SUBURBAN PROPANE PARTNERS LP
10-Q, 1998-08-07
MISCELLANEOUS RETAIL
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q
                                   (Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended JUNE 27, 1998
                                        -------------
                                       OR
[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 16 OF THE SECURITIES
         EXCHANGE ACT OF 1934

for the transition period from ______ to ______

Commission File Number:  1-14222
                         -------

                         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
- --------------------------------------------------------------------------------
(Address of principal executive office)     (Zip Code)

(973)887-5300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for each shorter  period that the  Registrant
was  required  to file such  reports),  and (2) had been  subject to such filing
requirements for the past 90 days.

                                    Yes X No
                                       --   --
           
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of August 6, 1998:

Suburban Propane Partners, L.P.  - 21,562,500  Common Units
                                 -  7,163,750  Subordinated Units

This Report contains a total of 18 pages.



<PAGE>


                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
                               INDEX TO FORM 10-Q

Part 1   Financial Information                                              PAGE

         Item 1 - Financial Statements

         SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
         ------------------------------------------------

          Condensed Consolidated Balance Sheets as of  June 27, 1998
          and September 27, 1997                                               3

          Condensed Consolidated Statements of Operations for the three
          months ended June 27, 1998 and June 28, 1997                         4

          Condensed Consolidated Statements of Operations for the nine
          months ended June 27, 1998 and June 28, 1997                         5

          Condensed Consolidated Statements of Cash Flows for the three
          and nine months ended June 27, 1998 and June 28, 1997                6

          Condensed Consolidated Statement of Partners' Capital
          for the nine months ended June 27, 1998                              7

          Notes to Condensed Consolidated Financial Statements              8-12

         Item 2 - Management's Discussion and Analysis of  Financial
                  Condition and Results of Operations                      13-16

Part 2   Other Information
         Item 5 - Other                                                       17
         Item 6 - Exhibits and Reports on Form 8-K                            17

         Signatures                                                           18



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

Statements made in this Form 10-Q which relate to the Partnership's expectations
or predictions are or may be deemed to be forward-looking  statements within the
meaning of Section 27A of the  Securities  Act of 1933 and 21E of the Securities
Exchange Act of 1934. The  Partnership's  actual  results may differ  materially
from those  contained  in any such  forward-looking  statements  depending  on a
number of  factors,  risks and  uncertainties,  some of which  are  outside  the
Partnership's control,  including the unit cost of propane,  weather,  continued
control of expenses, customer retention and regulatory developments.





<PAGE>
<TABLE>



                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
<CAPTION>

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


                                                                     JUNE 27,         SEPTEMBER 27,
                                                                       1998               1997
                                                                   (UNAUDITED)          (AUDITED)
                                                                   -----------       -------------
<S>                                                                <C>                 <C>  

ASSETS
Current assets:
     Cash and cash equivalents ..................................  $  80,683           $  19,336
     Accounts receivable, less allowance for
        doubtful accounts of $3,182 and $2,682, respectively          41,445              45,927
     Inventories ................................................     22,918              31,915
     Prepaid expenses and other current assets ..................      5,898               7,183
                                                                   ---------           ---------
          Total current assets ..................................    150,944             104,361
Property, plant and equipment, net ..............................    349,149             364,347
Net prepaid pension cost ........................................     34,506              48,598
Goodwill and other intangible assets, net .......................    216,496             219,017
Other assets ....................................................      2,501               9,311
                                                                   ---------           ---------
          Total assets ..........................................  $ 753,596           $ 745,634
                                                                   =========           =========


LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
     Accounts payable ...........................................  $  27,124           $  37,785
     Accrued employment and benefit costs .......................     21,889              19,957
     Accrued insurance ..........................................      5,020               5,280
     Customer deposits and advances .............................      8,330              12,795
     Accrued interest ...........................................     16,016               8,306
     Other current liabilities ..................................      9,172              12,578
                                                                   ---------           ---------
          Total current liabilities .............................     87,551              96,701
Long-term debt ..................................................    427,897             427,970
Postretirement benefits obligation ..............................     35,188              51,123
Accrued insurance ...............................................     18,528              18,468
Other liabilities ...............................................      9,728              10,133
                                                                   ---------           ---------
          Total liabilities .....................................    578,892             604,395
Partners' capital:
     Common Unitholders .........................................    109,342             100,476
     Subordinated Unitholder ....................................     52,932              39,835
     General Partner ............................................     25,469              12,830
     Unearned compensation ......................................    (13,039)            (11,902)
                                                                   ---------           ---------
          Total partners' capital ...............................    174,704             141,239
                                                                   ---------           ---------

          Total liabilities and partners' capital ...............  $ 753,596           $ 745,634
                                                                   =========           =========


</TABLE>


The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.
<PAGE>
<TABLE>

                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
<CAPTION>

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

                                                        THREE MONTHS ENDED
                                                  JUNE 27, 1998   JUNE 28, 1997
                                                  -------------   -------------
<S>                                                 <C>               <C> 

