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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 28, 2002

Commission File Number: 1-14222

SUBURBAN PROPANE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)

DELAWARE 22-3410353
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

240 Route 10 West
Whippany, NJ 07981
(973) 887-5300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Units New York Stock Exchange

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. [ ]

The aggregate market value as of December 13, 2002 of the registrant's Common
Units held by non-affiliates of the registrant, based on the reported closing
price of such units on the New York Stock Exchange on such date ($27.92/unit),
was approximately $687,705,533. As of December 13, 2002 there were 24,631,287
Common Units outstanding.

Documents Incorporated by Reference: None

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

INDEX TO ANNUAL REPORT ON FORM 10-K

PART I PAGE
----

ITEM 1. BUSINESS.................................................... 1
ITEM 2. PROPERTIES.................................................. 6
ITEM 3. LEGAL PROCEEDINGS........................................... 7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 7

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS AND RELATED
UNITHOLDER MATTERS.......................................... 8
ITEM 6. SELECTED FINANCIAL DATA..................................... 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 11
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK................................................. 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE......................... 26

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 27
ITEM 11. EXECUTIVE COMPENSATION...................................... 30
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................. 34
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 36
ITEM 14. CONTROLS AND PROCEDURES..................................... 36

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K......................................... 37

Signatures............................................................... 38
CERTIFICATIONS........................................................... 39

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
- -----------------------------------------------

This Annual Report on Form 10-K contains forward-looking statements
("Forward-Looking Statements") as defined in the Private Securities Litigation
Reform Act of 1995 relating to the Partnership's future business expectations
and predictions and financial condition and results of operations. Some of these
statements can be identified by the use of forward-looking terminology such as
"prospects," "outlook," "believes," "estimates," "intends," "may," "will,"
"should," "anticipates," "expects" or "plans" or the negative or other variation
of these or similar words, or by discussion or trends and conditions, strategies
or risks and uncertainties. These Forward-Looking Statements involve certain
risks and uncertainties that could cause actual results to differ materially
from those discussed or implied in such Forward-Looking Statements ("Cautionary
Statements"). The risks and uncertainties and their impact on the Partnership's
operations include, but are not limited to, the following risks:

o The impact of weather conditions on the demand for propane;
o Fluctuations in the unit cost of propane;
o The ability of the Partnership to compete with other suppliers of propane
and other energy sources;
o The impact on propane prices and supply of the political and economic
instability of the oil producing nations and other general economic
conditions;
o The ability of the Partnership to retain customers;
o The impact of energy efficiency and technology advances on the demand for
propane;
o The ability of management to continue to control expenses;
o The impact of regulatory developments on the Partnership's business;
o The impact of legal proceedings on the Partnership's business;
o The Partnership's ability to implement its expansion strategy into new
business lines and sectors;
o The Partnership's ability to integrate acquired businesses successfully.

Some of these Forward-Looking Statements are discussed in more detail in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in this Annual Report. On different occasions, the Partnership or
its representatives have made or may make Forward-Looking Statements in other
filings that the Partnership makes with the Securities and Exchange Commission,
in press releases or in oral statements made by or with the approval of one of
its authorized executive officers. Readers are cautioned not to place undue
reliance on Forward-Looking or Cautionary Statements, which reflect management's
opinions only as of the date hereof. The Partnership undertakes no obligation to
update any Forward-Looking or Cautionary Statement. All subsequent written and
oral Forward-Looking Statements attributable to the Partnership or persons
acting on its behalf are expressly qualified in their entirety by the Cautionary
Statements in this Annual Report and in future SEC reports.

PART I

ITEM 1. BUSINESS

GENERAL

Suburban Propane Partners, L.P. (the "Partnership"), a publicly traded
Delaware limited partnership is principally engaged, through its operating
partnership and subsidiaries, in the retail and wholesale marketing of propane
and related appliances and services. Based upon propane industry statistics, the
Partnership is the third largest retail marketer of propane in the United
States, serving approximately 750,000 active residential, commercial, industrial
and agricultural customers from approximately 330 customer service centers in
over 40 states as of September 28, 2002. The Partnership's operations are
concentrated in the east and west coast regions of the United States. The retail
propane sales volume of the Partnership was approximately 456.0 million gallons
during the year ended September 28, 2002. In addition, the Partnership sold
approximately 95.3 million gallons of propane at wholesale to large industrial
end users and other propane distributors during the fiscal year. Based on
industry statistics, the Partnership believes that its retail propane sales
volume constitutes approximately 4.4% of the domestic retail market for propane.

The Partnership conducts its business principally through Suburban Propane,
L.P., a Delaware limited partnership (the "Operating Partnership"). The
Partnership's general partner is Suburban Energy Services Group LLC (the
"General Partner"), a Delaware limited liability company owned by the
Partnership's senior management. The General Partner owns a combined 1.89%
general partner interest in the Partnership and the Operating Partnership and
the Partnership owns all of the limited partnership interests in the Operating
Partnership. The Partnership and the Operating Partnership commenced operations
on March 5, 1996 upon consummation of an initial public offering of common units
representing limited partner interests in the Partnership ("Common Units") and
the private placement of $425 million aggregate principal amount of Senior
Notes. Suburban Sales and Service, Inc. (the "Service Company"), a subsidiary of
the Operating Partnership, was formed at that time to operate the service work
and appliance and propane equipment parts businesses of the Partnership.

Other subsidiaries of the Operating Partnership include Gas Connection,
Inc. (doing business as HomeTown Hearth & Grill), Suburban @ Home, Inc., and
Suburban Franchising, Inc. HomeTown Hearth & Grill sells and installs natural
gas and propane gas grills, fireplaces and related accessories and supplies;
Suburban @ Home, Inc. sells, installs, services and repairs a full range of
heating and air conditioning products; and Suburban Franchising, Inc. creates
and develops propane related franchising business opportunities.

We currently file Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and current reports on Form 8-K with the Securities and Exchange Commission
("SEC"). The public may read and copy any materials that we file with the SEC at
the SEC's Public Reference Room at 450 Fifth Street, N. W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Any information filed by us
is also available on the SEC's EDGAR database at WWW.SEC.GOV.

Upon written request or through a link from our website at
WWW.SUBURBANPROPANE.COM, we will provide, without charge, copies of our Annual
Report on Form 10-K for the fiscal year ended September 28, 2002, each of the
Quarterly Reports on Form 10-Q, current reports filed or furnished on Form 8-K
and all amendments to such reports as soon as is reasonably practicable after
such reports are electronically filed with or furnished to the SEC. Requests
should be directed to: Suburban Propane Partners, L.P., Investor Relations, P.O.
Box 206, Whippany, New Jersey 07981-0206.

BUSINESS STRATEGY

Our business strategy is to deliver increasing value to our unitholders
through initiatives, both internal and external, geared toward achieving
sustainable profitable growth and increased quarterly distributions. We pursue
this business strategy through a combination of (i) an internal focus on
enhancing customer service, growing our customer base and improving the
efficiency of operations and, (ii) acquisitions of businesses to complement or
supplement our core propane operations.

We plan to continue to pursue internal growth of our existing propane
operations and to foster the growth of related retail and service operations
that can benefit from our infrastructure and national presence. We continue to
analyze our cost structure, develop programs to increase our customer base and
implement more efficient operating standards. We provide incentives to our
customer service centers across the United States to operate in a safe and
efficient manner, as well as based on customer satisfaction ratings measured
through a comprehensive customer satisfaction and retention program. We also
believe that we can continue to achieve internal growth through increased
reliance on information technology at our customer service centers.
Additionally, we continuously evaluate our existing facilities to identify
opportunities to optimize our return on assets by selectively divesting
operations in slower growing markets.

Because of the seasonal nature of the propane business and the impact on
earnings and cash flow, we also seek to acquire and develop related retail and
service business lines to complement the core propane operations. HomeTown
Hearth & Grill, acquired by the Partnership in 1999, sells and installs natural
gas and propane gas grills, fireplaces and related accessories and supplies
through ten retail stores in the northeast and northwest regions as of September
28, 2002. We continue to modify the HomeTown Hearth & Grill business model and
to evaluate areas to leverage our existing infrastructure for new retail
locations.

Suburban @ Home, Inc., which opened its first service center in September
2000, is an internally developed heating, ventilation and air conditioning
business offering a full range of products and services for "total indoor
comfort." We continue to invest in the growth of this business by the opening of
two additional retail locations during fiscal 2002 for a total of three retail
locations as of September 28, 2002. One element of our growth strategy is to use
HomeTown Hearth & Grill, Suburban @ Home, Inc. and other business ventures as a
platform on which to build a retail and service network that will complement our
core propane operations.

We have focused internally over the past three fiscal years, managing our
cost structure, strengthening our balance sheet and distribution coverage and
posturing our management team for growth and diversification. We also continue
to evaluate acquisition opportunities that will either extend our presence in
strategically attractive propane markets or diversify our operations in
non-propane businesses that can immediately contribute to our overall growth
strategy. We investigate and focus on businesses with long life assets and
relatively steady cash flow. Although we did not acquire any businesses in
fiscal 2002 or 2001, we believe there are numerous retail propane distribution
companies and other energy assets that are potential candidates for acquisition.
However, the competition for acquisitions of propane companies or other energy
assets is intense, and there can be no assurance that we will be able to acquire
such candidates on economically acceptable terms.

INDUSTRY BACKGROUND AND COMPETITION

Propane, a by-product of natural gas processing and petroleum refining, is
a clean-burning energy source recognized for its transportability and ease of
use relative to alternative forms of stand-alone energy sources. Retail propane
use falls into three broad categories: (i) residential and commercial
applications, (ii) industrial applications and (iii) agricultural uses. In the
residential and commercial markets, propane is used primarily for space heating,

water heating, clothes drying and cooking. Industrial customers primarily use
propane as a motor fuel burned in internal combustion engines that power
over-the-road vehicles, forklifts and stationary engines, to fire furnaces, as a
cutting gas and in other process applications. In the agricultural market,
propane is primarily used for tobacco curing, crop drying, poultry brooding and
weed control. In its wholesale operations, the Partnership sells propane
principally to large industrial end-users and other propane distributors.

Propane is extracted from natural gas or oil wellhead gas at processing
plants or separated from crude oil during the refining process. Propane is
normally transported and stored in a liquid state under moderate pressure or
refrigeration for 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 both colorless and odorless with an odorant added to
allow for its detection. Propane is clean burning, producing negligible amounts
of pollutants when consumed.

Based upon information provided by the National Propane Gas Association and
the Energy Information Administration, propane accounts for approximately 4% of
household energy consumption in the United States. This level has not changed
materially over the previous two decades. Propane competes primarily with
electricity, natural gas and fuel oil as an energy source, principally on the
basis of price, availability and portability.

Propane is more expensive than natural gas on an equivalent British Thermal
Unit basis in locations served by natural gas, but serves as an alternative to
natural gas in rural and suburban areas where natural gas is unavailable or
portability of product is required. Historically, the expansion of natural gas
into traditional propane markets has been inhibited by the capital costs
required to expand pipeline and retail distribution systems. Although the
extension of natural gas pipelines tends to displace propane distribution in
areas affected, the Partnership believes that new opportunities for propane
sales arise as more geographically remote neighborhoods are developed. Propane
is generally less expensive to use than electricity for space heating, water
heating, clothes drying and cooking. Due to the current geographical diversity
of the Partnership's operations, fuel oil has not been a significant competitor.
In addition, propane and fuel oil compete to a lesser extent as a result of the
cost of converting from one to the other.

In addition to competing with alternative energy sources, the Partnership
competes with other companies engaged in the retail propane distribution
business. Competition in the propane industry is highly fragmented and generally
occurs on a local basis with other large full-service multi-state propane
marketers, thousands of smaller local independent marketers and farm
cooperatives. Based on industry publications, the Partnership believes that the
10 largest retailers, including the Partnership, account for approximately 31%
of the total retail sales of propane in the United States and no single marketer
has more than a 10% share of the total retail market in the United States. Based
on industry statistics, the Partnership believes that its retail sales volume
constitutes approximately 4.4% of the domestic retail market for propane. Most
of the Partnership's retail distribution branches compete with five or more
marketers or distributors. Each retail distribution outlet operates in its own
competitive environment because retail marketers tend to locate in close
proximity to customers in order to lower the cost of providing service. The
typical retail distribution outlet generally has an effective marketing radius
of approximately 50 miles although in certain rural areas a satellite office may
extend the marketing radius.

PRODUCTS, SERVICES AND MARKETING

We distribute propane through a nationwide retail distribution network
consisting of approximately 330 customer service centers in over 40 states as of
September 28, 2002. Our operations are concentrated in the east and west coast
regions of the United States. In fiscal 2002, we served approximately 750,000
active customers. Approximately two-thirds of our retail propane volume has
historically been sold during the six month peak heating season from October
through March, as many customers use propane for heating purposes. Typically,
customer service centers are found in suburban and rural areas where natural gas
is not readily available. Generally, such locations 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. Most of our residential customers
receive their propane supply pursuant to an automatic delivery system that

eliminates the customer's need to make an affirmative purchase decision. From
our customer service centers, we also sell, install and service equipment
related to our propane distribution business, including heating and cooking
appliances, hearth products and supplies and, at some locations, propane fuel
systems for motor vehicles.

We sell propane primarily to six customer markets: residential, commercial,
industrial (including engine fuel), agricultural, other retail users and
wholesale. Approximately 83% of the gallons sold by the Partnership in fiscal
2002 were to retail customers: 39% to residential customers, 30% to commercial
customers, 11% to industrial customers, 5% to agricultural customers and 15% to
other retail users. The balance of approximately 17% of the gallons sold by the
Partnership in fiscal 2002 was for risk management activities and wholesale
customers. Sales to residential customers in fiscal 2002 accounted for
approximately 50% of our gross profit on propane sales, reflecting the
higher-margin nature of the residential market. No single customer accounted for
10% or more of our revenues during fiscal 2002.

Retail deliveries of propane are usually made to customers by means of
bobtail and rack trucks. Propane is pumped from the bobtail truck, with
capacities ranging from 2,125 gallons to 2,975 gallons of propane, into a
stationary storage tank on the customer's premises. The capacity of these
storage tanks ranges from approximately 100 gallons to approximately 1,200
gallons, with a typical tank having a capacity of 300 to 400 gallons. We also
deliver propane to retail customers in portable cylinders, which typically have
a capacity of 5 to 35 gallons. When these cylinders are delivered to customers,
empty cylinders are refilled in place or transported for replenishment at our
distribution locations. We also deliver propane to certain other bulk end users
of propane in larger trucks known as transports (which have an average capacity
of approximately 9,000 gallons). End-users receiving transport deliveries
include industrial customers, large-scale heating accounts, such as local gas
utilities which use propane as a supplemental fuel to meet peak load
deliverability requirements, and large agricultural accounts which use propane
for crop drying. Propane is generally transported from refineries, pipeline
terminals, storage facilities (including our storage facilities in Elk Grove,
California and Tirzah, South Carolina), and coastal terminals to our customer
service centers by a combination of common carriers, owner-operators and
railroad tank cars. See additional discussion in Item 2 of this Annual Report.

In our wholesale operations, we principally sell propane to large
industrial end-users and other propane distributors. The wholesale market
includes customers who use propane to fire furnaces, as a cutting gas and in
other process applications. Due to the low margin nature of the wholesale market
as compared to the retail market, we have selectively reduced our emphasis on
wholesale marketing over the last few years. Accordingly, sales of wholesale
gallons during fiscal 2002 decreased in comparison to fiscal 2001, which in turn
decreased from fiscal 2000.

PROPANE SUPPLY

Our propane supply is purchased from nearly 70 oil companies and natural
gas processors at more than 150 supply points located in the United States and
Canada. We also make purchases on the spot market. We purchased approximately
99% of our propane supplies from domestic suppliers during fiscal 2002. Most of
the propane purchased by us in fiscal 2002 was purchased pursuant to one year
agreements subject to annual renewal, but the percentage of contract purchases
may vary from year to year as we determine. Supply contracts generally provide
for pricing in accordance with posted prices at the time of delivery or the
current prices established at major storage points, and some contracts include a
pricing formula that typically is based on such market prices. Some of these
agreements provide maximum and minimum seasonal purchase guidelines. We use a
number of interstate pipelines, as well as railroad tank cars and delivery
trucks to transport propane from suppliers to storage and distribution
facilities.

Supplies of propane from our supply sources historically have been readily
available. Although we make no assurance regarding the availability of supplies
of propane in the future, we currently expect to be able to secure adequate
supplies during fiscal 2003. During the year ended September 28, 2002, Dynegy
Liquids Marketing and Trade ("Dynegy"), Enterprise Products Operating L.P.
("Enterprise") and Koch Hydrocarbon, LP ("Koch") provided approximately 23%, 15%
and 11%, respectively, of our total domestic propane supply. The availability of
our propane supply is dependent on several factors, including the severity of
winter weather and the price and availability of competing fuels such as natural
gas and heating oil. We believe that, if supplies from Dynegy, Enterprise or
Koch were interrupted, we would be able to secure adequate propane supplies from
other sources without a material disruption of our operations. However, the cost
of acquiring such propane might be materially higher and, at least on a
short-term basis, margins could be affected. Aside from these three suppliers,
no single supplier provided more than 10% of our total domestic propane supply
in the year ended September 28, 2002.

Our product procurement and price risk management group seeks to reduce the
effect of price volatility on our product costs and to help ensure the
availability of propane during periods of short supply. We are currently a party
to propane futures transactions on the New York Mercantile Exchange and to
forward and option contracts with various third parties to purchase and sell
product at fixed prices in the future. These activities are monitored by
management through enforcement of our Commodity Trading Policy. See additional
discussion in Item 7A of this Annual Report.

We operate large storage facilities in California and South Carolina and
smaller storage facilities in other locations and have rights to use storage
facilities in additional locations. As of September 28, 2002, the majority of
the storage capacity in California and South Carolina was leased to third
parties. Our storage facilities allow us to buy and store large quantities of
propane during periods of low demand, which generally occur during the summer
months. We believe our storage facilities help ensure a more secure supply of
propane during periods of intense demand or price instability.

TRADEMARKS AND TRADENAMES

The Partnership and its subsidiaries utilize a variety of trademarks and
tradenames that they own, including "Suburban Propane". The Partnership regards
its trademarks, tradenames and other proprietary rights as valuable assets and
believes that they have significant value in the marketing of its products.

GOVERNMENT REGULATION; ENVIRONMENTAL AND SAFETY MATTERS

We are subject to various federal, state and local environmental, health
and safety laws and regulations. Generally, these laws impose limitations on the
discharge of pollutants and establish standards for the handling of solid and
hazardous wastes. These laws include the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Clean Air Act, the Occupational Safety and Health Act, the
Emergency Planning and Community Right to Know Act, the Clean Water Act and
comparable state statutes. CERCLA, also known as the "Superfund" law, imposes
joint and several liability without regard to fault or the legality of the
original conduct on certain classes of persons that are considered to have
contributed to the release or threatened release of a "hazardous substance" into
the environment. Propane is not a hazardous substance within the meaning of
CERCLA. However, we own real property where such hazardous substances may exist
as a result of prior activities at such locations.

National Fire Protection Association Pamphlets No. 54 and No. 58, which
establish rules and procedures governing the safe handling of propane, or
comparable regulations, have been adopted as the industry standard in all of the
states in which we operate. In some states these laws are administered by state
agencies, and in others they are administered on a municipal level. With respect
to the transportation of propane by truck, we are subject to regulations

promulgated under the Federal Motor Carrier Safety Act. These regulations cover
the transportation of hazardous materials and are administered by the United
States Department of Transportation. We conduct ongoing training programs to
help ensure that our operations are in compliance with applicable safety
regulations. We maintain various permits that are necessary to operate some of
our facilities, some of which may be material to our operations. We believe that
the procedures currently in effect at all of our facilities for the handling,
storage and distribution of propane are consistent with industry standards and
are in compliance, in all material respects, with applicable laws and
regulations.

The Department of Transportation has established regulations addressing
emergency discharge control issues. The regulations, which became effective as
of July 1, 1999, required us to modify the inspection and record keeping
procedures for our cargo tank vehicles. A schedule of compliance is set forth
within the regulations. We have implemented the required discharge control
systems and comply, in all material respects, with current regulatory
requirements.

Future developments, such as stricter environmental, health or safety laws
and regulations thereunder, could affect our operations. We anticipate that
compliance with or liabilities under environmental, health and safety laws and
regulations, including CERCLA, will not have a material adverse effect on the
Partnership. To the extent that there are any environmental liabilities unknown
to the Partnership or environmental, health or safety laws or regulations are
made more stringent, there can be no assurance that the Partnership's results of
operations will not be materially and adversely affected.

EMPLOYEES

As of September 28, 2002, we had 3,181 full time employees, of whom 255
were engaged in general and administrative activities (including fleet
maintenance), 27 were engaged in transportation and product supply activities
and 2,899 were customer service center employees. As of September 28, 2002, 149
of such employees were represented by 11 different local chapters of labor
unions. We believe that our relations with both our union and non-union
employees are satisfactory. From time to time, we hire temporary workers to meet
peak seasonal demands.

ITEM 2. PROPERTIES

As of September 28, 2002, we owned approximately 70% of our customer
service center and satellite locations and leased the balance of our retail
locations from third parties. In addition, we own and operate a 22 million
gallon refrigerated, above-ground storage facility in Elk Grove, California and
a 60 million gallon underground storage cavern in Tirzah, South Carolina.

