Bank,
             National Association, as Agent, Issuing
             Bank and Swing Line Bank, and certain
             financial institutions named party thereto.

  10.20      Partnership Agreement of Hunlock Creek             Utilities     Form 10-K   10.24
             Energy Ventures dated December 8, 2001 by                        (9/30/01)
             and between UGI Hunlock Development Company
             and Allegheny Energy Supply Hunlock Creek
             LLC

  10.21      Amendment No. 1 to Partnership Agreement of           UGI        Form 10-K   10.21
             Hunlock Creek Energy Ventures, dated June                        (9/30/03)
             26, 2003, by and between UGI Hunlock
             Development Company and Allegheny Energy
             Supply Hunlock Creek, LLC

                                       39

                                     INCORPORATION BY REFERENCE
                                     --------------------------
EXHIBIT NO.                EXHIBIT                           REGISTRANT      FILING    EXHIBIT
- -----------                -------                           ----------      ------    -------
                                                                           
  10.22      Notice of appointment of Wachovia Bank,          AmeriGas      Form 10-K   10.6
             National Association as collateral Agent      Partners, L.P.   (9/30/03)
             effective as of August 28, 2003, pursuant
             to Intercreditor and Agency Agreement dated
             as of April 19, 1995

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

  10.23(a)   First Amendment dated as of July 31, 2001        AmeriGas      Form 10-K   10.8
             to Intercreditor and Agency Agreement dated   Partners, L.P.   (9/30/01)
             as of April 19, 1995

  10.24      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.

  10.24(a)   First Amendment dated as of July 31, 2001        AmeriGas      Form 10-K  10.10
             to General Security Agreement dated as of     Partners, L.P.   (9/30/01)
             April 19, 1995

  10.24(b)   Second Amendment dated as of October 14,         AmeriGas      Form 10-K  10.10(a)
             2004 to General Security Agreement dated as   Partners, L.P.   (9/30/04)
             of April 19, 1995

  10.25      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

  10.25(a)   First Amendment dated as of July 31, 2001        AmeriGas      Form 10-K  10.12
              to Subsidiary Security Agreement dated as    Partners, L.P.   (9/30/01)
              of April 19, 1995

  10.25(b)    Second Amendment dated as of October 14,         AmeriGas     Form 10-K  10.12(a)
              2004 to Subsidiary Security Agreement dated  Partners, L.P.   (9/30/04)
              as of April 19, 1995

                                       40

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

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

  10.28       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.

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

  10.30       Pledge Agreement dated September 1999               UGI             Form 10-K         10.28
              between Eastfield International Holdings,                           (9/30/99)
              Inc. and Raiffeisen Zentralbank Osterreich
              Aktiengesellschaft ("RZB")

  10.31       Pledge Agreement dated September 1999               UGI             Form 10-K         10.29
              between EuroGas Holdings, Inc. and RZB                              (9/30/99)

  10.32       Form of Guarantee Agreement dated                   UGI             Form 10-K         10.30
              September 1999 between UGI Corporation                              (9/30/99)
              and RZB relating to loan amount of EURO
              74 million

  10.33       Form of Guarantee Agreement dated                   UGI             Form 10-K         10.33
              September 2000 between UGI Corporation                              (9/30/00)
              and RZB relating to loan amount of EURO
              14.9 million

  10.34       Form of Guarantee Agreement dated                   UGI             Form 10-K         10.34
              September 2000 between UGI Corporation                              (9/30/00)
              and RZB relating to loan amount of EURO
              9 million

 10.34(a)     Amendments dated October 11, 2001 to                UGI             Form 10-K         10.34(a)
              September 1999 Guarantee Agreements                                 (9/30/02)
               between UGI Corporation and RZB

                                       41

                                             INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------
EXHIBIT NO.                    EXHIBIT                         REGISTRANT          FILING           EXHIBIT
- -----------------------------------------------------------------------------------------------------------
                                                                                        
  10.35**     Description of Change of Control                    UGI             Form 10-K         10.33
              arrangements for Messrs. Greenberg,                                 (9/30/99)
              Cuzzolina, Hall, Knauss and Mendicino

 *10.36**     UGI Corporation 2004 Omnibus Equity
              Compensation Plan UGI Employees
              Nonqualified Stock Option Grant Letter
              dated as of January 1, 2004

*10.36(a)**   UGI Corporation 2004 Omnibus Equity
              Compensation Plan UGI Utilities
              Employees Nonqualified Stock Option
              Grant Letter dated as of January 1, 2004

  10.37**     Description of Change of Control                  AmeriGas          Form 10-K         10.31
              arrangement for Mr. Bissell                    Partners, L.P.       (9/30/99)

  10.38**     2002 Non-Qualified Stock Option Plan                UGI             Form 10-Q          10.7
              Amended and Restated as of April 29, 2003                           (3/31/03)

  10.39**     1992 Non-Qualified Stock Option Plan                UGI             Form 10-Q          10.6
              Amended and Restated as of April 29, 2003                           (3/31/03)

  10.40       [Intentionally omitted]

  10.41       Service Agreement for comprehensive                 UGI             Form 10-K         10.41
              delivery service (Rate CDS) dated February                          (9/30/00)
              23, 1999 between UGI Utilities, Inc. and
              Texas Eastern Transmission Corporation

  10.42       Purchase Agreement dated January 30,              AmeriGas          Form 8-K           10.1
              2001 and Amended and Restated on August        Partners, L.P.       (8/8/01)
              7, 2001 by and among Columbia Energy
              Group, Columbia Propane Corporation,
              Columbia Propane, L.P., CP Holdings, Inc.,
              AmeriGas Propane, L.P., AmeriGas
              Partners, L.P., and AmeriGas Propane, Inc.

 *10.43**     UGI Corporation 2004 Omnibus Equity
              Compensation Plan, Sub-Plan for French
              Employees Stock Option Grant Letter dated
              as of 2004

   10.44      Agreement by Petrolane Incorporated and           Petrolane         Form 10-K         10.13
              certain of its subsidiaries party thereto       Incorporated        (9/23/94)
              ("Subsidiaries") for the Sale of the
              Subsidiaries' Inventory and Assets to the
              Goodyear Tire & Rubber Company and
              D.C.H., Inc., as Purchaser, dated as of
              December 18, 1985

                                       42

                                             INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------
EXHIBIT NO.                    EXHIBIT                         REGISTRANT          FILING           EXHIBIT
- -----------------------------------------------------------------------------------------------------------
                                                                                        
   10.45      Purchase Agreement by and among                   National          Form 8-K            10.5
              Columbia Propane, L.P., CP Holdings, Inc.,        Propane           (4/19/99)
              Columbia Propane Corporation, National         Partners, L.P.
              Propane Partners, L.P., National Propane
              Corporation, National Propane SPG, Inc.,
              and Triarc Companies, Inc. dated as of
              April 5, 1999

   10.46      Capital Contribution Agreement dated as of        AmeriGas          Form 8-K            10.2
              August 21, 2001 by and between Columbia        Partners, L.P.       (8/21/01)
              Propane, L.P. and AmeriGas Propane, L.P.
              acknowledged and agreed to by CP
              Holdings, Inc.

   10.47      Promissory Note by National Propane L.P.,         AmeriGas          Form 10-K          10.39
              a Delaware limited partnership in favor of     Partners, L.P.       (9/30/01)
              Columbia Propane Corporation dated July
              19, 1999

   10.48      Loan Agreement dated July 19, 1999,               AmeriGas          Form 10-K          10.40
              between National Propane, L.P. and             Partners, L.P.       (9/30/01)
              Columbia Propane Corporation

   10.49      First Amendment dated August 21, 2001 to          AmeriGas          Form 10-K          10.41
              Loan Agreement dated July 19, 1999             Partners, L.P.       (9/30/01)
              between National Propane, L.P. and
              Columbia Propane Corporation

   10.50      Columbia Energy Group Payment Guaranty            AmeriGas          Form 10-K          10.42
              dated April 5, 1999                            Partners, L.P.       (9/30/01)

   10.51      Keep Well Agreement by and between                AmeriGas          Form 10-K          10.46
              AmeriGas Propane, L.P. and Columbia            Partners, L.P.       (9/30/01)
              Propane Corporation dated August 21, 2001

  10.52**     AmeriGas Propane, Inc. 2000 Long-Term             AmeriGas          Form 10-Q           10.2
              Incentive Plan on Behalf of AmeriGas           Partners, L.P.       (6/30/04)
              Partners, L.P., as amended December 15,
              2003.

   10.53      Storage Transportation Service Agreement          Utilities         Form 10-K          10.25
              (Rate Schedule SST) between Utilities and                           (9/30/02)
              Columbia dated November 1, 1993, as
              modified pursuant to orders of the Federal
              Energy Regulatory Commission

   10.54      Gas Service Delivery and Supply                   Utilities         Form 10-K          10.32
              Agreement between Utilities and UGI                                 (9/30/04)
              Energy Services, Inc. dated August 26,
              2004

                                       43

                                             INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------
EXHIBIT NO.                    EXHIBIT                         REGISTRANT          FILING           EXHIBIT
- -----------------------------------------------------------------------------------------------------------
                                                                                        
   10.55      No-Notice Transportation Service                 Utilities          Form 10-K         10.27
              Agreement (Rate Schedule CDS) between                               (9/30/02)
              Utilities and Texas Eastern Transmission
              dated February 23, 1999, as modified
              pursuant to various orders of the Federal
              Energy Regulatory Commission

   10.56      No-Notice Transportation Service                 Utilities          Form 10-K         10.28
              Agreement (Rate Schedule CDS) between                               (9/30/02)
              Utilities and Texas Eastern Transmission
              dated October 31, 2000, as modified
              pursuant to various orders of the Federal
              Energy Regulatory Commission

   10.57      Firm Transportation Service Agreement            Utilities          Form 10-K         10.29
              (Rate Schedule FT-1) between Utilities and                          (9/30/02)
              Texas Eastern Transmission dated June 15,
              1999, as modified pursuant to various
              orders of the Federal Energy Regulatory
              Commission

   10.58      Amendment No. 1 dated November 1,                 Utilities         Form 10-K         10.26
              2004, to the Service Agreement (Rate FSS)                           (9/30/04)
              dated as of November 1, 1989 between
              Utilities and 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 P 61,060
              (1993), order on rehearing, 64 FERC
              P 61,365 (1993)

   10.59      Firm Transportation Service Agreement            Utilities          Form 10-K         10.31
              (Rate Schedule FT) between Utilities and                            (9/30/02)
              Transcontinental Gas Pipe Line dated
              October 1, 1996, as modified pursuant to
              various orders of the Federal Energy
              Regulatory Commission

   10.60      Amendment No. 1 dated November 1,                Utilities          Form 10-K         10.30
              2004, to the No-Notice Transportation                               (9/30/04)
              Service Agreement (Rate Schedule CDS)
              between Utilities and Texas Eastern
              Transmission dated February 23, 1999, as
              modified pursuant to various orders of the
              Federal Energy Regulatory Commission

                                       44

                                             INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------
EXHIBIT NO.                    EXHIBIT                         REGISTRANT          FILING           EXHIBIT
- -----------------------------------------------------------------------------------------------------------
                                                                                        
   10.61      Amendment No. 1 dated November 1,                Utilities          Form 10-K         10.33
              2004, to the Firm Transportation Service                            (9/30/04)
              Agreement (Rate Schedule FT-1) between
              Utilities and Texas Eastern Transmission
              dated June 15, 1999, as modified pursuant
              to various orders of the Federal Energy
              Regulatory Commission

   10.62      Firm Transportation Service Agreement            Utilities          Form 10-K         10.34
              (Rate Schedule FTS) between Utilities and                           (9/30/04)
              Columbia Gas Transmission dated
              November 1, 2004

   10.63      Amendment Agreement dated June 18,                  UGI             Form 10-Q          10.5
              2004, relating to the Senior Facilities                             (6/30/04)
              Agreement dated June 26, 2003, as
              Amended and Restated, between AGZ
              Holding, as Parent, Antargaz, the Senior
              Lenders, (as defined therein) and Calyon, as
              Mandated Lead Arranger, Facility Agent
              and Security Agent.

   10.64      Creditor Accession Agreement dated June             UGI             Form 10-Q          10.6
              18, 2004, between UGI Bordeaux Holding,                             (6/30/04)
              as the New Investor, and Calyon, as
              Security Agent.

   10.65      Letter of Undertakings dated June 18, 2004,         UGI             Form 10-Q          10.7
              by UGI Bordeaux Holding to AGZ                                      (6/30/04)
              Holding, the Parent of Antargaz, and
              Calyon, the Facility Agent, acting on behalf
              of the Lenders, (as defined within the
              Senior Facilities Agreement).

   10.66      Tax Consolidation Agreement, dated June             UGI             Form 10-Q          10.8
              18, 2004, entered into by UGI Bordeaux                              (6/30/04)
              Holding and its Subsidiaries named therein.

  10.67**     AmeriGas Propane, Inc. Executive                  AmeriGas          Form 10-K          10.4
              Employee Severance Pay Plan, as amended        Partners, L.P.       (9/30/04)
              December 6, 2004.

   10.68      Senior Facilities Agreement dated June 26,          UGI             Form 10-Q          10.1
              2003 as Amended and Restated July 2,                                (3/31/04)
              2003, between AGZ Holding and Antargaz,
              Credit Lyonnais, as Mandated Lead
              Arranger, Facility Agent and Security
              Agent, and the Financial Institutions named
              therein.

                                       45

                                             INCORPORATION BY REFERENCE
- ------------------------------------------------------------------------------------------------------------
EXHIBIT NO.                    EXHIBIT                         REGISTRANT          FILING           EXHIBIT
- ------------------------------------------------------------------------------------------------------------
                                                                                        
   10.69      Form of Amendment Agreement dated                   UGI             Form 10-Q          10.1(a)
              January 15, 2004 to Senior Facilities                               (3/31/04)
              Agreement, as Amended and Restated July
              2, 2003.

   10.70      Pledge of Financial Instruments Account             UGI             Form 10-Q          10.2
              relating to Financial Instruments held by                           (3/31/04)
              AGZ Holding in Antargaz, dated July 7,
              2003, between AGZ Holding, as Pledgor,
              and Credit Lyonnais, as Security Agent,
              and the Senior Lenders.

   10.71      Pledge of Financial Instruments Accounts            UGI             Form 10-Q          10.3
              relating to Financial Instruments held by                           (3/31/04)
              Antargaz in certain subsidiary companies,
              dated July 7, 2003, between Antargaz, as
              Pledgor, and Credit Lyonnais, as Security
              Agent, and the Revolving Lenders.

   10.72      Intercreditor Agreement, dated July 7,              UGI             Form 10-Q          10.4
              2003, between AGZ Holding, Antargaz,                                (3/31/04)
              AGZ Finance, the Senior Lenders (as
              defined therein), the Investors (as defined
              therein), and Credit Lyonnais, as Facility
              Agent for the Senior Lenders and as
              Security Agent.

   10.73      Seller's Guarantee dated February 16, 2001          UGI             Form 10-Q          10.5
              among Elf Antar France, Elf Aquitaine and                           (3/31/04)
              AGZ Holding.

   *13        Pages 13 through 55 of the 2004 Annual
              Report to Shareholders

    14        Code of Ethics for principal executive,             UGI             Form 10-K            14
              financial and accounting officers                                   (9/30/03)

   *21        Subsidiaries of the Registrant

   *23        Consent of PricewaterhouseCoopers LLP

   *31.1      Certification by the Chief Executive Officer
              relating to the Registrant's Report on Form
              10-K for the fiscal year ended September
              30, 2004 pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002

                                       46

                                             INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------
EXHIBIT NO.                    EXHIBIT                         REGISTRANT          FILING           EXHIBIT
- -----------------------------------------------------------------------------------------------------------
                                                                                        
*31.2         Certification by the Chief Financial Officer
              relating to the Registrant's Report on Form
              10-K for the fiscal year ended September
              30, 2004 pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002

*32           Certification by the Chief Executive Officer
              and the Chief Financial Officer relating to
              the Registrant's Report on Form 10-K for
              the fiscal year ended September 30, 2004,
              pursuant to Section 906 of the Sarbanes-
              Oxley Act of 2002.

*   Filed herewith.

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

                                       47

                                   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 7, 2004                   By: Anthony J. Mendicino
                                             -----------------------------------
                                             Anthony J. Mendicino
                                             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 7, 2004, 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

Anthony J. Mendicino                        Senior Vice President - Finance
- ------------------------------------        and Chief Financial Officer
Anthony J. Mendicino                        (Principal Financial Officer)

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

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

Thomas F. Donovan                           Director
- ------------------------------------
Thomas F. Donovan

                                       48

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on December 7, 2004, by the following persons on
behalf of the Registrant in the capacities indicated.

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

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

Ernest E. Jones                             Director
- ------------------------------------
Ernest E. Jones

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

Marvin O. Schlanger                         Director
- ------------------------------------
Marvin O. Schlanger

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

                                       49

                        UGI CORPORATION AND SUBSIDIARIES

                             FINANCIAL INFORMATION

                  FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K

                         YEAR ENDED SEPTEMBER 30, 2004

                                      F-1

                        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 report thereon of PricewaterhouseCoopers LLP
dated December 6, 2004, listed in the following index, are included in UGI's
2004 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 7, 7A and 8, the 2004 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 Registered Public Accounting Firm

   On Consolidated Financial Statements                              Exhibit 13                 28

   On Financial Statement Schedules                                     F-4

Financial Statements:

   Consolidated Balance Sheets, September 30,
        2004 and 2003                                                Exhibit 13              30 to 31

    For the years ended September 30, 2004, 2003 and 2002:

        Consolidated Statements of Income                            Exhibit 13                 29

        Consolidated Statements of Cash Flows                        Exhibit 13                 32

        Consolidated Statements of Stockholders'
           Equity                                                    Exhibit 13                 33

                                      F-2

                        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                                                         Exhibit 13           34 to 55

Supplementary Data (unaudited):

    Quarterly Data for the years ended
        September 30, 2004 and 2003                                           Exhibit 13              53

Financial Statement Schedules:

    For the years ended September 30, 2004, 2003 and 2002:

           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., UGI HVAC
     Enterprises, Inc. and AmeriGas Propane, Inc. savings plans will be filed
     by amendment within the time period specified by Rule 15d-21(b).

We have omitted all other financial statement schedules because the required
information is either (1) not present; (2) not present in amounts sufficient to
require submission of the schedule; or (3) the information required is included
elsewhere in the financial statements or related notes.

                                      F-3

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                       ON
                          FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Stockholders
of UGI Corporation:

Our audits of the consolidated financial statements referred to in our report
dated December 6, 2004 appearing in the 2004 Annual Report to Shareholders of
UGI Corporation (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedules listed in Item 15(a)(2) of this Form
10-K. In our opinion, these financial statement schedules present fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.

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

                                      F-4

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

                                 BALANCE SHEETS
                              (Millions of dollars)

                                                                                                  September 30,
                                                                                                               Restated
ASSETS                                                                                         2004              2003
- ------                                                                                      ---------         ---------

Current assets:
     Cash and cash equivalents                                                              $     0.7         $     0.6
     Accounts and notes receivable                                                                4.2               1.7
     Deferred income taxes                                                                        0.2               0.2
     Prepaid expenses and other current assets                                                    0.4               0.5
                                                                                            ---------         ---------
        Total current assets                                                                      5.5               3.0

Investments in subsidiaries                                                                     956.1             618.2

Other assets                                                                                     11.4               8.6
                                                                                            ---------         ---------

        Total assets                                                                        $   973.0         $   629.8
                                                                                            =========         =========

LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
- -----------------------------------------------

Current liabilities:
     Accounts and notes payable                                                             $    10.2         $    10.7
     Accrued liabilities                                                                          5.9               7.7
                                                                                            ---------         ---------
        Total current liabilities                                                                16.1              18.4

Noncurrent liabilities                                                                          122.8             112.7

Commitments and contingencies

Common stockholders' equity:
     Common Stock, without par value (authorized - 150,000,000 shares;
        issued - 57,576,497 and 49,798,097 shares, respectively)                                762.6             511.3
     Retained earnings                                                                          146.2              90.9
     Accumulated other comprehensive income                                                      22.6               4.7
                                                                                            ---------         ---------
                                                                                                931.4             606.9
        Less treasury stock, at cost                                                            (97.3)           (108.2)
                                                                                            ---------         ---------
          Total common stockholders' equity                                                     834.1             498.7
                                                                                            ---------         ---------
          Total liabilities and common stockholders' equity                                 $   973.0         $   629.8
                                                                                            =========         =========

Commitments and Contingencies:

     In addition to the guarantees of FLAGA debt described in Note 4 to
Consolidated Financial Statements, at September 30, 2004, UGI Corporation had
agreed to indemnify the issuers of $26.7 of surety bonds issued on behalf of
certain UGI subsidiaries. UGI Corporation is authorized to guarantee up to $10.0
in supplier obligations on behalf of UGI Development Company, of which $5.3 of
such obligations were outstanding as of September 30, 2004. UGI Corporation is
also authorized to guarantee up to $265.0 of supplier obligations of UGI Energy
Services, Inc., of which $235.4 of such obligations were outstanding as of
September 30, 2004.

                                       S-1

                        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,
                                                                                ----------------------------------------
                                                                                 2004             2003             2002
                                                                                -------          ------           ------
                                                                                                       
 Revenues                                                                         $   -           $   -            $   -

 Costs and expenses:
     Operating and administrative expenses                                         24.5            18.6             13.6
     Other income, net                                                            (24.0)          (17.6)           (12.4)
                                                                                -------          ------           ------
                                                                                    0.5             1.0              1.2
                                                                                -------          ------           ------

 Operating loss                                                                    (0.5)           (1.0)            (1.2)
 Interest expense on intercompany debt                                             (2.2)           (1.5)            (1.3)
                                                                                -------          ------           ------

 Loss before income taxes                                                          (2.7)           (2.5)            (2.5)
 Income tax benefit                                                                (1.3)           (2.4)            (0.9)
                                                                                -------          ------           ------

 Loss before equity in income
     of unconsolidated subsidiaries                                                (1.4)           (0.1)            (1.6)
 Equity in income of unconsolidated
     subsidiaries                                                                 113.0            99.0             77.1
                                                                                -------          ------           ------

 Net income                                                                    $  111.6          $ 98.9           $ 75.5
                                                                                =======          ======           ======

 Earnings per common share:
        Basic                                                                   $  2.36          $ 2.34           $ 1.83
                                                                                =======          ======           ======

        Diluted                                                                 $  2.31          $ 2.29           $ 1.80
                                                                                =======          ======           ======

 Average common shares outstanding (millions):
     Basic                                                                       47.308          42.220           41.325
                                                                                =======          ======           ======
     Diluted                                                                     48.341          43.236           41.907
                                                                                =======          ======           ======

                                       S-2

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

                            STATEMENTS OF CASH FLOWS
                              (Millions of dollars)

                                                                                                  Year Ended
                                                                                                 September 30,
                                                                                    ---------------------------------------
                                                                                      2004            2003           2002
                                                                                    --------         -------        -------

NET CASH PROVIDED BY OPERATING
     ACTIVITIES (a)                                                                 $  100.2         $  97.2       $  113.9

CASH  FLOWS  FROM  INVESTING  ACTIVITIES:
     Investments in unconsolidated subsidiaries                                       (300.2)         (117.1)        (101.5)

     Net repayments to unconsolidated subsidiary                                           -               -           13.0
                                                                                    --------         -------       --------
        Net cash used by investing activities                                         (300.2)         (117.1)         (88.5)

CASH  FLOWS  FROM  FINANCING  ACTIVITIES:
     Payment of dividends on Common Stock                                              (56.3)          (47.8)         (44.8)

     Issuance of intercompany long-term debt                                               -            44.5            8.0
     Issuance of Common Stock                                                          257.0            23.7           11.0

     Repurchases of Common Stock                                                        (0.6)           (0.1)             -
                                                                                    --------         -------       --------
        Net cash provided (used) by financing activities                               200.1            20.3          (25.8)
                                                                                    --------         -------       --------

Cash and cash equivalents increase (decrease)                                       $    0.1         $   0.4       $   (0.4)
                                                                                    ========         =======       ========
Cash and cash equivalents:
     End of period                                                                  $    0.7         $   0.6       $    0.2
     Beginning of period                                                                 0.6             0.2            0.6
                                                                                    --------         -------       --------
         Increase (decrease)                                                        $    0.1         $   0.4       $   (0.4)
                                                                                    ========         =======       ========

(a)  Includes dividends received from unconsolidated subsidiaries of $99.0,
     $94.0 and $111.7, respectively, for the years ended September 30, 2004,
     2003 and 2002.

                                       S-3

                        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, 2004
- -----------------------------
Reserves deducted from assets in
  the consolidated balance sheet:

            Allowance for doubtful accounts               $  14.8                 $  18.7         $  (16.8) (1)            $  22.3
                                                          =======                                                          =======
                                                                                                  $    5.6  (2)

Other reserves:

            Self-insured property and casualty
            liability                                     $  48.4                $  26.1          $  (17.3) (3)            $  57.8
                                                          =======                                                          =======
                                                                                                       0.6  (4)

            Insured property and casualty liability       $   0.6                                                          $   0.6
                                                          =======                                                          =======

            Environmental, litigation and other           $  15.7                $   5.7          $   (3.8) (3)            $  30.9
                                                          =======                                                          =======
                                                                                                  $   13.1  (2)
                                                                                                       0.2  (4)

Year Ended September 30, 2003
- -----------------------------
Reserves deducted from assets in
  the consolidated balance sheet:

            Allowance for doubtful accounts               $  11.8                $  18.5          $  (15.8) (1)            $  14.8
                                                          =======                                                          =======
                                                                                                  $    0.3  (4)

Other reserves:

            Self-insured property and casualty
            liability                                     $  42.7                $  21.2          $  (15.1) (3)            $  48.4
                                                          =======                                                          =======
                                                                                                      (0.4) (4)

            Insured property and casualty liability       $   3.5                $  (2.8)          $  (0.1) (4)            $   0.6
                                                          =======                                                          =======

            Environmental, litigation and other           $  13.9                $   6.0           $  (4.6) (3)            $  15.7
                                                          =======                                                          =======
                                                                                                       0.4  (4)

                                       S-4

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

Year Ended September 30, 2002
- -----------------------------
Reserves deducted from assets in
  the consolidated balance sheet:

            Allowance for doubtful accounts                   $  15.6        $  14.2       $  (18.0) (1)        $  11.8
                                                              =======                                           =======

            Allowance for amortization of
              other deferred costs - AmeriGas Propane         $   1.1        $     -       $   (1.1) (4)        $     -
                                                              =======                                           =======

Other reserves:

            Self-insured property and casualty liability      $  37.4        $  19.0       $  (15.6) (3)        $  42.7
                                                              =======                                           =======
                                                                                                1.9  (4)

            Insured property and casualty liability           $   1.5        $     -       $    2.0  (4)        $   3.5
                                                              =======                                           =======

            Environmental, litigation and other               $  11.7        $   3.7       $   (2.6) (3)        $  13.9
                                                              =======                                           =======
                                                                                                1.1  (4)

(1) Uncollectible accounts written off, net of recoveries.
(2) Acquisition
(3) Payments, net.
(4) Other adjustments.

                                       S-5

                                  EXHIBIT INDEX

EXHIBIT NO.          DESCRIPTION
- -----------          -----------
                  
  10.2               UGI Corporation 2004 Omnibus Equity Compensation Plan Directors
                     Stock Unit Grant Letter dated as of January 8, 2004

  10.3               UGI Corporation 2004 Omnibus Equity Compensation Plan Directors
                     Nonqualified Stock Option Grant Letter dated as of January 8, 2004

  10.4               UGI Corporation 2004 Omnibus Equity Compensation Plan Utilities
                     Employees Performance Unit Grant Letter dated as of January 1, 2004

  10.5               UGI Corporation 2004 Omnibus Equity Compensation Plan UGI
                     Employees Stock Unit Grant Letter dated as of January 1, 2004

  10.7               UGI Corporation 2004 Omnibus Equity Compensation Plan UGI
                     Employees Performance Unit Grant Letter dated as of January 1, 2004

  10.9               UGI Corporation 2004 Omnibus Equity Compensation Plan AmeriGas
                     Employees Nonqualified Stock Option Grant Letter dated as of January
                     1, 2004

  10.12              UGI Corporation Senior Executive Employee Severance Pay Plan
                     as amended December 7, 2004

  10.17              UGI Corporation 2004 Omnibus Equity Compensation Plan, as amended
                     December 7, 2004

  10.36              UGI Corporation 2004 Omnibus Equity Compensation Plan UGI Employees
                     Nonqualified Stock Option Grant Letter dated as of January 1, 2004

  10.36(a)           UGI Corporation 2004 Omnibus Equity Compensation Plan UGI Utilities
                     Employees Nonqualified Stock Option Grant Letter dated as of
                     January 1, 2004

  10.43              UGI Corporation 2004 Omnibus Equity Compensation Plan, Sub-Plan for
                     French Employees Stock Option Grant Letter dated as of January 1, 2004

                                       50

                              EXHIBIT INDEX (CONT.)

EXHIBIT NO.          DESCRIPTION
- -----------          -----------
                  
     13              Pages 13 through 55 of the 2004 Annual Report to Shareholders

     21              Subsidiaries of the Registrant

     23              Consent of PricewaterhouseCoopers LLP

     31.1            Certification by the Chief Executive Officer pursuant to Section
                     302 of the Sarbanes-Oxley Act

     31.2            Certification by the Chief Financial Officer pursuant to Section
                     302 of the Sarbanes-Oxley Act

     32              Certification by the Chief Executive Officer and Chief Financial
                     Officer pursuant to Section 906 of the Sarbanes-Oxley Act

                                       51

                                                                    EXHIBIT 10.2

                                                                       7/23/2004
                                                          Non-Employee Directors

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                             STOCK UNIT GRANT LETTER

This STOCK UNIT GRANT LETTER is dated as of January 8, 2004 (the "Date of
Grant") and delivered by UGI Corporation ("UGI"), to _________________ (the
"Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of stock units with respect to shares of common stock of
UGI ("Shares"). The Board of Directors of UGI (the "Board") has decided to make
a stock unit grant to the Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Stock Units.

      (a) Subject to the terms and conditions set forth in this Grant Letter,
the Board hereby awards the Participant an award of 1,275 Stock Units (as
defined below). The Stock Units are granted with Dividend Equivalents (as
defined below).

      (b) UGI shall keep records in an Account (as defined below) to reflect the
number of Stock Units and Dividend Equivalents credited to the Participant.
Fractional Stock Units shall accumulate in the Participant's Account and shall
be added to other fractional Stock Units to create whole Stock Units.

2. Dividend Equivalents with Respect to Stock Units.

      (a) Crediting of Dividend Equivalents. From the Date of Grant until the
Participant's Account has been fully distributed, on each payment date for a
dividend paid by UGI on its Shares, UGI shall credit to the Participant's
Account an amount equal to the Dividend Equivalent associated with the Stock
Units credited to the Participant on the record date for the dividend.

      (b) Conversion to Stock Units. On the last day of each Plan Year (as
defined below), the amount of the Dividend Equivalents credited to the
Participant's Account during that Plan Year shall be converted to a number of
Stock Units, based on the Unit Value (as defined below) on the last day of the
Plan Year. In the event of a Change of Control (as defined in the Plan) or in
the event the Participant dies or Separates from Service (as defined below)
prior to the last day of the Plan Year, as soon as practicable following such
event, and in no event later than the date on which Stock Units are redeemed in
accordance with Section 3, UGI shall convert the amount of Dividend Equivalents
previously credited to the Participant's Account during the Plan Year to a
number of Stock Units based on the Unit Value on the date of such Change of
Control, death or Separation from Service.

3. Events Requiring Redemption of Stock Units.

      (a) Redemption. UGI shall redeem Stock Units credited to the Participant's
Account at the times and in the manner prescribed by this Section 3. Except as
described in subsection (d) below, redemptions shall be made by issuing to the
Participant a number of Shares equal to the number of Stock Units being
redeemed; provided, however, that any fractional Stock Units credited to a
Participant's Account shall be paid in cash in an amount equal to the Unit Value
of such fractional Stock Unit at the redemption date.

      (b) Separation from Service or Death. In the event the Participant
Separates from Service or dies, UGI shall redeem all the Stock Units then
credited to the Participant's Account as soon as practicable following the
Participant's Separation from Service or death. In the event of death, the
redemption amount shall be paid to the Participant's estate.

      (c) Elections. The Participant may elect to defer receipt of the
redemption amount payable pursuant to subsection (b) upon Separation from
Service, until the Participant attains a specific age, not to exceed the age of
the Participant in January of the Plan Year following his or her attainment of
age 72. In addition, the Participant may elect to receive such payment in (i) a
single distribution or (ii) annual or quarterly installments over a period not
to exceed 20 years. Both such elections must be made at least 13 months before
the Participant's Separation from Service, or at such earlier date as UGI shall
require.

      (d) Change of Control. Unless otherwise provided by the Board, in the
event of a Change of Control, UGI shall redeem all the Stock Units then credited
to the Participant's Account. Such redemption amount shall be paid in cash. The
amount paid shall equal the product of the number of Stock Units being redeemed
multiplied by the Unit Value at the date of the Change of Control. The
Participant may elect to defer receipt of such payment until he or she attains a
specified age, not to exceed the age of the Participant in January of the Plan
Year following his or her attainment of age 72. In addition, the Participant may
elect to receive such payment in (i) a single distribution or (ii) annual or
quarterly installments over a period not to exceed 20 years. Both such elections
must be made at least 13 months before the Change of Control, or at such earlier
date as UGI shall require.

      (e) Installments. Dividend Equivalents will be credited to the
Participant's Account in accordance with Section 2 until the full amount of the
Participant's Account has been distributed. Each installment payment shall be
calculated by dividing the Participant's total Account balance as of such
payment date by the number of payments remaining in the installment period.

      (f) Acceleration. The Board may at any time accelerate the redemption of
outstanding Stock Units under such circumstances as the Board deems appropriate.

4. Definitions. For purposes of this Grant Letter, the following terms will have
the meanings set forth below:

                                       2

      (a) "Account" means UGI's bookkeeping account established pursuant to
Section 1, which reflects the number of Stock Units and the amount of Dividend
Equivalents standing to the credit of the Participant.

      (b) "Dividend Equivalent" means an amount determined by multiplying the
number of Shares subject to Stock Units by the per-share cash dividend, or the
per-share fair market value of any dividend in consideration other than cash,
paid by UGI on its common stock.

      (c) "Plan Year" means the calendar year.

      (d) "Separates from Service" means the Participant's termination of
service as a non-employee director and as an employee of UGI for any reason
other than death.

      (e) "Stock Unit" means the right of the Participant to receive a Share of
UGI common stock, or an amount based on the value of a Share of UGI common
stock, subject to the terms and conditions of this Grant Letter and the Plan.

      (f) "Unit Value" means, at any time, the value of each Stock Unit, which
value shall be equal to the Fair Market Value (as defined in the Plan) of a
Share on such date.

5. Taxes. All obligations of UGI under this Grant Letter shall be subject to the
rights of UGI as set forth in the Plan to withhold amounts required to be
withheld for any taxes, if applicable.

6. Conditions. The obligation of UGI to deliver Shares shall also be subject to
the condition that if at any time the Board shall determine in its discretion
that the listing, registration or qualification of the Shares upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issue of Shares, the Shares may not be
issued in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board. The issuance of Shares to the Participant pursuant
to this Grant Letter is subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.

7. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan and
the Terms and Conditions established by the Committee with respect to the Plan,
both of which are incorporated herein by reference, and in all respects shall be
interpreted in accordance with the Plan. The grant and payment of the Stock
Units are subject to interpretations, regulations and determinations concerning
the Plan established from time to time by the Board in accordance with the
provisions of the Plan, including, but not limited to, provisions pertaining to
(i) the registration, qualification or listing of the Shares issued under the
Plan, (ii) changes in capitalization of UGI and (iii) other requirements of
applicable law. The Board shall have the authority to interpret and construe
this Grant Letter pursuant to the terms of the Plan, and its decisions shall be
conclusive as to any questions arising hereunder.

8. No Shareholder Rights. Neither the Participant, nor any person entitled to
receive payment in the event of the Participant's death, shall have any of the
rights and privileges of a

                                       3

shareholder with respect to Shares, until certificates for Shares have been
issued upon payment of Stock Units. The Participant shall not have any interest
in any fund or specific assets of UGI by reason of this award or the Stock Unit
account established for the Participant.

9. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. If the Participant dies, any payments to be made under
this Grant Letter after the Participant's death shall be paid to the
Participant's estate. The rights and protections of UGI hereunder shall extend
to any successors or assigns of UGI and to UGI's parents, subsidiaries, and
affiliates.

10. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

11. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the records of UGI, or to such other address as the Participant may
designate to UGI in writing. Any notice shall be delivered by hand, sent by
telecopy or enclosed in a properly sealed envelope addressed as stated above,
registered and deposited, postage prepaid, in a post office regularly maintained
by the United States Postal Service.

      IN WITNESS WHEREOF, the parties have executed this Stock Unit Grant Letter
as of the Date of Grant.

Attest:                                  UGI Corporation

______________________________           By:____________________________________
Corporate Secretary                           Robert H. Knauss
                                              Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Performance Units described in this Grant
Letter, and I agree to be bound by the terms of the Plan, including the Terms
and Conditions, and this Grant Letter. I hereby further agree that all the
decisions and determinations of the Committee shall be final and binding on me
and any other person having or claiming a right under this Grant.

____________________________
Participant

                                       4

                                                                    EXHIBIT 10.3

                                                                       7/23/2004
                                                          Non-Employee Directors

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                     NONQUALIFIED STOCK OPTION GRANT LETTER

This STOCK OPTION GRANT, dated as of January 8, 2004 (the "Date of Grant"), is
delivered by UGI Corporation ("UGI") to _____________ (the "Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of options to purchase shares of common stock of UGI. The
Board of Directors of UGI (the "Board") has decided to make a stock option grant
to the Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth in this Grant
Letter and in the Plan, the Board hereby grants to the Participant a
nonqualified stock option (the "Option") to purchase 4,250 shares of common
stock of UGI ("Shares") at an exercise price of $34.01 per Share. The Option
shall be fully and immediately exercisable on the Date of Grant.

2. Term of Option.

      (a) The Option shall have a term of ten years from the Date of Grant and
shall terminate at the expiration of that period (5:00 p.m. EST on January 7,
2014), unless it is terminated at an earlier date pursuant to the provisions of
this Grant Letter or the Plan.

      (b) The Option, to the extent that it has not previously been exercised,
will terminate when the Participant Separates from Service (as defined below)
with the Company (as defined below). However, if the Participant Separates from
Service by reason of Retirement (as defined below), Disability (as defined
below), or death, the Option will thereafter be exercisable pursuant to the
following:

            (i) Retirement. If the Participant Separates from Service on account
      of Retirement, the Option held by such Participant may be exercised at any
      time prior to the earlier of the expiration date of the Option or the
      expiration of the 36-month period following the Participant's Retirement.

            (ii) Disability. If the Participant is determined to be Disabled by
      the Board, the Option may be exercised at any time prior to the earlier of
      the expiration date of the Option or the expiration of the 36-month period
      following the Participant's Separation from Service on account of
      Disability.

            (iii) Death. In the event of the death of the Participant while
      serving as a non-employee director or employee of the Company, the Option
      may be exercised by the personal representative of the Participant's
      estate, or the personal representative under applicable law if the
      Participant dies intestate, at any time prior to the earlier of the
      expiration date of the Option or the expiration of the 12-month period
      following the Participant's death.

      (c) In no event may the Option be exercised after the date that is
immediately before the tenth anniversary of the Date of Grant.

3. Exercise Procedures.

      (a) Subject to the provisions of Paragraph 2 above, the Participant may
exercise part or all of the exercisable Option by giving UGI irrevocable written
notice of intent to exercise on a form provided by UGI and delivered in the
manner provided in Section 11 below. Payment of the exercise price must be made
prior to issuance of the Shares. The Participant shall pay the exercise price
(i) in cash, (ii) by delivering Shares (or by attestation to ownership of
Shares), which shall be valued at their fair market value on the date of
delivery, which shall have been held by the Participant for at least six months,
and which shall have a fair market value on the date of exercise equal to the
exercise price, (iii) by payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board or (iv) by such other
method as the Board may approve.

      (b) The obligation of UGI to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the Board,
including such actions as UGI's counsel shall deem necessary or appropriate to
comply with relevant securities laws and regulations. UGI may require that the
Participant (or other person exercising the Option after the Participant's
death) represent that the Participant is purchasing Shares for the Participant's
own account and not with a view to or for sale in connection with any
distribution of the Shares, or such other representation as UGI deems
appropriate.

      (c) All obligations of UGI under this Grant Letter shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to
be withheld for any taxes, if applicable.

4. Definitions. Whenever used in this Grant Letter, the following terms will
have the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means the Participant's physical or mental disability, as
determined by the Board in its sole discretion.

      (c) "Retirement" means the Participant's Separation from Service after (1)
attaining age 65 with five or more years of service with the Company or (2) ten
or more years of service with the Company.

                                       -2-

      (d) "Separates from Service" or "Separation from Service" means the
Participant's termination of service as a non-employee director and as an
employee of the Company for any reason other than death.

5. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Board may take such actions as it deems appropriate pursuant to the Plan.

6. Restrictions on Exercise. Only the Participant may exercise the Option during
the Participant's lifetime and, after the Participant's death, the Option shall
be exercisable by the Participant's estate, to the extent that the Option is
exercisable pursuant to this Grant Letter.

7. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan and
the Terms and Conditions established by the Committee with respect to the Plan,
both of which are incorporated herein by reference, and in all respects shall be
interpreted in accordance with the Plan. The grant and exercise of the Option
are subject to interpretations, regulations and determinations concerning the
Plan established from time to time by the Board in accordance with the
provisions of the Plan, including, but not limited to, provisions pertaining to
(i) the registration, qualification or listing of the Shares, (ii) changes in
capitalization of the Company and (iii) other requirements of applicable law.
The Board shall have the authority to interpret and construe the Option pursuant
to the terms of the Plan, and its decisions shall be conclusive as to any
questions arising hereunder.

8. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares subject to the Option, until certificates for Shares have been issued
upon the exercise of the Option.

9. Assignment and Transfers. Except as the Board may otherwise permit pursuant
to the Plan, the rights and interests of the Participant under this Grant Letter
may not be sold, assigned, encumbered or otherwise transferred except, in the
event of the death of the Participant, by will or by the laws of descent and
distribution. The rights and protections of the Company hereunder shall extend
to any successors or assigns of the Company and to the Company's parents,
subsidiaries, and affiliates.

10. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

11. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the records of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

                                      -3-

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                        UGI Corporation

Attest

______________________________          By:_____________________________________
Corporate Secretary                           Robert H. Knauss
                                              Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Option described in this Grant Letter, and I
agree to be bound by the terms of the Plan, including the Terms and Conditions,
and this Grant Letter. I hereby further agree that all the decisions and
determinations of the Board shall be final and binding on me and any other
person having or claiming a right under this Grant.

___________________
Participant

                                      -4-

                                                                    EXHIBIT 10.4

                                                                       7/27/2004
                                                             Utilities Employees

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                          PERFORMANCE UNIT GRANT LETTER

This PERFORMANCE UNIT GRANT, dated as of January 1, 2004 (the "Date of Grant"),
is delivered by UGI Corporation ("UGI") to _____________ (the "Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of performance units ("Performance Units") with respect
to shares of common stock of UGI ("Shares"). The Compensation and Management
Development Committee of the Board of Directors of UGI (the "Committee") has
decided to grant Performance Units to the Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Performance Units. Subject to the terms and conditions set forth in
this Grant Letter and in the Plan, the Committee hereby grants to the
Participant __________ Performance Units. The number of Performance Units set
forth above is the target award of Performance Units. The Performance Units are
contingently awarded and will be earned and payable if and to the extent that
the performance goals and other conditions of the Grant Letter are met. The
Performance Units are granted with Dividend Equivalents (as defined in Section
9).

2. Performance Goals.

      (a) The Participant shall earn the right to payment of the Performance
Units if the performance goals described in subsection (b) below are met for the
measurement period, and if the Participant continues to be employed by, or
provide service to, the Company (as defined in Section 9) through December 31,
2006. The measurement period is the period beginning January 1, 2004 and ending
December 31, 2006.

      (b) The target award level of Performance Units and Dividend Equivalents
will be payable if UGI's Total Shareholder Return (TSR) equals the median TSR of
a peer group for the measurement period. The peer group is the group of
companies that comprises the S&P Utilities Index during the measurement period.
The actual amount of the award of Performance Units may be higher or lower than
the target award, or even zero, based on UGI's TSR percentile rank relative to
the companies in the S&P Utilities Index, as follows:

UGI's TSR Rank (Percentile)              Percentage of Target Award Earned
- ---------------------------              ---------------------------------
                                      
       Highest                                         200%
       90th                                            175%
       75th                                            150%
       60th                                            125%
       50th                                            100%
       40th                                             50%
       less than 40th                                    0%

The target award percentage earned will be interpolated between each of the
measuring points.

      (c) TSR shall be calculated by UGI using the comparative returns
methodology used by Bloomberg L.P. or its successor at the time of the
calculation. The share price used for determining TSR at the beginning and the
end of the measurement period will be the average price for the 90-day period
preceding the beginning of the measurement period (i.e., the 90-day period
ending on December 31, 2003) and the 90-day period ending on the last day of the
measurement period (i.e., the 90-day period ending on December 31, 2006).

      (d) The target award is the number of Performance Units set forth in
Section 1 above, which is the amount designated for 100% (50th TSR rank)
performance. The Participant can earn up to 200% of the target award if UGI's
TSR rank exceeds the 50th TSR rank, according to the foregoing schedule.

      (e) At the end of the measurement period, the Committee will determine
whether and to what extent the performance goals have been met and the amount to
be paid with respect to the Performance Units. Except as described in Section 3
below, the Participant must be employed by, or providing service to, the Company
on December 31, 2006 in order for the Participant to receive payment with
respect to the Performance Units.

