based upon either LIBOR or Wachovia National Bank's prime rate, plus, in each case, the applicable margin; or the Federal Funds rate plus 1/2 of 1%. An annual facility fee ranging from 0.375% to 0.50%, based upon certain financial tests, is payable quarterly whether or not borrowings occur. These fees and the other terms of the Revolving Credit Agreement are substantially the same as the terms under the Second Amended and Restated Credit Agreement, which provided a $75,000 working capital facility and a $25,000 acquisition facility. In connection with the Revolving Credit Agreement, the Operating Partnership's leverage ratio was reduced from 5.0 to 1 to a requirement to maintain a ratio of less than 4.5 to 1. As a result of the change in the leverage ratio under the Revolving Credit Agreement, the applicable leverage ratios under the 1996 Senior Notes and the 2002 Senior Notes were also reduced to 4.5 to 1. As of March 26, 2005, there was $38,000 outstanding under the working capital facility of the Revolving Credit Agreement that was used to fund working capital requirements during the heating season. The Partnership expects to repay the $38,000 by the end of June 2005.

On March 31, 2005 (subsequent to the end of the second quarter of fiscal 2005), the Partnership completed a refinancing (the "Refinancing") of the $297,500 outstanding principal amount of the 1996 Senior Notes and the $42,500 outstanding principal amount of the 2002 Senior Notes (collectively, the "Redeemed Notes"). Under the Refinancing, the Partnership issued $250,000 of additional notes under the indenture governing the 2003 Senior Notes and received proceeds of approximately $246,875, net of a $2,047 discount on sale and related underwriter fees. In addition, the Operating Partnership entered into an amendment to the Revolving Credit Agreement to provide, among other things, for a five-year $125,000 term loan facility (the "Term Loan"). The total net proceeds of approximately $370,936 from the issuance of additional senior notes under the 2003 Senior Notes and from the $125,000 of borrowings under the Term Loan, together with cash of approximately $7,335, were used to prepay the Redeemed Notes, including a prepayment premium of approximately $31,880 and interest accrued on the Redeemed Notes of approximately $6,391 from the last interest payment date through the date of redemption. As a result of the Refinancing, all of the outstanding amounts due under the 1996 Senior Notes and the 2002 Senior Notes have been classified as long-term as of March 26, 2005.

The Redeemed Notes required an annual principal repayment of $42,500 through 2012. The Refinancing replaces the annual cash requirement for principal amortization with the $125,000 five-year Term Loan and the $250,000 of senior notes due 2013 issued under the 2003 Senior Notes, significantly extending the Partnership's debt maturities and eliminating refinancing risk associated with the amortization of the Redeemed Notes. The Refinancing is expected to reduce the Partnership's annual interest expense for at least the next five years. The Partnership will record a one-time charge of approximately $36,242 during the third quarter of fiscal 2005 as a result of the Refinancing to reflect the loss on debt extinguishment associated with the prepayment premium and the write-off of $4,262 of unamortized bond issuance costs associated with the Redeemed Notes.

As of March 26, 2005, the 1996 Senior Notes, the 2002 Senior Notes and the Revolving Credit Agreement contained various restrictive and affirmative covenants applicable to the Operating Partnership. The Partnership was in compliance with all covenants and terms of the 1996 Senior Notes, the 2002 Senior Notes and the Revolving Credit Agreement as of March 26, 2005. As a result of the Refinancing, the Partnership eliminated the requirement to maintain a leverage ratio and an interest coverage ratio associated with the Redeemed Notes without adding comparable financial covenants under the 2003 Senior Notes. Additionally, as a result of the amendment to the Third Amended and Restated Credit Agreement, the Operating Partnership's required leverage ratio was reduced from 4.5 to 1 to a requirement to maintain a ratio of less than 4.0 to 1 and the interest coverage ratio was amended to require maintenance of a ratio of greater than 2.5 to 1 on a consolidated basis. In addition, the Revolving Credit Agreement and the 2003 Senior Notes both contain various restrictive and affirmative covenants applicable to the Operating Partnership and the Partnership, respectively, including (i) restrictions on the incurrence of additional indebtedness, and (ii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions.

Debt origination costs representing the costs incurred in connection with the placement of, and the subsequent amendment to, the Partnership's Senior Notes and Revolving Credit Agreement were

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capitalized within other assets and are being amortized on a straight-line basis over the term of the respective debt agreements. Other assets at March 26, 2005 and September 25, 2004 include debt origination costs with a net carrying amount of $10,942 and $10,506, respectively. Aggregate amortization expense related to deferred debt origination costs included within interest expense for the three and six months ended March 26, 2005 was $416 and $824, respectively, and $371 and $621 for the three and six months ended March 27, 2004, respectively.

9.	Distributions of Available Cash

The Partnership makes distributions to its partners approximately 45 days after the end of each fiscal quarter of the Partnership in an aggregate amount equal to its available cash ("Available Cash") for such quarter. Available Cash, as defined in the Partnership Agreement, generally means all cash on hand at the end of the respective fiscal quarter less the amount of cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. These reserves are retained for the proper conduct of the Partnership's business, the payment of debt principal and interest and for distributions during the next four quarters. Distributions by the Partnership in an amount equal to 100% of its Available Cash will generally be made 98.46% to the Common Unitholders and 1.54% to the General Partner, subject to the payment of incentive distributions to the General Partner to the extent the quarterly distributions exceed a target distribution of $0.55 per Common Unit.

As defined in the Partnership Agreement, the General Partner has certain Incentive Distribution Rights ("IDRs") which represent an incentive for the General Partner to increase distributions to Common Unitholders in excess of the target quarterly distribution of $0.55 per Common Unit. With regard to the first $0.55 per Common Unit of quarterly distributions paid in any given quarter, 98.46% of the Available Cash is distributed to the Common Unitholders and 1.54% is distributed to the General Partner. With regard to the balance of quarterly distributions in excess of the $0.55 per Common Unit target distribution, 85% of the Available Cash is distributed to the Common Unitholders and 15% is distributed to the General Partner.

On April 21, 2005, the Partnership declared a quarterly distribution of $0.6125 per Common Unit, or $2.45 on an annualized basis, in respect of the second quarter of fiscal 2005 payable on May 10, 2005 to holders of record on May 3, 2005. This quarterly distribution includes IDRs payable to the General Partner to the extent the quarterly distribution exceeds $0.55 per Common Unit.