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 28, 2002, we had
a fleet of 14 transport truck tractors, of which 8 were owned by the
Partnership, and 252 railroad tank cars, all of which were leased by the
Partnership. In addition, as of September 28, 2002 we utilized 1,200 bobtail and
rack trucks, of which 36% were owned by the Partnership, and 1,398 other
delivery and service vehicles, of which 36% were owned by the Partnership.
Vehicles that are not owned by the Partnership are leased. As of September 28,
2002, we owned 756,291 customer storage tanks with typical capacities of 100 to
500 gallons, 36,734 customer storage tanks with typical capacities of over 500
gallons and 88,548 portable cylinders with typical capacities of 5 to 10
gallons.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

Our operations are subject to all operating hazards and risks normally
incidental to handling, storing, and delivering combustible liquids such as
propane. As a result, we have been, and will continue to be, a defendant in
various legal proceedings and litigation arising in the ordinary course of
business. We are self-insured for general and product, workers' compensation and
automobile liabilities up to predetermined amounts above which third party
insurance applies. We believe that the self-insured retentions and coverage we
maintain are reasonable and prudent. Although any litigation is inherently
uncertain, based on past experience, the information currently available to us,
and the amount of our self-insurance reserves for known and unasserted
self-insurance claims (which was approximately $27.0 million at September 28,
2002), we do not believe that these pending or threatened litigation matters, or
known claims or known contingent claims, will have a material adverse effect on
our results of operations, financial condition or our cash flow.

On May 23, 2001, Heritage Propane Partners, L.P. ("Heritage") amended a
complaint it had filed on November 30, 1999 in the South Carolina Court of
Common Pleas, Fifth Judicial Circuit, against SCANA Corporation ("SCANA") and
Cornerstone Ventures, L.P. ("Cornerstone") to name the Operating Partnership as
a defendant (Heritage v. SCANA et al., Civil Action 01-CP-40-3262). Third party
insurance and the self-insurance reserves referenced above do not apply to this
action. The amended complaint alleges, among other things, that SCANA breached a
contract for the sale of propane assets and asserts claims against the Operating
Partnership for wrongful interference with prospective advantage and civil
conspiracy for allegedly interfering with Heritage's prospective contract with
SCANA. Heritage claims that it is entitled to recover its alleged lost profits
in the amount of $125.0 million and that all defendants are jointly and
severally liable to it for such amount. The Operating Partnership moved to
dismiss the claims asserted against it for failure to state a claim. On October
24, 2001, the court denied the Operating Partnership's motion to dismiss the
amended complaint. Currently, discovery is ongoing between all parties to this
lawsuit. A trial date has yet to be set. We believe that the claims against us
are without merit and are defending the action vigorously.

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

There were no matters submitted to a vote of security holders of the
Partnership, through the solicitation of proxies or otherwise, during the fourth
quarter of the year ended September 28, 2002.

PART II

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

The Common Units, representing limited partner interests in the
Partnership, are listed and traded on the New York Stock Exchange ("NYSE") under
the symbol SPH. As of December 13, 2002, there were 969 Common Unitholders of
record. The following table sets forth, for the periods indicated, the high and
low sales prices per Common Unit, as reported on the NYSE, and the amount of
cash distributions paid per Common Unit.

COMMON UNIT PRICE RANGE CASH DISTRIBUTION PAID
----------------------- ----------------------

HIGH LOW
---- ---
FISCAL 2001
- -----------
First Quarter $ 22.06 $ 19.00 $ 0.5375
Second Quarter 24.25 21.75 0.5500
Third Quarter 27.85 23.40 0.5500
Fourth Quarter 28.00 21.05 0.5625

FISCAL 2002
- -----------
First Quarter $ 27.99 $ 24.50 $ 0.5625
Second Quarter 28.40 24.36 0.5625
Third Quarter 28.25 25.59 0.5750
Fourth Quarter 28.49 20.00 0.5750

The Partnership makes quarterly distributions to its partners in an
aggregate amount equal to its Available Cash (as defined in the Second Amended
and Restated Partnership Agreement) for such quarter. Available Cash generally
means all cash on hand at the end of the fiscal quarter plus all additional cash
on hand as a result of borrowings subsequent to the end of such quarter less
cash reserves established by the Board of Supervisors in its reasonable
discretion for future cash requirements.

The Partnership is a publicly traded limited partnership that is not
subject to federal income tax. Instead, Unitholders are required to report their
allocable share of the Partnership's earnings or loss, regardless of whether the
Partnership makes distributions.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated historical financial
data of the Partnership. The selected consolidated historical financial data is
derived from the audited financial statements of the Partnership. The amounts in
the table below, except per unit data, are in thousands.

YEAR ENDED
------------------------------------------------------------
SEPT 28, SEPT 29, SEPT 30, SEPT 25, SEPT 26,
2002 2001 2000 (A) 1999 1998
-------- -------- -------- -------- --------

STATEMENT OF OPERATIONS DATA

Revenues ............................................ $ 665,105 $ 931,536 $ 841,304 $ 620,207 $ 667,999
Depreciation and amortization (b) ................... 29,693 38,502 38,772 34,906 36,531
Recapitalization costs (c) .......................... -- -- -- 18,903 --
Gain on sale of assets .............................. 6,768 -- 10,328 -- --
Income before interest expense and income taxes...... 88,214 91,475 79,560 53,272 68,814
Interest expense, net ............................... 33,987 37,590 40,794 30,765 30,614
Provision for income taxes .......................... 703 375 234 68 35
Net income .......................................... 53,524 53,510 38,532 22,439 38,165
Net income per unit - basic (d) ..................... 2.12 2.14 1.70 0.83 1.30
Cash distributions declared per unit ................ $ 2.28 $ 2.20 $ 2.11 $ 2.03 $ 2.00

BALANCE SHEET DATA (END OF PERIOD)
Current assets ...................................... $ 116,789 $ 124,339 $ 122,160 $ 78,637 $ 132,781
Total assets ........................................ 700,146 723,006 771,116 659,220 729,565
Current liabilities, incl. current portion of LT debt 187,545 162,103 131,461 103,006 91,550
Long-term borrowings ................................ 383,830 430,270 517,219 427,634 427,897
Other long-term liabilities ......................... 109,485 71,684 60,607 60,194 62,318
Partners' capital - Common Unitholders .............. 103,680 105,549 58,474 66,342 123,312
Partner's capital - General Partner ................. $ 1,924 $ 1,888 $ 1,866 $ 2,044 $ 24,488

STATEMENT OF CASH FLOWS DATA
Cash provided by/(used in)
Operating activities ............................. $ 68,775 $ 101,838 $ 59,467 $ 81,758 $ 70,073
Investing activities ............................. (6,851) (17,907) (99,067) (12,241) 2,900
Financing activities ............................. $ (57,463) $ (59,082) $ 42,853 $(120,944) $ (32,490)

OTHER DATA
EBITDA (e) .......................................... $ 117,907 $ 129,977 $ 118,332 $ 88,178 $ 105,345
Capital expenditures (f)
Maintenance and growth ........................... $ 17,464 $ 23,218 $ 21,250 $ 11,033 $ 12,617
Acquisitions ..................................... $ -- $ -- $ 98,012 $ 4,768 $ 4,041
Retail propane gallons sold ......................... 455,988 524,728 523,975 524,276 529,796

(a) Includes the results from the November 1999 acquisition of certain
subsidiaries of SCANA Corporation, accounted for under the purchase method,
from the date of acquisition.

(b) Depreciation and amortization expense for the year ended September 28, 2002
reflects the early adoption of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") as of

September 30, 2001 (the beginning of our 2002 fiscal year). SFAS 142
eliminates the requirement to amortize goodwill and certain intangible
assets. Amortization expense for the year ended September 28, 2002 reflects
approximately $7.4 million lower amortization expense compared to the year
ended September 29, 2001 as a result of the elimination of amortization
expense associated with goodwill.

(c) We incurred expenses of $18.9 million in connection with the
recapitalization transaction described in Note 1 to the consolidated
financial statements included in this Annual Report. These expenses
included $7.6 million representing cash expenses and $11.3 million
representing non-cash charges associated with the accelerated vesting of
restricted Common Units.

(d) Net income per limited partner unit is computed by dividing net income,
after deducting the General Partner's interest, by the weighted average
number of outstanding Common Units.

(e) EBITDA (earnings before interest, taxes, depreciation and amortization) is
calculated as income before interest expense and income taxes plus
depreciation and amortization. EBITDA should not be considered as an
alternative to net income (as an indicator of operating performance) or as
an alternative to cash flow (as a measure of liquidity or ability to
service debt obligations) and is not in accordance with or superior to
generally accepted accounting principles, but provides additional
information for evaluating the Partnership's ability to distribute
quarterly distributions or to increase quarterly distributions. Because
EBITDA excludes some, but not all, items that affect net income and this
measure may vary among companies, the EBITDA data presented above may not
be comparable to similarly titled measures of other companies. EBITDA has
been calculated using elements derived from captions on the consolidated
statement of operations included in this Annual Report as follows:

FISCAL FISCAL FISCAL FISCAL FISCAL
2002 2001 2000 1999 1998
------ ------ ------ ------ ------

Income before interest expense and
provision for income taxes $ 88,214 $ 91,475 $ 79,560 $ 53,272 $ 68,814
Add: Depreciation and amortization 29,693 38,502 38,772 34,906 36,531
------- ------- ------- ------- -------

EBITDA $117,907 $129,977 $118,332 $ 88,178 $105,345
======== ======== ======== ======== ========

(f) Our capital expenditures fall generally into three categories: (i)
maintenance expenditures, which include expenditures for repair and
replacement of property, plant and equipment, (ii) growth capital
expenditures which include new propane tanks and other equipment to
facilitate expansion of our customer base and operating capacity; and (iii)
acquisition capital expenditures, which include expenditures related to the
acquisition of propane and other retail operations and a portion of the
purchase price allocated to intangibles associated with such acquired
businesses.

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

The following is a discussion of the financial condition and results of
operations of the Partnership, which should be read in conjunction with the
historical consolidated financial statements and notes thereto included
elsewhere in this Annual Report. Since the Operating Partnership and Service
Company account for substantially all of the assets, revenues and earnings of
the Partnership, a separate discussion of the Partnership's results of
operations from other sources is not presented.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

The following are factors that regularly affect our operating results and
financial condition:

PRODUCT COSTS

The retail propane business is a "margin-based" business where the level of
profitability is largely dependent on the difference between retail sales price
and product cost. The unit cost of propane is subject to volatile changes as a
result of product supply or other market conditions; including, but not limited
to, economic and political factors impacting crude oil and natural gas supply or
pricing. Propane unit cost changes can occur rapidly over a short period of time
and can impact retail margins. There is no assurance that the Partnership will
be able to pass on product cost increases fully or immediately, particularly
when product costs increase rapidly. The average cost of propane to the
Partnership was substantially less throughout the majority of fiscal 2002
compared to both fiscal 2001 and 2000. The average cost of propane for fiscal
2002 was approximately 38% below fiscal 2001 levels, which were approximately
31% above fiscal 2000. Therefore, average retail sales prices can vary
significantly from year to year as product costs fluctuate with propane, crude
oil and natural gas commodity market conditions.

SEASONALITY

The retail propane distribution business is seasonal because of propane's
primary use for heating in residential and commercial buildings. Historically,
approximately two-thirds of the Partnership's retail propane volume is sold
during the six-month peak heating season from October through March.
Consequently, sales and operating profits are concentrated in the Partnership's
first and second fiscal quarters. Cash flows from operations, therefore, are
greatest during the second and third fiscal quarters when customers pay for
propane purchased during the winter heating season. Lower operating profits and
either net losses or lower net income during the period from April through
September (the Partnership's third and fourth fiscal quarters) are expected. To
the extent necessary, the Partnership will reserve cash from the second and
third quarters for distribution to Unitholders in the first and fourth fiscal
quarters.

WEATHER

Weather conditions have a significant impact on the demand for propane for
both heating and agricultural purposes. Many customers of the Partnership rely
heavily on propane as a heating fuel. Accordingly, the volume of propane sold is
directly affected by the severity of the winter weather in the Partnership's
service areas, which can vary substantially from year to year. In any given
area, sustained warmer-than-normal temperatures will tend to result in reduced
propane use, while sustained colder-than-normal temperatures will tend to result
in greater propane use.

RISK MANAGEMENT

Product supply contracts are generally one-year agreements subject to
annual renewal and generally permit suppliers to charge posted market prices
(plus transportation costs) at the time of delivery or the current prices
established at major delivery points. Since rapid increases in the cost of
propane may not be immediately passed on to retail customers, such increases
could reduce profit margins. The Partnership engages in risk management
activities to reduce the effect of price volatility on its product costs and to
help ensure the availability of propane during periods of short supply. The
Partnership is currently a party to propane futures contracts traded on the New
York Mercantile Exchange and enters into forward and option agreements with
third parties to purchase and sell propane at fixed prices in the future. Risk
management activities are monitored by management through enforcement of the
Partnership's Commodity Trading Policy and reported to the Partnership's Audit
Committee. Risk management transactions do not always result in increased
product margins. See additional discussion in Item 7A of this Annual Report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Certain amounts included in or affecting our consolidated financial
statements and related disclosures must be estimated, requiring management to
make certain assumptions with respect to values or conditions that cannot be
known with certainty at the time the financial statements are prepared. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. We are also subject to risks and uncertainties that
may cause actual results to differ from estimated results. Estimates are used
when accounting for depreciation and amortization of long-lived assets, employee
benefits, self-insurance and legal reserves, allowance for doubtful accounts,
asset valuation assessment and valuation of derivative instruments. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Any effects on our business,
financial position or results of operations resulting from revisions to these
estimates are recorded in the period in which the facts that give rise to the
revision become known.

Our significant accounting policies are summarized in Note 2 - Summary of
Significant Accounting Policies included within the Notes to Consolidated
Financial Statements section elsewhere in this Annual Report. We believe that
the following are our critical accounting policies:

REVENUE RECOGNITION. We recognize revenue from the sale of propane at the time
product is delivered to the customer. Revenue from the sale of appliances and
equipment is recognized at the time of sale or when installation is complete, as
applicable. Revenue from repair and maintenance activities is recognized upon
completion of the service.

ALLOWANCE FOR DOUBTFUL ACCOUNTS. We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make
required payments. If the financial condition of one or more of our customers
were to deteriorate resulting in an impairment in their ability to make
payments, additional allowances could be required.

PENSION AND OTHER POSTRETIREMENT BENEFITS. We estimate the rate of return on
plan assets, the discount rate to estimate the present value of future benefit
obligations and the cost of future health care benefits in determining our
annual pension and other postretirement benefit costs. In accordance with
generally accepted accounting principles, actual results that differ from our
assumptions are accumulated and amortized over future periods and therefore,
generally affect our recognized expense and recorded obligation in such future
periods. While we believe that our assumptions are appropriate, significant
differences in our actual experience or significant changes in market conditions
may materially affect our pension and other postretirement obligations and our
future expense. For a discussion of the impact of recent conditions in the
capital markets on our pension plan assets see "Pension Plan Assets" below.

SELF-INSURANCE RESERVES. Our accrued insurance reserves represent the estimated
costs of known and anticipated or unasserted claims under our general and
product, workers' compensation and automobile insurance policies. Accrued
insurance provisions for unasserted claims arising from unreported incidents are
based on an analysis of historical claims data. For each claim, we record a
self-insurance provision up to the estimated amount of the probable claim or the
amount of the deductible, whichever is lower, utilizing actuarially determined
loss development factors applied to actual claims data.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. See Item 7A of this Annual Report
for additional information about accounting for derivative instruments and
hedging activities.

RESULTS OF OPERATIONS

FISCAL YEAR 2002 COMPARED TO FISCAL YEAR 2001
- ---------------------------------------------

REVENUES. Revenues of $665.1 million in fiscal 2002 decreased $266.4
million, or 28.6%, compared to $931.5 million in fiscal 2001. This decrease is
principally due to a decrease in average selling prices, coupled with a decrease
in retail gallons sold. Average selling prices declined as a result of a
significant decline in the commodity price of propane in fiscal 2002 compared to
the prior year. The decrease in volume was attributable to record warm weather
conditions which were most dramatic during the peak heating months of October
through March of fiscal 2002 as well as, to a lesser extent, the impact of the
economic recession on commercial and industrial customers' buying habits.

Retail gallons sold decreased 13.1%, or 68.7 million gallons, to 456.0
million gallons in fiscal 2002 compared to 524.7 million gallons in fiscal 2001.
Nationwide temperatures during fiscal 2002 were 13% warmer than normal as
compared to temperatures that were 2% colder than normal during fiscal 2001, as
reported by the National Oceanic and Atmospheric Administration ("NOAA"). During
the peak heating months of October 2001 through March 2002, temperatures
nationwide were 13% warmer than normal as compared to 5% colder than normal in
the comparable period in fiscal 2001, as reported by NOAA. Volumes from the
components of our customer mix that are less weather sensitive declined
approximately 12% year-over-year.

Revenues from wholesale and risk management activities decreased $50.1
million, or 58.1%, to $36.1 million in fiscal 2002 compared to $86.2 million in
fiscal 2001. A less volatile commodity price environment for propane during
fiscal 2002 compared to fiscal 2001 resulted in reduced risk management
activities and lower volumes in the wholesale market.

Revenue from other sources, including sales of appliances and related parts
and services, of $94.8 million in fiscal 2002 increased $2.9 million, or 3.2%,
over fiscal 2001 revenues of $91.9 million.

OPERATING EXPENSES. Operating expenses decreased 9.5%, or $24.6 million, to
$234.1 million in fiscal 2002 compared to $258.7 million in fiscal 2001.
Operating expenses for the year ended September 28, 2002 include a $5.4 million
unrealized gain representing the net change in fair values of derivative
instruments not designated as hedges, compared to a $3.1 million unrealized loss
in fiscal 2001 (see Item 7A of this Annual Report for information on our
policies regarding the accounting for derivative instruments and hedging
activities). Excluding the impact of changes in the fair value of derivative
instruments on both the current and prior year results, operating expenses
decreased $16.1 million, or 6.3%, principally attributable to our ability to
reduce costs amidst declining volumes resulting from ongoing initiatives to
shift costs from fixed to variable, primarily in the areas of employee
compensation and benefits. The lower compensation costs were offset, in part, by
an increase in medical and dental costs in fiscal 2002 compared to the prior
year. Additionally, operating expenses were favorably impacted by lower
provisions for doubtful accounts and lower costs of operating our fleet,
including maintenance and fuel costs, in fiscal 2002 compared to fiscal 2001.
Provisions for doubtful accounts were higher in fiscal 2001 primarily from the
generally higher selling price environment driven by the higher average propane
costs.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased $1.7 million, or 5.2%, to $30.8 million in fiscal 2002 compared to
$32.5 million in fiscal 2001, again attributable to lower employee compensation
and benefit costs, as well as to lower fees for professional services.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
decreased 22.9%, or $8.8 million, to $29.7 million in fiscal 2002 compared to
$38.5 million in the prior year primarily as a result of our decision to early
adopt Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets" ("SFAS 142") effective September 30, 2001 (the
beginning of fiscal 2002), which eliminates the requirement to amortize goodwill
and certain intangible assets. If SFAS 142 had been in effect at the beginning
of the prior year, fiscal 2001 net income would have improved by $7.4 million.
Refer to "Adoption of New Accounting Standard" below for further information on
the adoption of SFAS 142.

GAIN ON SALE OF STORAGE FACILITY. On January 31, 2002, we sold our 170
million gallon propane storage facility in Hattiesburg, Mississippi, which was
considered a non-strategic asset, for net cash proceeds of $8.0 million,
resulting in a gain on sale of approximately $6.8 million.

INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES AND EBITDA. Income before
interest expense and income taxes decreased 3.6%, or $3.3 million, to $88.2
million compared to $91.5 million in the prior year. Earnings before interest,
taxes, depreciation and amortization ("EBITDA") decreased 9.3%, or $12.1
million, to $117.9 million in fiscal 2002 compared to $130.0 million in the
prior year. The decreases in income before interest expense and income taxes and
in EBITDA reflect the impact of the 13.1% lower retail volumes sold in fiscal
2002 attributable to unseasonably warm heating season temperatures and the
economy; partially offset by (i) the $26.3 million, or 9.0%, decrease in
combined operating and general and administrative expenses described above, (ii)
the impact of the $6.8 million gain on the sale of our Hattiesburg, Mississippi
storage facility and (iii) the impact on operating expenses of changes in the
fair value of derivative instruments described above. In addition, if SFAS 142
had been in effect at the beginning of the prior year, fiscal 2001 income before
interest expense and income taxes would have improved by $7.4 million.

EBITDA should not be considered as an alternative to net income (as an
indicator of operating performance) or as an alternative to cash flow (as a
measure of liquidity or ability to service debt obligations) and is not in
accordance with or superior to generally accepted accounting principles but
provides additional information for evaluating our ability to distribute our
quarterly distributions or to increase distributions. Because EBITDA excludes
some, but not all, items that affect net income and this measure may vary among
companies, the EBITDA data presented above may not be comparable to similarly
titled measures of other companies. EBITDA is calculated using elements derived
from captions on the consolidated statements of operations included in this
Annual Report. See Item 6 in this Annual Report for a reconciliation of EBITDA
to income before interest expense and provision for income taxes.

INTEREST EXPENSE. Net interest expense decreased 9.6%, or $3.6 million, to
$34.0 million in fiscal 2002 compared to $37.6 million in the prior year. This
decrease is primarily attributable to reductions in average amounts outstanding
during fiscal 2002 under our Revolving Credit Agreement, as well as lower
average interest rates.

FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000
- ---------------------------------------------

Results for fiscal 2001 reflect 52 weeks of operations compared to 53 weeks
in fiscal 2000. Results for fiscal 2000 include a $10.3 million gain on sale of
assets.

REVENUES. Revenues increased $90.2 million, or 10.7%, to $931.5 million in
fiscal 2001 compared to $841.3 million in fiscal 2000. Revenues from retail
propane activities increased $143.9 million, or 23.6%, to $753.4 million in
fiscal 2001 compared to $609.5 million in fiscal 2000. This increase is
primarily attributable to higher product costs which resulted in higher retail
sales prices.

Retail gallons sold increased slightly to 524.7 million gallons in fiscal
2001 compared to 524.0 million gallons in fiscal 2000. This increase is
attributable to colder weather offset by customer conservation efforts.
Nationwide temperatures during fiscal 2001 were 2% colder than normal as
compared to temperatures that were 11% warmer than normal during fiscal 2000, as
reported by the NOAA.