Revenues
     Propane ....................................   $ 110,463         $ 117,165
     Other ......................................      14,646            15,198
                                                    ---------         ---------
                                                      125,109           132,363


Costs and expenses
     Cost of sales ..............................      57,574            67,478
     Operating ..................................      51,016            51,413
     Depreciation and amortization ..............       9,079             9,342
     Selling, general and administrative expenses      10,365             8,172
     Restructuring charge .......................           0             6,911
                                                    ---------         ---------
                                                      128,034           143,316

Loss from operations ............................      (2,925)          (10,953)
Interest expense, net ...........................       7,306             8,181
                                                    ---------         ---------
Income before provision for income taxes ........     (10,231)          (19,134)
Provision for income taxes ......................           4                47
                                                    ---------         ---------
     Net loss ...................................   $ (10,235)        $ (19,181)
                                                    =========          =========

General Partner's interest in net loss ..........   $    (205)        $    (384)
                                                    ---------         ---------
Limited Partners' interest in net loss ..........   $ (10,030)        $ (18,797)
                                                    =========         =========
Basic and diluted net loss per Unit .............   $   (0.35)        $   (0.65)
                                                    =========         =========
Weighted average number of Units outstanding ....      28,726            28,726
                                                    =========         =========









</TABLE>


The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.
<PAGE>
<TABLE>

                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
<CAPTION>

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

                                                            NINE MONTHS ENDED
                                                         JUNE 27,      JUNE 28, 
                                                           1998          1997
                                                        --------      --------
<S>                                                     <C>          <C> 

Revenues
     Propane ........................................   $ 507,502    $ 602,126
     Other ..........................................      52,922       53,896
                                                        ---------    ---------
                                                          560,424      656,022


Costs and expenses
     Cost of sales ..................................     278,582      378,716
     Operating ......................................     156,181      163,869
     Depreciation and amortization ..................      27,544       27,811
     Selling, general and administrative expenses ...      26,350       24,309
     Gain on sale of investment in Dixie Pipeline Co.      (5,090)           0
     Restructuring charge ...........................           0        6,911
                                                        ---------    ---------
                                                          483,567      601,616

Income from operations ..............................      76,857       54,406
Interest expense, net ...............................      23,155       25,794
                                                        ---------    ---------
Income before provision for income taxes ............      53,702       28,612
Provision for income taxes ..........................          25          174
                                                        ---------    ---------
     Net income .....................................   $  53,677    $  28,438
                                                        =========    =========

General Partner's interest in net income ............   $   1,074    $     569
                                                        ---------    ---------
Limited Partners' interest in net income ............   $  52,603    $  27,869
                                                        =========    =========
Basic and diluted net income per Unit ...............   $    1.83    $    0.97
                                                        =========    =========
Weighted average number of Units outstanding ........      28,726       28,726
                                                        =========    =========







</TABLE>



The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.
<PAGE>
<TABLE>

                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
<CAPTION>
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

                                                                      THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                    JUNE 27,       JUNE 28,        JUNE 27,        JUNE 28,
                                                                      1998           1997            1998            1997
                                                              -------------   ------------   -------------   -------------
<S>                                                           <C>             <C>             <C>             <C>        
Cash flows from operating activities:
     Net (loss) income .....................................  $    (10,235)   $    (19,181)   $     53,677    $     28,438
     Adjustments to reconcile net (loss) income
     to net cash provided by operations:
          Depreciation .....................................         7,296           7,437          22,001          22,128
          Amortization .....................................         1,783           1,905           5,543           5,683
          Restructuring charge .............................             0           6,911               0           6,911
         (Gain) on disposal of investment ..................             0               0          (5,090)              0
         (Gain) loss on disposal of property, plant
            and equipment ..................................            59             (20)         (1,348)           (438)
     Changes in operating assets and liabilities,
      net of acquisitions and dispositions:
         Decrease in accounts receivable ...................        27,434          38,352           4,482           3,851
         (Increase) decrease in inventories ................        (1,591)          3,341           8,997          12,653
         Decrease in prepaid expenses
            and other current assets .......................         1,498           1,111           1,285             696
         (Decrease) in accounts payable ....................        (3,257)        (10,574)        (10,661)        (13,389)
          Increase (decrease) in accrued
           employment and benefit costs ....................         1,763             344           2,499          (2,083)
          Increase in accrued interest .....................         7,773           7,801           7,710           7,928
          (Decrease) in other accrued liabilities ..........        (2,208)         (1,982)         (8,131)         (7,109)
     Other noncurrent assets ...............................          (537)           (230)         (1,587)           (851)
     Deferred credits and other noncurrent
            liabilities ....................................         1,425             598          (1,702)         (4,248)
                                                              ------------    ------------    ------------    ------------
               Net cash provided by  operating
                   activities ..............................        31,203          35,813          77,675          60,170
                                                              ------------    ------------    ------------    ------------
Cash flows from investing activities:
      Capital expenditures .................................        (1,557)         (5,689)         (9,199)        (21,176)
      Acquisitions .........................................          (370)            (35)         (4,063)         (1,538)
      Proceeds from sale of investment .....................             0               0          13,090               0
      Proceeds from sale of property, plant and
                    equipment, net .........................           778           1,779           4,882           4,785
                                                              ------------    ------------    ------------    ------------
               Net cash (used in) provided by
                     investing activities ..................        (1,149)         (3,945)          4,710         (17,929)
                                                              ------------    ------------    ------------    ------------
Cash flows from financing activities:
      Short-term repayments ................................             0         (14,000)              0               0
      Long-term debt repayments ............................          (259)           (258)           (260)           (258)
      Proceeds from General Partner APU
          contribution .....................................             0               0          12,000               0
      Partnership distribution .............................       (10,926)        (10,926)        (32,778)        (36,509)
                                                              ------------    ------------    ------------    ------------
               Net cash (used in) financing activities .....       (11,185)        (25,184)        (21,038)        (36,767)
                                                              ------------    ------------    ------------    ------------
Net increase in cash and cash equivalents ..................        18,869           6,684          61,347           5,474
Cash and cash equivalents at beginning
     of period .............................................        61,814          17,721          19,336          18,931
                                                              ------------    ------------    ------------    ------------
Cash and cash equivalents at end
     of period .............................................  $     80,683    $     24,405    $     80,683    $     24,405 
                                                              ============    ============    ============    ============