10.	2000 Restricted Unit Plan

During fiscal 2005, the Partnership awarded 94,239 Restricted Units under the 2000 Restricted Unit Plan at an aggregate value of $3,129. Restricted Units issued under the 2000 Restricted Unit Plan vest over time with 25% of the Common Units vesting at the end of each of the third and fourth anniversaries of the issuance date and the remaining 50% of the Common Units vesting at the end of the fifth anniversary of the issuance date. Restricted Unit Plan participants are not eligible to receive quarterly distributions or vote their respective Restricted Units until vested. Restrictions also limit the sale or transfer of the Common Units by the award recipients during the restricted periods. The value of the Restricted Unit is established by the market price of the Common Units at the date of grant. Restricted Units are subject to forfeiture in certain circumstances as defined in the 2000 Restricted Unit Plan. Upon award of Restricted Units, the unamortized unearned compensation value is shown as a reduction to partners' capital. The unearned compensation is amortized ratably to expense over the restricted periods.

11.	Commitments and Contingencies

The Partnership is self-insured for general and product, workers' compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. At March 26, 2005 and September 25, 2004, the Partnership had accrued insurance liabilities of $41,201 and $38,241, respectively, representing the total estimated losses under these self-insurance programs. For the portion of the estimated self-insurance liability that exceeds insurance deductibles, the Partnership

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records an asset within other assets related to the amount of the liability to be covered by insurance which amounted to $3,945 and $2,941 as of March 26, 2005 and September 25, 2004, respectively. The Partnership is also involved in various legal actions that have arisen in the normal course of business, including those relating to commercial transactions and product liability. Management believes, based on the advice of legal counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Partnership's financial position or future results of operations, after considering its self-insurance liability for known and unasserted self-insurance claims.

The Partnership is subject to various laws and governmental regulations concerning environmental matters and expects that it will be required to expend funds to participate in remediation of these matters. In connection with the Agway Acquisition, the Partnership acquired certain surplus properties with either known or probable environmental exposure, some of which are currently in varying stages of investigation, remediation or monitoring. Additionally, the Partnership identified that certain active sites acquired contained environmental exposures which may require further investigation, future remediation or ongoing monitoring activities. The environmental exposures include instances of soil and/or groundwater contamination associated with the handling and storage of fuel oil, gasoline and diesel fuel. In the allocation of the purchase price to the assets acquired and liabilities assumed in the Agway Acquisition, the Partnership established an environmental reserve of $13,750. This reserve estimate was based on the Partnership's best estimate of future costs for environmental investigations, remediation and ongoing monitoring activities at the date of the Agway Acquisition associated with acquired properties with either known or probable environmental exposures.

Under the Purchase and Sale Agreement, however, the seller set aside $15,000 of the total purchase price in a separate escrow account to reimburse the Partnership for any such future environmental costs and expenses. Accordingly, in the allocation of the purchase price, the Partnership established a corresponding environmental escrow asset in the amount of $13,750 related to the future expected reimbursement from escrowed funds for environmental spending. Under the terms of the Purchase and Sale Agreement, the escrowed funds will be used to fund such environmental costs and expenses during the first three years following the closing date of the Agway Acquisition. Subject to amounts withheld with respect to any pending claims made prior to such third anniversary, any remaining escrowed funds will be remitted to the sellers at the end of the three-year period.

Management revised its estimates of environmental exposures at certain acquired sites and, as a result, increased the environmental reserve by $1,200 with a corresponding increase to the environmental escrow asset related to the future reimbursement from the environmental escrow established in the Agway Acquisition during the six months ended March 26, 2005. As of March 26, 2005 and September 25, 2004, $9,151 and $11,350, respectively, remained in the environmental reserve and $9,456 and $11,521, respectively, remained in the environmental escrow asset.

Estimating the extent of the Partnership's responsibility for a particular site and the method and ultimate cost of remediation of that site requires a number of assumptions and estimates on the part of management. As a result, the ultimate outcome of remediation of the sites may differ from current estimates. As additional information becomes available, estimates will be adjusted as necessary. Based on information currently available, and taking into consideration the level of the environmental reserve and the $15,000 environmental escrow, management believes that any liability that may ultimately result from changes in current estimates will not have a material impact on the results of operations, financial position or cash flows of the Partnership.

12.	Guarantees

The Partnership has residual value guarantees associated with certain of its operating leases, related primarily to transportation equipment, with remaining lease periods scheduled to expire periodically through fiscal 2012. Upon completion of the lease period, the Partnership guarantees that the fair value of the equipment will equal or exceed the guaranteed amount, or the Partnership will pay the lessor the difference. Although the equipment's fair value at the end of their lease terms has historically exceeded the guaranteed amounts, the maximum potential amount of aggregate future

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payments the Partnership could be required to make under these leasing arrangements, assuming the equipment is deemed worthless at the end of the lease term, is approximately $17,637. Of this amount, the fair value of residual value guarantees for operating leases entered into after December 31, 2002 was $5,196 and $3,684 which is reflected in other liabilities, with a corresponding amount included within other assets, in the accompanying condensed consolidated balance sheets as of March 26, 2005 and September 25, 2004, respectively.

13.	Discontinued Operations and Disposition

During the second quarter of fiscal 2004, the Partnership sold ten customer service centers in Texas, Oklahoma, Missouri and Kansas for total cash proceeds of approximately $24,000. This divestiture was in line with the Partnership's strategy of divesting operations in slower growing or non-strategic markets in an effort to identify opportunities to optimize the return on assets employed. The Partnership recorded a gain on sale of approximately $14,205 for the three and six months ended March 27, 2004 which was accounted for within discontinued operations pursuant to SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). During the second quarter of fiscal 2005, the Partnership finalized certain purchase price adjustments with the buyer of these customer service centers and recorded an additional gain on sale of $976. In accordance with SFAS 144, the individual captions on the consolidated statements of operations for the three and six months ended March 27, 2004 exclude the results from these discontinued operations, which were part of the Partnership's propane segment. The net impact on the Partnership's discontinued operations was not significant for the three and six months ended March 27, 2004.

14.	Pension Plans and Other Postretirement Benefits

The following table provides the components of net periodic benefit costs for the three and six months ended March 26, 2005 and March 27, 2004:

				Pension Benefits								Postretirement Benefits
				Three Months Ended								Three Months Ended
				March 26, 2005				March 27, 2004				March 26, 2005				March 27, 2004
Service cost				$	—			$	—			$	4			$	6
Interest cost					2,277				2,441				446				965
Expected return on plan assets					(2,334	)			(2,389	)			—				—
Amortization of prior service costs					—				—				(180	)			(180	)
Recognized net actuarial loss					1,660				1,497				—				—
Net periodic benefit cost				$	1,603			$	1,549			$	270			$	791

				Pension Benefits								Postretirement Benefits
				Six Months Ended								Six Months Ended
				March 26, 2005				March 27, 2004				March 26, 2005				March 27, 2004
Service cost				$	—			$	—			$	8			$	10
Interest cost					4,554				4,882				892				1,500
Expected return on plan assets					(4,668	)			(4,778	)			—				—
Amortization of prior service costs					—				—				(360	)			(360	)
Recognized net actuarial loss					3,320				2,994				—				—
Net periodic benefit cost				$	3,206			$	3,098			$	540			$	1,150

There are no projected minimum employer contribution requirements under IRS Regulations for fiscal year 2005 under our defined benefit pension plan. The projected annual contribution requirements related to the Partnership's postretirement health care and life insurance benefit plan for fiscal 2005 is $3,100, of which $1,078 has been contributed during the six months ended March 26, 2005.