Revenues from wholesale and risk management activities decreased $58.2
million, or 40.3%, to $86.2 million in fiscal 2001 compared to $144.4 million in
fiscal 2000. Although propane product costs were substantially higher in fiscal
2001 than in prior years, product costs began to decline in the second half of
fiscal 2001. Accordingly, the Partnership reduced its risk management activities
resulting in a decrease in revenues from the risk management sale of propane.

Revenue from other sources, including sales of appliances, related parts
and services of $91.9 million in fiscal 2001 increased $4.5 million, or 5.1%,
compared to fiscal 2000 revenues of $87.4 million.

OPERATING EXPENSES. Operating expenses increased 13.2%, or $30.2 million,
to $258.7 million in fiscal 2001 compared to $228.5 million in fiscal 2000. This
increase is principally attributable to increased payroll and benefit costs,
including increased incentive compensation accruals in line with higher
earnings, higher provisions for doubtful accounts resulting from the increases
in selling prices, higher insurance, increased vehicle fuel costs, the
development of retail and service business initiatives and unrealized losses
recorded under the provisions of Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), related to changes in fair values of the Partnership's derivative
instruments.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $3.9 million, or 13.6%, to $32.5 million in fiscal 2001 compared to
$28.6 million in fiscal 2000. This increase is primarily attributable to higher
payroll and benefit costs, including incentive compensation accruals in line
with higher earnings, increased costs for professional services and higher
equipment leasing costs; offset in part by gains realized on the sales of
non-strategic assets and corporate investments in fiscal 2001.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
remained consistent at $38.5 million in fiscal 2001 compared to $38.8 million in
fiscal 2000.

GAIN ON SALE OF ASSETS. Results for fiscal 2000 reflect a gain of $10.3
million associated with the sale of 23 customer service centers principally
located in Georgia in December 1999. Total cash proceeds in connection with the
sale amounted to approximately $19.4 million.

INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES AND EBITDA. Results for
fiscal 2000 include a $10.3 million gain on the sale of assets. Excluding this
one-time item, income before interest expense and income taxes increased 32.2%,
or $22.3 million, to $91.5 million in fiscal 2001 compared to $69.2 million in
the prior period. EBITDA, excluding the one-time item, increased 20.4%, or $22.0
million, to $130.0 million compared to $108.0 million in the prior period. The
increases in income before interest expense and income taxes and in EBITDA are
primarily attributable to higher gross profit of $56.1 million reflecting higher
retail margins, partially offset by increased operating and general and
administrative expenses.

EBITDA should not be considered as an alternative to net income (as an
indicator of operating performance) or as an alternative to cash flow (as a
measure of liquidity or ability to service debt obligations) and is not in
accordance with or superior to generally accepted accounting principles but
provides additional information for evaluating our ability to distribute our
quarterly distributions. Because EBITDA excludes some, but not all, items that
affect net income and this measure may vary among companies, the EBITDA data
presented above may not be comparable to similarly titled measures of other
companies. EBITDA is calculated using elements derived from captions on the
consolidated statement of operations included in this Annual Report on Form
10-K. See Item 6 in this Annual Report for a reconciliation of EBITDA to income
before interest expense and provision for income taxes.

INTEREST EXPENSE. Net interest expense decreased 7.8%, or $3.2 million, to
$37.6 million compared to $40.8 million in the prior year. The decrease is
primarily due to reductions in amounts outstanding under the Partnership's
Revolving Credit Agreement and, to a lesser extent, lower interest rates.

LIQUIDITY AND CAPITAL RESOURCES

Due to the seasonal nature of the propane business, cash flows from
operating activities are greater during the winter and spring seasons, our
second and third fiscal quarters, as customers pay for propane purchased during
the heating season. In fiscal 2002, net cash provided by operating activities
decreased $33.0 million, or 32.4%, to $68.8 million in fiscal 2002 compared to
$101.8 million in fiscal 2001. The decrease is primarily due to lower net
income, after adjusting for non-cash items in both periods (principally
depreciation, amortization and gains on asset disposals), as well as the impact
of unfavorable changes in working capital in comparison to the prior year,
principally reflecting lower compensation and benefit accruals, offset by lower
inventories.

Net cash provided by operating activities increased $42.3 million to $101.8
million in fiscal 2001 from $59.5 million in fiscal 2000. The increase was
primarily due to improved working capital principally reflected in decreased
accounts receivable, attributable to a decrease in sales during the fourth
quarter of fiscal 2001 in comparison to the fourth quarter of fiscal 2000,
decreased accounts payable, attributable to the decreased cost of propane during
the fourth quarter of fiscal 2001, and higher net income, after adjusting for
non-cash items (depreciation, amortization and gains on disposal of assets) in
both periods.

Net cash used in investing activities was $6.9 million in fiscal 2002,
reflecting $17.5 million in capital expenditures (including $13.0 million for
maintenance expenditures and $4.5 million to support the growth of operations)
offset by net proceeds of $10.6 million from the sale of assets (including net
proceeds of $8.0 million resulting from the sale of our propane storage facility
in Hattiesburg, Mississippi). Net cash used in investing activities was $17.9
million in fiscal 2001, reflecting $23.2 million in capital expenditures
(including $6.5 million for maintenance expenditures and $16.7 million to
support the growth of operations), offset by net proceeds of $5.3 million from
the sale of property, plant and equipment. Net cash used in investing activities
was $99.1 million in fiscal 2000, reflecting $21.3 million in capital
expenditures (including $7.5 million for maintenance expenditures and $13.8
million to support the growth of operations) and $98.0 million of acquisition
payments, including $97.0 million for the acquisition of certain assets from
SCANA Corporation in November 1999 (the "SCANA Acquisition"), offset by net
proceeds of $20.2 million from the sale of property, plant and equipment,
including 23 customer service centers.

Net cash used in financing activities for fiscal 2002 was $57.5 million,
primarily reflecting the payment of quarterly distributions to our Common
Unitholders and the General Partner. Net cash used in financing activities for
fiscal 2001 was $59.1 million, reflecting repayments under the Operating
Partnership's Revolving Credit Agreement, as amended and restated effective

January 29, 2001 (the "Revolving Credit Agreement"), including a net repayment
of $44.0 million borrowed under the SCANA Acquisition facility and a net
repayment of $6.5 million borrowed under the net working capital facility, and
$54.5 million in Partnership distributions, partly offset by net proceeds of
$47.1 million from a public offering of 2,352,700 Common Units in October 2000.
Net cash provided by financing activities for fiscal 2000 was $42.9 million,
reflecting $89.7 million in borrowings to fund the SCANA Acquisition and $3.8
million of net working capital borrowings under the Revolving Credit Agreement
offset by $47.4 million in Partnership distributions and $3.1 million of
expenses to amend the Revolving Credit Agreement. The increase of $7.1 million
in Partnership distributions during fiscal 2001 is attributable to the increase
in Common Units outstanding as a result of the public offering and the increases
in the quarterly distribution amounts.

On March 5, 1996, pursuant to a Senior Note Agreement (the "1996 Senior
Note Agreement"), we issued $425.0 million of senior notes (the "1996 Senior
Notes") with an annual interest rate of 7.54%. Our obligations under the 1996
Senior Note Agreement are unsecured and rank on an equal and ratable basis with
our obligations under the Revolving Credit Agreement. Under the terms of the
1996 Senior Note Agreement, we became obligated to pay the principal on the 1996
Senior Notes in equal annual payments of $42.5 million starting July 1, 2002,
with the last such payment due June 30, 2011. On July 1, 2002, we received net
proceeds of $42.5 million from the issuance of 7.37% Senior Notes due June, 2012
(the "2002 Senior Notes") and used the funds to pay the first annual principal
payment of $42.5 million due under the 1996 Senior Note Agreement. Our
obligations under the agreement governing the 2002 Senior Notes (the "2002
Senior Note Agreement") are unsecured and rank on an equal and ratable basis
with our obligations under the 1996 Senior Note Agreement and the Revolving
Credit Agreement. We intend to refinance the second annual principal payment of
$42.5 million on the 1996 Senior Notes due during fiscal 2003 and have initiated
discussions with various third parties. Alternatively, we currently expect that
we will generate sufficient funds from operations to satisfy the principal
payment.

Our Revolving Credit Agreement, as amended on January 29, 2001, provides a
$75.0 million working capital facility and a $50.0 million acquisition facility.
Borrowings under the Revolving Credit Agreement bear interest at a rate based
upon either LIBOR plus a margin, Wachovia National Bank's prime rate or the
Federal Funds rate plus 1/2 of 1%. An annual fee ranging from .375% to .50%,
based upon certain financial tests, is payable quarterly whether or not
borrowings occur. As of September 28, 2002 and September 29, 2001, $46.0 million
was outstanding under the acquisition facility of the Revolving Credit Agreement
and there were no borrowings under the working capital facility. The Revolving
Credit Agreement matures on May 31, 2003 and, accordingly, the $46.0 million
outstanding balance has been classified as a current liability at September 28,
2002. We have initiated discussions to extend, or otherwise modify, the
Revolving Credit Agreement on a long-term basis. Although there can be no
assurance, we currently believe that we will be able to extend or otherwise
modify the Revolving Credit Agreement on terms economically satisfactory to the
Partnership.

The 1996 Senior Note Agreement, the 2002 Senior Note Agreement and the
Revolving Credit Agreement contain various restrictive and affirmative covenants
applicable to the Operating Partnership, including (a) maintenance of certain
financial tests, including, but not limited to, a leverage ratio of less than
5.0 to 1 and an interest coverage ratio in excess of 2.5 to 1, (b) restrictions
on the incurrence of additional indebtedness, and (c) restrictions on certain
liens, investments, guarantees, loans, advances, payments, mergers,
consolidations, distributions, sales of assets and other transactions. In
addition, the 1996 Senior Note Agreement contains an Adjusted Net Worth test
which requires that we maintain an Adjusted Net Worth (as defined in the 1996
Senior Note Agreement) in excess of $50.0 million. We were in compliance with
all covenants and terms of the 1996 Senior Note Agreement, the 2002 Senior Note
Agreement and the Revolving Credit Agreement as of September 28, 2002. During
December 2002, we amended the 1996 Senior Note Agreement to (i) eliminate the
Adjusted Net Worth financial test to be consistent with the 2002 Senior Note
Agreement and Revolving Credit Agreement, and (ii) add a second tier leverage
ratio which will capture the underfunded portion of our pension obligations. See
"Pension Plan Assets" below.

We will make distributions in an amount equal to all of our Available Cash,
as defined in the Second Amended and Restated Partnership Agreement,
approximately 45 days after the end of each fiscal quarter to holders of record
on the applicable record dates. The Board of Supervisors reviews the level of
Available Cash on a quarterly basis based upon information provided by
management. During each of the first two quarters of fiscal 2002, we made
distributions to our Common Unitholders of $0.5625 per Common Unit. On May 8,
2002, the Board of Supervisors declared a $0.05 annualized increase in the
quarterly distribution from $0.5625 per Common Unit to $0.5750 per Common Unit,
or $2.30 on an annualized basis, for the third quarter of fiscal 2002, which was
paid on August 13, 2002. On October 23, 2002, the Board of Supervisors declared
a quarterly distribution of $0.5750 per Common Unit for the fourth quarter of
fiscal 2002, which was paid on November 12, 2002 to holders of record on
November 4, 2002.

These quarterly distributions included Incentive Distribution Rights
("IDRs"), which are payable to the General Partner to the extent the quarterly
distribution exceeds $0.55 per Common Unit. The IDRs represent an incentive for
the General Partner (which is owned by senior management of the Partnership) to
increase the distributions to Common Unitholders in excess of the $0.55 per
Common Unit target level. With regard to the first $0.55 of the Common Unit
distribution paid in each quarter, 98.11% of the Available Cash is distributed
to the Common Unitholders and 1.89% is distributed to the General Partner. With
regard to the balance of the Common Unit distributions paid, 85% of the
Available Cash is distributed to the Common Unitholders and 15% is distributed
to the General Partner.

As discussed above, the results of operations for the fiscal year ended
September 28, 2002 were adversely impacted by unseasonably warm weather
nationwide throughout fiscal 2002 and during the peak heating season, in
particular, as weather was 13% warmer than normal in fiscal 2002 and 15% warmer
than the prior year. Our ability to manage our cost structure, coupled with our
success in monetizing the Hattiesburg, Mississippi storage facility during the
second quarter of fiscal 2002, which was considered a non-strategic asset,
helped mitigate some of the negative impact of warmer weather conditions on our
results of operations and cash flow. Even with near record warm temperatures
nationwide throughout fiscal 2002, we effectively managed our cash flow without
the need to utilize our working capital facility under the Revolving Credit
Agreement.

Our anticipated cash requirements for fiscal 2003 include maintenance and
growth capital expenditures of approximately $16.0 million for the repair and
replacement of property, plant and equipment, approximately $34.0 million of
interest payments on the 1996 Senior Notes, the 2002 Senior Notes and the
Revolving Credit Agreement and a principal payment of $42.5 million due under
the 1996 Senior Note Agreement. In addition, assuming distributions remain at
the current level, we will be required to pay approximately $58.1 million in
distributions to Common Unitholders and the General Partner during fiscal 2003.
Based on our current estimate of our cash position, availability under the
Revolving Credit Agreement (unused borrowing capacity under the working capital
facility of $75.0 million at September 28, 2002) and expected cash flow from
operating activities, we expect to have sufficient funds to meet our current and
future obligations.

PENSION PLAN ASSETS

As a result of continued turbulent capital markets over the past two years,
coupled with the low interest rate environment, the market value of our pension
portfolio assets have declined significantly while the actuarial value of the
projected benefit obligation for our defined benefit pension plan has steadily
increased. As a result, the projected benefit obligation as of September 28,
2002 exceeded the market value of pension plan assets by $53.1 million. The
unrealized losses experienced in the pension assets resulted in the Partnership
recording a $37.8 million reduction to accumulated other comprehensive
(loss)/income, a component of partners' capital, at the end of fiscal 2002 in
order to adjust our pension liability to reflect the underfunded position. This
pension adjustment, coupled with the $47.3 million adjustment required at the
end of fiscal 2001, results in a cumulative reduction of partners' capital in
the amount of $85.1 million on the consolidated balance sheet at September 28,
2002. These required pension adjustments are attributable to the level of
unrealized losses experienced on our pension assets over the past two years and
represent non-cash charges to our partners' capital with no impact on the
results of operations for the fiscal year ended September 28, 2002.

While fiscal 2002 and 2001 results of operations were not affected by the
significant unrealized losses in the pension portfolio assets over the past two
years, pension expense is expected to increase in fiscal 2003 as unrealized
losses begin to affect the net periodic pension cost pursuant to SFAS No. 87,
"Employers Accounting for Pensions," unless market conditions generate
unrealized gains in our pension assets to offset past unrealized losses. For
purposes of computing the actuarial valuation of projected benefit obligations
and the fair value of plan assets, we reduced the key valuation assumptions to
reflect an estimate of current market expectations related to long-term rates of
return on assets and interest rates. The expected long-term rate of return on
plan assets was reduced from 9.5% as of September 29, 2001 to 8.5% as of
September 28, 2002 and the discount rate assumption was reduced to 6.75% from
7.25%. There were no funding requirements for the defined benefit pension plan
during fiscal 2002 or 2001. In an effort to minimize future increases in the
benefit obligations, during the fourth quarter of fiscal 2002, we adopted an
amendment to the defined benefit pension plan which will cease future service
credits effective January 1, 2003. This amendment resulted in a curtailment gain
of $1.1 million included within the net periodic pension cost for the year ended
September 28, 2002. There can be no assurances that future declines in capital
markets will not have an adverse impact on results of operations or cash flow.

LONG-TERM DEBT OBLIGATIONS AND OTHER COMMITMENTS

Long-term debt obligations and future minimum rental commitments under
noncancelable operating lease agreements as of September 28, 2002 are due as
follows (amounts in thousands):

FISCAL
FISCAL FISCAL FISCAL FISCAL 2007 AND
2003 2004 2005 2006 THEREAFTER TOTAL
-------------- -------------- ------------ ------------- ------------- -------------

Long-term debt $ 88,939 $ 42,910 $42,940 $42,980 $255,000 $472,769
Operating leases 17,277 15,076 12,254 9,761 11,822 66,190

Total long-term debt obligations -------------- -------------- ------------ ------------- ------------- -------------
and lease commitments $106,216 $ 57,986 $55,194 $52,741 $266,822 $538,959
============== ============== ============ ============= ============= =============

Additionally, we have standby letters of credit in the aggregate amount of
$29.8 million, in support of retention levels under our casualty insurance
programs and certain lease obligations, which expire on March 1, 2003.

RELATED PARTY TRANSACTION

In connection with the Partnership's recapitalization in fiscal 1999, the
General Partner acquired the general partner interests from Millennium Chemicals
Inc. for $6.0 million (the "GP Loan") which was borrowed under a private
placement with Mellon Bank N.A. ("Mellon"). In connection with the GP Loan, the
Operating Partnership entered into an agreement with Mellon under which the
Operating Partnership was required (and had the right) to purchase the note
evidencing the GP Loan in the event of a default under the GP Loan by the
General Partner. The Operating Partnership agreed to maintain sufficient
borrowing availability under its available lines of credit to enable it to
repurchase the GP Note in these circumstances. If the Operating Partnership
elected or was required to purchase the GP Note from Mellon, the Operating
Partnership had the right to cause up to all of the Common Units deposited by
management in a trust (amounting to 596,821 Common Units) to be forfeited and
cancelled (and to cause all of the related distributions to be forfeited),
regardless of the amount paid by the Operating Partnership to purchase the GP
Note. In August 2002, the General Partner repaid the remaining balance of the GP
Loan to Mellon and, as a result, all of the arrangements described above
terminated.

ADOPTION OF NEW ACCOUNTING STANDARD

Effective September 30, 2001, the beginning of our 2002 fiscal year, we
elected to early adopt the provisions of SFAS 142. SFAS 142 modifies the
financial accounting and reporting for goodwill and other intangible assets,
including the requirement that goodwill and certain intangible assets no longer
be amortized. This new standard also requires a transitional impairment review
for goodwill, as well as an annual impairment review, to be performed on a
reporting unit basis. As a result of the adoption of SFAS 142, amortization
expense for fiscal 2002 decreased by $7.4 million compared to fiscal 2001, as a
result of the lack of amortization expense related to goodwill. Aside from this
change in accounting for goodwill, no other change in accounting for intangible
assets was required as a result of the adoption of SFAS 142 based on the nature
of our intangible assets. In accordance with SFAS 142, we completed a
transitional impairment review and, as the fair values of identified reporting
units exceed the respective carrying values, goodwill was not considered
impaired as of the date of adoption of SFAS 142 nor as of September 28, 2002.

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001, the Financial Accounting Standards Board issued SFAS No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS 143"), which requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred and the associated asset retirement costs
be capitalized as part of the carrying amount of the long-lived asset. Accretion
expense and depreciation expense related to the liability and capitalized asset
retirement costs, respectively, would be recorded in subsequent periods. SFAS
143 is effective for fiscal years beginning after June 15, 2002. We do not
anticipate that adoption of this standard will have a material impact, if any,
on its consolidated financial position, results of operations or cash flows.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 applies to
all long-lived assets, including discontinued operations, and provides guidance
on the measurement and recognition of impairment charges for assets to be held
and used, assets to be abandoned and assets to be disposed of by sale. SFAS 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The provisions of this standard are to be
applied prospectively. We do not anticipate that adoption of this standard will
have a material impact on our consolidated financial position, results of
operations or cash flows.

On April 30, 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical
Corrections" ("SFAS 145"). SFAS 145 eliminates the requirement that gains and
losses from the extinguishment of debt be aggregated and, if material,
classified as an extraordinary item, net of the related income tax effect.
However, pursuant to SFAS 145, an entity would not be prohibited from
classifying such gains and losses as extraordinary items under certain
circumstances. SFAS 145 also makes several other technical corrections to
existing pronouncements that may change accounting practice. SFAS 145 is
effective for transactions occurring after May 15, 2002. Based on the nature of
transactions covered by this new standard, the standard did not have an impact
on the Partnership's consolidated financial position or consolidated results of
operations as of and for the year ended September 28, 2002. The provisions of
this standard will be reviewed on an ongoing basis, as applicable.

On June 28, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 requires
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. The provisions of SFAS 146 are effective for exit or disposal activities
initiated after December 31, 2002. The provisions of this standard will be
reviewed by the Partnership on an ongoing basis, as applicable.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 28, 2002, we were a party to propane forward and option
contracts with various third parties and futures traded on the New York
Mercantile Exchange (the "NYMEX"). Futures and forward contracts require that we
sell or acquire propane at a fixed price at fixed future dates. An option
contract allows, but does not require, its holder to buy or sell propane at a
specified price during a specified time period; the writer of an option contract
must fulfill the obligation of the option contract, should the holder choose to
exercise the option. At expiration, the contracts are settled by the delivery of
propane to the respective party or are settled by the payment of a net amount
equal to the difference between the then current price of propane and the fixed
contract price. The contracts are entered into in anticipation of market
movements and to manage and hedge exposure to fluctuating propane prices, as
well as to help ensure the availability of propane during periods of high
demand.

Market risks associated with the trading of futures, options and forward
contracts are monitored daily for compliance with our trading policy which
includes volume limits for open positions. Open inventory positions are reviewed
and managed daily as to exposures to changing market prices.

MARKET RISK

The Partnership is subject to commodity price risk to the extent that
propane market prices deviate from fixed contract settlement amounts. Futures
traded with brokers of the NYMEX require daily cash settlements in margin
accounts. Forward and option contracts are generally settled at the expiration
of the contract term either by physical delivery or through a net settlement
mechanism.