Supplemental disclosure of cash flow information:
     Cash paid for interest ................................  $        319    $        380    $     16,662    $     16,737         
                                                              ============    ============    ============    ============
Non-cash investing and financing activities:
      Assets acquired by incurring note payable ............  $       --      $       --      $        250    $       --           
                                                              ============    ============    ============    ============
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.
<PAGE>
<TABLE>

                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
<CAPTION>

              CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                                                                                          UNEARNED        TOTAL  
                                         NUMBER OF UNITS                                   GENERAL      COMPENSATION    PARTNERS'
                                    COMMON     SUBORDINATED    COMMON    SUBORDINATED      PARTNER    RESTRICTED UNITS   Capital
                                    ------     ------------    ------    ------------      -------    ----------------  ---------
                                   
<S>                                 <C>         <C>          <C>         <C>              <C>         <C>               <C>

Balance at September 27, 1997 .     21,562            7,164  $100,476    $     39,835     $ 12,830    $       (11,902)  $141,239   

Net Grants Issued under
Restricted Unit Plan ..........                                 1,703                                          (1,703)

Partnership distribution ......                               (32,343)                        (435)                      (32,778)

Amortization of Restricted Unit
compensation ..................                                                                                   566        566

APU contribution
(120 Units) ...................                                                             12,000                        12,000

Net income ....................                                39,506          13,097        1,074                        53,677
                                   -------      -----------  --------    ------------     --------    ---------------   --------   

Balance at June 27, 1998 ......     21,562            7,164  $109,342        $ 52,932     $ 25,469    $       (13,039)  $174,704  
                                  ========      ===========  ========    ============     ========    ===============   ========












</TABLE>




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



<PAGE>



                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 27, 1998
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)


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 the  Suburban  Propane  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 sales  businesses of the Predecessor  Company.  The  Partnership,  the
Operating  Partnership  and the  Service  Company are  collectively  referred to
hereinafter as the "Partnership  Entities".  The Partnership  Entities commenced
operations on March 5, 1996 (the "Closing Date") upon consummation of an initial
public  offering  of  18,750,000  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  (the "Senior Notes") 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 March 25, 1996,
the  underwriters  of the  Partnership's  initial public  offering  exercised an
overallotment  option to purchase an  additional  2,812,500  Common  Units.  The
Partnership Entities are, and the Predecessor Company was, engaged in the retail
and wholesale marketing of propane and related appliances and services.

Suburban Propane GP, Inc. (the "General  Partner") is a wholly-owned  subsidiary
of  Millennium  Petrochemicals  Inc.,  ("Millennium  Petrochemicals"),  formerly
Quantum  Chemical  Corporation,  and  serves  as  the  general  partner  of  the
Partnership  and  the  Operating  Partnership.  Both  the  General  Partner  and
Millennium  Petrochemicals are indirect wholly-owned  subsidiaries of Millennium
Chemicals  Inc.  ("Millennium"),  which was  formed as a result of Hanson  PLC's
demerger in October  1996.  Millennium is a Securities and  Exchange  Commission
registrant which files periodic reports. Millennium's annual report on Form 10-K
for the fiscal  year ended  December  31, 1997 has been filed  (Commission  File
Number 1-12091).  The General Partner holds a 1% general partner interest in the
Partnership and a 1.0101% general partner interest in the Operating Partnership.
In addition,  the General  Partner owns a 24.4% limited  partner  interest and a
special  limited  partner  interest  in the  Partnership.  The  limited  partner
interest is evidenced by 7,163,750  Subordinated  Units and the special  limited
partner interest is evidenced by 220,000 Additional  Partnership Units ("APUs").
The General Partner has delegated to the Partnership's  Board of Supervisors all
management powers over the business and affairs of the Partnership Entities that
the General Partner possesses under applicable law.