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15.	Segment Information

The Partnership manages and evaluates its operations in five reportable segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, HVAC and All Other. The chief operating decision maker evaluates performance of the operating segments using a number of performance measures, including gross margins and operating profit. Costs excluded from these profit measures are captured in Corporate and include corporate overhead expenses not allocated to the operating segments. Unallocated corporate overhead expenses include all costs of back office support functions that are reported as general and administrative expenses in the consolidated statements of operations. In addition, certain costs associated with field operations support that are reported in operating expenses in the consolidated statements of operations, including purchasing, training and safety, are not allocated to the individual operating segments. Thus, operating profit for each operating segment includes only the costs that are directly attributable to the operations of the individual segment. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies Note in the Partnership's Annual Report on Form 10-K for the fiscal year ended September 25, 2004.

The propane segment is primarily engaged in the retail distribution of propane to residential, commercial, industrial and agricultural customers and, to a lesser extent, wholesale distribution to large industrial end users. In the residential and commercial markets, propane is used primarily for space heating, water heating, cooking and clothes drying. Industrial customers use propane generally as a motor fuel burned in internal combustion engines that power over-the-road vehicles, forklifts and stationary engines, to fire furnaces and as a cutting gas. In the agricultural markets, propane is primarily used for tobacco curing, crop drying, poultry brooding and weed control.

The fuel oil and refined fuels segment is primarily engaged in the retail distribution of fuel oil, diesel, kerosene and gasoline to residential and commercial customers for use primarily as a source of heat in homes and buildings.

The natural gas and electricity segment is engaged in the marketing of natural gas and electricity to residential and commercial customers in the deregulated energy markets of New York and Pennsylvania. Under this operating segment, the Partnership owns the relationship with the end consumer and has agreements with the local distribution companies to deliver the natural gas or electricity from the Partnership's suppliers to the customer.

The HVAC segment is engaged in the sale, installation and servicing of a wide variety of home comfort equipment and parts, particularly in the areas of heating, ventilation and air conditioning.

The following table presents certain data by reportable segment and provides a reconciliation of total operating segment information to the corresponding consolidated amounts for the periods presented:

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				Three Months Ended								Six Months Ended
				March 26, 2005				March 27, 2004				March 26, 2005				March 27, 2004
Revenues:
Propane				$	360,830			$	353,618			$	619,613			$	546,758
Fuel oil and refined fuels					157,963				147,952				266,223				151,355
Natural gas and electricity					39,265				35,770				61,753				37,498
HVAC					27,104				27,750				59,274				43,602
All other					2,207				2,234				4,552				3,683
Total revenues				$	587,369			$	567,324			$	1,011,415			$	782,896
Income before interest expense and income taxes:
Propane				$	89,063			$	76,769			$	129,926			$	119,466
Fuel oil and refined fuels					(812	)			20,449				(481	)			20,351
Natural gas and electricity					4,366				2,757				4,915				2,851
HVAC					(3,157	)			2,782				(3,688	)			3,624
All other					(1,206	)			(1,317	)			(2,351	)			(2,125	)
Corporate					(13,184	)			(12,922	)			(18,398	)			(25,677	)
Total income before interest expense and income taxes					75,070				88,518				109,923				118,490
Reconciliation to income from continuing operations
Interest expense, net					10,480				10,770				20,343				20,481
Provision for income taxes					109				83				198				166
Income from continuing operations				$	64,481			$	77,665			$	89,382			$	97,843
Depreciation and amortization:
Propane				$	6,371			$	6,550			$	12,779			$	12,338
Fuel oil and refined fuels					1,180				1,193				2,361				1,274
Natural gas and electricity					183				72				602				93
HVAC					173				164				359				221
All other					82				81				150				162
Corporate					1,209				1,163				2,066				2,364
Total depreciation and amortization				$	9,198			$	9,223			$	18,317			$	16,452

												March 26, 2005				September 25, 2004
Assets:
Propane												$	804,569			$	720,645
Fuel oil and refined fuels													130,319				121,386
Natural gas and electricity													28,854				26,630
HVAC													19,245				20,715
All other													5,038				4,941
Corporate													150,323				185,671
Eliminations													(87,981	)			(87,981	)
Total assets												$	1,050,367			$	992,007

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ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of operations of the Partnership as of and for the three and six months ended March 26, 2005. The discussion should be read in conjunction with the historical consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 25, 2004.

Factors that Affect Our Operating Results and Financial Condition

Product Costs

The level of profitability in the retail propane and fuel oil businesses is largely dependent on the difference between retail sales price and product cost. The unit cost of propane and fuel oil is subject to volatile changes as a result of product supply or other market conditions, including, but not limited to, economic and political factors impacting crude oil and natural gas supply or pricing. Propane and fuel oil unit cost changes can occur rapidly over a short period of time and can impact profitability. There is no assurance that we will be able to pass on product cost increases fully or immediately, particularly when product costs increase rapidly. Therefore, average retail sales prices can vary significantly from year to year as product costs fluctuate with propane, fuel oil, crude oil and natural gas commodity market conditions.

Seasonality

The retail propane and fuel oil distribution businesses, as well as the natural gas marketing business, are seasonal because of the primary use for heating in residential and commercial buildings. Historically, approximately two-thirds of our retail propane volume is sold during the six-month peak heating season from October through March. The fuel oil business tends to experience greater seasonality given its more limited use for space heating and we expect that approximately three-fourths of our fuel oil volumes will be sold between October and March. Consequently, sales and operating profits are concentrated in our first and second fiscal quarters. Cash flows from operations, therefore, are greatest during the second and third fiscal quarters when customers pay for product purchased during the winter heating season. We expect lower operating profits and either net losses or lower net income during the period from April through September (our third and fourth fiscal quarters). To the extent necessary, we 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 our products, in particular propane, fuel oil and natural gas, for both heating and agricultural purposes. Many of our customers rely heavily on propane, fuel oil or natural gas as a heating source. Accordingly, the volume sold is directly affected by the severity of the winter weather in our service areas, which can vary substantially from year to year. In any given area, sustained warmer than normal temperatures will tend to result in reduced propane, fuel oil and natural gas consumption, while sustained colder than normal temperatures will tend to result in greater use.

Risk Management

Propane product supply contracts are generally one-year agreements subject to annual renewal and generally permit suppliers to charge posted market prices (plus transportation costs) at the time of delivery or the current prices established at major delivery points. Since rapid increases in the cost of propane or fuel oil may not be immediately passed on to retail customers, such increases could reduce profitability. Approximately 60% of our fuel oil volumes are sold to individual customers under agreements pre-establishing a fixed or maximum price per gallon over a twelve-month period (the "Ceiling Program"). The fixed or maximum price at which fuel oil is sold to these price plan customers is generally adjusted annually based on current market conditions prior to the start of the heating season.