CREDIT RISK

Futures are guaranteed by the NYMEX and, as a result, have minimal credit
risk. The Partnership is subject to credit risk with forward and option
contracts to the extent the counterparties do not perform. The Partnership
evaluates the financial condition of each counterparty with which it conducts
business and establishes credit limits to reduce exposure to credit risk of
non-performance.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We account for derivative instruments in accordance with the provisions of
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"), as amended by SFAS No. 137 and SFAS No. 138. All derivative
instruments are reported on the balance sheet, within other current assets or
other current liabilities, at their fair values. On the date that futures,
forward and option contracts are entered into, we make a determination as to
whether the derivative instrument qualifies for designation as a hedge. Prior to
March 31, 2002, we determined that our derivative instruments did not qualify as
hedges and, as such, the changes in fair values were recorded in income.
Beginning with contracts entered into subsequent to March 31, 2002, a portion of
the derivative instruments entered into have been designated and qualify as cash
flow hedges. For derivative instruments designated as cash flow hedges, we
formally assess, both at the hedge contract's inception and on an ongoing basis,
whether the hedge contract is highly effective in offsetting changes in cash
flows of hedged items. Changes in the fair value of derivative instruments
designated as cash flow hedges are reported in accumulated other comprehensive
income (loss) ("OCI") to the extent effective and reclassified into cost of
products sold during the same period in which the hedged item affects earnings.
The mark-to-market gains or losses on ineffective portions of hedges are
recognized in cost of products sold immediately. Changes in the fair value of
derivative instruments that are not designated as hedges are recorded in current
period earnings. Fair values for forward contracts and futures are derived from
quoted market prices for similar instruments traded on the NYMEX.

At September 28, 2002, the fair value of derivative instruments described
above resulted in derivative assets of $2.1 million. For the year ended
September 28, 2002 operating expenses include unrealized gains of $5.4 million
compared to unrealized losses of $3.1 million for the year ended September 29,
2001, attributable to the change in fair value of derivative instruments not
designated as hedges. At September 28, 2002, unrealized gains on derivative
instruments designated as cash flow hedges in the amount of $0.7 million were
included in OCI and are expected to be recognized in earnings during the next 12
months as the hedged transactions occur. However, due to the volatility of the
commodities market, the corresponding value in OCI is subject to change prior to
its impact on earnings.

SENSITIVITY ANALYSIS

In an effort to estimate our exposure to unfavorable market price changes
in propane related to our open positions under derivative instruments, we
developed a model that incorporated the following data and assumptions:

A. The actual fixed contract price of open positions as of September 28,
2002 for each of the future periods.

B. The estimated future market prices for futures and forward contracts
as of September 28, 2002 were derived from the NYMEX for traded
propane futures for each of the future periods.

C. The market prices determined in B above were adjusted adversely by a
hypothetical 10% change in the future periods and compared to the
fixed contract settlement amounts in A above to project the potential
negative impact on earnings that would be recognized for the
respective scenario.

Based on the sensitivity analysis described above, the hypothetical 10%
adverse change in market prices for each of the future months for which a
future, forward and/or option contract exists indicate either a reduction in
potential future gains or potential losses in future earnings by $0.7 million
and $1.5 million, as of September 28, 2002 and September 29, 2001, respectively.
The above hypothetical change does not reflect the worst case scenario. Actual
results may be significantly different depending on market conditions and the
composition of the open position portfolio.

As of September 28, 2002, our open position portfolio reflected a net long
position (purchase) aggregating $7.4 million.

The average posted price of propane on December 2, 2002 at Mont Belvieu,
Texas (a major storage point) was 48.4 cents per gallon as compared to 47.75
cents per gallon on September 28, 2002, representing a 1.4% increase.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Partnership's Consolidated Financial Statements and the Report of
Independent Accountants thereon and the Supplemental Financial Information
listed on the accompanying Index to Financial Statement Schedule are included
herein.

SELECTED QUARTERLY FINANCIAL DATA

Due to the seasonality of the retail propane business, first and second
quarter revenues and earnings are consistently greater than third and fourth
quarter results. The following presents the Partnership's selected quarterly
financial data for the last two fiscal years (unaudited; in thousands, except
per unit amounts).

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL YEAR
------- ------- ------- ------- ----------
FISCAL 2002
- -----------

Revenues ........................ $ 181,864 $ 235,887 $ 137,635 $ 109,719 $ 665,105
Gain on sale of storage facility. -- 6,768 -- -- 6,768
Income/(loss) before interest
expense and income taxes...... 29,475 70,740 (2,828) (9,173) 88,214
Net income/(loss) ............... 20,613 61,901 (11,028) (17,962) 53,524
Net income/(loss) per unit -
Basic ........................ 0.82 2.46 (0.44) (0.71) 2.12

Cash provided by/(used in):
Operating activities ......... 3,421 32,701 29,906 2,747 68,775
Investing activities ......... (4,018) 4,034 (3,213) (3,654) (6,851)
Financing activities ......... (14,168) (14,168) (14,186) (14,941) (57,463)

EBITDA (a) ...................... $ 37,061 $ 78,146 $ 4,549 $ (1,849) $ 117,907
Retail gallons sold ............. 123,958 168,621 86,730 76,679 455,988

FISCAL 2001
- -----------

Revenues ........................ $ 295,928 $ 354,893 $ 145,070 $ 135,645 $ 931,536
Income/(loss) before interest
expense and income taxes ..... 42,776 67,535 (5,542) (13,294) 91,475
Net income/(loss) ............... 32,717 57,176 (14,559) (21,824) 53,510
Net income/(loss) per unit -
Basic ........................ 1.33 2.28 (0.58) (0.87) 2.14

Cash provided by/(used in):
Operating activities ......... 1,522 35,871 46,651 17,794 101,838
Investing activities ......... (3,414) (4,651) (3,993) (5,849) (17,907)
Financing activities ......... 9,175 (32,984) (21,435) (13,838) (59,082)

EBITDA (a) ...................... $ 52,362 $ 77,554 $ 3,935 $ (3,874) $ 129,977
Retail gallons sold ............. 163,900 185,068 90,129 85,631 524,728

(a) EBITDA (earnings before interest, taxes, depreciation and
amortization) is calculated as income/(loss) before interest expense
and income taxes plus depreciation and amortization. EBITDA should not
be considered as an alternative to net income (as an indicator of
operating performance) or as an alternative to cash flow (as a measure
of liquidity or ability to service debt obligations) and is not in
accordance with or superior to generally accepted accounting
principles, but provides additional information for evaluating the
Partnership's ability to distribute quarterly distributions or to
increase quarterly distributions. Because EBITDA excludes some, but
not all, items that affect net income and this measure may vary among
companies, the EBITDA data presented above may not be comparable to
similarly titled measures of other companies. The following is a
reconciliation of EBITDA to income before interest expense and
provision for income taxes for the respective quarters:

FISCAL 2002 FIRST SECOND THIRD FOURTH TOTAL
- ------------ QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- -------

Income (loss) before interest expense
and provision for income taxes........ $ 29,475 $ 70,740 $ (2,828) $ (9,173) $ 88,214
Add: Depreciation and amortization..... 7,586 7,406 7,377 7,324 29,693
-------- -------- -------- -------- --------

EBITDA $ 37,061 $ 78,146 $ 4,549 $ (1,849) $117,907
======== ======== ======== ======== ========

FISCAL 2001 FIRST SECOND THIRD FOURTH TOTAL
- ------------ QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- -------
Income (loss) before interest expense
and provision for income taxes........ $ 42,776 $ 67,535 $ (5,542) $ (13,294) $ 91,475
Add: Depreciation and amortization 9,586 10,019 9,477 9,420 38,502
-------- -------- -------- -------- --------

EBITDA $ 52,362 $ 77,554 $ 3,935 $ (3,874) $129,977
======== ======== ======== ======== ========

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

PARTNERSHIP MANAGEMENT

The Partnership Agreement provides that all management powers over the
business and affairs of the Partnership are exclusively vested in its Board of
Supervisors and, subject to the direction of the Board of Supervisors, the
officers of the Partnership. No Unitholder has any management power over the
business and affairs of the Partnership or actual or apparent authority to enter
into contracts on behalf of, or to otherwise bind, the Partnership. Three
independent Elected Supervisors and two Appointed Supervisors serve on the Board
of Supervisors pursuant to the terms of the Partnership Agreement. The Appointed
Supervisors are appointed by the General Partner.

The three Elected Supervisors serve on the Audit Committee with the
authority to review, at the request of the Board of Supervisors, specific
matters as to which the Board of Supervisors believes there may be a conflict of
interest in order to determine if the resolution of such conflict proposed by
the Board of Supervisors is fair and reasonable to the Partnership. Under the
Partnership Agreement, any matters approved by the Audit Committee will be
conclusively deemed to be fair and reasonable to the Partnership, approved by
all partners of the Partnership and not a breach by the General Partner or the
Board of Supervisors of any duties they may owe the Partnership or the
Unitholders. In addition, the Audit Committee will review external financial
reporting of the Partnership, will recommend engagement of the Partnership's
independent accountants and will review the Partnership's procedures for
internal auditing and the adequacy of the Partnership's internal accounting
controls.

BOARD OF SUPERVISORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The following table sets forth certain information with respect to the
members of the Board of Supervisors and executive officers of the Partnership as
of December 18, 2002. Officers are elected for one-year terms and Supervisors
are elected or appointed for three-year terms. The Partnership will hold a
tri-annual meeting during the third quarter of fiscal 2003 for the election of
the elected members of the Board of Supervisors.

POSITION WITH THE
NAME AGE PARTNERSHIP
- --------------------- --- ----------------------------------------
Mark A. Alexander.... 44 President and Chief Executive Officer; Member of
the Board of Supervisors (Appointed Supervisor)
Michael J. Dunn, Jr.. 53 Senior Vice President - Corporate Development;
Member of the Board of Supervisors
(Appointed Supervisor)
David R. Eastin...... 44 Senior Vice President and Chief Operating Officer
Robert M. Plante..... 54 Vice President - Finance
Jeffrey S. Jolly..... 50 Vice President and Chief Information Officer
Michael M. Keating... 49 Vice President - Human Resources and Administration
A. Davin D'Ambrosio.. 38 Treasurer
Janice G. Meola...... 36 General Counsel and Secretary
Michael A. Stivala... 33 Controller
John Hoyt Stookey.... 72 Member of the Board of Supervisors
(Chairman and Elected Supervisor)
Harold R. Logan, Jr.. 58 Member of the Board of Supervisors
(Elected Supervisor)
Dudley C. Mecum...... 67 Member of the Board of Supervisors
(Elected Supervisor)
Mark J. Anton........ 76 Supervisor Emeritus

Mr. Alexander has served as President and Chief Executive Officer since
October 1996 and as an Appointed Supervisor since March 1996. He was Executive
Vice Chairman and Chief Executive Officer from March through October 1996. From
1989 until joining the Partnership, Mr. Alexander was an officer of Hanson
Industries (the United States management division of Hanson plc), most recently
Senior Vice President - Corporate Department. Mr. Alexander serves as Chairman
of the Board of Managers of the General Partner. He is a member of the Executive
Committee of the National Propane Gas Association and Chairman of the Research
and Development Advisory Committee of the Propane Education and Research
Council.

Mr. Dunn has served as Senior Vice President since June 1998 and became
Senior Vice President - Corporate Development in November 2002. Mr. Dunn has
served as an Appointed Supervisor since July 1998. He was Vice President -
Procurement and Logistics from March 1997 until June 1998. From 1983 until
joining the Partnership, Mr. Dunn was Vice President of Commodity Trading for
the investment banking firm of Goldman Sachs & Company. Mr. Dunn serves on the
Board of Managers of the General Partner.

Mr. Eastin has served as Chief Operating Officer since May 1999 and became
a Senior Vice President in November 2000. From 1992 until joining the
Partnership, Mr. Eastin held various executive positions with Star Gas Propane
LP, most recently as Vice President - Operations. Mr. Eastin serves on the Board
of Managers of the General Partner.

Mr. Plante has served as a Vice President since October 1999 and became
Vice President - Finance in November 2002. He was Treasurer from March 1996
through October 2002. Mr. Plante held various financial and managerial positions
with predecessors of the Partnership from 1977 until 1996.

Mr. Jolly has served as Vice President and Chief Information Officer since
May 1999. He was Vice President - Information Services from July 1997 until May
1999. From May 1993 until joining the Partnership, Mr. Jolly was Vice President
- - Information Systems at The Wood Company, a food services company.

Mr. Keating has served as Vice President - Human Resources and
Administration since July 1996. He previously held senior human resource
positions at Hanson Industries and Quantum Chemical Corporation ("Quantum"), a
predecessor of the Partnership.

Mr. D'Ambrosio became Treasurer in November 2002. He served as Assistant
Treasurer from October 2000 to November 2002 and as Director of Treasury
Services from January 1998 to October 2000. Mr. D'Ambrosio joined the
Partnership in May 1996 after ten years in the commercial banking industry.

Ms. Meola has served as General Counsel and Secretary of the Partnership
since May 1999. She was Counsel from July 1998 to May 1999 and Associate Counsel
from September 1996, when she joined the Partnership, until July 1998.

Mr. Stivala has served as Controller since December 2001. From 1991 until
joining the Partnership, he held several positions with PricewaterhouseCoopers
LLP, most recently as Senior Manager in the Assurance practice. Mr. Stivala is a
Certified Public Accountant and a member of the American Institute of Certified
Public Accountants.

Mr. Stookey has served as an Elected Supervisor and Chairman of the Board
of Supervisors since March 1996. From 1986 until September 1993, he was the
Chairman, President and Chief Executive Officer of Quantum and served as
non-executive Chairman and a director of Quantum from its acquisition by Hanson
plc in September 1993 until October 1995. Mr. Stookey is a director of United
States Trust Company of New York and Graphic Packaging, Inc.

Mr. Logan has served as an Elected Supervisor since March 1996. Since 1995,
he has been Executive Vice President - Finance, Treasurer and a director of
TransMontaigne Inc., which provides logistical services (i.e., pipeline,
terminaling and marketing) to producers and end users of refined petroleum
products. He served as Senior Vice President of Finance and a director of
Associated Natural Gas Corporation, an independent gatherer and marketer of
natural gas, natural gas liquids and crude oil, from 1987 until 1995. Mr. Logan
is a director of Union Bankshares Ltd. and Graphic Packaging, Inc.

Mr. Mecum has served as an Elected Supervisor since June 1996. He has been
a managing director of Capricorn Holdings, LLC (a sponsor of and investor in
leveraged buyouts) since June 1997. Mr. Mecum was a partner of G.L. Ohrstrom &
Co. (a sponsor of and investor in leveraged buyouts) from 1989 to June 1996. Mr.
Mecum is a director of Lyondell Chemical Co., Dyncorp, CitiGroup, Inc., CCC
Information Systems Inc. and Mrs. Fields Holding Company, Inc.

Mr. Anton has served as Supervisor Emeritus of the Board of Supervisors
since January 1999. He is a former President, Chief Executive Officer and
Chairman of the Board of Directors of Suburban Propane Gas Corporation, a
predecessor of the Partnership, and a former Executive Vice President of
Quantum.

BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Partnership's directors and
executive officers to file initial reports of ownership and reports of changes
in ownership of the Partnership's Common Units with the Securities and Exchange
Commission. Directors, executive officers and ten percent Unitholders are
required to furnish the Partnership with copies of all Section 16(a) forms that
they file. Based on a review of these filings, the Partnership believes that all
such filings were made timely during fiscal 2002.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth a summary of all compensation awarded or
paid to or earned by the chief executive officer and the four other most highly
compensated executive officers of the Partnership for services rendered to the
Partnership during each of the last three fiscal years.

ANNUAL COMPENSATION
------------------------
ALL
LTIP OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS(1)($) PAYOUT ($) COMPENSATION(2)($)
- --------------------------- ---- ---------- ----------- ---------- ------------------

Mark A. Alexander ............................... 2002 450,000 157,500 25,382 158,513
President and Chief Executive Officer ........... 2001 450,000 450,000 7,141 166,371
2000 400,000 304,000 -- 128,548

Michael J. Dunn, Jr ............................. 2002 275,000 81,813 12,135 85,956
Sr. Vice President - Corporate Development ...... 2001 260,000 221,000 3,414 89,321
2000 235,000 151,810 -- 67,324

David R. Eastin ................................. 2002 260,000 77,350 2,018 81,984
Senior Vice President and Chief Operating Officer 2001 240,000 204,000 -- 84,362
2000 190,000 108,300 -- 48,591

Robert M. Plante ................................ 2002 175,000 45,625 3,807 32,938
Vice President - Finance ........................ 2001 150,000 75,000 1,071 35,169
2000 132,500 50,350 -- 24,988

Jeffrey S. Jolly ................................ 2002 177,500 31,063 4,600 41,414
Vice President and Chief Information Officer .... 2001 170,000 85,000 1,294 47,660
2000 150,000 57,000 -- 58,556

(1) Bonuses are reported for the year earned, regardless of the year paid.

(2) For Mr. Alexander, this amount includes the following: $2,750 under the
Retirement Savings and Investment Plan; $1,479 in administrative fees under
the Cash Balance Pension Plan; $135,000 awarded under the Long-Term
Incentive Plan; and $19,284 for insurance. For Mr. Dunn, this amount
includes the following: $2,750 under the Retirement Savings and Investment
Plan; $1,479 in administrative fees under the Cash Balance Pension Plan;
$70,125 awarded under the Long-Term Incentive Plan; and $11,602 for
insurance. For Mr. Eastin, this amount includes the following: $2,750 under
the Retirement Savings and Investment Plan; $1,479 in administrative fees
under the Cash Balance Pension Plan; $66,300 awarded under the Long-Term
Incentive Plan; and $11,455 for insurance. For Mr. Plante, this amount
includes the following: $2,625 under the Retirement Savings and Investment
Plan; $1,479 in administrative fees under the Cash Balance Pension Plan;
$26,250 awarded under the Long-Term Incentive Plan; and $2,584 for
insurance. For Mr. Jolly, this amount includes the following: $2,663 under
the Retirement Savings and Investment Plan; $1,479 in administrative fees
under the Cash Balance Pension Plan; $26,625 awarded under the Long-Term
Incentive Plan; and $10,647 for insurance.

RETIREMENT BENEFITS

The following table sets forth the annual benefits upon retirement at age
65 in 2002, without regard to statutory maximums, for various combinations of
final average earnings and lengths of service which may be payable to Messrs.
Alexander, Dunn, Eastin, Plante and Jolly under the Pension Plan for Eligible
Employees of the Operating Partnership and its Subsidiaries and/or the Suburban
Propane Company Supplemental Executive Retirement Plan. Each such plan has been
assumed by the Partnership and each such person will be credited for service
earned under such plan to date. Messrs. Alexander, Dunn, and Eastin have 6
years, 5 years and 3 years, respectively, under both plans. For vesting
purposes, however, Mr. Alexander has 18 years combined service with the
Partnership and his prior service with Hanson Industries. Messrs. Plante and
Jolly have 25 years and 5 years, respectively, under the Pension Plan. They are
currently limited to IRS statutory maximums for defined benefit plans.

PENSION PLAN
ANNUAL BENEFIT FOR YEARS OF CREDITED SERVICE SHOWN (1),(2),(3),(4),(5)

AVERAGE
EARNINGS 5 YRS. 10 YRS. 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
--------- ------ ------- ------- ------- ------- ------- -------
$100,000 7,888 15,775 23,663 31,551 39,438 47,326 55,214
$200,000 16,638 33,275 49,913 66,551 83,188 99,826 116,464
$300,000 25,388 50,775 76,163 101,551 126,938 152,326 177,714
$400,000 34,138 68,275 102,413 136,551 170,688 204,826 238,964
$500,000 42,888 85,775 128,663 171,551 214,438 257,326 300,214

(1) The Plans' definition of earnings consists of base pay only.
(2) Annual Benefits are computed on the basis of straight life annuity
amounts. The pension benefit is calculated as the sum of (a) plus (b)
multiplied by (c) where (a) is that portion of final average earnings
up to 125% of social security Covered Compensation times 1.4% and (b)
is that portion of final average earnings in excess of 125% of social
security Covered Compensation times 1.75% and (c) is credited service
up to a maximum of 35 years.
(3) Effective January 1, 1998, the Plan was amended to a cash balance
benefit formula for current and future Plan participants. Initial
account balances were established based upon the actuarial equivalent
value of the accrued December 31, 1997 prior plan benefit. Annual
interest credits and pay-based credits will be credited to this
account. The 2002 pay-based credits for Messrs. Alexander, Dunn,
Eastin, Plante and Jolly are 3.0%, 2.0%, 1.5%, 10.0% and 2.0%,
respectively. Participants as of December 31, 1997 will receive the
greater of the cash balance benefit and the prior plan benefit through
the year 2002. It should also be noted that the Plan was amended
effective January 1, 2000. Under this amendment, individuals who are
hired or rehired on or after January 1, 2000 will not be eligible to
participate in the Plan.
(4) In addition, a supplemental cash balance account was established equal
to the value of certain benefits related to retiree medical and
vacation benefits. An initial account value was determined for those
active employees who were eligible for retiree medical coverage as of
April 1, 1998 equal to $415 multiplied by years of benefit service
(maximum of 35 years). Future pay-based credits and interest are
credited to this account. The 2002 pay-based credits for Messrs.
Alexander, Dunn, Eastin, Plante and Jolly are 2.0%, 0.0%, 0.0%, 2.0%
and 0.0%, respectively.
(5) Effective January 1, 2003, all future pay-based credits as determined
under the cash balance benefit formula will be discontinued. Interest
credits will continue to be applied based on the five-year U.S.
Treasury bond rate in effect during the preceding November, plus one
percent.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Partnership has adopted a non-qualified, unfunded supplemental
retirement plan known as the Supplemental Executive Retirement Plan (the
"SERP"). The purpose of the SERP is to provide certain executive officers with a
level of retirement income from the Partnership, without regard to statutory
maximums. Effective January 1, 1998, the Pension Plan for Eligible Employees of
Suburban Propane, L.P. (the "Qualified Plan") was amended and restated as a cash
balance plan. In light of the conversion of the Qualified Plan to a cash balance
formula, the SERP has been amended and restated effective January 1, 1998. The
annual amount of the Normal Retirement Benefit payable under the SERP shall be
determined as follows: (a) For Annuity Starting Dates or other determination
dates on or after January 1, 1998 and prior to January 1, 2003, a Participant's
Normal Retirement Benefit shall be equal to the excess of: (i) (A) the greater
of a Participant's Pension benefit (determined using Average Final Compensation
as defined in footnote 2 of the Retirement Benefits Section) or the accrued
benefit based on the Basic Account (determined using Compensation and Excess
Compensation as defined in the SERP), plus (B) the accrued benefit based on the
Supplemental Account, if any (determined using Compensation and Excess
Compensation as defined in the SERP); over (ii) the Participant's Pension
Offset. (b) For Annuity Starting Dates or other determination dates on or after
January 1, 2003, a Participant's Normal Retirement Benefit shall be equal to the
excess of: (i) (A) the greater of a Participant's Pension benefit determined as
of January 1, 2003 (based on Compensation, Benefit Service, and all other
relevant factors as of January 1, 2003) or the accrued benefit based on the
Basic Account (determined using Compensation and Excess Compensation as defined
in the SERP), plus (B) the accrued benefit based on the Supplemental Account, if
any (determined using Compensation and Excess Compensation as defined in the
SERP); over (ii) the Participant's Pension Offset. Messrs. Alexander, Dunn, and
Eastin currently participate in the SERP.