3. Termination of Employment or Service.

      (a) Except as described below, if the Participant's employment or service
with the Company terminates on or before December 31, 2006, the Performance
Units and all Dividend Equivalents credited under this Grant Letter will be
forfeited.

      (b) If the Participant terminates employment or service on account of
Retirement (as defined in Section 9), Disability (as defined in Section 9) or
death, the Participant will earn a pro-rata portion of the Participant's
outstanding Performance Units and Dividend Equivalents, if the performance goals
and the requirements of this Grant Letter are met. The prorated portion will be
determined as the amount that would otherwise be paid after the end of the
measurement period, based on achievement of the performance goals, multiplied by
a fraction, the numerator of which is the number of calendar years during the
measurement period in which the Participant has been employed by, or provided
service to, the Company and the denominator of which is three. For purposes of
the proration calculation, the calendar year in which the Participant's
termination of employment or service on account of Retirement, Disability, or
death occurs will be counted as a full year.

                                       2

      (c) In the event of termination of employment or service on account of
Retirement, Disability or death, the prorated amount shall be paid after the end
of the measurement period, or at an earlier date determined by the Committee.

4. Coordination with Severance Plan. Notwithstanding anything in this Grant
Letter to the contrary, if the Participant receives severance benefits under a
Severance Plan (as defined in Section 9) and the terms of such benefits require
that severance compensation payable under the Severance Plan be reduced by
benefits payable under this Plan, any amount payable to the Participant with
respect to Performance Units and Dividend Equivalents after the Participant's
termination of employment or service shall be reduced by the amount of severance
compensation paid to the Participant under the Severance Plan, as required by,
and according to the terms of, the Severance Plan.

5. Payment with Respect to Performance Units. If the Committee determines that
the conditions to payment of the Performance Units have been met, the Company
shall pay to the Participant, after the end of the measurement period, (i)
Shares or cash, or a combination of the two, as the Committee determines, equal
to the amount to be paid according to achievement of the performance goals, up
to the target award specified in Section 1 above, and (ii) cash in an amount
equal to the Fair Market Value (as defined in the Plan) of the Shares with
respect to the amount to be paid in excess of the target award.

6. Dividend Equivalents with Respect to Performance Units.

      (a) Dividend Equivalents shall accrue with respect to Performance Units
and shall be payable subject to the same performance goals and terms as the
Performance Units to which they relate. Dividend Equivalents shall be credited
with respect to the target award of Performance Units from the Date of Grant
until the payment date. If the underlying Performance Units are forfeited, all
related Dividend Equivalents shall also be forfeited.

      (b) While the Performance Units are outstanding, the Company will keep
records in a bookkeeping account for the Participant. On each payment date for a
dividend paid by UGI on its common stock, the Company shall credit to the
Participant's account an amount equal to the Dividend Equivalents associated
with the target award of Performance Units held by the Participant on the record
date for the dividend. No interest will be credited to any such account.

      (c) The target amount of Dividend Equivalents (100% of the Dividend
Equivalents credited to the Participant's account) will be earned if UGI's TSR
rank is at the 50th TSR rank for the measurement period. The Participant can
earn up to 200% of the target amount of Dividend Equivalents if UGI's TSR rank
exceeds the 50th TSR rank, according to the schedule in Section 2 above. Except
as described in Section 3(b) above, if the Participant's employment or service
with the Company terminates on or before December 31, 2006, all Dividend
Equivalents will be forfeited.

      (d) Dividend Equivalents will be paid in cash at the same time as the
underlying Performance Units are paid, after the Committee determines that the
conditions to payment have been met. Notwithstanding anything in this Grant
Letter to the contrary, the Participant may not

                                       3

accrue Dividend Equivalents in excess of $1,000,000 during any calendar year
under all grants under the Plan.

7. Withholding. The Participant shall be required to pay to the Company, or make
other arrangements satisfactory to the Company to provide for the payment of,
any federal, state, local or other taxes that the Company is required to
withhold with respect to the payments under this Grant Letter.

8. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Performance Units, and, in the event of a Change of
Control, the Committee may take such actions as it deems appropriate pursuant to
the Plan. For Participants who are employees of UGI Utilities, Inc.
("Utilities") or a subsidiary of Utilities, the term "Change of Control" shall
mean (i) a Change of Control of UGI as defined in the Plan, or (ii) one of the
events set forth on Exhibit A with respect to Utilities.

9. Definitions. For purposes of this Grant Letter, the following terms will have
the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Dividend Equivalent" means an amount determined by multiplying the
number of shares of UGI common stock subject to the target award of Performance
Units by the per-share cash dividend, or the per-share fair market value of any
dividend in consideration other than cash, paid by UGI on its common stock.

      (d) "Employed by, or provide service to, the Company" shall mean
employment or service as an employee or director of the Company.

      (e) "Performance Unit" means a hypothetical unit that represents the value
of one share of UGI common stock.

      (f) "Retirement" means the Participant's retirement under the Retirement
Income Plan for Employees of UGI Utilities, Inc., if the Participant is covered
by that Retirement Income Plan. "Retirement" for other Company employees means
termination of employment after attaining age 55 with ten or more years of
service with the Company.

      (g) "Severance Plan" means any severance plan maintained by the Company
that is applicable to the Participant.

10. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan
and the Terms and Conditions established by the Committee with respect to the
Plan, both of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan and the Terms and Conditions.
The grant and payment of Performance Units and Dividend Equivalents are subject
to interpretations, regulations and determinations concerning the Plan
established from time to time by the Committee in accordance with the provisions
of the Plan,

                                       4

including, but not limited to, provisions pertaining to (i) the registration,
qualification or listing of the Shares, (ii) changes in capitalization of the
Company and (iii) other requirements of applicable law. The Committee shall have
the authority to interpret and construe the grant pursuant to the terms of the
Plan, and its decisions shall be conclusive as to any questions arising
hereunder.

11. No Employment or Other Rights. The grant of Performance Units shall not
confer upon the Participant any right to be retained by or in the employ or
service of the Company and shall not interfere in any way with the right of the
Company to terminate the Participant's employment or service at any time. The
right of the Company to terminate at will the Participant's employment or
service at any time for any reason is specifically reserved.

12. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares related to the Performance Units, unless and until certificates for
Shares have been issued to the Participant or successor.

13. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. If the Participant dies, any payments to be made under
this Grant Letter after the Participant's death shall be paid to the
Participant's estate. The rights and protections of the Company hereunder shall
extend to any successors or assigns of the Company and to the Company's parents,
subsidiaries, and affiliates.

14. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

                                       5

15. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                      UGI Corporation

Attest

_________________________________     By:_______________________________________
Corporate Secretary                         Robert H. Knauss
                                            Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Performance Units described in this Grant
Letter, and I agree to be bound by the terms of the Plan, including the Terms
and Conditions, and this Grant Letter. I hereby further agree that all the
decisions and determinations of the Committee shall be final and binding on me
and any other person having or claiming a right under this Grant.

___________________________
Participant

                                       6

                                    EXHIBIT A

                   Change of Control with Respect to Utilities

For Participants who are employees of Utilities, or a subsidiary of Utilities,
the term "Change of Control" shall include the events set forth in this Exhibit
A with respect to Utilities, and the defined terms set forth used in this
Exhibit A, if not defined in the Plan, shall have the following meanings:

1. "Change of Control" shall include any of the following events:

            (A) UGI and the UGI Subsidiaries fail to own more than fifty percent
(50%) of the then outstanding shares of common stock of Utilities or more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of Utilities entitled to vote generally in the election of directors;
or

            (B) Completion by Utilities 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 Utilities' outstanding common stock and 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 Utilities'
outstanding common stock and voting securities, as the case may be; or

            (C) Completion of a complete liquidation or dissolution of the
Utilities or sale or other disposition of all or substantially all of the assets
of Utilities 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
Utilities' outstanding common stock and voting securities immediately prior to
such sale or disposition in substantially the same proportion as their ownership
of Utilities' outstanding common stock and voting securities, as the case may
be, immediately prior to such sale or disposition.

2. "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.

3. 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

                                       A-1

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 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 securities; 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 (40) days after the date of such
acquisition.

4. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

5. "Person" shall mean an individual or a corporation, partnership, trust,
unincorporated organization, association, or other entity.

6. "UGI Subsidiary" shall mean any corporation in which UGI directly or
indirectly, owns at least a fifty percent (50%) interest or an unincorporated
entity of which UGI, as applicable, directly or indirectly, owns at least fifty
percent (50%) of the profits or capital interests.

                                      A-2

                                                                    EXHIBIT 10.5

                                                                        7/2/2004
                                                                   UGI Employees

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                                STOCK UNIT GRANT

This STOCK UNIT GRANT, dated as of ___________, 2004 (the "Date of Grant"), is
delivered by UGI Corporation ("UGI") to _____________ (the "Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of stock units ("Stock Units") with respect to shares of
common stock of UGI ("Shares"). The Compensation and Management Development
Committee of the Board of Directors of UGI (the "Committee") has decided to
grant Stock Units to the Participant.

      NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound hereby, agree as follows:

1. Grant of Stock Units. Subject to the terms and conditions set forth in this
Agreement and in the Plan, UGI hereby grants to the Participant __________ Stock
Units. The Stock Units are contingently awarded and will be earned and payable
if and to the extent that the conditions of this Agreement are met. The Stock
Units are granted with Dividend Equivalents (as defined in Section 9).

2. Vesting. The Participant shall earn the right to payment of the Stock Units
if the Participant is employed by, or providing service to, the Company (as
defined below) on the applicable vesting date:

  Vesting Date     Vested Stock Units
  ------------     ------------------
                
_________, 2005         [___%]
_________, 2006         [___%]
_________, 2007         [___%]

If the foregoing schedule would produce fractional Shares, the number of Shares
for which the Stock Units vest shall be rounded down to the nearest whole Share.

3. Termination of Employment or Service.

      (a) Except as described below, if the Participant's employment or service
with the Company terminates before the Stock Units are fully vested, the
unvested Stock Units, and all related Dividend Equivalents, will be forfeited.

      (b) If the Participant ceases to be employed by, or provide service to,
the Company by reason of (i) Retirement (as defined below), (iii) Disability (as
defined below), or (iv) death, the Participant's unvested Stock Units will
become fully vested as of the termination date.

4. Payment with Respect to Stock Units. When the Stock Units vest, the Company
shall pay to the Participant whole Shares equal to the number of Stock Units
that have become vested on the vesting date.

5. Dividend Equivalents with Respect to Stock Units.

      (a) Dividend Equivalents shall accrue with respect to Stock Units and
shall be payable subject to the same vesting conditions as the Stock Units to
which they relate. Dividend Equivalents shall be credited with respect to the
Stock Units from the Date of Grant until the payment date. Dividend Equivalents
will become vested as the underlying Stock Units vest. If the underlying Stock
Units are forfeited, all related Dividend Equivalents shall also be forfeited.

      (b) While the Stock Units are outstanding, the Company will keep records
in a bookkeeping account for the Participant. On each payment date for a
dividend paid by UGI on its common stock, the Company shall credit to the
Participant's account an amount equal to the Dividend Equivalents associated
with the Stock Units held by the Participant on the record date for the
dividend. No interest will be credited to any such account.

      (c) Dividend Equivalents will be paid in cash at the same time as the
underlying Stock Units are paid.

      (d) Notwithstanding anything in this Agreement to the contrary, the
Participant may not accrue Dividend Equivalents in excess of $1,000,000 during
any calendar year under all grants under the Plan.

6. Coordination with Severance Plan. Notwithstanding anything in this Agreement
to the contrary, if the Participant receives severance benefits under a
Severance Plan (as defined in Section 9) and the terms of such benefits require
that severance compensation payable under the Severance Plan be reduced by
benefits payable under this Plan, any amount payable to the Participant with
respect to Stock Units and Dividend Equivalents after the Participant's
termination of employment or service shall be reduced by the amount of severance
compensation paid to the Participant under the Severance Plan, as required by,
and according to the terms of, the Severance Plan.

7. Withholding. The Participant shall be required to pay to the Company, or make
other arrangements satisfactory to the Company to provide for the payment of,
any federal, state, local or other taxes that the Company is required to
withhold with respect to the payments under this Agreement. The Participant may
elect to satisfy the Company's tax withholding obligation with respect to
payments in Shares by having Shares withheld up to an amount that does not
exceed the minimum applicable withholding tax rate for federal (including FICA),
state and local tax liabilities.

8. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Stock Units, and, in the event of a Change of
Control, the Committee may take such actions as it deems appropriate pursuant to
the Plan.

9. Definitions. For purposes of this Agreement, the following terms will have
the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

                                      A-2

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Dividend Equivalent" means an amount determined by multiplying the
number of shares of UGI common stock subject to the target award of Stock Units
by the per-share cash dividend, or the per-share fair market value of any
dividend in consideration other than cash, paid by UGI on its common stock.

      (d) "Employed by, or provide service to, the Company" shall mean
employment or service as an employee or director of the Company.

      (e) "Stock Unit" means a hypothetical unit that represents the value of
one share of UGI common stock.

      (f) "Retirement" means the Participant's retirement under the Retirement
Income Plan for Employees of UGI Utilities, Inc., if the Participant is covered
by that Retirement Income Plan. "Retirement" for other Company employees means
termination of employment after attaining age 55 with ten or more years of
service with the Company.

      (g) "Severance Plan" means any severance plan maintained by the Company
that is applicable to the Participant.

10. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant and payment of Stock
Units and Dividend Equivalents are subject to interpretations, regulations and
determinations concerning the Plan established from time to time by the
Committee in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) the registration, qualification or
listing of the Shares, (ii) changes in capitalization of the Company and (iii)
other requirements of applicable law. The Committee shall have the authority to
interpret and construe the grant pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

11. No Employment or Other Rights. The grant of Stock Units shall not confer
upon the Participant any right to be retained by or in the employ or service of
the Company and shall not interfere in any way with the right of the Company to
terminate the Participant's employment or service at any time. The right of the
Company to terminate at will the Participant's employment or service at any time
for any reason is specifically reserved.

12. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares related to the Stock Units, unless and until certificates for Shares have
been issued to the Participant or successor.

13. Assignment and Transfers. The rights and interests of the Participant under
this Agreement may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. If the Participant dies, any payments to be made under
this Agreement after the Participant's death shall be paid to the personal
representative of the Participant's estate, or the personal representative under
applicable law if the Participant dies intestate. The rights and protections of
the Company hereunder shall extend to any successors or assigns of the Company
and to the

                                      A-3

Company's parents, subsidiaries, and affiliates. This Agreement may be assigned
by the Company without the Participant's consent.

14. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

15. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Agreement, and the Participant has executed this Agreement,
effective as of the Date of Grant.

                                    UGI Corporation

Attest

_____________________________       By:_________________________________________
Corporate Secretary                        Robert H. Knauss
                                           Vice President, General Counsel

I hereby accept the Stock Units described in this Agreement, and I agree to be
bound by the terms of the Plan and this Agreement. I hereby further agree that
all the decisions and determinations of the Committee shall be final and
binding.

_______________________________
Participant

                                      A-4

                                                                    EXHIBIT 10.7

                                                                       7/23/2004
                                                                   UGI Employees

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                          PERFORMANCE UNIT GRANT LETTER

This PERFORMANCE UNIT GRANT, dated as of January 1, 2004 (the "Date of Grant"),
is delivered by UGI Corporation ("UGI") to _____________ (the "Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of performance units ("Performance Units") with respect
to shares of common stock of UGI ("Shares"). The Compensation and Management
Development Committee of the Board of Directors of UGI (the "Committee") has
decided to grant Performance Units to the Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Performance Units. Subject to the terms and conditions set forth in
this Grant Letter and in the Plan, the Committee hereby grants to the
Participant __________ Performance Units. The number of Performance Units set
forth above is the target award of Performance Units. The Performance Units are
contingently awarded and will be earned and payable if and to the extent that
the performance goals and other conditions of the Grant Letter are met. The
Performance Units are granted with Dividend Equivalents (as defined in Section
9).

2. Performance Goals.

      (a) The Participant shall earn the right to payment of the Performance
Units if the performance goals described in subsection (b) below are met for the
measurement period, and if the Participant continues to be employed by, or
provide service to, the Company (as defined in Section 9) through December 31,
2006. The measurement period is the period beginning January 1, 2004 and ending
December 31, 2006.

      (b) The target award level of Performance Units and Dividend Equivalents
will be payable if UGI's Total Shareholder Return (TSR) equals the median TSR of
a peer group for the measurement period. The peer group is the group of
companies that comprises the S&P Utilities Index during the measurement period.
The actual amount of the award of Performance Units may be higher or lower than
the target award, or even zero, based on UGI's TSR percentile rank relative to
the companies in the S&P Utilities Index, as follows:

UGI's TSR Rank
(Percentile)         Percentage of Target Award Earned
- ------------         ---------------------------------
                  
Highest                         200%
90th                            175%
75th                            150%
60th                            125%
50th                            100%
40th                             50%
less than 40th                    0%

The target award percentage earned will be interpolated between each of the
measuring points.

      (c) TSR shall be calculated by UGI using the comparative returns
methodology used by Bloomberg L.P. or its successor at the time of the
calculation. The share price used for determining TSR at the beginning and the
end of the measurement period will be the average price for the 90-day period
preceding the beginning of the measurement period (i.e., the 90-day period
ending on December 31, 2003) and the 90-day period ending on the last day of the
measurement period (i.e., the 90-day period ending on December 31, 2006).

      (d) The target award is the number of Performance Units set forth in
Section 1 above, which is the amount designated for 100% (50th TSR rank)
performance. The Participant can earn up to 200% of the target award if UGI's
TSR rank exceeds the 50th TSR rank, according to the foregoing schedule.

      (e) At the end of the measurement period, the Committee will determine
whether and to what extent the performance goals have been met and the amount to
be paid with respect to the Performance Units. Except as described in Section 3
below, the Participant must be employed by, or providing service to, the Company
on December 31, 2006 in order for the Participant to receive payment with
respect to the Performance Units.

3. Termination of Employment or Service.

      (a) Except as described below, if the Participant's employment or service
with the Company terminates on or before December 31, 2006, the Performance
Units and all Dividend Equivalents credited under this Grant Letter will be
forfeited.

      (b) If the Participant terminates employment or service on account of
Retirement (as defined in Section 9), Disability (as defined in Section 9) or
death, the Participant will earn a pro-rata portion of the Participant's
outstanding Performance Units and Dividend Equivalents, if the performance goals
and the requirements of this Grant Letter are met. The prorated portion will be
determined as the amount that would otherwise be paid after the end of the
measurement period, based on achievement of the performance goals, multiplied by
a fraction, the numerator of which is the number of calendar years during the
measurement period in which the Participant has been employed by, or provided
service to, the Company and the denominator of which is three. For purposes of
the proration calculation, the calendar year in which the Participant's
termination of employment or service on account of Retirement, Disability, or
death occurs will be counted as a full year.

                                       2

      (c) In the event of termination of employment or service on account of
Retirement, Disability or death, the prorated amount shall be paid after the end
of the measurement period, or at an earlier date determined by the Committee.

4. Coordination with Severance Plan. Notwithstanding anything in this Grant
Letter to the contrary, if the Participant receives severance benefits under a
Severance Plan (as defined in Section 9) and the terms of such benefits require
that severance compensation payable under the Severance Plan be reduced by
benefits payable under this Plan, any amount payable to the Participant with
respect to Performance Units and Dividend Equivalents after the Participant's
termination of employment or service shall be reduced by the amount of severance
compensation paid to the Participant under the Severance Plan, as required by,
and according to the terms of, the Severance Plan.

5. Payment with Respect to Performance Units. If the Committee determines that
the conditions to payment of the Performance Units have been met, the Company
shall pay to the Participant, after the end of the measurement period, (i)
Shares or cash, or a combination of the two, as the Committee determines, equal
to the amount to be paid according to achievement of the performance goals, up
to the target award specified in Section 1 above, and (ii) cash in an amount
equal to the Fair Market Value (as defined in the Plan) of the Shares with
respect to the amount to be paid in excess of the target award.

6. Dividend Equivalents with Respect to Performance Units.

      (a) Dividend Equivalents shall accrue with respect to Performance Units
and shall be payable subject to the same performance goals and terms as the
Performance Units to which they relate. Dividend Equivalents shall be credited
with respect to the target award of Performance Units from the Date of Grant
until the payment date. If the underlying Performance Units are forfeited, all
related Dividend Equivalents shall also be forfeited.

      (b) While the Performance Units are outstanding, the Company will keep
records in a bookkeeping account for the Participant. On each payment date for a
dividend paid by UGI on its common stock, the Company shall credit to the
Participant's account an amount equal to the Dividend Equivalents associated
with the target award of Performance Units held by the Participant on the record
date for the dividend. No interest will be credited to any such account.

      (c) The target amount of Dividend Equivalents (100% of the Dividend
Equivalents credited to the Participant's account) will be earned if UGI's TSR
rank is at the 50th TSR rank for the measurement period. The Participant can
earn up to 200% of the target amount of Dividend Equivalents if UGI's TSR rank
exceeds the 50th TSR rank, according to the schedule in Section 2 above. Except
as described in Section 3(b) above, if the Participant's employment or service
with the Company terminates on or before December 31, 2006, all Dividend
Equivalents will be forfeited.

      (d) Dividend Equivalents will be paid in cash at the same time as the
underlying Performance Units are paid, after the Committee determines that the
conditions to payment have been met. Notwithstanding anything in this Grant
Letter to the contrary, the Participant may not accrue Dividend Equivalents in
excess of $1,000,000 during any calendar year under all grants under the Plan.

                                       3

7. Withholding. The Participant shall be required to pay to the Company, or make
other arrangements satisfactory to the Company to provide for the payment of,
any federal, state, local or other taxes that the Company is required to
withhold with respect to the payments under this Grant Letter.

8. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Performance Units, and, in the event of a Change of
Control, the Committee may take such actions as it deems appropriate pursuant to
the Plan.

9. Definitions. For purposes of this Grant Letter, the following terms will have
the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Dividend Equivalent" means an amount determined by multiplying the
number of shares of UGI common stock subject to the target award of Performance
Units by the per-share cash dividend, or the per-share fair market value of any
dividend in consideration other than cash, paid by UGI on its common stock.

      (d) "Employed by, or provide service to, the Company" shall mean
employment or service as an employee or director of the Company.

      (e) "Performance Unit" means a hypothetical unit that represents the value
of one share of UGI common stock.

      (f) "Retirement" means the Participant's retirement under the Retirement
Income Plan for Employees of UGI Utilities, Inc., if the Participant is covered
by that Retirement Income Plan. "Retirement" for other Company employees means
termination of employment after attaining age 55 with ten or more years of
service with the Company.

      (g) "Severance Plan" means any severance plan maintained by the Company
that is applicable to the Participant.

10. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan
and the Terms and Conditions established by the Committee with respect to the
Plan, both of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant and payment of
Performance Units and Dividend Equivalents are subject to interpretations,
regulations and determinations concerning the Plan established from time to time
by the Committee in accordance with the provisions of the Plan, including, but
not limited to, provisions pertaining to (i) the registration, qualification or
listing of the Shares, (ii) changes in capitalization of the Company and (iii)
other requirements of applicable law. The Committee shall have the authority to
interpret and construe the grant pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

11. No Employment or Other Rights. The grant of Performance Units shall not
confer upon the Participant any right to be retained by or in the employ or
service of the Company and shall not interfere in any way with the right of the
Company to terminate the Participant's employment

                                       4

or service at any time. The right of the Company to terminate at will the
Participant's employment or service at any time for any reason is specifically
reserved.

12. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares related to the Performance Units, unless and until certificates for
Shares have been issued to the Participant or successor.

13. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. If the Participant dies, any payments to be made under
this Grant Letter after the Participant's death shall be paid to the
Participant's estate. The rights and protections of the Company hereunder shall
extend to any successors or assigns of the Company and to the Company's parents,
subsidiaries, and affiliates.

14. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

15. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                     UGI Corporation

Attest

_______________________________      By:________________________________________
Corporate Secretary                         Robert H. Knauss
                                            Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Performance Units described in this Grant
Letter, and I agree to be bound by the terms of the Plan, including the Terms
and Conditions, and this Grant Letter. I hereby further agree that all the
decisions and determinations of the Committee shall be final and binding on me
and any other person having or claiming a right under this Grant.

____________________________________
Participant

                                       5

                                                                    EXHIBIT 10.9

                                                                       7/26/2004
                                                              AmeriGas Employees

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                     NONQUALIFIED STOCK OPTION GRANT LETTER

      This STOCK OPTION GRANT, dated as of January 1, 2004 (the "Date of
Grant"), is delivered by UGI Corporation ("UGI") to _____________ (the
"Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of options to purchase shares of common stock of UGI. The
Compensation and Management Development Committee of the Board of Directors of
the Company (the "Committee") has decided to make a stock option grant to the
Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth in this Grant
Letter and in the Plan, the Committee hereby grants to the Participant a
nonqualified stock option (the "Option") to purchase ______ shares of common
stock of UGI ("Shares") at an exercise price of $33.97 per Share. The Option
shall become exercisable according to Paragraph 2 below.

2. Exercisability of Option. The Option shall become exercisable on the
following dates, if the Participant is employed by, or providing service to, the
Company (as defined below) on the applicable date:

                          Shares for Which the
      Date               Option is Exercisable
      ----               ---------------------
                      
January 1, 2005                 33 1/3%
January 1, 2006                 33 1/3%
January 1, 2007                 33 1/3%

The exercisability of the Option is cumulative, but shall not exceed 100% of the
Shares subject to the Option. If the foregoing schedule would produce fractional
Shares, the number of Shares for which the Option becomes exercisable shall be
rounded down to the nearest whole Share.

3. Term of Option.

      (a) The Option shall have a term of ten years from the Date of Grant and
shall terminate at the expiration of that period (5:00 p.m. EST on December 31,
2013), unless it is terminated at an earlier date pursuant to the provisions of
this Grant Letter or the Plan.

      (b) If the Participant ceases to be employed by, or provide service to,
the Company, the Option will terminate on the date the Participant ceases such
employment or service. However, if the Participant ceases to be employed by, or
provide service to, the Company by reason of (i) Termination without Cause, (ii)
Retirement (as defined below), (iii) Disability (as defined below), or (iv)
death, the Option held by the Participant will thereafter be exercisable
pursuant to the following terms:

            (i) Termination Without Cause. If the Participant terminates
      employment or service on account of a Termination without Cause, the
      Option will thereafter be exercisable only with respect to that number of
      Shares with respect to which the Option is already exercisable on the date
      the Participant's employment or service terminates. Such portion of the
      Option will terminate upon the earlier of the expiration date of the
      Option or the expiration of the 13-month period commencing on the date the
      Participant ceases to be employed by, or provide service to, the Company.

            (ii) Retirement. If the Participant ceases to be employed by, or
      provide service to, the Company on account of Retirement, the Option will
      thereafter become exercisable as if the Participant had continued to
      provide service to the Company for 36 months after the date of such
      Retirement. The Option will terminate upon the earlier of the expiration
      date of the Option or the expiration of such 36-month period.

            (iii) Disability. If the Participant ceases to be employed by, or
      provide service to, the Company on account of Disability, the Option will
      thereafter become exercisable as if the Participant had continued to
      provide service to the Company for 36 months after the date of such
      termination of employment or service. The Option will terminate upon the
      earlier of the expiration date of the Option or the expiration of such
      36-month period.

            (iv) Death. In the event of the death of the Participant while
      employed by, or providing service to, the Company, the Option will be
      fully and immediately exercisable and may be exercised at any time prior
      to the earlier of the expiration date of the Option or the expiration of
      the 12-month period following the Participant's death. Death of the
      Participant after the Participant has ceased to be employed by, or provide
      service to, the Company will not affect the otherwise applicable period
      for exercise of the Option determined pursuant to subsections (i), (ii) or
      (iii) above. After the Participant's death, the Participant's Option may
      be exercised by the Participant's estate.

4. Exercise Procedures.

      (a) Subject to the provisions of Paragraphs 2 and 3 above, the Participant
may exercise part or all of the exercisable Option by giving UGI irrevocable
written notice of intent to exercise on a form provided by UGI and delivered in
the manner provided in Section 13 below. Payment of the exercise price and any
applicable withholding taxes must be made prior to issuance of the Shares. The
Participant shall pay the exercise price (i) in cash, (ii) by delivering Shares
(or by attestation to ownership of Shares), which shall be valued at their fair
market value on the date of delivery, which shall have been held by the
Participant for at least six months, and which shall have a fair market value on
the date of exercise equal to the exercise price, (iii) by payment through a
broker in accordance with procedures acceptable to the Committee and

                                      -2-

permitted by Regulation T of the Federal Reserve Board or (iv) by such other
method as the Committee may approve. The Committee may impose such limitations
as it deems appropriate on the use of Shares to exercise the Option.

      (b) The obligation of UGI to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as UGI's counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. UGI may
require that the Participant (or other person exercising the Option after the
Participant's death) represent that the Participant is purchasing Shares for the
Participant's own account and not with a view to or for sale in connection with
any distribution of the Shares, or such other representation as UGI deems
appropriate.

      (c) All obligations of UGI under this Grant Letter shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to
be withheld for any taxes, if applicable.

5. Definitions. Whenever used in this Grant Letter, the following terms shall
have the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Employed by, or provide service to, the Company" shall mean
employment or service as an employee or director of the Company.

      (d) "Retirement" means the Participant's retirement under the Retirement
Income Plan for Employees of UGI Utilities, Inc., if the Participant is covered
by that Retirement Income Plan. "Retirement" for other Company employees means
termination of employment after attaining age 55 with ten or more years of
service with the Company.

      (e) "Termination without Cause" means termination of employment for the
convenience of the Company for any reason other than (i) misappropriation of
funds, (ii) habitual insobriety or substance abuse, (iii) conviction of a crime
involving moral turpitude, or (iv) 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.
The Committee may determine in its sole discretion whether, and under what
circumstances, the Participant's voluntary termination upon a significant
reduction in the Participant's duties and responsibilities will constitute a
Termination without Cause for purposes of the Grant Letter.

6. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Committee may take such actions as it deems appropriate pursuant to the Plan. If
the Grantee is an employee of AmeriGas Propane, Inc. ("AmeriGas"), the term
"Change of Control" shall mean (i) a Change of Control of UGI, as defined in the
Plan or (ii) one of the events set forth in Exhibit A with respect to AmeriGas.

                                      -3-

7. Restrictions on Exercise. Except as the Committee may otherwise permit
pursuant to the Plan, only the Participant may exercise the Option during the
Participant's lifetime and, after the Participant's death, the Option shall be
exercisable by the Participant's estate, to the extent that the Option is
exercisable pursuant to this Grant Letter.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan and
the Terms and Conditions established by the Committee with respect to the Plan,
both of which are incorporated herein by reference, and in all respects shall be
interpreted in accordance with the Plan and the Terms and Conditions. The grant
and exercise of the Option are subject to interpretations, regulations and
determinations concerning the Plan established from time to time by the
Committee in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) the registration, qualification or
listing of the Shares, (ii) changes in capitalization of the Company and (iii)
other requirements of applicable law. The Committee shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

9. No Employment or Other Rights. The grant of the Option shall not confer upon
the Participant any right to be retained by or in the employ or service of the
Company and shall not interfere in any way with the right of the Company to
terminate the Participant's employment or service at any time. The right of the
Company to terminate at will the Participant's employment or service at any time
for any reason is specifically reserved.

10. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares subject to the Option, until certificates for Shares have been issued
upon the exercise of the Option.

11. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. The rights and protections of the Company hereunder
shall extend to any successors or assigns of the Company and to the Company's
parents, subsidiaries, and affiliates.

12. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

13. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

                                      -4-

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                     UGI Corporation

Attest

_______________________________      By:________________________________________
Corporate Secretary                        Robert H. Knauss
                                           Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Option described in this Grant Letter, and I
agree to be bound by the terms of the Plan, including the Terms and Conditions,
and this Grant Letter. I hereby further agree that all the decisions and
determinations of the Committee shall be final and binding on me and any other
person having or claiming a right under this Grant.

______________________________
Participant

                                      -5-

                                    EXHIBIT A

                   Change of Control with Respect to AmeriGas

For Participants who are employees of AmeriGas, or a subsidiary of AmeriGas, the
term "Change of Control" shall include the events set forth in this Exhibit A
with respect to AmeriGas, and the defined terms used in this Exhibit A shall
have the following meanings:

1. "Change of Control" shall include any of the following events:

            (A) Completion by AmeriGas, the Public Partnership or the Operating
Partnership of a reorganization, merger or consolidation (a "Propane 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
AmeriGas voting securities or of the outstanding units of AmeriGas Partners,
L.P. ("Outstanding Units") immediately prior to such Propane Business
Combination do not, following such Propane Business Combination, Beneficially
Own, directly or indirectly, (a) if the entity resulting from such Propane
Business Combination is a corporation, more than fifty percent (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 such corporation
in substantially the same proportion as their ownership immediately prior to
such Combination of the AmeriGas' voting securities or the Outstanding Units, as
the case may be, or, (b) if the entity resulting from such Propane Business
Combination is a partnership, more than fifty percent (50%) of the then
outstanding common units of such partnership in substantially the same
proportion as their ownership immediately prior to such Propane Business
Combination of AmeriGas' voting securities or the Outstanding Units, as the case
may be; or

            (B) (a) Completion of a complete liquidation or dissolution of
AmeriGas, the Public Partnership or the Operating Partnership or (b) sale or
other disposition of all or substantially all of the assets of AmeriGas, the
Public Partnership or the Operating Partnership other than to an entity with
respect to which, following such sale or disposition, (I) if such entity is a
corporation, more than fifty percent (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 AmeriGas' voting securities or of the Outstanding
Units, as the case may be, immediately prior to such sale or disposition in
substantially the same proportion as their ownership of AmeriGas' voting
securities or of the Outstanding Units, as the case may be, immediately prior to
such sale or disposition, or, (II) if such entity is a partnership, more than
fifty percent (50%) of the then outstanding common units is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the Beneficial Owners, respectively, of
AmeriGas' voting securities or of the Outstanding Units, as the case may be,
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of AmeriGas' voting securities or of the
Outstanding Units immediately prior to such sale or disposition; or

                                      A-1

            (C) UGI and the UGI Subsidiaries fail to own more than fifty percent
(50%) of the then outstanding general partnership interests of the Public
Partnership or the Operating Partnership; or

            (D) UGI and the UGI Subsidiaries fail to own more than fifty percent
(50%) of the then outstanding shares of common stock of AmeriGas or more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of AmeriGas entitled to vote generally in the election of directors;
or

            (E) AmeriGas is removed as the general partner of the Public
Partnership by vote of the limited partners of the Public Partnership, or is
removed as the general partner of the Public Partnership or the Operating
Partnership as a result of judicial or administrative proceedings involving
AmeriGas, the Public Partnership or the Operating Partnership.

2. "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.

3. 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 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 securities;
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 (40) days after the
date of such acquisition.

4. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

                                      A-2

5. "Operating Partnership" shall mean AmeriGas Propane, L.P.

6. "Public Partnership" shall mean AmeriGas Partners, L.P.

7. "Person" shall mean an individual or a corporation, partnership, trust,
unincorporated organization, association, or other entity.

8. "UGI Subsidiary" shall mean any corporation in which UGI directly or
indirectly, owns at least a fifty percent (50%) interest or an unincorporated
entity of which UGI, as applicable, directly or indirectly, owns at least fifty
percent (50%) of the profits or capital interests.

                                      A-3

                                 UGI CORPORATION

                            SENIOR EXECUTIVE EMPLOYEE

                               SEVERANCE PAY PLAN

                         AS AMENDED ON DECEMBER 7, 2004

                                                                               .
                                                                               .
                                                                               .

                                 UGI CORPORATION
                            SENIOR EXECUTIVE EMPLOYEE
                               SEVERANCE PAY PLAN

                                TABLE OF CONTENTS

                                                                         Page
                                                                      
Article I      Background, Purpose and Term of Plan.....................   1

Article II     Definitions..............................................   2

Article III    Participation and Eligibility for Benefits...............   5

Article IV     Benefits.................................................   7

Article V      Method and Duration of Benefit Payments..................  10

Article VI     Administration...........................................  11

Article VII    Amendment and Termination................................  13

Article VIII   Duties of the Company....................................  14

Article IX     Claims Procedures........................................  15

Article X      Miscellaneous............................................  17

Appendix A     Change of Control........................................ A-1

                                        i

                                    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)
and was again amended and restated as of January 1, 1997, December 16, 2003 and
December 7, 2004. The terms and conditions of this Plan apply to the designated
senior executive employees in the United States of UGI Corporation, its
subsidiary UGI Utilities, Inc. and certain other affiliated entities, but not to
employees of AmeriGas Propane, Inc. or its subsidiaries.

      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
Executive Employees employed in the United States whose employment is terminated
without Just Cause, in recognition of their past service to the Company and its
Affiliates. In essence, benefits under the Plan are intended to be additional
compensation for past services or for the continuation of specified employee
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 employee 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)(B)(i) 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 and no employee shall have a vested right to such benefits. In
addition, the Plan has been drafted to give the Company broad discretion in
designating individuals who are eligible for benefits and the amount of such
benefits. All actions taken by the Company shall be in its role as the plan
sponsor and not as a fiduciary.

      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 the Company, acting in its sole discretion, elects to modify, supersede
or terminate it in accordance with the further provisions hereof.

                                   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 the
Company, 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 the Company as of the date of
reference.

      Section 2.05 "Change of Control" shall mean a change of control as defined
in the attached Appendix A, as amended from time to time by the Committee, in
its discretion.

      Section 2.06 "Chief Executive Officer" shall mean the individual serving
as the Chief Executive Officer of the Company 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, or its delegate.

      Section 2.08 "Company" shall mean UGI Corporation, a Pennsylvania
corporation, and any corporation succeeding to the business of UGI Corporation
by merger, consolidation, liquidation, 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.

      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 any predecessor of such entities, unless the Company
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 and its
Affiliates is terminated.

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

                                       2

      Section 2.13 "Executive Employee" shall mean any of the following
employees who are employed in the United States:

                  (a) An employee of the Company who is classified as Grade 76
      or above;

                  (b) An employee of UGI Utilities, Inc. or its successor who is
      classified as Grade 38 or above; or

                  (c) An executive level employee of any other Affiliate of the
      Company operating in the United States, other than AmeriGas Propane, Inc.
      and its subsidiaries, who is designated in writing by the Company as
      eligible to participate in the Plan.

In no event shall employees who are employed outside the United States, or
employees of AmeriGas Propane, Inc. or its subsidiaries, participate in the
Plan. In no event shall any of the following persons be considered an employee
for purposes of the Plan: (i) independent contractors, (ii) persons performing
services pursuant to an arrangement with a third party leasing organization or
(iii) any person whom the Company determines, in its sole discretion, is not a
common law employee, whether or not any such person is later determined to have
been a common law employee of the Company or an Affiliate.

      Section 2.14 "Executive Equity Plan" shall mean any long-term equity
incentive plan of the Company or any of its Affiliates, including without
limitation the UGI Corporation 2004 Omnibus Equity Compensation Plan, the UGI
Corporation 2000 Stock Incentive Plan, the UGI Corporation 1997 Stock Option and
Dividend Equivalent Plan and the AmeriGas Propane, Inc. 2000 Long-Term Incentive
Plan.

      Section 2.15 "Just Cause" shall mean (i) dismissal of an Executive
Employee due to misappropriation of funds, (ii) substance abuse or habitual
insobriety that adversely affects the Executive Employee's ability to perform
his or her job, (iii) conviction of a crime involving moral turpitude, or (iv)
gross negligence in the performance of duties. Disputes with respect to whether
Just Cause exists shall be resolved in accordance with Article IX.

      Section 2.16 "Participant" shall mean any Executive Employee who has been
designated by the Company as a participant in this Plan.

      Section 2.17 "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 2.18 "Plan Year" shall mean each fiscal year of the Company during
which this Plan is in effect.

      Section 2.19 "President and Chief Operating Officer" shall mean the
individual serving as the President and Chief Operating Officer of the Company
as of the date of reference.

      Section 2.20 "Release" shall mean a release and discharge of the Company,
all of its Affiliates, and all affiliated persons and entities from any and all
claims, demands and

                                       3

causes of action, other than as to amounts or benefits due to the Participant
under any qualified employee retirement plan of the Company or an Affiliate,
which shall be in such form as may be proscribed by the Company, acting as an
employer and not as a fiduciary, from time to time and with such modifications
as the Company deems appropriate for the Participant's particular situation.

      Section 2.21 "Restricted Awards" shall mean restricted stock, stock units,
performance units, restricted units, dividend equivalents, distribution
equivalents and other equity-based awards, other than stock options, that are
granted to a Participant under an Executive Equity Plan.

      Section 2.22 "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 2.23 "Year of Service" shall mean each twelve (12) month period
(or part thereof) beginning on the Participant's Employment 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
any predecessor of such entities, shall be counted only if permitted by the
Company.

                                       4

                                   ARTICLE III

                                  PARTICIPATION
                          AND ELIGIBILITY FOR BENEFITS

      Section 3.01 General Eligibility Requirement. In its sole discretion,
acting in its role as Plan sponsor and not as a fiduciary, the Company may grant
a Benefit under this Plan to any Executive Employee whom the Company designates
as a Participant and whose employment is terminated by the Company or an
Affiliate other than for Just Cause, death, or continuous illness, injury or
incapacity for a period of six consecutive months. Notwithstanding anything
herein to the contrary, an Executive Employee will not be considered to have
incurred a termination by the Company or an Affiliate for purposes of this Plan
if his or her employment is discontinued due to voluntary resignation or the
expiration of a leave of absence. In addition, the Executive Employee must meet
the requirements of Section 3.03 in order to receive a Benefit under this Plan.

      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 to an Executive Employee in connection with the
disposition of a business, division or affiliated company by the Company or an
Affiliate if substantially comparable terms of employment, as determined by the
Company, have been offered to the Executive Employee by the transferee;
provided, however, that the Company, acting in its role as Plan sponsor and not
as a fiduciary, may determine that the Company or an Affiliate will provide some
or all of the Benefits to an Executive Employee whose employment with the
Company and its Affiliates is terminated as described in Section 3.01. This
Section 3.02 shall not apply at or after a Change of Control.

      Section 3.03 Conditions to Entitlement to Benefits.

            (a) As further conditions to entitlement to Benefits under the Plan,
all Participants must, prior to the payment of any Benefits due hereunder, (i)
sign and not rescind or contest the enforceability of a Release; (ii) ratify any
patent assignment, confidentiality, non-solicitation, non-competition and other
post-employment activities agreement in effect between the Participant and the
Company or an Affiliate; (iii) return to the Company and its Affiliates any and
all property of the Company and its Affiliates held by the Participant,
including, but not limited to, all reports, manuals memoranda, computer disks,
tapes and data made available to the Participant during the performance of the
Participant's duties, including all copies; (iv) hold confidential any and all
information concerning the Company and its Affiliates, whether with respect to
its business, subscribers, providers, customers, operations, finances,
employees, contractors, or otherwise; and (v) cooperate fully with the Company
and its Affiliates to complete the transition of matters with which the
Participant is familiar or responsible to other employees and make himself or
herself available to answer questions or assist in matters which may require
attention after the Participant's Employment Termination Date.

                                       5

            (b) If the Committee determines, in its sole discretion, that the
Participant has violated one or more of the foregoing conditions to entitlement
to Benefits, the Committee may determine that the Participant will not receive
the Benefits or the Company may discontinue the payment of Benefits under the
Plan. Any remedy under this Section 3.03 shall be in addition to, and not in
place of, any other remedy the Company and its Affiliates may have, at law or
otherwise.

                                       6

                                   ARTICLE IV

                                    BENEFITS

      Section 4.01 Amount of Immediate Cash Benefit. The Company, acting in its
role as Plan sponsor and not as a fiduciary, shall determine which Executive
Employees shall be awarded a Benefit hereunder and the amount of any such
Benefit. The Company may take into account any factors it determines to be
relevant in deciding which Executive Employees shall be awarded Benefits and the
amount of such Benefits, and need not apply its determinations in a uniform
manner to terminated Executive Employees similarly situated. All such decisions
shall be final, binding and conclusive with respect to the Participant. Unless
the Company determines otherwise, 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 amounts
described in subsections (a) through (d), less the amount described in
subsection (e), 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
Company may, in its 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 as that
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 of which is his or
her Compensation and the denominator of which is twelve (12), in the case of the
President and Chief Operating Officer, an amount of paid notice equal to twelve
(12) times a fraction, the numerator 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).

                                       7

            (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.

            (e) If the Participant's employment with the Company and its
Affiliates terminates before a Change of Control, the cash amount computed in
subsections (a) through (d) above shall be reduced by the amount of cash and the
fair market value of any stock, partnership units or other property that is
payable to the Participant under Restricted Awards after the Participant's
termination of employment, as determined by the Committee. The Committee may
determine that payment of a portion of the Benefit under this Plan will be
delayed pending calculation of the amount payable under Restricted Awards, or
the Committee may decide to pay the amounts described in subsections (a) through
(d) above immediately and offset amounts payable under the Restricted Awards by
the amount of the Benefit previously paid under this Plan. In no event shall a
Participant be required to return to the Company or an Affiliate any amounts
previously paid under this Plan as a result of a decline in the value of
Restricted Awards.

            (f) The offset described in subsection (e) shall not apply if the
Participant's employment with the Company and its Affiliates terminates at or
after a Change of Control. In addition, the offset described in subsection (e)
shall not apply to any Restricted Awards for which all requirements for payment
have been met before the Participant's Employment Termination Date (for example,
if the restriction period for a Restricted Award ends on December 31, 2005, the
Restricted Award is payable on February 1, 2006 and the Participant's employment
is terminated on January 15, 2006, Benefits under this Plan shall not be offset
by the Restricted Award).

