SUBURBAN PROPANE PARTNERS LP, 10-K, 2000-12-20

SUBURBAN PROPANE PARTNERS LP
10-K, 2000-12-20
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

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

For the fiscal year ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 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)

Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class 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 Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for each shorter period that the Registrant
was required to file such reports), and (2) had been subject to such filing
requirements for the past 90 days. Yes X No
--- ---

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

The aggregate market value as of December 15, 2000 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 ($19.8125
/unit), was approximately $486,752,500. On December 15, 2000 there were
outstanding 24,631,287 Common Units.

Documents Incorporated by Reference: None

<PAGE>

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.................................................. 5
ITEM 3. LEGAL PROCEEDINGS........................................... 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 6

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS AND
RELATED UNITHOLDER MATTERS.................................. 7

ITEM 6. SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA............ 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK................................................. 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE......................... 18

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 19
ITEM 11. EXECUTIVE COMPENSATION...................................... 21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................. 26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 27

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K......................................... 29

Signatures............................................................. 31

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

THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
RELATING TO THE PARTNERSHIP'S FUTURE BUSINESS EXPECTATIONS AND PREDICTIONS AND
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THESE FORWARD-LOOKING STATEMENTS
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN SUCH FORWARD-LOOKING
STATEMENTS ("CAUTIONARY STATEMENTS") INCLUDE, AMONG OTHER THINGS: THE IMPACT OF
WEATHER CONDITIONS ON THE DEMAND FOR PROPANE; FLUCTUATIONS IN THE UNIT COST OF
PROPANE; THE ABILITY OF THE PARTNERSHIP TO COMPETE WITH OTHER SUPPLIERS OF
PROPANE AND OTHER ENERGY SOURCES; THE ABILITY OF THE PARTNERSHIP TO RETAIN
CUSTOMERS; THE IMPACT OF ENERGY EFFICIENCY AND TECHNOLOGY ADVANCES ON THE DEMAND
FOR PROPANE; THE ABILITY OF MANAGEMENT TO CONTINUE TO CONTROL EXPENSES; THE
IMPACT OF REGULATORY DEVELOPMENTS ON THE PARTNERSHIP'S BUSINESS; THE IMPACT OF
LEGAL PROCEEDINGS ON THE PARTNERSHIP'S BUSINESS; AND THE PARTNERSHIP'S ABILITY
TO IMPLEMENT ITS EXPANSION STRATEGY AND TO INTEGRATE ACQUIRED BUSINESSES
SUCCESSFULLY. 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 SUCH CAUTIONARY STATEMENTS.

<PAGE>

PART I

ITEM 1. BUSINESS.

GENERAL

Suburban Propane Partners, L.P. (the "Partnership"), a publicly traded
Delaware limited partnership, is engaged, through 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 more than 750,000 active
residential, commercial, industrial and agricultural customers from
approximately 350 customer service centers in over 40 states as of September 30,
2000. 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 524 million gallons during the fiscal year ended September 30,
2000. In addition, the Partnership sold approximately 286 million gallons of
propane at wholesale to large industrial end users and other propane
distributors during the year. Based on industry statistics for calendar year
1999, the Partnership believes that its retail propane sales volume constitutes
approximately 6% of the domestic retail market for propane.

The Partnership conducts its business principally through its subsidiary,
Suburban Propane, L.P., a Delaware limited partnership (the "Operating
Partnership" and, together with the Partnership, the "Partnerships"). The
Partnership and the Operating Partnership were formed in 1995 to acquire and
operate the propane business and assets of Suburban Propane, a division of
Quantum Chemical Corporation, (the "Predecessor Company") then owned by Hanson
PLC. The Predecessor Company had been continuously engaged in the retail propane
business since 1928 and had been owned by Quantum since 1983. In addition,
Suburban Sales and Service, Inc. (the "Service Company"), a subsidiary of the
Operating Partnership, was formed in 1995 to acquire and operate the service
work and appliance and propane equipment parts businesses of the Predecessor
Company. The Partnership, the Operating Partnership, the Service Company and a
corporate entity engaged in retail operations subsequently acquired by the
Operating Partnership, Gas Connection, Inc. (the "Retail Company"), are
collectively referred to hereinafter as the "Partnership Entities". The
Partnership, Operating Partnership and the Service Company 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"), the
private placement of $425.0 million aggregate principal amount of 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
Service Company.

BUSINESS STRATEGY

The Partnership's business strategy is to extend and consolidate its
presence in strategically attractive markets, primarily through the acquisition
of other propane distributors. During the past three fiscal years, the
Partnership acquired seven retail propane distributors and two retail
distributors of gas appliances, parts and related products at a total cost of
$11.4 million. In addition, in November 1999, the Partnership acquired the
propane operations of a group of affiliated companies in the southeastern United
States for a total cost of approximately $97.0 million. The operations acquired
in November 1999 included:

o A propane distributor supplying approximately 20 million gallons
annually from 22 service centers to more than 40,000 retail customers
in North and South Carolina,
o a propane cylinder refurbishing and refilling center serving
approximately 1,600 grocery and convenience stores in the Carolinas,
Georgia and Tennessee,
o a 60 million gallon propane storage cavern in South Carolina, and
o a 62-mile pipeline linking the storage cavern to the Dixie Pipeline.

Because of the seasonal nature of the propane business and the impact on

<PAGE>

earnings and cash flow, the Partnership also seeks to acquire and develop
related retail and service business lines that can benefit from the
Partnership's infrastructure and national presence. In February 1999, the
Partnership purchased Gas Connection, Inc., a small company with five retail
stores in the area surrounding Portland, Oregon, that sells and installs natural
gas and propane gas grills, fireplaces and related accessories and supplies. It
is the Partnership's intention for Gas Connection to provide a solid platform on
which to build a retail network that will complement its core propane
operations. As of September 30, 2000, the Partnership was operating ten Gas
Connection stores and plans to open additional stores throughout the northeast
and northwest regions.

In conjunction with its acquisition strategy, the Partnership continuously
evaluates its existing facilities to identify opportunities to optimize its
return on assets by selectively divesting marginally profitable operations in
slower growing markets. For example, in December 1999, the Partnership sold 23
of its service centers, principally located in Georgia, for total cash proceeds
of approximately $19.4 million.

The Partnership is also exploring new methods to market propane. On July
26, 2000, the Partnership announced that it would offer propane and related
services to businesses and consumers through a relationship with Essential.com,
which provides one-stop shopping for a broad range of energy and communications
services.

The Partnership also plans to continue to pursue internal growth of its
existing operations by acquiring new customers, retaining more of its existing
customers and selling additional products and services to customers. The
Partnership employs a nationwide sales organization and has a comprehensive
customer retention program. By retaining more of its existing customers and
continuing to seek new customers, the Partnership believes it can increase its
customer base and improve its profitability.

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 Energy Information Agency, propane
accounts for approximately three percent of household energy consumption in the
United States. 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 BTU 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

<PAGE>

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 40%
of the total retail sales of propane in the United States. Based on industry
statistics, the Partnership believes that its retail sales volume constitutes
approximately 6% 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 the marketing radius may be extended by
a satellite office.

PRODUCTS, SERVICES AND MARKETING

The Partnership distributes propane through a nationwide retail
distribution network consisting of approximately 350 customer service centers in
over 40 states as of September 30, 2000. The Partnership's operations are
concentrated in the east and west coast regions of the United States. In fiscal
2000, the Partnership served more than 750,000 active customers. Approximately
two-thirds of the Partnership's 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 the Partnership's residential customers
receive their propane supply pursuant to an automatic delivery system which
eliminates the customer's need to make an affirmative purchase decision. From
its customer service centers and stand alone retail centers, the Partnership
also sells, installs and services equipment related to its propane distribution
business, including heating and cooking appliances, hearth products and supplies
and, at some locations, propane fuel systems for motor vehicles.

The Partnership sells propane primarily to six markets: residential,
commercial, industrial (including engine fuel), agricultural, other retail users
and wholesale. Approximately 64.7% of the gallons sold by the Partnership in
fiscal 2000 were to retail customers: 39.8% to residential customers, 24.5% to
commercial customers, 14.0% to industrial customers (including 11.0% to engine
fuel customers), 6.1 % to agricultural customers and 15.6% to other retail
users. The balance of approximately 35.3% were for risk management activities
and wholesale customers. Sales to residential customers in fiscal 2000 accounted

<PAGE>

for approximately 52.0% of the Partnership's gross profit on propane sales,
reflecting the higher-margin nature of this segment of the market. No single
customer accounted for 10% or more of the Partnership's revenues during fiscal
year 2000.

Retail deliveries of propane are usually made to customers by means of
bobtail and rack trucks. Propane is pumped from the bobtail truck, which
generally holds 2,200 gallons of propane, into a stationary storage tank on the
customer's premises. The capacity of these tanks ranges from approximately 100
gallons to approximately 1,200 gallons, with a typical tank having a capacity of
300 to 400 gallons. The Partnership also delivers 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 picked up for
replenishment at the Partnership's distribution locations or are refilled in
place. The Partnership also delivers 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 the Partnership's storage facilities in Hattiesburg,
Mississippi, Elk Grove, California and Tirzah, South Carolina), and coastal
terminals to the Partnership's customer service centers by a combination of
transport trucks, common carriers, owner-operators and railroad tank cars. (See
Item 2 of this Report.)

In its wholesale operations, the Partnership principally sells propane to
large industrial end-users and other propane distributors. This market segment
includes customers who use propane to fire furnaces, as a cutting gas and in
other process applications. Due to the volatile propane pricing environment
encountered during fiscal 2000, the Partnership experienced an increase in
wholesale volumes associated with increased market opportunities.

PROPANE SUPPLY

The Partnership's propane supply is purchased from over 100 oil companies
and natural gas processors at more than 150 supply points located in the United
States and Canada. The Partnership also makes purchases on the spot market. The
Partnership purchased over 97% of its propane supplies from domestic suppliers
during fiscal 2000. Most of the propane purchased by the Partnership in fiscal
2000 was purchased pursuant to one year agreements subject to annual renewal,
but the percentage of contract purchases may vary from year to year as
determined by the Partnership. 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. The Partnership uses a
number of interstate pipelines, as well as railroad tank cars, delivery trucks,
common carriers and owner operators to transport propane from suppliers to
storage and distribution facilities.

Supplies of propane from the Partnership's sources historically have been
readily available. In the fiscal year ended September 30, 2000, Enterprise
Products Operating L.P. ("Enterprise") provided approximately 14% of the
Partnership's total domestic propane supply. The Partnership believes that, if
supplies from Enterprise were interrupted, it would be able to secure adequate
propane supplies from other sources without a material disruption of its
operations. Aside from Enterprise, no single supplier provided more than 10% of
the Partnership's total domestic propane supply in the fiscal year ended
September 30, 2000.

<PAGE>

The Partnership's product procurement and price risk management group seeks
to reduce the effect of price volatility on the Partnership's product costs and
to help insure the availability of propane during periods of short supply. The
Partnership is 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 the Partnership's
Commodity Trading Policy. (See Item 7A of this Report.)

The Partnership operates large storage facilities in Mississippi,
California and South Carolina and smaller storage facilities in other locations
and has rights to use storage facilities in additional locations. The majority
of the storage capacity in California and South Carolina is currently leased to
third parties. The Partnership's storage facilities allow the Partnership to buy
and store large quantities of propane during periods of low demand, which
generally occur during the summer months. The Partnership believes its storage
facilities help ensure a more secure supply of propane during periods of intense
demand or price instability.

TRADEMARKS AND TRADENAMES

The Partnership utilizes a variety of trademarks and tradenames which it
owns, 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

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.

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

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.

<PAGE>

EMPLOYEES

As of September 30, 2000 the Partnership had 3,247 full time employees, of
whom 315 were general and administrative (including fleet maintenance
personnel), 40 were transportation and product supply and 2,892 were customer
service center employees. As of September 30, 2000, 150 of such employees are
represented by 9 different local chapters of labor unions. The Partnership
believes that its relations with both its union and non-union employees are
satisfactory. From time to time, the Partnership hires temporary workers to meet
peak seasonal demands.

ITEM 2. PROPERTIES.

As of September 30, 2000, the Partnership owned approximately 68% of its
customer service center and satellite locations and leased the balance of its
retail locations from third parties. In addition, the Partnership owns and
operates a 187 million gallon underground storage facility in Hattiesburg,
Mississippi, 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 30, 2000, the
Partnership had a fleet of 16 transport truck tractors, of which 13 are owned by
the Partnership, and 327 railroad tank cars, all of which are leased by the
Partnership. In addition, the Partnership utilizes 1,278 bobtail and rack
trucks, of which 58% are owned by the Partnership, and 1,418 other delivery and
service vehicles, of which 47% are owned by the Partnership. Vehicles that are
not owned by the Partnership are leased. As of September 30, 2000, the
Partnership owned 919,692 customer storage tanks with typical capacities of 100
to 500 gallons and 103,020 portable cylinders with typical capacities of 5 to 10
gallons.

ITEM 3. LEGAL PROCEEDINGS.

LITIGATION

The Partnership's operations are subject to all operating hazards and
risks normally incidental to handling, storing, and delivering combustible
liquids such as propane. As a result, the Partnership has been, and will
continue to be, a defendant in various legal proceedings and litigation arising
in the ordinary course of business. The Partnership is self-insured for general
and product, workers' compensation and automobile liabilities up to
predetermined amounts above which third party insurance applies. The Partnership
believes that the self-insured retentions and coverage it maintains are
reasonable and prudent. Although any litigation is inherently uncertain, based
on past experience, the information currently available to it, and the amount of
its self-insurance reserves for known and unasserted self-insurance claims
(which was approximately $25.6 million at September 30, 2000), the Partnership
does not believe that these pending or threatened litigation matters, or known
claims or known contingent claims, will have a material adverse effect on its
results of operations or its financial condition.

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
fiscal quarter of the year ended September 30, 2000.

<PAGE>

PART II

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

The Common Units, representing limited partner interests in the
Partnership, are listed and traded on the New York Stock Exchange under the
symbol SPH. As of December 15, 2000, there were 1,028 registered Common
Unitholders of record. The following table sets forth, for the periods
indicated, the high and low sale prices per Common Unit, as reported on the New
York Stock Exchange, and the amount of cash distributions paid per Common Unit.

Common Unit Price Range Cash Distribution Paid
----------------------- ----------------------

High Low
---- ---
1999 Fiscal Year
----------------
First Quarter $19.94 $17.13 $0.5000
Second Quarter 20.13 18.00 0.5000
Third Quarter 20.50 17.94 0.5125
Fourth Quarter 20.75 19.00 0.5125

2000 Fiscal Year
----------------
First Quarter $20.63 $16.50 $0.5250
Second Quarter 20.00 16.44 0.5250
Third Quarter 20.13 18.38 0.5250
Fourth Quarter 22.06 19.56 0.5375

2001 Fiscal Year
----------------
First Quarter
(through December 15, 2000) $22.00 $19.00 -

The Partnership makes quarterly distributions to its partners in an
aggregate amount equal to its Available Cash (as defined) 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, partners are required to report their
allocable share of the Partnership's earnings or loss, regardless of whether the
Partnership makes distributions.

<PAGE>

ITEM 6. SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA.