LONG-TERM INCENTIVE PLAN

The Partnership has adopted a non-qualified, unfunded long-term incentive
plan for officers and key employees, effective October 1, 1997. Awards are based
on a percentage of base pay and are subject to the achievement of certain
performance criteria, including the Partnership's ability to earn sufficient
funds and make cash distributions on its Common Units with respect to each
fiscal year. Awards vest over time with one-third vesting at the beginning of
years three, four, and five from the award date.

Long-Term Incentive Plan awards earned in fiscal 2002 were as follows:

PERFORMANCE OR
OTHER PERIOD
AWARD UNTIL MATURATION POTENTIAL AWARDS UNDER PLAN
NAME FY 2002 OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ------- ---------------- --------- ------ -------

Mark A. Alexander $135,000 3-5 Years $ 0 $135,000 $135,000
Michael J. Dunn, Jr. 70,125 3-5 Years 0 70,125 70,125
David R. Eastin 66,300 3-5 Years 0 66,300 66,300
Robert M. Plante 26,250 3-5 Years 0 26,250 26,250
Jeffrey S. Jolly 26,625 3-5 Years 0 26,625 26,625

EMPLOYMENT AGREEMENT

The Partnership entered into an employment agreement (the "Employment
Agreement") with Mr. Alexander, which became effective March 5, 1996 and was
amended October 23, 1997 and April 14, 1999.

Mr. Alexander's Employment Agreement had an initial term of three years,
and automatically renews for successive one-year periods, unless earlier
terminated by the Partnership or by Mr. Alexander or otherwise terminated in
accordance with the Employment Agreement. The Employment Agreement for Mr.
Alexander provides for an annual base salary of $450,000 as of September 28,
2002 and provides for Mr. Alexander to earn a bonus up to 100% of annual base
salary (the "Maximum Annual Bonus") for services rendered based upon certain
performance criteria. The Employment Agreement also provides for the opportunity
to participate in benefit plans made available to other senior executives and
senior managers of the Partnership. The Partnership also provides Mr. Alexander
with term life insurance with a face amount equal to three times his annual base
salary. If a "change of control" (as defined in the Employment Agreement) of the
Partnership occurs and within six months prior thereto or at any time subsequent
to such change of control the Partnership terminates the Executive's employment
without "cause" or the Executive resigns with "good reason" or the Executive
terminates his employment during the six month period commencing on the six
month anniversary and ending on the twelve month anniversary of a "change of
control", then Mr. Alexander will be entitled to (i) a lump sum severance
payment equal to three times the sum of his annual base salary in effect as of
the date of termination and the Maximum Annual Bonus, and (ii) medical benefits
for three years from the date of such termination. The Employment Agreement
provides that if any payment received by Mr. Alexander is subject to the 20%
federal excise tax under Section 4999 of the Internal Revenue Code, the payment
will be grossed up to permit Mr. Alexander to retain a net amount on an
after-tax basis equal to what he would have received had the excise tax not been
payable.

Mr. Alexander also participates in the SERP, which provides retirement
income which could not be provided under the Partnership's qualified plans by
reason of limitations contained in the Internal Revenue Code.

SEVERANCE PROTECTION PLAN FOR KEY EMPLOYEES

The Partnership's officers and key employees are provided with employment
protection following a "change of control" as defined in the Severance
Protection Plan. This plan provides for severance payments equal to sixty-five
(65) weeks of base pay and target bonuses for such officers and key employees
following a "change of control" and termination of employment. Pursuant to their
Severance Protection Agreements, Messrs. Dunn, Eastin, Plante and Jolly, as
executive officers of the Partnership, have been granted severance protection
payments of seventy-eight (78) weeks of base pay and target bonuses following a
"change in control" and termination of employment in lieu of participation in
the Severance Protection Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Compensation of the executive officers of the Partnership is determined by
the Compensation Committee of its Board of Supervisors. The Compensation
Committee is comprised of Messrs. Stookey and Logan, neither of who are officers
or employees of the Partnership.

COMPENSATION OF SUPERVISORS

Mr. Stookey, who is the Chairman of the Board of Supervisors, receives
annual compensation of $75,000 for his services to the Partnership. Mr. Logan
and Mr. Mecum, the other two Elected Supervisors, receive $50,000 per year and
Mr. Mark J. Anton, who serves as Supervisor Emeritus, receives $15,000 per year.
All Elected Supervisors and the Supervisor Emeritus receive reimbursement of
reasonable out-of-pocket expenses incurred in connection with meetings of the
Board of Supervisors. The Partnership does not expect to pay any additional
remuneration to its employees (or employees of any of its affiliates) or
employees of the General Partner or any of its affiliates for serving as members
of the Board of Supervisors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of December 18, 2002
regarding the beneficial ownership of Common Units and Incentive Distribution
Rights by each member of the Board of Supervisors, each executive officer named
in the Summary Compensation table, all members of the Board of Supervisors and
executive officers as a group and each person or group known by the Partnership
(based upon filings under Section 13(d) or (g) under The Securities Exchange Act
of 1934) to own beneficially more than 5% thereof. Except as set forth in the
notes to the table, the business address of each individual or entity in the
table is c/o the Partnership, 240 Route 10 West, Whippany, New Jersey 07981-0206
and each individual or entity has sole voting and investment power over the
Common Units reported.

SUBURBAN PROPANE, L.P.

AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------------ -------------------- --------
<c>
Common Units Mark A. Alexander (a) 30,000 *
Michael J. Dunn, Jr. (a) 0 -
David R. Eastin (a) 0 -
Robert M. Plante (a) 250 -
Jeffrey S. Jolly (a) 0 -

John Hoyt Stookey 11,519 *
Harold R. Logan, Jr. 15,064 *
Dudley C. Mecum 5,634 *
Mark J. Anton (b) 4,600 *
All Members of the Board
of Supervisors and Executive
Officers as a Group (13 persons) 67,167 *

Goldman, Sachs & Co. (c) 2,317,166 9.6%
85 Broad Street Common Units
New York, NY 10004

Incentive Distribution Suburban Energy Services
Rights Group LLC N/A N/A

* Less than 1%.

(a) Excludes the following numbers of Common Units as to which the following
individuals deferred receipt as described below; Mr. Alexander - 243,902;
Mr. Dunn - 48,780; Mr. Eastin - 19,512; Mr. Plante - 19,512 and Mr. Jolly -
19,512. In connection with the Partnership's recapitalization in 1999,
members of the General Partner elected to defer receipt of a total of
596,821 Common Units issuable to them until the date the GP Loan was
repaid. These Common Units are held in trust pursuant to a Compensation
Deferral Plan, and the individuals who deferred receipt will have no voting
or investment power over these Common Units until they are distributed by
the trust. The GP Loan was repaid in full in August of 2002. Accordingly,
except as noted below, the deferred units will be distributed to the
members of the General Partner in January 2003 in accordance with the terms
of the Compensation Deferral Plan and may be voted and/or freely traded

thereafter. Mr. Alexander and Mr. Dunn have elected to further defer
receipt of their deferred units (totaling 292,682 Common Units) until
January 2008. As a consequence, their deferred units will remain in the
trust until that time and they will have no voting or investment power over
these deferred units. In the interim, however, Mr. Alexander and Mr. Dunn
have elected to receive the quarterly cash distributions on these deferred
units. Notwithstanding the foregoing, if a "change of control" of the
Partnership occurs (as defined in the Compensation Deferral Plan), all of
the deferred Common Units (and related distributions) held in the trust
automatically become distributable to the members.

(b) Mr. Anton shares voting and investment power over 3,600 Common Units with
his wife and over 1,000 Common Units with Lizmar Partners, L.P., a family
owned limited partnership of which he is its general partner.

(c) Holder reports having shared voting power with respect to all of the Common
Units and shared dispositive power with respect to all of the Common Units.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with the Partnership's recapitalization in 1999, the General
Partner acquired the general partner interests from Millennium Chemicals Inc.
for $6.0 million (the "GP Loan") which was borrowed under a private placement
with Mellon Bank N.A. ("Mellon"). In connection with the GP Loan, the Operating
Partnership entered into an agreement with Mellon under which the Operating
Partnership was required (and had the right) to purchase the note evidencing the
GP Loan in the event of a default under the GP Loan by the General Partner.

The Operating Partnership agreed to maintain sufficient borrowing
availability under its available lines of credit to enable it to repurchase the
GP Note in these circumstances. If the Operating Partnership elected or was
required to purchase the GP Note from Mellon, the Operating Partnership had the
right to cause up to all of the Common Units deposited by management in a trust
(amounting to 596,821 Common Units) to be forfeited and cancelled (and to cause
all of the related distributions to be forfeited), regardless of the amount paid
by the Operating Partnership to purchase the GP Note. In August 2002, the
General Partner repaid the remaining balance of the GP Loan to Mellon and, as a
result, all of the arrangements described above terminated.

ITEM 14. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Within 90 days prior to the filing date of this Annual Report, the
Partnership carried out an evaluation, under the supervision and with the
participation of the Partnership's management, including the Partnership's Chief
Executive Officer and Principal Financial Officer, of the effectiveness of the
design and operation of the Partnership's disclosure controls and procedures
pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 (the "Exchange
Act"). Based upon that evaluation, the Chief Executive Officer and Principal
Financial Officer concluded that the Partnership's disclosure controls and
procedures are effective.

Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in the reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time period specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
reports filed under the Exchange Act is accumulated and communicated to
management including the Chief Executive Officer and the Principal Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

(b) Changes in Internal Controls

There were no significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our
most recent evaluation.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:

1. (i) Financial Statements

See "Index to Financial Statements" set forth on page F-1.

(ii) Supplemental Financial Information

Balance Sheet Information of Suburban Energy Services Group LLC

See "Index to Supplemental Financial Information" set forth on
page F-23.

2. Financial Statement Schedule

See "Index to Financial Statement Schedule" set forth on page
S-1.

3. Exhibits

See "Index to Exhibits" set forth on page E-1.

(b) The Partnership filed a Form 8-K on January 11, 2002, April 11, 2002,
July 11, 2002 and October 10, 2002, each incorporating a press release
announcing the Partnership's Quarterly Earnings Conference Call.
Additionally, the Partnership filed a Form 8-K on July 24, 2002.

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.

Suburban Propane Partners, L.P.

By: /S/ MARK A. ALEXANDER
-----------------------------------------
Mark A. Alexander
President, Chief Executive Officer and
Appointed Supervisor

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

SIGNATURE TITLE DATE
--------- ----- ----

/S/ MICHAEL J. DUNN, JR Senior Vice President - Corporate December 20, 2002
- ----------------------- Development
(Michael J. Dunn, Jr.) Suburban Propane Partners, L.P.
Appointed Supervisor

/S/ JOHN HOYT STOOKEY Chairman and Elected Supervisor December 20, 2002
- ---------------------
(John Hoyt Stookey)

/S/ HAROLD R. LOGAN, JR. Elected Supervisor December 20, 2002
- ------------------------
(Harold R. Logan, Jr.)

/S/ DUDLEY C. MECUM Elected Supervisor December 20, 2002
- -------------------
(Dudley C. Mecum)

/S/ ROBERT M. PLANTE Vice President - Finance December 20, 2002
- -------------------- Suburban Propane Partners, L.P.
(Robert M. Plante) (Principal Financial Officer)

/S/ MICHAEL A. STIVALA Controller December 20, 2002
- ---------------------- Suburban Propane Partners, L.P.
(Michael A. Stivala) (Principal Accounting Officer)

CERTIFICATIONS

I, Mark A. Alexander, certify that:

1. I have reviewed this Annual Report on Form 10-K of Suburban Propane
Partners, L.P.;

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 Annual 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-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures 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 Annual Report
is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this Annual Report (the "Evaluation Date"); and

c) Presented in this Annual Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's Board of Supervisors (or persons performing the
equivalent functions):

a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
Annual Report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

December 20, 2002 /S/ MARK A. ALEXANDER
---------------------------------
Mark A. Alexander
President and Chief Executive Officer

I, Robert M. Plante, certify that:

1. I have reviewed this Annual Report on Form 10-K of Suburban Propane
Partners, L.P.;

b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this Annual Report (the "Evaluation Date"); and

c) Presented in this Annual Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

December 20, 2002 /S/ ROBERT M. PLANTE
---------------------------------
Robert M. Plante
Vice President - Finance
(Principal Financial Officer)

INDEX TO EXHIBITS
-----------------

The exhibits listed on this Exhibit Index are filed as part of this Annual
Report. Exhibits required to be filed by Item 601 of Regulation S-K, which are
not listed below, are not applicable.

EXHIBIT
NUMBER DESCRIPTION
------ -----------

D 2.1 Recapitalization Agreement dated as of November 27, 1998 by and
among the Partnership, the Operating Partnership, the General
Partner, Millennium and Suburban Energy Services Group LLC.

K 3.1 Second Amended and Restated Agreement of Limited Partnership of
the Partnership dated as of May 26, 1999.

K 3.2 Second Amended and Restated Agreement of Limited Partnership of
the Operating Partnership dated as of May 26, 1999.

G 10.1 Amended and Restated Credit Agreement dated as of January 29, 2001
by and among Suburban Propane, L.P., the Lenders referred to
therein, First Union National Bank, as Administrative Agent, Fleet
National Bank, as Syndication Agent and the Bank of New York, as
Managing Agent.

I 10.2 First Amendment to Amended and Restated Credit Agreement dated as
of April 3, 2002 between Suburban Propane, L.P., the Lenders
referred to therein, Wachovia Bank, National Association, as
Administrative Agent, Fleet National Bank, as Syndication Agent.

A 10.3 Note Agreement dated as of February 28, 1996 among certain
investors and the Operating Partnership relating to $425 million
aggregate principal amount of 7.54% Senior Notes due
June 30, 2011.

L 10.4 Amendment No. 1 to the Note Agreement dated May 13, 1998 among
certain investors and the Operating Partnership relating to $425
million aggregate principal amount of 7.54% Senior Notes due
June 30, 2011.

L 10.5 Amendment No. 2 to the Note Agreement dated March 29, 1999 among
certain investors and the Operating Partnership relating to $425
million aggregate principal amount of 7.54% Senior Notes due
June 30, 2011.

L 10.6 Amendment No. 3 to the Note Agreement dated December 6, 2000 among
certain investors and the Operating Partnership relating to $425
million aggregate principal amount of 7.54% Senior Notes due
June 30, 2011.

I 10.7 Amendment No. 4 to the Note Agreement dated March 21, 2002 among
certain investors and the Operating Partnership relating to $425
million aggregate principal amount of 7.54% Senior Notes due
June 30, 2011.

L 10.8 Amendment No. 5 to the Note Agreement dated November 20, 2002
among certain investors and the Operating Partnership relating to
$425 million aggregate principal amount of 7.54% Senior Notes due
June 30, 2011.

E-1

I 10.9 Guaranty Agreement dated as of April 11, 2002 provided by four
direct subsidiaries of Suburban Propane, L.P. for the 7.54% Senior
Notes due June 30, 2011.

I 10.10 Intercreditor Agreement dated March 21, 2002 between First Union
National Bank, the Lenders under the Operating Partnership's
Amended and Restated Credit Agreement and the Noteholders of the
Operating Partnership's 7.54% Senior Notes due June 30, 2011.

J 10.11 Note Agreement dated as of April 19, 2002 among certain investors
and the Operating Partnership relating to $42.5 million aggregate
principal amount of 7.37% Senior Notes due June 30, 2012.

J 10.12 Guaranty Agreement dated as of July 1, 2002 provided by certain
subsidiaries of Suburban Propane, L.P. for the 7.37% Senior Notes
due June 30, 2012.

A 10.13 Employment Agreement dated as of March 5, 1996 between the
Operating Partnership and Mr. Alexander.

C 10.14 First Amendment to Employment Agreement dated as of March 5, 1996
between the Operating Partnership and Mr. Alexander entered into
as of October 23, 1997.

E 10.15 Second Amendment to Employment Agreement dated as of March 5, 1996
between the Operating Partnership and Mr. Alexander entered into
as of April 14, 1999.

A 10.16 The Partnership's 1996 Restricted Unit Plan.

F 10.17 Suburban Propane Partners, L.P. 2000 Restricted Unit Plan.

B 10.18 The Partnership's Severance Protection Plan dated September 1996.

L 10.19 Suburban Propane L.P. Long-Term Incentive Plan as amended and
restated effective October 1, 1999.

E 10.20 Benefits Protection Trust dated May 26, 1999 by and between
Suburban Propane Partners, L.P. and First Union National Bank.

E 10.21 Compensation Deferral Plan of Suburban Propane Partners, L.P. and
Suburban Propane, L.P. dated May 26, 1999.

H 10.22 First Amendment to the Compensation Deferral Plan of Suburban
Propane Partners, L.P. and Suburban Propane, L.P. dated
November 5, 2001.

H 10.23 Amended and Restated Supplemental Executive Retirement Plan of the
Partnership (effective as of January 1, 1998).

H 10.24 Amended and Restated Retirement Savings and Investment Plan of
Suburban Propane (effective as of January 1, 1998).

L 10.25 Amendment No. 1 to the Retirement Savings and Investment Plan of
Suburban Propane (effective January 1, 2002).

L 21.1 Listing of Subsidiaries of the Partnership.

E-2

L 23.1 Consent of Independent Accountants.

L 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

A Incorporated by reference to the same numbered Exhibit to the Partnership's
Current Report on Form 8-K filed April 29, 1996.

B Incorporated by reference to the same numbered Exhibit to the Partnership's
Annual Report on Form 10-K for the fiscal year ended September 28, 1996.

C Incorporated by reference to the same numbered Exhibit to the Partnership's
Annual Report on Form 10-K for the fiscal year ended September 27, 1997.

D Incorporated by reference to Exhibit 2.1 to the Partnership's Current
Report on Form 8-K filed December 3, 1998.

E Incorporated by reference to the Partnership's Quarterly Report on Form
10-Q for the fiscal quarter ended June 26, 1999.

F Incorporated by reference to Exhibit 10.16 to the Partnership's Annual
Report on Form 10-K for the fiscal year ended September 30, 2000.

G Incorporated by reference to Exhibit (3)(A) to the Partnership's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 30, 2000.

H Incorporated by reference to the same number Exhibit to the Partnership's
Annual Report on Form 10-K for the fiscal year ended September 29, 2001.

I Incorporated by reference to the Partnership's Quarterly Report on Form
10-Q for the fiscal quarter ended March 30, 2002.

J Incorporated by reference to the Partnership's Quarterly Report on Form
10-Q for the fiscal quarter ended June 29, 2002.

K Incorporated by reference to the Partnership's Proxy Statement filed
pursuant to Section 14(a) of the Securities Exchange Act of 1934 on
April 22, 1999.

L Filed herewith.