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We engage in risk management activities to reduce the effect of price volatility on our product costs and to help ensure the availability of product during periods of short supply. We are currently a party to propane futures contracts traded on the New York Mercantile Exchange ("NYMEX") and enter into forward and option agreements with third parties to purchase and sell propane at fixed prices in the future. Additionally, we enter into derivative instruments in the form of futures and options traded on the NYMEX typically covering a significant portion of the fuel oil we expect to sell to customers under fixed price programs or Ceiling Programs in an effort to protect margins under these programs, although we evaluate the cost of this protection prior to entering into the derivative instruments. Risk management activities are monitored by an internal Commodity Risk Management Committee, made up of five members of management, through enforcement of our Hedging and Risk Management Policy and reported to our Audit Committee. Risk management transactions may not always result in increased product margins. See the additional discussion in Item 3 of this Quarterly Report.

Critical Accounting Policies and Estimates

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

Our significant accounting policies are summarized in Note 2 – Summary of Significant Accounting Policies included within the Notes to Consolidated Financial Statements section of the Annual Report on Form 10-K for the most recent fiscal year ended September 25, 2004. We believe that the following are our critical accounting policies:

Revenue Recognition.    We recognize revenue from the sale of propane, fuel oil and other refined fuels at the time product is delivered to the customer. Revenue from the sale of appliances and equipment is recognized at the time of sale or when installation is complete, as applicable. Revenue from repairs, maintenance and other service activities is recognized upon completion of the service. Revenue from HVAC service contracts is recognized ratably over the service period. Revenue from our natural gas and electricity business is recognized based on customer usage as determined by meter readings.

Allowances for Doubtful Accounts.    We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate our allowances for doubtful accounts using a specific reserve for known or anticipated uncollectible accounts, as well as an estimated reserve for potential future uncollectible accounts taking into consideration our historical write-offs. If the financial condition of one or more of our customers were to deteriorate resulting in an impairment in their ability to make payments, additional allowances could be required.

Pension and Other Postretirement Benefits.    We estimate the rate of return on plan assets, the discount rate to estimate the present value of future benefit obligations and the cost of future health

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care benefits in determining our annual pension and other postretirement benefit costs. In accordance with GAAP, actual results that differ from our assumptions are accumulated and amortized over future periods and therefore, generally affect our recognized expense and recorded obligation in such future periods. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in market conditions may materially affect our pension and other postretirement obligations and our future expense. See the Liquidity and Capital Resources section of Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K for the year ended September 25, 2004 for additional disclosure regarding pension and other postretirement benefits.

Self-Insurance Reserves.    Our accrued insurance reserves represent the estimated costs of known and anticipated or unasserted claims under our general and product, workers' compensation and automobile insurance policies. Accrued insurance provisions for unasserted claims arising from unreported incidents are based on an analysis of historical claims data. For each claim, we record a self-insurance provision up to the estimated amount of the probable claim utilizing actuarially determined loss development factors applied to actual claims data. We maintain insurance coverage wherein our net exposure for insured claims is limited to the insurance deductible, claims above which are paid by our insurance carriers. For the portion of our estimated self-insurance liability that exceeds our deductibles, we record an asset for the amount of the liability to be covered by insurance.

Environmental Reserves.    We establish reserves for environmental exposures when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based upon our best estimate of costs associated with environmental remediation and ongoing monitoring activities. Accrued environmental reserves are exclusive of claims against third parties. An asset is established where contribution or reimbursement from such third parties has been agreed and we are reasonably assured of receiving such contribution or reimbursement. Environmental reserves are not discounted.

Goodwill Impairment Assessment.    We assess the carrying value of goodwill at a reporting unit level, at least annually, based on an estimate of the fair value of the respective reporting unit. Fair value of the reporting unit is estimated using discounted cash flow analyses taking into consideration estimated cash flows in a ten-year projection period and a terminal value calculation at the end of the projection period.

Derivative Instruments and Hedging Activities.    See Item 3 of this Quarterly Report for additional information about accounting for derivative instruments and hedging activities.

Executive Summary of Results of Operations and Financial Condition

The second quarter of fiscal 2005 presented a very challenging operating environment driven by unseasonably warm weather across all of our service territories, as well as unprecedented high commodity prices. Our propane and fuel oil volumes were negatively affected by a combination of warm weather and customer conservation efforts resulting from continued high energy costs. Additionally, during the second quarter of fiscal 2005 commodity prices, fuel oil in particular, experienced unprecedented high levels and extreme volatility. Margin opportunities, and therefore profitability, in our refined fuels segment were significantly restricted as a result of our inability to pass on fully the rise in fuel oil prices due to our Ceiling Program, coupled with the fact that February and March 2005 volumes were not hedged as the costs to hedge became prohibitive due to market volatility.

We reported net income of $65.5 million, or $1.91 per Common Unit, for our second quarter of fiscal 2005, a decrease of $27.1 million, or 29.3%, compared to net income of $92.6 million, or $2.68 per Common Unit, in the prior year quarter. EBITDA (as defined and reconciled below) for the three months ended March 26, 2005 was $85.2 million, a decrease of $27.4 million, or 24.3%, compared to $112.6 million in the prior year quarter. EBITDA for the six month period ended March 26, 2005 decreased $20.6 million, or 13.8%, to $129.2 million compared to $149.8 million in the prior year period.

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The most significant impact on profitability during the second quarter of fiscal 2005 compared to the prior year quarter was the combined impact of the warmer than normal weather and high energy costs on our fuel oil segment. Profitability in the fuel oil and refined fuels segment decreased $26.9 million primarily as a result of our inability in a cost effective manner to hedge a portion of volume under our Ceiling Program. We have already taken positive steps to modify the Ceiling Program and hedging strategies for the fiscal 2006 heating season in order to address the external commodity price factors that impacted the program during fiscal 2005. In addition, our HVAC segment experienced a $5.9 million decrease in profitability primarily as a result of a lower level of service activity from the warmer than normal weather. Partially offsetting the negative results in our fuel oil and HVAC segments was the profitability in our propane and natural gas and electricity segments which increased $12.3 million and $1.6 million, respectively, during the second quarter of fiscal 2005, despite the impact of weather and commodity price increases.

EBITDA and net income for the second quarter and first half of the prior year were also favorably impacted by the net result of certain significant items, mainly relating to: (i) a $14.2 million gain from the sale of ten customer service centers in Texas, Oklahoma, Missouri and Kansas considered to be non-strategic; (ii) a non-cash charge of $5.6 million included within cost of products sold in the fuel oil and refined fuels segment relating to the settlement of futures contracts which were marked-to-market under purchase accounting for the Agway Acquisition; and, (iii) a $2.2 million restructuring charge related to our initial efforts to integrate certain management and back office functions of Agway Energy. These significant items had a net positive impact of $6.4 million on the prior year EBITDA and net income.