      Section 4.02 Executive Benefits. A Participant shall continue to be
entitled, through the end of the Participant's Salary Continuation Period, to
those employee benefits 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, the
Participant shall be responsible for making the required contributions at the
employee rate, 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 or an Affiliate
may pay to the Participant, at the time payment is otherwise to be made of cash
Benefits pursuant to

                                       8

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, a new employer; provided, however, that the
Participant shall not be required to refund any sum to the Company or an
Affiliate 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 coverages such as tax preparation services, 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 qualified retirement plans of the Company or an Affiliate 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 a qualified retirement plan of the Company or an Affiliate or an Executive
Equity Plan, and a terminated Executive 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 and its Affiliates. Notwithstanding anything
herein to the contrary, as determined by the Company, the Benefits payable under
this Plan to any Participant may be reduced by any and all payments required to
be made by the Company or an Affiliate under federal, state and local law,
including the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Section 2101 et. seq. or under any employment agreement or special severance
arrangement.

                                       9

                                    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 or an Affiliate. Payment shall be made as soon as
reasonably practicable after the fulfillment of all conditions for payment of
the Benefit set forth in Section 4.01, and subject to compliance with all
requirements of Section 3.03. All payments under the Plan are subject to
applicable federal, state and local taxes.

      Section 5.02 Payments to Beneficiaries. Each Participant shall designate
one or more beneficiaries 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 the absence of an effective beneficiary designation
hereunder, the Participant's estate shall be deemed to be the Participant's
designated beneficiary.

                                       10

                                   ARTICLE VI

                                 ADMINISTRATION

      Section 6.01 Appointment. The Committee shall consist of one (1) or more
persons appointed by the Board of Directors. Committee members may be, but need
not be, employees of the Company.

      Section 6.02 Tenure. Committee members shall serve at the pleasure of the
Board of Directors. 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 Board of Directors.

      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 Benefits to which each such Participant may be entitled, and to
determine the manner, time of payment and other requirements of payment of
Benefits 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 discretionary 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. The Committee may
delegate ministerial and other responsibilities to one or more Company
employees.

      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 Committee shall designate one
of its members to serve as Chairperson thereof. The Committee 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

                                       11

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, the Internal Revenue Code, and every other relevant statute,
each as amended, and all regulations thereunder (except that the Company, 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. All determinations made by the
Committee under the Plan shall be made solely at the discretion of the
Committee. 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 to whom the determination is directed.

      Section 6.09 Benefits of the Chief Executive Officer and other Executive
Officers. Notwithstanding the foregoing, the Compensation and Management
Development Committee shall serve as the Committee under the Plan with respect
to the Chief Executive Officer of the Company and other executive officers (as
determined by the Board of Directors). The Compensation and Management
Development Committee of the Board of Directors shall make all determinations
with respect to the Chief Executive Officer and other executive officers as to
any matter that directly pertains to, or affects, the Chief Executive Officer or
other executive officers.

      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.

                                       12

                                   ARTICLE VII

                            AMENDMENT AND TERMINATION

      Section 7.01 Amendment, Suspension and Termination. The Company, by action
of its Board of Directors or its Compensation and Management and Development
Committee, 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 or an Affiliate 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.

                                       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. The Company shall make payments from its general
assets to Participants in accordance with the terms of the Plan, as directed by
the Committee.

      Section 8.03 Discretion, Delegation.

            (a) Any decisions, actions or interpretations to be made under the
Plan by the Company shall be made in its sole discretion, not in any fiduciary
capacity and need not be uniformly applied to similarly situated individuals,
and such decisions, actions or interpretations shall be final, binding and
conclusive upon all parties.

            (b) The Company may take actions under the Plan by action of its
Board of Directors or its Compensation and Management Development Committee, or
by action of any officer or administrative committee to whom any of the
Company's authority with respect to the Plan shall have been delegated. The
Compensation and Management Development Committee shall be authorized to take
all Company actions under the Plan with respect to the Chief Executive Officer
and other executive officers (as determined by the Board of Directors).

                                       14

                                   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 on a form supplied by
the Committee. 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 Claim. A terminated employee may contest his or her
eligibility for the amount of benefit awarded by completing and filing with the
Committee a written request for review in the manner specified by the Committee.
Each such application must be supported by such information as the Committee
deems relevant and appropriate. The Committee will review the claim and provide
notice to the terminated employee, in writing, within 90 days after the claim is
filed unless special circumstances require an extension of time for processing
the claim. In no event shall the extension exceed a period of 90 days from the
end of the initial period. In the event that any claim for benefits is denied in
whole or in part, the terminated employee whose claim has been so denied shall
be notified of such denial in writing by the Committee. The notice advising of
the denial shall be written in a manner calculated to be understood by the
terminated employee and shall set forth: (i) specific references to the
pertinent Plan provisions on which the denial is based; (ii) a description of
any additional material or information necessary for the claimant to perfect the
claim and an explanation as to why such information is necessary; and (iii) an
explanation of the Plan's claim procedure and the time limits applicable to such
procedures, including a statement of the claimant's right to bring a civil
action under section 502(a) of ERISA following an adverse benefit determination
on appeal.

      Section 9.03 Appeals of Denied Claims for Benefits. All appeals shall be
made by the following procedure:

            (a) The terminated employee whose claim has been denied shall file
with the Committee a notice of appeal of the denial. Such notice shall be filed
within sixty (60) days of notification by the Committee of the claim denial,
shall be made in writing, and shall set forth all of the facts upon which the
appeal is based. Appeals not timely filed shall be barred.

            (b) The claimant or his duly authorized representative may:

(i) request a review upon written notice to the Committee;

(ii) examine the Plan and obtain, upon request and without charge, copies of all
information relevant to the claimant's appeal; and

(iii) submit issues and comments in writing.

            (c) The Named Appeals Fiduciary (as described in Section 9.04) shall
issue a decision no later than 60 days after receipt of a request for review
unless special circumstances, such as the need to hold a hearing, require a
longer period of time, in which case a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the terminated employee's
notice of appeal.

                                       15

            (d) The Named Appeals Fiduciary shall consider the merits of the
claimant's written presentations, the merits of any facts or evidence in support
of the denial of benefits, and such other facts and circumstances as the Named
Appeals Fiduciary shall deem relevant.

            (e) The Named Appeals Fiduciary shall render a determination upon
the appealed claim which determination shall be accompanied by a written
statement setting forth:

(i) specific reasons for the decision, written in a manner calculated to be
understood by the claimant;

(ii) specific references to the pertinent Plan provisions on which the decision
is based;

(iii) the claimant's right to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claim for benefits; and

(iv) the claimant's right to bring a civil action under section 502(a) of ERISA.

      Section 9.04 Appointment of the Named Appeals Fiduciary. The Named Appeals
Fiduciary shall be the person or persons named as such by the Board of
Directors, or, if no such person or persons be named, then the person or persons
named by the Committee as the Named Appeals Fiduciary. Named Appeals Fiduciaries
may at any time be removed by the Board of Directors, and any Named Appeals
Fiduciary named by the Committee may be removed by the Committee. All such
removals may be with or without cause and shall be effective on the date stated
in the notice of removal. The Named Appeals Fiduciary shall be a "Named
Fiduciary" within the meaning of ERISA, and unless appointed to other fiduciary
responsibilities, shall have no authority, responsibility or liability with
respect to any matter other than the proper discharge of the functions of the
Named Appeals Fiduciary as set forth herein.

                                       16

                                    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.

      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 or an Affiliate, 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 by a court of competent jurisdiction,
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, the Company 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 the
Company, 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 the
Company 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.

      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 or an Affiliate which may be applied by the Company or an
Affiliate to the payment of Benefits.

                                       17

      Section 10.08 Payments to Incompetent Persons. 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, its Affiliates, 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, the Company has caused the Plan to be executed
by its duly authorized officer and its corporate seal to be affixed hereto as of
the effective date described above.

                                        UGI CORPORATION

 Attest:

_________________________               By: _______________________________
Margaret M. Calabrese                        Robert H. Knauss
Secretary                                    Vice President & General Counsel

                                       18

                                   APPENDIX A

                                CHANGE OF CONTROL

            For purposes of the Plan, the term "Change of Control" shall have
the meaning set forth below and the defined terms used in the definition of
"Change of Control" shall have the meanings set forth below.

                  1. "Change of Control" shall mean:

                        (a) Any Person (except the Participant (as defined in
the Plan), his Affiliates and Associates, UGI, any Subsidiary of UGI, any
employee benefit plan of UGI or of any Subsidiary of UGI, or any Person or
entity organized, appointed or established by UGI 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 UGI (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then outstanding
voting securities of UGI entitled to vote generally in the election of directors
(the "Company Voting Securities"), in either case unless the members of UGI'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 Change of
Control provisions of this Plan; or

                        (b) 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 UGI'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 UGI (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or

                        (c) Completion by UGI 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

                                      A-1

Securities, as the case may be, in any such case unless the members of UGI'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 Change of Control provisions of this Plan; or

                        (d) Completion of (i) a complete liquidation or
dissolution of UGI or (ii) sale or other disposition of all or substantially all
of the assets of UGI 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 UGI'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 Change of Control provisions of this Plan.

                  2. "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").

                  3. 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 or Associates) has

                                      A-2

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 UGI; 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 40 days after the date of such acquisition.

                  4. "Board" shall mean the Board of Directors of UGI.

                  5. "Person" shall mean an individual or a corporation,
partnership, trust, unincorporated organization, association, or other entity.

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

                  7. "UGI" shall mean UGI Corporation.

                                      A-3

                                                                   EXHIBIT 10.17

                                 UGI CORPORATION

                      2004 OMNIBUS EQUITY COMPENSATION PLAN

                         AS AMENDED ON DECEMBER 7, 2004

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN

                                TABLE OF CONTENTS

                                                        PAGE
                                                     
1.       Purpose......................................    1
2.       Definitions..................................    1
3.       Administration...............................    3
4.       Grants.......................................    4
5.       Shares Subject to the Plan...................    4
6.       Eligibility for Participation................    5
7.       Options......................................    6
8.       Stock Units..................................    7
9.       Performance Units............................    7
10.      Stock Awards.................................    8
11.      Dividend Equivalents.........................    8
12.      Other Stock-Based Awards.....................    9
13.      Qualified Performance-Based Compensation.....    9
14.      Directors' Equity Plan.......................   10
15.      Deferrals....................................   10
16.      Withholding of Taxes.........................   10
17.      Transferability of Grants....................   11
18.      Consequences of a Change of Control..........   11
19.      Requirements for Issuance of Shares..........   12
20.      Amendment and Termination of the Plan........   12
21.      Miscellaneous................................   13

                                        i

                                 UGI CORPORATION

                      2004 OMNIBUS EQUITY COMPENSATION PLAN

      1. PURPOSE

      The purpose of the UGI Corporation 2004 Omnibus Equity Compensation Plan
(the "Plan") is to provide (i) designated employees of UGI Corporation ("UGI")
and its subsidiaries, and (ii) non-employee members of the board of directors of
UGI with the opportunity to receive grants of stock options, stock units,
performance units, stock awards, dividend equivalents and other stock-based
awards. UGI believes that the Plan will encourage the participants to contribute
materially to the growth of UGI, thereby benefitting UGI's shareholders, and
will align the economic interests of the participants with those of the
shareholders.

      The Plan shall be effective as of January 1, 2004, and has been approved
by the shareholders of UGI. The UGI Corporation Directors' Equity Compensation
Plan shall be merged into the Plan as of the effective date of the Plan. The
Plan was amended in December 2004, effective as of the original effective date
of the Plan.

      2. DEFINITIONS

      Whenever used in this Plan, the following terms will have the respective
meanings set forth below:

      (a) "Board" means UGI's Board of Directors as constituted from time to
time.

      (b) "Certificate" means a certificate, or electronic book entry
equivalent, for a share of Stock.

      (c) "Change of Control" means a change of control of UGI as described on
the attached Exhibit A, or as modified by the Board from time to time.

      (d) "Code" means the Internal Revenue Code of 1986, as amended.

      (e) "Committee" means (i) with respect to Grants to Employees, the
Compensation and Management Development Committee of the Board or its successor,
and (ii) with respect to Grants made to Non-Employee Directors, the Board or its
delegate.

      (f) "Company" means UGI and any Subsidiary.

      (g) "Date of Grant" means the effective date of a Grant; provided,
however, that no retroactive Grants will be made.

      (h) "Directors' Equity Plan" means the UGI Corporation Directors' Equity
Compensation Plan.

                                       1

      (i) "Dividend Equivalent" means an amount determined by multiplying the
number of shares of Stock subject to a Grant by the per-share cash dividend, or
the per-share fair market value (as determined by the Committee) of any dividend
in consideration other than cash, paid by UGI on its Stock.

      (j) "Effective Date" of the Plan means January 1, 2004, subject to
approval of the Plan by the shareholders of UGI.

      (k) "Employee" means an employee of the Company (including an officer or
director who is also an employee). For purposes of the Plan, the term "Employee"
shall also include a chief executive officer or other officer or person who
performs management and policymaking functions with respect to a Subsidiary of
UGI located outside the United States.

      (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      (m) "Fair Market Value" of Stock means the average, rounded to one cent
($0.01), of the highest and lowest sales prices of a share of Stock on the New
York Stock Exchange on the day on which Fair Market Value is being determined,
as reported on the composite tape for transactions on the New York Stock
Exchange. In the event that there are no Stock transactions on the New York
Stock Exchange on such day, the Fair Market Value will be determined as of the
immediately preceding day on which there were Stock transactions on that
exchange. Notwithstanding the foregoing, in the case of a broker-assisted
exercise pursuant to Section 7(f), the Fair Market Value will be the actual sale
price of the shares issued upon exercise of the Option.

      (n) "Grant" means an Option, Stock Unit, Performance Unit, Stock Award,
Dividend Equivalent or Other Stock-Based Award granted under the Plan.

      (o) "Grant Letter" means the written instrument that sets forth the terms
and conditions of a Grant, including all amendments thereto.

      (p) "Non-Employee Director" means a member of the Board who is not an
employee of the Company.

      (q) "Option" means an option to purchase shares of Stock, as described in
Section 7.

      (r) "Option Price" means an amount per share of Stock purchasable under an
Option, as designated by the Committee.

      (s) "Other Stock-Based Award" means any Grant based on, measured by or
payable in Stock (other than Grants described in Sections 7, 8, 9, 10 and 11 of
the Plan) as described in Section 12.

      (t) "Participant" means an Employee or Non-Employee Director designated by
the Committee to participate in the Plan.

                                       2

      (u) "Performance Unit" means an award of a phantom unit representing a
share of Stock, as described in Section 9.

      (v) "Plan" means this 2004 Omnibus Equity Compensation Plan, as in effect
from time to time.

      (w) "Stock" means the common stock of UGI or such other securities of UGI
as may be substituted for Stock pursuant to Section 5(d) or Section 18.

      (x) "Stock Award" means an award of Stock as described in Section 10.

      (y) "Stock Unit" means an award of a phantom unit representing a share of
Stock, as described in Section 8.

      (z) "Subsidiary" means any corporation or partnership, at least 20% of the
outstanding voting stock, voting power or partnership interest of which is
owned, directly or indirectly, by UGI.

      (aa) "Target Amount" means a target number of Shares to be issued based on
achievement of the performance goals and satisfaction of all conditions for
payment of Performance Units at the 100% level.

      (bb) "UGI" means UGI Corporation, a Pennsylvania corporation or any
successor thereto.

      3. ADMINISTRATION

      (a) Committee. The Plan shall be administered and interpreted by the
Compensation and Management Development Committee of the Board or its successor
with respect to grants to Employees. The Plan shall be administered and
interpreted by the Board, or by a committee of directors to whom the Board has
delegated responsibility, with respect to grants to Non-Employee Directors. The
Board or committee, as applicable, that has authority with respect to a specific
Grant shall be referred to as the "Committee" with respect to that Grant.
Ministerial functions may be performed by an administrative committee comprised
of Company employees appointed by the Committee.

      (b) Committee Authority. The Committee shall have the sole authority to
(i) determine the Participants to whom Grants shall be made under the Plan, (ii)
determine the type, size and terms and conditions of the Grants to be made to
each such Participant, (iii) determine the time when the grants will be made and
the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms and conditions of any previously issued Grant, subject to the
provisions of Section 19 below, and (v) deal with any other matters arising
under the Plan.

      (c) Committee Determinations. The Committee shall have full power and
express discretionary authority to administer and interpret the Plan, to make
factual determinations and to adopt or amend such rules, regulations, agreements
and instruments for implementing the Plan

                                       3

and for the conduct of its business as it deems necessary or advisable, in its
sole discretion. The Committee's interpretations of the Plan and all
determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons having any interest in
the Plan or in any awards granted hereunder. All powers of the Committee shall
be executed in its sole discretion, in the best interest of the Company, not as
a fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated Participants.

      4. GRANTS

      (a) Grants under the Plan may consist of Options as described in Section
7, Stock Units as described in Section 8, Performance Units as described in
Section 9, Stock Awards as described in Section 10, Dividend Equivalents as
described in Section 11 and Other Stock-Based Awards as described in Section 12.
All Grants shall be subject to such terms and conditions as the Committee deems
appropriate and as are specified in writing by the Committee to the Participant
in the Grant Letter.

      (b) All Grants shall be made conditional upon the Participant's
acknowledgement, in writing or by acceptance of the Grant, that all decisions
and determinations of the Committee shall be final and binding on the
Participant, his or her beneficiaries and any other person having or claiming an
interest under such Grant. Grants under a particular Section of the Plan need
not be uniform as among the Participants.

      (c) The Committee may make Grants that are contingent on, and subject to,
shareholder approval of the Plan or an amendment to the Plan.

      5. SHARES SUBJECT TO THE PLAN

      (a) Shares Authorized. The total aggregate number of shares of Stock that
may be issued under the Plan is 3,500,000 shares, subject to adjustment as
described below. The maximum number of shares of Stock that may be issued under
the Plan pursuant to Grants other than Options and Dividend Equivalents during
the term of the Plan is 800,000 shares, subject to adjustment as described
below. The shares may be authorized but unissued shares of Stock or reacquired
shares of Stock, including shares purchased by the Company on the open market
for purposes of the Plan. Grants paid in cash shall not count against the
foregoing share limits.

      (b) Share Counting. For administrative purposes, when the Committee makes
a Grant payable in Stock, the Committee shall reserve shares equal to the
maximum number of shares that may be issued under the Grant. If and to the
extent Options granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, and if and to
the extent that any Stock Awards, Stock Units, Performance Units, Dividend
Equivalents or Other Stock-Based Awards are forfeited or terminated, or
otherwise are not paid in full, the shares reserved for such Grants shall again
be available for purposes of the Plan. Shares of Stock surrendered in payment of
the Option Price of an Option shall again be available for issuance under the
Plan. To the extent that Grants are paid in cash, and not in

                                       4

shares of Stock, any shares previously reserved for issuance pursuant to such
Grants shall again be available for issuance under the Plan.

      (c) Individual Limits. All Grants under the Plan, other than Dividend
Equivalents, shall be expressed in shares of Stock. The maximum aggregate number
of shares of Stock with respect to which all Grants, other than Dividend
Equivalents, may be made under the Plan to any individual during any calendar
year shall be 750,000 shares, subject to adjustment as described below. The
maximum aggregate number of shares of Stock with respect to which all Grants,
other than Options and Dividend Equivalents, may be made under the Plan to any
individual during any calendar year shall be 100,000 shares, subject to
adjustment as described below. A Participant may not accrue Dividend Equivalents
during any calendar year in excess of $1,000,000. The individual limits of this
subsection (b) shall apply without regard to whether the Grants are to be paid
in Stock or cash. All cash payments (other than with respect to Dividend
Equivalents) shall equal the Fair Market Value of the shares of Stock to which
the cash payment relates.

      (d) Adjustments. If there is any change in the number or kind of shares of
Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization,
stock split, or combination or exchange of shares, (ii) by reason of a merger,
reorganization or consolidation, (iii) by reason of a reclassification or change
in par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Stock is substantially
reduced as a result of a spinoff or the Company's payment of an extraordinary
dividend or distribution, the maximum number of shares of Stock available for
issuance under the Plan, the maximum number of shares of Stock for which any
individual may receive Grants in any year, the number of shares covered by
outstanding Grants, the kind of shares to be issued under the Plan, and the
price per share or the applicable market value of such Grants shall be
appropriately adjusted by the Committee to reflect any increase or decrease in
the number of, or change in the kind or value of, issued shares of Stock to
preclude, to the extent practicable, the enlargement or dilution of rights and
benefits under such Grants; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. Any adjustments determined
by the Committee shall be final, binding and conclusive.

      6. ELIGIBILITY FOR PARTICIPATION

      (a) Eligible Persons. All Employees, including Employees who are officers
or members of the Board, and all Non-Employee Directors shall be eligible to
participate in the Plan.

      (b) Selection of Participants. The Committee shall select the Employees
and Non-Employee Directors to receive Grants and shall determine the number of
shares of Stock subject to each Grant.

                                       5

      7. OPTIONS

      (a) General Requirements. The Committee may grant Options to an Employee
or Non-Employee Director upon such terms and conditions as the Committee deems
appropriate under this Section 7. The Committee may grant Dividend Equivalents
with respect to Options.

      (b) Number of Shares. The Committee shall determine the number of shares
of Stock that will be subject to each Grant of Options to Employees and
Non-Employee Directors.

      (c) Type of Option, Price and Term.

            (i) The Committee may grant Options that are nonqualified stock
options and are not considered incentive stock options under section 422 of the
Code.

            (ii) The Option Price of Stock subject to an Option shall be
determined by the Committee and shall be equal to or greater than the Fair
Market Value of a share of Stock on the Date of Grant.

            (iii) The Committee shall determine the term of each Option. The
term of an Option shall not exceed ten years from the Date of Grant.

      (d) Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions as may be determined by the Committee
and specified in the Grant Letter. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.

      (e) Termination of Employment or Service. Except as provided in the Grant
Letter, an Option may only be exercised while the Participant is employed by the
Company, or providing service as a Non-Employee Director. The Committee shall
determine in the Grant Letter under what circumstances and during what time
periods a Participant may exercise an Option after termination of employment or
service.

      (f) Exercise of Options. A Participant may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company. The Participant shall pay the Option Price for the Option (i) in
cash, (ii) by delivering shares of Stock owned by the Participant and having a
Fair Market Value on the date of exercise equal to the Option Price or by
attestation to ownership of shares of Stock having an aggregate Fair Market
Value on the date of exercise equal to the Option Price, (iii) by payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board, or (iv) by such other method as the Committee may
approve. Shares of Stock used to exercise an Option shall have been held by the
Participant for the requisite period of time to avoid adverse accounting
consequences to the Company with respect to the Option. Payment for the shares
pursuant to the Option, and any required withholding taxes, must be received by
the time specified by the Committee depending on the type of payment being made,
but in all cases prior to the issuance of the Stock.

                                       6

      8. STOCK UNITS

      (a) General Requirements. The Committee may grant Stock Units to an
Employee or Non-Employee Director, upon such terms and conditions as the
Committee deems appropriate under this Section 8. Each Stock Unit shall
represent the right of the Participant to receive a share of Stock or an amount
based on the value of a share of Stock. All Stock Units shall be credited to
accounts on the Company's records for purposes of the Plan.

      (b) Terms of Stock Units. The Committee may grant Stock Units that are
payable on terms and conditions determined by the Committee. Stock Units may be
paid at the end of a specified period, or payment may be deferred to a date
authorized by the Committee. The Committee shall determine the number of Stock
Units to be granted and the requirements applicable to such Stock Units. The
Committee may grant Dividend Equivalents with respect to Stock Units.

      (c) Payment With Respect to Stock Units. Payment with respect to Stock
Units shall be made in cash, in Stock, or in a combination of the two, as
determined by the Committee. The Grant Letter shall specify the maximum number
of shares that can be issued under the Stock Units.

      (d) Requirement of Employment or Service. The Committee shall determine in
the Grant Letter under what circumstances a Participant may retain Stock Units
after termination of the Participant's employment or service, and the
circumstances under which Stock Units may be forfeited.

      9. PERFORMANCE UNITS

      (a) General Requirements. The Committee may grant Performance Units to an
Employee or Non-Employee Director, upon such terms and conditions as the
Committee deems appropriate under this Section 9. Each Performance Unit shall
represent the right of the Participant to receive a share of Stock or an amount
based on the value of a share of Stock, if specified performance goals and other
conditions are met. All Performance Units shall be credited to accounts on the
Company's records for purposes of the Plan.

      (b) Terms of Performance Units. The Committee shall establish the
performance goals and other conditions for payment of Performance Units.
Performance Units may be paid at the end of a specified performance or other
period, or payment may be deferred to a date authorized by the Committee. The
Committee shall determine the number of Performance Units to be granted and the
requirements applicable to such Performance Units. The Committee may grant
Dividend Equivalents with respect to Performance Units.

      (c) Payment With Respect to Performance Units. Payment with respect to
Performance Units shall be made in cash, in Stock, or in a combination of the
two, as determined by the Committee. The Committee shall establish a Target
Amount for Performance Units in the Grant Letter. Payment of Performance Units
in excess of the Target Amount shall be made in cash.

                                       7

      (d) Requirement of Employment or Service. The Committee shall determine in
the Grant Letter under what circumstances a Participant may retain Performance
Units after termination of the Participant's employment or service, and the
circumstances under which Performance Units may be forfeited.

      10. STOCK AWARDS

      (a) General Requirements. The Committee may issue shares of Stock to an
Employee or Non-Employee Director under a Stock Award, upon such terms and
conditions as the Committee deems appropriate under this Section 10. Shares of
Stock issued pursuant to Stock Awards may be issued for cash consideration or
for no cash consideration, and subject to restrictions or no restrictions, as
determined by the Committee. The Committee may establish conditions under which
restrictions on Stock Awards shall lapse over a period of time or according to
such other criteria as the Committee deems appropriate, including restrictions
based upon the achievement of specific performance goals.

      (b) Number of Shares. The Committee shall determine the number of shares
of Stock to be issued pursuant to a Stock Award and any restrictions applicable
to such shares.

      (c) Requirement of Employment or Service. The Committee shall determine in
the Grant Letter under what circumstances a Participant may retain Stock Awards
after termination of the Participant's employment or service, and the
circumstances under which Stock Awards may be forfeited.

      (d) Restrictions on Transfer. While Stock Awards are subject to
restrictions, a Participant may not sell, assign, transfer, pledge or otherwise
dispose of the shares of a Stock Award except upon death as described in Section
17. Each Certificate for a share of a Stock Award shall contain a legend giving
appropriate notice of the restrictions in the Grant. The Participant shall be
entitled to have the legend removed when all restrictions on such shares have
lapsed. The Company may retain possession of any Certificates for Stock Awards
until all restrictions on such shares have lapsed.

      (e) Right to Vote and to Receive Dividends. The Committee shall determine
to what extent, and under what conditions, the Participant shall have the right
to vote shares of Stock Awards and to receive any dividends or other
distributions paid on such shares during the restriction period.

      11. DIVIDEND EQUIVALENTS.

      (a) General Requirements. When the Committee makes a Grant under the Plan,
the Committee may grant Dividend Equivalents in connection with such Grants,
under such terms and conditions as the Committee deems appropriate under this
Section 11. Dividend Equivalents may be paid to Participants currently or may be
deferred, as determined by the Committee. All Dividend Equivalents that are not
paid currently shall be credited to accounts on the Company's records for
purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation,
or may be converted to Stock Units for the Participant, as determined by the
Committee. Unless otherwise specified in the Grant Letter, deferred Dividend
Equivalents will not accrue interest.

                                       8

The Committee may provide that Dividend Equivalents shall be payable based on
the achievement of specific performance goals.

      (b) Payment with Respect to Dividend Equivalents. Dividend Equivalents may
be payable in cash or shares of Stock or in a combination of the two, as
determined by the Committee.

      12. OTHER STOCK-BASED AWARDS

      The Committee may grant other awards, including stock appreciation rights,
that are based on, measured by or payable in Stock to Employees or Non-Employee
Directors, on such terms and conditions as the Committee deems appropriate under
this Section 12. Other Stock-Based Awards may be granted subject to achievement
of performance goals or other conditions and may be payable in Stock or cash, or
in a combination of the two, as determined by the Committee in the Grant Letter.
The Committee may grant Dividend Equivalents with respect to Other Stock-Based
Awards.

      13. QUALIFIED PERFORMANCE-BASED COMPENSATION

      (a) Designation as Qualified Performance-Based Compensation. The Committee
may determine that Stock Units, Performance Units, Stock Awards, Dividend
Equivalents or Other Stock-Based Awards granted to an Employee shall be
considered "qualified performance-based compensation" under section 162(m) of
the Code. The provisions of this Section 13 shall apply to any such Grants that
are to be considered "qualified performance-based compensation" under section
162(m) of the Code.

      (b) Performance Goals. When Stock Units, Performance Units, Stock Awards,
Dividend Equivalents or Other Stock-Based Awards that are to be considered
"qualified performance-based compensation" are granted, the Committee shall
establish in writing (i) the objective performance goals that must be met, (ii)
the period during which performance will be measured, (iii) the maximum amounts
that may be paid if the performance goals are met, and (iv) any other conditions
that the Committee deems appropriate and consistent with the requirements of
Section 162(m) of the Code for "qualified performance-based compensation." The
performance goals shall satisfy the requirements for "qualified
performance-based compensation," including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the performance goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the
performance goals have been met. The Committee shall not have discretion to
increase the amount of compensation that is payable, but may reduce the amount
of compensation that is payable, pursuant to Grants identified by the Committee
as "qualified performance-based compensation."

      (c) Criteria Used for Objective Performance Goals. The Committee shall use
objectively determinable performance goals based on one or more of the following
criteria: stock price, earnings per share, net earnings, operating earnings,
margin, EBITDA (earnings before interest, taxes, depreciation and amortization),
net capital employed, return on assets,

                                       9

shareholder return, return on equity, return on capital employed, growth in
assets, unit volume, sales, cash flow, market share, relative performance to a
comparison group designated by the Committee, or strategic business criteria
consisting of one or more objectives based on meeting specified revenue goals,
market penetration goals, customer growth, geographic business expansion goals,
cost targets or goals relating to acquisitions or divestitures. The performance
goals may relate to the Participant's business unit or the performance of the
Company as a whole, or any combination of the foregoing. Performance goals need
not be uniform as among Participants.

      (d) Timing of Establishment of Goals. The Committee shall establish the
performance goals in writing either before the beginning of the performance
period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the performance period or (ii) the date on which 25% of the
performance period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code.

      (e) Certification of Results. The Committee shall certify the performance
results for the performance period specified in the Grant Letter after the
performance period expires. The Committee shall determine the amount, if any, to
be paid pursuant to each Grant based on the achievement of the performance goals
and the satisfaction of all other terms of the Grant Letter.

      (f) Death, Disability or Other Circumstances. The Committee may provide in
the Grant Letter that Grants identified as qualified performance-based
compensation shall be payable, in whole or in part, in the event of the
Participant's death or disability, a Change of Control or under other
circumstances consistent with the Treasury regulations and rulings under section
162(m) of the Code.

      14. DIRECTORS' EQUITY PLAN

      The Directors' Equity Plan shall be merged into this Plan as of the
Effective Date, and all outstanding Units and accrued Dividend Equivalents under
the Directors' Equity Plan as of the Effective Date shall be issued and paid out
of this Plan. No additional awards shall be made under the Directors' Equity
Plan. Dividend Equivalents shall be credited under this Plan with respect to
outstanding Units under the Directors' Equity Plan, according to terms and
conditions established by the Committee under Section 11.

      15. DEFERRALS

      The Committee may permit a Participant to defer receipt of the payment of
cash or the delivery of shares that would otherwise be due to the Participant in
connection with any Grant. The Committee shall establish rules and procedures
for any such deferrals.

      16. WITHHOLDING OF TAXES

      (a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company may require that the Participant or other person
receiving or exercising Grants pay to the Company

                                       10

the amount of any federal, state or local taxes that the Company is required to
withhold with respect to such Grants, or the Company may deduct from other wages
paid by the Company the amount of any withholding taxes due with respect to such
Grants.

      (b) Election to Withhold Shares. If the Committee so permits, a
Participant may elect to satisfy the Company's tax withholding obligation with
respect to Grants paid in Stock by having shares withheld, at the time such
Grants become taxable, up to an amount that does not exceed the minimum
applicable withholding tax rate for federal (including FICA), state and local
tax liabilities. The election must be in a form and manner prescribed by the
Committee and may be subject to the prior approval of the Committee.

      17. TRANSFERABILITY OF GRANTS

      Only the Participant may exercise rights under a Grant during the
Participant's lifetime, and a Participant may not transfer those rights except
by will or by the laws of descent and distribution. When a Participant dies, the
personal representative or other person entitled to succeed to the rights of the
Participant may exercise such rights. Any such successor must furnish proof
satisfactory to the Company of his or her right to receive the Grant under the
Participant's will or under the applicable laws of descent and distribution.

      18. CONSEQUENCES OF A CHANGE OF CONTROL

      (a) Notice and Acceleration. Upon a Change of Control, unless the
Committee determines otherwise, (i) the Company shall provide each Participant
who holds outstanding Grants with written notice of the Change of Control, (ii)
all outstanding Options shall automatically accelerate and become fully
exercisable, (iii) the restrictions and conditions on all outstanding Stock
Awards shall immediately lapse, (iv) all Stock Units and Performance Units shall
become payable in cash in an amount not less than their Target Amount or in a
larger amount, up to the maximum Grant value, as determined by the Committee,
and (v) Dividend Equivalents and Other Stock-Based Awards shall become payable
in full in cash, in amounts determined by the Committee.

      (b) Assumption of Grants. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding Options
that are not exercised shall be assumed by, or replaced with comparable options
by, the surviving corporation (or a parent or subsidiary of the surviving
corporation), and other Grants that remain outstanding after the Change of
Control shall be converted to similar grants of the surviving corporation (or a
parent or subsidiary of the surviving corporation).

      (c) Other Alternatives. Notwithstanding the foregoing, subject to
subsection (d) below, in the event of a Change of Control, the Committee may
take any of the following actions with respect to any or all outstanding Grants,
without the consent of any Participant: (i) the Committee may require that
Participants surrender their outstanding Options in exchange for a payment by
the Company, in cash or Stock as determined by the Committee, in an amount equal
to the amount by which the then Fair Market Value of the shares of Stock subject
to the

                                       11

Participant's unexercised Options exceeds the Option Price, if any, (ii) after
giving Participants an opportunity to exercise their outstanding Options, the
Committee may terminate any or all unexercised Options at such time as the
Committee deems appropriate, and (iii) with respect to Participants holding
Stock Units, Performance Units, Dividend Equivalents or Other Stock-Based
Awards, the Committee may determine that such Participants shall receive a
payment in settlement of such Stock Units, Performance Units, Dividend
Equivalents or Other Stock-Based Awards, in such amount and form as may be
determined by the Committee. Such surrender, termination or settlement shall
take place as of the date of the Change of Control or such other date as the
Committee may specify.

      (d) Committee. The Committee making the determinations under this Section
18 following a Change of Control must be comprised of the same members as those
of the Committee immediately before the Change of Control. If the Committee
members do not meet this requirement, the automatic provisions of subsections
(a) and (b) shall apply, and the Committee shall not have discretion to vary
them.

      (e) Other Transactions. The Committee may provide in a Grant Letter that a
sale or other transaction involving a Subsidiary or other business unit of the
Company shall be considered a Change of Control for purposes of a Grant, or the
Committee may establish other provisions that shall be applicable in the event
of a specified transaction.

      19. REQUIREMENTS FOR ISSUANCE OF SHARES

      No Stock shall be issued in connection with any Grant hereunder unless and
until all legal requirements applicable to the issuance of such Stock have been
complied with to the satisfaction of the Committee. The Committee shall have the
right to condition any Grant made to any Participant hereunder on such
Participant's undertaking in writing to comply with such restrictions on his or
her subsequent disposition of such shares of Stock as the Committee shall deem
necessary or advisable, and Certificates representing such shares may be
legended to reflect any such restrictions. Certificates representing shares of
Stock issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon. No
Participant shall have any right as a shareholder with respect to Stock covered
by a Grant until shares have been issued to the Participant.

      20. AMENDMENT AND TERMINATION OF THE PLAN

      (a) Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that the Board shall not amend the Plan without approval of
the shareholders of UGI if such approval is required in order to comply with the
Code or applicable laws, or to comply with applicable stock exchange
requirements. No amendment or termination of this Plan shall, without the
consent of the Participant, materially impair any rights or obligations under
any Grant previously made to the Participant under the Plan, unless such right
has been reserved in the Plan or the Grant Letter, or except as provided in
Section 21(c) below.

      (b) No Repricing Without Shareholder Approval. Notwithstanding anything in
the Plan to the contrary, the Committee may not reprice Options, nor may the
Board amend the Plan

                                       12

to permit repricing of Options, unless the shareholders of UGI provide prior
approval for such repricing. The term "repricing" shall have the meaning given
that term in Section 303A(8) of the New York Stock Exchange Listed Company
Manual, as in effect from time to time.

      (c) Shareholder Approval for "Qualified Performance-Based Compensation."
If Stock Units, Performance Units, Stock Awards, Dividend Equivalents or Other
Stock-Based Awards are granted as "qualified performance-based compensation"
under Section 13 above, the Plan must be reapproved by the UGI shareholders no
later than the first shareholders meeting that occurs in the fifth year
following the year in which the shareholders previously approved the provisions
of Section 13, if additional Grants are to be made under Section 13 and if
required by section 162(m) of the Code or the regulations thereunder.

      (d) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its Effective Date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the shareholders. The termination of the Plan shall not impair the power and
authority of the Committee with respect to an outstanding Grant.

      21. MISCELLANEOUS

      (a) Grants in Connection with Corporate Transactions and Otherwise.
Nothing contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including Grants to employees thereof
who become Employees, or for other proper corporate purposes, or (ii) limit the
right of the Company to grant stock options or make other stock-based awards
outside of this Plan. Without limiting the foregoing, the Committee may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company in substitution for a grant
made by such corporation. The terms and conditions of the Grants may vary from
the terms and conditions required by the Plan and from those of the substituted
stock incentives, as determined by the Committee

      (b) Reduction of Responsibilities. The Committee shall have discretion to
adjust an Employee's outstanding Grants if the Employee's authority, duties or
responsibilities are significantly reduced.

      (c) Compliance with Law. The Plan, the exercise of Options and the
obligations of the Company to issue or transfer shares of Stock under Grants
shall be subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to persons subject to section
16 of the Exchange Act, it is the intent of the Company that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3
or its successors under the Exchange Act. In addition, it is the intent of the
Company that Options, and Grants made under Section 13 of the Plan, comply with
the applicable provisions of section 162(m) of the Code. To the extent that any
legal requirement of section 16 of the Exchange Act or section 162(m) of the
Code as set forth in the Plan ceases to be required under section 16 of the
Exchange Act or section 162(m) of the Code, that Plan provision shall cease to

                                       13

apply. The Committee may revoke any Grant if it is contrary to law or modify a
Grant to bring it into compliance with any valid and mandatory government
regulation. The Committee may also adopt rules regarding the withholding of
taxes on payments to Participants. The Committee may, in its sole discretion,
agree to limit its authority under this Section.

      (d) Enforceability. The Plan shall be binding upon and enforceable against
the Company and its successors and assigns.

      (e) Funding of the Plan; Limitation on Rights. This Plan shall be
unfunded. The Company shall not be required to establish any special or separate
fund or to make any other segregation of assets to assure the payment of any
Grants under this Plan. Nothing contained in the Plan and no action taken
pursuant hereto shall create or be construed to create a fiduciary relationship
between the Company and any Participant or any other person. No Participant or
any other person shall under any circumstances acquire any property interest in
any specific assets of the Company. To the extent that any person acquires a
right to receive payment from the Company hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Company.

      (f) Rights of Participants. Nothing in this Plan shall entitle any
Employee, Non-Employee Director or other person to any claim or right to receive
a Grant under this Plan. Neither this Plan nor any action taken hereunder shall
be construed as giving any individual any rights to be retained by or in the
employment or service of the Company.

      (g) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Grant. The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

      (h) Employees Subject to Taxation Outside the United States. With respect
to Participants who are subject to taxation in countries other than the United
States, the Committee may make Grants on such terms and conditions as the
Committee deems appropriate to comply with the laws of the applicable countries,
and the Committee may create such procedures, addenda and subplans and make such
modifications as may be necessary or advisable to comply with such laws.

      (i) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Letters issued under the Plan shall be governed and
construed by and determined in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflict of laws provisions thereof.

                                       14

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN

                                    EXHIBIT A

For purposes of the Plan, the term "Change of Control," and other defined terms
used in the definition of "Change of Control," shall have the following
meanings:

            1. "Change of Control" shall mean:

               (i) Any Person (except UGI, any UGI Subsidiary, any employee
benefit plan of UGI or of any UGI Subsidiary, or any Person or entity organized,
appointed or established by UGI 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 UGI (the "Outstanding UGI
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of UGI entitled to vote generally in the election of directors (the
"UGI Voting Securities"); or

               (ii) Individuals who, as of the beginning of any 24-month period,
constitute the UGI Board of Directors (the "Incumbent UGI Board") cease for any
reason to constitute at least a majority of the Incumbent UGI Board, provided
that any individual becoming a director of UGI subsequent to the beginning of
such period whose election or nomination for election by the UGI shareholders
was approved by a vote of at least a majority of the directors then comprising
the Incumbent UGI Board shall be considered as though such individual were a
member of the Incumbent UGI 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 UGI (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or

               (iii) Consummation by UGI 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 UGI Common Stock and UGI 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 UGI Common Stock and UGI Voting Securities, as the case may be; or

               (iv) Consummation of (a) a complete liquidation or dissolution of
UGI or (b) a sale or other disposition of all or substantially all of the assets
of UGI 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

                                      A-1

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 UGI Common Stock and UGI Voting
Securities immediately prior to such sale or disposition in substantially the
same proportion as their ownership of the Outstanding UGI Common Stock and UGI
Voting Securities, as the case may be, immediately prior to such sale or
disposition.

            2. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

            3. 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 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 securities;
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 (40) days after the
date of such acquisition.

            4. "Person" shall mean an individual or a corporation, partnership,
trust, unincorporated organization, association, or other entity.

            5. "UGI Subsidiary" shall mean any corporation in which UGI directly
or indirectly, owns at least a fifty percent (50%) interest or an unincorporated
entity of which UGI, as applicable, directly or indirectly, owns at least fifty
percent (50%) of the profits or capital interests.

                                      A-2

                                                                   EXHIBIT 10.36

                                                                       7/23/2004
                                                                   UGI Employees

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                     NONQUALIFIED STOCK OPTION GRANT LETTER

      This STOCK OPTION GRANT, dated as of January 1, 2004 (the "Date of
Grant"), is delivered by UGI Corporation ("UGI") to _____________ (the
"Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of options to purchase shares of common stock of UGI. The
Compensation and Management Development Committee of the Board of Directors of
the Company (the "Committee") has decided to make a stock option grant to the
Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth in this Grant
Letter and in the Plan, the Committee hereby grants to the Participant a
nonqualified stock option (the "Option") to purchase ______ shares of common
stock of UGI ("Shares") at an exercise price of $33.97 per Share. The Option
shall become exercisable according to Paragraph 2 below.

2. Exercisability of Option. The Option shall become exercisable on the
following dates, if the Participant is employed by, or providing service to, the
Company (as defined below) on the applicable date:

                         Shares for Which the
      Date              Option is Exercisable
      ----              ---------------------
                     
January 1, 2005                33 1/3%
January 1, 2006                33 1/3%
January 1, 2007                33 1/3%

The exercisability of the Option is cumulative, but shall not exceed 100% of the
Shares subject to the Option. If the foregoing schedule would produce fractional
Shares, the number of Shares for which the Option becomes exercisable shall be
rounded down to the nearest whole Share.

3. Term of Option.

      (a) The Option shall have a term of ten years from the Date of Grant and
shall terminate at the expiration of that period (5:00 p.m. EST on December 31,
2013), unless it is terminated at an earlier date pursuant to the provisions of
this Grant Letter or the Plan.

      (b) If the Participant ceases to be employed by, or provide service to,
the Company, the Option will terminate on the date the Participant ceases such
employment or service. However, if the Participant ceases to be employed by, or
provide service to, the Company by reason of (i) Termination without Cause, (ii)
Retirement (as defined below), (iii) Disability (as defined below), or (iv)
death, the Option held by the Participant will thereafter be exercisable
pursuant to the following terms:

            (i) Termination Without Cause. If the Participant terminates
      employment or service on account of a Termination without Cause, the
      Option will thereafter be exercisable only with respect to that number of
      Shares with respect to which the Option is already exercisable on the date
      the Participant's employment or service terminates. Such portion of the
      Option will terminate upon the earlier of the expiration date of the
      Option or the expiration of the 13-month period commencing on the date the
      Participant ceases to be employed by, or provide service to, the Company.

            (ii) Retirement. If the Participant ceases to be employed by, or
      provide service to, the Company on account of Retirement, the Option will
      thereafter become exercisable as if the Participant had continued to
      provide service to the Company for 36 months after the date of such
      Retirement. The Option will terminate upon the earlier of the expiration
      date of the Option or the expiration of such 36-month period.

            (iii) Disability. If the Participant ceases to be employed by, or
      provide service to, the Company on account of Disability, the Option will
      thereafter become exercisable as if the Participant had continued to
      provide service to the Company for 36 months after the date of such
      termination of employment or service. The Option will terminate upon the
      earlier of the expiration date of the Option or the expiration of such
      36-month period.

            (iv) Death. In the event of the death of the Participant while
      employed by, or providing service to, the Company, the Option will be
      fully and immediately exercisable and may be exercised at any time prior
      to the earlier of the expiration date of the Option or the expiration of
      the 12-month period following the Participant's death. Death of the
      Participant after the Participant has ceased to be employed by, or provide
      service to, the Company will not affect the otherwise applicable period
      for exercise of the Option determined pursuant to subsections (i), (ii) or
      (iii) above. After the Participant's death, the Participant's Option may
      be exercised by the Participant's estate.

4. Exercise Procedures.

      (a) Subject to the provisions of Paragraphs 2 and 3 above, the Participant
may exercise part or all of the exercisable Option by giving UGI irrevocable
written notice of intent to exercise on a form provided by UGI and delivered in
the manner provided in Section 13 below. Payment of the exercise price and any
applicable withholding taxes must be made prior to issuance of the Shares. The
Participant shall pay the exercise price (i) in cash, (ii) by delivering Shares
(or by attestation to ownership of Shares), which shall be valued at their fair
market value on the date of delivery, which shall have been held by the
Participant for at least six months, and which shall have a fair market value on
the date of exercise equal to the exercise price, (iii) by payment through a
broker in accordance with procedures acceptable to the Committee and

                                      -2-

permitted by Regulation T of the Federal Reserve Board or (iv) by such other
method as the Committee may approve. The Committee may impose such limitations
as it deems appropriate on the use of Shares to exercise the Option.