2.       BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --       --------------------------------------------------------------------

BASIS OF PRESENTATION.  The condensed  consolidated financial statements include
the  accounts  of  the  Partnership  Entities.   All  significant   intercompany

<PAGE>

transactions  and accounts  have been  eliminated.  The  accompanying  condensed
consolidated  financial  statements  are  unaudited  and have been  prepared  in
accordance  with the  rules  and  regulations  of the  Securities  and  Exchange
Commission.  They  include  all  adjustments  which  the  Partnership  considers
necessary for a fair statement of the results for the interim period  presented.
Such  adjustments  consisted  only of normal  recurring  items unless  otherwise
disclosed.  These financial  statements  should be read in conjunction  with the
Company's  Annual  Report on Form 10-K for the fiscal year ended  September  27,
1997, including management's  discussion of financial results contained therein.
Due to the seasonal nature of the Partnership's propane business, the results of
operations for interim periods are not necessarily  indicative of the results to
be expected for a full year.

FISCAL PERIOD.  The Partnership's fiscal periods end on the Saturday nearest the
end of the quarter.

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

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

PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at cost.
Depreciation   of  property,   plant  and   equipment  is  computed   using  the
straight-line  method over the estimated service lives which range from three to
forty years.

Accumulated  depreciation  at June 27, 1998 and  September 27, 1997 was $136,401
and $115,705, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS.  Goodwill and other intangible assets are 
comprised of the following:
                                                    JUNE 27,       SEPTEMBER 27,
                                                     1998              1997
                                                     ----              ----

         Goodwill ...............................   $237,803          $235,439
         Debt origination costs .................      6,224             6,224
         Other, principally noncompete agreements      5,075             4,514
                                                    --------          --------
                                                     249,102           246,177
         Less:  Accumulated amortization ........     32,606            27,160
                                                    --------          --------
                                                    $216,496          $219,017
                                                    ========          ========

INCOME TAXES.  As discussed in Note 1, the Partnership  Entities  consist of two
limited  partnerships,  the Partnership and the Operating  Partnership,  and one
corporate  entity,  the  Service  Company.  For  federal  and state  income  tax
purposes,  the earnings attributed 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  attributed to the Service Company are
subject  to federal  and state  income  taxes.  Accordingly,  the  Partnership's
consolidated  financial  statements  reflect  income tax expense  related to the
Service Company's earnings.

<PAGE>


NET INCOME (LOSS) PER UNIT.  Financial  Accounting Standards Board Statement No.
128,  "Earnings per Share"  ("Statement  No. 128"),  issued in February 1997 and
effective for financial  statements  for periods ending after December 15, 1997,
establishes and simplifies  standards for computing and presenting  earnings per
share.  Statement No. 128 requires restatement of all prior-period  earnings per
share data  presented.  Basic net  income  (loss) per  limited  partner  unit is
computed by dividing net income (loss), after deducting the General Partner's 2%
interest,  by the  weighted  average  number  of  outstanding  Common  Units and
Subordinated  Units.  Diluted  net income  (loss) per  limited  partner  unit is
computed by dividing net income (loss), after deducting the General Partner's 2%
interest,  by the  weighted  average  number  of  outstanding  Common  Units and
Subordinated  Units and the weighted  average number of Restricted Units granted
under the Restricted Unit Award Plan, after adjusting for unearned  compensation
associated with such units.

NEW  ACCOUNTING  STANDARD.  In June 1998,  the  Financial  Accounting  Standards
Board issued Statement of Financial Accounting Standards  No.  133,  "Accounting
for Derivative  Instruments  and   Hedging   Activities"  ("Statement No. 133").
Statement  No. 133   requires  entities  to  record   derivatives  as  assets or
liabilities  on the balance sheet  and  to  measure  them  at  fair  value. This
standard is effective for  the  Partnership's  2000  fiscal  year. Management is
currently evaluating the impact this statement  may  have  on  the Partnership's
financial statements.