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

Predecessor
Partnership (a) Company
-------------
March 5, October 1,
Year Ended Year Ended Year Ended Year Ended 1996 1995
----------------------------------------------------------- through through
Sept 30, Sept 25, Sept 26, Sept 27, Sept 28, March 4,
2000 1999 1998 1997 1996 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data
Revenues ........................... $ 836,829 $ 619,778 $ 667,287 $ 771,131 $ 323,947 $ 383,999
Depreciation and
Amortization ....................... 38,772 34,906 36,531 37,307 21,046 14,816
Restructuring Charge ............... -- -- -- 6,911 2,340 --
Recapitalization Cost .............. -- 18,903 -- -- -- --
Gain on Sale of Assets ............. 10,328 -- -- -- -- --
Income (Loss) Before Interest
Expense and Income Taxes .......... 79,560 53,272 68,814 47,763 (3,464) 61,796
Interest Expense, Net .............. 40,794 30,765 30,614 33,979 17,171 --
Provision for Income Taxes ......... 234 68 35 190 147 28,147
Net Income (Loss) .................. 38,532 22,439 38,165 13,594 (20,782) 33,649
Net Income (Loss) per Unit (b) ..... $ 1.70 $ 0.83 $ 1.30 $ 0.46 $ (0.71) --

Balance Sheet Data (c)
(end of period)
Current Assets ..................... $ 122,160 $ 78,637 $ 132,781 $ 104,361 $ 120,692
Total Assets ....................... 771,116 659,220 729,565 745,634 776,651
Current Liabilities ................ 131,461 103,006 91,550 96,701 101,826
Long-term Debt ..................... 517,219 427,634 427,897 427,970 428,229
Other Long-term liabilities ........ 60,607 60,194 62,318 79,724 81,917
Partners' Capital - General Partner 1,866 2,044 24,488 12,830 3,286 --
Partners' Capital - Limited Partners 58,474 66,342 123,312 128,409 161,393 --

Statement of Cash
Flows Data
Cash Provided by
(Used in)
Operating Activities ............. $ 59,467 $ 81,758 $ 70,073 $ 58,848 $ 62,961 $ (3,765)
Investing Activities ............. $ (99,067) $ (12,241) $ 2,900 $ (20,709) $ (30,449) $ (21,965)
Financing Activities ............. $ 42,853 $(120,944) $ (32,490) $ (37,734) $ (13,786) $ 25,799

Other Data
EBITDA (d) ......................... $ 118,332 $ 88,178 $ 105,345 $ 85,070 $ 17,582 $ 76,612
Capital Expenditures (e)
Maintenance and growth ............. $ 21,250 $ 11,033 $ 12,617 $ 24,888 $ 16,089 $ 9,796
Acquisitions ....................... $ 98,012 $ 4,768 $ 4,041 $ 1,880 $ 15,357 $ 13,172
Retail Propane
Gallons Sold .................... 523,975 524,276 529,796 540,799 257,029 309,871

</TABLE>

<PAGE>

NOTES:
------

(a) The Partnership acquired the propane business and assets of the Predecessor
Company on March 5, 1996 (the Closing Date). There are no material
differences in the basis of assets and liabilities between the Partnership
and the Predecessor Company.

(b) Net income (loss) per Unit is computed by dividing the limited partners'
interest in net income (loss) by the number of weighted average Units
outstanding.

(c) Balances as of September 30, 2000 include those relating to the November
1999 acquisition of SCANA, where applicable.

(d) EBITDA (earnings before interest, taxes, depreciation and amortization) is
defined 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 pay the Minimum
Quarterly Distribution.

(e) The Partnership's 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 the Partnership's customer base and operating
capacity; and (iii) acquisition capital expenditures, which include
expenditures related to the acquisition of retail propane 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 historical financial condition and
results of operations of the Partnership. The discussion should be read in
conjunction with the historical consolidated financial statements and notes
thereto included elsewhere in this Form 10-K. 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.

GENERAL

The Partnership's retail propane business consists primarily of
transporting propane purchased on a year-to-year contract basis and in the spot
market, mainly from major oil companies, to its retail distribution outlets and
then to storage tanks located on its customers' premises. In the Partnership's
wholesale operations, it sells propane to large industrial end-users and other
propane distributors.

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 prices
and product cost. The unit cost of propane is subject to volatile changes as a
result of product supply or other market conditions. 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, particularly when product costs increase rapidly.

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 of October through March. Consequently,

<PAGE>

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. 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 which can vary
substantially from year to year.

RISK MANAGEMENT

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 enters into
forward and option 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 years ended
September 30, 2000 and September 25, 1999. For additional information, see Item
7A of this Report.

SELECTED QUARTERLY FINANCIAL DATA

Due to the seasonality of the retail propane business, first and second
quarter revenues and earnings are consistently greater than the comparable third
and fourth quarter results. The following presents the Partnership's selected
quarterly financial data for the last two fiscal years.

Fiscal 2000 (unaudited) (in thousands, except per Unit amounts)

First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 2000
------------- -------------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $200,462 $290,880 $153,959 $191,528 $836,829
Gain on Sale of Assets 10,328 -- -- -- 10,328
Income (Loss) Before Interest
Expense and Income Taxes 37,411 49,619 (385) (7,085) 79,560
Net Income (Loss) 27,991 39,305 (10,699) (18,065) 38,532
Net Income (Loss) per Unit 1.23 1.73 (.47) (.79) 1.70
EBITDA(a) 46,417 59,503 9,480 2,932 118,332
Retail Gallons Sold 140,516 191,865 96,483 95,111 523,975

</TABLE>

<PAGE>

Fiscal 1999 (unaudited) (in thousands, except per Unit amounts)

First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal 1999
------------- -------------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $161,216 $221,978 $121,905 $114,679 $619,778
Recapitalization Costs -- -- (18,903) -- (18,903)
Income (Loss) Before Interest
Expense and Income Taxes 23,963 54,777 (17,948) (7,520) 53,272
Net Income (Loss) 16,370 47,161 (25,293) (15,799) 22,439
Net Income (Loss) per Unit .56 1.61 (.93) (.70) .83
EBITDA (a) 32,745 63,507 (9,259) 1,185 88,178
Retail Gallons Sold 137,603 195,045 103,893 87,735 524,276

</TABLE>

(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 pay the Minimum Quarterly Distribution. 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.

RESULTS OF OPERATIONS

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999
---------------------------------------------

Results for fiscal 2000 include a $10.3 million gain on the sale of assets.
Results for fiscal 1999 reflect costs of $18.9 million resulting from the
Partnership's recapitalization. Fiscal 2000 includes 53 weeks of operations
compared to 52 weeks in the prior year.

REVENUES. Revenues increased $217.1 million or 35.0% to $836.8 million in
fiscal 2000 compared to $619.8 million in fiscal 1999. Revenues from retail
propane activities increased $117.9 million or 24.0% to $609.5 million in fiscal
2000 compared to $491.6 million in fiscal 1999. This increase is primarily
attributable to higher product costs which resulted in higher selling prices.

Temperatures during fiscal 2000 were 12% warmer than normal and 4% warmer
than fiscal 1999, as reported by National Oceanic and Atmospheric Administration
("NOAA"). Temperatures during October through March of the fiscal 2000 heating
season were one of the warmest on record with temperatures being 13% warmer than
normal and 4% warmer than the prior year period.

Retail gallons sold remained consistent with fiscal 1999 amounting to 524.0
million gallons in fiscal 2000 compared to 524.3 million gallons in fiscal 1999.

Revenues from wholesale and risk management activities increased $91.7
million or 174.3% to $144.4 million in fiscal 2000 compared to $52.7 million in
fiscal 1999. This increase is attributed to increased wholesale activity
principally resulting from increased market opportunities attributable to a more
volatile propane pricing environment.

Other revenues increased 9.8% or $7.4 million to $82.9 million in fiscal
2000 compared to $75.5 million in fiscal 1999. The increase is attributable to
higher sales of gas grills, fireplaces and related parts and an increase in
service/installation revenues associated with several retail growth initiatives.

OPERATING EXPENSES. Operating expenses increased 6.6% or $13.8 million to

<PAGE>

$224.0 million in fiscal 2000 compared to $210.2 million in fiscal 1999. The
increase in operating expenses is principally attributable to increased payroll
and benefit costs reflecting the acquisition of SCANA, continued expansion of
retail and service business initiatives, an additional week of operations in
fiscal 2000 and to a lesser extent, higher vehicle fuel costs.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
11.1% or $3.9 million to $38.8 million compared to $34.9 million in fiscal 1999.
The increase is attributable to additional assets associated with the SCANA
acquisition.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased $0.7 million or 2.5% to $28.6 million in fiscal 2000 compared to $29.4
million in the prior year. The decrease in general and administrative expenses
is primarily attributable to gains realized on the sale of non-strategic assets
and lower expenses for professional services.

GAINS 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.

RECAPITALIZATION COSTS. Results for fiscal 1999 reflect expenses of $18.9
million incurred in connection with the Partnership's recapitalization
transactions. Approximately $7.6 million of the recapitalization costs represent
amounts paid for financial advisory fees, proxy solicitation fees, legal,
accounting and tax service fees and $1.0 million paid to Millennium to extend
the scheduled closing date for the Recapitalization. The $7.6 million includes
approximately $0.3 million of expenses paid for purchase of the Former General
Partner's interests. Approximately $11.3 million of the recapitalization costs
reflect compensation expense recognized upon accelerated vesting of 673,165
issued and outstanding Restricted Units on the closing date of the
Recapitalization pursuant to the change of control provisions of the Restricted
Unit Plan. The Partnership also incurred approximately $1.8 million in fees and
expenses to amend its Senior Note Agreement. Such amount has been deferred and
is being amortized over the remaining term of the Senior Notes.

INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES AND EBITDA. Results for the
fiscal year 2000 include a $10.3 million gain on the sale of assets. Results for
the fiscal year 1999 include $18.9 million of recapitalization costs. Excluding
these one-time items from both periods, income before interest expense and
income taxes decreased 4.1% or $2.9 million to $69.2 million compared to $72.2
million in the prior period. EBITDA, excluding the one-time items from both
periods, increased 0.9% or $0.9 million to $108.0 million compared to $107.1
million in the prior period.

The decrease in income before interest expense and income taxes is
primarily attributable to increased depreciation and amortization associated
with the SCANA acquisition, partially offset by higher income associated with
the SCANA acquisition and lower general and administrative expenses. The
increase in EBITDA is principally attributable to higher income associated with
the SCANA acquisition and lower 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 increased 32.6% or $10.0 million to
$40.8 million compared to $30.8 million in the prior year. The increase is due
to interest expense on borrowings to fund the SCANA acquisition.

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998
---------------------------------------------

REVENUES. Revenues decreased $47.5 million or 7.1% to $619.8 million in
fiscal 1999 compared to $667.3 million in fiscal 1998. Revenues from retail
propane activities decreased $31.8 million or 6.1% to $491.6 million in fiscal
1999 compared to $523.4 million in fiscal 1998. This decrease is primarily

<PAGE>

attributable to lower product costs which resulted in lower selling prices and,
to a lesser extent, a decrease in retail gallons sold.

Overall, higher nationwide inventories of propane, coupled with warmer than
normal temperatures during the winter of fiscal 1999, resulted in a significant
decrease in the cost of propane when compared to the winter of fiscal 1998.
Temperatures during fiscal 1999 were 8% warmer than normal and 1% warmer than
fiscal 1998, as reported by National Oceanic and Atmospheric Administration
("NOAA"). Temperatures during October through March of the fiscal 1999 heating
season were one of the warmest on record with temperatures being 9% warmer than
normal and 2% warmer than the prior year period.

Retail gallons sold decreased 1.0% or 5.5 million gallons to 524.3 million
gallons in fiscal 1999 compared to 529.8 million gallons in the prior year. The
decline in retail gallons sold is principally attributable to warmer
temperatures, principally during the winter heating season, in all areas of the
Partnership's operations.

Revenues from wholesale and risk management activities decreased $22.5
million or 29.9% to $52.7 million in fiscal 1999 compared to $75.2 million in
fiscal 1998. This decrease is attributed to lower product costs which resulted
in lower selling prices and to the Partnership's reduced emphasis on wholesale
marketing, due to the low margin nature of the wholesale market.

Other revenues increased 9.9% or $6.8 million to $75.5 million in fiscal
1999 compared to $68.7 million in fiscal 1998. The increase is attributable to
higher sales of appliances and related parts and an increase in
service/installation revenues associated with several retail growth initiatives.

OPERATING EXPENSES. Operating expenses remained consistent with fiscal 1999
amounting to $210.2 million compared to $210.4 million in fiscal 1998 as lower
payroll, benefits costs and vehicle fuel costs were offset by increased
operating expenses associated with several retail growth initiatives.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased $0.8 million or 2.7% to $29.4 million in fiscal 1999 compared to $30.2
million in the prior year. Fiscal 1998 results reflect a $1.4 million write-off
of certain impaired information system assets and a $2.0 million charge related
to insurance claims for which insurance coverage was denied. Excluding these
non-recurring items, general and administrative expenses increased $2.6 million
or 9.7% in fiscal 1999, principally due to higher information system expenses
including costs incurred to address Y2K compliance and the absence of offsetting
dividend income of $0.8 million earned in the prior year on the sold investment
in the Dixie Pipeline Company.

INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES AND EBITDA. Results for the
fiscal year 1999 include $18.9 million of recapitalization costs. Results for
the fiscal year 1998 include a $5.1 million gain from the sale of an investment
in the Dixie Pipeline Co., a $1.8 million write-off of certain impaired assets
and a $2.0 million charge related to insurance claims for which insurance

<PAGE>

coverage was denied. Excluding these one-time items from both periods, income
before interest expense and income taxes increased 6.9% or $4.7 million to $72.2
million compared to $67.5 million in the prior period. EBITDA, excluding the
one-time items from both periods, increased 2.9% or $3.0 million to $107.1
million compared to $104.1 million in the prior period.

The improvement in income before interest expense and income taxes and
EBITDA is primarily attributable to higher overall gross profit of $5.8 million,
partially offset by higher general and administrative expenses. The increase in
gross profit principally resulted from higher sales of appliances and related
parts and increased service/installation activities attributable to several
retail growth initiatives and an increase in gains realized on the Partnership's
product procurement and price risk management activities, including hedging
transactions. 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 remained comparable at $30.8
million in fiscal 1999 compared with $30.6 million in the prior year.

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. In fiscal 2000,
net cash provided by operating activities decreased $22.3 million to $59.5
million compared to $81.8 million in fiscal 1999. The decrease is primarily due
to higher working capital requirements principally reflected in increased
accounts receivable, inventory and accounts payable due to the increased cost of
propane in fiscal 2000, coupled with lower net income of $9.7 million, after
adjusting for non-cash items (depreciation and amortization, gains on disposal
of assets and recapitalization costs) in both periods. The lower net income,
after adjusting for non-cash items, primarily results from increased interest
expense associated with borrowings to fund the SCANA acquisition.

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 SCANA, offset by net proceeds of $20.2 million from the sale of
property, plant and equipment, including 23 customer service centers. Net cash
provided by investing activities was $12.2 million in fiscal 1999, consisting of
capital expenditures of $11.0 million (including $3.2 million for maintenance
expenditures and $7.8 million to support the growth of operations) and
acquisition payments of $4.8 million, offset by proceeds from the sale of
property and equipment of $3.6 million. The increase of $10.2 million in capital
expenditures during fiscal 2000, as compared to fiscal 1999, is attributable to
higher information system expenditures related to the replacement and expansion
of internal information systems and higher expenditures for customer tanks
associated with new customer installations.

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 Partnership's Bank
Credit Facilities offset by $47.4 million in Partnership distributions and $3.1
million of expenses to amend the Partnership's Bank Credit Facilities.

In fiscal 1999, net cash provided by operating activities increased $11.7
million to $81.8 million compared to $70.1 million in fiscal 1998. The increase
was primarily due to higher net income of $8.3 million, after excluding the
non-recurring Recapitalization costs of $18.9 million in fiscal 1999 and the
$5.1 million gain on the sale of an investment in fiscal 1998, and favorable
changes in operating assets and liabilities of $4.2 million, partially offset by
lower depreciation and amortization of $1.6 million. Changes in operating assets
and liabilities included an increase in accounts payable of $15.2 million
primarily attributable to changes in the timing and payment terms on propane
purchases partially offset by decreases in accounts receivable of $5.3 million
inventories of $1.7 million and prepaid expenses of $2.3 million.

<PAGE>

Net cash used in financing activities for fiscal 1999 was $120.9 million,
reflecting $69.0 million paid to the Former General Partner to redeem all
outstanding Subordinated Units and APUs, $9.4 million of recapitalization costs,
$2.1 million of net working capital borrowings under the Partnership's Bank
Credit Facilities and $44.6 million in Partnership distributions.

Net cash provided by investing activities was $2.9 million in fiscal 1998,
consisting of capital expenditures of $12.6 million (including $6.0 million for
maintenance expenditures and $6.6 million to support the growth of operations)
and acquisition payments of $4.0 million, offset by proceeds from the sale of
property and equipment of $6.5 million and $13.1 million from the sale of the
investment in the Dixie Pipeline Co.

Net cash used in financing activities for fiscal year 1998 was $32.5
million, reflecting $44.2 million of Partnership distributions and $0.3 million
in debt repayments partially offset by $12.0 million in APU contributions
received from the Former General Partner.