E-3

INDEX TO FINANCIAL STATEMENTS

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

PAGE
----

Report of Independent Accountants................................... F-2

Consolidated Balance Sheets - as of September 28, 2002 and
September 29, 2001.................................................. F-3

Consolidated Statements of Operations -
Years Ended September 28, 2002, September 29, 2001 and
September 30, 2000................................................ F-4

Consolidated Statements of Cash Flows -
Years Ended September 28, 2002, September 29, 2001 and
September 30, 2000................................................ F-5

Consolidated Statements of Partners' Capital -
Years Ended September 28, 2002, September 29, 2001 and
September 30, 2000................................................ F-6

Notes to Consolidated Financial Statements.......................... F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Supervisors and Unitholders of
Suburban Propane Partners, L.P.:

In our opinion, the consolidated financial statements listed in the index
appearing under Item 15.(a)1.(i) on page 37 present fairly, in all material
respects, the financial position of Suburban Propane Partners, L.P. and its
subsidiaries (the "Partnership") at September 28, 2002 and September 29, 2001
and the results of their operations and their cash flows for each of the three
fiscal years in the period ended September 28, 2002 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the index
appearing under Item 15.(a)2. on page 37 presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Florham Park, NJ
October 23, 2002

F-2

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands)

September 28, September 29,
2002 2001
------------- -------------

ASSETS
Current assets:

Cash and cash equivalents ................................ $ 40,955 $ 36,494
Accounts receivable, less allowance for doubtful accounts
of $1,894 and $3,992, respectively .................... 33,002 42,702
Inventories .............................................. 36,367 41,891
Prepaid expenses and other current assets ................ 6,465 3,252
--------- ---------
Total current assets ............................. 116,789 124,339
Property, plant and equipment, net ........................... 331,009 344,374
Goodwill, net ................................................ 243,260 243,789
Other intangible assets, net ................................. 1,474 1,990
Other assets ................................................. 7,614 8,514
--------- ---------
Total assets .................................... $ 700,146 $ 723,006
========= =========

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable ......................................... $ 27,412 $ 38,685
Accrued employment and benefit costs ..................... 21,430 29,948
Current portion of long-term borrowings .................. 88,939 42,907
Accrued insurance ........................................ 8,670 7,860
Customer deposits and advances ........................... 26,125 23,217
Accrued interest ......................................... 8,666 8,318
Other current liabilities ................................ 6,303 11,168
--------- ---------
Total current liabilities ...................... 187,545 162,103
Long-term borrowings ......................................... 383,830 430,270
Postretirement benefits obligation ........................... 33,284 34,521
Accrued insurance ............................................ 18,299 17,881
Accrued pension liability .................................... 53,164 13,703
Other liabilities ............................................ 4,738 5,579
--------- ---------
Total liabilities ............................. 680,860 664,057
--------- ---------

Commitments and contingencies

Partners' capital:
Common Unitholders (24,631 units issued and outstanding) 103,680 105,549
General Partner ........................................ 1,924 1,888
Deferred compensation .................................. (11,567) (11,567)
Common Units held in trust, at cost .................... 11,567 11,567
Unearned compensation .................................. (1,924) (1,211)
Accumulated other comprehensive (loss) ................. (84,394) (47,277)
--------- ---------
Total partners' capital ...................... 19,286 58,949
--------- ---------
Total liabilities and partners' capital ...... $ 700,146 $ 723,006
========= =========

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

F-3

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)

Year Ended
-----------------------------------------------
September 28, September 29, September 30,
2002 2001 2000
------------- ------------- -------------

Revenues

Propane ................................................... $ 570,280 $ 839,607 $ 753,931
Other ..................................................... 94,825 91,929 87,373
--------- --------- ---------
665,105 931,536 841,304

Costs and expenses
Cost of products sold ..................................... 289,055 510,313 476,176
Operating ................................................. 234,140 258,735 228,495
General and administrative ................................ 30,771 32,511 28,629
Depreciation and amortization ............................. 29,693 38,502 38,772
Gain on sale of storage facility .......................... (6,768) -- --
Gain on sale of assets .................................... -- -- (10,328)
--------- --------- ---------
576,891 840,061 761,744
--------- --------- ---------

Income before interest expense and provision for income taxes 88,214 91,475 79,560
Interest expense, net ....................................... 33,987 37,590 40,794
--------- --------- ---------

Income before provision for income taxes .................... 54,227 53,885 38,766
Provision for income taxes .................................. 703 375 234
--------- --------- ---------
Net income .................................................. $ 53,524 $ 53,510 $ 38,532
========= ========= =========

General Partner's interest in net income .................... $ 1,362 $ 1,048 $ 771
--------- --------- ---------
Limited Partners' interest in net income .................... $ 52,162 $ 52,462 $ 37,761
========= ========= =========

Net income per unit - basic ................................. $ 2.12 $ 2.14 $ 1.70
========= ========= =========
Weighted average number of units outstanding - basic ........ 24,631 24,514 22,275
--------- --------- ---------

Net income per unit - diluted ............................... $ 2.12 $ 2.14 $ 1.70
========= ========= =========
Weighted average number of units outstanding - diluted ...... 24,665 24,530 22,275
--------- --------- ---------

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

F-4

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Year Ended
-----------------------------------------------
September 28, September 29, September 30,
2002 2001 2000
------------- ------------- -------------
Cash flows from operating activities:

Net income ............................................................. $ 53,524 $ 53,510 $ 38,532
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation expense .............................................. 27,857 28,517 29,142
Amortization of intangible assets ................................. 1,836 9,985 9,630
Amortization of unearned compensation ............................. 985 440 215
(Gain) on disposal of property, plant and
equipment, net .................................................. (546) (3,843) (11,313)
(Gain) on sale of storage facility ................................ (6,768) -- --
Changes in assets and liabilities, net of acquisitions
and dispositions:
Decrease/(increase) in accounts receivable ........................ 9,635 18,601 (21,072)
Decrease/(increase) in inventories ................................ 5,402 (260) (6,016)
(Increase)/decrease in prepaid expenses and
other current assets ........................................... (2,526) 1,699 (2,504)
(Decrease)/increase in accounts payable ........................... (10,862) (21,109) 19,726
(Decrease)/increase in accrued employment
and benefit costs .............................................. (8,518) 10,969 (650)
Increase/(decrease) in accrued interest ........................... 348 147 (79)
(Decrease)/increase in other accrued liabilities .................. (1,153) 4,635 4,403
Net change in other noncurrent assets and liabilities ............. (439) (1,453) (547)
--------- --------- ---------
Net cash provided by operating activities ................... 68,775 101,838 59,467
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures .................................................. (17,464) (23,218) (21,250)
Acquisitions .......................................................... -- -- (98,012)
Proceeds from sale of property, plant and equipment, net .............. 10,613 5,311 20,195
--------- --------- ---------
Net cash (used in) investing activities ..................... (6,851) (17,907) (99,067)
--------- --------- ---------
Cash flows from financing activities:
Long-term debt (repayments)/borrowings, net ........................... (408) (44,428) 89,659
Short-term debt (repayments)/borrowings, net .......................... -- (6,500) 3,750
Credit agreement fees ................................................. -- (730) (3,123)
Net proceeds from public offering ..................................... -- 47,079 --
Partnership distributions ............................................. (57,055) (54,503) (47,433)
--------- --------- ---------
Net cash (used in)/provided by financing activities.......... (57,463) (59,082) 42,853
--------- --------- ---------
Net increase in cash and cash equivalents ................................... 4,461 24,849 3,253
Cash and cash equivalents at beginning of year .............................. 36,494 11,645 8,392
--------- --------- ---------
Cash and cash equivalents at end of year .................................... 40,955 36,494 11,645
========= ========= =========

Supplemental disclosure of cash flow information:
Cash paid for interest .................................................. $ 34,134 $ 37,774 $ 40,944
========= ========= =========
Non-cash adjustment for minimum pension liability ....................... $ 37,800 $ 47,277 $ --
========= ========= =========

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

F-5

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(in thousands)

Common
Number of Common General Deferred Units Held Unearned
Common Units Unitholder Partner Compensation in Trust Compensation
------------ ---------- ------- ------------ -------- ------------

Balance at September 25, 1999 .............. 22,235 $ 66,342 $ 2,044 $ (10,712) $ 10,712 $ --
Net income .................................. 37,761 771
Other comprehensive income:
Unrealized gain on securities ............

Comprehensive income ........................

Partnership distributions ................... (46,484) (949)
Grants issued under Compensation
Deferral Plan ............................ 43 855 (855) 855 (855)
Amortization of Compensation
Deferral Plan ............................. -- -- -- -- -- 215
------------ ---------- ------- ------------ -------- ------------

Balance at September 30, 2000 ............... 22,278 58,474 1,866 (11,567) 11,567 (640)
Net income .................................. 52,462 1,048
Other comprehensive income:
Unrealized holding loss ..................
Less: Reclassification adjustment
for gains included in net income ........
Minimum pension liability adjustment .....

Comprehensive income ........................

Partnership distributions ................... (53,477) (1,026)
Sale of Common Units under
public offering, net of expenses .......... 2,353 47,079
Grants issued under Restricted
Unit Plan, net of forfeitures ............. 1,011 (1,011)
Amortization of Compensation
Deferral Plan ............................. 212
Amortization of Restricted
Unit Plan, net of forfeitures ............. -- -- -- -- -- 228
------------ ---------- ------- ------------ -------- ------------

Balance at September 29, 2001 .............. 24,631 105,549 1,888 (11,567) 11,567 (1,211)
Net income .................................. 52,162 1,362
Other comprehensive income:
Net unrealized gains on cash flow hedges ..
Less: Reclassification of realized
gains on cash flow hedges into earnings
Minimum pension liability adjustment ......

Comprehensive income ........................

Partnership distributions ................... (55,729) (1,326)
Grants issued under Restricted
Unit Plan, net of forfeitures ............. 1,698 (1,698)
Amortization of Compensation
Deferral Plan ............................. 382
Amortization of Restricted
Unit Plan, net of forfeitures ............. -- -- -- -- -- 603
------------ ---------- ------- ------------ -------- ------------

Balance at September 28, 2002 ............... 24,631 $ 103,680 $ 1,924 $ (11,567) $ 11,567 $ (1,924)
============ ========== ======= ============ ======== ============

Accumulated
Other
Compre- Total Compre-
hensive Partners' hensive
(Loss)/Income Capital Income
------------- ------- -------

Balance at September 25, 1999 .............. $ -- $ 68,386
Net income .................................. 38,532 $ 38,532
Other comprehensive income:
Unrealized gain on securities ............ 2,129 2,129 2,129
--------
Comprehensive income ........................ $ 40,661
========
Partnership distributions ................... (47,433)
Grants issued under Compensation
Deferral Plan ............................ --
Amortization of Compensation
Deferral Plan ............................. -- 215
------------- -------

Balance at September 30, 2000 ............... 2,129 61,829
Net income .................................. 53,510 $ 53,510
Other comprehensive income:
Unrealized holding loss .................. (1,046) (1,046) (1,046)
Less: Reclassification adjustment
for gains included in net income ........ (1,083) (1,083) (1,083)
Minimum pension liability adjustment ..... (47,277) (47,277) (47,277)
--------
Comprehensive income ........................ $ 4,104
========
Partnership distributions ................... (54,503)
Sale of Common Units under
public offering, net of expenses .......... 47,079
Grants issued under Restricted
Unit Plan, net of forfeitures ............. --
Amortization of Compensation
Deferral Plan ............................. 212
Amortization of Restricted
Unit Plan, net of forfeitures ............. -- 228
------------- -------

Balance at September 29, 2001 .............. (47,277) 58,949
Net income .................................. 53,524 $ 53,524
Other comprehensive income:
Net unrealized gains on cash flow hedges .. 838 838 838
Less: Reclassification of realized
gains on cash flow hedges into earnings (155) (155) (155)
Minimum pension liability adjustment ...... (37,800) (37,800) (37,800)
--------
Comprehensive income ........................ $ 16,407
========
Partnership distributions ................... (57,055)
Grants issued under Restricted
Unit Plan, net of forfeitures ............. --
Amortization of Compensation
Deferral Plan ............................. 382
Amortization of Restricted
Unit Plan, net of forfeitures ............. -- 603
------------- -------

Balance at September 28, 2002 ............... $ (84,394) $ 19,286
============= =======

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

F-6

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per unit amounts)

1. PARTNERSHIP ORGANIZATION AND FORMATION

Suburban Propane Partners, L.P. (the "Partnership") was formed on December 19,
1995 as a Delaware limited partnership. The Partnership and its subsidiary,
Suburban Propane, L.P. (the "Operating Partnership"), were formed to acquire and
operate the propane business and assets of Suburban Propane, a division of
Quantum Chemical Corporation (the "Predecessor Company"). In addition, Suburban
Sales & Service, Inc. (the "Service Company"), a subsidiary of the Operating
Partnership, was formed to acquire and operate the service work and appliance
and parts businesses of the Predecessor Company. The Partnership, the Operating
Partnership and the Service Company commenced operations on March 5, 1996 (the
"Closing Date") upon consummation of an initial public offering of 21,562,500
common units representing limited partner interests in the Partnership (the
"Common Units"), the private placement of $425,000 aggregate principal amount of
Senior Notes due 2011 issued by the Operating Partnership and the transfer of
all the propane assets (excluding the net accounts receivable balance) of the
Predecessor Company to the Operating Partnership and the Service Company.

On January 5, 2001, Suburban Holdings, Inc., a subsidiary of the Operating
Partnership, was formed to hold the stock of Gas Connection, Inc., Suburban @
Home, Inc. and Suburban Franchising, Inc. Gas Connection, Inc. (d/b/a HomeTown
Hearth & Grill) sells and installs natural gas and propane gas grills,
fireplaces and related accessories and supplies; Suburban @ Home, Inc. sells,
installs, services and repairs a full range of heating and air conditioning
products; and Suburban Franchising, Inc. creates and develops propane related
franchising business opportunities. The Partnership, the Operating Partnership,
the Service Company, Suburban Holdings, Inc. and its subsidiaries are
collectively referred to hereinafter as the "Partnership Entities."

From the Closing Date through May 26, 1999, Suburban Propane GP, Inc. (the
"Former General Partner"), a wholly-owned indirect subsidiary of Millennium
Chemicals, Inc., served as the general partner of the Partnership and Operating
Partnership owning a 1% general partner interest in the Partnership and a
1.0101% general partner interest in the Operating Partnership. In addition, the
Former General Partner owned a 24.4% limited partner interest evidenced by
7,163,750 Subordinated Units and a special limited partner interest in the
Partnership.

On May 26, 1999, the Partnership completed a recapitalization (the
"Recapitalization") which included the redemption of the Subordinated Units and
special limited partner interest from the Former General Partner, and the
substitution of Suburban Energy Services Group LLC (the "General Partner") as
the new general partner of the Partnership and the Operating Partnership
following the General Partner's purchase of the combined 2.0101% general partner
interests for $6,000 in cash. The General Partner is owned by senior management
of the Partnership and, following the public offering discussed in Note 13, owns
a combined 1.89% general partner interest in the Partnership and the Operating
Partnership.

The Partnership Entities are engaged in the retail and wholesale marketing of
propane and related appliances and services. The Partnership serves
approximately 750,000 active residential, commercial, industrial and
agricultural customers from approximately 330 customer service centers in over
40 states. The Partnership's operations are concentrated in the east and west
coast regions of the United States. No single customer accounted for 10% or more
of the Partnership's revenues during fiscal 2002, 2001 or 2000. During fiscal
2002 and 2001, three suppliers provided approximately 49% and 47%, respectively,
of the Partnership's total domestic propane supply. The Partnership believes
that, if supplies from any of these three suppliers were interrupted, it would
be able to secure adequate propane supplies from other sources without a
material disruption of its operations.

F-7

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Partnership Entities. All significant intercompany transactions
and account balances have been eliminated.

FISCAL PERIOD. The Partnership's fiscal year ends on the last Saturday nearest
to September 30. As fiscal 2000 ended on Saturday, September 30, 2000, fiscal
2000 includes 53 weeks of operations compared to 52 weeks in each of fiscal 2002
and fiscal 2001.

REVENUE RECOGNITION. Sales of propane are recognized at the time product is
delivered to the customer. Revenue from the sale of appliances and equipment is
recognized at the time of sale or when installation is complete, as applicable.
Revenue from repair and maintenance activities is recognized upon completion of
the service.

USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Estimates have been made by management in the areas of
insurance and litigation reserves, pension and other postretirement benefit
liabilities and costs, valuation of derivative instruments, asset valuation
assessment, as well as the allowance for doubtful accounts. Actual results could
differ from those estimates, making it reasonably possible that a change in
these estimates could occur in the near term.

CASH AND CASH EQUIVALENTS. The Partnership considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents. The carrying amount approximates fair value because of the
short maturity of these instruments.

INVENTORIES. Inventories are stated at the lower of cost or market. Cost is
determined using a weighted average method for propane and a standard cost basis
for appliances, which approximates average cost.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The Partnership is exposed to the
impact of market fluctuations in the commodity price of propane. The Partnership
routinely uses commodity futures, forward and option contracts to hedge its
commodity price risk and to ensure supply during periods of high demand. All
derivative instruments are reported on the balance sheet, within other current
assets or other current liabilities, at their fair values. On the date that
futures, forward and option contracts are entered into, the Partnership makes a
determination as to whether the derivative instrument qualifies for designation
as a hedge. Prior to March 31, 2002, the Partnership determined that its
derivative instruments did not qualify as hedges and, as such, the changes in
fair values were recorded in income. Beginning with contracts entered into
subsequent to March 31, 2002, a portion of the derivative instruments entered
into by the Partnership have been designated and qualify as cash flow hedges.
For derivative instruments designated as cash flow hedges, the Partnership
formally assesses, both at the hedge contract's inception and on an ongoing
basis, whether the hedge contract is highly effective in offsetting changes in
cash flows of hedged items. Changes in the fair value of derivative instruments
designated as cash flow hedges are reported in accumulated other comprehensive
income (loss) to the extent effective and reclassified into cost of products
sold during the same period in which the hedged item affects earnings. The
mark-to-market gains or losses on ineffective portions of hedges are recognized
in cost of products sold immediately. Changes in the fair value of derivative
instruments that are not designated as hedges are recorded in current period
earnings.

F-8

LONG-LIVED ASSETS. Long-lived assets include:

PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at cost.
Expenditures for maintenance and routine repairs are expensed as incurred while
betterments are capitalized as additions to the related assets and depreciated
over the asset's remaining useful life. The Partnership capitalizes costs
incurred in the acquisition and modification of computer software used
internally, including consulting fees and costs of employees dedicated solely to
a specific project. At the time assets are retired, or otherwise disposed of,
the asset and related accumulated depreciation are removed from the accounts,
and any resulting gain or loss is recognized within operating expenses.
Depreciation is determined for related groups of assets under the straight-line
method based upon their estimated useful lives as follows:

Buildings 40 Years
Building and land improvements 10-40 Years
Transportation equipment 4-30 Years
Storage facilities 20 Years
Equipment, primarily tanks and cylinders 3-40 Years
Computer software 3-5 Years

GOODWILL. Goodwill represents the excess of the purchase price over the fair
value of net assets acquired. Effective September 30, 2001, the beginning of the
Partnership's 2002 fiscal year, the Partnership elected to early adopt the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"). As a result of the adoption
of SFAS 142, goodwill is no longer amortized to expense, rather is subject to an
impairment review at a reporting unit level, at least annually.

OTHER INTANGIBLE ASSETS. Other intangible assets consist primarily of
non-compete agreements which are amortized under the straight-line method over
the periods of the related agreements, ending periodically between fiscal years
2003 and 2011.

The Partnership reviews the recoverability of long-lived assets when
circumstances indicate that the carrying amount of the asset may not be
recoverable and the undiscounted cash flows estimated to be generated by these
assets under various assumptions are less than the carrying amounts of those
assets. When necessary, impairment losses are measured and recorded by comparing
the estimated fair value of the assets to their carrying amount. No impairment
of long-lived assets was required during fiscal year 2002, 2001 or 2000.

ACCRUED INSURANCE. Accrued insurance represents the estimated costs of known and
anticipated or unasserted claims under the Partnership's general and product,
workers' compensation and automobile insurance policies. Accrued insurance
provisions for unasserted claims arising from unreported incidents are based on
an analysis of historical claims data. For each claim, the Partnership records a
self-insurance provision up to the estimated amount of the probable claim or the
amount of the deductible, whichever is lower, utilizing actuarially determined
loss development factors applied to actual claims data. Claims are generally
settled within 5 years of origination.

INCOME TAXES. As discussed in Note 1, the Partnership Entities consist of two
limited partnerships, the Partnership and the Operating Partnership, and five
corporate entities. For federal and state income tax purposes, the earnings
attributable to the Partnership and Operating Partnership are included in the
tax returns of the individual partners. As a result, no recognition of income
tax expense has been reflected in the Partnership's consolidated financial
statements relating to the earnings of the Partnership and Operating
Partnership. The earnings attributable to the corporate entities are subject to
federal and state income taxes. Accordingly, the Partnership's consolidated
financial statements reflect income tax expense related to the corporate
entities' earnings. Net earnings for financial statement purposes may differ
significantly from taxable income reportable to Unitholders as a result of
differences between the tax basis and financial reporting basis of assets and
liabilities and the taxable income allocation requirements under the Partnership
Agreement.

F-9

Income taxes for the corporate entities are provided based on the asset and
liability approach to accounting for income taxes. Under this method, deferred
tax assets and liabilities are recognized for the expected future tax
consequences of differences between the carrying amounts and the tax basis of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period when
the change is enacted.

UNIT-BASED COMPENSATION. The Partnership accounts for unit-based compensation in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. Upon award of
restricted units under the Partnership's Restricted Unit Plan, unearned
compensation equivalent to the market price of the Restricted Units on the date
of grant is established as a reduction of partners' capital. The unearned
compensation is amortized ratably to expense over the restricted periods. The
Partnership follows the disclosure only provision of SFAS No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"). Pro forma net income and net income
per limited partner unit under the fair value method of accounting for
Restricted Units under SFAS 123 would be the same as reported net income and net
income per limited partner unit.

NET INCOME PER UNIT. Basic net income per limited partner unit is computed by
dividing net income, after deducting the General Partner's approximate 2%
interest, by the weighted average number of outstanding Common Units. Diluted
net income per limited partner unit is computed by dividing net income, after
deducting the General Partner's approximate 2% interest, by the weighted average
number of outstanding Common Units and time vested Restricted Units granted
under the 2000 Restricted Unit Plan. In computing diluted net income per unit,
weighted average units outstanding used to compute basic net income per unit
were increased by 34,000 units and 16,000 units for the years ended September
28, 2002 and September 29, 2001, respectively, to reflect the potential dilutive
effect of the time vested Restricted Units outstanding using the treasury stock
method. Net income is allocated to the Common Unitholders and the General
Partner in accordance with their respective Partnership ownership interests,
after giving effect to any priority income allocations for incentive
distributions allocated to the General Partner.

COMPREHENSIVE INCOME. The Partnership reports comprehensive income (the total of
net income and all other non-owner changes in partners' capital) within the
consolidated statement of partners' capital. Comprehensive income includes
unrealized gains and losses on derivative instruments accounted for as cash flow
hedges, unrealized gains and losses on equity securities classified as
available-for-sale and minimum pension liability adjustments.

RECENTLY ISSUED ACCOUNTING STANDARDS. In July 2001, the FASB issued SFAS No.
143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), which requires
that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred and the associated asset
retirement costs be capitalized as part of the carrying amount of the long-lived
asset. Accretion expense and depreciation expense related to the liability and
capitalized asset retirement costs, respectively, would be recorded in
subsequent periods. SFAS 143 is effective for fiscal years beginning after June
15, 2002. The Partnership does not anticipate that adoption of this standard
will have a material impact, if any, on its consolidated financial position,
results of operations or cash flows.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 applies to all long-lived
assets, including discontinued operations, and provides guidance on the
measurement and recognition of impairment charges for assets to be held and
used, assets to be abandoned and assets to be disposed of by sale. SFAS 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The provisions of this standard are to be
applied prospectively. The Partnership does not anticipate that adoption of this
standard will have a material impact on its consolidated financial position,
results of operations or cash flows.