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

3.       DISTRIBUTIONS OF AVAILABLE CASH
- --       -------------------------------  

The Partnership will make distributions to its partners 45 days after the end of
each fiscal quarter in an aggregate  amount equal to its Available Cash for such
quarter.  Available  Cash  generally  means  all  cash on hand at the end of the
fiscal quarter less cash reserves established by the Board of Supervisors in its
reasonable  discretion  for future cash  requirements.  In  accordance  with the
Distribution  Support  Agreement among the Partnership,  the General Partner and
Millennium,  to enhance  the  Partnership's  ability to  distribute  the Minimum
Quarterly  Distribution  on the Common Units,  the General Partner has agreed to
contribute  to the  Partnership  cash in exchange for APUs.  The APUs  represent
non-voting,  limited partner Partnership  interests with a stated value per unit
of $100. The APUs are not entitled to cash  distributions  or allocations of any
items of Partnership  income,  gain, loss,  deduction or credit. The Partnership
did not require  any cash  contributions  in exchange  for APUs from the General
Partner in the third fiscal quarter.  On May 12, 1998, the Partnership  paid the
Minimum Quarterly  Distributions on all outstanding Common Units for the quarter
ended March 28, 1998. The Partnership  did not make a quarterly  distribution on
its  Subordinated  Units (which are held by the General Partner) for said fiscal
quarter.  At June 27,  1998,  the  General  Partner has  contributed  a total of
$22,000 or 220,000 APUs and has a remaining maximum  contribution  obligation of
$21,600 or 216,000 APUs under the Distribution Support Agreement.

4.       RELATED PARTY TRANSACTIONS
- --       -------------------------- 

Pursuant to a Computer Services Agreement (the "Services Agreement") dated as of
the  Closing  Date  between  Millennium   Petrochemicals  and  the  Partnership,
Millennium  Petrochemicals  permitted  the  Partnership  to  utilize  Millennium
Petrochemicals' mainframe computer for the generation of customer bills, reports
and information  regarding the  Partnership's  retail sales.  For the six months
ended  March 28,  1998,  the  Partnership  incurred  expenses  of $202 under the

<PAGE>

Services  Agreement.  The Services  Agreement was terminated  effective April 3,
1998 at which time the Partnership  began utilizing the services of an unrelated
third party provider.

5.       COMMITMENTS AND CONTINGENCIES
- --       -----------------------------

The Partnership leases certain property, plant and equipment for various periods
under  noncancelable  leases.  Rental expense under operating leases was $12,942
for the nine months ended June 27, 1998.

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 June 27, 1998, accrued insurance  liabilities  amounted to
$23,548,  representing  the total  estimated  losses under these  self-insurance
programs. These liabilities represent the gross estimated losses as no claims or
lawsuits,  individually  or in the  aggregate,  were  estimated  to  exceed  the
Partnership's deductibles on its insurance policies.

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.  It is the opinion of management,  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.

6.       LONG-TERM DEBT AND BANK CREDIT FACILITIES
- --       -----------------------------------------

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

The Bank Credit  Facilities  consist of a $75,000 working capital facility and a
$25,000 acquisition facility. The Operating Partnership's  obligations under the
Bank Credit  Facilities  are  unsecured  on an equal and ratable  basis with the
Operating Partnership's obligations under the Senior Notes. Borrowings under the
Bank Credit Facilities will bear interest at a rate based upon either LIBOR plus
a margin,  First Union National Bank's prime rate or the Federal Funds rate plus
1/2 of 1%. An annual fee ranging from .20% to .25% based upon certain  financial
tests will be payable  quarterly whether or not borrowings occur. As of June 27,
1998, such fee was .25%. On February 25, 1998, the Operating Partnership entered
into the First Amendment to its Amended and Restated Bank Credit Agreement.  The
Bank Credit Facilities will expire September 30, 2000.

No amounts were outstanding under the Bank Credit Facilities as of September 27,
1997 and June 27, 1998.

The Senior Note Agreement and Bank Credit Facilities contain various restrictive
and affirmative covenants  applicable to the  Operating  Partnership,  including
(i)  maintenance  of  certain   financial   tests,   (ii)  restrictions  on  the
incurrence of additional indebtedness, and (iii) restrictions on certain  liens,
investments,  guarantees,  loans,  advances, payments, mergers,  consolidations,
distributions, sales of assets and other transactions.

<PAGE>


7.       RESTRICTED UNIT PLAN
- --       --------------------

The  Partnership's  1996  Restricted  Unit Award Plan authorizes the issuance of
Common  Units with an  aggregate  value of $15,000 to  executives,  managers and
Elected  Supervisors  of the  Partnership.  Upon issuance of  Restricted  Units,
unearned  compensation is amortized ratably over the applicable  vesting periods
under the Plan.
                                    UNITS            VALUE PER UNIT
                                    -----            --------------

Outstanding September 27, 1997    634,148           $18.41 - $21.63
Awarded ......................     97,556           $17.91
Forfeited ....................    (12,195)          $18.41 - $21.63
                                 --------           ---------------

Outstanding June 27, 1998 ....    719,509           $17.91 - $21.63
                                  =======           ===============

For the nine months  ended June 27,  1998,  the  Partnership  amortized  $566 of
unearned compensation.

8.       EMPLOYEE BENEFIT PLANS
- --       ----------------------

Effective  January 1, 1998,  the  Partnership,  in  connection  with its overall
restructuring efforts to implement long-term cost reduction strategies, modified
certain employee benefit plans.