      (b) The obligation of UGI to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as UGI's counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. UGI may
require that the Participant (or other person exercising the Option after the
Participant's death) represent that the Participant is purchasing Shares for the
Participant's own account and not with a view to or for sale in connection with
any distribution of the Shares, or such other representation as UGI deems
appropriate.

      (c) All obligations of UGI under this Grant Letter shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to
be withheld for any taxes, if applicable.

5. Definitions. Whenever used in this Grant Letter, the following terms shall
have the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Employed by, or provide service to, the Company" shall mean
employment or service as an employee or director of the Company.

      (d) "Retirement" means the Participant's retirement under the Retirement
Income Plan for Employees of UGI Utilities, Inc., if the Participant is covered
by that Retirement Income Plan. "Retirement" for other Company employees means
termination of employment after attaining age 55 with ten or more years of
service with the Company.

      (e) "Termination without Cause" means termination of employment for the
convenience of the Company for any reason other than (i) misappropriation of
funds, (ii) habitual insobriety or substance abuse, (iii) conviction of a crime
involving moral turpitude, or (iv) 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.
The Committee may determine in its sole discretion whether, and under what
circumstances, the Participant's voluntary termination upon a significant
reduction in the Participant's duties and responsibilities will constitute a
Termination without Cause for purposes of the Grant Letter.

6. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Committee may take such actions as it deems appropriate pursuant to the Plan.

                                      -3-

7. Restrictions on Exercise. Except as the Committee may otherwise permit
pursuant to the Plan, only the Participant may exercise the Option during the
Participant's lifetime and, after the Participant's death, the Option shall be
exercisable by the Participant's estate, to the extent that the Option is
exercisable pursuant to this Grant Letter.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan and
the Terms and Conditions established by the Committee with respect to the Plan,
both of which are incorporated herein by reference, and in all respects shall be
interpreted in accordance with the Plan and the Terms and Conditions. The grant
and exercise of the Option are subject to interpretations, regulations and
determinations concerning the Plan established from time to time by the
Committee in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) the registration, qualification or
listing of the Shares, (ii) changes in capitalization of the Company and (iii)
other requirements of applicable law. The Committee shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

9. No Employment or Other Rights. The grant of the Option shall not confer upon
the Participant any right to be retained by or in the employ or service of the
Company and shall not interfere in any way with the right of the Company to
terminate the Participant's employment or service at any time. The right of the
Company to terminate at will the Participant's employment or service at any time
for any reason is specifically reserved.

10. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares subject to the Option, until certificates for Shares have been issued
upon the exercise of the Option.

11. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. The rights and protections of the Company hereunder
shall extend to any successors or assigns of the Company and to the Company's
parents, subsidiaries, and affiliates.

12. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

13. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

                                      -4-

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                     UGI Corporation

Attest

________________________________     By:________________________________________
Corporate Secretary                         Robert H. Knauss
                                            Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Option described in this Grant Letter, and I
agree to be bound by the terms of the Plan, including the Terms and Conditions,
and this Grant Letter. I hereby further agree that all the decisions and
determinations of the Committee shall be final and binding on me and any other
person having or claiming a right under this Grant.

_________________
Participant

                                      -5-

                                                                EXHIBIT 10.36(a)

                                                                       7/26/2004
                                                             Utilities Employees

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                     NONQUALIFIED STOCK OPTION GRANT LETTER

      This STOCK OPTION GRANT, dated as of January 1, 2004 (the "Date of
Grant"), is delivered by UGI Corporation ("UGI") to _____________ (the
"Participant").

                                    RECITALS

      The UGI Corporation 2004 Omnibus Equity Compensation Plan (the "Plan")
provides for the grant of options to purchase shares of common stock of UGI. The
Compensation and Management Development Committee of the Board of Directors of
the Company (the "Committee") has decided to make a stock option grant to the
Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth in this Grant
Letter and in the Plan, the Committee hereby grants to the Participant a
nonqualified stock option (the "Option") to purchase ______ shares of common
stock of UGI ("Shares") at an exercise price of $33.97 per Share. The Option
shall become exercisable according to Paragraph 2 below.

2. Exercisability of Option. The Option shall become exercisable on the
following dates, if the Participant is employed by, or providing service to, the
Company (as defined below) on the applicable date:

                            Shares for Which the
      Date                 Option is Exercisable
      ----                 ---------------------
                        
January 1, 2005                   33 1/3%
January 1, 2006                   33 1/3%
January 1, 2007                   33 1/3%

The exercisability of the Option is cumulative, but shall not exceed 100% of the
Shares subject to the Option. If the foregoing schedule would produce fractional
Shares, the number of Shares for which the Option becomes exercisable shall be
rounded down to the nearest whole Share.

3. Term of Option.

      (a) The Option shall have a term of ten years from the Date of Grant and
shall terminate at the expiration of that period (5:00 p.m. EST on December 31,
2013), unless it is terminated at an earlier date pursuant to the provisions of
this Grant Letter or the Plan.

      (b) If the Participant ceases to be employed by, or provide service to,
the Company, the Option will terminate on the date the Participant ceases such
employment or service. However, if the Participant ceases to be employed by, or
provide service to, the Company by reason of (i) Termination without Cause, (ii)
Retirement (as defined below), (iii) Disability (as defined below), or (iv)
death, the Option held by the Participant will thereafter be exercisable
pursuant to the following terms:

            (i) Termination Without Cause. If the Participant terminates
      employment or service on account of a Termination without Cause, the
      Option will thereafter be exercisable only with respect to that number of
      Shares with respect to which the Option is already exercisable on the date
      the Participant's employment or service terminates. Such portion of the
      Option will terminate upon the earlier of the expiration date of the
      Option or the expiration of the 13-month period commencing on the date the
      Participant ceases to be employed by, or provide service to, the Company.

            (ii) Retirement. If the Participant ceases to be employed by, or
      provide service to, the Company on account of Retirement, the Option will
      thereafter become exercisable as if the Participant had continued to
      provide service to the Company for 36 months after the date of such
      Retirement. The Option will terminate upon the earlier of the expiration
      date of the Option or the expiration of such 36-month period.

            (iii) Disability. If the Participant ceases to be employed by, or
      provide service to, the Company on account of Disability, the Option will
      thereafter become exercisable as if the Participant had continued to
      provide service to the Company for 36 months after the date of such
      termination of employment or service. The Option will terminate upon the
      earlier of the expiration date of the Option or the expiration of such
      36-month period.

            (iv) Death. In the event of the death of the Participant while
      employed by, or providing service to, the Company, the Option will be
      fully and immediately exercisable and may be exercised at any time prior
      to the earlier of the expiration date of the Option or the expiration of
      the 12-month period following the Participant's death. Death of the
      Participant after the Participant has ceased to be employed by, or provide
      service to, the Company will not affect the otherwise applicable period
      for exercise of the Option determined pursuant to subsections (i), (ii) or
      (iii) above. After the Participant's death, the Participant's Option may
      be exercised by the Participant's estate.

4. Exercise Procedures.

      (a) Subject to the provisions of Paragraphs 2 and 3 above, the Participant
may exercise part or all of the exercisable Option by giving UGI irrevocable
written notice of intent to exercise on a form provided by UGI and delivered in
the manner provided in Section 13 below. Payment of the exercise price and any
applicable withholding taxes must be made prior to issuance of the Shares. The
Participant shall pay the exercise price (i) in cash, (ii) by delivering Shares
(or by attestation to ownership of Shares), which shall be valued at their fair
market value on the date of delivery, which shall have been held by the
Participant for at least six months, and which shall have a fair market value on
the date of exercise equal to the exercise price, (iii) by payment through a
broker in accordance with procedures acceptable to the Committee and

                                      -2-

permitted by Regulation T of the Federal Reserve Board or (iv) by such other
method as the Committee may approve. The Committee may impose such limitations
as it deems appropriate on the use of Shares to exercise the Option.

      (b) The obligation of UGI to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as UGI's counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. UGI may
require that the Participant (or other person exercising the Option after the
Participant's death) represent that the Participant is purchasing Shares for the
Participant's own account and not with a view to or for sale in connection with
any distribution of the Shares, or such other representation as UGI deems
appropriate.

      (c) All obligations of UGI under this Grant Letter shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to
be withheld for any taxes, if applicable.

5. Definitions. Whenever used in this Grant Letter, the following terms shall
have the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Employed by, or provide service to, the Company" shall mean
employment or service as an employee or director of the Company.

      (d) "Retirement" means the Participant's retirement under the Retirement
Income Plan for Employees of UGI Utilities, Inc., if the Participant is covered
by that Retirement Income Plan. "Retirement" for other Company employees means
termination of employment after attaining age 55 with ten or more years of
service with the Company.

      (e) "Termination without Cause" means termination of employment for the
convenience of the Company for any reason other than (i) misappropriation of
funds, (ii) habitual insobriety or substance abuse, (iii) conviction of a crime
involving moral turpitude, or (iv) 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.
The Committee may determine in its sole discretion whether, and under what
circumstances, the Participant's voluntary termination upon a significant
reduction in the Participant's duties and responsibilities will constitute a
Termination without Cause for purposes of the Grant Letter.

6. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Committee may take such actions as it deems appropriate pursuant to the Plan.
For Participants who are employees of UGI Utilities, Inc. ("Utilities") or a
subsidiary of Utilities, the term "Change of Control" shall mean (i) a Change of
Control of UGI as defined in the Plan, or (ii) one of the events set forth on
Exhibit A with respect to Utilities.

                                      -3-

7. Restrictions on Exercise. Except as the Committee may otherwise permit
pursuant to the Plan, only the Participant may exercise the Option during the
Participant's lifetime and, after the Participant's death, the Option shall be
exercisable by the Participant's estate, to the extent that the Option is
exercisable pursuant to this Grant Letter.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan and
the Terms and Conditions established by the Committee with respect to the Plan,
both of which are incorporated herein by reference, and in all respects shall be
interpreted in accordance with the Plan and the Terms and Conditions. The grant
and exercise of the Option are subject to interpretations, regulations and
determinations concerning the Plan established from time to time by the
Committee in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) the registration, qualification or
listing of the Shares, (ii) changes in capitalization of the Company and (iii)
other requirements of applicable law. The Committee shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

9. No Employment or Other Rights. The grant of the Option shall not confer upon
the Participant any right to be retained by or in the employ or service of the
Company and shall not interfere in any way with the right of the Company to
terminate the Participant's employment or service at any time. The right of the
Company to terminate at will the Participant's employment or service at any time
for any reason is specifically reserved.

10. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares subject to the Option, until certificates for Shares have been issued
upon the exercise of the Option.

11. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. The rights and protections of the Company hereunder
shall extend to any successors or assigns of the Company and to the Company's
parents, subsidiaries, and affiliates.

12. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

13. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

                                      -4-

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                    UGI Corporation

Attest

______________________________      By:_________________________________________
Corporate Secretary                        Robert H. Knauss
                                           Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Terms and Conditions
incorporated herein. I accept the Option described in this Grant Letter, and I
agree to be bound by the terms of the Plan, including the Terms and Conditions,
and this Grant Letter. I hereby further agree that all the decisions and
determinations of the Committee shall be final and binding on me and any other
person having or claiming a right under this Grant.

_________________________________
Participant

                                      -5-

                                    EXHIBIT A

                   Change of Control with Respect to Utilities

For Participants who are employees of Utilities, or a subsidiary of Utilities,
the term "Change of Control" shall include the events set forth in this Exhibit
A with respect to Utilities, and the defined terms set forth used in this
Exhibit A, if not defined in the Plan, shall have the following meanings:

1. "Change of Control" shall include any of the following events:

            (A) UGI and the UGI Subsidiaries fail to own more than fifty percent
(50%) of the then outstanding shares of common stock of Utilities or more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of Utilities entitled to vote generally in the election of directors;
or

            (B) Completion by Utilities 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 Utilities' outstanding common stock and 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 Utilities'
outstanding common stock and voting securities, as the case may be; or

            (C) Completion of a complete liquidation or dissolution of the
Utilities or sale or other disposition of all or substantially all of the assets
of Utilities 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
Utilities' outstanding common stock and voting securities immediately prior to
such sale or disposition in substantially the same proportion as their ownership
of Utilities' outstanding common stock and voting securities, as the case may
be, immediately prior to such sale or disposition.

2. "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.

3. 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

                                      A-1

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 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 securities; 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 (40) days after the date of such
acquisition.

4. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

5. "Person" shall mean an individual or a corporation, partnership, trust,
unincorporated organization, association, or other entity.

6. "UGI Subsidiary" shall mean any corporation in which UGI directly or
indirectly, owns at least a fifty percent (50%) interest or an unincorporated
entity of which UGI, as applicable, directly or indirectly, owns at least fifty
percent (50%) of the profits or capital interests.

                                      A-2

                                                                   EXHIBIT 10.43

                                                                   UGI 7/22/2004

                                 UGI CORPORATION
                      2004 OMNIBUS EQUITY COMPENSATION PLAN
                          SUB-PLAN FOR FRENCH EMPLOYEES

                            STOCK OPTION GRANT LETTER

      This STOCK OPTION GRANT, dated as of____________ ___, 2004 (the "Date of
Grant"), is delivered by UGI Corporation ("UGI") to _____________ (the
"Participant").

                                    RECITALS

      The UGI Corporation Sub-Plan for French Employees under the 2004 Omnibus
Equity Compensation Plan (the "Plan") provides for the grant of options to
purchase shares of common stock of UGI. The Board of Directors of UGI (the
"Board") authorizes and administers all option grants to employees in France,
and the Board has decided to make a stock option grant to the Participant.

      NOW, THEREFORE, the parties to this Grant Letter, intending to be legally
bound hereby, agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth in this Grant
Letter and in the Plan, UGI hereby grants to the Participant a stock option (the
"Option") to purchase ______ shares of common stock of UGI ("Shares") at an
exercise price of U.S. $______ per Share. The Option is intended to be a
qualified option for French tax purposes and a nonqualified stock option for
U.S. tax purposes. The Option shall become exercisable according to Section 2
below.

2. Exercisability of Option. The Option shall become exercisable on the
following date, if the Participant is employed by the Company (as defined below)
on the applicable date:

                                        Shares for Which the
           Date                         Option is Exercisable
           ----                         ---------------------
                                     
_______________ __, 2008                         100%

3. Term of Option.

      (a) The Option shall have a term of nine years and six months from the
Date of Grant and shall terminate at the expiration of that period (5:00 p.m.
U.S. EST on ______________ __, 201_), unless it is terminated at an earlier date
pursuant to the provisions of this Grant Letter or the Plan.

      (b) If the Participant ceases to be employed by the Company, the Option
will terminate on the date the Participant ceases such employment, except as
provided below. If the Participant ceases to be employed by the Company by
reason of (i) Termination without Cause (as defined below), (ii) Retirement (as
defined below), (iii) Disability (as defined below), or (iv) death, the Option
held by the Participant will thereafter be exercisable pursuant to the following
terms:

            (i) Termination Without Cause. If the Participant's employment
      terminates on account of a Termination without Cause, the Option will
      thereafter be exercisable only with respect to that number of Shares with
      respect to which the Option is already exercisable on the date the
      Participant's employment terminates. Such portion of the Option will
      terminate upon the earlier of the expiration date of the Option or the
      expiration of the 13-month period commencing on the date the Participant
      ceases to be employed by the Company.

            (ii) Retirement. If the Participant ceases to be employed by the
      Company on account of Retirement, the Option will thereafter become
      exercisable as if the Participant had remained employed by the Company for
      48 months after the date of such Retirement. The Option will terminate
      upon the earlier of the expiration date of the Option or the expiration of
      such 48-month period.

            (iii) Disability. If the Participant is determined to be Disabled,
      the Option will thereafter become exercisable as if the Participant had
      remained employed by the Company for 48 months after the date of such
      Disability. The Option will terminate upon the earlier of the expiration
      date of the Option or the expiration of such 48-month period.

            (iv) Death. In the event of the death of the Participant while
      employed by the Company or while the Option is outstanding pursuant to
      subsections (i), (ii) or (iii) above, the Option will be fully and
      immediately exercisable and may be exercised at any time prior to
      expiration of the six-month period following the Participant's death.
      After the Participant's death, the Participant's Option may be exercised
      by the Participant's estate.

4. Exercise Procedures.

      (a) Subject to the provisions of Sections 2 and 3 above, the Participant
may exercise part or all of the exercisable Option by giving UGI irrevocable
written notice of intent to exercise on a form provided by UGI and delivered in
the manner provided in Section 13 below. Payment of the exercise price and any
applicable withholding taxes must be made prior to issuance of the Shares. The
Participant shall pay the exercise price (i) in cash in U.S. dollars or (ii) by
payment through a broker in accordance with procedures acceptable to the Board
and permitted by Regulation T of the U.S. Federal Reserve Board.

      (b) The obligation of UGI to deliver Shares upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the Board,
including such actions as UGI's counsel shall deem necessary or appropriate to
comply with relevant securities laws and regulations. UGI may require that the
Participant (or other person exercising the Option after the Participant's

                                       2

death) represent that the Participant is purchasing Shares for the Participant's
own account and not with a view to or for sale in connection with any
distribution of the Shares, or such other representation as UGI deems
appropriate.

      (c) All obligations of UGI under this Grant Letter shall be subject to the
rights of the Company as set forth in the Plan to withhold amounts required to
be withheld for any taxes, if applicable.

5. Definitions. Whenever used in this Grant Letter, the following terms shall
have the meanings set forth below:

      (a) "Company" means UGI and its Subsidiaries (as defined in the Plan).

      (b) "Disability" means a long-term disability as defined in the Company's
long-term disability plan applicable to the Participant.

      (c) "Employed by the Company" shall mean employment as an employee of the
Company. For purposes of this Grant Letter, the Participant's period of
employment shall not include any period of notice of termination of employment,
whether expressed or implied. The Participant's date of cessation of employment
shall mean the date upon which the Participant ceases active performance of
services for the Company following the provision of such notification of
termination or resignation from employment and shall be determined solely by
this Grant Letter and without reference to any other agreement, written or oral,
including the Participant's contract of employment.

      (d) "Retirement" means termination of employment after attaining age 55
with ten or more years of service with the Company.

      (e) "Termination without Cause" means termination of employment for the
convenience of the Company for any reason other than (i) misappropriation of
funds, (ii) habitual insobriety or substance abuse, (iii) conviction of a crime
involving moral turpitude, or (iv) 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.

6. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control, the
Board may take such actions as it deems appropriate pursuant to the Plan.

7. Restrictions on Exercise. Except as the Board may otherwise permit pursuant
to the Plan, only the Participant may exercise the Option during the
Participant's lifetime and, after the Participant's death, the Option shall be
exercisable solely by the Participant's estate, to the extent that the Option is
exercisable pursuant to this Grant Letter.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan and
the Sub-Plan for French Employees, the terms of which are incorporated herein by
reference, and in all respects shall be interpreted in accordance with the Plan.
The grant and exercise of the Option are subject to interpretations, regulations
and determinations concerning the Plan established from time to time by the
Board in accordance with the provisions of the Plan, including, but not

                                       3

limited to, provisions pertaining to (i) the registration, qualification or
listing of the Shares, (ii) changes in capitalization of the Company and (iii)
other requirements of applicable law. The Board shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

9. No Employment or Other Rights. The grant of the Option shall not confer upon
the Participant any right to be retained by or in the employ of the Company and
shall not interfere in any way with the right of the Company to terminate the
Participant's employment at any time. The right of the Company to terminate at
will the Participant's employment at any time for any reason is specifically
reserved.

10. No Shareholder Rights. Neither the Participant, nor any person entitled to
exercise the Participant's rights in the event of the Participant's death, shall
have any of the rights and privileges of a shareholder with respect to the
Shares subject to the Option, until certificates for Shares have been issued
upon the exercise of the Option.

11. Assignment and Transfers. The rights and interests of the Participant under
this Grant Letter may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. The rights and protections of the Company hereunder
shall extend to any successors or assigns of the Company and to the Company's
parents, subsidiaries, and affiliates.

12. Applicable Law. The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to the conflicts of
laws provisions thereof.

13. Notice. Any notice to UGI provided for in this instrument shall be addressed
to UGI in care of the Corporate Secretary at UGI's headquarters, and any notice
to the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.

14. Authorization to Release Necessary Personal Information.

      (a) The Participant hereby authorizes and directs the Participant's
employer to collect, use and transfer in electronic or other form, any personal
information (the "Data") regarding the Participant's employment, the nature and
amount of the Participant's compensation and the fact and conditions of the
Participant's participation in the Plan (including, but not limited to, the
Participant's name, home address, telephone number, date of birth, social
security number (or any other social or national identification number), salary,
nationality, job title, number of Shares held and the details of all options or
any other entitlement to Shares awarded, cancelled, exercised, vested, unvested
or outstanding) for the exclusive purpose of implementing, administering and
managing the Participant's participation in the Plan. The Participant
understands that the Data may be transferred to the Company, or to any third
parties assisting in the implementation, administration and management of the
Plan, including any requisite transfer

                                       4

to a broker or other third party assisting with the exercise of options under
the Plan or with whom Shares acquired upon exercise of this Option or cash from
the sale of such shares may be deposited. The Participant acknowledges that
recipients of the Data may be located in different countries, and those
countries may have data privacy laws and protections different from those in the
country of the Participant's residence. Furthermore, the Participant
acknowledges and understands that the transfer of the Data to the Company, or to
any third parties, is necessary for the Participant's participation in the Plan.
The Participant understands that the Data will be held only as long as necessary
to implement, administer and manage the Participant's participation in the Plan.
For all transfers, the Participant's employer agrees and warrants that the
processing, including the transfer itself, of the Data will be carried out in
accordance with the French and European legal data protection regulation.

      (b) The Participant may at any time amend the Data and/or withdraw the
consents herein, by contacting the Participant's local human resources
representative in writing. The Participant further acknowledges that withdrawal
of consent may affect the Participant's ability to exercise or realize benefits
from the Option, and the Participant's ability to participate in the Plan.

15. No Entitlement or Claims for Compensation.

      (a) The grant of options under the Plan is made at the discretion of the
Board, and the Plan may be suspended or terminated by UGI at any time. The grant
of an option in one year or at one time does not in any way entitle the
Participant to an option grant in the future. The Plan is wholly discretionary
in nature and is not to be considered part of the Participant's normal or
expected compensation subject to severance, resignation, redundancy or similar
compensation. The value of the Option is an extraordinary item of compensation
which is outside the scope of the Participant's employment contract (if any).

      (b) The Participant shall have no rights to compensation or damages as a
result of the Participant's cessation of employment for any reason whatsoever,
whether or not in breach of contract, insofar as those rights arise or may arise
from the Participant's ceasing to have rights under or be entitled to exercise
this Option as a result of such cessation or from the loss or diminution in
value of such rights. If the Participant did acquire any such rights, the
Participant is deemed to have waived them irrevocably by accepting the Option.

                                       5

      IN WITNESS WHEREOF, UGI has caused its duly authorized officers to execute
and attest this Grant Letter, and the Participant has executed this Grant
Letter, effective as of the Date of Grant.

                                        UGI Corporation

Attest

__________________________________      By:_____________________________________
Corporate Secretary                           Robert H. Knauss
                                              Vice President and General Counsel

I hereby acknowledge receipt of the Plan and the Sub-Plan for French Employees
incorporated herein. I accept the Option described in this Grant Letter, and I
agree to be bound by the terms of the Plan, including the Sub-Plan for French
Employees, and this Grant Letter. I hereby further agree that all the decisions
and determinations of the Board shall be final and binding on me and any other
person having or claiming a right under this Grant.

______________________________
Participant

                                       6

                                              UGI Corporation 2004 Annual Report

FINANCIAL REVIEW

BUSINESS OVERVIEW

UGI Corporation ("UGI") is a holding company that distributes and markets energy
products and related services through subsidiaries and joint-venture affiliates.
We are a domestic and international distributor of propane and butane-based
liquefied petroleum gases (collectively, "LPG"); a provider of natural gas and
electric service through regulated local distribution utilities; a generator of
electricity through our ownership interests in electric generation facilities; a
regional marketer of energy commodities; and a provider of heating and cooling
services.

      We conduct a national propane distribution business through AmeriGas
Partners, L.P. ("AmeriGas Partners") and its principal operating subsidiaries
AmeriGas Propane, L.P. ("AmeriGas OLP") and AmeriGas Eagle Propane, L.P. ("Eagle
OLP"). At September 30, 2004, UGI, through its wholly owned second-tier
subsidiary AmeriGas Propane, Inc. (the "General Partner"), held an approximate
46% effective interest in AmeriGas Partners. We refer to AmeriGas Partners and
its subsidiaries together as "the Partnership" and the General Partner and its
subsidiaries, including the Partnership, as "AmeriGas Propane."

      Our wholly owned subsidiary UGI Enterprises, Inc. ("Enterprises") (1)
conducts an LPG distribution business in France; (2) conducts an LPG
distribution business in Austria, the Czech Republic and Slovakia ("FLAGA"); and
(3) participates in an LPG joint-venture business in the Nantong region of
China. Our LPG distribution business in France is conducted through Antargaz, an
operating subsidiary of AGZ Holding ("AGZ"), and its operating subsidiaries
(collectively, "Antargaz"). We refer to our foreign operations collectively as
"International Propane."

      Our natural gas and electric distribution utilities are conducted through
UGI Utilities, Inc. ("UGI Utilities"). UGI Utilities owns and operates a natural
gas distribution utility ("Gas Utility") in parts of eastern and southeastern
Pennsylvania and an electric distribution utility ("Electric Utility") in
northeastern Pennsylvania. Gas Utility and Electric Utility are subject to
regulation by the Pennsylvania Public Utility Commission ("PUC").

      Enterprises also conducts an energy marketing business primarily in the
Eastern region of the United States through its wholly owned subsidiary, UGI
Energy Services, Inc. ("Energy Services"). Energy Services' wholly owned
subsidiary UGI Development Company ("UGID") and UGID's joint-venture affiliate
Hunlock Creek Energy Ventures ("Energy Ventures") own interests in
Pennsylvania-based electric generation assets. Prior to its transfer to Energy
Services in June 2003, UGID was a wholly owned subsidiary of UGI Utilities.
Through other subsidiaries, Enterprises owns and operates a heating,
ventilation, air-conditioning and refrigeration service business in the Middle
Atlantic states ("HVAC/R").

      This Financial Review should be read in conjunction with our Consolidated
Financial Statements and Notes to Consolidated Financial Statements including
the reportable segment information included in Note 19.

RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

Fiscal 2004 marked another year of earnings growth as we continued to focus on
our core competencies as a marketer and distributor of energy products and
services.

      On March 31, 2004, we purchased the remaining 80.5% ownership interest in
AGZ that we did not already own ("Antargaz Acquisition"). AGZ is the parent
company of Antargaz, a leading distributor of LPG in France. This transaction
was $0.26 per share dilutive in 2004 due to the following factors. First, we
incurred a $9.1 million pre-tax foreign exchange loss ($0.13 per diluted share)
as we fixed the euro-denominated purchase price in dollars. Second, we issued
7.8 million shares of our common stock in March ($0.22 per diluted share) to
finance part of the acquisition. Partially offsetting the first two items were
the additional Antargaz earnings ($0.09 per diluted share) after March 31, 2004
resulting from our increased ownership. The Antargaz Acquisition has also
significantly changed our business. In Fiscal 2005, assuming normal weather, we
expect our domestic and international LPG operations collectively to represent
approximately one-half of our net income and our utility business operations to
represent about one-third.

      Winter weather conditions in the United States and Europe are the most
important variables affecting our annual earnings performance. This is because a
substantial portion of the energy products we sell are used in heating
applications.

2004 COMPARED WITH 2003

CONSOLIDATED RESULTS

Effective October 1, 2003, our Energy Services segment includes the operating
results of Energy Services' gas marketing business as well as UGID's electric
generation business. Prior-year amounts have been restated to be consistent with
the current period presentation.

                                                                                 Variance -
                                                                                 Favorable
                                 2004                     2003                  (Unfavorable)
                                 ----                     ----                  -------------
                                   % OF TOTAL               % of total
                            NET        NET           Net         Net          Net
                          INCOME      INCOME       Income      Income       Income       % change
                          -------  ----------      -------  ----------      -------      --------
                                                                       
(Millions of dollars)
AmeriGas Propane          $  29.4      26.3%       $  23.2      23.5%       $   6.2         26.7%
International Propane        13.3      11.9%           3.6       3.6%           9.7         N.M.
Gas Utility                  37.9      34.0%          48.0      48.5%         (10.1)       (21.0)%
Electric Utility             11.0       9.9%          10.6      10.7%           0.4          3.8%
Energy Services              18.2      16.3%          11.2      11.3%           7.0         62.5%
Corporate & Other             1.8       1.6%           2.3       2.3%          (0.5)       (21.7)%
                          -------     -----        -------     -----        -------        -----
Total                     $ 111.6     100.0%       $  98.9     100.0%       $  12.7         12.8%
                          -------     -----        -------     -----        -------        -----

N.M. - Due to the Antargaz Acquisition, variance is not meaningful.

                                                                              13

FINANCIAL REVIEW (continued)

      The following table presents certain financial and statistical information
for our principal businesses for Fiscal 2004 and Fiscal 2003:

                                                                       Increase
                                       2004          2003             (Decrease)
                                     --------      --------     ---------------------
                                                                    
(Millions of dollars)
AMERIGAS PROPANE:
Revenues                             $1,775.9      $1,628.4     $  147.5           9.1%
Total margin (a)                     $  746.7      $  718.1     $   28.6           4.0%
Partnership EBITDA (b)               $  255.9      $  234.4     $   21.5           9.2%
Operating income                     $  176.0      $  164.5     $   11.5           7.0%
Retail gallons sold (millions)        1,059.1       1,074.9        (15.8)        (1.5)%
Degree days - % (warmer) colder
   than normal (c)                       (4.9)%         0.2%           -             -

INTERNATIONAL PROPANE:
Revenues                             $  333.4      $   54.5     $  278.9           N.M.
Total margin (a)                     $  195.4      $   27.1     $  168.3           N.M.
Operating income                     $   20.5      $    0.7     $   19.8           N.M.
Income from equity investees         $   10.6      $    5.9     $    4.7           N.M.
Income before income taxes           $   13.7      $    2.5     $   11.2           N.M.

GAS UTILITY:
Revenues                             $  560.4      $  539.9     $   20.5           3.8%
Total margin (a)                     $  191.5      $  196.9     $   (5.4)        (2.7)%
Operating income                     $   80.1      $   96.1     $  (16.0)       (16.6)%
Income before income taxes           $   64.2      $   80.7     $  (16.5)       (20.4)%
System throughput -
   billions of cubic feet ("bcf")        82.2          83.8         (1.6)        (1.9)%
Degree days - % (warmer) colder
   than normal                           (2.9)%         7.0%           -             -

ELECTRIC UTILITY:
Revenues                             $   89.7      $   88.8     $    0.9           1.0%
Total margin (a)                     $   41.6      $   40.3     $    1.3           3.2%
Operating income                     $   20.9      $   20.3     $    0.6           3.0%
Income before income taxes           $   18.9      $   18.0     $    0.9           5.0%
Distribution sales - millions of
   kilowatt hours ("gwh")               983.9         980.0          3.9           0.4%

ENERGY SERVICES:
Revenues                             $  967.2      $  668.0     $  299.2          44.8%
Total margin (a)                     $   55.0      $   35.6     $   19.4          54.5%
Operating Income                     $   31.1      $   19.2     $   11.9          62.0%
Income before income taxes           $   31.1      $   19.2     $   11.9          62.0%

N.M. - Due to the Antargaz Acquisition, variance is not meaningful.

(a) Total margin represents total revenues less total cost of sales and, with
respect to Electric Utility, revenue-related taxes, i.e. Electric Utility gross
receipts taxes of $4.8 million in both Fiscal 2004 and Fiscal 2003. For
financial statement purposes, revenue-related taxes are included in "Utility
taxes other than income taxes" on the Consolidated Statements of Income.

(b) Partnership EBITDA (earnings before interest expense, income taxes and
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 accounting principles
generally accepted in the United States of America. Management uses Partnership
EBITDA as the primary measure of segment profitability for the AmeriGas Propane
reportable segment (see Note 19 to Consolidated Financial Statements).

(c) Deviation from average heating degree days based upon national weather
statistics provided by the National Oceanic and Atmospheric Administration
("NOAA") for 335 airports in the United States, excluding Alaska.

AMERIGAS PROPANE. Based upon heating degree day data, temperatures in Fiscal
2004 were 4.9% warmer than normal compared to temperatures that were essentially
normal in Fiscal 2003. Retail propane volumes sold during Fiscal 2004 decreased
slightly compared to Fiscal 2003 as the effects of warmer than normal winter
weather more than offset volume growth from acquisitions, principally the
October 2003 acquisition of Horizon Propane LLC ("Horizon Propane"). In
addition, Fiscal 2004 retail propane volumes were also negatively affected by
customer conservation driven by record-high propane product costs. Low margin
wholesale volumes increased primarily reflecting greater product cost hedging
activities.

      Retail propane revenues increased $104.6 million as a $124.8 million
increase due to higher average selling prices was partially offset by a $20.2
million decrease due to the lower retail volumes sold. Wholesale propane
revenues increased $32.5 million reflecting (1) a $23.3 million increase due to
higher average selling prices and (2) a $9.2 million increase due to the higher
volumes sold relating to product cost hedging activities. In Fiscal 2004, the
propane industry experienced sustained higher propane product costs which
resulted in higher average retail and wholesale selling prices. Total propane
cost of sales increased $115.4 million principally reflecting the effects of
significantly higher propane product costs.

      Despite lower retail volumes sold as a result of the warmer weather, total
margin increased $28.6 million due to higher average retail propane margins per
gallon and greater margin from non-propane sales and services. As a result of
significantly higher propane product costs, the Partnership increased average
retail selling prices realizing higher average margins per gallon while
remaining competitive in the marketplace. Average margin per gallon associated
with the Partnership's Prefilled Propane Xchange program ("PPX(R)") decreased in
Fiscal 2004 as selling prices were lowered in response to competition in the
marketplace. The effects of lower average PPX(R) selling prices on PPX(R) margin
per gallon were partially offset by effective cost management initiatives.
Margin from non-propane sales and services increased $6.9 million principally
reflecting higher margin from tank rentals, PPX(R) cylinder sales and hauling
and terminal sales and services.

      Partnership EBITDA increased $21.5 million in Fiscal 2004 reflecting (1)
the previously mentioned increase in total margin, (2) the absence of a $3.0
million loss on extinguishment of long-term debt incurred in Fiscal 2003, and
(3) a $2.8 million increase in other income. These increases were partially
offset by a $12.6 million increase in operating and administrative expenses
principally due to higher compensation, distribution, administrative and general
insurance expenses partially offset by the absence of $3.8 million of expenses
associated with initiating the management realignment in Fiscal 2003 and the
continued beneficial effects on Fiscal 2004 operating expenses of the
realignment. Other income in Fiscal 2004 increased principally due to greater
income from finance charges.

      Operating income in Fiscal 2004 increased $11.5 million as the previously
mentioned increases in margin and other income were partially offset by (1)
higher depreciation and amortization expense related to recent acquisitions, (2)
higher depreciation associated with PPX(R) and (3) the aforementioned increase
in operating expenses.

14

                                              UGI Corporation 2004 Annual Report

INTERNATIONAL PROPANE. International Propane results of operations in Fiscal
2004 have significantly increased compared to Fiscal 2003 due to the
consolidation of all of Antargaz' operations beginning April 1, 2004 as a result
of the Antargaz Acquisition. Antargaz' revenues, total margin and operating
income from April 1, 2004 to September 30, 2004 were $270.8 million, $164.8
million and $15.1 million, respectively. During the twelve months ended
September 30, 2004, Antargaz sold approximately 336 million gallons of LPG while
experiencing weather that was 5% warmer than normal compared to 342 million
gallons sold and weather that was 11% warmer than normal during the twelve
months ended September 30, 2003. Despite the improved weather in Fiscal 2004
compared to Fiscal 2003, volumes declined due primarily to lower high volume,
low margin sales principally to crop-drying customers. International Propane's
revenues increased significantly during Fiscal 2004 principally due to including
all of Antargaz' results of operations on a consolidated basis beginning April
1, 2004. FLAGA's revenues increased $8.1 million in Fiscal 2004 due to the
effects of an approximately 12% stronger euro on slightly higher base-currency
revenues despite lower volumes sold. International Propane total margin
increased primarily due to the Antargaz Acquisition and a $3.5 million increase
in FLAGA's margin. FLAGA's margin increased in Fiscal 2004 as a result of the
effects of a stronger euro on slightly improved base-currency margin.

      The increase in International Propane operating income principally
reflects the previously mentioned increases in margin partially offset by (1)
higher operating expenses resulting from the Antargaz Acquisition and (2) a loss
of $9.1 million resulting from the settlement of contracts for the forward
purchase of euros used to fund a portion of the purchase price of the Antargaz
Acquisition. FLAGA's operating income increased during Fiscal 2004 primarily
reflecting lower operating expenses as a result of cost reduction initiatives
partially offset by the effects of a stronger euro.

      International Propane income from equity investees in Fiscal 2004 includes
equity investee income from our 19.5% ownership interest in AGZ through March
31, 2004. The $4.7 million increase over Fiscal 2003 primarily reflects higher
income from AGZ resulting from (1) the effects of colder weather during the
Fiscal 2004 winter heating season and (2) lower base-currency LPG product costs
partially offset by the effect of the stronger euro.

      The increase in International Propane income before income taxes reflects
the combined increase in Antargaz' results as an equity investee and on a
consolidated basis and the previously mentioned increase in FLAGA's operating
income partially offset by greater interest expense resulting from the Antargaz
Acquisition.

GAS UTILITY. Weather in Gas Utility's service territory based upon heating
degree days was 2.9% warmer than normal in Fiscal 2004 compared with weather
that was 7.0% colder than normal in Fiscal 2003. Total distribution system
throughput decreased 1.6 bcf or 1.9% as the adverse effects of the warmer
weather on heating-related sales to firm- residential, commercial and industrial
("retail core-market") customers were partially offset by greater volumes
transported for delivery service customers and the volume effects of
year-over-year retail core-market customer growth. The increase in Gas Utility
revenues during Fiscal 2004 includes a $20.1 million increase in revenues from
off-system sales partially offset by lower retail core-market and delivery
service revenues. The decline in retail core-market revenues reflects the
effects of the reduced retail core-market volumes partially offset by higher
average purchased gas cost ("PGC") rates reflecting higher natural gas costs.
Gas Utility's cost of gas was $368.9 million in Fiscal 2004 compared to $343.0
million in Fiscal 2003 reflecting greater cost of gas associated with the higher
off-system sales and the higher average retail core-market PGC rates partially
offset by the effects of the lower retail core-market volumes sold. Increases or
decreases in Gas Utility's cost of gas associated with retail core-market
customers result from changes in retail core-market volumes, the price of the
gas purchased and the level of gas costs collected through the PGC recovery
mechanism. Under this recovery mechanism, Gas Utility records the cost of gas
associated with sales to retail core-market customers equal to the amount
included in rates and defers the difference on the balance sheet as a regulatory
asset or liability representing an amount to be collected from or refunded to
customers in a future period. As a result, increases or decreases in the cost of
gas associated with retail core-market customers have no direct effect on retail
core-market margin.

      Gas Utility total margin declined $5.4 million principally reflecting a
$4.0 million decline in retail core-market margin and the effects of lower
margins on delivery-service.

      Gas Utility operating income declined $16.0 million in Fiscal 2004
principally reflecting the previously mentioned decline in total margin, lower
other income and higher operating and administrative expenses. Other income
declined $5.4 million due in large part to a decline in non-tariff service
income, costs related to settling a regulatory claim and the absence of pension
income in Fiscal 2004. Operating and administrative expenses increased $3.8
million due primarily to higher compensation and benefits expense, including the
effects of a lump-sum payment made to a participant of UGI Utilities' unfunded
executive retirement plan, partially offset by the absence of costs related to
settling an environmental claim recorded in the prior year and lower Fiscal 2004
distribution system maintenance expenses. The decrease in Gas Utility income
before income taxes reflects the decline in operating income and slightly higher
interest expense in Fiscal 2004 resulting from classifying dividends paid on
preferred shares subject to mandatory redemption as interest expense beginning
July 1, 2003, in accordance with Statement of Financial Accounting Standards
("SFAS") No. 150, "Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity" ("SFAS 150").

ELECTRIC UTILITY. Electric Utility's Fiscal 2004 kilowatt-hour sales were
slightly higher than in Fiscal 2003 due in large part to greater air
conditioning sales partially offset by the adverse effects of slightly warmer
winter weather on heating-related sales.

      The increase in Electric Utility revenues in Fiscal 2004 reflects the
higher kilowatt-hour sales and higher rates. Electric Utility's cost of sales
declined $0.4 million in Fiscal 2004 reflecting lower Electric Utility purchased
power costs.

      Electric Utility total margin in Fiscal 2004 increased $1.3 million
reflecting the previously mentioned increase in revenues and decrease in
purchased power costs. Operating income was higher in Fiscal 2004 reflecting the
increase in total margin partially offset by slightly higher operating and
administrative expenses

                                                                              15

FINANCIAL REVIEW (continued)

and lower other income. The increase in income before income taxes reflects the
increase in total operating income and slightly lower interest expense.

ENERGY SERVICES. The increase in Energy Services revenues in Fiscal 2004
resulted primarily from (1) a 30% increase in natural gas volumes sold due in
large part to the full year effect of the March 2003 acquisition of the
northeastern U.S. gas marketing business of TXU Energy Retail Company, L.P., a
subsidiary of TXU Energy (the "TXU Energy Acquisition"), and to a lesser extent
customer growth, (2) the full year effect of UGID's June 2003 purchase of an
additional 4.9% (83 megawatt) interest in the Conemaugh electric generation
station located near Johnstown, Pennsylvania ("Conemaugh"), and (3) higher
natural gas and power prices. Energy Services total margin in Fiscal 2004 grew
$19.3 million over Fiscal 2003. The total margin increase contributed by UGID's
electric generation business was $10.5 million primarily reflecting the
additional interest in Conemaugh and the previously mentioned higher power
prices. The remaining increase in Energy Services total margin in Fiscal 2004,
generated by Energy Services' gas marketing business, reflects the higher
natural gas volumes sold and winter peaking services.

      The increase in Energy Services income before income taxes principally
reflects the previously mentioned increase in total margin partially offset by
higher operating expenses resulting from our purchase of the additional interest
in Conemaugh and the TXU Energy Acquisition.

INTEREST EXPENSE AND INCOME TAXES. Interest expense increased to $119.1 million
in Fiscal 2004 from $109.2 million in Fiscal 2003 due to significantly higher
International Propane interest expense as a result of the Antargaz Acquisition
partially offset by lower AmeriGas Propane interest expense. The Company's
effective income tax rate was 36.6% in Fiscal 2004 and 37.8% in Fiscal 2003.

2003 COMPARED WITH 2002

CONSOLIDATED RESULTS

                                                                  Variance -
                                                                  Favorable
                              2003               2002           (Unfavorable)
                              ----               ----           -------------
                                % of total                  % of total
                          Net      Net       Net      Net       Net
                        Income   Income    Income   Income    Income   % Change
                        ------  ---------- ------   ------  ---------- --------
                                                     
(Millions of dollars)
AmeriGas Propane         $23.2     23.5%    $17.4     23.0%    $ 5.8      33.3%
Gas Utility               48.0     48.5%     36.4     48.2%     11.6      31.9%
Electric Utility          10.6     10.7%      5.3      7.0%      5.3     100.0%
Energy Services           11.2     11.3%      7.3      9.7%      3.9      53.4%
International Propane      3.6      3.6%      7.5      9.9%     (3.9)    (52.0)%
Corporate & Other          2.3      2.3%      1.6      2.1%      0.7      43.8%
                         -----    -----     -----    -----     -----     -----
Total                    $98.9    100.0%    $75.5    100.0%    $23.4      31.0%
                         -----    -----     -----    -----     -----     -----

      Net income was higher in Fiscal 2003 reflecting the effects of colder
heating-season weather in our Gas Utility, Electric Utility and AmeriGas Propane
service territories and the effects of acquisitions and other growth initiatives
in our electric generation and Energy Services businesses. This improved
performance was partially offset by a decline in FLAGA's Fiscal 2003 results and
the absence of income from our debt investments in AGZ redeemed in July 2002.

      The following table presents certain financial and statistical information
by our principal businesses for Fiscal 2003 and Fiscal 2002:

                                                                      Increase
                                       2003         2002              (Decrease)
                                     --------     --------      ---------------------
                                                                    
(Millions of dollars)
AMERIGAS PROPANE:
Revenues                             $1,628.4     $1,307.9      $  320.5         24.5%
Total margin                         $  718.1     $  654.8      $   63.3          9.7%
Partnership EBITDA                   $  234.4     $  209.6      $   24.8         11.8%
Operating income                     $  164.5     $  145.0      $   19.5         13.4%
Retail gallons sold (millions)        1,074.9        987.5          87.4          8.9%
Degree days - % colder (warmer)
   than normal                            0.2%       (10.0)%           -            -

GAS UTILITY:
Revenues                             $  539.9     $  404.5      $  135.4         33.5%
Total margin                         $  196.9     $  162.9      $   34.0         20.9%
Operating income                     $   96.1     $   77.1      $   19.0         24.6%
Income before income taxes           $   80.7     $   62.9      $   17.8         28.3%
System throughput -
   billions of cubic feet ("bcf")        83.8         70.5          13.3         18.9%
Degree days - % colder (warmer)
   than normal                            7.0%       (17.4)%           -            -

ELECTRIC UTILITY:
Revenues                             $   88.8     $   83.5      $    5.3          6.3%
Total margin (a)                     $   40.3     $   30.2      $   10.1         33.4%
Operating income                     $   20.3     $   11.7      $    8.6         73.5%
Income before income taxes           $   18.0     $    9.3      $    8.7         93.5%
Distribution sales - millions of
   kilowatt hours ("gwh")               980.0        933.6          46.4          5.0%

ENERGY SERVICES:
Revenues                             $  668.0     $  344.8      $  323.2         93.7%
Total margin                         $   35.6     $   24.1      $   11.5         47.7%
Operating income                     $   19.2     $   12.6      $    6.6         52.4%
Income before income taxes           $   19.2     $   12.6      $    6.6         52.4%

INTERNATIONAL PROPANE:
Revenues                             $   54.5     $   46.7      $    7.8         16.7%
Total margin                         $   27.1     $   24.1      $    3.0         12.4%
Operating income                     $    0.7     $    3.9      $   (3.2)       (82.1)%
Income from equity investees         $    5.9     $    8.3      $   (2.4)       (28.9)%
Income before income taxes           $    2.5     $    8.0      $   (5.5)       (68.8)%

(a) Electric Utility total margin represents total revenues less cost of sales
and Electric Utility gross receipts taxes of $4.8 million and $4.6 million in
2003 and 2002, respectively.