In March 1996, the Operating Partnership issued $425.0 million aggregate
principal amount of Senior Notes with an interest rate of 7.54%. The Senior
Notes mature June 30, 2011. The Senior Note Agreement requires that the
principal be paid in equal annual payments of $42.5 million starting June 30,
2002.

As of September 30, 2000, the Partnership had available a $175.0 million
Revolving Credit Agreement with a syndicate of banks led by First Union National
Bank as Administrative Agent. The Revolving Credit Agreement consists of a
$100.0 million acquisition facility and a $75.0 million working capital facility
which expire on March 31, 2001. The Revolving Credit Agreement provides the
Partnership, at the Partnership's option, the right to extend the expiration
date from March 31, 2001 to December 31, 2001 provided that the maximum ratio of
consolidated total indebtedness to EBITDA (as defined in the Revolving Credit
Agreement) will decrease from 5.10 to 1.00 to 4.75 to 1.00 during the nine month
extension period. Borrowings under the acquisition facility and the working
capital facility were $90.0 million and $6.5 million, respectively, as of
September 30, 2000. Borrowings under the acquisition facility represent amounts
outstanding to fund the SCANA acquisition.

The 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, (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. The
Operating Partnership was in compliance with all covenants and terms as of
September 30, 2000. The Partnership intends to exercise its option to extend the
Revolving Credit Agreement to December 31, 2001 or replace the existing
Revolving Credit Agreement with a new facility with more favorable restrictive
and affirmative covenants prior to March 31, 2001.

On October 17, 2000, the Partnership sold 2.175 million Common Units in a
public offering at a price of $21.125 per unit realizing proceeds of $43.5
million, net of underwriting commissions and any other offering expenses. On
November 14, 2000, following the underwriters partial exercise of its
over-allotment option, the Partnership sold an additional 177,700 Common Units
at the same price, generating net proceeds of $3.6 million. These transactions
increased the total number of Common Units outstanding to 24.632 million. The
aggregate proceeds of $47.1 million were applied to reduce outstanding Revolving
Credit borrowings.

The Partnership will make distributions in an amount equal to all of its
Available Cash approximately 45 days after the end of each fiscal quarter to
holders of record on the applicable record dates. The Partnership has made
distributions of $.5250 per Unit to its Common Unitholders for each of the first
three quarters of fiscal 2000 and a distribution of $.5375 per Unit for the
fourth fiscal quarter of fiscal 2000 consisting of $.50 in Minimum Quarterly
Distribution and an additional distribution of $.025 during the first three
quarters of fiscal 2000 and $.0375 per Common Unit for the fourth quarter of
fiscal 2000.

The Partnership's anticipated cash requirements for fiscal 2001 include
maintenance and growth capital expenditures of approximately $19.1 million for
the repair and replacement of property, plant and equipment, approximately $38.3
million of interest payments on the Senior Notes and the Revolving Credit
Agreement and approximately $53.9 million in Minimum Quarterly Distributions and

<PAGE>

additional distributions to its Common Unitholders and General Partner during
fiscal 2001. Based on its current cash position, availability under the
Revolving Credit Agreement and expected cash from operating activities, the
Partnership expects to have sufficient funds to meet these obligations for
fiscal 2001, as well as all of its current obligations and working capital needs
during fiscal 2001.

THE RECAPITALIZATION

From March 5, 1996 through May 26, 1999, Suburban Propane GP, Inc. (the
"Former General Partner"), a wholly-owned indirect subsidiary of Millennium
Chemicals, Inc., ("Millennium"), 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. Millennium became a publicly traded company upon Hanson PLC's
spin-off of its chemical business, including its interests in the Partnership,
in October 1996. In addition, the Former General Partner owned a 24.4% limited
partner interest and a special limited partner interest in the Partnership. The
limited partner interest was evidenced by 7,163,750 Subordinated Units and the
special limited partner interest was evidenced by 220,000 Additional Partnership
Units ("APUs").

On May 26, 1999, after receiving Unitholder approval, the Partnership
completed a recapitalization (the "Recapitalization"), pursuant to which the
Partnership simplified its capital structure by, among other things, redeeming
all 7,163,750 outstanding Subordinated Units and all 220,000 outstanding APUs,
all of which were owned by the Former General Partner, for a total price of
$69.0 million in cash. In connection with the Recapitalization, the
Partnership's Distribution Support Agreement with the Former General Partner was
terminated and replaced with a $21.6 million liquidity arrangement provided by
the Partnership under the Operating Partnership's Amended and Restated Credit
Agreement. The quarterly distribution was increased and the size of the Board of
Supervisors was reduced from seven to five members, with the three supervisors
elected by holders of Common Units representing a majority of the Board.

In addition, the Former General Partner sold its entire general partner
interests in the Partnership and the Operating Partnership, including its
incentive distribution rights in the Partnership ("IDRs"), to Suburban Energy
Services Group LLC, a new entity owned by senior management of the Partnership
(the "Successor General Partner"), for a total price of $6.0 million. The
Successor General Partner assumed the rights and duties of the Former General
Partner under the partnership agreements of the Partnership and the Operating
Partnership and was substituted as the new general partner of the Partnership
and the Operating Partnership. In connection with the Recapitalization and the
substitution of the Successor General Partner, the IDRs were amended to reduce
the Successor General Partner's right to receive distributions in excess of the
Minimum Quarterly Distribution and the Board of Supervisors was given the right
to convert the IDRs to Common Units after the fifth anniversary of the
Recapitalization. The Partnership Agreement and the Operating Partnership
Agreement were amended to permit and effect the Recapitalization and the
substitution of the Successor General Partner.

NEW ACCOUNTING STANDARDS

In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement No. 133"). Statement No. 133, as
amended by Statement No. 137 and Statement No. 138, requires entities to record
derivatives as assets or liabilities on the balance sheet based on their fair

<PAGE>

value and any subsequent changes in the fair values of contracts must be
recorded in income, unless the contracts qualify as hedges. Contracts qualifying
for hedge accounting would have changes in fair values reported as a component
of comprehensive income (equity). The Partnership will adopt Statement No. 133
effective with the first fiscal quarter of 2001, as required. Management has
determined that the Partnership's derivative contracts do not qualify for hedge
accounting and will mark-to-market its derivatives through income. Based on the
Partnership's derivatives outstanding on September 30, 2000, the transition
amount required to be recognized upon adoption of Statement No. 133 on October
1, 2000 will not be significant to the Partnership. However, changes to the
contracts outstanding after that date will cause volatility in earnings.

In fiscal 2000, the staff of the Securities and Exchange Commission
("SEC") issued Staff Accounting Bulletin No. 101, "Revenue Recognition", ("SAB
101"). SAB 101, and its subsequent amendments, summarizes the SEC's views in
applying generally accepted accounting principles to revenue recognition in
financial statements. SAB 101 will be implemented by the Partnership in fiscal
year 2001 and management does not anticipate the implementation will be
significant to the Partnership.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2000, the Partnership was party to propane forward and
option contracts with various third parties and futures traded on the New York
Mercantile Exchange ("NYMEX"). Forward and future contracts provide that the
Partnership 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 the Partnership's 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
contracts 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.

CREDIT RISK

Futures contracts 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.

<PAGE>

SENSITIVITY ANALYSIS

In an effort to estimate the Partnership's exposure to unfavorable market
price changes in propane related to its open inventory positions, the
Partnership developed a model which incorporated the following data and
assumptions:

A. The actual fixed price contract settlement amounts were utilized for
each of the future periods.
B. The estimated future market prices were derived from the NYMEX for
traded propane futures for each of the future periods as of
September 30, 2000.
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
additional loss in earnings which 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 potential losses in
future earnings of $1.0 million and $0.7 million, as of September 30, 2000 and
September 25, 1999, 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 30, 2000, the
Partnership's open position portfolio reflected a net long position (purchase)
aggregating $25.4 million.

As of November 30, 2000, the posted price of propane at Mont Belvieu, Texas
(a major storage point) was 62 cents per gallon which is consistent with the
posted price at September 30, 2000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Partnership's Consolidated Financial Statements and the Report of
Independent Accountants thereon and the Supplementary Financial Information
listed on the accompanying Index to Financial Statement Schedules are included
herein. See Item 7 for Selected Quarterly Financial Data.

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

None.

<PAGE>

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, as amended.
The Appointed Supervisors are appointed by the Successor 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. 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 15, 2000. Officers are elected for one-year terms and Supervisors
are elected or appointed for three-year terms.

Position With the
Name Age Partnership
------------------------- ----- ----------------------------------------

Mark A. Alexander........ 42 President and Chief Executive Officer;
Member of the Board of Supervisors
(Appointed Supervisor)
Michael J. Dunn, Jr...... 51 Senior Vice President -- Member of the
Board of Supervisors
(Appointed Supervisor)
David R. Eastin.......... 42 Senior Vice President and Chief Operating
Officer
John W. Smolak........... 51 Chief Financial Officer
Michael M. Keating....... 47 Vice President -- Human Resources and
Administration
Edward J. Grabowiecki... 38 Vice President, Controller and Chief
Accounting Officer
Jeffrey S. Jolly........... 48 Vice President and Chief Information
Officer
Robert M. Plante.......... 52 Vice President and Treasurer
Janice G. Meola........... 34 General Counsel and Secretary
John Hoyt Stookey........ 70 Member of the Board of Supervisors
(Chairman and Elected Supervisor)
Harold R. Logan, Jr...... 56 Member of the Board of Supervisors
(Elected Supervisor)
Dudley C. Mecum.......... 65 Member of the Board of Supervisors
(Elected Supervisor)
Mark J. Anton............ 74 Supervisor Emeritus

<PAGE>

Mr. Alexander serves as President and Chief Executive Officer of the
Partnership and as an Appointed Supervisor of the Board of Supervisors. Prior to
October 1, 1996, he served as Executive Vice Chairman and Chief Executive
Officer of the Partnership. Mr. Alexander was Senior Vice President -- Corporate
Development of Hanson Industries (Hanson's management division in the United
States) from 1995 until March 4, 1996, where he was responsible for mergers and
acquisitions, real estate and divestitures, and was Vice President of
Acquisitions from 1989 to 1995. He was an Associate Director of Hanson from 1993
and a Director of Hanson Industries from June 1995 until March 4, 1996. Mr.
Alexander also has served as the Chairman of the Board of Managers of Suburban
Energy Services Group LLC since May 1999. He is also a director-at-large of the
National Propane Gas Association and a member of its Executive Committee. He is
President of the Coalition for Fair Competition in Rural Markets and Chairman of
the Research and Development Advisory Committee of the Propane Education and
Research Council.

Mr. Dunn serves as Senior Vice President of the Partnership and as an
Appointed Supervisor of the Board of Supervisors. Mr. Dunn was Vice President --
Procurement and Logistics of the Partnership from March 1997 until June 1998.
Prior to joining the Partnership, Mr. Dunn was Vice President of Commodity
Trading for Goldman Sachs & Company, New York, NY since 1981. Mr. Dunn also has
served on the Board of Managers of Suburban Energy Services Group LLC since May
1999.

Mr. Eastin serves as Senior Vice President and Chief Operating Officer of
the Partnership. He has served as Chief Operating Officer since May 1999 and
became a Senior Vice President in November 2000. Prior to joining the
Partnership in May 1999, Mr. Eastin was employed by Star Gas Propane LP since
1992 holding the positions of Vice President, Operations, Director of Eastern
Operations and Regional Manager. From 1980 to 1992, Mr. Eastin served as Area
Manager and District Manager at Ferrellgas Partners, L.P. and its predecessor
company, Buckeye Gas Products Company.

Mr. Smolak serves as Chief Financial Officer of the Partnership. Prior to
joining the Partnership in October 2000, he served as Senior Vice President of
Finance & Administration and Chief Financial Officer for 1-800-Flowers.com, Inc.
from January 1999 to September 2000. From February 1995 to December 1998, Mr.
Smolak was employed by Lechters, Inc. as the Vice President and Chief Financial
Officer and then Senior Vice President and Chief Financial Officer. He was
Senior Vice President of Administration and Chief Financial Officer of Jungle
Jim's Playlands, Inc. from 1993 to 1995 and from 1990 to 1992 served as Vice
President and Chief Financial Officer of Precision LensCrafters, a division of
U.S. Shoe Corporation. During the period of 1977 to 1990, he served in several
senior financial positions, as well as that of a management consultant with
Booz, Allen & Hamilton.

Mr. Keating serves as Vice President -- Human Resources and Administration
of the Partnership. Mr. Keating was Director of Human Resources at Hanson
Industries from 1993 to July 1996 and was Director of Human Resources and
Corporate Personnel at Quantum Chemical Corporation from 1989 to 1993.

Mr. Grabowiecki serves as Vice President, Controller and Chief Accounting
Officer of the Partnership. Mr. Grabowiecki served as Director of Accounting
Services of the Partnership from January 1996 to September 1996. Prior to
joining the Partnership, Mr. Grabowiecki was a regional controller for Discovery
Zone, Inc. from June 1993 to January 1996. Mr. Grabowiecki held several
positions at Ernst & Young from 1984 to 1993, including Senior Manager from 1992
to 1993.

Mr. Jolly serves as Vice President and Chief Information Officer of the
Partnership. He served as Chief Information Officer from May 1999 to the
present. He has served as Vice President Information Services since July 1997.
Mr. Jolly was employed as Vice President Information Systems at The Wood Company
from 1993 to 1997. From 1989 to 1993, he was employed by Johanna Dairies, Inc.
and Alpo Pet Foods Inc. for four and one years, respectively.

<PAGE>

Mr. Plante serves as Vice President and Treasurer of the Partnership. He
has served as Vice President since October 1999 and as Treasurer since March
1996. Mr. Plante was Director of Financial Services from 1993 to 1996 and held
various other management positions with the organization since 1977.

Ms. Meola serves as General Counsel and Secretary of the Partnership. She
served as Counsel from July 1998 to May 1999. She was Associate Counsel from
September 1996 to July 1998. Prior to joining the Partnership, Ms. Meola was
employed as Environmental Counsel for the CNA Insurance Companies and its
predecessor, Continental Insurance Company, from 1994 to 1996. From 1992 to
1994, she was employed by Bumgardner, Hardin & Ellis as a litigation associate.
She served as a judicial clerk to the Honorable Arthur N. D'Italia, A.J.S.C.,
during the 1991 to 1992 court term.

Mr. Stookey has served as an Elected Supervisor and Chairman of the Board
of Supervisors of the Partnership since March 5, 1996. He served as the
non-executive Chairman and a director of Quantum from the time it was acquired
by Hanson on September 30, 1993 to October 31, 1995. From 1986 to September 30,
1993, he was the Chairman, President and Chief Executive Officer of Quantum. He
is also a director of United States Trust Company of New York and Graphic
Packaging, Inc.

Mr. Logan has served as an Elected Supervisor of the Partnership since
March 5, 1996. Mr. Logan has served as Executive Vice President -- Finance,
Treasurer and a Director of TransMontaigne Inc. since 1995. TransMontaigne Inc.
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, which in 1994 was acquired by Panhandle Eastern Corporation, from 1987
until 1995. Mr. Logan is also a director of Union Bankshares Ltd.

Mr. Mecum has served as an Elected Supervisor since June 1996. Mr. Mecum
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 also a director of Lyondell Chemical Co., Dyncorp.,
CitiGroup, Inc. and CCC Information Systems Inc.

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

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 Company'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 the 2000 fiscal year.