In this regard,  the  Partnership  amended its  noncontributory  defined benefit
pension plan to provide for a cash balance format as compared to a final average
format  which was in effect  prior to  January  1, 1998.  The  Partnership  also
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.

The Partnership has in part accounted for the  restructuring  of the above-noted
benefit  plans as a reduction  in the  postretirement  plan  benefit  obligation
(retaining only the obligation  related to employees  retired on or before March
1, 1998) and as a corresponding  decrease in the net prepaid pension cost with a
net difference of $300 being recognized as a gain in the accompanying  statement
of operations for the nine months ended June 27, 1998.

9.       SUBSEQUENT EVENT - COMMON UNIT DISTRIBUTION
- --       -------------------------------------------

On July 21, 1998 the Partnership announced a quarterly distribution of $0.50 per
Limited  Partner  Common Unit for the third  quarter of fiscal  1998  payable on
August 11, 1998. The Partnership  will not make a quarterly  distribution on its
Subordinated  Units  (which are held by the  General  Partner)  for said  fiscal
quarter.

<PAGE>






           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


THREE MONTHS ENDED JUNE 27, 1998
- --------------------------------
COMPARED TO THREE MONTHS ENDED JUNE 28, 1997
- --------------------------------------------

REVENUES

Revenues  decreased  5.5% or $7.3 million to $125.1 million for the three months
ended June 27,  1998 as compared to $132.4  million for the three  months  ended
June 28, 1997. The overall  decrease is primarily  attributable to lower propane
costs  resulting  in lower sales prices to  customers  and to a lesser  extent a
decline in retail gallons.  Propane gallons sold to retail  customers  decreased
2.1% or 2.2 million  gallons to 100.7  million  gallons.  The decrease in retail
gallons is principally due to warmer temperatures, particularly in the months of
April  and May,  compared  to the prior  period.  Temperatures  nationally  were
approximately 19% warmer than in the prior period. Wholesale and trading gallons
sold increased 84.3% or 21.1 million  gallons to 46.2 million gallons  resulting
from the  Partnership's  expansion  of its  product  procurement  and price risk
management activities.

GROSS PROFIT

Gross  profit  increased  4.1% or $2.7  million  to $67.5  million  in the third
quarter of fiscal  1998,  principally  due to  overall  higher  margins  and the
Partnership's  expansion of its product  procurement  and price risk  management
activities. (See "Hedging")

OPERATING EXPENSES

Operating  expenses  decreased .8% or $.4 million to $51.0 million for the three
months  ended June 27, 1998 as compared  to $51.4  million for the three  months
ended  June  28,  1997.  The  decrease  in  operating  expenses  is  principally
attributable  to the  continued  favorable  impact of  restructuring  activities
undertaken during 1997, primarily lower payroll and benefit costs offset in part
by a $.4 million write down in the value of a former operating facility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and administrative expenses increased $2.2 million or 26.8% to
$10.4  million for the three  months  ended June 27,  1998,  as compared to $8.2
million in the prior period.  The increase is primarily  attributable  to a $1.4
million write off of certain impaired information systems assets and an increase
in professional consulting services.

OPERATING INCOME AND EBITDA

Operating  loss  decreased  $8.0  million to a loss of $2.9 million in the three
months ended June 27, 1998 compared to $11.0 million in the prior period's third
quarter.  The prior  period's  loss of $11.0  million  includes  a $6.9  million
restructuring charge which resulted from the Partnership's reorganization of its
Product Procurement and Logistics Group, a redesign of its Fleet and Maintenance
Group and  changes in field  management  to improve  operations.  Excluding  the
current  period asset write downs and the prior period's  restructuring  charge,

<PAGE>

the operating  loss decreased $2.9 million to $1.1 million as compared to a loss
of $4.0  million in the third  quarter of fiscal  1997.  Excluding  the one-time
charges in both periods,  EBITDA  increased  $2.7 million to $8.0  million.  The
increase  in EBITDA and  operating  income is  primarily  attributable  to lower
period  expenses  and  higher  overall  gross  profit  offset  in part by higher
selling, 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)   but  provides   additional   information   for   evaluating   the
Partnership's ability to distribute the Minimum Quarterly Distribution.

INTEREST EXPENSE

Net interest  expense  decreased $.9 million to $7.3 million in the three months
ended June 27, 1998 compared with $8.2 million in the prior period. The decrease
is attributable to improved  working capital  management and lower product costs
coupled with higher interest income on significantly  increased cash investments
during the three months ended June 27, 1998 as compared to the prior period.