AMERIGAS PROPANE. Weather based upon heating degree days was essentially normal
during Fiscal 2003 compared to weather that was 10.0% warmer than normal in
Fiscal 2002. Although temperatures nationwide averaged near normal during Fiscal
2003, our overall results reflect weather that was significantly warmer in the
West and generally colder than normal in the East. Retail propane volumes sold
increased 87.4 million gallons in Fiscal 2003 due principally to the effects of
the colder weather and, to a much lesser extent, volume growth from acquisitions
and customer growth. These increases were achieved

16

                                              UGI Corporation 2004 Annual Report

notwithstanding the effects of price-induced customer conservation and, with
respect to commercial and industrial customers, continued economic weakness.

      Retail propane revenues increased $272.7 million reflecting (1) a $175.1
million increase due to higher average selling prices and (2) a $97.6 million
increase due to the higher retail volumes sold. Wholesale propane revenues
increased $38.3 million reflecting (1) a $31.7 million increase due to higher
average selling prices and (2) a $6.6 million increase due to the higher volumes
sold. The higher retail and wholesale selling prices reflect significantly
higher propane product costs during Fiscal 2003 resulting from, among other
things, higher crude oil and natural gas prices and lower propane inventories.
Other revenues from ancillary sales and services were $125.8 million in Fiscal
2003 and $116.3 million in Fiscal 2002. Total cost of sales increased $257.2
million reflecting the higher propane product costs and higher volumes sold.

      The $63.3 million increase in total margin is principally due to the
higher propane gallons sold and, to a lesser extent, slightly higher average
retail propane unit margins. Notwithstanding the previously mentioned
significant increase in the commodity price of propane, retail propane unit
margins were slightly higher than the prior year reflecting the effects of the
higher average selling prices and the benefits of favorable propane product cost
management activities.

      Partnership EBITDA increased $24.8 million in Fiscal 2003 reflecting the
previously mentioned increase in total margin and a $4.6 million increase in
other income partially offset by a $40.6 million increase in Partnership
operating and administrative expenses and a $2.3 million increase in losses
associated with early extinguishments of long-term debt. Operating and
administrative expenses increased principally due to higher medical and general
insurance expenses, higher distribution expenses as a result of the previously
mentioned greater retail volumes, and higher incentive compensation and
uncollectible accounts expenses. In addition, the Partnership incurred $3.8
million of costs during Fiscal 2003 associated with a realignment of the
Partnership's management structure announced in June 2003. Other income in
Fiscal 2003 includes a gain of $1.1 million from the settlement of certain hedge
contracts and greater income from finance charges and asset sales while other
income in the prior year was reduced by a $2.1 million loss from declines in the
value of propane commodity option contracts. Operating income in Fiscal 2003
increased less than the increase in Partnership EBITDA due to higher
depreciation expense principally associated with PPX(R) partially offset by the
previously mentioned increase in losses associated with early extinguishments of
long-term debt.

GAS UTILITY. Weather in Gas Utility's service territory based upon heating
degree days was 7.0% colder than normal during Fiscal 2003 compared to weather
that was 17.4% warmer than normal during Fiscal 2002. The significantly colder
weather resulted in higher heating-related sales to retail core-market customers
and, to a lesser extent, greater volumes transported for residential, commercial
and industrial delivery service customers. System throughput in Fiscal 2003 also
benefited from a year-over-year increase in the number of customers.

      Gas Utility revenues increased principally as a result of the previously
mentioned greater retail core-market and delivery service volumes and higher
average retail core-market PGC rates resulting from higher natural gas costs.
Gas Utility cost of gas was $343.0 million in Fiscal 2003, an increase of $101.3
million from the prior year, reflecting the higher retail core-market volumes
sold and the higher retail core-market PGC rates.

      The increase in Gas Utility total margin principally reflects a $27.1
million increase in retail core-market total margin due to the higher retail
core-market sales and increased margin from greater delivery service volumes.

      The increase in Gas Utility operating income principally reflects the
increase in total margin partially offset by a $12.7 million increase in
operating and administrative expenses and lower other income. Fiscal 2003
operating and administrative expenses include higher costs associated with
litigation-related costs and expenses, greater distribution system maintenance
expenses, higher uncollectible accounts expenses and increased incentive
compensation costs. Other income declined $3.2 million principally reflecting a
$2.2 million decrease in pension income and lower interest income on PGC
undercollections. The increase in Gas Utility income before income taxes
reflects the increase in operating income offset by higher interest expense on
PGC over-collections and, beginning July 1, 2003, the classification of
dividends on preferred shares as a component of interest expense.

ELECTRIC UTILITY. Electric Utility's Fiscal 2003 kilowatt-hour distribution
sales increased principally as a result of weather based upon heating degree
days that was 8.4% colder than normal compared to weather that was 14.5% warmer
than normal in the prior year.

      The higher Electric Utility revenues reflect the previously mentioned
increase in Electric Utility kilowatt-hour distribution sales. Beginning
September 2002, Electric Utility began purchasing its power needs exclusively
from third-party electricity suppliers under fixed-price energy and capacity
contracts and, to a much lesser extent, on the spot market. Notwithstanding the
increase in Electric Utility revenues, cost of sales decreased $5.0 million in
Fiscal 2003 due to lower Electric Utility per-unit purchased power costs.

      The increase in Electric Utility total margin principally reflects lower
Electric Utility per-unit purchased power costs and the increase in Electric
Utility sales. The higher Fiscal 2003 operating income reflects the greater
total margin partially offset by higher operating and administrative expenses
resulting from higher transmission and distribution expenses and a $0.4 million
decrease in other income. The increase in Electric Utility income before income
taxes reflects the increase in operating income and slightly lower interest
expense.

ENERGY SERVICES. The increase in Energy Services' revenues in Fiscal 2003
resulted from higher natural gas prices, and, to a lesser extent, a more than
40% increase in natural gas volumes sold due in large part to the March 2003 TXU
Energy Acquisition and greater sales of electricity produced by UGID's electric
generation assets. Prior to September 2002, UGID sold substantially all of the
electricity it produced to Electric Utility with the associated revenue and
margin eliminated in our consolidated results. Beginning September 2002, UGID
began selling electric power

                                                                              17

FINANCIAL REVIEW (continued)

produced from its interests in electricity generating facilities to third
parties on the spot market. Additionally, the greater Fiscal 2003 UGID sales and
revenues reflect UGID's June 2003 purchase of an additional 4.9% (83 megawatt)
interest in Conemaugh. The greater Energy Services' Fiscal 2003 total margin
reflects the increase in natural gas volumes sold partially offset by slightly
lower average unit margins and margin from the greater sales of electricity
produced by UGID's electric generation assets. The increase in total margin was
partially offset by higher operating expenses resulting principally from the TXU
Energy Acquisition, growth initiatives and our purchase of the additional
interest in Conemaugh.

INTERNATIONAL PROPANE. FLAGA's revenues increased $7.8 million, notwithstanding
a 5% decline in volumes sold, primarily reflecting the currency translation
effects of a stronger euro and, to a lesser extent, higher average selling
prices. Volumes were lower in Fiscal 2003 principally due to the loss of a
high-volume, low unit margin customer and, to a lesser extent, price-induced
conservation and continued weak economic activity. The increase in Fiscal 2003
total margin reflects the translation effects of the stronger euro. The decline
in FLAGA's operating income, notwithstanding the increase in total margin, is
substantially the result of the translation effects of the stronger euro on
operating and administrative expenses and, to a lesser extent, higher
base-currency expenses.

      The decline in Fiscal 2003 earnings from our equity investees is
principally a result of the July 2002 redemption of our debt investments in AGZ.
Income from our debt investments in AGZ in Fiscal 2002 includes $0.9 million of
interest income and a currency transaction gain of $1.6 million resulting from
the early redemption of this euro-denominated debt in July 2002. Equity income
from AGZ in Fiscal 2003 was comparable with Fiscal 2002, notwithstanding a
decline in Antargaz' base-currency results, reflecting the effects of the
stronger euro. The decline in International Propane income before income taxes
reflects the combined decrease in FLAGA operating income and in our income from
equity investees offset by slightly lower interest expense.

INTEREST EXPENSE AND INCOME TAXES. Interest expense was $109.2 million in Fiscal
2003 compared to $109.1 million in Fiscal 2002 as slightly higher UGI Utilities
interest expense was partially offset by slightly lower Partnership interest
expense. The Company's effective income tax rate was 37.8% in Fiscal 2003 and
Fiscal 2002.

FINANCIAL CONDITION AND LIQUIDITY

CAPITALIZATION AND LIQUIDITY

Total cash, cash equivalents and short-term investments were $199.6 million at
September 30, 2004 compared with $192.1 million at September 30, 2003. These
amounts include $114.6 million and $116.3 million, respectively, of cash, cash
equivalents and short-term investments readily available to UGI.

      The primary sources of UGI's cash and short-term investments are the cash
dividends it receives from its principal subsidiaries AmeriGas, Inc., UGI
Utilities and Enterprises. AmeriGas, Inc.'s ability to pay dividends to UGI is
largely dependent upon distributions it receives from AmeriGas Partners. At
September 30, 2004, our approximately 46% effective ownership interest in the
Partnership consisted of 24.5 million Common Units and a 2% general partner
interest. Approximately 45 days after the end of each fiscal quarter, the
Partnership distributes all of its Available Cash (as defined in the Third
Amended and Restated Agreement of Limited Partnership of AmeriGas Partners, the
"Partnership Agreement") relating to such fiscal quarter. Since its formation in
1995, the Partnership has paid the Minimum Quarterly Distribution of $0.55
("MQD") on all limited partner units outstanding. The amount of Available Cash
needed annually to pay the MQD on all units and the general partner interests in
Fiscal 2004, 2003 and 2002 was approximately $118 million, $112 million and $109
million, respectively. Based upon the number of Partnership units outstanding on
September 30, 2004, the amount of Available Cash needed annually to pay the MQD
on all units and the general partner interests is approximately $120 million.
The ability of the Partnership to pay the MQD on all units depends upon a number
of factors. These factors include (1) the level of Partnership earnings; (2) the
cash needs of the Partnership's operations (including cash needed for
maintaining and increasing operating capacity); (3) changes in operating working
capital; and (4) the ability of the Partnership to borrow under its Credit
Agreement, to refinance maturing debt and to increase its long-term debt. Some
of these factors are affected by conditions beyond our control including
weather, competition in markets we serve, the cost of propane and changes in
capital market conditions.

      Dividends from Enterprises' indirect subsidiary, Antargaz, are subject to
restrictions under its debt agreements. During Fiscal 2004, the Senior
Facilities Agreement was amended to permit AGZ to pay a one-time cumulative
dividend of approximately $54.4 million which was based on 50% of AGZ's
consolidated net income for the two-year period ended March 31, 2004. The amount
of any dividends expected to be received, based on AGZ's consolidated net income
for the period April 1, 2004 through September 30, 2004, is minimal. The
earliest that dividends relating to AGZ's Fiscal 2005 consolidated net income
can be received is during the first quarter of Fiscal 2006.

      During Fiscal 2004, 2003 and 2002, AmeriGas, Inc., UGI Utilities and
Enterprises paid cash dividends to UGI as follows:

Year Ended September 30,     2004         2003        2002
- -----------------------     -------      -------     -------
                                            
(Millions of dollars)
AmeriGas, Inc.              $  39.0      $  44.7     $  49.4
UGI Utilities                  45.0         33.9        37.9
Enterprises                    69.4(a)       7.1        23.6(b)
                            -------      -------     -------
Total dividends to UGI      $ 153.4      $  85.7     $ 110.9
                            -------      -------     -------

(a)   Includes dividend from Antargaz of $54.4 million.

(b)   Includes $17.0 of the proceeds related to the redemption of debt
      investments in AGZ.

      Dividends received by UGI are available to pay dividends on UGI Common
Stock and for investment purposes.

      On July 27, 2004, UGI's Board of Directors declared a quarterly dividend
on UGI Common Stock of $0.3125 per share payable on October 1, 2004 to
shareholders of record on August 31, 2004. UGI raised the annual dividend rate
to $1.25 per share, or $0.3125

18

                                              UGI Corporation 2004 Annual Report

per share on a quarterly basis, from $1.14 per share, or $0.2850 per share on a
quarterly basis, effective with this quarterly dividend.

      AMERIGAS PARTNERS. The Partnership's debt outstanding at September 30,
2004 totaled $901.4 million. There were no amounts outstanding under AmeriGas
OLP's Credit Agreement at September 30, 2004.

      AmeriGas OLP's Credit Agreement expires on October 15, 2008 and consists
of (1) a $100 million Revolving Credit Facility and (2) a $75 million
Acquisition Facility. The Revolving Credit Facility may be used for working
capital and general purposes of AmeriGas OLP. The Acquisition Facility provides
AmeriGas OLP with the ability to borrow up to $75 million to finance the
purchase of propane businesses or propane business assets or, to the extent it
is not so used, for working capital and general purposes, subject to
restrictions in the AmeriGas Partners Senior Notes indentures. Issued and
outstanding letters of credit under the Revolving Credit Facility, which reduce
the amount available for borrowings, totaled $45.9 million at September 30,
2004. AmeriGas OLP's short-term borrowing needs are seasonal and are typically
greatest during the fall and winter heating-season months due to the need to
fund higher levels of working capital.

      AmeriGas OLP also has a credit agreement with the General Partner to
borrow up to $20 million on an unsecured, subordinated basis, for working
capital and general purposes. UGI has agreed to contribute up to $20 million to
the General Partner to fund such borrowings.

      AmeriGas Partners periodically issues debt and equity securities and
expects to continue to do so. It has issued debt securities and common units in
underwritten public offerings in each of the last three fiscal years. Most
recently it issued debt securities in April 2004 and common units in May 2004,
both in underwritten public offerings. Proceeds of its public offerings are used
by the Partnership to reduce indebtedness and for general Partnership purposes,
including funding acquisitions. AmeriGas Partners has effective debt and equity
shelf registration statements with the U.S. Securities and Exchange Commission
("SEC") under which it may issue up to an additional (1) 1.4 million AmeriGas
Partners Common Units and (2) up to $446.2 million of debt or equity pursuant to
an unallocated shelf registration statement.

      AmeriGas OLP must maintain certain financial ratios in order to borrow
under its Credit Agreement including a minimum interest coverage ratio and a
maximum debt to EBITDA ratio, as defined. AmeriGas OLP's ratios calculated as of
September 30, 2004 permit it to borrow up to the maximum amount available. For a
more detailed discussion of the Partnership's credit facilities, see Note 4 to
Consolidated Financial Statements. Based upon existing cash balances, cash
expected to be generated from operations, borrowings available under its Credit
Agreement, and the expected refinancing of its maturing long-term debt, the
Partnership's management believes that the Partnership will be able to meet its
anticipated contractual commitments and projected cash needs during Fiscal 2005.

INTERNATIONAL PROPANE. At September 30, 2004, Antargaz had total debt
outstanding of $474.5 million. There were no amounts outstanding under the
revolver portion of the Senior Facilities Agreement at September 30, 2004.

      Antargaz' Senior Facilities Agreement expires June 30, 2008 and consists
of (1) a euro-denominated variable-rate term loan and (2) a E50 million
revolver. At September 30, 2004, there was E193 million ($240.0 million)
outstanding under the term loan. Principal payments of E9 million on the term
loan are due semi-annually on March 31 and September 30 each year with final
payments of E39 million and E100 million due March 31, 2008 and June 30, 2008,
respectively. The Senior Facilities term loan has been collateralized by
substantially all of Antargaz' shares in its subsidiaries, its equity investee
and by substantially all of its accounts receivable.

      In July 2002, AGZ issued E165 million of 10% Senior Notes due 2011 (the
"High Yield Bonds"), through one of its subsidiaries, AGZ Finance ("AGZ
Finance"). Interest on the High Yield Bonds is payable semi-annually on January
15 and July 15. AGZ Finance may redeem the bonds in whole or in part at a
premium commencing July 2006. The High Yield Bonds are listed on the Luxembourg
Exchange. Antargaz' management believes that it will be able to meet its
anticipated contractual commitments and projected cash needs during Fiscal 2005
principally with cash generated from operations.

      The Senior Facilities Agreement and the Trust Deed, dated July 23, 2002,
among AGZ Finance, as issuer, AGZ, as guarantor, and the Bank of New York, as
trustee, ("Trust Deed") relating to the High Yield Bonds, restrict the ability
of AGZ to, among other things, incur additional indebtedness, make investments,
incur liens, prepay indebtedness, and effect mergers, consolidations and sales
of assets. Under these agreements, AGZ is generally permitted to make restricted
payments, such as dividends, equal to 50% of consolidated net income, as defined
in each respective agreement, for (1) the immediately preceding fiscal year, in
the case of the Senior Facilities Agreement, and (2) on a cumulative basis since
July 2002, in the case of the Trust Deed, if no event of default exists or would
exist upon payment of such restricted payment. Also, see Note 4 to Consolidated
Financial Statements.

      FLAGA has a E15 million working capital loan commitment from a European
bank expiring in November 2005. Borrowings under the working capital facility
totaled E13.8 million ($17.2 million) at September 30, 2004. Debt issued under
this agreement, as well as $71.5 million of acquisition and special purpose debt
of FLAGA, are subject to guarantees of UGI. For a more detailed discussion of
FLAGA's debt, see Note 4 to Consolidated Financial Statements. FLAGA's
management expects to repay long-term debt maturing in Fiscal 2005 of
approximately $11.6 million principally through cash generated from operations
and capital contributions from UGI.

UGI UTILITIES. UGI Utilities' debt outstanding totaled $278.1 million at
September 30, 2004. Included in this amount is $60.9 million under revolving
credit agreements.

      UGI Utilities has revolving credit commitments under which it may borrow
up to a total of $110 million. These agreements are currently scheduled to
expire in June 2007. In addition, UGI Utilities has an uncommitted arrangement
with a major bank from which it may borrow up to $20 million. At September 30,
2004, there were no borrowings outstanding under this arrangement. Amounts
outstanding under the revolving credit agreements and the uncommitted
arrangement are classified as bank loans on the Consolidated Balance Sheets. The
revolving credit agreements

                                                                              19

FINANCIAL REVIEW (continued)

have restrictions on such items as total debt, debt service and payments for
investments. On October 1, 2004, all 200,000 shares of UGI Utilities' $7.75
preferred shares subject to mandatory redemption were redeemed at a price of
$100 per share together with full cumulative dividends. The redemption was
funded with proceeds from the issuance of $20 million of 6.13% Medium-Term Notes
due October 2034. UGI Utilities has a shelf registration statement with the SEC
under which it may issue up to an additional $20 million of Medium-Term Notes or
other debt securities. In order to provide additional short-term liquidity
during the peak-heating season, on November 1, 2004, UGI Utilities borrowed $20
million under the uncommitted arrangement with a major bank which is scheduled
to mature on March 1, 2005. Based upon cash expected to be generated from Gas
Utility and Electric Utility operations, short-term borrowings, including
borrowings available under revolving credit agreements and the availability of
its Medium-Term Notes, UGI Utilities' management believes that it will be able
to meet its anticipated contractual and projected cash commitments during Fiscal
2005. For a more detailed discussion of UGI Utilities' long-term debt and
revolving credit facilities, see Note 4 to Consolidated Financial Statements.

ENERGY SERVICES. Energy Services has a $150 million receivables purchase
facility ("Receivables Facility") with an issuer of receivables-backed
commercial paper expiring in August 2007, although the Receivables Facility may
terminate prior to such date due to the termination of commitments of the
Receivables Facility's back-up purchasers. Under the Receivables Facility,
Energy Services transfers, on an ongoing basis and without recourse, its trade
accounts receivable to its wholly owned, special purpose subsidiary, Energy
Services Funding Corporation ("ESFC"), which is consolidated for financial
statement purposes. ESFC, in turn, has sold, and subject to certain conditions,
may from time to time sell, an undivided interest in the receivables to a
commercial paper conduit of a major bank. The maximum level of funding available
at any one time from this facility is $150 million. The proceeds of these sales
are less than the face amount of the accounts receivable sold by an amount that
approximates the purchaser's financing cost of issuing its own
receivables-backed commercial paper. ESFC was created and has been structured to
isolate its assets from creditors of Energy Services and its affiliates,
including UGI. This two-step transaction is accounted for as a sale of
receivables following the provisions of SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." Energy
Services continues to service, administer and collect trade receivables on
behalf of the commercial paper issuer and ESFC. At September 30, 2004, the
outstanding balance of ESFC trade receivables was $63.4 million of which no
amount was sold to the commercial paper conduit. Based upon cash expected to be
generated from operations and borrowings available under its Receivables
Facility, management believes that Energy Services will be able to meet its
anticipated contractual and projected cash commitments during Fiscal 2005.

      In addition, a major bank has committed to issue up to $50 million of
standby letters of credit, secured by cash or marketable securities ("LC
Facility"). Energy Services expects to fund the collateral requirements with
borrowings under its Receivables Facility. The LC Facility expires in April
2005.

CASH FLOWS

OPERATING ACTIVITIES. Due to the seasonal nature of the Company's businesses,
cash flows from operating activities are generally strongest during the second
and third fiscal quarters when customers pay for natural gas, propane and other
LPG and electricity consumed during the heating season months. Conversely,
operating cash flows are generally at their lowest levels during the first and
fourth fiscal quarters when the Company's investment in working capital,
principally inventories and/or accounts receivable, is generally greatest. The
Company's major business units use revolving credit facilities, or in the case
of Energy Services its Receivables Facility, to satisfy their seasonal operating
cash flow needs. Cash flow from operating activities was $257.8 million in
Fiscal 2004, $249.1 million in Fiscal 2003, and $247.5 million in Fiscal 2002.
Cash flow from operating activities before changes in operating working capital
was $330.1 million in Fiscal 2004, $256.3 million in Fiscal 2003, and $233.7
million in Fiscal 2002. Changes in operating working capital used $72.3 million
and $7.2 million of cash in Fiscal 2004 and Fiscal 2003, respectively, and
provided $13.8 million of cash in Fiscal 2002. The increase in cash used for
working capital in Fiscal 2004 reflects the effect of higher natural gas and
propane commodity costs and changes in Gas Utility deferred fuel costs partially
offset by cash provided by Antargaz due in part to net changes in accounts
receivable and accounts payable since March 31, 2004.

INVESTING ACTIVITIES. Cash flow used in investing activities was $412.8 million
in Fiscal 2004, $226.1 million in Fiscal 2003, and $66.4 million in Fiscal 2002.
Investing activity cash flow is principally affected by capital expenditures and
investments in property, plant and equipment, cash paid for acquisitions of
businesses, investments in and distributions from our equity investees, and
proceeds from sales of assets. During Fiscal 2004, we spent $133.7 million for
property, plant and equipment, an increase of $32.8 million from Fiscal 2003,
principally reflecting Antargaz capital expenditures during the six months ended
September 30, 2004 and increased Partnership capital expenditures. Cash paid for
business acquisitions in Fiscal 2004 principally reflects the Antargaz
Acquisition.

FINANCING ACTIVITIES. Cash flow provided by financing activities was $161.9
million in Fiscal 2004 compared to cash flow used of $75.3 million in Fiscal
2003 and $74.3 million in Fiscal 2002. Financing activity cash flow changes are
primarily due to issuances and repayments of long-term debt, net borrowings
under revolving credit facilities, dividends and distributions on UGI Common
Stock and AmeriGas Partners Common Units, and proceeds from public offerings of
AmeriGas Partners Common Units and issuances of UGI Common Stock.

      In March 2004, 7.5 million shares of UGI Common Stock were sold in an
underwritten public offering at a public offering price of $32.10 per share.
During April 2004, the underwriters exercised a portion of their overallotment
option for the purchase of an additional 0.3 million shares. The proceeds of
approximately $239 million from this issuance were primarily used to fund the
Antargaz Acquisition.

      In May 2004, AmeriGas Partners sold 2.0 million Common Units in an
underwritten public offering at a public offering price of $25.61 per unit. In
June 2004, the underwriters partially exercised their overallotment option in
the amount of 0.1 million Common Units. The net proceeds of the public offering
totaling $51.2 million, and associated capital contributions from the General
Partner totaling $1.0 million, were contributed to AmeriGas OLP and used

20

                                              UGI Corporation 2004 Annual Report

to reduce indebtedness under its bank credit agreement and for general
partnership purposes. Concurrent with this sale of Common Units, the Company
recorded a gain in the amount of $12.2 million, which is reflected in the
Company's balance sheet as an increase in common stockholders' equity and a
corresponding decrease in minority interests in AmeriGas Partners, in accordance
with the guidance in SEC Staff Accounting Bulletin, No. 51, "Accounting for
Sales of Common Stock by a Subsidiary" ("SAB 51"). Deferred income tax
liabilities of $6.6 million associated with this gain were recorded with a
corresponding decrease in stockholders' equity and reflected in the Consolidated
Balance Sheet. The gain had no effect on the Company's net income or cash flow.
The gain resulted because the public offering price of the AmeriGas Partners
Common Units exceeded the associated carrying amount of our investment in the
Partnership on the date of their sale.

      In April 2004, AmeriGas OLP repaid $53.8 million face amount of maturing
First Mortgage Notes. In conjunction with this repayment, AmeriGas Partners
issued $28 million face amount of 8.875% Senior Notes due 2011 at an effective
rate of 7.18% and contributed the net proceeds of $30.1 million to AmeriGas OLP.

      During Fiscal 2004 we paid cash dividends on UGI Common Stock of $56.3
million and the Partnership paid the MQD on all limited partner units.

CONVERSION OF AMERIGAS PARTNERS SUBORDINATED UNITS

      In December 2002, the General Partner determined that the cash-based
performance and distribution requirements for the conversion of the
then-remaining 9,891,072 Subordinated Units of AmeriGas Partners, all of which
were held by the General Partner, had been met in respect of the quarter ended
September 30, 2002. As a result, in accordance with the Second Amended and
Restated Agreement of Limited Partnership of AmeriGas Partners, L.P., the
Subordinated Units were converted to an equivalent number of Common Units
effective November 18, 2002. Concurrent with the Subordinated Unit conversion,
the Company recorded a $157.0 million increase in common stockholders' equity,
and a corresponding decrease in minority interests in AmeriGas Partners,
associated with gains from sales of Common Units by AmeriGas Partners in
conjunction with, and subsequent to, the Partnership's April 19, 1995 initial
public offering. These gains were determined in accordance with the guidance in
SAB 51. Due to the preference nature of the Common Units, the Company was
precluded from recording these gains until the Subordinated Units converted to
Common Units. In addition, in June 2003, AmeriGas Partners sold 2,900,000 Common
Units in an underwritten public offering. Concurrent with this sale of Common
Units, the Company recorded a gain in the amount of $22.6 million which is
reflected in the Company's balance sheet as an increase in common stockholders'
equity in accordance with the guidance in SAB 51. Total deferred income tax
liabilities of $70.7 million associated with these gains were recorded with a
corresponding decrease in stockholders' equity and reflected in the restated
Consolidated Balance Sheet at September 30, 2003. The changes to the Company's
balance sheet resulting from the Subordinated Unit conversion and subsequent
sale of AmeriGas Partners Common Units had no effect on the Company's net income
or cash flow and did not result in an increase in the number of AmeriGas
Partners limited partner units outstanding.

UGI UTILITIES PENSION PLAN

UGI Utilities sponsors a defined benefit pension plan ("Pension Plan") for
employees of UGI Utilities, UGI and certain of UGI's other subsidiaries. The
fair value of Pension Plan assets was $196.4 million and $183.9 million at
September 30, 2004 and 2003, respectively. At September 30, 2004 and 2003, the
Pension Plan's assets exceeded its accumulated benefit obligations by $9.2
million and $7.3 million, respectively. The Company is in full compliance with
regulations governing defined benefit pension plans, including Employee
Retirement Income Security Act of 1974 ("ERISA") rules and regulations, and does
not anticipate it will be required to make a contribution to the Pension Plan in
Fiscal 2005. Pre-tax pension expense (income) reflected in Fiscal 2004, 2003 and
2002 results was $1.2 million, $(1.1) million and $(4.0) million, respectively.
The decrease in pension income during this period principally reflects the
changes in the market value of Pension Plan assets and decreases in the discount
rate assumption. Pension expense in Fiscal 2005 is expected to be approximately
$3.0 million due in large part to the expiration of the Pension Plan's
transition asset amortization.

CAPITAL EXPENDITURES

In the following table, we present capital expenditures (which exclude
acquisitions) by our businesses for Fiscal 2004, 2003 and 2002. We also provide
amounts we expect to spend in Fiscal 2005. We expect to finance Fiscal 2005
capital expenditures principally from cash generated by operations and
borrowings under our credit facilities.

                             2005          2004          2003          2002
Year Ended September 30,   --------      --------      --------      --------
(Millions of dollars)     (estimate)
                                                         
AmeriGas Propane           $   62.4      $   61.7      $   53.4      $   53.5
International Propane          45.2          27.6           4.5           3.9
Gas Utility                    41.4          35.5          37.2          31.0
Electric Utility                9.6           5.3           4.1           4.6
Energy Services                 7.1           2.9           1.0           1.2
Other                           0.9           0.7           1.2           0.5
                           --------      --------      --------      --------
Total                      $  166.6      $  133.7      $  101.4      $   94.7
                           --------      --------      --------      --------

CONTRACTUAL CASH OBLIGATIONS AND COMMITMENTS

The Company has contractual cash obligations that extend beyond Fiscal 2004
including scheduled repayments of long-term debt, operating lease payments,
unconditional purchase obligations for pipeline capacity, pipeline
transportation and natural gas storage services, commitments to purchase natural
gas, propane and electricity and prior to their redemption on

                                                                              21

FINANCIAL REVIEW (continued)

October 1, 2004, UGI Utilities preferred shares subject to mandatory redemption.
The following table presents contractual cash obligations under agreements
existing as of September 30, 2004 (in millions).

                                                  Payments Due by Period
                              ----------------------------------------------------------------
                                             1 year        2 - 3         4 - 5         After
                                Total       or less        years         years         5 years
                              --------      --------      --------      --------      --------
                                                                       
Long-term debt                $1,634.5      $  117.4      $  348.7      $  354.2      $  814.2
UGI Utilities preferred
   shares subject to
   mandatory redemption           20.0          20.0             -             -             -
Operating leases                 221.8          46.5          73.7          51.4          50.2
AmeriGas Propane
   supply contracts               12.8          12.8             -             -             -
International Propane
   supply contracts              271.1         109.4         161.6             -             -
Energy Services supply
   contracts                     510.6         449.4          61.2             -             -
Gas Utility and Electric
   Utility supply,
   storage and
   transportation contracts      598.3         188.5         181.3         112.3         116.3
                              --------      --------      --------      --------      --------
Total                         $3,269.1      $  944.0      $  826.5      $  517.9      $  980.7
                              --------      --------      --------      --------      --------

RELATED PARTY TRANSACTIONS

During Fiscal 2004, 2003 and 2002, the Company did not enter into any related
party transactions that had a material effect on its financial condition,
results of operations or cash flows.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet arrangements that are expected to have a
material effect on the Company's financial condition, change in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.

UTILITY REGULATORY MATTERS

Since the 1980s, larger commercial and industrial customers have been able to
purchase gas supplies from entities other than Gas Utility. As a result of
Pennsylvania's Natural Gas Choice and Competition Act (the "Gas Competition
Act") that became effective July 1, 1999, all natural gas consumers in
Pennsylvania, including residential and smaller commercial and industrial
customers ("core-market customers"), have been afforded this opportunity. Under
the Gas Competition Act, natural gas distribution companies ("NGDCs"), like Gas
Utility, continue to serve as the supplier of last resort for all core-market
customers, and such sales of gas, as well as the distribution service provided
by NGDCs, continue to be subject to rate regulation by the PUC. As of September
30, 2004, less than two percent of Gas Utility's core market customers purchase
their gas from alternative suppliers.

      As a result of the Electricity Generation Customer Choice and Competition
Act (the "Electric Competition Act") that became effective January 1, 1997, all
of Electric Utility's customers have the ability to acquire their electricity
from entities other than Electric Utility. Electric Utility remains the provider
of last resort ("POLR") for its customers that are not served by an alternate
electric generation provider. The terms and conditions under which Electric
Utility provides POLR service, and rules governing the rates that may be charged
for such service, have been established in a series of PUC-approved settlements,
the latest of which became effective on June 7, 2004 (collectively, the "POLR
Settlement").

      Electric Utility's POLR service rules provide for annual shopping periods
during which customers may elect to remain on POLR service or choose an
alternate supplier. Customers who do not select an alternate supplier are
obligated to remain on POLR service until the next shopping period. Residential
customers who return to POLR service at a time other than during the annual
shopping period must remain on POLR service until the date of the second open
shopping period after returning. Commercial and industrial customers who return
to POLR service at a time other than during the annual shopping period must
remain on POLR service until the next open shopping period, and may, in certain
circumstances, be subject to generation rate surcharges.

      Consistent with the terms of the POLR Settlement, Electric Utility's POLR
rates will increase beginning January 2005, and Electric Utility is permitted,
but not required, to further increase its POLR rates beginning January 2006.
Electric Utility is also permitted to, and has, entered into multiple-year
fixed-rate POLR service contracts with certain of its customers.

      Pursuant to the requirements of the Electric Competition Act, the PUC is
currently developing post-rate-cap POLR regulations that are expected to further
define POLR service obligations and pricing. As of September 30, 2004, fewer
than 1% of Electric Utility's customers have chosen an alternative electricity
generation supplier.

      We account for the operations of Gas Utility and Electric Utility in
accordance with SFAS No. 71, "Accounting for the Effects of Certain Types of
Regulation" ("SFAS 71"). SFAS 71 requires us to record the effects of rate
regulation in the financial statements. SFAS 71 allows us to defer expenses and
revenues on the balance sheet as regulatory assets and liabilities when it is
probable that those expenses and income will be allowed in the ratemaking
process in a period different from the period in which they would have been
reflected in the income statement of an unregulated company. These deferred
assets and liabilities are then flowed through the income statement in the
period in which the same amounts are included in rates and recovered from or
refunded to customers. As required by SFAS 71, we monitor our regulatory and
competitive environments to determine whether the recovery of our regulatory
assets continues to be probable. If we were to determine that recovery of these
regulatory assets is no longer probable, such assets would be written off
against earnings. We believe that SFAS 71 continues to apply to our regulated
operations and that the recovery of our regulatory assets is probable.

22

                                              UGI Corporation 2004 Annual Report

MANUFACTURED GAS PLANTS

From the late 1800s through the mid-1900s, UGI Utilities and its former
subsidiaries owned and operated a number of manufactured gas plants ("MGPs")
prior to the general availability of natural gas. Some constituents of coal tars
and other residues of the manufactured gas process are today considered
hazardous substances under the Superfund Law and may be present on the sites of
former MGPs. Between 1882 and 1953, UGI Utilities owned the stock of subsidiary
gas companies in Pennsylvania and elsewhere and also operated the businesses of
some gas companies under agreement. Pursuant to the requirements of the Public
Utility Holding Company Act of 1935, UGI Utilities divested all of its utility
operations other than those which now constitute Gas Utility and Electric
Utility.

      UGI Utilities does not expect its costs for investigation and remediation
of hazardous substances at Pennsylvania MGP sites to be material to its results
of operations because Gas Utility is currently permitted to include in rates,
through future base rate proceedings, prudently incurred remediation costs
associated with such sites. UGI Utilities has been notified of several sites
outside Pennsylvania on which private parties allege MGPs were formerly owned or
operated by it or owned or operated by its former subsidiaries. Such parties are
investigating the extent of environmental contamination or performing
environmental remediation. UGI Utilities is currently litigating three claims
against it relating to out-of-state sites. We 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.

      Management believes that under applicable law UGI Utilities should not be
liable in those instances in which a former subsidiary owned or operated an MGP.
There could be, however, significant future costs of an uncertain amount
associated with environmental damage caused by MGPs outside Pennsylvania that
UGI Utilities directly operated, or that were owned or operated by former
subsidiaries of UGI Utilities, if a court were to conclude that (1) the
subsidiary's separate corporate form should be disregarded or (2) UGI Utilities
should be considered to have been an operator because of its conduct with
respect to its subsidiary's MGP.

      In April 2003, Citizens Communications Company ("Citizens") served a
complaint naming UGI Utilities as a third-party defendant in a civil action
pending in United States District Court for the District of Maine. In that
action, the plaintiff, City of Bangor, Maine ("City"), sued Citizens to recover
environmental response costs associated with MGP wastes generated at a plant
allegedly operated by Citizens' predecessors at a site on the Penobscot River.
Citizens subsequently joined UGI Utilities and ten other third party defendants
alleging that the third-party defendants are responsible for an equitable share
of costs Citizens may be required to pay to the City for cleaning up tar
deposits in the Penobscot River. The City believes that it could cost as much as
$50 million to clean up the river. UGI Utilities believes that it has good
defenses to the claim and is defending the suit.

      By letter dated July 29, 2003, Atlanta Gas Light Company ("AGL") served
UGI Utilities with a complaint filed in the United States District Court for the
Middle District of Florida in which AGL alleges that UGI Utilities is
responsible for 20% of approximately $8 million incurred by AGL in the
investigation and remediation of a former MGP site in St. Augustine, Florida.
UGI Utilities formerly owned stock of the St. Augustine Gas Company, the owner
and operator of the MGP. UGI Utilities believes that it has good defenses to the
claim and is defending the suit.

      AGL previously informed UGI Utilities that it was investigating
contamination that appeared to be related to MGP operations at a site owned by
AGL in Savannah, Georgia. A former subsidiary of UGI Utilities' operated the MGP
in the early 1900s. AGL has recently informed UGI Utilities that it has begun
remediation of MGP wastes at the site and believes that the total cost of
remediation could be as high as $55 million. AGL has not filed suit against UGI
Utilities for a share of these costs. UGI Utilities believes that it will have
good defenses to any action that may arise out of this site.

      On September 20, 2001, Consolidated Edison Company of New York ("ConEd")
filed suit against UGI Utilities in the United States District Court for the
Southern District of New York, seeking contribution from UGI Utilities for an
allocated share of response costs associated with investigating and assessing
gas plant related contamination at former MGP sites in Westchester County, New
York. The complaint alleges that UGI Utilities "owned and operated" the MGPs
prior to 1904. The complaint also seeks a declaration that UGI Utilities is
responsible for an allocated percentage of future investigative and remedial
costs at the sites. ConEd believes that the cost of remediation for all of the
sites could exceed $70 million. By orders issued in November 2003 and March
2004, the court granted UGI Utilities' motion for summary judgment and dismissed
ConEd's complaint. ConEd has appealed.

      By letter dated June 24, 2004, KeySpan Energy ("KeySpan") informed UGI
Utilities that KeySpan has spent $2.3 million and expects to spend another $11
million to clean up an MGP site it owns in Sag Harbor, New York. KeySpan
believes that UGI Utilities is responsible for approximately 50% of these costs
as a result of UGI Utilities' alleged direct ownership and operation of the
plant from 1885 to 1902. UGI Utilities is in the process of reviewing the
information provided by KeySpan and is investigating this claim.

    By letter dated August 5, 2004, Yankee Gas Services Company and Connecticut
Light and Power Company, subsidiaries of Northeast Utilities, (together, the
"Northeast Companies"), demanded contribution from UGI Utilities for past and
future remediation costs related to MGP operations on thirteen sites owned by
the Northeast Companies in nine cities in the State of Connecticut. The
Northeast Companies allege that UGI Utilities controlled operations of the
plants from 1883 to 1941. According to the letter, investigation and remedial
costs at the sites to date total approximately $10 million and complete
remediation costs for all sites could total $182 million. The Northeast
Companies seek an unspecified fair and equitable allocation of these costs to
UGI Utilities. UGI Utilities is in the process of reviewing the information
provided by Northeast Companies and is investigating this claim.

                                                                              23

FINANCIAL REVIEW (continued)

MARKET RISK DISCLOSURES

Our primary market risk exposures are (1) market prices for propane and other
LPG, natural gas and electricity; (2) changes in interest rates; and (3) foreign
currency exchange rates.

      The risk associated with fluctuations in the prices the Partnership and
our International Propane operations pay for LPG is principally a result of
market forces reflecting changes in supply and demand for propane and other
energy commodities. The Partnership's profitability is sensitive to changes in
propane supply costs and the Partnership generally passes on increases in such
costs to customers. The Partnership may not, however, always be able to pass
through product cost increases fully or on a timely basis, particularly when
product costs rise rapidly. In order to reduce the volatility of the
Partnership's propane market price risk, it uses contracts for the forward
purchase or sale of propane, propane fixed-price supply agreements, and
over-the-counter derivative commodity instruments including price swap and
option contracts. International Propane's profitability is sensitive to changes
in LPG supply costs and International Propane generally passes on increases in
such costs to customers. International Propane may not, however, always be able
to pass through product cost increases fully or on a timely basis, particularly
when product costs rise rapidly. In order to reduce the long-term volatility of
Antargaz' LPG market price risk, Antargaz intends to hedge a portion of its
future U.S. dollar denominated LPG product purchases through the use of
derivative instruments, including forward foreign exchange contracts. Antargaz
may also enter into other contracts, similar to those used by the Partnership to
reduce the volatility in the cost of LPG that it purchases. FLAGA uses
derivative commodity instruments to reduce market risk associated with a portion
of its propane purchases. Over-the-counter derivative commodity instruments
utilized by the Partnership and FLAGA to hedge forecasted purchases of propane
are generally settled at expiration of the contract. In order to minimize credit
risk associated with its derivative commodity contracts, the Partnership
monitors established credit limits with the contract counterparties. Although we
use derivative financial and commodity instruments to reduce market price risk
associated with forecasted transactions, we do not use derivative financial and
commodity instruments for speculative or trading purposes.

      Gas Utility's tariffs contain clauses that permit recovery of
substantially all of the prudently incurred costs of natural gas it sells to its
customers. The recovery clauses provide for a periodic adjustment for the
difference between the total amounts actually collected from customers through
PGC rates and the recoverable costs incurred. Because of this ratemaking
mechanism, there is limited commodity price risk associated with our Gas Utility
operations. Gas Utility uses exchange-traded natural gas call option contracts
to reduce volatility in the cost of gas it purchases for its retail core-market
customers. The cost of these call option contracts, net of any associated gains,
is included in Gas Utility's PGC recovery mechanism.

      Electric Utility purchases its electric power needs from electricity
suppliers under fixed-price energy and capacity contracts and, to a much lesser
extent, on the spot market. Prices for electricity can be volatile especially
during periods of high demand or tight supply. In accordance with POLR
settlements approved by the PUC, Electric Utility may increase its POLR rates up
to certain limits through December 31, 2006. In accordance with these
settlements, effective January 1, 2005 and January 1, 2006, POLR generation
rates for all metered customers may increase up to 4.5% and 7.5%, respectively,
of total rates in effect on December 31, 2004. The approved POLR rate increases
are not expected to have a material effect on our financial condition or results
of operations. Currently, Electric Utility's fixed-price contracts with
electricity suppliers mitigate most risks associated with the POLR service rate
limits in effect through December 31, 2006. However, should any of the suppliers
under these contracts fail to provide electric power under the terms of the
power and capacity contracts, any increases in the cost of replacement power or
capacity would negatively impact Electric Utility results. In order to reduce
this non performance risk, Electric Utility has diversified its purchases across
several suppliers and entered into bilateral collateral arrangements with
certain of them.

      In order to manage market price risk relating to substantially all of
Energy Services' forecasted fixed-price sales of natural gas, Energy Services
purchases exchange-traded natural gas futures contracts or enters into
fixed-price supply arrangements. Exchange-traded natural gas futures contracts
are guaranteed by the New York Mercantile Exchange ("NYMEX") and have nominal
credit risk. The change in market value of these contracts generally requires
daily cash deposits in margin accounts with brokers. Although Energy Services'
fixed-price supply arrangements mitigate most risks associated with its
fixed-price sales contracts, should any of the natural gas suppliers under these
arrangements fail to perform, increases, if any, in the cost of replacement
natural gas would adversely impact Energy Services' results. In order to reduce
this risk of supplier nonperformance, Energy Services has diversified its
purchases across a number of suppliers.

    UGID has entered into fixed-price sales agreements for a portion of the
electricity expected to be generated by its interests in electric generation
assets. In the unlikely event that these generation assets would not be able to
produce all of the electricity needed to supply electricity under these
agreements, UGID would be required to purchase such electricity on the spot
market or under contract with other electricity suppliers. Accordingly,
increases in the cost of replacement power could negatively impact the Company's
results.

      We have both fixed-rate and variable-rate debt. Changes in interest rates
impact the cash flows of variable-rate debt but generally do not impact its fair
value. Conversely, changes in interest rates impact the fair value of fixed-rate
debt but do not impact their cash flows.