Retail propane gallons sold in the second quarter of fiscal 2005 decreased 20.8 million gallons, or 9.5%, to 199.1 million gallons from 219.9 million gallons in the prior year quarter. Sales of fuel oil and other refined fuels amounted to 92.9 million gallons during the second quarter of fiscal 2005 compared to 104.2 million gallons in the prior year quarter, a decrease of 10.8%. As reported by the National Oceanic and Atmospheric Administration ("NOAA"), average temperatures in our service territories for the second quarter of fiscal 2005 were 4% warmer than normal compared to 1% warmer than normal in the prior year quarter. Significantly warmer than normal temperatures during January and February 2005 (the most critical months of the heating season) were somewhat offset by a burst of cold weather in March 2005. Average temperatures across our service areas in January 2005 were 8% warmer than normal, compared to 2% colder than normal in January 2004. In the commodities markets, the average posted prices of propane and fuel oil during the second quarter of fiscal 2005 increased 17% and 47%, respectively, compared to the average posted prices in the prior year quarter.

While weather and the volatile commodity price environment had a negative impact on our volumes and profit opportunities, we continue to focus on those factors that are within our control by controlling operating expenses and continuing to focus on our balance sheet. Combined operating and general and administrative expenses decreased $2.2 million, despite increased professional service fees associated with our preparation for compliance with the requirements of the Sarbanes-Oxley Act of 2002 and higher costs to operate our fleet due primarily to higher fuel costs. Additionally, shortly after the end of our second quarter we completed a debt refinancing which accomplished three important objectives: (i) we significantly extended our debt maturities and eliminated the refinancing risk associated with the annual amortization requirements of our 7.54% senior notes due 2011 and our 7.37% senior notes due 2012 (collectively, the "Redeemed Notes"); (ii) we reduced our expected annual interest expense for at least the next five years; and, (iii) we eliminated certain restrictive covenants that were included in the Redeemed Notes, leaving us with more flexibility going forward.

Looking ahead to the remainder of fiscal 2005, while weather does not typically have a significant impact on our operations during the second half of the fiscal year, we expect that commodity price volatility will continue to present challenges to our operations. We continue to focus attention on our systems and facility integration efforts in the northeast, as well as to take steps to improve on our cost structure and strengthen our financial position. Delays in system integration efforts have caused a delay in recognizing additional synergies from the Agway Acquisition beyond those originally anticipated, particularly in the areas of routing and forecasting customer requirements.

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Our anticipated cash requirements for the remainder of fiscal 2005 include: (i) maintenance and growth capital expenditures of approximately $13.4 million; (ii) interest payments of approximately $19.0 million; (iii) repayment of outstanding borrowings of $38.0 million under our Revolving Credit Agreement; and, (iv) assuming distributions remain at the current level, approximately $38.3 million of distributions to Common Unitholders and the General Partner. Based on our current estimates of cash flow from operations, our cash position at the end of the second quarter of fiscal 2005 and availability under the Revolving Credit Agreement (unused borrowing capacity under the working capital facility of $37.0 million at March 26, 2005), we expect to have sufficient funds to meet our current and future obligations, including the increased costs to complete our systems and facility integration in the northeast.

Results of Operations

Three Months Ended March 26, 2005 Compared to Three Months Ended March 27, 2004

Revenues

(Dollars in thousands)				Three Months Ended								Increase (Decrease)				Percent Increase (Decrease)
				March 26, 2005				March 27, 2004
Revenues
Propane				$	360,830			$	353,618			$	7,212				2.0	%
Fuel oil and refined fuels					157,963				147,952				10,011				6.8	%
Natural gas and electricity					39,265				35,770				3,495				9.8	%
HVAC					27,104				27,750				(646	)			(2.3	)%
All other					2,207				2,234				(27	)			(1.2	)%
Total revenues				$	587,369			$	567,324			$	20,045				3.5	%

Total revenues increased $20.0 million, or 3.5%, to $587.4 million for the three months ended March 26, 2005 compared to $567.3 million for the three months ended March 27, 2004 driven primarily by higher average selling prices resulting from significantly higher commodity prices. Retail sales volumes in our propane and fuel oil segments were negatively impacted by a combination of warmer than normal average nationwide temperatures, as well as the impact of customer conservation efforts in response to the significant rise in energy cost. As reported by NOAA, average temperatures in our service territories for the second quarter of fiscal 2005 were 4% warmer than normal compared to 1% warmer than normal in the prior year quarter. Significantly warmer than normal temperatures during January and February 2005 (the most critical months of the heating season) were somewhat offset by a burst of cold weather in March 2005. Average temperatures across our service areas in January 2005 were 8% warmer than normal, compared to 2% colder than normal in January 2004.

Revenues from the distribution of propane and related activities of $360.8 million in the second quarter of fiscal 2005 increased $7.2 million, or 2.0%, compared to $353.6 million in the prior year quarter, primarily due to the impact of higher average selling prices in line with significantly higher product costs, offset to an extent by the impact of 9.5% lower volumes. Retail propane gallons sold in the second quarter of fiscal 2005 decreased 20.8 million gallons, or 9.5%, to 199.1 million gallons from 219.9 million gallons in the prior year quarter. Average propane selling prices increased approximately 14% as a result of sustained higher commodity prices for propane. The average posted price of propane during the second quarter of fiscal 2005 increased approximately 17% compared to the average posted prices in the prior year quarter. Additionally, included within the propane segment are revenues from wholesale and risk management activities of $5.0 million for the three months ended March 26, 2005 which decreased $6.8 million compared to the prior year quarter.

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Revenues from the distribution of fuel oil and other refined fuels of $158.0 million in the second quarter of fiscal 2005 increased $10.0 million, or 6.8%, from $148.0 million in the prior year quarter. Sales of fuel oil and other refined fuels amounted to 92.9 million gallons during the second quarter of fiscal 2005 compared to 104.2 million gallons in the prior year quarter, a decrease of 10.8%. During the second quarter of fiscal 2005, fuel oil commodity prices experienced unprecedented high levels and extreme volatility. The average posted price of fuel oil during the second quarter of fiscal 2005 increased approximately 47% compared to the average posted prices in the prior year quarter. Therefore, revenues increased as a result of a significant increase in average selling prices in line with the unprecedented high fuel oil prices, offset to an extent by the 10.8% decline in volumes.

Additionally, revenues for the second quarter of fiscal 2005 were favorably impacted by a 9.8% increase in our natural gas and electricity marketing segment, which increased to $39.3 million from $35.8 million in the prior year quarter, principally due to increased natural gas volumes and higher average selling prices. Revenues in our HVAC segment declined 2.3%, to $27.1 million during the second quarter of fiscal 2005 compared to $27.8 million in the prior year quarter.