NINE MONTHS ENDED JUNE 27, 1998
- -------------------------------
COMPARED TO NINE MONTHS ENDED JUNE 28, 1997
- -------------------------------------------

REVENUES

Revenues  decreased 14.6% or $95.6 million to $560.4 million for the nine months
ended June 27, 1998 as compared to $656.0 million for the nine months ended June
28, 1997. The overall decrease is primarily  attributable to lower propane costs
resulting in lower sales  prices to  customers.  Propane  gallons sold to retail
customers  decreased  1.4% or 6.1 million  gallons to 439.2  million  gallons as
compared to the same period in the prior year. The decrease in retail gallons is
primarily  attributable to temperatures being 7% warmer than in the prior year's
comparable  period.  Wholesale and trading  gallons sold  increased 7.5% or 12.4
million gallons to 178.4 million.  The increase is attributable to the expansion
of trading activities by the Product Procurement and Logistics Group.

GROSS PROFIT

Gross profit  increased 1.6% or $4.5 million to $281.8 for the nine months ended
June 27,  1998,  principally  attributable  to overall  higher  margins  and the
Partnership's  expansion of its product  procurement  and price risk  management
activities.

OPERATING EXPENSES

Operating expenses decreased 4.7% or $7.7 million to $156.2 million for the nine
months  ended June 27, 1998 as  compared  to $163.9  million for the nine months
ended  June  28,  1997.  The  decrease  in  operating  expenses  is  principally
attributable to lower payroll expenses resulting from  restructuring  activities
undertaken during 1997 and lower fleet fuel and maintenance costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and administrative  expenses increased 8.4% or $2.0 million to
$26.4 million for the nine months ended June 27, 1998, compared to $24.3 million
in the prior period. The increase is principally  attributable to a $1.4 million

<PAGE>

write off of certain  information  system  assets  during  the third  quarter of
fiscal 1998 and higher costs for professional consulting services.

OPERATING INCOME AND EBITDA

Operating income increased  $22.5  million to $76.9  million in the  nine months
ended  June  27,  1998 compared  to  $54.4  million in the prior period.  EBITDA
increased $22.2 million to $104.4 million.

Results for the nine months ended June 27, 1998 include a $5.1 million gain from
the sale of an investment in the Dixie Pipeline Co. and a $1.8 million write off
of  certain  impaired  assets.  Results  for the  prior  year  period  include a
restructuring charge of $6.9 million.

Excluding these one-time items from both periods, operating income increased 20%
or $12.3  million  to  $73.6  million  as compared to $61.3 million in the prior
period. EBITDA, excluding the one-time items from both periods,  increased 13.4%
or $12.0  million to $101.1  million as compared  to $89.1  million in the prior
period.

The  improvement  in operating  income and EBITDA is primarily  attributable  to
lower period expenses and higher overall gross profit.

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)  but  provides  additional
information for evaluating the  Partnership's  ability to distribute the Minimum
Quarterly Distribution.

INTEREST EXPENSE

Net interest expense  decreased $2.6 million to $23.2 million in the nine months
ended June 27,  1998  compared  with  $25.8  million  in the prior  period.  The
decrease  is  attributable  to improved  working  capital  management  and lower
product  costs  which  resulted  in  no  amounts   being   borrowed   under  the
Partnership's Bank Credit Facilities  during the nine months ended June 27, 1998
coupled with higher interest income on significantly increased cash  investments
in the current period.

HEDGING

The  Partnership  engages in hedging  transactions 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 on the New York Mercantile  Exchange and, to a limited extent,
enters into  agreements  to  purchase  and sell  propane at fixed  prices in the
future.  These activities are monitored by management through enforcement of the
Partnership's  Commodity  Trading  Policy.  Hedging  does not  always  result in
increased  product  margins  and  the  Partnership  does  not  consider  hedging
activities  to be material to  operations or liquidity for the nine month period
ended June 27, 1998.

READINESS FOR YEAR 2000

The  Partnership  has taken actions and continues to evaluate the extent of work
required  to make its  computer-based  systems  Year 2000  compliant,  including

<PAGE>

replacing  and/or updating  existing  legacy  systems.  While these efforts will
involve  additional  costs,  the  Partnership   believes,   based  on  available
information,  that it will be able to  manage  its total  Year  2000  transition
without any material adverse effect on its business operations.

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 as customers pay for
propane purchased during the heating season.  For the nine months ended June 27,
1998, net cash provided by operating  activities  was $77.7 million  compared to
cash provided by operating  activities of $60.2 million in the nine months ended
June 28, 1997.  The increase of $17.5  million was  primarily  due to higher net
income after adjusting for non-cash items and an increase in accrued  employment
and benefit costs.