      Our variable-rate debt includes borrowings under AmeriGas OLP's Credit
Agreement, borrowings under UGI Utilities' revolving credit agreements, and a
substantial portion of Antargaz' and FLAGA's debt. These debt agreements have
interest rates that are generally indexed to short-term market interest rates.
Antargaz has effectively fixed the interest rate on a portion of their
variable-rate debt through June 2005 through the use of

24

                                              UGI Corporation 2004 Annual Report

interest rate swaps. At September 30, 2004 and 2003, combined borrowings
outstanding under these agreements totaled $393.4 million and $119.7 million,
respectively. Excluding the effectively fixed portion of Antargaz' variable-rate
debt, based upon weighted average borrowings outstanding under these agreements
during Fiscal 2004 and Fiscal 2003, an increase in short-term interest rates of
100 basis points (1%) would have increased our interest expense by $2.1 million
and $1.8 million, respectively.

      The remainder of our debt outstanding is subject to fixed rates of
interest. A 100 basis point increase in market interest rates would result in
decreases in the fair value of this fixed-rate debt of $61.8 million and $57.1
million at September 30, 2004 and 2003, respectively. A 100 basis point decrease
in market interest rates would result in increases in the fair value of this
fixed-rate debt of $66.6 million and $61.7 million at September 30, 2004 and
2003, respectively.

      Our long-term debt is typically issued at fixed rates of interest based
upon market rates for debt having similar terms and credit ratings. As these
long-term debt issues mature, we may refinance such debt with new debt having
interest rates reflecting then-current market conditions. This debt may have an
interest rate that is more or less than the refinanced debt. In order to reduce
interest rate risk associated with a portion of near-term forecasted issuances
of fixed-rate debt, we often enter into interest rate protection agreements.

      The primary currency for which the Company has exchange rate risk is the
U.S. dollar versus the euro. The U.S. dollar value of our foreign-denominated
assets and liabilities will fluctuate with changes in the associated foreign
currency exchange rates. With respect to FLAGA, the net effect of changes in
foreign currency exchange rates on their U.S. dollar denominated assets and
liabilities would not be material because FLAGA's U.S. dollar denominated
assets and liabilities are not materially different in amount. With respect to
our net investments in FLAGA and Antargaz, a 10% decline in the value of the
euro versus the U.S. dollar would reduce their aggregate net book value by
approximately $37.3 million, which amount would be reflected in other
comprehensive income. In March 2004, the Company entered into a foreign currency
swap agreement to hedge a portion of its net investment in foreign operations.
This foreign currency swap agreement was designated as a net investment hedge in
a foreign subsidiary and qualified for hedge accounting. Therefore, upon
settlement in July 2004, a loss of $1.0 million was recorded in other
comprehensive income. Any realized gains or losses associated with net
investments in foreign operations will remain in other comprehensive income
until such foreign operations have been liquidated. From time to time, the
Company may use derivative instruments to hedge additional portions of its net
investments in foreign subsidiaries.

      The following table summarizes the fair values of unsettled market risk
sensitive derivative instruments held at September 30, 2004 and 2003. Fair
values reflect the estimated amounts that we would receive or (pay) to terminate
the contracts at the reporting date based upon quoted market prices of
comparable contracts at September 30, 2004. The table also includes the changes
in fair value that would result if there were a ten percent adverse change in
(1) the market price of propane; (2) the market price of natural gas; (3) the
market price of electricity; and (4) interest rates on ten-year U.S. treasury
notes.

                                                         Change in
                                            Fair Value   Fair Value
(Millions of dollars)                       ----------   ----------
                                                   
September 30, 2004:
   Propane commodity price risk                $13.1       $(13.8)
   Natural gas commodity price risk              4.8         (3.4)
   Electricity commodity price risk              2.0         (1.0)
   Interest rate risk                           (2.8)        (6.3)

September 30, 2003:
   Propane commodity price risk                $(0.6)      $(24.3)
   Natural gas commodity price risk             (1.0)        (9.2)
   Interest rate risk                            0.2         (2.4)

      Gas Utility's exchange traded natural gas call option contracts are
excluded from the table above because any associated net gains are included in
Gas Utility's PGC recovery mechanism.

     Because the Company's derivative instruments generally qualify as hedges
under SFAS 133, we expect that changes in the fair value of derivative
instruments used to manage commodity or interest rate market risk would be
substantially offset by gains or losses on the associated anticipated
transactions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements and related disclosures in compliance
with accounting principles generally accepted in the United States of America
requires the selection and application of appropriate accounting principles to
the relevant facts and circumstances of the Company's operations and the use of
estimates made by management. The Company has identified the following critical
accounting policies that are most important to the portrayal of the Company's
financial condition and results of operations. Changes in these policies could
have a material effect on the financial statements. The application of these
accounting policies necessarily requires management's most subjective or
complex judgments regarding estimates and projected outcomes of future events
which could have a material impact on the financial statements. Management has
reviewed these critical accounting policies, and the estimates and assumptions
associated with them, with its Audit Committee. In addition, management has
reviewed the following disclosures regarding the application of these critical
accounting policies with the Audit Committee.

LITIGATION ACCRUALS AND ENVIRONMENTAL REMEDIATION LIABILITIES.

We are involved in litigation regarding pending claims and legal actions that
arise in the normal course of our businesses. In addition, UGI Utilities and its
former subsidiaries owned and operated a number of MGPs in Pennsylvania and
elsewhere at which hazardous substances may be present. In accordance with
accounting principles generally accepted in the United

                                                                              25

                                              UGI Corporation 2004 Annual Report

FINANCIAL REVIEW (continued)

States of America, the Company establishes reserves for pending claims and legal
actions or environmental remediation obligations when it is probable that a
liability exists and the amount or range of amounts can be reasonably estimated.
Reasonable estimates involve management judgments based on a broad range of
information and prior experience. These judgments are reviewed quarterly as more
information is received and the amounts reserved are updated as necessary. Such
estimated reserves may differ materially from the actual liability, and such
reserves may change materially as more information becomes available and
estimated reserves are adjusted.

REGULATORY ASSETS AND LIABILITIES. Gas Utility and Electric Utility are subject
to regulation by the PUC. In accordance with SFAS 71, we record the effects of
rate regulation in our financial statements as regulatory assets or regulatory
liabilities. We continually assess whether the regulatory assets are probable of
future recovery by evaluating the regulatory environment, recent rate orders and
public statements issued by the PUC, and the status of any pending deregulation
legislation. If future recovery of regulatory assets ceases to be probable, the
elimination of those regulatory assets would adversely impact our results of
operations and cash flows. As of September 30, 2004, our regulatory assets
totaled $65.0 million. See Note 1 to the Consolidated Financial Statements.

DEPRECIATION AND AMORTIZATION OF LONG-LIVED ASSETS. We compute depreciation on
UGI Utilities' property, plant and equipment on a straight-line basis over the
average remaining lives of its various classes of depreciable property and on
our other property, plant and equipment on a straight-line basis over estimated
useful lives generally ranging from 2 to 40 years. We also use amortization
methods and determine asset values of intangible assets other than goodwill
using reasonable assumptions and projections. Changes in the estimated useful
lives of property, plant and equipment and changes in intangible asset
amortization methods or values could have a material effect on our results of
operations.

PURCHASE PRICE ALLOCATION. From time to time, the Company enters into material
business combinations. In accordance with SFAS No. 141, "Business Combinations"
("SFAS 141"), the purchase price is allocated to the various assets and
liabilities acquired at their estimated fair value. Fair values of assets and
liabilities are based upon available information and may involve us engaging an
independent third party to perform an appraisal. Estimating fair values can be a
complex and judgmental area and most commonly impacts property, plant and
equipment and intangible assets, including those with indefinite lives.
Generally, we have, if necessary, up to one year from the acquisition date to
finalize the purchase price allocation.

IMPAIRMENT OF GOODWILL. Certain of the Company's business units have goodwill
resulting from purchase business combinations. In accordance with SFAS No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), each of our reporting units
with goodwill is required to perform impairment tests annually or whenever
events or circumstances indicate that the value of goodwill may be impaired. In
order to perform these impairment tests, management must determine the reporting
unit's fair value using quoted market prices or, in the absence of quoted market
prices, valuation techniques which use discounted estimates of future cash flows
to be generated by the reporting unit. These cash flow estimates involve
management judgments based on a broad range of information and historical
results. To the extent estimated cash flows are revised downward, the reporting
unit may be required to write down all or a portion of its goodwill which would
adversely impact our results of operations. As of September 30, 2004, our
goodwill totaled $1,245.9 million.

DEFINED BENEFIT PENSION PLAN. The costs of providing benefits under our Pension
Plan are dependent on historical information such as employee age, length of
service, level of compensation and the actual rate of return on plan assets. In
addition, certain assumptions relating to the future are utilized including the
discount rate applied to benefit obligations, the expected rate of return on
plan assets and the rate of compensation increase. Pension Plan assets are held
in trust and consist principally of equity and fixed income mutual funds.
Changes in plan assumptions as well as fluctuations in actual equity or bond
market returns could have a material impact on future pension costs. We believe
the two most critical assumptions are the expected rate of return on plan assets
and the discount rate. An unfavorable change in the expected rate of return on
plan assets of 50 basis points would result in higher pre-tax pension expense of
approximately $1.0 million in Fiscal 2005. An unfavorable change in the discount
rate of 50 basis points would result in higher pre-tax pension expense of $1.5
million in Fiscal 2005.

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

      On December 8, 2003, the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the "Act") was signed into law. Among other things,
the Act provides for a prescription drug benefit to Medicare beneficiaries on a
voluntary

26

                                              UGI Corporation 2004 Annual Report

basis beginning in 2006. To encourage employers to continue to offer retiree
prescription drug benefits, the Act provides for a tax-free subsidy to employers
who offer a prescription drug benefit that is at least actuarially equivalent to
the standard benefit offered under the Act. In May 2004, the FASB issued Staff
Position No. FAS 106-2, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003" ("FSP
106-2"). FSP 106-2 is effective for periods beginning after June 15, 2004.

      The Company provides postretirement health care benefits to certain of its
retirees and a limited number of active employees meeting certain age and
service requirements. See Note 6 to the Consolidated Financial Statements for
information on our Employee Retirement Plans. These postretirement benefits
include certain retiree prescription drug benefits. The Company has determined
that, as currently designed, its prescription drug benefit for retirees is not
actuarially equivalent to the standard benefit offered under the Act and, as a
result, does not qualify for the tax-free subsidy.

FORWARD-LOOKING STATEMENTS

Information contained in this Financial Review and elsewhere in this Annual
Report may contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such statements use forward-looking words such as "believe," "plan,"
"anticipate," "continue," "estimate," "expect," "may," "will," or other similar
words. These statements discuss plans, strategies, events or developments that
we expect or anticipate will or may occur in the future.

      A forward-looking statement may include a statement of the assumptions or
bases underlying the forward-looking statement. We believe that we have chosen
these assumptions or bases in good faith and that they are reasonable. However,
we caution you that actual results almost always vary from assumed facts or
bases, and the differences between actual results and assumed facts or bases can
be material, depending on the circumstances. When considering forward-looking
statements, you should keep in mind the following important factors which could
affect our future results and could cause those results to differ materially
from those expressed in our forward-looking statements: (1) adverse weather
conditions resulting in reduced demand; (2) cost volatility and availability of
propane and other LPG, oil, electricity, and natural gas and the capacity to
transport product to our market areas; (3) changes in domestic and foreign laws
and regulations, including safety, tax and accounting matters; (4) competitive
pressures from the same and alternative energy sources; (5) failure to acquire
new customers thereby reducing or limiting any increase in revenues; (6)
liability for environmental claims; (7) customer conservation measures and
improvements in energy efficiency and technology resulting in reduced demand;
(8) adverse labor relations; (9) large customer, counterparty or supplier
defaults; (10) liability in excess of insurance coverage for personal injury and
property damage arising from explosions and other catastrophic events, including
acts of terrorism, resulting from operating hazards and risks incidental to
generating and distributing electricity and transporting, storing and
distributing natural gas, propane and LPG; (11) political, regulatory and
economic conditions in the United States and in foreign countries; (12) interest
rate fluctuations and other capital market conditions, including foreign
currency rate fluctuations; (13) reduced distributions from subsidiaries; and
(14) the timing and success of the Company's efforts to develop new business
opportunities.

      These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors could also
have material adverse effects on future results. We undertake no obligation to
update publicly any forward-looking statement whether as a result of new
information or future events except as required by the federal securities laws.

                                                                              27

                                              UGI Corporation 2004 Annual Report

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 accounting
principles generally accepted in the United States of America 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, but not absolute, assurance that assets are
safeguarded and that transactions are executed in accordance with management's
authorization and are properly recorded to permit the preparation of reliable
financial information. There are limits in all systems of internal control,
based on the recognition that the cost of the system should not exceed the
benefits to be derived. We believe that the 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. However, this report is not the same as the report of
management on the effectiveness of internal control over financial reporting
that will be included in the Company's annual report on Form 10-K for the fiscal
year ending September 30, 2005.

      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 overseeing the financial reporting process and the adequacy of
controls, and for monitoring the independence of the Company's independent
accountants and the performance of the independent account ants and internal
audit staff. The Committee appoints the independent accountants to conduct the
annual audit of the Company's consolidated financial statements. The Committee
is also responsible for maintaining direct channels of communication among the
Board of Directors, management, and both the independent accountants and
internal auditors.

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

/s/ Lon R. Greenberg
- ------------------------
Lon R. Greenberg
Chief Executive Officer

/s/ Anthony J. Mendicino
- ------------------------
Anthony J. Mendicino
Chief Financial Officer

/s/ Michael J. Cuzzolina
- ------------------------
Michael J. Cuzzolina
Chief Accounting Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF UGI CORPORATION:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of UGI
Corporation and its subsidiaries (the "Company") at September 30, 2004 and
2003, and the results of their operations and their cash flows for each of the
three years in the period ended September 30, 2004 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

      In fiscal 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."

      As discussed in Note 2 to the financial statements, the 2003 consolidated
balance sheet and statement of stockholders' equity have been restated to record
deferred income tax liabilities on the conversion of the Company's subordinated
units in AmeriGas Partners, L.P., which occurred in November 2002, and upon
subsequent sales by the Partnership of units to the public.

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

28

                                              UGI Corporation 2004 Annual Report

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

                                                                                   Year Ended September 30,
                                                                                   ------------------------
                                                                            2004             2003             2002
                                                                         ----------       ----------       ----------
                                                                                                  
REVENUES
AmeriGas Propane                                                         $  1,775.9       $  1,628.4       $  1,307.9
Utilities                                                                     650.1            628.7            488.0
International Propane                                                         333.4             54.5             46.7
Energy Services and other                                                   1,025.3            714.5            371.1
                                                                         ----------       ----------       ----------
                                                                            3,784.7          3,026.1          2,213.7
                                                                         ----------       ----------       ----------

COSTS AND EXPENSES
Cost of sales                                                               2,526.9          1,984.3          1,296.6
Operating and administrative expenses                                         790.5            644.1            576.5
Utility taxes other than income taxes                                          12.5             12.2             11.9
Depreciation and amortization                                                 132.3            103.0             93.5
Other income, net                                                              (8.8)           (19.8)           (18.1)
                                                                         ----------       ----------       ----------
                                                                            3,453.4          2,723.8          1,960.4
                                                                         ----------       ----------       ----------

OPERATING INCOME                                                              331.3            302.3            253.3
Income from equity investees                                                   11.3              5.3              8.5
Loss on extinguishments of debt                                                   -             (3.0)            (0.7)
Interest expense                                                             (119.1)          (109.2)          (109.1)
Minority interests, principally in AmeriGas Partners                          (47.5)           (34.6)           (28.0)
                                                                         ----------       ----------       ----------
INCOME BEFORE INCOME TAXES AND SUBSIDIARY PREFERRED STOCK DIVIDENDS           176.0            160.8            124.0
Income taxes                                                                  (64.4)           (60.7)           (46.9)
Dividends on UGI Utilities preferred shares subject to mandatory
 redemption                                                                       -             (1.2)            (1.6)
                                                                         ----------       ----------       ----------
NET INCOME                                                               $    111.6       $     98.9       $     75.5
                                                                         ----------       ----------       ----------

EARNINGS PER COMMON SHARE:
Basic                                                                    $     2.36       $     2.34       $     1.83
                                                                         ==========       ==========       ==========
Diluted                                                                  $     2.31       $     2.29       $     1.80
                                                                         ==========       ==========       ==========

AVERAGE COMMON SHARES OUTSTANDING (MILLIONS):
Basic                                                                        47.308           42.220           41.325
                                                                         ==========       ==========       ==========
Diluted                                                                      48.341           43.236           41.907
                                                                         ==========       ==========       ==========

See accompanying notes to consolidated financial statements.

                                                                              29

CONSOLIDATED BALANCE SHEETS
(Millions of dollars)

                                                                                                       September 30,
                                                                                                  -----------------------
                                                                                                                 Restated
                                                                                                    2004           2003
                                                                                                  --------       --------
                                                                                                           
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                                         $  149.6       $  142.1
Short-term investments (at cost, which approximates fair value)                                       50.0           50.0
Accounts receivable (less allowances for doubtful accounts of $22.3 and $14.8, respectively)         367.3          213.1
Accrued utility revenues                                                                               9.7            7.4
Inventories                                                                                          198.4          136.6
Deferred income taxes                                                                                 14.9           23.5
Prepaid expenses and other current assets                                                             46.6           28.6
                                                                                                  --------       --------
   Total current assets                                                                              836.5          601.3
                                                                                                  --------       --------

PROPERTY, PLANT AND EQUIPMENT
AmeriGas Propane                                                                                   1,121.3        1,076.2
International Propane                                                                                525.7           76.4
UGI Utilities                                                                                        944.3          907.9
Other                                                                                                 83.0           81.5
                                                                                                  --------       --------
                                                                                                   2,674.3        2,142.0
Accumulated depreciation and amortization                                                           (892.4)        (805.2)
                                                                                                  --------       --------
   Net property, plant, and equipment                                                              1,781.9        1,336.8
                                                                                                  --------       --------

OTHER ASSETS
Goodwill and excess reorganization value                                                           1,245.9          671.5
Intangible assets (less accumulated amortization of $27.5 and $16.4, respectively)                   184.4           34.7
Utility regulatory assets                                                                             65.0           60.3
Other assets                                                                                         121.7           90.6
                                                                                                  --------       --------
   Total assets                                                                                   $4,235.4       $2,795.2
                                                                                                  ========       ========

See accompanying notes to consolidated financial statements.

30

                                              UGI Corporation 2004 Annual Report

                                                                                                     September 30,
                                                                                                 ---------------------
                                                                                                              Restated
                                                                                                   2004         2003
                                                                                                 --------     --------
                                                                                                        
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt                                                             $  122.8     $   65.0
UGI Utilities bank loans                                                                             60.9         40.7
Other bank loans                                                                                     17.2         15.9
UGI Utilities preferred shares subject to mandatory redemption, without par value                    20.0            -
Accounts payable                                                                                    323.9        202.5
Employee compensation and benefits accrued                                                           87.7         41.9
Dividends and interest accrued                                                                       43.0         40.1
Income taxes accrued                                                                                  2.0          8.9
Deposits and advances                                                                                98.7         83.0
Other current liabilities                                                                           146.6         86.2
                                                                                                 --------     --------
   Total current liabilities                                                                        922.8        584.2
                                                                                                 --------     --------

DEBT AND OTHER LIABILITIES
Long-term debt                                                                                    1,547.3      1,158.5
Deferred income taxes                                                                               441.4        293.8
Deferred investment tax credits                                                                       7.6          8.0
UGI Utilities preferred shares subject to mandatory redemption, without par value                       -         20.0
Other noncurrent liabilities                                                                        303.8         97.4
                                                                                                 --------     --------
   Total liabilities                                                                              3,222.9      2,161.9
                                                                                                 --------     --------

Commitments and contingencies (Note 12)

Minority interests, principally in AmeriGas Partners                                                178.4        134.6

COMMON STOCKHOLDERS' EQUITY
Common Stock, without par value
   (authorized - 150,000,000 shares; issued - 57,576,497 and 49,798,097 shares, respectively)       762.8        511.7
Retained earnings                                                                                   146.2         90.9
Accumulated other comprehensive income                                                               22.6          4.7
Notes receivable from employees                                                                      (0.2)        (0.4)
                                                                                                 --------     --------
                                                                                                    931.4        606.9
Treasury stock, at cost                                                                             (97.3)      (108.2)
                                                                                                 --------     --------
   Total common stockholders' equity                                                                834.1        498.7
                                                                                                 --------     --------
   Total liabilities and stockholders' equity                                                    $4,235.4     $2,795.2
                                                                                                 ========     ========

31

                                              UGI Corporation 2004 Annual Report

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)

                                                                         Year Ended September 30,
                                                                    ---------------------------------
                                                                     2004          2003        2002
                                                                    -------      -------      -------
                                                                                     
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                          $ 111.6      $  98.9      $  75.5
Reconcile to net cash provided by operating activities:
   Depreciation and amortization                                      132.3        103.0         93.5
   Minority interests                                                  47.5         34.6         28.0
   Deferred income taxes, net                                           3.0         (2.8)        11.0
   Provision for uncollectible accounts                                17.3         18.5         14.2
   Net change in settled accumulated other comprehensive income         9.0         (5.2)        13.3
   Other, net                                                           9.4          9.3         (1.8)
   Net change in:
      Accounts receivable and accrued utility revenues                  4.9        (56.1)        10.7
      Inventories                                                     (39.4)       (25.3)        19.7
      Deferred fuel costs                                              (6.9)        19.0         (7.1)
      Accounts payable                                                (49.7)        34.9         (0.4)
      Other current assets and liabilities                             18.8         20.3         (9.1)
                                                                    -------      -------      -------
   Net cash provided by operating activities                          257.8        249.1        247.5
                                                                    -------      -------      -------

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment                       (133.7)      (100.9)       (94.7)
Acquisitions of businesses, net of cash acquired                     (308.6)       (38.6)        (0.7)
Acquisition of additional interest in Conemaugh Station                   -        (51.3)           -
Proceeds from redemption of AGZ Bonds                                     -            -         17.7
Net proceeds from disposals of assets                                  11.5          5.9          9.7
Investments in equity investees                                           -         (0.4)        (0.3)
Increase in short-term investments                                        -        (50.0)           -
Other, net                                                             18.0          9.2          1.9
                                                                    -------      -------      -------
   Net cash used by investing activities                             (412.8)      (226.1)       (66.4)
                                                                    -------      -------      -------

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends on UGI Common Stock                                         (56.3)       (47.7)       (44.8)
Distributions on AmeriGas Partners publicly held Common Units         (62.4)       (56.4)       (53.5)
Issuance of long-term debt                                             30.1        167.8         81.1
Repayment of long-term debt                                           (77.4)      (236.5)      (105.0)
AmeriGas Propane bank loans (decrease) increase                           -        (10.0)        10.0
UGI Utilities bank loans increase (decrease)                           20.2          3.5        (20.6)
Other bank loans increase (decrease)                                    0.1          5.4         (2.2)
Issuance of AmeriGas Partners Common Units                             51.2         75.0         49.7
Issuance of UGI Common Stock                                          257.0         23.7         11.0
Repurchases of UGI Common Stock                                        (0.6)        (0.1)           -
                                                                    -------      -------      -------

   Net cash provided (used) by financing activities                   161.9        (75.3)       (74.3)
                                                                    -------      -------      -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                 0.6          0.1            -
                                                                    -------      -------      -------
Cash and cash equivalents increase (decrease)                       $   7.5      $ (52.2)     $ 106.8
                                                                    =======      =======      =======

CASH AND CASH EQUIVALENTS:
End of year                                                         $ 149.6      $ 142.1      $ 194.3
Beginning of year                                                     142.1        194.3         87.5
                                                                    -------      -------      -------
   (Decrease) increase                                              $   7.5      $ (52.2)     $ 106.8
                                                                    =======      =======      =======

See accompanying notes to consolidated financial statements.

32

                                              UGI Corporation 2004 Annual Report

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Millions of dollars, except per share amounts)

                                                                        Accumulated      Notes
                                                                          Other        Receivable
                                                   Common   Retained   Comprehensive     from       Treasury
                                                    Stock   Earnings   Income (Loss)   Employees      Stock       Total
                                                   ------   --------   -------------   ---------    --------    ---------
                                                                                              
BALANCE SEPTEMBER 30, 2001                         $395.0   $    9.0   $      (13.5)   $    (4.6)   $ (134.9)    $   251.0
Net income                                                      75.5                                                  75.5
Net loss on derivative instruments
   (net of tax of $0.4)                                                        (1.5)                                  (1.5)
Reclassification of net losses on
derivative
   instruments (net of tax of $11.6)                                           18.3                                   18.3
Foreign currency translation adjustments
   (net of tax  of $2.2)                                                        4.4                                    4.4
Reclassification of foreign currency translation
   gain (net of tax of $0.5)                                                   (1.1)                                  (1.1)
                                                            --------   ------------                              ---------
Comprehensive income                                            75.5           20.1                                   95.6
Cash dividends on Common Stock
   ($1.083 per share)                                          (44.8)                                                (44.8)
Common Stock issued:
   Employee and director plans                        1.0                                                7.4           8.4
   Dividend reinvestment plan                         0.6                                                2.0           2.6
Common Stock reacquired                                                                                 (0.1)         (0.1)
Payments on notes receivable from employees                                                  1.1                       1.1
                                                   ------   --------   ------------    ---------    --------     ---------
BALANCE SEPTEMBER 30, 2002                          396.6       39.7            6.6         (3.5)     (125.6)        313.8
Net income                                                      98.9                                                  98.9
Net gain on derivative instruments
   (net of tax of $9.1)                                                        13.5                                   13.5
Reclassification of net gains on
   derivative instruments (net of tax of $14.0)                               (20.7)                                 (20.7)
Foreign currency translation adjustments
   (net of tax of $3.1)                                                         5.3                                    5.3
                                                            --------   ------------                              ---------
Comprehensive income (loss)                                     98.9           (1.9)                                  97.0
Cash dividends on Common Stock
   ($1.13 per share)                                           (47.7)                                                (47.7)
Common Stock issued:
   Employee and director plans                        5.0                                               16.0          21.0
   Dividend reinvestment plan                         1.2                                                1.5           2.7
Net gain in connection with issuances of units
   by AmeriGas Partners (net of tax of $70.7),
   as restated                                      108.9                                                            108.9
Common Stock reacquired                                                                                 (0.1)         (0.1)
Payments on notes receivable from employees                                                  3.1                       3.1
                                                   ------   --------   ------------    ---------    --------     ---------
BALANCE SEPTEMBER 30, 2003, AS RESTATED             511.7       90.9            4.7         (0.4)     (108.2)        498.7
Net income                                                     111.6                                                 111.6
Net gain on derivative instruments
   (net of tax of $15.0)                                                       22.6                                   22.6
Reclassification of net gains on
   derivative instruments (net of tax of $6.9)                                (10.6)                                 (10.6)
Foreign currency translation adjustments
   (net of tax of $0.9)                                                         5.9                                    5.9
                                                            --------   ------------                              ---------
Comprehensive income                                           111.6           17.9                                  129.5
Cash dividends on Common Stock
   ($1.20 per share)                                           (56.3)                                                (56.3)
Common Stock issued:
   Public offering                                  239.6                                                            239.6
   Employee and director plans                        4.6                                               10.3          14.9
   Dividend reinvestment plan                         1.3                                                1.2           2.5
Net gain in connection with issuances of units
   by AmeriGas Partners (net of tax of $6.6)          5.6                                                              5.6
Common Stock reacquired                                                                                 (0.6)         (0.6)
Payments on notes receivable from employees                                                  0.2                       0.2
                                                   ------   --------   ------------    ---------    --------     ---------
BALANCE SEPTEMBER 30, 2004                         $762.8   $  146.2   $       22.6    $    (0.2)   $  (97.3)    $   834.1
                                                   ======   ========   ============    =========    ========     =========

See accompanying notes to consolidated financial statements.
                                                                              33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION. UGI Corporation ("UGI") is a holding company that owns and
operates natural gas and electric utility, electricity generation, retail
propane distribution, energy marketing and related businesses in the United
States. Through foreign subsidiaries and a joint-venture affiliate, UGI also
distributes liquefied petroleum gases ("LPG") in France, Austria, the Czech
Republic, Slovakia and China. We refer to UGI and its consolidated subsidiaries
collectively as "the Company" or "we."

      We conduct a national propane distribution business through AmeriGas
Partners, L.P. ("AmeriGas Partners") and its principal operating subsidiaries
AmeriGas Propane, L.P. ("AmeriGas OLP") and AmeriGas OLP's subsidiary, AmeriGas
Eagle Propane, L.P. ("Eagle OLP"). AmeriGas Partners, AmeriGas OLP and Eagle OLP
are Delaware limited partnerships. UGI's wholly owned second-tier subsidiary
AmeriGas Propane, Inc. (the "General Partner") serves as the general partner of
AmeriGas Partners and AmeriGas OLP. AmeriGas OLP and Eagle OLP (collectively
referred to as "the Operating Partnerships") comprise the largest retail propane
distribution business in the United States serving residential, commercial,
industrial, motor fuel and agricultural customers from locations in 46 states.
We refer to AmeriGas Partners and its subsidiaries together as "the Partnership"
and the General Partner and its subsidiaries, including the Partnership, as
"AmeriGas Propane." At September 30, 2004, the General Partner and its wholly
owned subsidiary Petrolane Incorporated ("Petrolane") collectively held a 1%
general partner interest and a 44.6% limited partner interest in AmeriGas
Partners, and effective 46.1% and 46.0% ownership interests in AmeriGas OLP and
Eagle OLP, respectively. Our limited partnership interest in AmeriGas Partners
comprises 24,525,004 Common Units. The remaining 54.4% interest in AmeriGas
Partners comprises 29,948,268 publicly held Common Units representing limited
partner interests.

      The Partnership has no employees. Employees of the General Partner
conduct, direct and manage the activities of AmeriGas Partners and AmeriGas OLP.
The General Partner also provides management and administrative services to
AmeriGas Eagle Holdings, Inc., the general partner of Eagle OLP, under a
management services agreement. The General Partner is reimbursed monthly for all
direct and indirect expenses it incurs on behalf of the Partnership including
all General Partner employee compensation costs and a portion of UGI employee
compensation and administrative costs. Although the Partnership's operating
income represents a significant portion of our consolidated operating income,
the Partnership's impact on our consolidated net income is considerably less due
to the Partnership's significant minority interest and higher relative interest
charges.

      Our wholly owned subsidiary UGI Enterprises, Inc. ("Enterprises") (1)
conducts a propane and butane-based LPG distribution business in France through
its subsidiary UGI France, Inc. ("UGI France"); (2) conducts an LPG distribution
business in Austria, the Czech Republic and Slovakia ("FLAGA"); and (3)
participates in an LPG joint-venture business in the Nantong region of China. We
refer to our foreign operations collectively as "International Propane." Our LPG
distribution business in France is conducted through Antargaz, an operating
subsidiary of AGZ Holding ("AGZ"), and its operating subsidiaries (collectively,
"Antargaz").

      Our natural gas and electric distribution utility businesses are conducted
through our wholly owned subsidiary, UGI Utilities, Inc. ("UGI Utilities"). UGI
Utilities owns and operates a natural gas distribution utility ("Gas Utility")
in parts of eastern and southeastern Pennsylvania and an electric distribution
utility ("Electric Utility") in northeastern Pennsylvania. Gas Utility and
Electric Utility (collectively, "Utilities") are subject to regulation by the
Pennsylvania Public Utility Commission ("PUC").

      In addition, Enterprises conducts an energy marketing business primarily
in the Eastern region of the United States through its wholly owned subsidiary,
UGI Energy Services, Inc. ("Energy Services"). Energy Services' wholly owned
subsidiary UGI Development Company ("UGID") and UGID's joint-venture affiliate
Hunlock Creek Energy Ventures ("Energy Ventures") own interests in
Pennsylvania-based electric generation assets. Prior to its transfer to Energy
Services in June 2003, UGID was a wholly owned subsidiary of UGI Utilities.
Through other subsidiaries, Enterprises owns and operates a heating,
ventilation, air-conditioning and refrigeration service business in the Middle
Atlantic States ("HVAC/R").

      UGI is exempt from registration as a holding company and not otherwise
subject to regulation under the Public Utility Holding Company Act of 1935
except for acquisitions under section 9(a)(2) because it files an annual
exemption statement with the U.S. Securities and Exchange Commission ("SEC").
UGI is not subject to regulation by the PUC.

CONSOLIDATION PRINCIPLES. The consolidated financial statements include the
accounts of UGI and its controlled subsidiary companies, which, except for the
Partnership, are majority owned. We eliminate all significant intercompany
accounts and transactions when we consolidate. We report the public's limited
partner interests in the Partnership and other parties' interests in our
consolidated, but less than 100% owned subsidiaries of Antargaz as minority
interests. Entities in which we own 50% or less and in which we exercise
significant influence over operating and financial policies are accounted for by
the equity method (see Note 17). Effective with our March 31, 2004 acquisition
of the remaining 80.5% ownership interests in AGZ, we began consolidating all of
its operations (see Note 3). Investments in equity investees are included in
other assets in the Consolidated Balance Sheets. Gains resulting from the
issuances and sales of AmeriGas Partners' common units are recorded as an
increase to common stockholders' equity with a corresponding decrease in
minority interests in accordance with SEC Staff Accounting Bulletin No. 51,
"Accounting for Sales of Common Stock by a Subsidiary." In addition, we record
deferred income tax liabilities with a corresponding reduction in stockholders'
equity associated with such gains (see Notes 2 and 16).

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

34

                                              UGI Corporation 2004 Annual Report

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

REGULATED UTILITY OPERATIONS. We account for the operations of Gas Utility and
Electric Utility in accordance with Statement of Financial Accounting Standards
("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation"
("SFAS 71"). SFAS 71 requires us to record the effects of rate regulation in the
financial statements. SFAS 71 allows us to defer expenses and revenues on the
balance sheet as regulatory assets and liabilities when it is probable that
those expenses and income will be allowed in the ratemaking process in a period
different from the period in which they would have been reflected in the income
statement of an unregulated company. These deferred assets and liabilities are
then flowed through the income statement in the period in which the same amounts
are included in rates and recovered from or refunded to customers. As required
by SFAS 71, we monitor our regulatory and competitive environments to determine
whether the recovery of our regulatory assets continues to be probable. If we
were to determine that recovery of these regulatory assets is no longer
probable, such assets would be written off against earnings. We believe that
SFAS 71 continues to apply to our regulated utility operations and that the
recovery of our regulatory assets is probable.

      Regulatory assets and liabilities associated with Gas Utility and Electric
Utility operations included in our accompanying balance sheets at September 30
comprise the following:

                                         2004        2003
                                         ----        ----
                                             
Regulatory assets:
   Income taxes recoverable            $  62.0     $  57.6
   Other postretirement benefits           1.9         2.2
   Other                                   1.1         0.5
                                       -------     -------
Total regulatory assets                $  65.0     $  60.3
                                       -------     -------
Regulatory liabilities:
   Other postretirement benefits       $   3.0     $   3.8
   Deferred fuel costs                     7.9        14.7
                                       -------     -------
Total regulatory liabilities           $  10.9     $  18.5
                                       -------     -------

      Utilities' regulatory liabilities relating to other postretirement
benefits and deferred fuel costs are included in "other noncurrent liabilities"
and "other current liabilities," respectively, on the Consolidated Balance
Sheets. Utilities does not recover a rate of return on its regulatory assets.

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

CONSOLIDATED STATEMENTS OF CASH FLOWS. We define cash equivalents as all highly
liquid investments with maturities of three months or less when purchased. We
record cash equivalents at cost plus accrued interest, which approximates market
value. We paid interest totaling $117.7 in 2004, $109.8 in 2003 and $106.2 in
2002. We paid income taxes totaling $70.2 in 2004, $48.2 in 2003 and $48.0 in
2002.

REVENUE RECOGNITION. We recognize revenues from the sale of propane and other
LPG principally as product is delivered to customers. Revenue from the sale of
appliances and equipment is recognized at the time of sale or installation. We
record Utilities' regulated revenues for service provided to the end of each
month which includes an accrual for certain unbilled amounts based upon
estimated usage. We reflect the impact of Utilities' rate increases or decreases
at the time they become effective. Energy Services records revenues when energy
products are delivered to customers.

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

EARNINGS PER COMMON SHARE. Basic earnings per share reflect the weighted-average
number of common shares outstanding. Diluted earnings per share include the
effects of dilutive stock options and common stock awards. In the following
table, we present shares used in computing basic and diluted earnings per share
for 2004, 2003 and 2002:

                                           2004        2003        2002
                                           ----        ----        ----
                                                         
Denominator (millions of shares):
   Average common shares
     outstanding for basic computation    47.308      42.220      41.325
   Incremental shares issuable for
     stock options and awards              1.033       1.016       0.582
                                          ------      ------      ------
Average common shares outstanding for
   diluted computation                    48.341      43.236      41.907
                                          ------      ------      ------

INCOME TAXES. AmeriGas Partners and the Operating Partnerships are not directly
subject to federal income taxes. Instead, their taxable income or loss is
allocated to the individual partners. We record income taxes on our share of (1)
the Partnership's current taxable income or loss and (2) the differences between
the book and tax bases of the Partnership's assets and liabilities. The
Operating Partnerships have subsidiaries which operate in corporate form and are
directly subject to federal income taxes.

                                                                              35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

Note 1 continued

      Gas Utility and Electric Utility record deferred income taxes in the
Consolidated Statements of Income resulting from the use of accelerated
depreciation methods based upon amounts recognized for ratemaking purposes. They
also record a deferred income tax liability for tax benefits that are flowed
through to ratepayers when temporary differences originate and record a
regulatory income tax asset for the probable increase in future revenues that
will result when the temporary differences reverse.

      We are amortizing deferred investment tax credits related to Utilities'
plant additions over the service lives of the related property. Utilities
reduces its deferred income tax liability for the future tax benefits that will
occur when investment tax credits, which are not taxable, are amortized. We also
reduce the regulatory income tax asset for the probable reduction in future
revenues that will result when such deferred investment tax credits amortize.

PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION. The amounts we assign to
property, plant and equipment of businesses we acquire are based upon estimated
fair value at date of acquisition. When Gas Utility and Electric Utility retire
depreciable utility plant and equipment, we charge the original cost, net of
removal costs and salvage value, to accumulated depreciation for financial
accounting purposes. When our unregulated businesses retire or otherwise dispose
of plant and equipment, we remove the cost and accumulated depreciation from the
appropriate accounts and any resulting gain or loss is recognized in "Other
income, net" in the Consolidated Statements of Income. We record depreciation
expense for Utilities' plant and equipment on a straight-line method over the
estimated average remaining lives of the various classes of its depreciable
property. Depreciation expense as a percentage of the related average
depreciable base for Gas Utility was 2.3% in both 2004 and 2003 and 2.5% in
2002. Depreciation expense as a percentage of the related average depreciable
base for Electric Utility was 2.8% in 2004 and 3.0% in both 2003 and 2002. We
compute depreciation expense on plant and equipment associated with our LPG
operations using the straight-line method over estimated service lives generally
ranging from 15 to 40 years for buildings and improvements; 7 to 30 years for
storage and customer tanks and cylinders; and 2 to 12 years for vehicles,
equipment, and office furniture and fixtures. We compute depreciation expense on
plant and equipment associated with our electric generation assets on a
straight-line basis over 25 years. Depreciation expense was $119.9 in 2004,
$97.1 in 2003 and $88.2 in 2002.

      Costs to install Partnership-owned tanks, net of amounts billed to
customers, are capitalized and amortized over the estimated period of benefit
not exceeding ten years.

INTANGIBLE ASSETS. Intangible assets comprise the following at September 30:

                                                   2004            2003
                                                   ----            ----
                                                          
Not subject to amortization:
   Goodwill                                     $  1,152.6      $  578.2
   Excess reorganization value                        93.3          93.3
                                                ----------      --------
                                                $  1,245.9      $  671.5
                                                ----------      --------
Other intangible assets:
   Customer relationships, noncompete
     agreements and other                       $    169.7      $   51.1
   Trademark (not subject to amortization)            42.2             -
                                                ----------      --------
     Gross carrying amount                           211.9          51.1
                                                ----------      --------
     Accumulated amortization                        (27.5)        (16.4)
                                                ----------      --------
   Net carrying amount                          $    184.4      $   34.7
                                                ----------      --------

      The increase in the carrying amount of intangible assets during the year
ended September 30, 2004 is principally the result of the acquisition of the
remaining 80.5% ownership interests in AGZ and other smaller acquisitions. The
increase in goodwill was slightly offset by the settlement of an income tax
benefit held by Petrolane, which related to a period prior to the formation of
the Partnership. The settlement resulted in a reduction to the value of the net
assets contributed to AmeriGas OLP by Petrolane at the Partnership formation
date. The adjustment was recorded by the Partnership during the year ended
September 30, 2004 as a $5.5 reduction in both goodwill and partners' capital.

      We amortize customer relationship and noncompete agreement intangibles
over their estimated periods of benefit which do not exceed 15 years.
Amortization expense of intangible assets was $11.1 in 2004, $6.1 in 2003 and
$4.6 in 2002 including amortization expense associated with customer contracts
recorded in cost of sales. Estimated amortization expense of intangible assets
during the next five fiscal years is as follows: Fiscal 2005 - $15.4; Fiscal
2006 - $14.9; Fiscal 2007 - $14.3; Fiscal 2008 - $13.9; Fiscal 2009 - $12.5.

      In accordance with the provisions of SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), we amortize intangible assets over their useful
lives unless we determined their lives to be indefinite. Goodwill, including
excess reorganization value, and other intangible assets with indefinite lives
are not amortized but are subject to tests for impairment at least annually.
SFAS 142 requires that we perform impairment tests annually or more frequently
if events or circumstances indicate that the value of goodwill might be
impaired. No provisions for goodwill impairments were recorded during 2004, 2003
or 2002.

STOCK-BASED COMPENSATION. As permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), we apply the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), in recording compensation expense for grants of stock,
stock options, and other equity instruments to employees.

36

                                              UGI Corporation 2004 Annual Report

      We use the intrinsic value method prescribed by APB 25 for our stock-based
employee compensation plans. We recognized total stock and unit-based
compensation expense of $14.3, $10.4 and $5.7 in 2004, 2003 and 2002,
respectively. If we had determined stock-based compensation expense under the
fair value method prescribed by the provisions of SFAS 123, net income and basic
and diluted earnings per share for 2004, 2003 and 2002 would have been as
follows:

                                           Year Ended September 30,
                                          2004        2003      2002
                                          ----        ----      ----
                                                      
Net income, as reported                 $  111.6    $  98.9    $  75.5
Add: Stock and unit-based employee
   expense included in reported net
   income, net of related tax effects        9.3        6.8        3.7
Deduct: Total stock and unit-based
   employee compensation expense
   determined under the fair value
   method for all awards, net of
   related tax effects                     (10.4)      (7.6)      (4.7)
                                        --------    -------    -------
Pro forma net income                    $  110.5    $  98.1    $  74.5
                                        --------    -------    -------
Basic earnings per share:
   As reported                          $   2.36    $  2.34    $  1.83
   Pro forma                            $   2.34    $  2.32    $  1.80
Diluted earnings per share:
   As reported                          $   2.31    $  2.29    $  1.80
   Pro forma                            $   2.29    $  2.27    $  1.78
                                        --------    -------    -------

      For a description of our stock and unit-based compensation plans and
related disclosures, see Note 9.

DEFERRED DEBT ISSUANCE COSTS. Included in other assets are net deferred debt
issuance costs of $13.9 at September 30, 2004 and $15.5 at September 30, 2003.
We are amortizing these costs over the terms of the related debt.

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

DEFERRED FUEL COSTS. Gas Utility's tariffs contain clauses which permit recovery
of certain purchased gas costs through the application of purchased gas cost
("PGC") rates. The clauses provide for periodic adjustments to PGC rates for the
difference between the total amount of purchased gas costs collected from
customers and the recoverable costs incurred. In accordance with SFAS 71, we
defer the difference between amounts recognized in revenues and the applicable
gas costs incurred until they are subsequently billed or refunded to customers.

UGI UTILITIES PREFERRED SHARES SUBJECT TO MANDATORY REDEMPTION. Beginning July
1, 2003 through the date of their redemption on October 1, 2004 (see Note 8),
the Company accounted for UGI Utilities preferred shares subject to mandatory
redemption in accordance with SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" ("SFAS 150").
SFAS 150 establishes guidelines on how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. The
adoption of SFAS 150, effective July 1, 2003, resulted in the Company presenting
UGI Utilities preferred shares subject to mandatory redemption in the
liabilities section of the balance sheet, and reflecting dividends paid on these
shares as a component of interest expense, for periods presented after June 30,
2003. Prior to July 1, 2003, these dividends were reflected as a deduction from
net income on the Consolidated Statements of Income. Because SFAS 150
specifically prohibits the restatement of financial statements prior to its
adoption, prior period amounts have not been reclassified.

ENVIRONMENTAL AND OTHER LEGAL MATTERS. We 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. Amounts accrued generally reflect
our best estimate of costs expected to be incurred or the minimum liability
associated with a range of expected environmental response costs. Our estimated
liability for environmental contamination is reduced to reflect anticipated
participation of other responsible parties but is not reduced for possible
recovery from insurance carriers. In those instances for which the amount and
timing of cash payments associated with environmental investigation and cleanup
are reliably determinable, we discount such liabilities to reflect the time
value of money. We intend to pursue recovery of incurred costs through all
appropriate means, including regulatory relief. 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 is currently permitted to include in rates,
through future base rate proceedings, a five-year average of such prudently
incurred removal costs. At September 30, 2004, the Company's accrued liability
for environmental investigation and cleanup costs was not material.

Similar to environmental matters, we accrue investigation and other legal costs
when it is probable that a liability exists and the amount or range of amounts
can be reasonably estimated (see Note 12).

FOREIGN CURRENCY TRANSLATION. Balance sheets of international subsidiaries and
our investment in an international propane joint venture are translated into
U.S. dollars using the exchange rate at the balance sheet date. Income
statements and equity method results are translated into U.S. dollars using an
average exchange rate for each reporting period. Where the local currency is the
functional currency, translation adjustments are recorded in other comprehensive
income. Where the local currency is not the functional currency, translation
adjustments are recorded in net income.