<PAGE>

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 Long-Term Compensation
--------------------------------------- -------------------------------------
Other All
Annual Restricted Other
Name and Principal Position Year Salary ($) Bonus(1)($) Compensation($) $ Units(2),(3)(#) Compensation(4)
--------------------------- ---- ---------- ---------- --------------- -- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark A. Alexander ................... 2000 400,000 304,000 - -- -- 128,548
President and Chief Executive Officer 1999 400,000 400,000 - -- -- 95,000
1998 381,250 381,528 - -- -- 64,275

Michael J. Dunn, Jr ................. 2000 235,000 151,810 - -- -- 67,324
Sr. Vice President .................. 1999 225,000 191,250 - -- -- 48,024
1998 178,000 153,177 - -- -- 31,561

David R. Eastin ..................... 2000 190,000 108,300 - -- -- 47,093
Chief Operating Officer ............. 1999 67,307 47,396 - 389,020 19,512 16,420

Jeffrey S. Jolly .................... 2000 150,000 57,000 - -- -- 58,274
Vice President and Chief Information 1999 145,000 72,500 - 96,000 5,366 20,213
Officer ............................. 1998 137,500 67,500 - 289,000 14,146 14,655

Michael M. Keating .................. 2000 145,000 55,100 - -- -- 34,098
Vice President, Human Resources and . 1999 140,000 70,000 - -- -- 19,837
Administration ...................... 1998 135,000 67,500 - -- -- 14,145

</TABLE>

(1)Bonuses are reported for the year earned, regardless of the year paid.
(2)Mr. Jolly was granted these restricted units pursuant to the Partnership's
1996 Restricted Unit Plan. The aggregate dollar value of Restricted Units was
computed by multiplying the number of Restricted Units granted by the closing
market price on the date of grant. These Restricted Units, and the Restricted
Units granted to Messrs. Alexander, Dunn and Keating prior to the years for
which information is included in the table, would have vested automatically
upon the Recapitalization under a "change of control" provision contained in
the Partnership's 1996 Restricted Unit Plan. Each executive officer, however,
agreed to surrender all of his Restricted Units, prior to their vesting upon
the Recapitalization, in exchange for an equal number of units. These units
were deposited into the Partnership's Benefits Protection Trust (the
"Benefits Protection Trust"), and are being held in such trust and will be
distributed to each executive in accordance with the terms of the new
compensation deferral plan of the Partnership and Suburban Propane, L.P., a
subsidiary of the Partnership through which the Partnership operates (the
"Operating Partnership"), described below (the "Deferral Plan"). The number
of units held in the Benefits Protection Trust at September 30, 2000, and the
aggregate value thereof (calculated at a per unit price of $22.00, the
closing price of a Common Unit on September 29, 2000, as reported on the New
York Stock Exchange) were 243,902 ($5,365,844) for Mr. Alexander, 48,780
($1,073,160) for Mr. Dunn, 19,512 ($429,264) for Mr. Jolly and 29,268
($643,896) for Mr. Keating. Quarterly distributions associated with the units
held in the Benefits Protection Trust will be deposited into the trust and
deferred by each executive until the date the General Partner's $6.0 million
loan from Mellon Bank ("Mellon") used to finance the acquisition of the
Partnership's general partnership interests from the former general partner
(the "GP Loan") is repaid in full, or the seventh anniversary of the closing
of the Recapitalization, whichever date the executive has chosen, but subject
to the earlier distribution and forfeiture provisions of the Deferral Plan.
(3)Mr. Eastin was granted 19,512 Special Common Units pursuant to the Deferral
Plan. The aggregate dollar value of these Special Common Units was computed
by multiplying the number of Special Common Units granted by the closing

<PAGE>

market price on the date of grant. Mr. Eastin's right to receive these
Special Common Units is subject to forfeiture should his employment with the
Partnership terminate. The forfeiture schedule provides that his right to (a)
100% of the Special Common Units shall be forfeited if his employment
terminates before May 26, 2002, (b) 75% of the Special Common Units shall be
forfeited if his employment terminates after May 26, 2002 but before May 26,
2003, and (c) 50% of the Special Common Units shall be forfeited if his
employment terminates after May 26, 2003 but before May 26, 2004. The
forfeiture provisions lapse as to 100% of these Special Common Units on the
earlier of May 26, 2004 and the repayment of the GP Loan. These Special
Common Units, valued at $429,264 on September 29, 2000, are held in the
Benefits Protection Trust and are subject to the same terms and conditions
that are described in footnote 3.
(4)For Mr. Alexander, these amounts for 2000 include the following: $5,000 under
the Retirement Savings and Investment Plan; $1,704 in administrative fees
under the Cash Balance Pension Plan; $105,000 awarded under the 1996
Long-Term Incentive Program; and $16,844 for miscellaneous insurance. For Mr.
Dunn, these amounts include the following: $5,000 under the Retirement
Savings and Investment Plan; $1,704 in administrative fees under the Cash
Balance Pension Plan; $52,434 awarded under the 1996 Long-Term Incentive
Program; and $8,186 for miscellaneous insurance. For Mr. Eastin, these
amounts include the following: $3,502 under the Retirement Savings and
Investment Plan; $1,704 in administrative fees under the Cash Balance Pension
Plan; $32,419 awarded under the 1996 Long-Term Incentive Program; and $9,468
for miscellaneous insurance. For Mr. Jolly, these amounts include the
following: $4,368 under the Retirement Savings and Investment Plan; $1,704 in
administrative fees under the Cash Balance Pension Plan; $19,688 awarded
under the 1996 Long-Term Incentive Program; $9,181 for miscellaneous
insurance; and $23,333 in loan forgiveness. For Mr. Keating, these amounts
include the following: $4,219 under the Retirement Savings and Investment
Plan; $1,704 in administrative fees under the Cash Balance Pension Plan;
$19,031 awarded under the 1996 Long-Term Incentive Program; and $9,144 for
miscellaneous insurance.

1999 DEFERRAL PLAN

Under the terms of the Partnership's 1996 Restricted Unit Plan, the
substitution of the General Partner as the general partner of the Partnership
resulted in a "change of control" that would have caused all unvested Restricted
Units to automatically vest. However, all of the executives and key employees of
the Partnership who became members of the General Partner and owned Restricted
Units agreed to surrender such Restricted Units, prior to vesting, in exchange
for the right to participate in the Deferral Plan. The Partnership deposited the
units issued in exchange for Restricted Units into the Benefits Protection
Trust, which was structured as a "rabbi" trust within the meaning of the
Internal Revenue Code of 1954, as amended. All cash distributions made by the
Partnership on units held in the Benefits Protection Trust are deposited into
the Benefits Protection Trust.

Pursuant to the Deferral Plan, the members of the General Partner deferred
receipt of their units and related distributions until the date the GP Loan is
repaid in full or the seventh anniversary of the closing of the
Recapitalization, whichever date the deferring party may choose, but subject to
the earlier distribution and forfeiture provisions of the Deferral Plan. The
members of the General Partner also defer receipt of $930,000 per year of
quarterly distributions on deferred units to support the Partnership's Minimum
Quarterly Distribution through the fiscal quarter ending March 31, 2001. In
addition, if Suburban Propane L.P., a subsidiary of the Partnership through
which the Partnership principally conducts its business (the "Operating
Partnership"), elects or is required to purchase the GP Loan from Mellon, the
terms of the Deferral Plan provide that all of the members' deferred units may,
at the Partnership's or the Operating Partnership's discretion, be forfeited and
cancelled (and all of the related distributions may also be forfeited),
regardless of the amount paid by the Operating Partnership to purchase the GP
Loan. Notwithstanding the foregoing, if a "change of control" of the Partnership
occurs (as defined in the Deferral Plan), all of the deferred units (and related
distributions) held in the trust automatically become distributable to the
members of the General Partner.

RETIREMENT BENEFITS

The following table sets forth the annual benefits upon retirement at age

<PAGE>

65 in 2000, 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, Jolly, and Keating 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 4
years, 3 years and 1 year, respectively, under both plans. For vesting purposes,
however, Mr. Alexander has 16 years combined service with the Partnership and
his prior service with Hanson Industries. Messrs. Jolly and Keating have 3 years
and 15 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)

Average
Earnings 5 Yrs. 10 Yrs. 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs. 35 Yrs.
-------- ------ ------- ------- ------- ------- ------- -------
$100,000 7,982 15,964 23,947 31,929 39,911 47,893 55,875
$200,000 16,732 33,464 50,197 66,929 83,661 100,393 117,125
$300,000 25,482 50,964 76,447 101,929 127,411 152,893 178,375
$400,000 34,232 68,464 102,697 136,929 171,161 205,393 239,625
$500,000 42,982 85,964 128,947 171,929 214,911 257,893 300,875

(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 2000 pay-based credits for
Messrs. Alexander, Dunn, Eastin, Jolly, and Keating are 3.0%, 1.5%, 1.5%,
1.5%, and 2.5% 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 2000
pay-based credits for Messrs. Alexander, Dunn, Eastin, Jolly, and Keating are
2.0%, 0.0%, 0.0%, 0.0% and 2.0% respectively. This account is payable in
addition to the "grandfathered benefit calculations."

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Partnership has adopted a non-qualified, unfunded supplemental
retirement plan known as the Supplemental Executive Retirement Plan. The purpose
of the Plan is to provide certain executive officers with a level of retirement
income from the Partnership, without regard to statutory maximums. Under the
Plan, a participant's annual benefit, assuming retirement at age 65, is equal to
(a) 1.4% of the participant's highest average annual compensation for the 60
consecutive months in the last 120 months of benefit service affording the
highest such average, or during all months of benefit service if less than 60
months (the "Average Final Compensation") not in excess of 125% of Covered
Compensation plus (b) 1.75% of the participant's Average Final Compensation in
excess of 125% of Covered Compensation times (c) the participant's years of

<PAGE>

benefit service with the Partnership (not to exceed 35) minus (d) the amount of
the monthly accrued benefit payable as of the determination date (reduced to
reflect commencement of the benefit payable hereunder prior to the normal
retirement date) to the participant under Suburban's Pension Plan in the form of
a single life annuity, multiplied by twelve (the "Pension Offset"). Messrs.
Alexander, Dunn, and Eastin currently participate in this Plan. The Plan was
amended as of April 14, 1999 to provide that a sale or transfer of the General
Partner of the Partnership would not constitute a "change of control" under the
Plan entitling its participants to lump sum payments.

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 contingencies, 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 end of
years three, four, and five from the award date.

Long-Term Incentive Plan awards earned in fiscal year 2000 were as follows:
<TABLE>
<CAPTION>

Performance or
Other Period
Award Until Maturation Potential Awards Under Plan
Name FY 2000 or Payout Threshold Target Maximum
---- ------- ---------------- --------- -------- -------

<S> <C> <C> <C> <C> <C>
Mark A. Alexander $105,000 3-5 Years $ 0 $60,000 $120,000
Michael J. Dunn, Jr. 52,434 3-5 Years 0 29,963 59,925
David R. Eastin 32,419 3-5 Years 0 18,525 37,050
Jeffrey S. Jolly 19,688 3-5 Years 0 11,250 22,500
Michael M. Keating 19,031 3-5 Years 0 10,875 21,750

</TABLE>

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 $400,000 as of September 30,
2000. In addition, Mr. Alexander may 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.

<PAGE>

The substitution of the General Partner as the general partner of the
Partnership resulted in a "change of control" under the terms of Mr. Alexander's
employment agreement. As of April 14, 1999, Mr. Alexander agreed to waive his
right to receive a change of control payment solely in connection with the
Recapitalization. Mr. Alexander also agreed that a sale or transfer of the
General Partner after the Recapitalization would not constitute a change of
control under the Employment Agreement.

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 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, Jolly and Keating, 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. The Compensation Committee is comprised
of Messrs. Stookey and Logan, neither of whom are officers or employees of the
Partnership.

COMPENSATION OF SUPERVISORS

Mr. Stookey 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. In addition, each Elected Supervisor participated in
the Restricted Unit Plan and had received Unit Awards with a value of $0.3
million which vested and converted to Common Units in connection with the
Partnership's Recapitalization. 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 15, 2000
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 person 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 Units
reported.

<PAGE>

SUBURBAN PROPANE, L.P.
----------------------
<TABLE>
<CAPTION>

NAME AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------- ------------------- -------------------- --------
<S> <C> <C>
Common Units Mark A. Alexander (a) 25,000 *
Michael J. Dunn, Jr. (a) 0 -
David R. Eastin (a) 0 *
Jeffrey S. Jolly (a) 0 -
Michael M. Keating (a) 0 -
John Hoyt Stookey 11,519 *
Harold R. Logan, Jr. 17,134 *
Dudley C. Mecum 5,634 *
Mark J. Anton (b) 3,600 *
All Members of the Board
of Supervisors and Executive
Officers as a Group (13 persons) 63,337 *

Goldman, Sachs & Co. (c) 2,799,273 12.6%
85 Broad Street Common Units
New York, NY 10004

Incentive Distribution Suburban Energy Services
Rights Group LLC (a) N/A N/A

*Less than 1%.

</TABLE>

(a) Excludes the following numbers of Common Units held in the Benefits
Protection Trust; Mr. Alexander: 243,902; Mr. Dunn: 48,780; Mr. Eastin:
19,512; Mr. Keating: 29,268 and Mr. Jolly: 19,512. The above individuals
have no voting or investment power over these Common Units. These
individuals have the following ownership interests in the Successor General
Partner: Mr. Alexander: 40.9%; Mr. Dunn: 8.2%; Mr. Eastin: 3.3%; Mr.
Keating: 4.9% and Mr. Jolly: 3.3%. Suburban Energy Services Group LLC is
the General Partner. The business address of Suburban Energy Services Group
LLC is 240 Route 10 West, Whippany, New Jersey 07981.
(b) Mr. Anton shares voting and investment power over these shares with his
wife.
(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.

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In connection with the Recapitalization, the General Partner acquired the
general partner interests, including its incentive distribution rights, in the
Partnership from Millennium Chemicals Inc. for $6.0 million using the proceeds
of the GP Loan. The Partnership paid expenses of $0.3 million incurred by the
General Partner.

Under the occurrence and continuance of an event of default, as defined in
the GP Loan, Mellon Bank will have the right to cause the Partnership to
purchase the note evidencing the GP Loan (the "GP Note"). The Partnership has
agreed to maintain borrowing availability under its available lines of credit,
which will be sufficient to enable it to repurchase the GP Note in these
circumstances. The GP Note will also cross-default to the Partnership's
obligations under its Senior Note Agreement and its Revolving Credit Agreement.
Upon a default under the GP Loan, the Partnership will also have the right to
purchase the GP Note from Mellon Bank.

If the Partnership elects or is required to purchase the GP Note from
Mellon Bank, the Partnership has the right, exercisable in its sole discretion
pursuant to the Deferral Plan, to cause up to all of the units deposited in the
trust related to the Deferral Plan to be forfeited and cancelled (and to cause
all of the related distributions to be forfeited), regardless of the amount paid
by the Partnership to purchase the GP Note.

Alexander & Associates provides executive search services to the
Partnership. The firm is owned by Richard Alexander, the brother of Mark
Alexander, the Partnership's President and Chief Executive Officer. The
Partnership paid the firm $199,884 through December 15, 2000 for the successful
completion of three searches. The Partnership believes that the terms of the
engagement were no less favorable to the Partnership than those that could have
been obtained from unrelated parties.

<PAGE>

PART IV

ITEM 14. 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-20.

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.

Management Contracts and Compensatory Plans and Arrangements

- Employment Agreement dated as of March 5, 1996 between the
Operating Partnership and Mr. Alexander (filed as Exhibit 10.6 to
the Partnership's Current Report on Form 8-K filed on April 29,
1996).

- 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 (filed as Exhibit 10.7 to the
Partnership's Annual Report on Form 10-K for the fiscal year
ended September 27, 1997).

- 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 (filed as Exhibit (10)(c) to the
Partnership's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 26, 1999).

- The Partnership's 1996 Restricted Unit Plan (filed as Exhibit
10.8 to the Partnership's Current Report on Form 8-K filed on
April 29, 1996).

- Form of Unit Grant Agreement pursuant to the Partnership's 1996
Restricted Unit Plan (filed as Exhibit 10.9 to the Partnership's
Current Report on Form 8-K filed on April 29, 1996).

- The Partnership's Supplemental Executive Retirement Plan (filed
as Exhibit 10.11 to the Partnership's Annual Report on Form 10-K
for the fiscal year ended September 28, 1996).

- The Partnership's Severance Protection Plan dated September 1996
(filed as Exhibit 10.12 to the Partnership's Annual Report on
Form 10-K for the fiscal year ended September 28, 1996).

- Compensation Deferral Plan of Suburban Propane Partners, L.P. and
Suburban Propane, L.P., dated May 26, 1999 (filed as Exhibit
(10)(e) to the Partnership's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 26, 1999).

<PAGE>

- Benefits Protection Trust dated May 26, 1999 by and between
Suburban Propane Partners, L.P. and First Union National Bank
(filed as Exhibit (10)(f) to the Partnership's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 26, 1999).

- Suburban Propane Partners, L.P. 2000 Restricted Unit Plan (Filed
as Exhibit 10.16 herewith).