F-10

On April 30, 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections" ("SFAS
145"). SFAS 145 eliminates the requirement that gains and losses from the
extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. However, pursuant to
SFAS 145, an entity would not be prohibited from classifying such gains and
losses as extraordinary items under certain circumstances. SFAS 145 also makes
several other technical corrections to existing pronouncements that may change
accounting practice. SFAS 145 is effective for transactions occurring after May
15, 2002. Based on the nature of transaction covered by this new standard, the
standard did not have an impact on the Partnership's consolidated financial
position or consolidated results of operations as of and for the year ended
September 28, 2002. The provisions of this standard will be reviewed on an
ongoing basis, as applicable.

On June 28, 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
The provisions of SFAS 146 are effective for exit or disposal activities
initiated after December 31, 2002. The provisions of this standard will be
reviewed by the Partnership on an ongoing basis, as applicable.

RECLASSIFICATIONS. Certain prior period amounts have been reclassified to
conform with the current period presentation.

3. DISTRIBUTIONS OF AVAILABLE CASH

The Partnership makes distributions to its partners approximately 45 days after
the end of each fiscal quarter of the Partnership in an aggregate amount equal
to its Available Cash for such quarter. Available Cash, as defined in the Second
Amended and Restated Partnership Agreement, generally means all cash on hand at
the end of the respective fiscal quarter less the amount of cash reserves
established by the Board of Supervisors in its reasonable discretion for future
cash requirements. These reserves are retained for the proper conduct of the
Partnership's business, the payment of debt principal and interest and for
distributions during the next four quarters. Distributions by the Partnership in
an amount equal to 100% of its Available Cash will generally be made 98.11% to
the Common Unitholders and 1.89% to the General Partner, subject to the payment
of incentive distributions to the General Partner to the extent the quarterly
distributions exceed a target distribution of $0.55 per Common Unit.

As defined in the Second Amended and Restated Partnership Agreement, the General
Partner has certain Incentive Distribution Rights ("IDRs") which represent an
incentive for the General Partner to increase distributions to Common
Unitholders in excess of the target quarterly distribution of $0.55 per Common
Unit. With regard to the first $0.55 quarterly distributions paid in any given
quarter, 98.11% of the Available Cash is distributed to the Common Unitholders
and 1.89% is distributed to the General Partner. With regard to the balance of
quarterly distributions in excess of the $0.55 per Common Unit target
distribution, 85% of the Available Cash is distributed to the Common Unitholders
and 15% is distributed to the General Partner.

F-11

The following summarizes the quarterly distributions per Common Unit declared
and paid for each of the quarters in the three fiscal years in the period ended
September 28, 2002:

September 28, September 29, September 30,
2002 2001 2000
------------- ------------- -------------

First Quarter $ 0.5625 $ 0.5375 $ 0.5250
Second Quarter 0.5625 0.5500 0.5250
Third Quarter 0.5750 0.5500 0.5250
Fourth Quarter $ 0.5750 $ 0.5625 $ 0.5375

On October 23, 2002, the Partnership declared a quarterly distribution of
$0.5750 per Common Unit, or $2.30 on an annualized basis, for the fourth quarter
of fiscal 2002 that was paid on November 12, 2002 to holders of record on
November 4, 2002. This quarterly distribution includes incentive distributions
payable to the General Partner to the extent the quarterly distribution exceeds
$0.55 per Common Unit, pursuant to the IDRs provided for in the Second Amended
and Restated Partnership Agreement.

4. ADOPTION OF NEW ACCOUNTING STANDARD

Effective September 30, 2001, the beginning of the Partnership's 2002 fiscal
year, the Partnership elected to early adopt the provisions of SFAS 142 which
modifies the financial accounting and reporting for goodwill and other
intangible assets, including the requirement that goodwill and certain
intangible assets no longer be amortized. This new standard also requires a
transitional impairment review for goodwill, as well as an annual impairment
review, to be performed on a reporting unit basis. As a result of the adoption
of SFAS 142, amortization expense for the year ended September 28, 2002
decreased by $7,416 compared to the year ended September 29, 2001 due to the
lack of amortization expense related to goodwill. Aside from this change in
accounting for goodwill, no other change in accounting for intangible assets was
required as a result of the adoption of SFAS 142 based on the nature of the
Partnership's intangible assets. In accordance with SFAS 142, the Partnership
completed its transitional impairment review and, as the fair values of
identified reporting units exceeded the respective carrying values, goodwill was
not considered impaired as of the date of adoption of SFAS 142 nor as of
September 28, 2002.

The following table reflects the effect of the adoption of SFAS 142 on net
income and net income per unit as if SFAS 142 had been in effect for the periods
presented:

September 28, September 29, September 30,
2002 2001 2000
------------- ------------- -------------

Net income:
As reported ...................... $ 53,524 $ 53,510 $ 38,532
Goodwill amortization ............ -- 7,416 7,292
---------- ---------- ----------
As adjusted ...................... $ 53,524 $ 60,926 $ 45,824
========== ========== ==========

Basic and diluted net income per unit:
As reported ...................... $ 2.12 $ 2.14 $ 1.70
Goodwill amortization ............ -- 0.29 0.32
---------- ---------- ----------
As adjusted ...................... $ 2.12 $ 2.43 $ 2.02
========== ========== ==========

F-12

Other intangible assets at September 28, 2002 and September 29, 2001 consist
primarily of non-compete agreements with a gross carrying amount of $4,240 and
$4,540, respectively, and accumulated amortization of $2,766 and $2,550,
respectively. These non-compete agreements are amortized under the straight-line
method over the periods of the agreements, ending periodically between fiscal
years 2003 and 2011. Aggregate amortization expense related to other intangible
assets for the years ended September 28, 2002, September 29, 2001 and September
30, 2000 was $498, $563 and $597, respectively.

Aggregate amortization expense related to other intangible assets for each of
the five succeeding fiscal years as of September 28, 2002 is as follows: 2003 -
$427; 2004 - $360; 2005 - $303; 2006 - $232; and, 2007 - $75.

For the year ended September 28, 2002, the net carrying amount of goodwill
decreased by $529 as a result of the sale of certain assets during the period.

5. RELATED PARTY TRANSACTION

In connection with the Partnership's recapitalization in 1999, the General
Partner acquired the general partner interests from Millennium Chemicals Inc.
for $6,000 (the "GP Loan") which was borrowed under a private placement with
Mellon Bank N.A. ("Mellon"). In connection with the GP Loan, the Operating
Partnership entered into an agreement with Mellon under which the Operating
Partnership was required (and had the right) to purchase the note evidencing the
GP Loan in the event of a default under the GP Loan by the General Partner.

The Operating Partnership agreed to maintain sufficient borrowing availability
under its available lines of credit to enable it to repurchase the GP Note in
these circumstances. If the Operating Partnership elected or was required to
purchase the GP Note from Mellon, the Operating Partnership had the right to
cause up to all of the Common Units deposited by management in a trust under the
Compensation Deferral Plan (amounting to 596,821 Common Units) to be forfeited
and cancelled (and to cause all of the related distributions to be forfeited),
regardless of the amount paid by the Operating Partnership to purchase the GP
Note. As of September 29, 2001, the balance outstanding under the GP Loan was
$1,895. In August 2002, the General Partner repaid the remaining balance of the
GP Loan to Mellon and, as a result, all of the arrangements described above
terminated.

6. SELECTED BALANCE SHEET INFORMATION

Inventories consist of the following:

September 28, September 29,
2002 2001
------------- -------------

Propane ................................... $28,799 $33,080
Appliances ................................ 7,568 8,811
------- -------
$36,367 $41,891
======= =======

The Partnership enters into contracts to buy propane for supply purposes. Such
contracts generally have terms of less than one year, with propane costs based
on market prices at the date of delivery.

F-13

Property, plant and equipment consist of the following:

September 28, September 29,
2002 2001
------------- -------------

Land and improvements ..................... $ 28,043 $ 28,490
Buildings and improvements ................ 57,245 56,276
Transportation equipment .................. 46,192 52,973
Storage facilities ........................ 31,797 25,378
Equipment, primarily tanks and cylinders .. 393,079 388,217
Construction in progress .................. 11,935 9,060
-------- --------
568,291 560,394
Less: accumulated depreciation ............ 237,282 216,020
-------- --------
$331,009 $344,374
======== ========

Depreciation expense for the years ended September 28, 2002, September 29, 2001
and September 30, 2000 amounted to $27,857, $28,517 and $29,142, respectively.

7. LONG-TERM BORROWINGS

Long-term borrowings consist of the following:

September 28, September 29,
2002 2001
------------- -------------

Senior Notes, 7.54%, due June 30, 2011 ...... $382,500 $425,000
Senior Notes, 7.37%, due June 30, 2012 ...... 42,500 --
Note payable, 8%, due in annual installments
through 2006.............................. 1,698 2,048
Amounts outstanding under Acquisition
Facility of Revolving Credit Agreement ... 46,000 46,000
Other long-term liabilities ................. 71 129
-------- --------
472,769 473,177
Less: current portion ....................... 88,939 42,907
-------- --------
$383,830 $430,270
======== ========

On the Closing Date, pursuant to a Senior Note Agreement (the "1996 Senior Note
Agreement") the Operating Partnership issued $425,000 of Senior Notes (the "1996
Senior Notes") with an annual interest rate of 7.54%. The Operating
Partnership's obligations under the 1996 Senior Note Agreement are unsecured and
rank on an equal and ratable basis with the Operating Partnership's obligations
under the Revolving Credit Agreement discussed below. The 1996 Senior Notes will
mature June 30, 2011, and require semiannual interest payments which commenced
June 30, 1996. The 1996 Senior Note Agreement requires that the principal be
paid in equal annual payments of $42,500 starting July 1, 2002.

Pursuant to the Partnership's intention to refinance the first annual principal
payment of $42,500, the Partnership executed on April 19, 2002 a Note Purchase
Agreement for the private placement of 10-year 7.37% Senior Notes due June, 2012
(the "2002 Senior Note Agreement"). On July 1, 2002, the Partnership received
$42,500 from the issuance of the Senior Notes under the 2002 Senior Note
Agreement and used the funds to pay the first annual principal payment of
$42,500 due under the 1996 Senior Note Agreement. The Operating Partnership's
obligations under the 2002 Senior Note Agreement are unsecured and rank on an
equal and ratable basis with the Operating Partnership's obligations under the
1996 Senior Note Agreement and the Revolving Credit Agreement.

F-14

The Partnership intends to refinance the second annual principal payment of
$42,500 during fiscal year 2003 and has initiated discussions with various third
parties to reach a refinancing agreement with favorable terms to the
Partnership. Alternatively, the Partnership currently expects that it will
generate sufficient funds from operations to make the principal payment when it
comes due.

On November 10, 1999, in connection with the acquisition of certain subsidiaries
of SCANA Corporation (the "SCANA Acquisition"; see Note 14, Acquisition and
Dispositions), the Partnership replaced its former Bank Credit Facilities, which
had consisted of a $75,000 working capital facility and a $25,000 acquisition
facility, with a new $175,000 Revolving Credit Agreement with a syndicate of
banks led by Wachovia Bank, N.A. (f/k/a First Union National Bank), as
Administrative Agent. Effective January 29, 2001, the Partnership amended its
existing Revolving Credit Agreement, reducing the acquisition facility from
$100,000 to $50,000 and extending the term to May 31, 2003. In addition, the
covenant to maintain a minimum net worth was eliminated and the maximum ratio of
consolidated total indebtedness to EBITDA (as defined in the amendment) was
reduced from 5.10 to 1 to 5.00 to 1 from April 1, 2001 through May 31, 2003. The
Partnership's working capital facility was retained at $75,000. Borrowings under
the Revolving Credit Agreement bear interest at a rate based upon either LIBOR
plus a margin, Wachovia Bank's prime rate or the Federal Funds rate plus 1/2 of
1%. An annual fee ranging from .375% to .50%, based upon certain financial
tests, is payable quarterly whether or not borrowings occur. As of September 28,
2002, the fee was .50%. The Partnership has initiated discussions with the
Administrative Agent for the Revolving Credit Agreement in order to either renew
or refinance the existing Revolving Credit Agreement on a long-term basis.

As of September 28, 2002 and September 29, 2001, $46,000 was outstanding under
the acquisition facility of the Revolving Credit Agreement resulting from the
SCANA Acquisition and there were no amounts outstanding under the working
capital facility of the Revolving Credit Agreement. As of September 28, 2002,
the Partnership had borrowing capacity of $4,000 under the acquisition facility
and $75,000 under the working capital facility of the Revolving Credit
Agreement. The weighted average interest rate associated with borrowings under
the Revolving Credit Agreement was 3.67%, 6.98% and 8.04% for fiscal year 2002,
2001 and 2000, respectively.

Debt origination costs representing the costs incurred in connection with the
placement of, and the subsequent amendment to, the $425,000 of Senior Notes were
capitalized within other assets and are being amortized on a straight-line basis
over 15 years. Other assets at September 28, 2002 and September 29, 2001 include
debt origination costs with a net carrying amount of $5,926 and $6,612,
respectively. Aggregate amortization expense related to deferred debt
origination costs included within depreciation and amortization expense for the
years ended September 28, 2002, September 29, 2001 and September 30, 2000 was
$1,338, $2,005 and $1,740, respectively.

The aggregate amounts of long-term debt maturities subsequent to September 28,
2002 are as follows: 2003 - $88,939; 2004 - $42,910; 2005 - $42,940; 2006 -
$42,980; 2007 - $42,500; and, thereafter - $212,500.

F-15

8. RESTRICTED UNIT PLANS

In November 2000, the Partnership adopted the Suburban Propane Partners, L.P.
2000 Restricted Unit Plan (the "2000 Restricted Unit Plan") which authorizes the
issuance of Common Units with an aggregate value of $10,000 (487,804 Common
Units valued at the initial public offering price of $20.50 per unit) to
executives, managers and other employees of the Partnership. Restricted Units
issued under the 2000 Restricted Unit Plan vest over time with 25% of the Common
Units vesting at the end of each of the third and fourth anniversaries of the
issuance date and the remaining 50% of the Common Units vesting at the end of
the fifth anniversary of the issuance date. The 2000 Restricted Unit Plan
participants are not eligible to receive quarterly distributions or vote their
respective Restricted Units until vested. Restrictions also limit the sale or
transfer of the units during the restricted periods. The value of the Restricted
Unit is established by the market price of the Common Unit at the date of grant.
Restricted Units are subject to forfeiture in certain circumstances as defined
in the 2000 Restricted Unit Plan.

In 1996, the Partnership adopted the 1996 Restricted Unit Award Plan (the "1996
Restricted Unit Plan") which authorized the issuance of Common Units with an
aggregate value of $15,000 (731,707 Common Units valued at the initial public
offering price of $20.50 per unit) to executives, managers and Elected
Supervisors of the Partnership. According to the change of control provisions of
the 1996 Restricted Unit Plan, all outstanding Restricted Units on the closing
date of the Recapitalization vested and converted into Common Units. At the date
of the Recapitalization, individuals who became members of the General Partner
surrendered receipt of 553,896 Common Units, representing substantially all of
their vested Restricted Units, in exchange for the right to participate in a new
compensation deferral plan of the Partnership and the Operating Partnership (see
Note 9, Compensation Deferral Plan).

Following is a summary of activity in the Restricted Unit Plans:

Weighted Average
Grant Date Fair
Units Value Per Unit
------------ ----------------

Outstanding September 30, 2000 .............. -- $ --
Awarded ..................................... 78,228 20.66
Forfeited ................................... (29,268) 20.66
-------- --------
Outstanding September 29, 2001 .............. 48,960 20.66
Awarded ..................................... 66,298 26.63
Forfeited ................................... (3,272) (20.66)
-------- --------
Outstanding September 28, 2002 .............. 111,986 $ 24.19
======== ========

During the years ended September 28, 2002 and September 29, 2001, the
Partnership amortized $603 and $228, respectively, of unearned compensation
associated with the 2000 Restricted Unit Plan, net of forfeitures.

9. COMPENSATION DEFERRAL PLAN

Effective May 26, 1999, in connection with the Partnership's Recapitalization,
the Partnership adopted the Compensation Deferral Plan (the "Deferral Plan")
which provided for eligible employees of the Partnership to defer receipt of all
or a portion of the vested Restricted Units granted under the 1996 Restricted
Unit Plan in exchange for the right to participate in and receive certain
payments under the Deferral Plan. The Deferral Plan also allows eligible
employees to defer receipt of Common Units subsequently granted by the
Partnership under the Deferral Plan. The Partnership granted Common Units under
the Deferral Plan only once. The Common Units granted under the Deferral Plan
and related Partnership distributions were subject to forfeiture provisions such
that (a) 100% of the Common Units would be forfeited if the grantee ceased to be

F-16

employed prior to the third anniversary of the Recapitalization, (b) 75% would
be forfeited if the grantee ceased to be employed after the third anniversary
but prior to the fourth anniversary of the Recapitalization and (c) 50% would be
forfeited if the grantee ceased to be employed after the fourth anniversary but
prior to the fifth anniversary of the Recapitalization. All forfeiture
provisions lapsed in August of 2002 upon the repayment of the GP Loan. Upon
issuance of Common Units under the Deferral Plan, unearned compensation
equivalent to the market value of the Common Units at the date of grant is
recorded. The unearned compensation is amortized in accordance with the Deferral
Plan's forfeiture provisions. The unamortized unearned compensation value is
shown as a reduction of partners' capital in the accompanying consolidated
balance sheets.

Senior management of the Partnership surrendered 553,896 Common Units, at the
date of the Recapitalization, into the Deferral Plan. The Partnership deposited
into a trust on behalf of these individuals 553,896 Common Units. During fiscal
2000, certain members of management deferred receipt of an additional 42,925
Common Units granted under the Deferral Plan, with a fair value of $19.91 per
Common Unit at the date of grant, by depositing the units into the trust.
Pursuant to the Deferral Plan, these individuals deferred receipt of these
Common Units and related distributions by the Partnership until the date the GP
Loan (See Note 5, Related Party Transaction) was repaid in full or the seventh
anniversary of the date of the Recapitalization was completed, whichever they
may have chosen, but subject to the earlier distribution and forfeiture
provisions of the Deferral Plan. As a result of the repayment of the remaining
balance of the GP Loan in August 2002, the Common Units deposited into the trust
are now eligible to be distributed to the participants.

As of September 28, 2002 and September 29, 2001, 596,821 Common Units were held
in trust under the Deferral Plan. The value of the Common Units deposited in the
trust and the related deferred compensation trust liability in the amount of
$11,567 are reflected in the accompanying consolidated balance sheets as
components of partners' capital. During the years ended September 28, 2002,
September 29, 2001 and September 30, 2000, the Partnership amortized $382, $212
and $215, respectively, of unearned compensation associated with the Deferral
Plan.

10. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

DEFINED BENEFIT PLAN. The Partnership has a noncontributory defined benefit
pension plan which was originally designed to cover all eligible employees of
the Partnership who met certain requirements as to age and length of service.
Effective January 1, 1998, the Partnership amended its noncontributory defined
benefit pension plan to provide for a cash balance format as compared to a final
average pay format which was in effect prior to January 1, 1998. The cash
balance format is designed to evenly spread the growth of a participant's earned
retirement benefit throughout his/her career as compared to the final average
pay format, under which a greater portion of employee benefits were earned
toward the latter stages of one's career. Effective January 1, 2000,
participation in the noncontributory defined benefit pension plan was limited to
eligible participants in existence on that date with no new participants
eligible to participate in the plan. On September 20, 2002, the Board of
Supervisors approved an amendment to the defined benefit pension plan whereby,
effective January 1, 2003, future service credits will cease and eligible
employees will receive interest credits only toward their ultimate retirement
benefit.

Contributions, as needed, are made to a trust maintained by the Partnership. The
trust's assets consist primarily of common stock, fixed income securities and
real estate. Contributions to the defined benefit plan are made by the
Partnership in accordance with the Employee Retirement Income Security Act of
1974 minimum funding standards plus additional amounts which may be determined
from time to time.

DEFINED CONTRIBUTION PLAN. The Partnership has a defined contribution plan
covering most employees. Contributions and costs are a percent of the
participating employees' compensation. These amounts totaled $947, $4,560 and
$1,908 for the years ended September 28, 2002, September 29, 2001 and September
30, 2000, respectively.

F-17

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. The Partnership provides
postretirement health care and life insurance benefits for certain retired
employees. Partnership employees hired prior to July 1993 and that retired prior
to March 1998 are eligible for such benefits if they reached a specified
retirement age while working for the Partnership. Effective January 1, 2000, the
Partnership terminated its postretirement benefit plan for all eligible
employees retiring after March 1, 1998. All active and eligible employees who
were to receive benefits under the postretirement plan subsequent to March 1,
1998, were provided a settlement by increasing their accumulated benefits under
the cash balance pension plan, noted above. The Partnership does not fund its
postretirement health care and life insurance benefit plans.