                                                                              37

\
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

Note 1 continued

COMPREHENSIVE INCOME. Comprehensive income comprises net income and other
comprehensive (loss) income. Other comprehensive (loss) income principally
results from gains and losses on derivative instruments qualifying as cash flow
hedges and foreign currency translation adjustments. The components of
accumulated other comprehensive income at September 30, 2003 and 2004 follow:

                                 Derivative     Foreign
                                Instruments     Currency
                                   Gains      Translation
                                 (Losses)     Adjustments    Total
                                 --------     -----------    -----
                                                   
Balance - September 30, 2003     $  (4.1)      $   8.8      $   4.7
Balance - September 30, 2004     $   7.3       $  15.3      $  22.6
                                 -------       -------      -------

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

      On December 8, 2003, the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the "Act") was signed into law. Among other things,
the Act provides for a prescription drug benefit to Medicare beneficiaries on a
voluntary basis beginning in 2006. To encourage employers to continue to offer
retiree prescription drug benefits, the Act provides for a tax-free subsidy to
employers who offer a prescription drug benefit that is at least actuarially
equivalent to the standard benefit offered under the Act. In May 2004, the FASB
issued Staff Position No. FAS 106-2, "Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of
2003" ("FSP 106-2"). FSP 106-2 is effective for periods beginning after June 15,
2004.

      The Company provides postretirement health care benefits principally to
certain of its retirees and a limited number of active employees meeting certain
age and service requirements. See Note 6 for information on our Employee
Retirement Plans. These postretirement benefits include certain retiree
prescription drug benefits. The Company has determined that, as currently
designed, its prescription drug benefit for retirees is not actuarially
equivalent to the standard benefit offered under the Act and, as a result, does
not qualify for the tax-free subsidy.

NOTE 2 - PRIOR YEAR RESTATEMENT

We have restated the fiscal 2003 Consolidated Balance Sheet and Statement of
Stockholders' Equity to record deferred income tax liabilities on the gains
resulting from the conversion of our Subordinated Units in the Partnership (see
Note 16), which occurred in December 2002, and upon subsequent sales by the
Partnership of units to the public. The restatement has no impact on our
Consolidated Statements of Income or Consolidated Statements of Cash Flows.

      Under our interpretation of accounting rules at the time of the
conversion, including Staff Accounting Bulletin No. 51, "Accounting for Sales of
Common Stock by a Subsidiary," we accounted for the gains resulting from the
conversion of Subordinated Units in the Partnership, and subsequent sales by the
Partnership of units to the public, as increases in stockholders' equity in
amounts equal to the increase in the value of our investment in the Partnership.
We did not record deferred income tax liabilities relating to the gains because
of our intention to hold our investment in the Partnership indefinitely. While
our intention to hold the Partnership units indefinitely has not changed, we
have reconsidered our previous judgments in the application of SFAS No. 109,
"Accounting for Income Taxes" ("SFAS 109"), and have recorded deferred income
tax liabilities on the gains. The following table summarizes the effect of the
restatement:

                                 As of September 30, 2003
                                 ------------------------
                               As previously
                                 reported     As restated
                                 --------     -----------
                                        
Deferred income taxes           $     223.1   $     293.8
Common Stock                    $     582.4   $     511.7
                                -----------   -----------

NOTE 3 - ACQUISITIONS AND INVESTMENTS

On March 31, 2004 (the "Closing Date"), UGI, through its subsidiary, UGI
Bordeaux Holding (as assignee of UGI France), completed its acquisition of the
remaining outstanding 80.5% ownership interests of AGZ, a French corporation and
the parent company of Antargaz, a French corporation and a leading distributor
of LPG in France, pursuant to the terms of (i) a Share Purchase Agreement dated
as of February 17, 2004, by and among UGI France, UGI, PAI partners, a French
corporation, and certain officers, directors and managers of AGZ and Antargaz
and their affiliates, and (ii) that certain Medit Joinder Agreement dated
February 20, 2004, by and among UGI France, UGI, Medit Mediterranea GPL,.,
a company incorporated under the laws of Italy ("Medit"), and PAI partners
(herein referred to as the "Antargaz Acquisition"). The acquisition of the
remaining interests in AGZ is consistent with our growth strategies and core
competencies.

      The purchase price on the Closing Date of E261.8 or $319.2 (excluding
transaction fees and expenses) was subject to post-closing working capital and
net debt adjustments. UGI used the cash proceeds from its March 2004 public
offering of 7.5 million shares of its common stock and $89.0 of available cash
to fund the purchase price. In accordance with the Share Purchase Agreement, UGI
paid an additional E5.8 ($7.1) as a result of post-closing adjustments. In
addition, we incurred transaction fees and expenses of $5.4. See Note 9 for
additional information regarding the issuance of UGI Common Stock.

38

                                              UGI Corporation 2004 Annual Report

      The Antargaz Acquisition has been accounted for as a step acquisition.
UGI's initial 19.5% equity investment in AGZ has been allocated to 19.5% of
AGZ's assets and liabilities at March 31, 2004. The amount by which the carrying
value of UGI's equity investment exceeded the aforementioned allocation has been
recorded as goodwill. The purchase price of the remaining 80.5% of AGZ,
including transaction fees and expenses, has been allocated to the assets
acquired and liabilities assumed, as follows:

                                                                
Working capital                                                    $       28.7
Property, plant and equipment                                             337.0
Goodwill                                                                  469.3
Customer relationships (estimated useful life of twelve years)             97.1
Trademark and other intangible assets                                      38.6
Long-term debt (including current maturities)                            (392.6)
Deferred income taxes                                                    (108.8)
Minority interests                                                        (11.1)
Other assets and liabilities                                             (126.5)
                                                                   ------------
Total                                                              $      331.7
                                                                   ------------

None of the goodwill is expected to be deductible for income tax purposes.

      The Company has completed its review and determination of the fair value
of the portion of AGZ's assets acquired and liabilities assumed, principally the
fair values of property, plant and equipment and identifiable intangible assets.
The assets and liabilities of AGZ are included in our Consolidated Balance Sheet
as of September 30, 2004. The operating results of AGZ are included in our
consolidated results beginning April 1, 2004. Prior to April 1, 2004, our 19.5%
equity interest in AGZ is reflected in our Consolidated Financial Statements
under the equity method of accounting.

      The following table presents unaudited pro forma income statement and
basic and diluted per share data for the years ended September 30, 2004 and 2003
as if the Antargaz Acquisition had occurred as of the beginning of those
periods:

                                                     2004           2003
                                                     ----           ----
                                                 (pro forma)     (pro forma)
                                                           
Revenues                                         $   4,293.0     $   3,725.0
Net income                                             168.2           122.9

Earnings per share:
   Basic                                         $      3.31     $      2.46
   Diluted                                       $      3.24     $      2.41
                                                 -----------     -----------

      The pro forma results of operations reflect AGZ's historical operating
results after giving effect to adjustments directly attributable to the
transaction that are expected to have a continuing effect. The pro forma amounts
are not necessarily indicative of the operating results that would have occurred
had the acquisition been completed as of the date indicated, nor are they
necessarily indicative of future operating results.

      On October 1, 2003, AmeriGas OLP acquired substantially all of the retail
propane distribution assets and business of Horizon Propane LLC ("Horizon
Propane") for total cash consideration of $31.0. In December 2003, AmeriGas OLP
paid Horizon Propane a working capital adjustment of $0.1 in accordance with the
Asset Purchase Agreement. During its fiscal year ended June 30, 2003, Horizon
Propane sold over 30 million gallons of propane from ninety locations in twelve
states. In addition, AmeriGas OLP completed several smaller acquisitions of
retail propane businesses, HVAC/R acquired a commercial refrigeration business
and FLAGA acquired a retail propane distribution business in the Czech Republic
during the year ended September 30, 2004. The pro forma effect of these
transactions is not material.

      In June 2003, pursuant to an asset purchase agreement between and among
Allegheny Energy Supply Company, LLC, Allegheny Energy Supply Conemaugh, LLC
("Allegheny Conemaugh"), UGID, and UGI, UGID acquired an additional 83 megawatt
ownership interest in the Conemaugh electricity generation station ("Conemaugh")
from Allegheny Conemaugh, a unit of Allegheny Energy, Inc. ("Allegheny"), for
$51.3 in cash, subject to a $3.0 credit. Conemaugh is a 1,711-megawatt,
coal-fired electricity generation station located near Johnstown, Pennsylvania
and is owned by a consortium of energy companies and operated by a unit of
Reliant Resources, Inc. under contract. The purchase increased UGID's ownership
interest in Conemaugh to 102 megawatts (6.0%) from 19 megawatts (1.1%)
previously. Substantially all of the purchase price for the additional interest
in Conemaugh is included in property, plant and equipment in the Consolidated
Balance Sheet.

      In March 2003, Energy Services acquired the northeastern U.S. gas
marketing business of TXU Energy Retail Company, L.P., a subsidiary of TXU Corp.
(the "TXU Energy Acquisition"), for approximately $10.0 in cash. As a result of
the TXU Energy Acquisition, Energy Services assumed the existing sales and
supply agreements for approximately one thousand commercial and industrial
customers located primarily in New York, Pennsylvania, Ohio and New Jersey.

      During 2003, AmeriGas OLP acquired several retail propane distribution
businesses and HVAC/R acquired a commercial refrigeration business for total
cash consideration of $28.6. In conjunction with these acquisitions, liabilities
of $1.5 were incurred. The operating results of these businesses have been
included in our results of operations from their respective dates of
acquisition.

      In November 2004, UGI Asset Management, Inc., a wholly owned subsidiary of
Energy Services, acquired from ConocoPhillips Company and AmerE Holdings, Inc.
(a wholly owned, indirect subsidiary of AmeriGas Propane, L.P.) in separate
transactions 100% of the issued and outstanding common stock of Atlantic Energy,
Inc. for an aggregate purchase price of approximately $24 in cash, subject to
post-closing adjustments. In connection with this acquisition, Atlantic Energy,
Inc. and AmeriGas Propane, L.P. entered into a long-term propane supply
agreement.

                                                                              39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

NOTE 4 - DEBT

Long-term debt comprises the following at September 30:

                                                          2004         2003
                                                          ----         ----
                                                               
AMERIGAS PROPANE:
AmeriGas Partners Senior Notes:
   8.875%, due May 2011 (including unamortized
     premium of $8.3 and $6.4, respectively,
     effective rate - 8.46%)                            $  396.3     $  366.4
   10%, due April 2006 (less unamortized discount
     of $0.1 and $0.2, respectively, effective
     rate  - 10.125%)                                       59.9         59.8
AmeriGas OLP First Mortgage Notes:
   Series A, 9.34% - 11.71%, due April 2005
      through April 2009 (including unamortized
      premium of $5.2 and $6.6, respectively,
      effective rate  - 8.91%)                             165.2        166.6
   Series B, 10.07%, due April 2005 (including
      unamortized premium of $0.3 and $1.1,
      respectively, effective rate - 8.74%)                 40.3         81.1
   Series C, 8.83%, due April 2005 through April 2010       82.5         96.3
   Series D, 7.11%, due March 2009 (including
      unamortized premium of $1.6 and $1.9,
      respectively, effective rate - 6.52%)                 71.6         71.9
   Series E, 8.50%, due July 2010 (including
      unamortized premium of $0.1, effective
      rate - 8.47%)                                         80.1         80.1
Other                                                        5.5          5.1
                                                        --------     --------
Total AmeriGas Propane                                     901.4        927.3
                                                        --------     --------
INTERNATIONAL PROPANE:
Antargaz Senior Facilities term loan,
   due March 2005 through June 2008                        240.0            -
Antargaz 10% High Yield Bonds, due July 2011
   (including unamortized premium of $20.0,
   effective rate - 7.68%)                                 225.2            -
FLAGA Acquisition Note, due through
   September 2006                                           68.2         68.9
FLAGA euro special purpose facility                          3.3          4.2
Other                                                        9.3            -
                                                        --------     --------
Total International Propane                                546.0         73.1
                                                        --------     --------
UGI UTILITIES:
Medium-Term Notes:
   7.25% Notes, due November 2017                           20.0         20.0
   7.17% Notes, due June 2007                               20.0         20.0
   7.37% Notes, due October 2015                            22.0         22.0
   6.62% Notes, due May 2005                                20.0         20.0
   7.14% Notes, due December 2005 (including
     unamortized premium of $0.2 and $0.3,
     respectively, effective rate - 6.64%)                  30.2         30.3
   7.14% Notes, due December 2005                           20.0         20.0
   5.53% Notes, due September 2012                          40.0         40.0
   5.37% Notes, due August 2013                             25.0         25.0
   6.50% Notes, due August 2033                             20.0         20.0
                                                        --------     --------
Total UGI Utilities                                        217.2        217.3
                                                        --------     --------
Other                                                        5.5          5.8
                                                        --------     --------
Total long-term debt                                     1,670.1      1,223.5
Less current maturities (including net unamortized
   premiums of $5.4 and $3.1, respectively)               (122.8)       (65.0)
                                                        --------     --------
Total long-term debt due after one year                 $1,547.3     $1,158.5
                                                        --------     --------

      Scheduled principal repayments of long-term debt due in fiscal years 2005
to 2009 follows:

                             2005      2006     2007     2008       2009
                             ----      ----     ----     ----       ----
                                                    
AmeriGas Propane           $  57.0   $ 114.9   $ 54.3   $  54.0    $ 123.9
UGI Utilities                 20.0      50.0     20.0         -          -
International Propane         39.7      83.8     24.2     173.2          -
Other                          0.7       0.7      0.8       3.1          -
                           -------   -------   ------   -------    -------
Total                      $ 117.4   $ 249.4   $ 99.3   $ 230.3    $ 123.9
                           -------   -------   ------   -------    -------

AMERIGAS PROPANE

AMERIGAS PARTNERS SENIOR NOTES. The 8.875% Senior Notes generally cannot be
redeemed at our option prior to May 20, 2006. A redemption premium applies
thereafter through May 19, 2009. The 10% Senior Notes generally cannot be
redeemed at our option prior to their maturity. AmeriGas Partners prepaid $15 of
its 10.125% Senior Notes in November 2001 at a redemption price of 103.375% and
the remaining $85 of its 10.125% Senior Notes in January 2003 at a redemption
price of 102.25%, in each instance, including accrued interest.

AmeriGas Partners recognized losses of $3.0 and $0.7 associated with these
prepayments which amounts are reflected in "Loss on extinguishments of debt" in
the 2003 and 2002 Consolidated Statements of Income, respectively. AmeriGas
Partners may, under certain circumstances following the disposition of assets or
a change of control, be required to offer to prepay its Senior Notes.

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

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

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

40

                                              UGI Corporation 2004 Annual Report

Issued and outstanding letters of credit, which reduce available borrowings
under the Revolving Credit Facility, totaled $45.9 and $33.4 at September 30,
2004 and 2003, respectively.

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

      The Revolving Credit Facility and the Acquisition Facility permit AmeriGas
OLP to borrow at prevailing interest rates, including the base rate, defined as
the higher of the Federal Funds rate plus 0.50% or the agent bank's prime rate
(4.75% at September 30, 2004), or at a two-week, one-, two-, three-, or
six-month Eurodollar Rate, as defined in the Credit Agreement, plus a margin.
The margin on Eurodollar Rate borrowings (which ranges from 1.00% to 2.25%), and
the Credit Agreement facility fee rate (which ranges from 0.25% to 0.50%) are
dependent upon AmeriGas OLP's ratio of funded debt to earnings before interest
expense, income taxes, depreciation and amortization ("EBITDA"), each as defined
in the Credit Agreement.

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

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

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

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

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

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

INTERNATIONAL PROPANE

Antargaz' Senior Facilities Agreement consists of (1) a euro-denominated
variable-rate term loan and (2) a E50 revolver. At September 30, 2004, there
was E193 ($240.0) outstanding under the term loan and no borrowings
outstanding under the revolver. Principal payments of E9 on the term loan are
due semi-annually on March 31 and September 30 each year with final payments of
E39 and E100 due March 31, 2008 and June 30, 2008, respectively. The
term loan bears interest at euribor or libor plus margin, as defined by the
Senior Facilities Agreement. Margin (which ranges from 0.85% to 1.75%) is
dependent upon Antargaz' ratio of total net debt to EBITDA, each as defined by
the Senior Facilities Agreement. Antargaz has fixed the interest rate on a
portion of its term loan through the use of interest rate swap agreements (see
Note 13). The Senior Facilities debt has been collateralized by substantially
all of Antargaz' shares in its subsidiaries and its equity investee, and by
substantially all of its accounts receivable.

      In July 2002, AGZ issued E165 of 10% Senior Notes due 2011 (the "High
Yield Bonds"), through one of its subsidiaries, AGZ Finance. Interest on the
High Yield Bonds is payable semi-annually on January 15 and July 15. AGZ Finance
may redeem the bonds in whole or in part at a premium commencing July 2006.

      At September 30, 2004, FLAGA's multi-currency acquisition note
("Acquisition Note") consisted of $5.4 of U.S. dollar-denominated obligations
and E50.5 of euro-denominated obligations. The U.S. dollar-denominated
obligations under the Acquisition Note bear interest at fixed rates ranging from
5.70% to 5.92% while the euro-denominated obligations bear interest at a rate of
1.25% over one- to twelve-month euribor rates (as chosen by FLAGA from time to
time). The effective interest rates on the Acquisition Note at September 30,
2004 and September 30, 2003 were 3.83% and 4.00%, respectively. FLAGA may prepay
the Acquisition Note, in whole or in part. Prior to March 11, 2005, such
prepayments shall be at a premium

      At September 30, 2004, FLAGA has a E15 working capital loan commitment
from a European bank. The working capital facility expires in November 2005, but
may be extended with

                                                                              41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

Note 4 continued

the bank's consent. Loans under the working capital facility, as well as
borrowings under FLAGA's special purpose facility, bear interest at market
rates. The weighted-average interest rates on FLAGA's working capital facility
were 3.04% at September 30, 2004 and 3.40% at September 30, 2003. Borrowings
under the working capital facility at September 30, 2004 and 2003 totaled E13.8
($17.2) and E13.6 ($15.9), respectively, and are classified as bank loans.

RESTRICTIVE COVENANTS AND GUARANTEES. The Senior Facilities Agreement and the
Trust Deed, dated July 23, 2002, among AGZ Finance, as issuer, AGZ, as
guarantor, and the Bank of New York, as trustee, ("Trust Deed") relating to the
High Yield Bonds restrict the ability of AGZ and its subsidiaries, including
Antargaz, to, among other things, incur additional indebtedness, make
investments, incur liens, prepay indebtedness, and effect mergers,
consolidations and sales of assets. Under these agreements, AGZ is generally
permitted to make restricted payments, such as dividends, equal to 50% of
consolidated net income, as defined in each respective agreement, for (1) the
immediately preceding fiscal year, in the case of the Senior Facilities
Agreement, and (2) on a cumulative basis since July 2002, in the case of the
Trust Deed, if no event of default exists or would exist upon payment of such
restricted payment.

      The FLAGA Acquisition Note, special purpose facility and working capital
facility are subject to guarantees of UGI. In addition, under certain conditions
regarding changes in the credit rating of UGI Utilities' long-term debt, the
lending bank may require UGI to grant additional security or may accelerate
repayment of the debt.

UGI UTILITIES

REVOLVING CREDIT AGREEMENTS. At September 30, 2004, UGI Utilities had revolving
credit agreements with five banks providing for borrowings of up to $110. These
agreements are currently scheduled to expire in June 2007. UGI Utilities may
borrow at various prevailing interest rates, including LIBOR and the banks'
prime rate. UGI Utilities pays quarterly commitment fees on these credit lines.
UGI Utilities had revolving credit agreement borrowings totaling $60.9 at
September 30, 2004 and $40.7 at September 30, 2003, which we classify as bank
loans. The weighted-average interest rates on UGI Utilities bank loans were
2.35% at September 30, 2004 and 1.63% at September 30, 2003.

RESTRICTIVE COVENANTS. UGI Utilities' credit agreements have restrictions on
such items as total debt, debt service, and payments for investments. They also
require consolidated tangible net worth of at least $125. At September 30, 2004,
UGI Utilities was in compliance with these financial covenants.

NOTE 5 - INCOME TAXES

Income (loss) before income taxes comprises the following:

                                        2004           2003           2002
                                        ----           ----           ----
                                                          
Domestic                             $    160.7      $  157.1      $  117.2
Foreign                                    15.3           3.7           6.8
                                     ----------      --------      --------
Total income before income taxes     $    176.0      $  160.8      $  124.0
                                     ----------      --------      --------

      The provisions for income taxes consist of the following:

                                         2004          2003        2002
                                         ----          ----        ----
                                                        
Current expense:
   Federal                             $   46.8      $  48.1     $  26.5
   State                                   14.4         15.4         9.3
   Foreign                                  0.2            -         0.1
                                       --------      -------     -------
   Total current expense                   61.4         63.5        35.9
Deferred (benefit) expense:
   Federal                                  4.3          2.3        11.8
   State                                   (1.6)        (3.6)       (0.4)
   Foreign                                  0.7         (1.1)          -
   Investment tax credit amortization      (0.4)        (0.4)       (0.4)
                                       --------      -------     -------
   Total deferred expense (benefit)         3.0         (2.8)       11.0
                                       --------      -------     -------
Total income tax expense               $   64.4      $  60.7     $  46.9
                                       --------      -------     -------

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

                                         2004       2003        2002
                                         ----       ----        ----
                                                       
Statutory federal tax rate               35.0%      35.0%       35.0%
Difference in tax rate due to:
   State income taxes, net of federal     4.8        4.6         5.3
Other, net                               (3.2)      (1.8)       (2.5)
                                         ----       ----        ----
Effective tax rate                       36.6%      37.8%       37.8%
                                         ----       ----        ----

42

                                              UGI Corporation 2004 Annual Report

      Deferred tax liabilities (assets) comprise the following at September 30:

                                                               Restated
                                                   2004          2003
                                                   ----          ----
                                                         
Excess book basis over tax basis of property,
  plant and equipment                           $    335.3     $  224.3
SAB 51 gains                                          77.3         70.7
Intangibles                                           58.3            -
Utility regulatory assets                             27.6         25.0
Pension plan asset                                    10.5         11.0
Other                                                 20.0         16.7
                                                ----------     --------
Gross deferred tax liabilities                       529.0        347.7
                                                ----------     --------
Self-insured property and casualty liability         (11.6)        (9.9)
Employee-related benefits                            (25.8)       (20.6)
Premium on long-term debt                             (9.7)        (3.0)
Tax litigation                                        (8.1)        (0.8)
Deferred investment tax credits                       (3.1)        (3.3)
Utility regulatory liabilities                        (4.0)        (7.7)
Operating loss carryforwards                         (13.3)       (17.0)
Allowance for doubtful accounts                       (4.8)        (3.9)
Other                                                (24.8)       (12.9)
                                                ----------     --------
Gross deferred tax assets                           (105.2)       (79.1)
                                                ----------     --------
Deferred tax assets valuation allowance                2.7          1.7
                                                ----------     --------
Net deferred tax liabilities                    $    426.5     $  270.3
                                                ----------     --------

      UGI Utilities had recorded deferred tax liabilities of approximately $39.4
as of September 30, 2004 and $37.0 as of September 30, 2003, pertaining to
utility temporary differences, principally a result of accelerated tax
depreciation for state income tax purposes, 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 $3.1 at September 30, 2004 and $3.3
at September 30, 2003, pertaining to utility deferred investment tax credits.
UGI Utilities had recorded regulatory income tax assets related to these net
deferred taxes of $62.0 as of September 30, 2004 and $57.6 as of September 30,
2003. These regulatory income tax assets represent future revenues expected to
be recovered through the ratemaking process. We will recognize this regulatory
income tax asset in deferred tax expense as the corresponding temporary
differences reverse and additional income taxes are incurred.

      Foreign net operating loss carryforwards of FLAGA totaled approximately
$44.3 of which $6.7 expires through 2011 and $37.6 of which has no expiration
date. At September 30, 2004, deferred tax assets relating to operating loss
carryforwards include those of FLAGA and $3.1 of deferred tax assets associated
with state net operating loss carryforwards expiring through 2024.
Substantially all of our deferred tax valuation allowances relate to state
operating loss carryforwards.

NOTE 6 - EMPLOYEE RETIREMENT PLANS

DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT PLANS. We sponsor a defined
benefit pension plan ("UGI Utilities Pension Plan") for employees of UGI, UGI
Utilities, and certain of UGI's other wholly owned subsidiaries. In addition, we
provide postretirement health care benefits to certain retirees and a limited
number of active employees meeting certain age and service requirements, and
postretirement life insurance benefits to nearly all domestic active and retired
employees. As a result of the Antargaz Acquisition, we assumed underfunded
retirement benefits which are based upon the employee's salary and service and
are primarily to be paid upon retirement ("AGZ benefits"). In addition, Antargaz
employees are covered by a postretirement medical plan. Our disclosures include
the effects of AGZ benefits and other postretirement welfare benefits.

      The following provides a reconciliation of projected benefit obligations,
plan assets, and funded status of these plans as of September 30:

                                          Pension           Other Postretirement
                                          Benefits                Benefits
                                      2004        2003        2004        2003
                                      ----        ----        ----        ----
                                                            
CHANGE IN BENEFIT OBLIGATIONS:
   Benefit obligations  -
     beginning of year              $  209.5    $  190.9    $   28.8    $   27.3
   Service cost                          4.9         4.5         0.2         0.2
   Interest cost                        13.0        13.0         1.7         1.8
   Actuarial loss                        2.6        10.5         1.3         1.1
   Antargaz Acquisition                 11.8           -         3.3           -
   Benefits paid                        (9.5)       (9.4)       (2.5)       (1.6)
                                    --------    --------    --------    --------
   Benefit obligations - end of
     year                           $  232.3    $  209.5    $   32.8    $   28.8
                                    --------    --------    --------    --------
CHANGE IN PLAN ASSETS:
   Fair value of plan assets-
     beginning of year              $  183.9    $  166.1    $    9.0    $    7.8
   Actual return on plan assets         22.0        27.2         0.8         0.2
   Employer contributions                  -           -         2.7         2.6
   Antargaz Acquisition                  3.8           -           -           -
   Benefits paid                        (9.5)       (9.4)       (2.5)       (1.6)
                                    --------    --------    --------    --------
   Fair value of plan assets-
     end of year                    $  200.2    $  183.9    $   10.2    $    9.0
                                    --------    --------    --------    --------
Funded status of the plans          $  (32.1)   $  (25.6)   $  (22.6)   $  (19.8)
Unrecognized net actuarial loss         47.9        51.2         6.1         5.9
Unrecognized prior service cost          1.6         2.4           -           -
Unrecognized net transition
(asset) obligation                         -        (1.4)        6.8         7.7
                                    --------    --------    --------    --------
Prepaid (accrued) benefit cost-
   end of year                      $   17.4    $   26.6    $   (9.7)   $   (6.2)
                                    --------    --------    --------    --------
WEIGHTED-AVERAGE ASSUMPTIONS
   AS OF SEPTEMBER 30:
Discount rate                            6.1%        6.2%        6.1%        6.2%
Expected return on plan assets           9.0%        9.0%        5.8%        6.0%
Rate of increase in salary levels        4.0%        4.0%        4.0%        4.0%
                                    --------    --------    --------    --------

                                                                              43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

Note 6 continued

      Net pension expense (income) is determined using assumptions as of the
beginning of each fiscal year. Funded status is determined using assumptions as
of the end of each fiscal year. The expected rate of return on assets assumption
is based on the rates of return for certain asset classes and the allocation of
plan assets among those asset classes as well as actual historic long-term rates
of return on our plan assets.

      Net periodic pension expense (income) and other postretirement benefit
costs include the following components:

                                        Pension             Other Postretirement
                                        Benefits                  Benefits
                                ------------------------   -----------------------
                                 2004     2003     2002     2004    2003     2002
                                 ----     ----     ----     ----    ----     ----
                                                          
Service cost                    $  5.0   $  4.5   $  3.6   $ 0.2   $ 0.2    $  0.1
Interest cost                     13.0     13.0     12.5     1.8     1.8       1.7
Expected return on assets        (17.3)   (17.9)   (19.1)   (0.5)   (0.4)     (0.3)
Amortization of:
   Transition (asset)
     obligation                   (1.4)    (1.6)    (1.6)    0.9     0.9       0.9
   Prior service cost              0.7      0.6      0.6       -       -         -
   Actuarial (gain) loss           1.2      0.3        -     0.3     0.1      (0.1)
Antargaz Aquisition                0.3        -        -     0.2       -         -
                                ------   ------   ------   -----   -----    ------
Net benefit cost (income)          1.5     (1.1)    (4.0)    2.9     2.6       2.3
Change in regulatory
   assets and liabilities            -        -        -     0.9     1.0       1.2
                                ------   ------   ------   -----   -----    ------
Net expense (income)            $  1.5   $ (1.1)  $ (4.0)  $ 3.8   $ 3.6    $  3.5
                                ------   ------   ------   -----   -----    ------

      UGI Utilities Pension Plan assets are held in trust. Although the UGI
Utilities Pension Plan projected benefit obligations exceeded plan assets at
September 30, 2004 and 2003, plan assets exceeded accumulated benefit
obligations by $9.2 and $7.3, respectively. The Company did not make any
contributions in 2004 nor does it believe it will be required to make any
contributions to the UGI Utilities Pension Plan during the year ending September
30, 2005. At September 30, 2004, the accumulated benefit obligation of AGZ
benefits exceeded the plan assets by $6.5. However, the accrual recorded in our
Consolidated Balance Sheet at September 30, 2004 exceeds the minimum pension
liability. Antargaz does not expect to make any contributions to fund AGZ
benefits during the year ending September 30, 2005.

      Pursuant to orders issued by the PUC, UGI Utilities has established a
Voluntary Employees' Beneficiary Association ("VEBA") trust to pay retiree
health care and life insurance benefits by depositing into the VEBA the annual
amount of postretirement benefits costs determined under SFAS No. 106,
"Employers Accounting for Postretirement Benefits Other than Pensions." The
difference between such amounts and amounts included in UGI Utilities' rates is
deferred for future recovery from, or refund to, ratepayers. VEBA investments
consist principally of equity and fixed income mutual funds. UGI Utilities
contributed $2.5 million to the VEBA during the year ended September 30, 2004
and expects to contribute approximately $2.5 million during the year ending
September 30, 2005.

      Expected payments for pension benefits and for other postretirement
welfare benefits are as follows:

                                              Other
                            Pension       Postretirement
                            Benefits         Benefits
                            --------         --------
                                    
Fiscal 2005                 $   10.6         $    2.4
Fiscal 2006                     10.6              2.5
Fiscal 2007                     10.9              2.6
Fiscal 2008                     11.0              2.7
Fiscal 2009                     11.6              2.7
Fiscal 2010-2014                67.8             13.3
                            --------         --------

      In accordance with our investment strategy to obtain long-term growth, our
target allocations are to maintain a mix of 60% equities and the remainder in
fixed income funds or cash equivalents. The targets and actual allocations for
the UGI Utilities Pension Plan assets and VEBA trust assets at September 30 are
as follows:

                                   Target     Pension Plan       VEBA
                          Pension Plan  VEBA   2004   2003   2004    2003
                                                   
Equities                        60%      60%     63%    60%   58%     57%
Fixed income funds              40%      30%     37%    40%   27%     29%
Cash equivalents               N/A       10%    N/A    N/A    15%     14%
                               ---       --     ---    ---    --      --

UGI Common Stock comprised approximately 8% and 7% of UGI Utilities Pension Plan
assets at September 30, 2004 and 2003, respectively.

      The assumed health care cost trend rates are 10.0% for fiscal 2005,
decreasing to 5.5% in fiscal 2010. A one percentage point change in the assumed
health care cost trend rate would change the 2004 postretirement benefit cost
and obligation as follows:

                                                       1% Increase   1% Decrease
                                                       -----------   -----------
                                                               
Effect on total service and interest costs              $   0.1       $  (0.1)
Effect on postretirement benefit obligation             $   1.7       $  (1.5)
                                                        -------       -------

      We also sponsor unfunded and non-qualified supplemental executive
retirement plans. At September 30, 2004 and 2003, the projected benefit
obligations of these plans were $12.4 and $11.9, respectively. We recorded net
benefit costs for these plans of $1.9 in 2004, $1.9 in 2003 and $1.4 in 2002. We
also recorded a settlement loss of $1.5 in 2004 associated with these plans.

DEFINED CONTRIBUTION PLANS. We sponsor 401(k) savings plans for eligible
employees of UGI, UGI Utilities, AmeriGas Propane, HVAC/R and certain of UGI's
other wholly owned domestic subsidiaries. Generally, participants in these plans
may contribute a portion of their compensation on either a before-tax basis, or
on both a before-tax and after-tax basis. These plans also provide for either
mandatory or discretionary employer matching contributions at various rates. The
cost of benefits under the savings plans totaled $8.2 in 2004, $7.3 in 2003 and
$4.5 in 2002.

NOTE 7 - INVENTORIES

Inventories comprise the following at September 30:

                                              2004            2003
                                              ----            ----
                                                     
Propane and other LPG                       $    92.1      $   53.8
Utility fuel and gases                           69.8          54.6
Materials, supplies and other                    36.5          28.2
                                            ---------      --------
Total inventories                           $   198.4      $  136.6
                                            ---------      --------

44

                                              UGI Corporation 2004 Annual Report

NOTE 8 - SERIES PREFERRED STOCK

UGI has 5,000,000 shares of UGI Series Preferred Stock, including both series
subject to and series not subject to mandatory redemption, authorized for
issuance. We had no shares of UGI Series Preferred Stock outstanding at
September 30, 2004 or 2003.

      UGI Utilities has 2,000,000 shares of UGI Utilities Series Preferred
Stock, including both series subject to and series not subject to mandatory
redemption, 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. We have paid cash
dividends at the specified annual rates on all outstanding UGI Utilities Series
Preferred Stock.

      At September 30, 2004 and 2003, UGI Utilities had outstanding 200,000
shares of $7.75 Series Cumulative Preferred Stock. UGI Utilities' redeemed all
200,000 shares of the $7.75 UGI Utilities Series Cumulative Preferred Stock on
October 1, 2004 at a price of $100 per share together with full cumulative
dividends. The redemption was funded with proceeds from the October 2004
issuance of $20 of 6.13% Medium-Term Notes due October 2034.

NOTE 9 - COMMON STOCK AND INCENTIVE STOCK AWARD PLANS

In March 2004, UGI Corporation sold 7.5 million shares of common stock in an
underwritten public offering at a public offering price of $32.10 per share.
During April 2004, the underwriters exercised a portion of their overallotment
option for the purchase of an additional 0.3 million shares. As mentioned in
Note 3, the proceeds of the public offering of approximately $239 were used
primarily to fund a portion of the purchase price of the remaining ownership
interests in AGZ.

      Common Stock share activity for 2002, 2003, and 2004 follows:

                                     Issued      Treasury   Outstanding
                                     ------      --------   -----------
                                                   
Balance September 30, 2001         49,798,097   (8,853,501) 40,944,596
Issued:
   Employee and director plans              -      482,794     482,794
   Dividend reinvestment plan               -      130,593     130,593
Reacquired                                  -       (5,388)     (5,388)
                                   ----------   ----------  ----------
Balance September 30, 2002         49,798,097   (8,245,502) 41,552,595
Issued:
   Employee and director plans              -    1,050,921   1,050,921
   Dividend reinvestment plan               -       97,665      97,665
Reacquired                                  -       (1,823)     (1,823)
                                   ----------   ----------  ----------
Balance September 30, 2003         49,798,097   (7,098,739) 42,699,358
Issued:
   Public offering                  7,778,400            -   7,778,400
   Employee and director plans              -      653,250     653,250
   Dividend reinvestment plan               -       80,190      80,190
                                   ----------   ----------  ----------
Balance September 30, 2004         57,576,497   (6,365,299) 51,211,198
                                   ----------   ----------  ----------

STOCK OPTION AND INCENTIVE PLANS. Under UGI's current equity compensation plans,
we may grant options to acquire shares of Common Stock, or issue stock-based
awards ("Units") to key employees and non-employee directors. The exercise price
for options may not be less than the fair market value on the grant date. Grants
of stock options or Units may vest immediately or ratably over a period of
years, and stock options generally can be exercised no later than ten years from
the grant date.

      Under the 2004 Omnibus Equity Compensation Plan ("OECP"), awards
representing up to 3,500,000 shares of Common Stock may be granted. The maximum
number of shares that may be issued pursuant to grants other than stock options
or dividend equivalents is 800,000 shares. In addition, the OECP provides that
both option grants and Units may provide for the crediting of Common Stock
dividend equivalents to participants' accounts. Dividend equivalents on employee
awards will be paid in cash, and such payments may, at the participants'
request, be deferred. Dividend equivalents on non-employee director awards are
paid in additional Common Stock Units. Stock-based awards may be settled, at the
option of the Company, in shares of Common Stock, cash, or a combination of
Common Stock and cash. The actual number of shares (or their cash equivalent)
ultimately issued, and the actual amount of dividend equivalents paid, is
generally dependent upon the achievement of objective performance goals. During
2004, 2003 and 2002, the Company made stock-based awards other than stock
options and dividend equivalents representing 134,300, 81,750, and 254,250
shares, respectively. At September 30, 2004, awards representing 447,100 shares
of Common Stock were outstanding under our equity compensation plans. There are
outstanding stock-based awards and stock options under a number of plans,
however, no further awards will be made under any plan other than the OECP.

      Stock option transactions under all of our plans for 2002, 2003, and 2004
follow:

                                             Shares     Average Option Price
                                             ------     --------------------
                                                  
Shares under option - September 30, 2001    2,553,357          14.214
Granted                                       714,375          20.470
Exercised                                    (437,967)         14.019
                                            ---------          ------
Shares under option - September 30, 2002    2,829,765          15.857
                                            ---------          ------
Granted                                       694,500          25.179
Exercised                                    (997,526)         14.681
Forfeited                                     (44,250)         22.725
                                            ---------          ------
Shares under option - September 30, 2003    2,482,489          18.818
                                            ---------          ------
Granted                                       747,250          33.637
Exercised                                    (521,026)         15.783
Forfeited                                     (44,250)         25.707
                                            ---------          ------
Shares under option - September 30, 2004    2,664,463          23.414
                                            ---------          ------
Options exercisable 2002                    1,706,889          14.515
Options exercisable 2003                    1,428,987          15.454
Options exercisable 2004                    1,359,335          18.020
                                            ---------          ------

                                                                              45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

Note 9 continued

      The following table presents additional information relating to stock
options outstanding and exercisable at September 30, 2004:

                                                   Range of exercise prices
                                             --------------------------------------
                                                                 
                                            $13.58-20.40               $20.41-36.45
                                            ============               ============
Options outstanding at September 30, 2004:
   Number of options                           1,274,338                  1,390,125
   Weighted average remaining
     contractual life (in years)                    5.85                       8.74
   Weighted average exercise price          $      16.74               $      29.53
Options exercisable at September 30, 2004:
   Number of options                           1,091,585                    267,750
   Weighted average exercise price          $      16.13               $      25.70
                                            ------------               ------------

      At September 30, 2004, 2,508,796 shares of Common Stock were available for
future grants under the OECP, of which up to 547,546 may be issued pursuant to
grants other than stock options or dividend equivalents.

OTHER EQUITY-BASED COMPENSATION PLANS AND AWARDS. Under the AmeriGas Propane,
Inc. 2000 Long-Term Incentive Plan ("2000 Propane Plan"), the General Partner
may grant to key employees the right to receive a total of 500,000 AmeriGas
Partners Common Units, or cash equivalent to the fair market value of such
Common Units, upon the achievement of performance goals. In addition, the 2000
Propane Plan may provide for the crediting of Partnership Common Unit
distribution equivalents to participants' accounts. Distribution equivalents
will be paid in cash and such payments may, at the participants' request, be
deferred. The actual number of Common Units (or their cash equivalent)
ultimately issued, and the actual amount of distribution equivalents paid, is
dependent upon the achievement of performance goals. Generally, each grant,
unless paid, will terminate when the participant ceases to be employed by the
General Partner. We also have a nonexecutive Common Unit plan under which the
General Partner may grant awards of up to a total of 200,000 Common Units to key
employees who do not participate in the 2000 Propane Plan. Generally, awards
under the nonexecutive plan vest at the end of a three-year period and will be
paid in Common Units and cash. The General Partner made awards under the 2000
Propane Plan and the nonexecutive plan representing 51,200, 112,500 and 43,250
Common Units in 2004, 2003 and 2002, respectively. At September 30, 2004 and
2003, awards representing 142,786 and 209,336 Common Units, respectively, were
outstanding.

FAIR VALUE INFORMATION. The per share weighted-average fair value of stock
options granted under our option plans was $3.77 in 2004, $2.60 in 2003 and
$3.27 in 2002. 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 we used for option grants during 2004, 2003 and 2002 are
as follows:

                               2004       2003        2002
                               ----       ----        ----
                                           
Expected life of option       6 years    6 years    6 years
Expected volatility            18.2%      21.6%      28.8%
Expected dividend yield         4.9%       6.1%       6.7%
Risk free interest rate         3.7%       3.1%       4.7%
                              -----      -----      -----

STOCK OWNERSHIP POLICY. Under the terms of our Stock Ownership Policy,
executives and certain key employees are required to own UGI Common Stock in
amounts ranging from 3,000 to 150,000 shares. Prior to the enactment of the
Sarbanes-Oxley Act of 2002, we offered full recourse, interest-bearing loans to
employees in order to assist them in meeting the ownership requirements. Each
loan may not exceed ten years and is collateralized by the Common Stock
purchased. At September 30, 2004 and 2003, loans outstanding totaled $0.2 and
$0.4, respectively. The Company is not currently offering loans under this
program.

NOTE 10 - PREFERENCE STOCK PURCHASE RIGHTS

Holders of our Common Stock own one-third of one right (as described below) for
each outstanding share of Common Stock. The rights expire in 2006. 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 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:

      1.    acquires 20% or more of our Common Stock ("Acquiring Person") or

      2.    announces or commences a tender offer for 30% or more of our Common
            Stock.

      We are entitled to redeem the rights at five cents per right at any time
before the earlier of:

      1.    the expiration of the rights in April 2006 or

      2.    ten days after a person or group has acquired 20% of our Common
            Stock if a majority of continuing Directors concur and, in certain
            circumstances, thereafter.

      Each holder of a right, other than an Acquiring Person, 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 if:

      1.    an Acquiring Person merges with UGI or engages in certain other
            transactions with us or

      2.    a person acquires 40% or more of our Common Stock.

      In addition, if, after UGI (or an Acquiring Person) publicly announces
that an Acquiring Person has become such, UGI engages in a merger or other
business combination transaction in which:

      1.    we are not the surviving corporation, or

      2.    we are the surviving corporation, but our Common Stock is changed or
            exchanged, or

46

                                              UGI Corporation 2004 Annual Report

      3.    50% or more of our assets or earning power is sold or transferred,
            then 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 our earnings.

NOTE  11 - PARTNERSHIP DISTRIBUTIONS

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

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

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

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

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

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

NOTE 12 - COMMITMENTS AND CONTINGENCIES

We lease various buildings and other facilities and transportation, computer,
and office equipment under operating leases. Certain of our leases contain
renewal and purchase options and also contain step-rent provisions. Our
aggregate rental expense for such leases was $50.4 in 2004, $47.4 in 2003 and
$46.5 in 2002.

      Minimum future payments under operating leases that have initial or
remaining noncancelable terms in excess of one year are as follows:

                                                                 After
                            2005    2006   2007   2008   2009    2009
                            ----    ----   ----   ----   ----    ----
                                              
AmeriGas Propane           $39.3   $33.2  $28.2  $23.9  $19.6   $45.1
UGI Utilities                3.5     3.1    2.6    1.8    0.9     2.9
International Propane
   and other                 3.7     3.4    3.2    3.0    2.2     2.2
                           -----   -----  -----  -----  -----   -----
Total                      $46.5   $39.7  $34.0  $28.7  $22.7   $50.2
                           -----   -----  -----  -----  -----   -----

      Gas Utility has gas supply agreements with producers and marketers with
terms not exceeding one year. Gas Utility also has agreements for firm pipeline
transportation and natural gas storage services, which Gas Utility may terminate
at various dates through 2016. Gas Utility's costs associated with
transportation and storage capacity agreements are included in its annual PGC
filing with the PUC and are recoverable through PGC rates. In addition, Gas
Utility has short-term gas supply agreements which permit it to purchase certain
of its gas supply needs on a firm or interruptible basis at spot-market prices.

      Electric Utility purchases its capacity requirements and electric energy
needs under contracts with various suppliers and on the spot market. Contracts
with producers for capacity and energy needs expire at various dates through
fiscal 2008.

      Energy Services enters into fixed price contracts with suppliers to
purchase natural gas to meet its sales commitments. Generally, these contracts
have terms of less than two years.

      The Partnership enters into fixed price contracts to purchase a portion of
its supply requirements. These contracts generally have terms of less than one
year.

      The following table presents contractual obligations under Gas Utility,
Electric Utility, Energy Services, AmeriGas Propane and International Propane
supply, storage and service contracts existing at September 30, 2004:

                                                                               After
                                         2005    2006    2007   2008   2009    2009
                                         ----    ----    ----   ----   ----    ----
                                                            
Gas Utility and Electric
   Utility supply, storage and
   transportation contracts             $188.5  $100.6  $ 80.7  $60.6  $51.7  $116.3
Energy Services supply contracts         449.4    59.6     1.6      -      -       -
AmeriGas Propane supply contracts         12.8       -       -      -      -       -
International Propane supply contracts   109.4   109.4    52.2      -      -       -
                                        ------  ------  ------  -----  -----  ------
Total                                   $760.1  $269.6  $134.5  $60.6  $51.7  $116.3
                                        ------  ------  ------  -----  -----  ------

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

      The Partnership has succeeded to certain lease guarantee obligations of
Petrolane relating to Petrolane's divestiture of non-propane operations before
its 1989 acquisition by QFB Partners. Future lease payments under these leases
total approximately $12 at September 30, 2004. The leases expire through 2010
and some of them are currently in default. The

                                                                              47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

Note 12 continued

Partnership has succeeded to the indemnity agreement of Petrolane by which Texas
Eastern Corporation ("Texas Eastern"), a prior owner of Petrolane, agreed to
indemnify Petrolane against any liabilities arising out of the conduct of
businesses that do not relate to, and are not a part of, the propane business,
including lease guarantees. In December 1999, Texas Eastern filed for
dissolution under the Delaware General Corporation Law. PanEnergy Corporation
("PanEnergy"), Texas Eastern's sole stockholder, assumed all of Texas Eastern's
liabilities as of December 20, 2002, to the extent of the value of Texas
Eastern's assets transferred to PanEnergy as of that date (which was estimated
to exceed $94), and to the extent that such liabilities arise within ten years
from Texas Eastern's date of dissolution. Notwithstanding the dissolution
proceeding, and based on Texas Eastern previously having satisfied directly
defaulted lease obligations without the Partnership's having to honor its
guarantee, we believe that the probability that the Partnership will be required
to directly satisfy the lease obligations subject to the indemnification
agreement is remote.