(b) Reports on Form 8-K

Report on Form 8-K dated November 9, 2000 announcing the Partnership's
hiring of John W. Smolak as Chief Financial Officer.

<PAGE>

SIGNATURES
----------

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

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> <C> <C>
/s/ MICHAEL J. DUNN, JR. Appointed Supervisor December 18, 2000
------------------------
(Michael J. Dunn, Jr.)

/s/ JOHN HOYT STOOKEY Elected Supervisor December 18, 2000
---------------------
(John Hoyt Stookey)

/s/ HAROLD R. LOGAN, JR. Elected Supervisor December 18, 2000
------------------------
(Harold R. Logan, Jr.)

/s/ DUDLEY C. MECUM Elected Supervisor December 18, 2000
-------------------
(Dudley C. Mecum)

/s/ JOHN W. SMOLAK Chief Financial Officer December 18, 2000
------------------- of Suburban Propane
(John W. Smolak) Partners, L.P.

/s/ EDWARD J. GRABOWIECKI Vice President, Controller December 18, 2000
------------------------- and Chief Accounting Officer
(Edward J. Grabowiecki) of Suburban Propane Partners, L.P.

</TABLE>

<PAGE>

INDEX TO EXHIBITS

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

A 3.1 Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of March 4, 1996.

A 3.2 Amended and Restated Agreement of Limited Partnership of the
Operating Partnership dated as of March 4, 1996.

I 10.1 Credit Agreement dated as of November 8, 1999 by and among
Suburban Propane, L.P., the Lenders referred to therein and First
Union National Bank, as Administrative Agent.

A 10.2 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.

A 10.6 Employment Agreement dated as of March 5, 1996 between the
Operating Partnership and Mr. Alexander.

C 10.7 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.

F 10.8 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 10.9 The Partnership's 1996 Restricted Unit Plan.

A 10.10 Form of Unit Grant Agreement pursuant to the Partnership's 1996
Restricted Unit Plan.

B 10.11 The Partnership Supplemental Executive Retirement Plan (effective
as of March 5, 1996).

B 10.12 The Partnership's Severance Protection Plan dated September 1996.

E 10.13 Suburban Propane L.P. Long-Term Incentive Program.

E-1

<PAGE>

Exhibit
Number Description
------ -----------

G 10.14 Benefits Protection Trust dated May 26, 1999 by and between
Suburban Propane Partners, L.P. and First Union National Bank.

H 10.15 Compensation Deferral Plan of Suburban Propane Partners, L.P. and
Suburban Propane, L.P. dated May 26, 1999.

J 10.16 Suburban Propane Partners, L.P. 2000 Restricted Unit Plan.

J 21.1 Listing of Subsidiaries of the Partnership.

J 23.1 Consent of Independent Accountants.

J 27.1 Financial Data Schedule.

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

A Incorporated by reference to the same numbered Exhibit to the Partnership's
Current Report 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 Form 8-K filed
December 3, 1998.

E 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, 1998.

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

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

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

I Incorporated by reference to Exhibit 10.1 to the Partnership's Annual Report
on Form 10-K for the fiscal year ended September 25, 1999.

J Filed herewith.

E-2

<PAGE>

INDEX TO FINANCIAL STATEMENTS

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

Page
----

Report of Independent Accountants F-2
Consolidated Balance Sheets-September 30, 2000 and September 25, 1999 F-3
Consolidated Statements of Operations -
Years Ended September 30, 2000, September 25, 1999
and September 26, 1998 F-4
Consolidated Statements of Cash Flows -
Years Ended September 30, 2000, September 25, 1999
and September 26, 1998 F-5
Consolidated Statements of Partners' Capital -
Years Ended September 30, 2000, September 25, 1999
and September 26, 1998 F-6
Notes to Consolidated Financial Statements F-7

F-1

<PAGE>

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 14(a)1(i) on page 29 present fairly, in all material
respects, the financial position of Suburban Propane Partners, L.P. and its
subsidiaries (the "Partnership") at September 30, 2000 and September 25, 1999,
and the results of their operations and their cash flows for each of the three
fiscal years in the period ended September 30, 2000, 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 14(a)2 on page 29 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 the
financial statement schedule are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements and the 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 the opinion expressed
above.

PricewaterhouseCoopers LLP
Florham Park, NJ
October 24, 2000, except for Note 14
which is as of November 14, 2000

F-2

<PAGE>
<TABLE>
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands)

September 30, September 25,
2000 1999
------------- -------------

ASSETS
<S> <C> <C>
Current assets:
Cash & cash equivalents .................................. $ 11,645 $ 8,392
Accounts receivable, less allowance for doubtful accounts
of $ 2,975 and $2,089, respectively ...................... 61,303 37,620
Inventories .............................................. 41,631 29,727
Prepaid expenses and other current assets ................ 7,581 2,898
--------- ---------
Total current assets ............................. 122,160 78,637
Property, plant and equipment, net ........................... 350,640 330,807
Net prepaid pension cost ..................................... 33,687 33,498
Goodwill & other intangibles assets, net ..................... 261,617 213,963
Other assets ................................................. 3,012 2,315
--------- ---------
Total assets .................................... $ 771,116 $ 659,220
========= =========

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable ......................................... $ 59,794 $ 40,068
Accrued employment and benefit costs ..................... 18,979 19,629
Short-term borrowings .................................... 6,500 2,750
Accrued insurance ........................................ 6,170 5,120
Customer deposits and advances ........................... 23,164 17,774
Accrued interest ......................................... 8,171 8,250
Other current liabilities ................................ 8,683 9,415
--------- ---------
Total current liabilities ...................... 131,461 103,006
Long-term borrowings ......................................... 517,219 427,634
Postretirement benefits obligation ........................... 33,885 34,394
Accrued insurance ............................................ 19,458 18,009
Other liabilities ............................................ 7,264 7,791
--------- ---------
Total liabilities ............................. 709,287 590,834
--------- ---------

Partners' capital:
Common Unitholders ..................................... 58,474 66,342
General Partner ........................................ 1,866 2,044
Deferred compensation trust ............................ (11,567) (10,712)
Common Units held in trust, at cost .................... 11,567 10,712
Unearned Compensation .................................. (640) --
Accumulated other comprehensive income ................. 2,129 --
--------- ---------
Total partners' capital ...................... 61,829 68,386
--------- ---------
Total liabilities and partners' capital ...... $ 771,116 $ 659,220
========= =========
</TABLE>

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

F-3

<PAGE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per Unit amounts)
<CAPTION>

Year Ended
------------------------------------------
September 30, September 25, September 26,
2000 1999 1998
------------- ------------- -------------
Revenues
<S> <C> <C> <C>
Propane ................................................ $ 753,931 $ 544,265 $ 598,599
Other .................................................. 82,898 75,513 68,688
--------- --------- ---------
836,829 619,778 667,287
--------- --------- ---------

Costs and expenses
Cost of sales ........................................... 476,176 273,109 326,440
Operating ............................................... 224,020 210,217 210,415
Depreciation and amortization ........................... 38,772 34,906 36,531
General and administrative expenses ..................... 28,629 29,371 30,177
Recapitalization costs .................................. -- 18,903 --
Gain on sale of investment in Dixie Pipeline Co. ........ -- -- (5,090)
Gain on sale of assets .................................. (10,328) -- --
--------- --------- ---------
757,269 566,506 598,473

Income before interest expense and
provision for income taxes .............................. 79,560 53,272 68,814
Interest expense, net ....................................... 40,794 30,765 30,614
--------- --------- ---------
Income before provision for income taxes .................... 38,766 22,507 38,200
Provision for income taxes .................................. 234 68 35
--------- --------- ---------
Net income .............................................. $ 38,532 $ 22,439 $ 38,165
========= ========= =========

General Partner's interest in net income .................... $ 771 $ 449 $ 763
--------- --------- ---------
Limited Partners' interest in net income .................... $ 37,761 $ 21,990 $ 37,402
========= ========= =========
Basic and diluted net income per Unit ....................... $ 1.70 $ 0.83 $ 1.30
========= ========= =========
Weighted average number of Units outstanding ................ 22,275 26,563 28,726
--------- --------- ---------

</TABLE>

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

F-4
<PAGE>

<TABLE>

SUBURBAN PROPANE PARTNERS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Year Ended
-----------------------------------------------

September 30, September 25, September 26,
2000 1999 1998
------------- ------------- -------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income ....................................................... $ 38,532 $ 22,439 $ 38,165
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation ................................................ 29,142 26,989 29,166
Amortization ................................................ 9,630 7,917 7,365
(Gain) on sale of investment ................................ -- -- (5,090)
(Gain) on disposal of property, plant and
equipment ................................................. (11,313) (578) (1,391)
Recapitalization costs ...................................... -- 18,903 --
Changes in operating assets and liabilities, net of
acquisitions and dispositions:
(Increase)/decrease in accounts receivable .................. (21,072) 1,514 6,793
(Increase)/decrease in inventories .......................... (6,016) 235 1,953
(Increase)/decrease in prepaid expenses and
other current assets ....................................... (2,504) 968 3,317
Increase/(decrease) in accounts payable ..................... 19,726 8,753 (6,470)
(Decrease)/increase in accrued employment
and benefit costs .......................................... (435) (855) 1,595
(Decrease)/increase in accrued interest ..................... (79) 52 (108)
Increase in other accrued liabilities ...................... 4,403 1,198 458
Other noncurrent assets .......................................... (886) (4,086) (2,853)
Deferred credits and other noncurrent liabilities ................ 339 (1,691) (2,827)
--------- --------- ---------
Net cash provided by operating activities .............. 59,467 81,758 70,073
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures ............................................ (21,250) (11,033) (12,617)
Acquisitions .................................................... (98,012) (4,768) (4,041)
Proceeds from sale of investment ................................ -- -- 13,090
Proceeds from sale of property, plant and equipment, net ........ 20,195 3,560 6,468
--------- --------- ---------
Net cash (used in) provided by investing activities..... (99,067) (12,241) 2,900
--------- --------- ---------
Cash flows from financing activities:
Long-term borrowings/(repayments) net ........................... 89,659 (695) (260)
Short-term borrowings ........................................... 3,750 2,750 --
Proceeds from General Partner APU contribution .................. -- -- 12,000
Redemption of Subordinated Units and APU's ...................... -- (69,000) --
Payment of recapitalization costs ............................... -- (9,367) --
Credit agreement expenses........................................ (3,123) -- --
Partnership distribution ........................................ (47,433) (44,632) (44,230)
--------- --------- ---------
Net cash provided by (used in) financing activities .... 42,853 (120,944) (32,490)
--------- --------- ---------
Net increase/(decrease) in cash ...................................... 3,253 (51,427) 40,483
Cash and cash equivalents at beginning of period ...................... 8,392 59,819 19,336
--------- --------- ---------
Cash and cash equivalents at end of period ............................ $ 11,645 $ 8,392 $ 59,819
========= ========= =========

Supplemental disclosure of cash flow information:
Cash paid for interest ............................................ $ 40,944 $ 32,602 $ 32,659
========= ========= =========
Non-cash investing and financing activities
Assets acquired by incurring note payable ......................... $ -- $ -- $ 250
========= ========= =========

</TABLE>

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

F-5
<PAGE>
<TABLE>

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(in thousands)

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

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 27, 1997 ...... 21,562 7,164 $100,476 $ 39,835 $ 12,830 $ -- $ -- $ (11,902)

Net Income ......................... 28,090 9,312 763

Net grants forfeited under
Restricted Unit Plan ............... (594) 594

Partnership distribution ........... (43,125) (1,105)

Amortization of Restricted
Unit compensation .................. 626

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

Balance at September 26, 1998....... 21,562 7,164 84,847 49,147 24,488 (10,682)

Net Income ......................... 6,807 15,183 449

Net grants issued under
Restricted Unit Plan ............... 1,154 (1,154)

Partnership distribution ........... (43,739) (893)

Amortization of Restricted
Unit compensation .................. 443

Recapitalization transactions....... 674 (7,164) 17,273 (64,330) (22,000) 10,712 (10,712) 11,393
------ ------------ ------ ------------ ------- -------- ------------ ------------

Balance at September 25, 1999....... 22,236 66,342 2,044 10,712 (10,712)

Net income ......................... 37,761 771

Other comprehensive income:
Unrealized gain on securities....

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

Partnership distribution ........... (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 22,279 -- $ 58,474 $ -- $ 1,866 $ 11,567 $ (11,567) $ (640)
====== ============ ====== ============ ======= ======== ============ ============

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

<PAGE>

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(in thousands)

Accumulated
Other Total
Comprehensive Partners' Comprehensive
Income Capital Income
------------- --------- -------------

<S> <C> <C> <C>
Balance at September 27, 1997 ...... $141,239

Net Income ......................... 38,165

Net grants forfeited under
Restricted Unit Plan ............... --

Partnership distribution ........... (44,230)

Amortization of Restricted
Unit compensation .................. 626

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

Balance at September 26, 1998....... 147,800

Net Income ......................... 22,439

Net grants issued under
Restricted Unit Plan ............... --

Partnership distribution ........... (44,632)

Amortization of Restricted
Unit compensation .................. 443

Recapitalization transactions....... (57,664)
------------- --------- -------------

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 distribution ........... (47,433)

Grants issued under Compensation
Deferral Plan ......................

Amortization of Compensation
Deferral Plan ...................... -- 215
------------- --------- -------------

Balance at September 30, 2000 $ 2,129 $ 61,829
============= ========= =============

</TABLE>

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

F-6

<PAGE>

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Dollars in thousands)

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, the Service Company and a corporate operating entity subsequently
acquired by the Operating Partnership, Gas Connection, Inc. (the "Retail
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 over-allotment option to purchase an
additional 2,812,500 Common Units.

From the Closing Date through May 26, 1999, Suburban Propane GP, Inc. (the
"General Partner"), a wholly-owned indirect subsidiary of Millennium Chemicals,
Inc. ("Millennium"), 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. Millennium
became a publicly traded company upon Hanson PLC's spin-off of its chemical
business, including its interests in the Partnership, in October 1996. In
addition, the General Partner owned a 24.4% limited partner interest and a
special limited partner interest in the Partnership. The limited partner
interest was evidenced by 7,163,750 Subordinated Units and the special limited
partner interest was evidenced by 220,000 Additional Partnership Units ("APUs").

On May 26, 1999, the Partnership completed a recapitalization (the
"Recapitalization") which included the redemption of the Subordinated Units and
APUs from the General Partner, and the general partner was replaced with a new
General Partner, Suburban Energy Services Group LLC (the "Successor General
Partner"), owned by Senior Management of the Partnership (See Note 10 - The
Recapitalization).

The Partnership Entities are, and the Predecessor Company was, engaged in the
retail and wholesale marketing of propane and related appliances and services.
The Partnership believes it is the third largest retail marketer of propane in
the United States, serving more than 750,000 active residential, commercial,
industrial and agricultural customers from approximately 350 customer service
centers in over 40 states. 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 524 million gallons during the
fiscal years ended September 30, 2000 and September 25, 1999. Based on industry
statistics, the Partnership believes that its retail propane sales volume
constitutes approximately 6% of the domestic retail market for propane.

F-7

<PAGE>

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION. The consolidated financial statements present the
consolidated financial position, results of operations and cash flows of the
Partnership. All significant intercompany transactions and accounts 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 1999
and fiscal 1998.

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.

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.

FINANCIAL INSTRUMENTS. The Partnership routinely uses propane futures and
forward contracts to reduce the risk of future price fluctuations and to help
ensure supply during periods of high demand. Gains and losses on futures and
forward contracts designated as hedges are deferred and recognized in cost of
sales as a component of the product cost for the related hedged transaction. In
order for a future or forward contract to be accounted for as a hedge, the item
to be hedged must expose the Partnership to price risk and the future or forward
must reduce such price risk. As the Partnership is subject to propane market
pricing and the propane forwards and futures highly correlate with changes in
the market price of propane, hedge accounting is often utilized. The Partnership
accounts for financial instruments which do not meet the hedge criteria or for
hedging transactions which are terminated, under the mark or market rules which
require gains or losses to be immediately recognized in earnings. In the
Consolidated Statement of Cash Flows, cash flows from qualifying hedges are
classified in the same category as the cash flows from the items being hedged.
Net realized gains and losses for fiscal years 2000, 1999 and 1998 and
unrealized gains and losses on open positions as of September 30, 2000 and
September 25, 1999, respectively, were not material. See "New Accounting
Standards" for further information.