Net cash provided by investing  activities  amounted to $4.7 million  during the
nine months ended June 27, 1998 which  includes  proceeds of $13.1  million from
the sale of the Partnership's  minority interest in the Dixie Pipeline Co., $4.9
million  from the sale of  property,  plant and  equipment,  offset by  business
acquisition  payments of $4.1 million and capital  expenditures  of $9.2 million
(including $4.1 million for maintenance expenditures and $5.1 million to support
the  growth of  operations).  Net cash used in  investing  activities  was $17.9
million  for  the  nine  months  ended  June  28,  1997  consisting  of  capital
expenditures  of  $21.2  million   (including   $11.5  million  for  maintenance
expenditures  and  $9.7  million  to  support  the  growth  of  operations)  and
acquisition  payments  of $1.5  million,  offset  by  proceeds  from the sale of
property,  plant  and  equipment  of  $4.8  million.  The  decrease  in  capital
expenditures  of $12.0  million  for the nine  months  ended June 27,  1998 when
compared to the prior year period is  primarily  due to  reductions  in customer
equipment and new vehicle  purchases as the Partnership has elected to lease new
vehicles in lieu of purchasing same.

Net cash used in  financing  activities  for the nine months ended June 27, 1998
was $21.0 million,  principally  reflecting the Partnership's cash distributions
and the proceeds of the  General  Partner's APU  contributions  of $12.0 million
received during the first quarter of fiscal 1998.

Net cash  used in  financing  activities  for  the nine  months  ended  June 28,
1997 was $36.8  million, principally reflecting the Partnership's distributions.

The Partnership has announced that it will make a distribution of $0.50 per Unit
to its Common  Unitholders  on August 11, 1998 for the third  fiscal  quarter of
1998.  The  Partnership  will  not  make  a  distribution  to  the  Subordinated
Unitholder  for  said  fiscal  quarter.  The  Partnership  does  not  anticipate
utilizing  proceeds  available  under the  Distribution  Support  Agreement with
respect to the  funding of the  Minimum  Quarterly  Distribution  for the fourth
quarter of fiscal 1998.

The ability of the Partnership to satisfy its future  obligations will depend on
its future performance, which will be subject to prevailing economic, financial,
business and weather conditions and other factors,  many of which are beyond its
control.  Future capital needs of the Partnership are expected to be provided by
future  operations,  existing cash balances,  the Bank Credit Facilities and, to
the extent available  and  required, APU contributions from the General Partner.
The  Partnership may incur  additional  indebtedness or issue  additional  Units
to fund possible future acquisitions.


<PAGE>



                SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

                                     PART II



ITEM 5.           OTHER INFORMATION - None.



ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits
                           (27)  Financial Data Schedule

                  (b)      Reports on Form 8-K
                           None

<PAGE>



                                   SIGNATURES



PURSUANT TO THE  REQUIREMENTS  OF THE SECURITIES ACT OF 1934, THE REGISTRANT HAS
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED  THEREUNTO DULY
AUTHORIZED:











                                  SUBURBAN PROPANE PARTNERS, L.P.



DATE:  AUGUST 7,  1998         BY   /S/ ANTHONY M.SIMONOWICZ
                                    ------------------------
                              ANTHONY M. SIMONOWICZ
                              VICE PRESIDENT, CHIEF FINANCIAL OFFICER





                               BY   /S/ EDWARD J.GRABOWIECKI
                                    ------------------------
                              EDWARD J. GRABOWIECKI
                              CONTROLLER AND CHIEF ACCOUNTING OFFICER

<TABLE> <S> <C>

<ARTICLE>                                          5
<LEGEND>
This shedule contains summary financial information extracted from the financial
statementscontained in the body of the accompanying For 10-Q and is qualified in
it's entirety by reference to such financial statements 
</LEGEND>
<MULTIPLIER>                                       1,000
       
<S>                                                  <C>
<PERIOD-TYPE>                                      9-MOS
<FISCAL-YEAR-END>                                  SEP-26-1998
<PERIOD-START>                                     SEP-29-1997
<PERIOD-END>                                       JUN-27-1998
<CASH>                                             80,683
<SECURITIES>                                       0
<RECEIVABLES>                                      44,627
<ALLOWANCES>                                       3,182
<INVENTORY>                                        22,918
<CURRENT-ASSETS>                                   150,944
<PP&E>                                             485,550
<DEPRECIATION>                                     136,401
<TOTAL-ASSETS>                                     753,596
<CURRENT-LIABILITIES>                              87,551
<BONDS>                                            427,897
                              0
                                        0
<COMMON>                                           0
<OTHER-SE>                                         174,704
<TOTAL-LIABILITY-AND-EQUITY>                       753,596
<SALES>                                            560,424
<TOTAL-REVENUES>                                   560,424
<CGS>                                              278,582
<TOTAL-COSTS>                                      434,763
<OTHER-EXPENSES>                                   0
<LOSS-PROVISION>                                   2,329
<INTEREST-EXPENSE>                                 23,155
<INCOME-PRETAX>                                    53,702
<INCOME-TAX>                                       25
<INCOME-CONTINUING>                                53,677
<DISCONTINUED>                                     0
<EXTRAORDINARY>                                    0
<CHANGES>                                          0
<NET-INCOME>                                       53,677
<EPS-PRIMARY>                                      0
<EPS-DILUTED>                                      0
        


</TABLE>


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