      On August 21, 2001, AmeriGas Partners, through AmeriGas OLP, acquired the
propane distribution businesses of Columbia Energy Group (the "2001
Acquisition") pursuant to the terms of a purchase agreement (the "2001
Acquisition Agreement") by and among Columbia Energy Group ("CEG"), Columbia
Propane Corporation ("Columbia Propane"), Columbia Propane, L.P. ("CPLP"), CP
Holdings, Inc. ("CPH," and together with Columbia Propane and CPLP, the "Company
Parties"), AmeriGas Partners, AmeriGas OLP and the General Partner (together
with AmeriGas Partners and AmeriGas OLP, the "Buyer Parties"). As a result of
the 2001 Acquisition, AmeriGas OLP acquired all of the stock of Columbia Propane
and CPH and substantially all of the partnership interests of CPLP. Under the
terms of an earlier acquisition agreement (the "1999 Acquisition Agreement"),
the Company Parties agreed to indemnify the former general partners of National
Propane Partners, L.P. (a predecessor company of the Columbia Propane
businesses) and an affiliate (collectively, "National General Partners") against
certain income tax and other losses that they may sustain as a result of the
1999 acquisition by CPLP of National Propane Partners, L.P. (the "1999
Acquisition") or the operation of the business after the 1999 Acquisition
("National Claims"). At September 30, 2004, the potential amount payable under
this indemnity by the Company Parties was approximately $60. These indemnity
obligations will expire on the date that CPH acquires the remaining outstanding
partnership interest of CPLP, which is expected to occur on or after July 19,
2009.

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

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

      From the late 1800s through the mid-1900s, UGI Utilities and its former
subsidiaries owned and operated a number of manufactured gas plants ("MGPs")
prior to the general availability of natural gas. Some constituents of coal tars
and other residues of the manufactured gas process are today considered
hazardous substances under the Superfund Law and may be present on the sites of
former MGPs. Between 1882 and 1953, UGI Utilities owned the stock of subsidiary
gas companies in Pennsylvania and elsewhere and also operated the businesses of
some gas companies under agreement. Pursuant to the requirements of the Public
Utility Holding Company Act of 1935, UGI Utilities divested all of its utility
operations other than those which now constitute Gas Utility and Electric
Utility.

      UGI Utilities does not expect its costs for investigation and remediation
of hazardous substances at Pennsylvania MGP sites to be material to its results
of operations because Gas Utility is currently permitted to include in rates,
through future base rate proceedings, prudently incurred remediation costs
associated with such sites. UGI Utilities has been notified of several sites
outside Pennsylvania on which private parties allege MGPs were formerly owned or
operated by it or owned or operated by its former subsidiaries. Such parties are
investigating the extent of environmental contamination or performing
environmental remediation. UGI Utilities is currently litigating three claims
against it relating to out-of-state sites. We 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.

      Management believes that under applicable law UGI Utilities should not be
liable in those instances in which a former subsidiary owned or operated an MGP.
There could be, however, significant

48

                                              UGI Corporation 2004 Annual Report

future costs of an uncertain amount associated with environmental damage caused
by MGPs outside Pennsylvania that UGI Utilities directly operated, or that were
owned or operated by former subsidiaries of UGI Utilities, if a court were to
conclude that (1) the subsidiary's separate corporate form should be disregarded
or (2) UGI Utilities should be considered to have been an operator because of
its conduct with respect to its subsidiary's MGP.

      In April 2003, Citizens Communications Company ("Citizens") served a
complaint naming UGI Utilities as a third-party defendant in a civil action
pending in United States District Court for the District of Maine. In that
action, the plaintiff, City of Bangor, Maine ("City"), sued Citizens to recover
environmental response costs associated with MGP wastes generated at a plant
allegedly operated by Citizens' predecessors at a site on the Penobscot River.
Citizens subsequently joined UGI Utilities and ten other third party defendants
alleging that the third-party defendants are responsible for an equitable share
of costs Citizens may be required to pay to the City for cleaning up tar
deposits in the Penobscot River. The City believes that it could cost as much as
$50 to clean up the river. UGI Utilities believes that it has good defenses to
the claim and is defending the suit.

      By letter dated July 29, 2003, Atlanta Gas Light Company ("AGL") served
UGI Utilities with a complaint filed in the United States District Court for the
Middle District of Florida in which AGL alleges that UGI Utilities is
responsible for 20% of approximately $8 incurred by AGL in the investigation and
remediation of a former MGP site in St. Augustine, Florida. UGI Utilities
formerly owned stock of the St. Augustine Gas Company, the owner and operator of
the MGP. UGI Utilities believes that it has good defenses to the claim and is
defending the suit.

      AGL previously informed UGI Utilities that it was investigating
contamination that appeared to be related to MGP operations at a site owned by
AGL in Savannah, Georgia. A former subsidiary of UGI Utilities operated the MGP
in the early 1900s. AGL has recently informed UGI Utilities that it has begun
remediation of MGP wastes at the site and believes that the total cost of
remediation could be as high as $55. AGL has not filed suit against UGI
Utilities for a share of these costs. UGI Utilities believes that it will have
good defenses to any action that may arise out of this site.

      On September 20, 2001, Consolidated Edison Company of New York ("ConEd")
filed suit against UGI Utilities in the United States District Court for the
Southern District of New York, seeking contribution from UGI Utilities for an
allocated share of response costs associated with investigating and assessing
gas plant related contamination at former MGP sites in Westchester County, New
York. The complaint alleges that UGI Utilities "owned and operated" the MGPs
prior to 1904. The complaint also seeks a declaration that UGI Utilities is
responsible for an allocated percentage of future investigative and remedial
costs at the sites. ConEd believes that the cost of remediation for all of the
sites could exceed $70. By orders issued in November 2003 and March 2004, the
court granted UGI Utilities' motion for summary judgment and dismissed ConEd's
complaint. ConEd has appealed.

      By letter dated June 24, 2004, KeySpan Energy ("KeySpan") informed UGI
Utilities that KeySpan has spent $2.3 and expects to spend another $11 to clean
up an MGP site it owns in Sag Harbor, New York. KeySpan believes that UGI
Utilities is responsible for approximately 50% of these costs as a result of UGI
Utilities' alleged direct ownership and operation of the plant from 1885 to
1902. UGI Utilities is in the process of reviewing the information provided by
KeySpan and is investigating this claim.

      By letter dated August 5, 2004, Yankee Gas Services Company and
Connecticut Light and Power Company, subsidiaries of Northeast Utilities,
(together, the "Northeast Companies"), demanded contribution from UGI Utilities
for past and future remediation costs related to MGP operations on thirteen
sites owned by the Northeast Companies in nine cities in the State of
Connecticut. The Northeast Companies allege that UGI Utilities controlled
operations of the plants from 1883 to 1941. According to the letter,
investigation and remedial costs at the sites to date total approximately $10
and complete remediation costs for all sites could total $182. The Northeast
Companies seek an unspecified fair and equitable allocation of these costs to
UGI Utilities. UGI Utilities is in the process of reviewing the information
provided by Northeast Companies and is investigating this claim.

      Antargaz has filed suit against the French tax authorities in connection
with the assessment of business tax related to the tax treatment of Antargaz
owned tanks at customer locations used to store LPG. Antargaz has recorded a
liability for the business tax relating to tanks for the period from January 1,
1997 through September 30, 2004 of approximately E 28.4 ($35.3). Elf Antar
France, now Total France, and Elf Aquitaine, former owners of Antargaz, agreed
to indemnify Antargaz for all payments which would have been due from Antargaz
in respect of the business tax related to its tanks for the period from January
1, 1997 through December 31, 2000. In March 2004, the local court rendered a
decision against Antargaz which resulted in a E 1.7 ($2.1) assessment by the
tax assessor relating to the business tax at certain sites in the pending suit.
Antargaz paid this assessment and was fully reimbursed in April 2004 for this
assessment pursuant to the indemnity agreement. Antargaz is appealing the
assessment. As of September 30, 2004, the indemnity from the former owners
represents approximately E 9.4 ($11.7) of the business tax liability.

      In addition to these matters, there are other pending claims and legal
actions arising in the normal course of our businesses. We cannot predict with
certainty the final results of environmental and other matters. However, it is
reasonably possible that some of them could be resolved unfavorably to us.

      Although we currently believe, after consultation with counsel, that
damages or settlements, if any, recovered by the plaintiffs in such claims or
actions will not have a material adverse effect on our financial position,
damages or settlements could be material to our operating results or cash flows
in future periods depending on the nature and timing of future developments with
respect to these matters and the amounts of future operating results and cash
flows.

                                                                              49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

NOTE 13 - FINANCIAL INSTRUMENTS

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

      FLAGA also uses derivative instruments, principally price swap contracts,
to reduce market risk associated with purchases of LPG. These contracts may or
may not qualify for hedge accounting under SFAS 133.

      In future periods Antargaz may use derivative instruments, including
forward foreign exchange contracts and other instruments similar to those used
by the Partnership, to manage the cost of a portion of its forecasted purchases
of LPG.

      Energy Services uses exchange-traded natural gas futures contracts to
manage market risk associated with forecasted purchases of natural gas it sells
under firm commitments. These derivative instruments are designated as cash flow
hedges. The fair values of these futures contracts are affected by changes in
natural gas prices.

      In accordance with its commodity hedging policy, Gas Utility may enter
into natural gas call option contracts to reduce volatility in the cost of gas
it purchases for its firm-residential, commercial and industrial ("retail
core-market") customers and the Electric Utility may enter into electric swap
agreements in order to reduce the volatility in the cost of anticipated
electricity requirements. Because the cost of the natural gas option contracts
and any associated gains will be included in Gas Utility's PGC recovery
mechanism, as these contracts are marked to fair value in accordance with SFAS
133, any gains are deferred for future recovery from or refund to Gas Utility's
ratepayers.

      UGI Utilities is a party to a number of contracts that have elements of a
derivative instrument. These contracts include, among others, binding purchase
orders, contracts which provide for the purchase and delivery of natural gas and
electricity, and service contracts that require the counterparty to provide
commodity storage, transportation or capacity service to meet our normal sales
commitments. Although many of these contracts have the requisite elements of a
derivative instrument, these contracts are not subject to the accounting
requirements of SFAS 133 because they provide for the delivery of products or
services in quantities that are expected to be used in the normal course of
operating our business or the value of the contract is directly associated with
the price or value of a service.

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

      Antargaz has entered into interest rate swap agreements to fix the
variable interest rates on a portion of the Senior Facilities term loan through
June 2005. Antargaz may enter into additional interest rate swap agreements in
order to fix interest rates over additional periods.

      During the year ended September 30, 2004, 2003 and 2002, the net pre-tax
loss recognized in earnings representing cash flow hedge ineffectiveness was
$1.5, $3.1 and $2.1, respectively.

      Gains and losses included in accumulated other comprehensive income at
September 30, 2004 relating to cash flow hedges will be reclassified into (1)
cost of sales when the forecasted purchase of propane, natural gas or
electricity subject to the hedges impacts net income and (2) interest expense
when interest on anticipated issuances of fixed-rate long-term debt is reflected
in net income. Included in accumulated other comprehensive income at September
30, 2004 are net after-tax losses of approximately $3.9 from IRPAs associated
with forecasted issuances of debt generally anticipated to occur during the next
two years and settled IRPAs. The amount of this net loss which is expected to be
reclassified into net income during the next twelve months is not material. Also
included in accumulated other comprehensive income at September 30, 2004 are net
after-tax gains of approximately $10.7 principally associated with future
purchases of natural gas and propane generally anticipated to occur during the
next twelve months and net after-tax gains of approximately $1.1 associated with
future electric supply purchases expected to occur in fiscal 2007. The actual
amount of gains or losses on unsettled derivative instruments that ultimately is
reclassified into net income will depend upon the value of such derivative
contracts when settled. The fair value of derivative instruments is included in
other current assets, other assets, other current liabilities and other
noncurrent liabilities in the Consolidated Balance Sheets.

      The primary currency for which the Company has exchange rate risk is the
U.S. dollar versus the euro. The U.S. dollar value of our foreign-denominated
assets and liabilities will fluctuate with changes in the associated foreign
currency exchange rates. From time to time, the Company may use derivative
instruments to hedge portions of its net investments in foreign subsidiaries. If
a derivative is designated as a hedge of an investment in a foreign subsidiary
and qualifies for hedge accounting, any realized gains or losses remain in other
comprehensive income until such foreign operations have been liquidated. At
September 30, 2004, a net after-tax loss of $0.6 is included in accumulated
other comprehensive income associated with a settled net investment hedge.

      The carrying amounts of financial instruments included in current assets
and current liabilities (excluding unsettled derivative instruments and current
maturities of long-term debt)

50

                                              UGI Corporation 2004 Annual Report

approximate their fair values because of their short-term nature. The carrying
amounts and estimated fair values of our remaining financial instruments
(including unsettled derivative instruments) at September 30 are as follows:

                                                 Carrying      Estimated
                                                  Amount       Fair Value
                                                  ------       ----------
                                                         
2004:
   Natural gas futures and options contracts    $      4.8     $      4.8
   Electric supply swap                                2.0            2.0
   Propane swap and option contracts                  13.1           13.1
   Interest rate protection agreements                (2.8)          (2.8)
   Long-term debt                                  1,670.1        1,817.1
   UGI Utilities preferred shares subject to
     mandatory redemption                             20.0           20.0
2003:
   Natural gas futures and options contracts    $      1.1     $      1.1
   Propane swap and option contracts                  (0.6)          (0.6)
   Interest rate protection agreements                 0.2            0.2
   Long-term debt                                  1,223.5        1,337.7
   UGI Utilities preferred shares subject to
     mandatory redemption                             20.0           20.9
                                                ----------     ----------

      We estimate the fair value of long-term debt by using current market
prices and by discounting future cash flows using rates available for similar
type debt. The estimated fair value of UGI Utilities preferred shares subject to
mandatory redemption is based on the fair value of redeemable preferred stock
with similar credit ratings and redemption features. On October 1, 2004 all
200,000 shares of UGI Utilities' $7.75 preferred shares subject to mandatory
redemption were redeemed at a price of $100 per share together with full
cumulative dividends. Fair values of derivative instruments reflect the
estimated amounts that we would receive or pay to terminate the contracts at the
reporting date based upon quoted market prices of comparable contracts at
September 30, 2004 and 2003.

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

NOTE 14 - ENERGY SERVICES ACCOUNTS RECEIVABLE SECURITIZATION FACILITY

Energy Services has a $150 receivables purchase facility ("Receivables
Facility") with an issuer of receivables-backed commercial paper expiring in
August 2007, although the Receivables Facility may terminate prior to such date
due to the termination of the commitments of the Receivables Facility's back-up
purchasers. Under the Receivables Facility, Energy Services transfers, on an
ongoing basis and without recourse, its trade accounts receivable to its wholly
owned, special purpose subsidiary, Energy Services Funding Corporation ("ESFC"),
which is consolidated for financial statement purposes. ESFC, in turn, has sold,
and subject to certain conditions, may from time to time sell, an undivided
interest in the receivables to a commercial paper conduit of a major bank. The
maximum level of funding available at any one time from this facility is $150.
The proceeds of these sales are less than the face amount of the accounts
receivable sold by an amount that approximates the purchaser's financing cost of
issuing its own receivables-backed commercial paper. ESFC was created and has
been structured to isolate its assets from creditors of Energy Services and its
affiliates, including UGI. This two-step transaction is accounted for as a sale
of receivables following the provisions of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
Energy Services continues to service, administer and collect trade receivables
on behalf of the commercial paper issuer and ESFC.

      During 2004 and 2003, Energy Services sold trade receivables totaling
$949.6 and $651.3, respectively, to ESFC. During 2004 and 2003, ESFC sold an
aggregate $246.0 and $196.0, respectively, of undivided interests in its trade
receivables to the commercial paper conduit. At September 30, 2004, the
outstanding balance of ESFC trade receivables was $63.4 of which no amount was
sold to the commercial paper conduit. At September 30, 2003, there were $38.5 of
ESFC trade receivables outstanding which amount was net of $17 in trade
receivables sold to the commercial paper conduit. Losses on sales of receivables
to the commercial paper conduit that occurred during the years ended September
30, 2004 and 2003, which losses are included in other income, net, were $0.4 and
$0.3, respectively.

      In addition, a major bank has committed to issue up to $50 of standby
letters of credit, secured by cash or marketable securities ("LC Facility").
Energy Services expects to fund the collateral requirements with borrowings
under its Receivables Facility. The LC Facility expires April 2005.

NOTE 15 - OTHER INCOME, NET Other income, net, comprises the following:

                                         2004        2003        2002
                                         ----        ----        ----
                                                      
Interest and interest-related income   $  (3.2)    $  (6.6)    $  (5.3)
Utility non-tariff service income         (2.0)       (5.7)       (5.7)
Gain on sales of fixed assets             (0.1)       (1.6)       (1.6)
Pension income                               -        (1.1)       (4.0)
Foreign currency hedge loss                9.1           -           -
Finance charges                           (6.5)       (3.9)       (2.2)
Other                                     (6.1)       (0.9)        0.7
                                       -------     -------     -------
Total other income, net                $  (8.8)    $ (19.8)    $ (18.1)
                                       -------     -------     -------

                                                                              51

                                              UGI Corporation 2004 Annual Report

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

NOTE 16 - CONVERSION OF AMERIGAS PARTNERS SUBORDINATED UNITS AND COMMON UNIT
ISSUANCE

In December 2002, the General Partner determined that the cash-based performance
and distribution requirements for the conversion of the then-remaining 9,891,072
Subordinated Units of AmeriGas Partners, all of which were held by the General
Partner, had been met in respect of the quarter ended September 30, 2002. As a
result, in accordance with the Second Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, L.P., the Subordinated Units were converted to
an equivalent number of Common Units effective November 18, 2002. Concurrent
with the Subordinated Unit conversion, the Company recorded a $157.0 increase in
common stockholders' equity, and a corresponding decrease in minority interests
in AmeriGas Partners, associated with gains from sales of Common Units by
AmeriGas Partners in conjunction with, and subsequent to, the Partnership's
April 19, 1995 initial public offering. These gains were determined in
accordance with the guidance in SEC Staff Accounting Bulletin No. 51,
"Accounting for Sales of Common Stock by a Subsidiary" ("SAB 51"). The gains
resulted because the public offering prices of the AmeriGas Partners Common
Units exceeded the associated carrying amount of our investment in the
Partnership on the dates of their sale. Due to the preference nature of the
Common Units, the Company was precluded from recording these gains until the
Subordinated Units converted to Common Units. The changes to the Company's
balance sheet resulting from the Subordinated Unit conversion had no effect on
the Company's net income or cash flow and did not result in an increase in the
number of AmeriGas Partners limited partner units outstanding. On June 17, 2003,
AmeriGas Partners sold 2,900,000 Common Units in an underwritten public offering
at a public offering price of $27.12 per unit. The net proceeds of the public
offering totaling $75.0 and associated capital contributions from the General
Partner totaling $1.5, were contributed to AmeriGas OLP and used to reduce
indebtedness under its bank credit agreement and for general partnership
purposes. The underwriters' overallotment option expired unexercised. Concurrent
with this sale of Common Units, the Company recorded a gain in the amount of
$22.6 which is reflected in the Company's balance sheet as an increase in common
stockholders' equity in accordance with the guidance in SAB 51. The gain had no
effect on the Company's net income or cash flow. Total deferred income tax
liabilities of $70.7 associated with these gains were recorded with a
corresponding decrease in common stockholders' equity and reflected in the
restated Consolidated Balance Sheet at September 30, 2003.

      On May 26, 2004, AmeriGas Partners sold 2,000,000 Common Units in an
underwritten public offering at a public offering price of $25.61 per unit. On
June 10, 2004, the underwriters partially exercised their overallotment option
in the amount of 100,000 Common Units. The net proceeds of the public offering
totaling $51.2 and associated capital contributions from the General Partner
totaling $1.0 were contributed to AmeriGas OLP and used to reduce indebtedness
under its bank credit agreement and for general partnership purposes.

Concurrent with this sale of Common Units, the Company recorded a gain in the
amount of $12.2 which is reflected in the Company's balance sheet as an increase
in common stockholders' equity in accordance with the guidance in SAB 51.
Deferred income tax liabilities of $6.6 associated with this gain with a
corresponding decrease in common stockholders' equity were recorded and
reflected in the Consolidated Balance Sheet. The gain had no effect on the
Company's net income or cash flow.

NOTE 17 - INVESTMENTS IN EQUITY INVESTEES

Our principal investments accounted for using the equity method and our
approximate percentage ownership interest in each at September 30, 2004 and 2003
are as follows:

Company                                  2004                      2003
- -------                                  ----                      ----
                                                            
Atlantic Energy                         50.0%(a)                  50.0%
AGZ                                    100.0%(b)                  19.5%
China Gas Partners                      50.0%                     50.0%
Hunlock Creek Energy Ventures           50.0%                     50.0%
Geovexin                                44.9%                      N/A

(a) In November 2004, a subsidiary of Energy Services acquired 100% of Atlantic
Energy, (see Note 3).

(b) Prior to the Antargaz Acquisition on March 31, 2004, we accounted for our
19.5% ownership interest in AGZ under the equity method. Effective with our 100%
ownership, we discontinued the equity method and began reflecting all of AGZ's
operations on a consolidated basis beginning April 1, 2004.

      Income from our equity investees comprises the following:

                                           2004       2003        2002
                                           ----       ----        ----
                                                       
Equity in income of equity investees     $  11.3    $   5.3     $   6.0
Interest income on AGZ Bonds                   -          -         0.9
Currency gain from redemption of
   AGZ Bonds                                   -          -         1.6
                                         -------    -------     -------
Total                                    $  11.3    $   5.3     $   8.5
                                         -------    -------     -------

      Undistributed net earnings of our equity investees included in
consolidated retained earnings were $0.5 and $3.3 at September 30, 2004 and
2003, respectively.

      On March 27, 2001, UGI France, a wholly owned indirect subsidiary of
Enterprises, together with Paribas Affaires Industrielles ("PAI") and Medit
acquired, through AGZ, the stock and certain related

52

                                              UGI Corporation 2004 Annual Report

assets of Antargaz, formerly Elf Antargaz. Under the terms of the Shareholders'
Funding Agreement among UGI France, PAI and Medit, we acquired an approximate
19.5% equity interest in AGZ; PAI an approximate 68.1% interest; Medit an
approximate 9.7% interest; and certain members of management of AGZ an
approximate 2.7% interest. PAI is a leading private equity fund manager in
Europe and an affiliate of BNP Paribas, one of Europe's largest commercial and
investment banks. Medit is a supplier of logistics services to the liquefied
petroleum gas industry in Europe, primarily Italy.

      Pursuant to the Shareholders' Funding Agreement, on March 27, 2001, UGI
France made a E29.8 ($26.6) investment comprising a E9.8 investment in shares of
AGZ and a E20.0 investment in redeemable bonds of AGZ ("AGZ Bonds"). In July
2003, the Company received a dividend of E5.0 ($5.6) from AGZ. In July 2002, the
Company received $19.3 in cash from AGZ in repayment of E18 face value ($17.7)
of AGZ Bonds, representing 90% of such bonds held by the Company, plus accrued
interest. This repayment was funded from the proceeds of the High Yield Bonds.
Concurrent with the repayment, the remaining E2.0 (10%) investment in AGZ Bonds
was redeemed in the form of additional shares of AGZ. After these transactions,
the Company continued to hold an approximate 19.5% equity investment in shares
of AGZ. As a result of the redemption of AGZ Bonds, we recorded a pretax
currency transaction gain of $1.6 which is included in income from equity
investees in the 2002 Consolidated Statement of Income. Because we believed we
had significant influence over operating and financial policies of AGZ due, in
part, to our membership on its Board of Directors, our investment in AGZ was
accounted for by the equity method prior to our acquisition of the remaining
80.5% ownership interests in AGZ.

      Summarized financial information for AGZ, prior to the Antargaz
Acquisition, follows:

                                              2003            2002
                                              ----            ----
                                                     
STATEMENT OF INCOME DATA:
Revenues                                   $    698.4      $   534.8
                                           ----------      ---------
Operating income                           $     96.7      $    79.4
Interest, net                                   (37.7)         (27.9)
                                           ----------      ---------
Income before income taxes                 $     59.0      $    51.5
Income taxes                               $    (24.4)     $   (20.7)
Net income                                 $     32.7      $    29.9
                                           ----------      ---------
BALANCE SHEET DATA (AT SEPTEMBER 30):
Current assets                             $    196.8
Property, plant and equipment, net              321.6
Goodwill                                        443.8
Other assets                                    106.2
                                           ----------
   Total assets                            $  1,068.4
                                           ----------
Current liabilities                        $    136.2
Long-term debt                                  453.9
Other liabilities                               354.8
                                           ----------
   Total liabilities                       $    944.9
                                           ----------
Equity                                     $    123.5
                                           ----------

      Summarized financial information for our other equity investments are not
presented because they are not material to our Consolidated Balance Sheets or
Consolidated Statements of Income.

NOTE 18 - QUARTERLY DATA (UNAUDITED)

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

                                        December 31,          March 31,          June 30,        September 30,
                                       2003     2002      2004       2003      2004    2003      2004    2003
                                       ----     ----      ----       ----      ----    ----      ----    ----
                                                                                
Revenues                             $ 893.7  $ 739.9  $ 1,316.6  $ 1,135.9  $ 823.4  $ 623.1  $ 751.0  $527.2
Operating income                     $ 108.3  $ 107.4  $   181.6  $   184.4  $  33.9  $   8.4  $   7.5  $  2.1
Income (loss) from equity investees  $   4.2  $   1.9  $     8.4  $     5.0  $  (0.6) $   0.2  $  (0.7) $ (1.8)
Net income (loss)                    $  38.8  $  36.7  $    67.1  $    69.8  $   8.3  $  (2.0) $  (2.6) $ (5.6)
Earnings (loss) per share:
   Basic                             $  0.91  $  0.88  $    1.51  $    1.66  $  0.16  $ (0.05) $ (0.05) $(0.13)
   Diluted                           $  0.88  $  0.86  $    1.48  $    1.62  $  0.16  $ (0.05) $ (0.05) $(0.13)
                                     -------  -------  ---------  ---------  -------  -------  -------  ------

                                                                              53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars and euros, except per share amounts and where indicated
otherwise)

NOTE 19 - SEGMENT INFORMATION

      We have organized our business units into six reportable segments
generally based upon products sold, geographic location (domestic or
international) or regulatory environment. Our reportable segments are: (1)
AmeriGas Propane; (2) an international LPG segment comprising Antargaz; (3) an
international LPG segment comprising FLAGA and our international propane equity
investment ("Other"); (4) Gas Utility; (5) Electric Utility; and (6) Energy
Services (comprising Energy Services' gas marketing business and UGID's
electricity generation business). We refer to both international segments
collectively as "International Propane."

      Effective October 1, 2003, we realigned our business units in order to
expand the energy management services available to our customers and to
strengthen our focus on power marketing. As a result of this realignment, the
operating results of UGID have been combined with those of Energy Services
rather than with Electric Utility as previously reported. We restated our
prior-year segment data to be consistent with the current period presentation.

      AmeriGas Propane derives its revenues principally from the sale of propane
and related equipment and supplies to retail customers from locations in 46
states. Our International Propane segments' revenues are derived principally
from the distribution of LPG to retail customers in France, Austria, the Czech
Republic and Slovakia. Gas Utility's revenues are derived principally from the
sale and distribution of natural gas to customers in eastern and southeastern
Pennsylvania. Electric Utility derives its revenues principally from the
distribution of electricity in two northeastern Pennsylvania counties. Energy
Services revenues are derived from the sale of natural gas and, to a lesser
extent, electricity and fuel oil and LPG to customers located primarily in the
Eastern region of the United States.

      The accounting policies of our reportable segments are the same as those
described in Note 1. We evaluate AmeriGas Propane's performance principally
based upon the Partnership's earnings before interest expense, income taxes,
depreciation and amortization ("Partnership EBITDA"). Although we use
Partnership EBITDA to evaluate AmeriGas Propane's profitability, it 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 accounting principles generally accepted in the United
States of America. The Company's definition of Partnership EBITDA may be
different from that used by other companies. We evaluate the performance of our
International Propane, Gas Utility, Electric Utility and Energy Services
segments principally based upon their income (loss) before income taxes.

      No single customer represents more than ten percent of our consolidated
revenues and there are no significant intersegment transactions. In addition,
all of our reportable segments' revenues, other than those of our International
Propane segments, are derived from sources within the United States, and all of
our reportable segments' long-lived assets, other than those of our
International Propane segments, are located in the United States.

54

                                              UGI Corporation 2004 Annual Report

Financial information by our six reportable business segments follows:

                                                                                    Reportable Segments
                                                             -----------------------------------------------------------
                                                                                                  International Propane
                                                                                                  ---------------------
                                                             AmeriGas    Gas    Electric  Energy                         Corporate &
                                       Total   Eliminations  Propane   Utility  Utility  Services  Antargaz   Other (b)  Other (c)
                                     --------  ------------  --------  -------  -------  --------  --------   ---------  -----------
                                                                                              
2004
 Revenues                            $3,784.7  $          -  $1,775.9  $ 560.4  $  89.7  $  967.2  $  270.8   $    62.6  $   58.1
 Cost of sales                       $2,526.9  $          -  $1,029.2  $ 368.9  $  43.3  $  912.2  $  106.0   $    32.0  $   35.3
 Operating income                    $  331.3  $          -  $  176.0  $  80.1  $  20.9  $   31.1  $   15.1   $     5.4  $    2.7
 Income (loss) from equity investees     11.3             -       0.7        -        -         -      10.8        (0.2)        -
 Interest expense                      (119.1)            -     (83.1)   (15.9)    (2.0)        -     (14.0)       (3.6)     (0.5)
 Minority interests                     (47.5)            -     (47.7)       -        -         -       0.1         0.1         -
                                     --------  ------------  --------  -------  -------  --------  --------   ---------  --------
 Income before income taxes          $  176.0             -  $   45.9  $  64.2  $  18.9  $   31.1  $   12.0   $     1.7  $    2.2
 Depreciation and amortization       $  132.3             -  $   80.7  $  19.5  $   3.0  $    4.0  $   18.5   $     5.5  $    1.1
 Partnership EBITDA (a)                                      $  255.9
 Total assets                        $4,235.4  $     (322.1) $1,567.9  $ 766.0  $  89.8  $  182.8  $1,344.5   $   156.2  $  450.3
 Capital expenditures                $  133.7  $          -  $   61.7  $  35.5  $   5.3  $    2.9  $   23.6   $     4.0  $    0.7
 Investments in equity investees     $   17.2  $          -  $    3.5  $     -  $     -  $    9.6  $    4.1   $       -  $      -
 Goodwill and excess reorganization
   value                             $1,245.9  $          -  $  608.2  $     -  $     -  $    2.8  $  561.6   $    68.2  $    5.1
                                     ========  ============  ========  =======  =======  ========  ========   =========  ========
2003
 Revenues                            $3,026.1  $       (2.4) $1,628.4  $ 539.9  $  88.8  $  668.0  $      -   $    54.5  $   48.9
 Cost of sales                       $1,984.3  $          -  $  910.3  $ 343.0  $  43.7  $  632.4  $      -   $    27.4  $   27.5
 Operating income                    $  302.3  $          -  $  164.5  $  96.1  $  20.3  $   19.2  $   (0.9)  $     1.6  $    1.5
 Income (loss) from equity investees      5.3             -      (0.6)       -        -         -       6.4        (0.5)        -
 Loss on extinguishments of debt         (3.0)            -      (3.0)       -        -         -         -           -         -
 Interest expense                      (109.2)            -     (87.1)   (15.4)    (2.3)        -         -        (4.1)     (0.3)
 Minority interests                     (34.6)            -     (34.6)       -        -         -         -           -         -
                                     --------  ------------  --------  -------  -------  --------  --------   ---------  --------
 Income before income taxes          $  160.8  $          -  $   39.2  $  80.7  $  18.0  $   19.2  $    5.5   $    (3.0) $    1.2
 Depreciation and amortization       $  103.0  $          -  $   74.8  $  18.1  $   3.0  $    2.2  $      -   $     3.9  $    1.0
 Partnership EBITDA (a)                                      $  234.4
 Total assets                        $2,795.2  $      (39.6) $1,518.5  $ 725.1  $  84.0  $  164.2  $      -   $   165.0  $  178.0
 Capital expenditures                $  101.4  $          -  $  53.4(d)$  37.2  $   4.1  $    1.0  $      -   $     4.5  $    1.2
 Acquisition of additional interest
   in Conemaugh Station              $   51.3  $          -  $      -  $     -  $     -  $   51.3  $      -   $       -  $      -
 Investments in equity investees     $   39.9  $          -  $    2.8  $     -  $     -  $   10.3  $   26.8   $       -  $      -
 Goodwill and excess reorganization
   value                             $  671.5  $          -  $  601.6  $     -  $     -  $    2.8  $      -   $    62.8  $    4.3
                                     ========  ============  ========  =======  =======  ========  ========   =========  ========
2002
 Revenues                            $2,213.7  $      (12.0) $1,307.9  $ 404.5  $  83.5  $  344.8  $      -   $    46.7  $   38.3
 Cost of sales                       $1,296.6  $      (10.0) $  653.1  $ 241.7  $  48.7  $  320.8  $      -   $    22.6  $   19.7
 Operating income                    $  253.3  $          -  $  145.0  $  77.1  $  11.7  $   12.6  $      -   $     3.9  $    3.0
 Income (loss) from equity investees      8.5             -       0.3        -        -         -       9.1(e)     (0.8)     (0.1)
 Loss on extinguishments of debt         (0.7)            -      (0.7)       -        -         -         -           -         -
 Interest expense                      (109.1)            -     (87.8)   (14.2)    (2.4)        -         -        (4.2)     (0.5)
 Minority interests                     (28.0)            -     (28.0)       -        -         -         -           -         -
                                     --------  ------------  --------  -------  -------  --------  --------   ---------  --------
 Income before income taxes          $  124.0  $          -  $   28.8  $  62.9  $   9.3  $   12.6  $    9.1   $    (1.1) $    2.4
 Depreciation and amortization       $   93.5  $          -  $   66.4  $  19.0  $   3.0  $    1.0  $      -   $     3.2  $    0.9
 Partnership EBITDA (a)                                      $  209.6
 Total assets                        $2,624.5  $      (34.1) $1,505.8  $ 689.1  $  89.1  $   77.1  $      -   $   141.1  $  156.4
 Capital expenditures                $   94.7  $          -  $ 53.5(d) $  31.0  $   4.6  $    1.2  $      -   $     3.9  $    0.5
 Investments in equity investees     $   35.5  $          -  $    3.4  $     -  $     -  $   10.0  $   22.1   $       -  $      -
 Goodwill and excess reorganization
   value                             $  644.9  $          -  $  589.1  $     -  $     -  $      -  $      -   $    53.1  $    2.7
                                     ========  ============  ========  =======  =======  ========  ========   =========  ========

(a)   The following table provides a reconciliation of Partnership EBITDA to
      AmeriGas Propane operating income:

Year ended September 30,                2004       2003         2002
- ------------------------                ----       ----         ----
                                                      
Partnership EBITDA                     $255.9     $234.4       $209.6
Depreciation and amortization (i)       (80.6)     (74.6)       (66.1)
Minority interests (ii)                   1.4        1.1          1.1
Income (loss) from equity investees      (0.7)       0.6         (0.3)
Loss on extinguishments of debt             -        3.0          0.7
                                       ------     ------       ------
Operating income                       $176.0     $164.5       $145.0
                                       ======     ======       ======

(i)   Excludes General Partner depreciation and amortization of $0.1, $0.2, and
      $0.3 in 2004, 2003 and 2002, respectively.

(ii)  Principally represents the General Partner's 1.01% interest in AmeriGas
      OLP

(b)   International Other principally comprises FLAGA and our joint-venture
      business in China.

(c)   Corporate & Other results of operations principally comprise UGI
      Enterprises' HVAC/R operations, net expenses of UGI's captive general
      liability insurance company and UGI Corporation's unallocated corporate
      and general expenses, and interest income. Corporate & Other assets
      principally comprise cash and short-term investments and an intercompany
      loan. The intercompany interest associated with the intercompany loan is
      eliminated in the segment presentation.

(d)   Includes capital leases of $0.5 in 2003.

(e)   In addition to equity income (loss) of international propane equity
      investees, 2002 includes a currency transaction gain of $1.6 from the
      redemption of AGZ Bonds and $0.9 of interest income on AGZ Bonds.

                                                                              55

                                                                               .
                                                                               .
                                                                               .
                                                                      EXHIBIT 21

                         SUBSIDIARIES OF UGI CORPORATION

SUBSIDIARY                                                                                  OWNERSHIP      STATE OF INCORPORATION
- ----------                                                                                  ---------      ----------------------
                                                                                                   
AMERIGAS, INC.                                                                                 100%                  PA
       AMERIGAS PROPANE, INC. *                                                                100%                  PA
             AmeriGas Partners, L.P.                                                           (1)                   DE
                   AmeriGas Finance Corp.                                                      100%                  DE
                   AmeriGas Eagle Finance Corp.                                                100%                  DE
                   AP Eagle Finance Corp                                                       100%                  DE
             AmeriGas Propane L.P.                                                           98.9899%                DE
                   AmeriGas Propane Parts & Service, Inc.                                      100%                  PA
                   AmeriGas Eagle Propane, L.P.                                                99%                   DE
                                     AmeriGas Eagle Parts & Service, Inc.                      100%                  PA
                   AmeriGas Eagle Propane, Inc                                                 100%                  DE
                                     AmerE Holdings, Inc.                                      100%                  DE
                                     AmeriGas Eagle Holdings, Inc. **                          100%                  DE
                                                   Active Propane of Wisconsin, LLC            100%                  DE
             AmeriGas Technology Group, Inc.                                                   100%                  PA
             Petrolane Incorporated                                                            100%                  PA
       FOUR FLAGS DRILLING COMPANY, INC.                                                       100%                  PA
ASHTOLA PRODUCTION COMPANY                                                                     100%                  PA
       UGI ETHANOL DEVELOPMENT CORPORATION                                                     100%                  PA
NEWBURY HOLDING COMPANY                                                                        100%                  DE
UGI ENTERPRISES, INC.                                                                          100%                  PA
       CFN ENTERPRISES, INC.                                                                   100%                  DE
             CF Networks LLC                                                                   60%                   DE
       EASTFIELD INTERNATIONAL HOLDINGS, INC.                                                  100%                  DE
             FLAGA GmbH                                                                        100%               AUSTRIA
                   FLAGA Energievorsorgung GmbH                                                100%               GERMANY
                   FLAGA Plyn, spol. s.r.o.                                                    100%            CZECH REPUBLIC
                                     LPG Technik s.r.o.                                        100%            CZECH REPUBLIC
                   FLAGA Slovplyn, spol. s r.o.                                                100%               SLOVAKIA
                   FLAGA Suisse GmbH                                                           100%             SWITZERLAND
                   GTP Gas Trans Praha spol. s r.o.                                            60%             CZECH REPUBLIC
                                     GTB Gas Trans Bratislava, s.r.o.                          100%               SLOVAKIA
                   TSG - Transport- und Speditionsgesellschaft m.b.H.                          50%                AUSTRIA
                                     GTE - Gastrans-Erfurt-GmbH                                90%                GERMANY
       EUROGAS HOLDINGS, INC.                                                                  100%                  DE
       UGI ASSET MANAGEMENT, INC.                                                              100%                  DE
       MCHUGH SERVICE COMPANY                                                                  100%                  PA
       UGI ENERGY SERVICES, INC.                                                               100%                  PA
             Energy Services Funding Corporation                                               100%                  DE
             Hellertown Pipeline Company                                                       100%                  PA
             Homestead Holding Company                                                         100%                  DE
             UGI DEVELOPMENT COMPANY                                                           100%                  PA
                   UGID Holding Company                                                        100%                  DE
                   UGI Hunlock Development Company                                             100%                  PA
             UGI POWER SUPPLY, INC.                                                            100%                  PA
             UGI HVAC ENTERPRISES, INC.                                                        100%                  DE

SUBSIDIARY                                                                                  OWNERSHIP      STATE OF INCORPORATION
- ----------                                                                                  ---------      ----------------------

       UGI INTERNATIONAL ENTERPRISES, INC.                                                     100%                  PA
             UGI France, Inc.                                                                  100%                  DE
                   UGI Bordeaux Holding                                                        100%                FRANCE
                                     AGZ Holding                                               100%                FRANCE
                                     AGZ Finance                                               100%                FRANCE
                                     Antargaz                                                  100%                FRANCE
                                                   Wogegal                                     100%                FRANCE
                                                   Aquitaine Pyrenees                          100%                FRANCE
                                                   Gaz Est Distribution                        100%                FRANCE
                                                   Nord GPL                                    100%                FRANCE
                                                   Rhone Mediterranee Gaz                      85%                 FRANCE
                                                   Rhone Gaz                                  50.62%               FRANCE
                                                   Sigap Quest                                 66%                 FRANCE
                                                   Sobegal                                     72%                 FRANCE
                                                   Norgal                                     52.66%               FRANCE
             UGI Finance, LLC                                                                  100%                  DE
       UGI BLACK SEA ENTERPRISES, INC.                                                         100%                  PA
       UGI INTERNATIONAL (ROMANIA), INC.                                                       100%                  PA
       UGI ROMANIA, INC.                                                                       100%                  PA
       UGI INTERNATIONAL (CHINA), INC.                                                         100%                  DE
       UGI CHINA, INC.                                                                         100%                  DE
       UGI SOUTHWEST CHINA DEVELOPMENT COMPANY, LLC                                            100%                  DE
UGI PROPERTIES, INC.                                                                           100%                  PA
UGI UTILITIES, INC.                                                                            100%                  PA
UNITED VALLEY INSURANCE COMPANY                                                                100%                  VT

(1)  AmeriGas Propane, Inc. and its subsidiary, Petrolane Incorporated, hold
a combined 46% (approx.) interest in AmeriGas Partners, L.P.
*Sole General Partner of each of AmeriGas Partners, L.P. and AmeriGas
 Propane, L.P.
** Sole General Partner of AmeriGas Eagle Propane, L.P.

                                                                      EXHIBIT 23

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 33-78776 and 333-42296) and Form S-8 (Nos.
33-47319, 33-61722, 333-22305, 333-49080, 333-104938 and 333-118147) of UGI
Corporation of our report dated December 6, 2004 relating to the financial
statements, which appears in the Annual Report to Shareholders, which is
incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report dated December 6, 2004 relating to the
financial statement schedules, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
December 14, 2004

                                                                    EXHIBIT 31.1

                                 CERTIFICATIONS

I, Lon R. Greenberg, certify that:

1.    I have reviewed this annual report on Form 10-K of UGI Corporation;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(d)) for the registrant
      and have:

      (a)   designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      (b)   evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      (c)   disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect the
            registrant's internal control over financial reporting.

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of registrant's board
      of directors:

      (a)   all significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

                                                                    EXHIBIT 31.1

      (b)   any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: December 14, 2004

                                          /s/ Lon R. Greenberg
                                          --------------------------------------
                                          Lon R. Greenberg
                                          Chairman, President and
                                          Chief Executive Officer of
                                          UGI Corporation

                                                                    EXHIBIT 31.2

I, Anthony J. Mendicino, certify that:

1.    I have reviewed this annual report on Form 10-K of UGI Corporation;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(d)) for the registrant
      and have:

      (a)   designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      (b)   evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      (c)   disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter that has materially
            affected, or is reasonably likely to materially affect the
            registrant's internal control over financial reporting.

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of registrant's board
      of directors:

      (a)   all significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

                                                                    EXHIBIT 31.2

      (b)   any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: December 14, 2004

                                          /s/ Anthony J. Mendicino
                                          --------------------------------------
                                          Anthony J. Mendicino
                                          Senior Vice President - Finance and
                                          Chief Financial Officer of
                                          UGI Corporation

                                                                      EXHIBIT 32

    CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
          RELATING TO A PERIODIC REPORT CONTAINING FINANCIAL STATEMENTS

      I, Lon R. Greenberg, Chief Executive Officer, and I, Anthony J. Mendicino,
Chief Financial Officer, of UGI Corporation, a Pennsylvania corporation (the
"Company"), hereby certify that to our knowledge:

      (1)   The Company's periodic report on Form 10-K for the period ended
            September 30, 2004 (the "Form 10-K") fully complies with the
            requirements of Section 13(a) of the Securities Exchange Act of
            1934, as amended; and

      (2)   The information contained in the Form 10-K fairly presents, in all
            material respects, the financial condition and results of operations
            of the Company.

                                      * * *

CHIEF EXECUTIVE OFFICER                              CHIEF FINANCIAL OFFICER

/s/ Lon R. Greenberg                                 /s/ Anthony J. Mendicino
- ------------------------------------                 --------------------------
Lon R. Greenberg                                     Anthony J. Mendicino

Date: December 14, 2004                              Date: December 14, 2004

      A signed original of this written statement required by Section 906 has
      been provided to UGI Corporation and will be retained by UGI Corporation
      and furnished to the Securities and Exchange Commission or its staff upon
      request.