REVENUE RECOGNITION. Sales of propane are recognized at the time product is
shipped or delivered to the customer. Revenue from the sale of propane,
appliances and equipment is recognized at the time of sale or installation.
Revenue from repairs and maintenance is recognized upon completion of the
service.

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 estimates average cost.

PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at cost.
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 10-20 Years
Transportation equipment 5-30 Years
Storage facilities 30 Years
Equipment, primarily tanks and cylinders 3-40 Years

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.

F-8

<PAGE>

GOODWILL AND OTHER INTANGIBLE ASSETS. Goodwill and other intangible assets are
comprised of the following:

September 30, September 25,
2000 1999
------------- -------------

Goodwill .................................. $296,201 $242,230
Debt origination costs .................... 8,024 8,024
Deferred credit agreement cost ............ 3,123 --
Other, principally non-compete agreements.. 4,940 4,948
-------- --------
312,288 255,202
Less: accumulated amortization ............ 50,671 41,239
-------- --------
$261,617 $213,963
======== ========

Goodwill represents the excess of the purchase price over the fair value of net
assets acquired and is being amortized on a straight-line basis over periods
ranging from twenty to forty years from the date of acquisition.

The Partnership periodically evaluates goodwill for impairment by calculating
the anticipated future cash flows attributable to its operations. Such expected
cash flows, on an undiscounted basis, are compared to the carrying values of the
tangible and intangible assets, and if impairment is indicated, the carrying
value of goodwill is adjusted. In the opinion of management, no impairment of
goodwill exists.

Debt origination costs represent the costs incurred in connection with the
placement of and the subsequent amendment to the $425,000 of Senior Notes are
being amortized on a straight-line basis over 15 years.

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. 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 two
corporate entities, the Service Company and the Retail Company. 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.

Income taxes are provided based on the provisions of Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes", which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements and tax returns in different
years. Under this method, deferred income tax assets and liabilities are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.

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, and makes the pro forma
information disclosures required under the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation". Upon issuance of Units under the
plans, unearned compensation equivalent to the market value of the

F-9
<PAGE>

Restricted Units or Common Units granted under the Compensation Deferral Plan is
charged at the date of grant. The unearned compensation is amortized ratably
over the restricted periods. The unamortized unearned compensation value is
shown as a reduction of partners' capital in the accompanying consolidated
balance sheets. As a result of the May 26, 1999 Recapitalization, all
unamortized compensation related to the Restricted Units was earned and expense
of $11,393 was recorded. As of September 30, 2000 there were no Units
outstanding under the Restricted Unit Plan and there were 42,925 Common Units
outstanding under the Compensation Deferral Plan.

NET INCOME (LOSS) PER UNIT. 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,
Subordinated Units, time vested Restricted Units granted under the Restricted
Unit Award Plan and time vested Common Units granted under the Compensation
Deferral Plan.

COMPREHENSIVE INCOME. SFAS No. 130, "Reporting Comprehensive Income" ("Statement
No. 130") was adopted in fiscal 1999. Statement No. 130 requires entities to
report comprehensive income (the total of net income and all other non-owner
changes in partners' capital) either below net income in the statement of
operations, in a separate statement of comprehensive income or within the
statement of partners' capital. Comprehensive income includes unrealized gains
and losses on equity securities classified as available-for-sale and is included
as a component of partners' capital.

NEW ACCOUNTING STANDARDS. In June 1998, FASB issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("Statement No. 133").
Statement No. 133, as amended by Statement No. 137 and Statement No. 138,
requires entities to record derivatives as assets or liabilities on the balance
sheet based on their fair value and any subsequent changes in the fair values of
contracts must be recorded in income, unless the contracts qualify as hedges.
Contracts qualifying for hedge accounting would have changes in fair values
reported as a component of comprehensive income (equity). The Partnership will
adopt Statement No. 133 effective with the first fiscal quarter of 2001, as
required. Management has determined that the Partnership's derivative contracts
do not qualify for hedge accounting and will mark-to-market its derivatives
through income. Based on the Partnership's derivatives outstanding on September
30, 2000, the transition amount required to be recognized upon adoption of
Statement No. 133 on October 1, 2000 will not be significant to the Partnership.
However, changes to the contracts outstanding after that date will cause
volatility in earnings.

In fiscal 2000, the staff of the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition", ("SAB 101").
SAB 101, and its subsequent amendments, summarizes the SEC's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. SAB 101 will be implemented by the Partnership in fiscal year 2001
and management does not anticipate the implementation will be significant to the
Partnership.

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 with respect to each fiscal
quarter of the Partnership in an aggregate amount equal to its Available Cash
for such quarter. Available Cash generally means, with respect to any fiscal
quarter of the Partnership, all cash on hand at the end of such quarter 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% to the Common Unitholders and 2% to the General
Partner, subject to the payment of incentive distributions in the event
Available Cash exceeds a target distribution of $0.55 per Unit per quarter as
defined in the Partnership Agreement. Common Units will be entitled to
arrearages if the full Minimum Quarterly Distribution is not paid with respect
to any quarter through the fiscal quarter ending March 31, 2001.

F-10
<PAGE>

Effective with the completion of the Recapitalization (See Note 10 - The
Recapitalization), the Distribution Support Agreement among the Partnership, the
General Partner and Millennium, which was used to enhance the Partnership's
ability to distribute the Minimum Quarterly Distribution on Common Units, was
terminated and replaced by a $22,000 liquidity subfacility provided by the
Partnership under the Partnership's Bank Credit Facilities (See Note 6 -
Long-Term Debt and Revolving Credit Agreement). Under the Distribution Support
Agreement, the General Partner had agreed to contribute to the Partnership cash
in exchange for APUs. In connection with the Recapitalization, the Partnership
redeemed all the outstanding APUs representing $22,000 that the General Partner
had previously contributed under the Distribution Support Agreement.

The Partnership has paid the Minimum Quarterly Distribution on all outstanding
Common Units during each quarter of fiscal 2000. The Partnership has increased
the quarterly distribution to Unitholders from $.5250 to $.5375 per quarter
effective for the fiscal fourth quarter ended September 30, 2000. The total
amount consists of the existing Minimum Quarterly Distribution of $.50 per Unit
per quarter plus an additional $0.0375 per Unit per quarter above the Minimum
Quarterly Distribution.

4. RELATED PARTY TRANSACTIONS

In connection with the Partnership's Recapitalization (See Note 10 - The
Recapitalization), the Successor 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
addition, the Partnership incurred expenses of $300 to complete the purchase of
the general partner interest by the Successor General Partner.

Under the occurrence and continuance of an event of default, as defined in the
GP Loan, Mellon will have the right to cause the Partnership to purchase the
note evidencing the GP Loan (the "GP Note"). The Partnership has agreed to
maintain borrowing availability under its available lines of credit, which will
be sufficient to enable it to repurchase the GP Note in these circumstances. The
note evidencing the GP Loan will also cross-default to the obligations of the
Partnership's obligations under its Senior Note Agreement and its Revolving
Credit Agreement. Upon a GP default, the Partnership also will have the right to
purchase the GP Note from Mellon.

If the Partnership elects or is required to purchase the note from Mellon, the
Partnership has the right, exercisable in its sole discretion pursuant to the
new compensation deferral plan established for the members of the Successor
General Partner, to cause up to all of the Common Units deposited in the trust
(amounting to $11,567 as of September 30, 2000) related to the compensation
deferral plan to be forfeited and cancelled (and to cause all of the related
distributions to be forfeited), regardless of the amount paid by the Partnership
to purchase the GP Note.

Pursuant to a Computer Services Agreement (the "Services Agreement") dated as of
the Closing Date between Millennium and the Partnership, Millennium permitted
the Partnership to utilize Millennium's mainframe computer for the generation of
customer bills, reports and information regarding the Partnership's retail
sales. The Services Agreement was terminated effective April 3, 1998 at which
time the Partnership began utilizing the services of an unrelated third party
provider. For the year ended September 26, 1998 the Partnership incurred
expenses of $202 under the Services Agreement.

5. SELECTED BALANCE SHEET INFORMATION

Inventories consist of:

September 30, September 25,
2000 1999
------------- -------------

Propane ................................. $ 33,050 $ 24,367
Appliances and heating accessories....... 8,581 5,360
-------- --------
$ 41,631 $ 29,727
======== ========

F-11
<PAGE>

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.

Property, plant and equipment consist of:

September 30, September 25,
2000 1999
------------- -------------

Land and improvements..................... $ 28,776 $ 27,892
Buildings and improvements................ 54,855 49,838
Transportation equipment.................. 59,228 55,541
Storage facilities........................ 30,854 24,923
Equipment, primarily tanks and cylinders.. 375,476 341,151
-------- --------
549,189 499,345
Less: accumulated depreciation............ 198,549 168,538
-------- --------
$350,640 $330,807

6. LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT

Long-term debt consists of:
September 30, September 25,
2000 1999
------------- -------------

Senior Notes, 7.54%, due June 30, 2011.... $425,000 $425,000

Note payable, 8%, due in annual
installments through 2006............... 2,370 2,670
Amounts outstanding under Acquisition
Facility of Revolving Credit Agreement.. 90,000 --
Other long-term liabilities............... 225 267
-------- --------
517,595 427,937
Less: current portion 376 303
-------- --------
$517,219 $427,634
======== ========

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 Revolving Credit
Agreement 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 payments of
$42,500 starting June 30, 2002.

On November 10, 1999, in connection with the acquisition of SCANA (See Note 13 -
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 First Union National Bank as Administrative
Agent. The Revolving Credit Agreement consists of a $100,000 acquisition
facility and a $75,000 working capital facility which expire on March 31, 2001.
Borrowings under the Revolving Credit Agreement 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 .375% to .50%,
based upon certain financial tests, is payable quarterly whether or not
borrowings occur. As of September 30, 2000, such fee was .50%.

The Revolving Credit Agreement provides the Partnership, at the Partnership's
option, the right to extend the expiration date from March 31, 2001 to December
31, 2001 provided that the maximum ratio of consolidated total indebtedness to
EBITDA (as defined in the Revolving Credit Agreement) would decrease from 5.10
to 1.00 to 4.75 to 1.00 during the nine month extension period.

F-12

<PAGE>

As of September 30, 2000, $90,000 was outstanding under the acquisition facility
of the Revolving Credit Agreement resulting from the acquisition of SCANA and
$6,500 was outstanding under the working capital facility. As of September 25,
1999, $2,750 was outstanding under the former Bank Credit Facilities.

Based on the current rates offered to the Partnership for debt of the same
remaining maturities, the carrying value of the Partnership's long-term debt
approximates its fair market value.

The Senior Note Agreement and Revolving Credit Agreement contain various
restrictive and affirmative covenants applicable to the Operating Partnership,
including (a) maintenance of certain financial tests (including maintaining
minimum net worth of $50,000), (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. The Partnership intends to exercise its option to
extend the Revolving Credit Agreement to December 31, 2001 or replace the
existing Revolving Credit Agreement with a new facility with more favorable
restrictive and affirmative covenants prior to March 31, 2001.

7. RESTRICTED UNIT PLAN

In 1996, the Partnership adopted the 1996 Restricted Unit Award Plan (the
"Restricted Unit Plan") which authorizes 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. Units issued under the Restricted Unit Plan were
subject to a bifurcated vesting procedure such that (a) twenty-five percent of
the issued Units were to vest over time with one-third of such units vesting at
the end of each of the third, fifth and seventh anniversaries of the issuance
date, and (b) the remaining seventy-five percent of the Units were to vest
automatically upon, and in the same proportions as, the conversion of
Subordinated Units to Common Units. Restricted Unit Plan participants were not
eligible to receive quarterly distributions or vote their respective Units until
vested. Restrictions generally 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 Restricted Unit
Plan. According to the change of control provisions of the Restricted Unit Plan,
all outstanding Restricted Units on the closing date of the Recapitalization
(See Note 10 - The Recapitalization) vested and converted into Common Units.

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

Units Value Per Unit
----- --------------

OUTSTANDING, SEPTEMBER 27, 1997 .......... 634,148 $18.41 - $21.63

Awarded .................................. 97,556 $19.91
Forfeited ................................ (109,893) $18.41 - $21.63
--------- ---------------

OUTSTANDING, SEPTEMBER 26, 1998 .......... 621,811 $18.41 - $21.63

Awarded .................................. 74,143 $17.88 - $19.06
Forfeited ................................ (22,789) $17.88 - $19.91
Vested and converted to Common Units...... (673,165) $17.88 - $21.63
--------- ---------------

OUTSTANDING, SEPTEMBER 25, 1999 AND
SEPTEMBER 30, 2000 ....................... -0- $ -0-
========= ===============

F-13
<PAGE>

For the year ended September 25, 1999, the Partnership amortized $443 of
unearned compensation and recorded an expense of $11,336 related to the
accelerated vesting on the closing date of the Recapitalization which is
included in recapitalization costs in the accompanying statements of operations
(See Note 10 - The Recapitalization). For the year ended September 26, 1998, the
Partnership amortized $626 of unearned compensation.

The Partnership intends on adopting a new Restricted Unit Plan in fiscal 2001
which will replace the existing Restricted Unit Plan. The new Restricted Unit
Plan will eliminate the bifurcated vesting procedures and substitute a five-year
vesting procedure. The Partnership does not anticipate awarding any of the Units
which remain available under the existing Restricted Unit Plan which amount to
58,542 Units at September 30, 2000.

8. 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 surrender their
right to receive all or a portion of their unvested Common Units granted under
the Partnership's 1996 Restricted Unit Award Plan prior to the time their Common
Units were substantially certain to vest in exchange for the right to
participate in and receive certain payments under the Deferral Plan. Senior
management of the Partnership surrendered 553,896 Restricted Units, representing
substantially all of their Restricted Units, before they vested in exchange for
the right to participate in the Deferral Plan. The Partnership deposited into a
trust on behalf of these individuals 553,896 Common Units.

The Deferral Plan also allows eligible employees to defer receipt of Common
Units that may be subsequently granted by the Partnership under the Deferral
Plan. The Common Units granted under the Deferral Plan and related Partnership
distributions are subject to forfeiture provisions such that (a) 100% of the
Common Units would be forfeited if the grantee ceases to be employed prior to
the third anniversary of the Recapitalization, (b) 75% would be forfeited if the
grantee ceases 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 ceases to be employed after the fourth anniversary but prior to the
fifth anniversary of the Recapitalization. Upon issuance of Common Units under
the Deferral Plan, unearned compensation equivalent to the market value of the
Common Units is charged at the date of grant. 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. For the year ended
September 30, 2000, the Partnership amortized $215 of unearned compensation.

Pursuant to the Deferral Plan, participants have deferred receipt of these
Common Units and related distributions by the Partnership by depositing the
Units into a trust. The value of the Common Units deposited in the trust and the
related deferred compensation trust liability are reflected in the accompanying
consolidated balance sheets as components of partners' capital.

Following is a summary of activity in the Deferral Plan:

Units Value Per Unit
----- --------------

Outstanding, September 25, 1999........... - -

Awarded................................... 42,925 $19.91
------- --------

Outstanding, September 30, 2000........... 42,925 $19.91
======= ========

9. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

DEFINED 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.

F-14
<PAGE>

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 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. 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 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, after costs associated with such restructuring, being
recognized as a gain in the accompanying statement of operations for the year
ended September 26, 1998.

The Partnership has a noncontributory defined benefit pension plan covering all
eligible employees of the Partnership who have met certain requirements as to
age and length of service. Contributions 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.