Cost of Products Sold

(Dollars in thousands)				Three Months Ended								Increase				Percent Increase
				March 26, 2005				March 27, 2004
Cost of products sold
Propane				$	195,264			$	188,941			$	6,323				3.3	%
Fuel oil and refined fuels					140,251				110,518				29,733				26.9	%
Natural gas and electricity					33,353				31,673				1,680				5.3	%
HVAC					10,269				10,157				112				1.1	%
All other					1,378				1,269				109				8.6	%
Total cost of products sold				$	380,515			$	342,558			$	37,957				11.1	%
As a percent of total revenues					64.8	%			60.4	%

The cost of products sold reported in the consolidated statements of operations represents the weighted average unit cost of propane and fuel oil sold, as well as the cost of natural gas and electricity, including transportation costs to deliver product from our supply points to storage or to our customer service centers. Cost of products sold also includes the cost of appliances and related parts sold or installed by our customer service centers computed on a basis that approximates the average cost of the products. Cost of products sold is reported exclusive of any depreciation and amortization; these amounts are reported separately within the consolidated statements of operations.

Cost of products sold increased $38.0 million, or 11.1%, to $380.5 million for the three months ended March 26, 2005 compared to $342.6 million in the prior year quarter. The increase results primarily from higher commodity prices for propane and fuel oil. Cost of products sold associated with the distribution of propane and related activities of $195.3 million increased $6.3 million, or 3.3%, over the prior year quarter. Higher propane prices resulted in a $29.7 million increase in cost of products sold during the second quarter of fiscal 2005 compared to the prior year quarter, partially offset by decreased propane volumes which had an impact of $16.6 million. Lower wholesale and risk management activities, noted above, decreased cost of products sold by $6.6 million compared to the prior year quarter.

Cost of products sold associated with our fuel oil and refined fuels segment of $140.3 million increased $29.7 million, or 26.9%, over the prior year quarter. During the second quarter of fiscal 2005, fuel oil prices experienced unprecedented high levels and extreme volatility. The impact of the unprecedented high commodity prices increased cost of products sold by $41.7 million during the quarter ended March 26, 2005 compared to the prior year quarter, partially offset by decreased volumes which had an impact of $12.0 million. While revenues increased 6.8%, margin opportunities in

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our fuel oil and refined fuels segment were significantly restricted as a result of a pricing program that pre-established a maximum price per gallon. Our practice is to hedge a significant portion of the gallons expected to be delivered under this Ceiling Program in an effort to protect the margins; however, the cost to hedge our Ceiling Program during February and March 2005 became prohibitive as a result of the extreme volatility in fuel oil prices. Cost of products sold as a percentage of revenues in our fuel oil and refined fuels segment increased from 74.7% during the second quarter of fiscal 2004 to 88.8% in the second quarter of fiscal 2005 primarily as a result of our inability to pass on fully the unprecedented rise in fuel oil prices, coupled with the fact that February and March 2005 volumes were not hedged as the costs to hedge became prohibitive due to market volatility.

In addition, the increase in revenues attributable to our natural gas and electricity segment had a $1.7 million impact on cost of products sold for the three months ended March 26, 2005 compared to the prior year quarter. Cost of products sold in our HVAC segment was relatively flat to the prior year quarter.

For the quarter ended March 26, 2005, cost of products sold represented 64.8% of revenues compared to 60.4% in the prior year quarter. This increase results primarily from the significantly higher commodity costs in our fuel oil segment compared to fuel oil selling prices. As noted above, our margin opportunities in our fuel oil business were restricted by the combination of unprecedented high levels of fuel oil prices and extreme market volatility.

Operating Expenses

(Dollars in thousands)				Three Months Ended								Increase				Percent Increase
				March 26, 2005				March 27, 2004
Operating expenses				$	110,379			$	107,454			$	2,925				2.7	%
As a percent of total revenues					18.8	%			18.9	%

All costs of operating our retail distribution and appliance sales and service operations are reported within operating expenses in the consolidated statements of operations. These operating expenses include the compensation and benefits of field and direct operating support personnel, costs of operating and maintaining our vehicle fleet, overhead and other costs of our purchasing, training and safety departments and other direct and indirect costs of our customer service centers. Changes in the fair value of derivative instruments that are not designated as hedges are recorded in current period earnings within operating expenses.

Operating expenses of $110.4 million for the three months ended March 26, 2005 increased $2.9 million, or 2.7%, compared to $107.5 million in the prior year quarter. Operating expenses in the fiscal 2005 second quarter include a $2.8 million unrealized (non-cash) loss representing the net change in fair values of derivative instruments during the period, compared to a $1.1 million unrealized gain in the prior year quarter resulting in a $3.9 million increase in operating expenses for the quarter ended March 26, 2005 compared to the prior year quarter (see Item 3 in this Quarterly Report for information on our policies regarding the accounting for derivative instruments). Offsetting the impact of the mark-to-market adjustments, operating expenses decreased as a result of a $1.6 million decrease in employee compensation and benefit costs driven primarily by lower profitability impacting variable compensation plans and $2.4 million lower operating costs at our customer service centers; offset by a $1.5 million increase in costs to operate and maintain our fleet and $1.5 million higher insurance and medical costs.

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General and Administrative Expenses

(Dollars in thousands)				Three Months Ended								Decrease				Percent Decrease
				March 26, 2005				March 27, 2004
General and administrative expenses				$	12,207			$	17,392			$	(5,185	)			(29.8	)%
As a percent of total revenues					2.1	%			3.1	%

All costs of our back office support functions, including compensation and benefits for executives and other support functions, as well as other costs and expenses to maintain finance and accounting, treasury, legal, human resources, corporate development and the information systems functions are reported within general and administrative expenses in the consolidated statements of operations.

General and administrative expenses of $12.2 million for the three months ended March 26, 2005 were $5.2 million, or 29.8%, lower compared to $17.4 million during second quarter of fiscal 2004. The decrease was primarily attributable to $6.2 million lower employee compensation and benefit costs attributable to lower variable compensation and slightly lower headcount in support functions, offset to an extent by higher professional service fees attributable primarily to our preparation for compliance with the requirements of the Sarbanes-Oxley Act of 2002.

Depreciation and Amortization

(Dollars in thousands)				Three Months Ended								Decrease				Percent Decrease
				March 26, 2005				March 27, 2004
Depreciation and amortization				$	9,198			$	9,223			$	(25	)			(0.3	)%
As a percent of total revenues					1.6	%			1.6	%

Depreciation and amortization expense for the three months ended March 26, 2005 was comparable to the prior year quarter, with both periods reporting a full quarter of expense associated with the depreciation and amortization of tangible and intangible assets acquired in the Agway Acquisition.