The following table provides a reconciliation of the changes in the benefit
obligations and the fair value of the plan assets for each of the years ended
September 28, 2002 and September 29, 2001 and a statement of the funded status
for both years:

Other
Pension Benefits Postretirement Benefits
---------------------- -----------------------
2002 2001 2002 2001
--------- --------- --------- ---------

Reconciliation of benefit obligations:
Benefit obligation at beginning of year ...... $ 167,187 $ 151,415 $ 37,559 $ 38,254
Service cost ................................. 4,445 5,024 16 123
Interest cost ................................ 11,581 11,034 2,574 2,794
Actuarial loss/(gain) ........................ 8,700 15,875 3,852 (1,270)
Curtailment gain ............................. (1,812) -- -- --
Benefits paid ................................ (15,403) (16,161) (2,865) (2,342)
--------- --------- --------- ---------
Benefit obligation at end of year ............ $ 174,698 $ 167,187 $ 41,136 $ 37,559
========= ========= ========= =========

Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year $ 143,116 $ 177,051 $ -- $ --
Actual return on plan assets ................. (6,179) (17,774) -- --
Employer contributions ....................... -- -- 2,865 2,342
Benefits paid ................................ (15,403) (16,161) (2,865) (2,342)
--------- --------- --------- ---------
Fair value of plan assets at end of year ..... $ 121,534 $ 143,116 $ -- $ --
========= ========= ========= =========

Funded status:
Funded status at end of year ................. $ (53,164) $ (24,071) $ (41,136) $ (37,559)
Unrecognized prior service cost .............. -- (1,303) (3,026) (3,746)
Net unrecognized actuarial losses ............ 85,077 58,948 8,060 4,249
Accumulated other comprehensive (loss) ....... (85,077) (47,277) -- --
--------- --------- --------- ---------
Accrued benefit liability .................... (53,164) (13,703) (36,102) (37,056)
Less: Current portion ........................ -- -- 2,818 2,535
--------- --------- --------- ---------
Non-current benefit liability ................ $ (53,164) $ (13,703) $ (33,284) $ (34,521)
========= ========= ========= =========

As a result of continued declines in the United States capital markets during
the majority of fiscal 2001 and 2002, the pension portfolio assets of the
Partnership's defined benefit pension plan have experienced significant
unrealized losses over the past two fiscal years. Additionally, the current low
interest rate environment at the end of fiscal 2002 resulted in a reduction in
the discount rate assumptions impacting the valuation of benefit obligations as
of September 28, 2002. As a result of the unrealized losses in the pension

F-18

portfolio assets and decline in valuation assumptions, the Partnership was
required to adjust the accrued pension liability by $37,800 as of September 28,
2002. This adjustment for the minimum pension liability, coupled with the
$47,277 adjustment required as of September 29, 2001 (the end of fiscal 2001),
results in a cumulative adjustment of $85,077 which is offset by a reduction to
accumulated other comprehensive (loss), a component of partners' capital.

In an effort to minimize future increases in the benefit obligations, the
Partnership adopted an amendment to the defined benefit pension plan which will
cease future service credits effective January 1, 2003. This amendment resulted
in a curtailment gain of $1,093 included within the net periodic pension cost
for the year ended September 28, 2002. Additionally, as a result of the
amendment, as of September 28, 2002 there is no difference between the projected
benefit obligation and the accumulated benefit obligation.

The following table provides the components of net periodic benefit costs for
the years ended September 28, 2002 and September 29, 2001:

Other
Pension Benefits Postretirement Benefits
---------------------- -----------------------
2002 2001 2002 2001
--------- --------- --------- ---------

Service cost ..................... $ 4,445 $ 5,024 $ 16 $ 123
Interest cost .................... 11,581 11,034 2,574 2,794
Expected return on plan assets ... (14,974) (15,735) -- --
Amortization of prior service cost (210) (210) (720) (721)
Curtailment gain ................. (1,093) -- -- --
Recognized net actuarial loss .... 1,912 -- 41 145
-------- -------- -------- --------
Net periodic benefit cost ........ $ 1,661 $ 113 $ 1,911 $ 2,341
======== ======== ======== ========

Pension benefit income was ($189) and other postretirement benefit costs were
$2,330 for the year ended September 30, 2000. The assumptions used in the
measurement of the Partnership's benefit obligations are shown in the following
table:

Other
Pension Benefits Postretirement Benefits
----------------------------- -----------------------------
September 28, September 29, September 28, September 29,
2002 2001 2002 2001
------------- ------------- ------------- -------------

Weighted-average discount rate ... 6.75% 7.25% 6.75% 7.25%
Average rate of compensation
increase........................ 3.50% 3.50% -- --
Weighted-average expected long-term
rate of return on plan assets... 8.50% 9.50% -- --

The accumulated postretirement benefit obligation was based on a 12% increase in
the cost of covered health care benefits at September 28, 2002 and an 8%
increase in the cost of covered health care benefits at September 29, 2001. The
12% increase in health care costs assumed at September 28, 2002 is assumed to
decrease gradually to 5.00% in fiscal 2010 and to remain at that level
thereafter. Increasing the assumed health care cost trend rates by 1.0% in each
year would increase the Partnership's benefit obligation as of September 28,
2002 by approximately $1,552 and the aggregate of service and interest
components of net periodic postretirement benefit expense for the year ended
September 28, 2002 by approximately $119.

F-19

11. FINANCIAL INSTRUMENTS

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The Partnership purchases propane
at various prices that are eventually sold to its customers, exposing the
Partnership to market fluctuations in the price of propane. A control
environment has been established which includes policies and procedures for risk
assessment and the approval, reporting and monitoring of derivative instruments
and hedging activities. The Partnership closely monitors the potential impacts
of commodity price changes and, where appropriate, utilizes commodity futures,
forward and option contracts to hedge its commodity price risk, to protect
margins and to ensure supply during periods of high demand. Derivative
instruments are used to hedge a portion of the Partnership's forecasted
purchases for no more than one year in the future.

SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS No. 137 and SFAS No. 138 ("SFAS 133") requires all derivatives
(with certain exceptions), whether designated in hedging relationships or not,
to be recorded on the consolidated balance sheet at fair value. SFAS 133
requires that changes in the derivative instrument's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges, either fair value hedges or cash flow hedges,
allows a derivative's gains and losses to offset related results on the hedged
item in the statement of operations, and requires that a company formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting. Fair value hedges are derivative financial instruments that
hedge the exposure to changes in the fair value of an asset or liability or an
identified portion thereof attributable to a particular risk. Cash flow hedges
are derivative financial instruments that hedge the exposure to variability in
expected future cash flows attributable to a particular risk.

Since March 31, 2002, the Partnership's futures and forward contracts qualify
and have been designated as cash flow hedges and, as such, the effective
portions of changes in the fair value of these derivative instruments are
recorded in other comprehensive income (loss) ("OCI") and are recognized in cost
of products sold when the hedged item impacts earnings. As of September 28,
2002, unrealized gains on derivative instruments designated as cash flow hedges
in the amount of $683 were included in OCI and are expected to be recognized in
earnings during the next 12 months as the hedged forecasted transactions occur.
However, due to the volatility of the commodities market, the corresponding
value in OCI is subject to change prior to its impact on earnings.

Option contracts are not classified as hedges and, as such, changes in the fair
value of these derivative instruments are recognized within operating expenses
in the consolidated statement of operations as they occur. Additionally, prior
to March 31, 2002, the Partnership's futures and forward contracts were not
designated as cash flow hedges and the changes in fair value of these
instruments were recognized in earnings as they occurred. For the year ended
September 28, 2002, operating expenses included unrealized gains in the amount
of $5,356 compared to unrealized losses of ($3,071) for the year ended September
29, 2001, attributable to changes in the fair value of derivative instruments
not designated as hedges.

CREDIT RISK. The Partnership's principal customers are residential and
commercial end users of propane served by approximately 330 customer service
centers in over 40 states. No single customer accounted for more than 10% of
revenues during fiscal 2002, 2001 or 2000 and no concentration of receivables
exists at the end of fiscal 2002 or 2001.

Futures contracts are traded on and guaranteed by the New York Merchantile
Exchange ("NYMEX") and as a result, have minimal credit risk. Futures contracts
traded with brokers of the NYMEX require daily cash settlements in margin
accounts. The Partnership is subject to credit risk with forward and option
contracts entered into with various third parties to the extent the
counterparties do not perform. The Partnership evaluates the financial condition
of each counterparty with which it conducts business and establishes credit
limits to reduce exposure to credit risk based on non-performance. The
Partnership does not require collateral to support the contracts.

F-20

FAIR VALUE OF FINANCIAL INSTRUMENTS. The fair value of cash and cash equivalents
are not materially different from their carrying amounts because of the
short-term nature of these instruments. The fair value of the Revolving Credit
Agreement approximates the carrying value since the interest rates are
periodically adjusted to reflect market conditions. Based on the current rates
offered to the Partnership for debt of the same remaining maturities, the
carrying value of the Partnership's Senior Notes approximates their fair market
value.

12. COMMITMENTS AND CONTINGENCIES

COMMITMENTS. The Partnership leases certain property, plant and equipment,
including portions of the Partnership's vehicle fleet, for various periods under
noncancelable leases. Rental expense under operating leases was $25,452, $24,690
and $19,931 for the years ended September 28, 2002, September 29, 2001 and
September 30, 2000, respectively.

Future minimum rental commitments under noncancelable operating lease agreements
as of September 28, 2002 are as follows:

FISCAL YEAR
-----------
2003 $ 17,277
2004 15,076
2005 12,254
2006 9,761
2007 and thereafter 11,822

CONTINGENCIES. As discussed in Note 2, the Partnership is self-insured for
general and product, workers' compensation and automobile liabilities up to
predetermined amounts above which third party insurance applies. At September
28, 2002 and September 29, 2001, the Partnership had accrued insurance
liabilities of $26,969 and $25,741, respectively, representing the total
estimated losses under these self-insurance programs. The Partnership is also
involved in various legal actions which have arisen in the normal course of
business, including those relating to commercial transactions and product
liability. Management believes, based on the advice of legal counsel, that the
ultimate resolution of these matters will not have a material adverse effect on
the Partnership's financial position or future results of operations, after
considering its self-insurance liability for known and unasserted self-insurance
claims.

The Partnership is subject to various federal, state and local environmental,
health and safety laws and regulations. Generally, these laws impose limitations
on the discharge of pollutants and establish standards for the handling of solid
and hazardous wastes. These laws include the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Clean Air Act, the Occupational Safety and Health Act, the
Emergency Planning and Community Right to Know Act, the Clean Water Act and
comparable state statutes. CERCLA, also known as the "Superfund" law, imposes
joint and several liability without regard to fault or the legality of the
original conduct on certain classes of persons that are considered to have
contributed to the release or threatened release of a "hazardous substance" into
the environment. Propane is not a hazardous substance within the meaning of
CERCLA. However, the Partnership owns real property where such hazardous
substances may exist.

Future developments, such as stricter environmental, health or safety laws and
regulations thereunder, could affect Partnership operations. The Partnership
anticipates that compliance with or liabilities under environmental, health and
safety laws and regulations, including CERCLA, will not have a material adverse
effect on the Partnership. To the extent that there are any environmental
liabilities unknown to the Partnership or environmental, health or safety laws
or regulations are made more stringent, there can be no assurance that the
Partnership's results of operations will not be materially and adversely
affected.

F-21

13. PUBLIC OFFERING

On October 17, 2000, the Partnership sold 2,175,000 Common Units in a public
offering at a price of $21.125 per Common Unit realizing proceeds of $43,500,
net of underwriting commissions and other offering expenses. On November 14,
2000, following the underwriter's partial exercise of its over-allotment option,
the Partnership sold an additional 177,700 Common Units at the same price,
generating additional net proceeds of $3,600. The aggregate net proceeds of
$47,100 were applied to reduce the Partnership's outstanding Revolving Credit
Agreement borrowings. These transactions increased the total number of Common
Units outstanding to 24,631,287. As a result of the public offering, the
combined general partner interest in the Partnership was reduced from 2.0101% to
1.89% while the Common Unitholder interest in the Partnership increased from 98%
to 98.11%.

14. ACQUISITION AND DISPOSITIONS

On January 31, 2002, the Partnership sold its 170 million gallon propane storage
facility in Hattiesburg, Mississippi, which was considered a non-strategic
asset, for net cash proceeds of approximately $8,000, resulting in a gain on
sale of approximately $6,768.

On December 3, 1999 the Partnership sold 23 customer service centers principally
located in Georgia for total cash proceeds of approximately $19,400 and recorded
a gain of $10,328.

On November 8, 1999, the Partnership acquired the assets of SCANA Propane Gas,
Inc., SCANA Propane Storage, Inc., SCANA Propane Supply, Inc., USA Cylinder
Exchange, Inc., and C&T Pipeline, LLC from SCANA Corporation for $86,000 plus
working capital. SCANA Propane Gas, Inc. distributes approximately 20 million
gallons annually and services more than 40,000 customers from 22 customer
service centers in North and South Carolina. USA Cylinder Exchange, Inc.
operates an automated 20-lb. propane cylinder refurbishing and refill center in
Hartsville, South Carolina, selling to approximately 1,600 grocery and
convenience stores in the Carolinas, Georgia and Tennessee. SCANA Propane
Storage, Inc. owns a 60 million gallon storage cavern in Tirzah, South Carolina
which is connected to the Dixie Pipeline by the 62 mile propane pipeline owned
by C&T Pipeline, LLC. The acquisition has been accounted for using the purchase
method of accounting. Accordingly, the purchase price has been allocated to the
assets and liabilities based on their estimated fair values and the balance of
$54,283 has been recorded as goodwill. Unaudited pro forma consolidated results
after giving effect to the acquisition during the year ended September 30, 2000
would not have been materially different from the reported amounts for the year.

F-22

INDEX TO SUPPLEMENTAL FINANCIAL INFORMATION

SUBURBAN ENERGY SERVICES GROUP LLC

PAGE
----

Report of Independent Accountants .............................. F-24

Balance Sheets-September 28, 2002 and September 29, 2001........ F-25

Notes to Balance Sheets ........................................ F-26

F-23

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of
Suburban Energy Services Group LLC:

In our opinion, the accompanying balance sheets present fairly, in all material
respects, the financial position of Suburban Energy Services Group LLC at
September 28, 2002 and September 29, 2001 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
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the balance sheets are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the balance sheets, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall balance sheet
presentation. We believe that our audits provide a reasonable basis for our
opinion.

PricewaterhouseCoopers LLP
Florham Park, NJ
October 23, 2002

F-24

SUBURBAN ENERGY SERVICES GROUP LLC

BALANCE SHEETS

September 28, September 29,
2002 2001
------------- -------------

ASSETS
Current assets:

Cash and cash equivalents ............................................... $ 4,363 $ 8,668
---------- ----------
Total current assets ............................................ 4,363 8,668
Investment in Suburban Propane Partners, L.P. ............................... 1,924,003 1,888,492
Goodwill, net ............................................................... 3,112,560 3,112,560
---------- ----------
Total assets ................................................... $5,040,926 $5,009,720
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable ......................................... $ -- $1,600,000
Accrued interest ........................................................ -- 13,487
---------- ----------
Total current liabilities ..................................... -- 1,613,487
Note payable ................................................................ -- 295,000
---------- ----------
Total liabilities ............................................ -- 1,908,487
---------- ----------

Stockholders' equity:
Common stock, $1 par value, 2,000 shares issued and outstanding ....... 2,000 2,000
Additional paid-in capital ............................................ 3,405,108 2,790,886
Retained earnings ..................................................... 1,633,818 308,347
---------- ----------
Total stockholders' equity .................................. 5,040,926 3,101,233
---------- ----------
Total liabilities and stockholders' equity .................. $5,040,926 $5,009,720
========== ==========

The accompanying notes are an integral part of these balance sheets.

F-25

SUBURBAN ENERGY SERVICES GROUP LLC
NOTES TO BALANCE SHEETS
SEPTEMBER 28, 2002 AND SEPTEMBER 29, 2001

1. ORGANIZATION AND FORMATION

Suburban Energy Services Group LLC (the "Company") was formed on October 26,
1998 as a limited liability company pursuant to the Delaware Limited Liability
Company Act. The Company was formed to purchase the general partner interests in
Suburban Propane Partners, L.P. (the "Partnership") from Suburban Propane GP,
Inc. (the "Former General Partner"), a wholly-owned indirect subsidiary of
Millennium Chemicals Inc., and become the successor general partner. The Company
purchased a 1% general partner interest in the Partnership and a 1.0101% general
partner interest in Suburban Propane, L.P., the Operating Partnership.

The Partnership is a publicly-traded master limited partnership whose common
units are listed on the New York Stock Exchange and is engaged in the retail and
wholesale marketing of propane and related appliances and services. As a result
of a public offering by the Partnership on October 17, 2000, the Company's
interest in the Partnership was reduced to .88%. The Company's interest in
Suburban Propane, L.P. was not affected.

The Company acquired the general partner interests from Millennium Chemicals
Inc. on May 26, 1999 (the "Closing Date") for $6,000,000, which was borrowed
under a credit agreement with Mellon Bank, N.A. ("Mellon"). The Company is owned
by senior management of Suburban Propane, L.P. Each owner has contributed their
pro-rata share of $2,000 as their initial capital contribution. The Company
repaid the $6,000,000 from the general partner distributions received from the
Partnership and from capital contributions from its owners. On August 16, 2002,
the Company repaid the remaining balance of the loan from Mellon.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING PERIOD. The Company's accounting period ends on the last Saturday
nearest to September 30.

CASH AND CASH EQUIVALENTS. The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be
cash equivalents. The carrying amount approximates fair value because of the
short maturity of these instruments.

INVESTMENT IN SUBURBAN PROPANE PARTNERS, L.P. As previously noted, the Company
acquired a combined 2% general partner interest in the Partnership on the
Closing Date which was subsequently reduced to 1.89%. The Company accounts for
its investment under the equity method of accounting whereby the Company
recognizes in income its share of net income of Suburban Propane Partners, L.P.
consolidated net income (loss) and reduces its investment balance to the extent
of partnership distributions the Company receives from Suburban Propane
Partners, L.P.

GOODWILL. The Company recorded goodwill on the Closing Date of $3,305,340
representing the excess of the $6,000,000 purchase price over the carrying value
of the General Partner's capital account reflected on the books of Suburban
Propane Partners, L.P. Effective September 30, 2001, the beginning of the
Company's 2002 fiscal year, the Company elected to early adopt the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and

F-26

Other Intangible Assets" ("SFAS 142"). SFAS 142 modifies the financial
accounting and reporting for goodwill and other intangible assets, including the
requirement that goodwill and certain intangible assets no longer be amortized.
This new standard also requires a transitional impairment review for goodwill,
as well as an annual impairment review. As a result of the adoption of SFAS 142,
amortization expense for the year ended September 28, 2002 decreased by $82,620
compared to the year ended September 29, 2001 due to the lack of amortization
expense related to goodwill. The Company's transitional impairment review did
not result in the recognition of an impairment loss.

INCOME TAXES. For federal and state income tax purposes, the earnings and losses
attributable to the Company are included in the tax returns of the individual
stockholders. As a result, no recognition of income taxes has been reflected in
the accompanying financial statements.

3. NOTE PAYABLE

On the Closing Date, the Company borrowed $6,000,000 under a loan agreement (the
"GP Loan") with Mellon to finance the purchase of the general partner interests
held by the Former General Partner. The GP loan was secured by a pledge of the
general partner interests held by the Company.

The GP Loan had a term of five years from the Closing Date and required interest
to be paid at a rate equal to LIBOR plus 2% with such interest to be paid no
less frequently than quarterly. The original GP Loan maturities as of September
30, 2000 were: $1,030,000 in 2001, $1,600,000 in 2002, $1,600,000 in 2003 and
$795,000 in 2004. During fiscal 2001, the Company prepaid a portion of the GP
loan modifying the loan maturities to: $1,600,000 in 2002 and $295,000 in 2003.

Upon the occurrence and continuance of an event of default under the GP Loan,
Mellon had the right to cause Suburban Propane, L.P. to purchase the note
evidencing the GP Loan (the "GP Note"). Suburban Propane, L.P. had agreed to
maintain borrowing availability under its available lines of credit, which would
be sufficient to enable it to repurchase the GP Note in these circumstances. The
GP Note also cross-defaulted to the obligations of Suburban Propane, L.P.'s
obligations under its Senior Note Agreement and its Revolving Credit Agreement.
Upon a GP Note default, Suburban Propane, L.P. also had the right to purchase
the GP Note from Mellon.

As discussed above, the GP Loan was repaid in full on August 16, 2002 and, as a
result, the arrangements described above terminated.

F-27

INDEX TO FINANCIAL STATEMENT SCHEDULE

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

PAGE
----

Schedule II Valuation and Qualifying Accounts-Years Ended
September 28, 2002, September 29, 2001 and
September 30, 2000. S-2

S-1

SCHEDULE II
===========

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Balance at Charged Balance
Beginning to Costs and Other at End
of Period Expenses Additions Deductions of Period
---------- ------------ --------- ---------- ---------

Year Ended September 30, 2000
- -----------------------------

Allowance for doubtful accounts .... $ 2,089 $ 3,137 $ -- $ (2,251) $ 2,975
========== ============ ========= ========== =========

Year Ended September 29, 2001
- -----------------------------

Allowance for doubtful accounts .... $ 2,975 $ 5,328 $ -- $ (4,311) $ 3,992
========== ============ ========= ========== =========

Year Ended September 28, 2002
- -----------------------------

Allowance for doubtful accounts .... $ 3,992 $ 1,147 $ -- $ (3,245) $ 1,894
========== ============ ========= ========== =========

S-2

EXHIBIT 21.1
------------

SUBSIDIARIES OF SUBURBAN PROPANE PARTNERS, L.P.

Suburban Propane, L.P., a Delaware limited partnership

Suburban Sales & Service, Inc., a Delaware corporation

Suburban Holdings, Inc., a Delaware corporation

Gas Connection, Inc., an Oregon corporation

Suburban @ Home, Inc., a Delaware corporation

Suburban Franchising, Inc., a Nevada corporation

EXHIBIT 23.1
------------

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-10197 and No. 333-72972) and Form S-4 (No.
333-95077) of our report dated October 23, 2002 relating to the financial
statements, which appears in the Suburban Propane Partners, L.P.'s Annual Report
on Form 10-K for the year ended September 28, 2002. We also consent to the
incorporation by reference of our report dated October 23, 2002 relating to the
financial statement schedule, which appears in such Annual Report on Form 10-K.
We also consent to the incorporation by reference in such registration
statements of our report dated October 23, 2002 on the financial statements of
Suburban Energy Services Group LLC, which appears in such Annual Report on Form
10-K.

PricewaterhouseCoopers LLP
Florham Park, NJ
December 20, 2002