September 30, September 25,
2000 1999
------------- -------------
The following table sets forth the plan's
actuarial assumptions:

Weighted-average discount rate............ 7.75% 7.50%
Average rate of compensation increase..... 3.50% 3.50%
Weighted-average expected long-term rate
of return on plan assets................. 9.50% 9.0%

The following table provides a reconciliation
of benefit obligations:

Benefit obligation at beginning of year .. $155,933 $178,785
Service cost.............................. 4,403 5,673
Interest cost............................. 10,945 11,107
Actuarial (gain).......................... (1,946) (19,723)
Benefits paid............................. (17,920) (19,909)
--------- ---------
Benefit obligation at end of year......... $151,415 $155,933
========= =========

The following table provides a reconciliation
of plan assets:

Fair value of plan assets at beginning of
year..................................... $177,981 $179,090
Actual return on plan assets.............. 16,990 18,800
Benefits paid............................. (17,920) (19,909)
--------- ---------
Fair value of plan assets at end of year.. $177,051 $177,981
========= =========

The following table provides a reconciliation
of the funded status of the plan:

Funded status............................. $ 25,636 $ 22,048
Unrecognized prior service cost........... (1,513) (1,723)
Unrecognized net actuarial loss........... 9,564 13,173
--------- ---------
Prepaid benefit cost...................... $ 33,687 $ 33,498
========= =========

F-15
<PAGE>

The net periodic pension (income)/expense includes the following:

Year Ended Year Ended Year Ended
September 30, September 25, September 26,
2000 1999 1998
------------- ------------- -------------

<S> <C> <C> <C>
Service cost ............................. $ 4,403 $ 5,674 $ 5,038
Interest cost ............................ 10,945 11,107 11,698
Expected return on plan assets ........... (15,327) (16,254) (16,901)
Amortization of prior service cost ....... (210) (210) (185)
Recognized net actuarial loss ............ -- 741 --
Plan amendment ........................... -- -- 14,392
--------- ---------- ---------
Net periodic pension (income)/expense.. $ (189) $ 1,058 $ 14,042
========= ========== =========
</TABLE>

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 $1,908, $1,331 and $1,923 for the years
ended September 30, 2000, September 25, 1999 and September 26, 1998,
respectively.

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. The
Partnership does not fund its postretirement benefit plan.

September 30, September 25,
2000 1999
------------- -------------

The following table provides a reconciliation
of benefit obligations:

Benefit obligation at beginning of year .. $ 38,808 $ 41,447
Service cost ............................. 130 136
Interest cost ............................ 2,753 2,581
Actuarial (gain) ......................... (265) (1,772)
Benefits paid ............................ (3,172) (3,505)
Amendments ............................... -- (79)
--------- ---------
Benefit obligation at end of year ........ $ 38,254 $ 38,808
========= =========

The following table provides a reconciliation
of the funded status of the plan:

Funded status ............................ $(38,254) $(38,808)
Unrecognized prior service cost .......... (4,467) (5,188)
Unrecognized net actuarial loss .......... 5,664 6,097
--------- ---------
Accrued benefit liability ................ $(37,057) $(37,899)
Less: Current portion ................... 3,172 3,505
--------- ---------
Non-current liability .................... $ 33,885 $ 34,394
========= =========

F-16
<PAGE>

The net periodic postretirement benefit (income)/expense includes the following
components:

Year Ended Year Ended Year Ended
September 30, September 25, September 26,
2000 1999 1998
------------- ------------- -------------

<S> <C> <C> <C>
Service cost ............................. $ 130 $ 136 $ 474
Interest cost ............................ 2,753 2,581 2,645
Amortization of prior service cost ....... (721) (714) (536)
Recognized net actuarial loss ............ 168 284 184
Plan amendment ........................... -- -- (15,367)
--------- ---------- ---------
Net periodic postretirement benefit
(income)/expense............... $ 2,330 $ 2,287 $(12,600)
========= ========== =========
</TABLE>

The accumulated postretirement benefit obligation was based on a 7% and 8%
increase in the cost of covered health care benefits for 2000 and 1999,
respectively. This rate is assumed to decrease gradually to 5.75% in 2002 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 30, 2000 by $1,180 and the aggregate of service and interest
components of accumulated postretirement net periodic postretirement benefit
cost for the year ended September 30, 2000 by $90.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75% and 7.5% at September 30, 2000 and
September 25, 1999, respectively.

10. THE RECAPITALIZATION

On May 26, 1999, after receiving Unitholder approval, the Partnership completed
the Recapitalization contemplated by its November 27, 1998 Recapitalization
Agreement with Millennium, the General Partner and the Successor General
Partner. The elements of the Recapitalization included:

o The redemption by the Partnership of all 7,163,750 Subordinated Units
and 220,000 APUs, which were owned by the General Partner, for $69,000
in cash.

o The substitution of the Successor General Partner as the new general
partner of the Partnership and the Operating Partnership following its
purchase of the combined 2% general partner interests in the
Partnership and the Operating Partnership and the incentive
distribution rights in the Partnership for $6,000 in cash (the "GP
Interest Purchase").

o The amendment of the Senior Note, Bank Credit Facilities and the
partnership agreements of the Partnership and the Operating
Partnership to permit and effect the Recapitalization and to reduce
the distribution levels that apply to the incentive distribution
rights of the Successor General Partner.

o The termination of the Distribution Support Agreement among the
Partnership, the General Partner and Millennium and its replacement
with a liquidity arrangement provided by the Partnership under the
Bank Credit Facilities, as amended.

o An increase in the quarterly distribution to the Partnership's
Unitholders from $0.50 to $0.5125 per Unit per quarter (from $2.00 to
$2.05 per Unit per year), effective for the fiscal quarter ended June
26, 1999. The total amount consists of the existing Minimum Quarterly
Distribution of $0.50 per Unit per quarter plus an additional $0.0125
per Unit per quarter above the Minimum Quarterly Distribution.

F-17
<PAGE>

The Partnership incurred expenses of $18,903 in connection with the
Recapitalization transactions of which $7,567 represents cash expenses and
$11,336 represents non-cash expenses associated with the accelerating vesting of
Restricted Units. The redemption price and the costs of the Recapitalization
were funded entirely from available cash on hand.

The Successor General Partner borrowed the $6,000 purchase price for the GP
Interest Purchase from Mellon, N.A. In connection with the GP Loan, the
Operating Partnership entered into a purchase agreement with Mellon under which
the Operating Partnership is required to purchase the note evidencing the GP
Loan in the event of a default under the GP Loan by the Successor General
Partner.

The Successor General Partner is owned by Senior Management of the Partnership
who had previously been granted Restricted Units under the Partnership's
Restricted Unit Plan. These individuals surrendered 553,896 Restricted Units
representing substantially all of their Restricted Units, before they vested
(according to their terms, the Restricted Units vested and converted into Common
Units on completion of the Recapitalization) in exchange for the right to
participate in a new compensation deferral plan of the Partnership and the
Operating Partnership. The Partnership deposited into a trust on behalf of these
individuals 553,896 Common Units. Pursuant to the new compensation deferral
plan, these individuals have deferred receipt of these Common Units and related
distributions by the Partnership until the date the GP Loan is repaid in full or
the seventh anniversary of the date the Recapitalization is completed, whichever
they may choose, but subject to the earlier distribution and forfeiture
provisions of the compensation deferral plan. The value of the Common Units
deposited in the trust and the related deferred compensation trust liability are
reflected in the accompanying consolidated balance sheets at September 30, 2000
and September 25, 1999 as components of Partners' Capital.

11. INCOME TAXES

As discussed in Note 2, the Partnership's earnings for federal and state income
tax purposes are included in the tax returns of the individual partners.
Accordingly, no recognition has been given to income taxes in the accompanying
financial statements of the Partnership except for earnings of the corporate
entities which are subject to federal and state income taxes.

12. COMMITMENTS AND CONTINGENCIES

COMMITMENTS
===========

The Partnership leases certain property, plant and equipment for various periods
under noncancelable leases. Rental expense under operating leases was $19,931,
$18,018 and $16,993 for the years ended September 30, 2000, September 25, 1999
and September 26, 1998, respectively.

Future minimum rental commitments under noncancelable operating lease agreements
as of September 30, 2000 are as follows:

FISCAL YEAR
-----------
2001 $19,817
2002 15,608
2003 15,462
2004 10,977
2005 and thereafter 20,613

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 30, 2000 and September
25, 1999, accrued insurance liabilities amounted to $25,628 and $23,129,
respectively, representing the total estimated

F-18
<PAGE>

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.

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.

13. ACQUISITION AND DISPOSITIONS

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 Corp. 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 and is being amortized over its estimated useful life of
forty years. Unaudited pro forma consolidated results after giving effect to the
acquisition during the years ended September 25, 1999 and September 30, 2000
would not have been materially different from the reported amounts for either
year.

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.

14. SUBSEQUENT EVENTS

On October 17, 2000, the Partnership sold 2,175 Common Units in a public
offering at a price of $21.125 per Unit realizing proceeds of $43,500, net of
underwriting commissions and any other offering expenses. On November 14, 2000,
following the underwriters partial exercise of its over-allotment option, the
Partnership sold an additional 0.178 Common Units at the same price, generating
net proceeds of $3,600. The aggregate net proceeds of $47,100 were applied to
reduce outstanding Revolving Credit borrowings.

F-19
<PAGE>

INDEX TO SUPPLEMENTAL FINANCIAL INFORMATION

SUBURBAN ENERGY SERVICES GROUP LLC

PAGE
----

Report of Independent Accountants F-21

Balance Sheets - September 30, 2000 and September 25, 1999 F-22

Notes to Consolidated Balance Sheets F-23

F-20

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------

To the Stockholders of
Suburban Energy Services Group LLC

In our opinion, the accompanying consolidated balance sheets present fairly, in
all material respects, the financial position of Suburban Energy Services Group
LLC at September 30, 2000 and September 25, 1999 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 the
opinion expressed above.

PricewaterhouseCoopers LLP
Florham Park, NJ
October 24, 2000

F-21
<PAGE>

SUBURBAN ENERGY SERVICES GROUP LLC
BALANCE SHEETS
<TABLE>
<CAPTION>

September 30, September 25,
2000 1999
------------- -------------

Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents ........................ $ 5,986 $ 23,149
----------- -----------

Total current assets ............................. 5,986 23,149

Investment in Suburban Propane Partners, L.P. .... 1,866,426 2,044,453
Goodwill, net .................................... 3,195,180 3,277,800
----------- -----------

Total assets ................................. $ 5,067,592 $ 5,345,402
=========== ===========

Liabilities
Current Liabilities:
Current portion of note payable .................. $ 1,030,000 $ 460,000
Interest payable ................................. 55,733 49,933
----------- -----------

Total current liabilities ........................ 1,085,733 509,933

Note payable ....................................... 3,995,000 5,425,000
----------- -----------

Total liabilities ................................ 5,080,733 5,934,933
----------- -----------

Stockholders' equity (deficit)
Common stock, $1 par value, 2,000 shares
issued and outstanding ....................... 2,000 2,000
Additional paid in capital ....................... 345,141 --
Accumulated earnings (deficit) ................... (360,282) (591,531)
----------- -----------

Total stockholders' equity (deficit) ........... (13,141) (589,531)
----------- -----------

Total liabilities and stockholders' equity
(deficit).................................... $ 5,067,592 $ 5,345,402
=========== ===========

</TABLE>

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

F-22

<PAGE>

SUBURBAN ENERGY SERVICES GROUP LLC
Notes To Financial Statements

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. It was formed to purchase the general partner interests in Suburban
Propane Partners, L.P. 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 and owns a 0.88%
general partner interest in Suburban Propane Partners, L.P. and a 1.0101%
general partner interest in Suburban Propane, L.P., a wholly-owned subsidiary of
Suburban Propane Partners, L.P.

Suburban Propane Partners, L.P. is a publicly-traded Master Limited Partnership
traded on the New York Stock Exchange and is engaged in the retail and wholesale
marketing of propane and related appliances and services.

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 private placement 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 plans to repay the $6,000,000 borrowing from its
general partner distributions to be received from Suburban Propane Partners,
L.P. and from capital contributions from its owners. During the year ended
September 30, 2000, the Company's owners made capital contributions in the
amount of $345,141.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION. The accompanying financial statements have been
prepared on the accrual basis of accounting.

INVESTMENT IN SUBURBAN PROPANE PARTNERS, L.P. As previously noted, the
Company acquired a combined 2% general partner interest in Suburban Propane
Partners, L.P. on the Closing Date. The Company accounts for its investment
under the equity method of accounting whereby the Company recognizes in income
2% 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. The Company amortizes goodwill over a
forty-year period utilizing the straight-line method. Accumulated amortization
at September 30, 2000 and September 25, 1999 amounted to $110,160 and $27,540,
respectively.

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 is secured by a pledge of the
general partner interests held by the Company.

The GP Loan has a term of five years from the Closing Date and requires interest
to be paid at a rate equal to LIBOR plus 2% with such interest to be paid no
less frequently than quarterly. The GP Loan maturities for each of the next four
years are: $1,030,000 in 2001, $1,600,000 in 2002, $1,600,000 in 2003 and
$795,000 in 2004.

F-23
<PAGE>

The GP Loan contains various covenants limiting the ability of the Company to
(i) incur indebtedness, (ii) grant liens, (iii) acquire assets, other than the
general partner interests, and (iv) merge, consolidate or sell its assets.

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

4. 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 tax expense (benefit) has been reflected
in the accompanying financial statements.

F-24

<PAGE>

Index to Financial Statement Schedule
Suburban Propane Partners, L.P. and Subsidiaries

PAGE
----

Schedule II Valuation and Qualifying Accounts for the fiscal years
ended September 30, 2000, September 25, 1999 and
September 26, 1998. S-2

S-1

<PAGE>

<TABLE>
<CAPTION>
SCHEDULE II
-----------

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

BALANCE AT CHARGED DEDUCTIONS BALANCE
BEGINNING TO COST / OTHER (AMOUNTS AT END
OF PERIOD EXPENSES ADDITIONS CHARGED OFF) OF PERIOD
--------- -------- --------- ------------ ---------

Year Ended September 26, 1998
-----------------------------

<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts $ 2,682 $ 2,642 $-- $(2,942) $ 2,382
======= ======= === ======= =======

Accumulated amortization:
Goodwill .................... $25,633 $ 6,134 $-- $ -- $31,767
Other intangibles ........... $ 1,527 $ 1,036 $-- $ -- $ 2,563
------- ------- --- ------- -------
Total ....... $27,160 $ 7,170 $-- $ -- $34,330
======= ======= === ======= =======

Restructuring reserves ........ $ 4,566 $ -- $-- $(4,566) $ --
======= ======= === ======= =======

Year Ended September 25, 1999
-----------------------------

Allowance for doubtful accounts $ 2,382 $ 2,601 $-- $(2,894) $ 2,089
======= ======= === ======= =======

Accumulated amortization:
Goodwill .................... $31,767 $ 5,977 $-- $ -- $37,744
Other intangibles ........... $ 2,563 $ 1,076 $-- $ (144) $ 3,495
------- ------- --- ------- -------
Total ....... $34,330 $ 7,053 $-- $ (144) $41,239
======= ======= === ======= =======

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

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

Accumulated amortization:
Goodwill .................... $37,744 $ 7,292 $-- $ (18) $45,018
Other intangibles ........... $ 3,495 $ 2,338 $-- $ (180) $ 5,653
------- ------- --- ------- -------
Total ....... $41,239 $ 9,630 $-- $ (198) $50,671
======= ======= === ======= =======

</TABLE>

S-2

<PAGE>

SUBURBAN PROPANE PARTNERS, L.P.

2000 RESTRICTED UNIT PLAN

<PAGE>

SUBURBAN PROPANE PARTNERS, L.P. 2000 RESTRICTED UNIT PLAN

ARTICLE I

PURPOSE AND APPROVAL

The purpose of this Plan is to strengthen Suburban Propane
Partners, L.P., a Delaware limited partnership (the "Partnership"), by providing
an incentive to certain selected employees of the Partnership and affiliated
entities, and thereby encouraging them to devote their abilities and industry to
the success of the Partnership's business enterprise in such a manner as to
maximize the Partnership's value. It is intended that this purpose be achieved
by extending to such individuals an added long-term incentive for continued
service to the Partnership, and for high levels of performance and unusual
efforts which enhance the Partnership's value through the grant of rights to
receive Common Units (as hereinafter defined) of the Partnership.

ARTICLE II

DEFINITIONS

For the purposes of this Plan, unless otherwise specified in
an agreement, capitalized terms shall have the following meanings:

2.1 "Act" shall mean the Securities Act of 1933, as amended.

2.2 "Agreement" shall mean the written agreement between the Partnership
and a Grantee evidencing the grant of an Award and setting forth the terms and
conditions thereof.

2.3 "Award" shall mean a grant of restricted Common Units pursuant to the
terms of this Plan.

2.4 "Beneficial Ownership" shall mean as that term is used within the
meaning of Rule 13d-3 promulgated under the Exchange Act.