Interest Expense, net

(Dollars in thousands)				Three Months Ended								Decrease				Percent Decrease
				March 26, 2005				March 27, 2004
Interest expense, net				$	10,480			$	10,770			$	(290	)			(2.7	)%
As a percent of total revenues					1.8	%			1.9	%

Net interest expense decreased $0.3 million, or 2.7%, to $10.5 million for the three months ended March 26, 2005, compared to $10.8 million in the prior year quarter. The decrease results primarily from a reduction in amounts outstanding under our 7.54% senior notes due to repayment of the third annual principal payment of $42.5 million during the fourth quarter of fiscal 2004 using cash on hand.

Net Income and EBITDA.    Net income of $65.5 million for the three months ended March 26, 2005 decreased $27.1 million, or 29.3%, compared to $92.6 million in the prior year quarter. We reported EBITDA of $85.2 million for the three months ended March 26, 2005, compared to $112.6 million for the prior year quarter, a decrease of $27.4 million, or 24.3%. Net income and EBITDA for the second quarter of fiscal 2005 were unfavorably impacted by a highly volatile commodity price environment, particularly in our fuel oil and refined fuels segment, as well as the impact on propane and fuel oil volumes from unseasonably warm weather during the quarter.

EBITDA and net income for the second quarter of the prior year were favorably impacted by the net result of certain significant items, mainly relating to: (i) a $14.2 million gain from the sale of ten

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customer service centers in Texas, Oklahoma, Missouri and Kansas considered to be non-strategic; (ii) a non-cash charge of $5.6 million included within cost of products sold within our fuel oil and refined fuels segment relating to the settlement of futures contracts which were marked-to-market under purchase accounting for the Agway Acquisition; and, (iii) a $2.2 million restructuring charge related to our initial efforts to integrate certain management and back office functions of Agway Energy. These significant items had a net positive impact of $6.4 million on the prior year EBITDA and net income.

EBITDA represents net income before deducting interest expense, income taxes, depreciation and amortization. Our management uses EBITDA as a measure of liquidity and we are including it because we believe that it provides our investors and industry analysts with additional information to evaluate our ability to meet our debt service obligations and to pay our quarterly distributions to holders of our Common Units. Moreover, certain of our debt agreements require us to use EBITDA as a component in calculating our leverage and interest coverage ratios. EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income or net cash provided by operating activities determined in accordance with GAAP. Because EBITDA as determined by us excludes some, but not all, items that affect net income, it may not be comparable to EBITDA or similarly titled measures used by other companies. The following table sets forth (i) our calculation of EBITDA and (ii) a reconciliation of EBITDA, as so calculated, to our net cash provided by operating activities:

(Dollars in thousands)				Three Months Ended
				March 26, 2005				March 27, 2004
Net income				$	65,457			$	92,560
Add:
Provision for income taxes					109				83
Interest expense, net					10,480				10,770
Depreciation and amortization					9,198				9,223
EBITDA					85,244				112,636
Add (subtract):
Provision for income taxes					(109	)			(83	)
Interest expense, net					(10,480	)			(10,770	)
Gain on disposal of property, plant and equipment, net					(860	)			(79	)
Gain on sale of customer service centers					(976	)			(14,205	)
Changes in working capital and other assets and liabilities					(65,288	)			(75,726	)
Net cash provided by (used in)
Operating activities				$	7,531			$	11,773
Investing activities				$	(5,035	)		$	15,355
Financing activities				$	(1,443	)		$	(18,348	)

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Six Months Ended March 26, 2005 Compared to Six Months Ended March 27, 2004

Revenues

(Dollars in thousands)				Six Months Ended								Increase				Percent Increase
				March 26, 2005				March 27, 2004
Revenues
Propane				$	619,613			$	546,758			$	72,855				13.3	%
Fuel oil and refined fuels					266,223				151,355				114,868				75.9	%
Natural gas and electricity					61,753				37,498				24,255				64.7	%
HVAC					59,274				43,602				15,672				35.9	%
All other					4,552				3,683				869				23.6	%
Total revenues				$	1,011,415			$	782,896			$	228,519				29.2	%

Total revenues increased $228.5 million, or 29.2%, to $1,011.4 million for the six months ended March 26, 2005 compared to $782.9 million for the six months ended March 27, 2004 as a result of the addition of Agway Energy for the full six months during fiscal 2005 compared to just three months during fiscal 2004 (the date of the Agway Acquisition was December 23, 2003), offset to an extent by the net result of high commodity prices and lower volumes during the second quarter of fiscal 2005 compared to the prior year second quarter as described in detail above. Offsetting the favorable impact on revenues from the addition of the Agway Energy operations for the full six months of fiscal 2005 was the negative impact on propane and fuel oil volumes from warmer than normal average temperatures in our service territories and the impact of high energy costs on customer buying habits. As reported by NOAA, average temperatures in our service territories for the first six months of fiscal 2005 were 5% warmer than normal compared to 3% warmer than normal in the prior year period, with significantly warmer weather experienced during January and February 2005 (the most critical months of the heating season).

Revenues from the distribution of propane and related activities of $619.6 million during the first six months of fiscal 2005 increased $72.9 million, or 13.3%, compared to $546.8 million in the first half of the prior year due to the impact of higher average selling prices in line with significantly higher product costs, offset to an extent by the impact of lower volumes. Retail propane gallons sold during the first six months of fiscal 2005 decreased 11.0 million gallons, or 3.1%, to 340.9 million gallons from 351.9 million gallons in the prior year period. Average propane selling prices increased approximately 20% as a result of sustained higher commodity prices for propane. The average posted price of propane during the first six months of fiscal 2005 increased approximately 30% compared to the average posted prices in the prior year period. Additionally, included within the propane segment are revenues from wholesale and risk management activities of $9.1 million for the six months ended March 26, 2005 which decreased $11.1 million compared to the prior year period.

Revenues from the distribution of fuel oil and other refined fuels of $266.2 million in the first six months of fiscal 2005 increased $114.9 million, or 75.9%, from $151.4 million in the prior year period. Sales of fuel oil and other refined fuels amounted to 158.8 million gallons during the first half of fiscal 2005 compared to 112.2 million gallons in the prior year period, an increase of 41.5%, attributable to the impact of the Agway Acquisition for a full six months in fiscal 2005 compared to only three months in fiscal 2004; offset to an extent by the impact on volumes from the warmer than normal average temperatures in the northeast. In addition to the increase in volumes, fuel oil commodity prices experienced unprecedented high levels and extreme volatility during the first half of fiscal 2005 impacting average selling prices year-over-year. The average posted price of fuel oil during the first six months of fiscal 2005 increased approximately 53% compared to the prior year period. As described under cost of products sold below, we were unsuccessful in fully passing along the extreme rise in fuel oil prices as a result of our Ceiling Program, thus impacting profitability in the fuel oil and refined fuels segment.