2.5 "Board" shall mean the Board of Supervisors of the Partnership.

2.6 "Cause" shall mean, unless otherwise provided in an Agreement, (a) the
Grantee's gross negligence or willful misconduct in the performance of his
duties, (b) the Grantee's willful or grossly negligent failure to perform his
duties, (c) the breach by the Grantee of any written covenants to Suburban
Propane, L.P. or any of the Partnership's other affiliates, (d) dishonest,
fraudulent or unlawful behavior by the Grantee (whether or not in conjunction
with employment) or the Grantee being subject to a judgment, order or decree (by
consent or otherwise) by any governmental or regulatory authority which
restricts his ability to engage in the business conducted by Suburban Propane,
L.P., the Partnership, or any of their affiliates, or (e) willful or reckless
breach by the Grantee of any policy adopted by Suburban Propane, L.P., the
Partnership, or any of their affiliates, concerning conflicts of interest,
standards of business conduct or fair employment practices or procedures with
respect to compliance with applicable law.

2.7 "Change in Capitalization" shall mean any increase or reduction in the
number of Common Units, or any change (including, but not limited to, a change
in value) in the Common Units, or exchange of Common Units for a different
number of kind of units or other securities of the Partnership, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or other convertible
securities, unit distribution, unit split or reverse unit split, cash dividend,
property dividend, combination or exchange of units, repurchase of units, change
in corporate structure or otherwise.

<PAGE>

2.8 "Code" shall mean the Internal Revenue Code of 1986, as amended.

2.9 "Committee" shall mean the Compensation Committee of the Board.

2.10 "Common Units" shall mean the common units representing limited
partnership interest of the Partnership.

2.11 "Disability" shall have the same meaning that such term (or similar
term) has under the Partnership's long-term disability plan, or as otherwise
determined by the Committee.

2.12 "Effective Date" shall mean November 1, 2000.

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

2.14 "Fair Market Value" per unit on any date shall mean the average of the
high and low sale prices of the Common Units on such date on the principal
national securities exchange on which such Common Units are listed or admitted
to trading, or if such Common Units are not so listed or admitted to trading,
the arithmetic mean of the per Common Unit closing bid price and per Common Unit
closing asked price on such date as quoted on the National Association of
Securities Dealers Automated Quotation System or such other market on which such
prices are regularly quoted, or, if there have been no published bid or asked
quotations with respect to Common Units on such date, the Fair Market Value
shall be the value established by the Board in good faith.

2.15 "General Partner" has the meaning set forth in the Partnership
Agreement.

2.16 "Good Reason" shall mean, unless otherwise provided in an Agreement,
in the case of an employee of Suburban Propane, L.P. or any of the Partnership's
other affiliates, (a) any failure by Suburban Propane, L.P. or any of the
Partnership's other affiliates to comply in any material respect with the
compensation provisions of a written employment agreement between the Grantee
and Suburban Propane, L.P. or any of the Partnership's other affiliates, (b) a
material adverse change in the Grantee's title without his consent, or (c) the
assignment to the Grantee, without his consent, of duties and responsibilities
materially inconsistent with his level of responsibility.

2.17 "Grantee" shall mean a person to whom an Award has been granted under
the Plan.

2.18 "Partnership" shall mean Suburban Propane Partners, L.P., a Delaware
limited partnership, and its successors.

2.19 "Partnership Agreement" shall mean the Second Amended and Restated
Agreement of Limited Partnership of the Partnership.

2.20 "Person" has the meaning used for purposes of Section 13(d) or 14(d)
of the Exchange Act.

<PAGE>

2.21 "Plan" shall mean the Suburban Propane Partners, L.P. 2000 Restricted
Unit Plan.

2.22 "Pooling Period" shall mean, with respect to a Pooling Transaction,
the period ending on the first date on which the combined entity resulting from
such Pooling Transaction publishes thirty days of combined operating results.

2.23 "Pooling Transaction" shall mean an acquisition of or by the
Partnership in a transaction which is intended to be treated as a "pooling of
interests" under generally accepted accounting principles.

2.24 "Subsidiary" means any corporation, partnership, or other Person of
which a majority of its voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Partnership.

ARTICLE III

ADMINISTRATION OF THE PLAN

3.1 The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A quorum shall consist
of not less than two members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and held.
Notwithstanding anything else herein to the contrary, the Committee may delegate
to any individual or committee of individuals the responsibility to carry out
any of its rights and duties with respect to the Plan. No member of the
Committee or any individual to whom it has delegated any of its rights and
duties shall be liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or any transaction
hereunder, except for liability arising from his or her own willful misfeasance,
gross negligence or reckless disregard of his or her duties. The Partnership
hereby agrees to indemnify each member of the Committee and its delegates for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiating for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization for any
transaction hereunder.

3.2 Each member of the Committee shall be a "disinterested person" within
the meaning of Rule 16b-3 under the Exchange Act.

3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power, consistent with Rule 16b-3 under the Exchange
Act, from time to time to:

(a) select those employees and members of the Board to whom Awards
shall be granted and to determine the terms and conditions (which need not
be identical) of each such Award;

(b) make any amendment or modification to any Agreement consistent
with the terms of the Plan;

(c) construe and interpret the Plan and the Awards, and establish,
amend and revoke rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or supplying any
omission, or reconciling any inconsistency in the Plan or in any Agreement
or between the Plan and any Agreement, in the manner and to the extent it
shall deem necessary or advisable so that the Plan complies with applicable
law, including Rule 16b-3 under the Exchange Act to the extent applicable,
and otherwise to make the Plan fully effective. All decisions and
determinations by the Committee or its delegates in the exercise of this
power shall be final, binding and conclusive upon the Partnership, its
subsidiaries, the Grantees and all other persons having any interest
therein;

<PAGE>

(d) exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and

(e) generally, exercise such powers and perform such acts as it deems
necessary or advisable to promote the best interests of the Partnership
with respect to the Plan.

3.4 The maximum number of Common Units that may be made the subject of
Awards granted under the Plan is 487,805. The Partnership shall reserve for
purposes of the Plan, out of its authorized but unissued units, such amount of
Common Units.

3.5 Notwithstanding anything inconsistent contained in this Plan, the
number of Common Units subject to, or which may become subject to, Awards at any
time under the Plan shall be reduced to such lesser amount as may be required
pursuant to the methods of calculation necessary so that the exemptions provided
pursuant to Rule 16b-3 under the Exchange Act will continue to be available for
transactions involving all current and future Awards. In addition, during the
period that any Awards remain outstanding under the Plan, the Committee may make
good faith adjustments with respect to the number of Common Units attributable
to such Awards for purposes of calculating the maximum number of Common Units
subject to the granting of future Awards under the Plan, provided that following
such adjustments the exemptions provided pursuant to Rule 16b-3 under the
Exchange Act will continue to be available for transactions involving all
current and future Awards.

ARTICLE IV

COMMON UNIT GRANTS

4.1 Time Vesting Grants. From time to time, the Committee may grant
restricted Common Units to Grantees, in such amounts as it deems prudent and
proper. Such rights shall be granted, and the Common Units underlying such
rights shall be issued, in consideration of the performance of services and for
no other consideration.

4.2 Forfeiture. A Grantee's rights with respect to the restricted Common
Units shall remain forfeitable at all times prior to the date on which the
restrictions thereon shall have lapsed in accordance with the terms of the Plan
and the Award.

4.3 Vesting Schedule. The restricted Common Unit grants made pursuant to
Section 4.1 shall vest and become non-forfeitable, unless otherwise determined
by the Committee (at the time of Award or otherwise), and the restrictions
thereon shall lapse, at a rate of 25% on the third anniversary of the date of
the applicable Award, a second 25% on the fourth anniversary, and a final 50% on
the fifth anniversary of the date of the applicable Award, provided that the
Grantee is employed on such date.

4.4 Other Grants. Notwithstanding anything else herein to the contrary, the
Committee may grant Common Units on such terms and conditions as it determines
in its sole discretion, the terms and conditions of which shall be set forth in
the applicable Award.

<PAGE>

ARTICLE V

OTHER PROVISIONS APPLICABLE TO VESTING

5.1 Forfeiture. Unless otherwise provided in an Award, any and all
restricted Common Units in respect of which the restrictions have not previously
lapsed shall be forfeited (and automatically transferred to and reacquired by
the Partnership at no cost to the Partnership and neither the Grantee nor any
successors, heirs, assigns, or personal representatives of such Grantee shall
thereafter have any further right or interest therein) upon the termination of
the Grantee's employment for any reason.

5.2 Disability. Notwithstanding the provisions of Section 5.1, unless
otherwise provided in an Agreement, if a Grantee's employment terminates as a
result of Disability, the restricted Common Units held by such Grantee for one
year on the date of termination shall immediately vest.

5.3 Recycling of Forfeited Shares. Subject to the restrictions set forth in
Rule 16b-3 of the Exchange Act, any Common Units forfeited hereunder may be,
after six months, the subject of an Award pursuant to this Plan.

ARTICLE VI

DELIVERY OF UNITS, ETC.

6.1 Delivery of Common Units. Subject to Section 16, upon the vesting of
Common Units, the Partnership shall deliver to the Grantee a certificate
representing such number of Common Units as are subject to such rights, to the
extent of such vesting, free of all restrictions hereunder within 45 days of the
date of vesting.

6.2 Transferability. Until such time as restricted Common Units have vested
and become non-forfeitable and certificates representing Common Units in respect
thereof have been issued, a Grantee shall not be entitled to transfer such
Common Units.

6.3 Rights of Grantees. Until such time as restricted Common Units have
vested and become non-forfeitable and certificates representing Common Units in
respect thereof have been issued, a Grantee shall not be entitled to exercise
any rights of a unitholder with respect thereto, including the right to vote
such units and the right to receive allocations or distributions thereon.

ARTICLE VII

ADJUSTMENT UPON CHANGES IN CAPITALIZATION

7.1 In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the maximum
number and class of Common Units or other units or securities with respect to
which Awards may be granted under the Plan, (ii) the number of Common Units or
other units or securities which are subject to outstanding Awards granted under
the Plan, and the purchase price therefor, if applicable.

7.2 If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to new, additional or different rights to acquire units or
other securities, such new, additional or different rights or securities shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the units subject to the Award prior to such
Change in Capitalization.

<PAGE>

7.3 Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which also constitutes a Pooling
Transaction, the Committee may take such actions which are specifically
recommended by an independent accounting firm retained by the Partnership to the
extent reasonably necessary to assure that the Pooling Transaction will qualify
as such, including but not limited to (i) deferring the vesting or lapsing of
restrictions with respect to any Award, (ii) providing that the payment or
settlement in respect of any Award be made in the form of cash, units, shares of
stock or securities of a successor or acquiror of the Partnership, or a
combination of the foregoing and (iii) providing for the extension of the
vesting period of any Award to the extent necessary to accommodate the
foregoing.

ARTICLE VIII

TERMINATION AND AMENDMENT OF THE PLAN

The Plan shall terminate on the day preceding the tenth anniversary of
the Effective Date and no Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
terminate, modify or suspend the Plan or any Agreement provided, however, that
no such amendment, modification, suspension or termination shall impair or
adversely affect any Awards theretofore granted under the Plan, except with the
consent of the Grantee, nor shall any amendment, modification, suspension or
termination deprive any Grantee of any Common Units which he or she may have
acquired through or as a result of the Plan. To the extent necessary under
Section 16(b) of the Exchange Act and the rules and regulations promulgated
thereunder or other applicable law, no amendment shall be effective unless
approved by the unitholders of the Partnership in accordance with applicable law
and regulations.

ARTICLE IX

MISCELLANEOUS

9.1 Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of options to acquire the Common
Units, and such arrangements may be either applicable generally or only in
specific cases.

9.2 Limitation of Liability. As illustrative of the limitations of
liability of the Partnership, but not intended to be exhaustive thereof, nothing
in the Plan shall be construed to:

(a) give any person any right to be granted an Award other than at the
sole discretion of the Committee;

(b) give any person any rights whatsoever with respect to the Common
Units except as specifically provided in the Plan or an Agreement;

(c) limit in any way the right of the Partnership or any of its
affiliates to terminate the employment of any person at any time; or

(d) be evidence of any agreement or understanding, express or implied,
that the Partnership will employ any person at any particular rate of
compensation or for any particular period of time.

<PAGE>

9.3 Regulations and Other Approvals; Governing Law. Except as to matters of
federal law, this Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of New Jersey
without giving effect to conflicts of law principles.

Notwithstanding any other provisions of this Plan, the obligation of the
Partnership to deliver the Common Units in respect thereof under the Plan shall,
in each case, be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining of
all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.

(a) Except as provided in Article VIII hereof, the Board may make such
changes to the Plan or an Agreement as may be necessary or appropriate to
comply with the rules and regulations of any government authority.

(b) Each Award is subject to the requirement that, if at any time the
Committee determines, in its sole and absolute discretion, that the
listing, registration or qualification of the Common Units issuable
pursuant to the Plan is required by any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the grant of an Award of the issuance of the Common Units,
no Awards shall be granted and no Common Units shall be issued, in whole or
in part, unless such listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions not
acceptable to the Committee.

(c) Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of the Common Units or any
other securities acquired pursuant to the Plan is not covered by a then
current registration statement under the Act or is not otherwise exempt
from such registration, such Common Units shall be restricted against
transfer to the extent required by the Act and Rule 144 or other
regulations thereunder. The Committee may require any person receiving
Common Units pursuant to an award granted under the Plan, as a condition
precedent to receipt of such Common Units, to represent and warrant to the
Partnership in writing that the Common Units acquired by such individual
are acquired without a view to any distribution thereof and will not be
sold or transferred other than pursuant to an effective registration
thereof under said Act or pursuant to an exemption applicable under the Act
or the rules and regulations promulgated thereunder. The certificates
evidencing any of such Common Units shall be appropriately legended to
reflect their status as restricted securities as aforesaid.

9.4 Withholding of Taxes. At such times as a Grantee recognizes taxable
income in connection with the rights to acquire Common Units granted hereunder
(a "Taxable Event"), the Grantee shall pay to the Partnership an amount equal to
the federal, state and local income taxes and other amounts as may be required
by law to be withheld by the Partnership in connection with the Taxable Event
(the "Withholding Taxes") prior to the issuance of such units. The Partnership
shall have the right to deduct from any payment of cash to a Grantee an amount
equal to the Withholding Taxes in satisfaction of the obligation to pay
Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to
the Partnership, the Grantee may make a written election (the "Tax Election"),
which may be accepted or rejected in the discretion of the Committee, to have
withheld a portion of the Common Units then issuable to him or her having an
aggregate Fair Market Value, on the date preceding the date of such issuance,
equal to the Withholding Taxes, provided that in respect of a Grantee who may be
subject to liability under Section 16(b) of the Exchange Act, such withholding
is done in accordance with any applicable Rule under section 16(b) of the
Exchange Act.

<PAGE>

9.5 Interpretation. The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act, and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner consistent
therewith. Any provisions inconsistent with such rule shall be inoperative and
shall not affect the validity of the Plan.

9.6 Effective Date. The effective date of the Plan shall be the Effective
Date. The effectiveness of this Plan is subject to approval of the Plan prior to
the Effective Date by the partners of the Partnership.

<PAGE>

EXHIBIT 21.1
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SUBSIDIARIES OF SUBURBAN PROPANE PARTNERS, L.P.
-----------------------------------------------

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

Suburban Sales & Service, Inc., a Delaware corporation

Gas Connection Inc., an Oregon corporation

Suburban @ Home, Inc., a Delaware corporation

<PAGE>

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 Form S-4 (No. 333-95077) of Suburban
Propane Partners, L.P. of our report dated October 24, 2000, except for Note 14,
which is as of November 14, 2000, appearing on page F-2 of this Annual Report on
Form 10-K. We also consent to the application of such report to the Financial
Statement Schedule listed under Item 14(a) 2 of this Form 10-K when such
schedule is read in conjunction with the consolidated financial statements
referred to in our report. The audits referred to in such report also included
this schedule. We also consent to the incorporation by reference in such
registration statement of our report dated October 24, 2000 on the financial
statements of Suburban Energy Services Group LLC appearing on page F-21 of this
Annual Report on Form 10-K.

PricewaterhouseCoopers LLP
Florham Park, NJ
December 18, 2000