Additionally, results for the first half of fiscal 2005 were favorably impacted by a 64.7% increase in revenues from the marketing of natural gas and electricity in deregulated markets, which increased

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$24.3 million, to $61.8 million, from $37.5 million in the prior year period. Revenues in our HVAC segment increased 35.9%, to $59.3 million during the first half of fiscal 2005 compared to $43.6 million in the prior year period. Increases in both the natural gas and electricity and HVAC segments are attributable to the impact of the Agway Acquisition.

Cost of Products Sold

(Dollars in thousands)				Six Months Ended								Increase				Percent Increase
				March 26, 2005				March 27, 2004
Cost of products sold
Propane				$	342,273			$	283,856			$	58,417				20.6	%
Fuel oil and refined fuels					232,049				113,174				118,875				105.0	%
Natural gas and electricity					53,851				33,183				20,668				62.3	%
HVAC					23,049				17,620				5,429				30.8	%
All other					2,733				2,145				588				27.4	%
Total cost of products sold				$	653,955			$	449,978			$	203,977				45.3	%
As a percent of total revenues					64.7	%			57.5	%

Cost of products sold increased $204.0 million to $654.0 million for the six months ended March 26, 2005 compared to $450.0 million in the prior year period. The increase results primarily from the increase in retail propane volumes sold due to the addition of Agway Energy volumes, as well as the addition of fuel oil and other refined fuel sales volumes, which had a combined impact of $110.7 million on the year-over-year comparison of cost of products sold. Higher commodity prices for propane also increased cost of products sold by $76.2 million compared to the first half of the prior year. Decreased wholesale and risk management activities, noted above, decreased cost of products sold by $9.5 million compared to the prior year period.

Cost of products sold associated with the fuel oil and refined fuels segment of $232.0 million increased $118.9 million compared the prior year period. Fuel oil commodity prices experienced sustained high levels and extreme volatility throughout fiscal 2005 and, in particular, during February and March 2005 which recorded a record high posted price of $1.65 per gallon. The impact of the unprecedented high commodity prices increased cost of products sold for the six months ended March 26, 2005 by $41.7 million compared to the prior year period. As described in more detail in the three month comparison above, margin opportunities in our fuel oil and refined fuels segment during the second quarter of fiscal 2005 were significantly restricted as a result of our Ceiling Program, coupled with the fact that February and March 2005 volumes were not hedged due to significantly higher costs to hedge this program.

In addition, the increase in revenues attributable to our natural gas and electricity and HVAC segments had a $20.7 million and $5.4 million impact, respectively, on cost of products sold for the six months ended March 26, 2005 compared to the prior year period.

For the six months ended March 26, 2005, cost of products sold represented 64.7% of revenues compared to 57.5% in the prior year period. This increase results primarily from the different mix of products sold during fiscal 2005 as a result of the additional product offerings from the Agway Energy operations. Generally, the prices for fuel oil and other refined fuels as a percentage of product revenues tend to be between 20% and 30% higher than propane costs are as a percentage of propane revenues. In addition, cost of products sold as a percentage of revenues in our fuel oil and refined fuels segment increased from 74.8% during the first half of fiscal 2004 to 87.2% in the first half of fiscal 2005 primarily as a result of our inability to pass on fully the unprecedented rise in fuel oil prices, coupled with the increased costs to hedge the program toward the end of the fiscal 2005 heating season.

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Operating Expenses

(Dollars in thousands)				Six Months Ended								Increase				Percent Increase
				March 26, 2005				March 27, 2004
Operating expenses				$	206,045			$	167,903			$	38,142				22.7	%
As a percent of total revenues					20.4	%			21.4	%

Operating expenses of $206.0 million for the six months ended March 26, 2005 increased $38.1 million, or 22.7%, compared to $167.9 million in the prior year period. Operating expenses in the first half of fiscal 2005 include a $0.3 million unrealized (non-cash) loss representing the net change in fair values of derivative instruments during the period, compared to a $0.3 million unrealized gain in the first half of the prior year (see Item 3 in this Quarterly Report for information on our policies regarding the accounting for derivative instruments). In addition to the non-cash impact of changes in the fair value of derivative instruments, the most significant impact on operating expenses was the impact on employee, vehicle and facility costs from the addition of the Agway Energy operations for a full six months compared to three months in fiscal 2004.

Operating expenses in the first half of fiscal 2005 increased primarily in the following areas: (i) employee compensation and benefit costs increased $19.5 million as a result of increased field personnel from the addition of the Agway Energy operations; (ii) costs to operate our fleet increased $4.8 million; (iii) operating costs at our customer service centers increased $7.3 million; and, (iv) insurance and medical costs increased $6.5 million.

General and Administrative Expenses

(Dollars in thousands)				Six Months Ended								Decrease				Percent Decrease
				March 26, 2005				March 27, 2004
General and administrative expenses				$	23,175			$	27,894			$	(4,719	)			(16.9	)%
As a percent of total revenues					2.3	%			3.6	%

General and administrative expenses of $23.2 million for the six months ended March 26, 2005 were $4.7 million, or 16.9%, lower compared to $27.9 million during the first half of fiscal 2004. The decrease was primarily attributable to lower employee compensation and benefit costs attributable to lower variable compensation and slightly lower headcount in support functions offset to an extent by higher professional service fees. In addition, fiscal 2004 included increased costs associated with efforts to acquire Agway Energy, as well as incremental costs for integration activities.

Depreciation and Amortization

(Dollars in thousands)				Six Months Ended								Increase				Percent Increase
				March 26, 2005				March 27, 2004
Depreciation and amortization				$	18,317			$	16,452			$	1,865				11.3	%
As a percent of total revenues					1.8	%			2.1	%

Depreciation and amortization expense increased 11.3% to $18.3 million for the six months ended March 26, 2005 compared to $16.5 million for the prior year period, primarily as a result of the additional depreciation and amortization associated with the acquired tangible and intangible assets from the Agway Acquisition.

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Interest Expense, net

(Dollars in thousands)				Six Months Ended								Decrease				Percent Decrease
				March 26, 2005				March 27, 2004
Interest expense, net				$	20,343			$	20,481			$	(138	)			(0.7	)%
As a percent of total revenues					2.0	%			2.6	%

Net interest expense of $20.3 million for the six months ended March 26, 2005 was relatively flat compared to the prior year period. The increased interest due to the addition of $175.0 million of 6.875% senior notes associated with financing for the Agway Acquisition was offset by a reduction in amounts outstanding under our 7.54% senior notes due to repayment of the third annual principal payment of $42.5 million during the fourth quarter of fiscal 2004 using cash on hand. Interest expense in the first half of fiscal 2004 also included a one-time fee of $1.9 million related to financing commitments for the Agway Acquisition.

Net Income and EBITDA.    Net income of $90.4 million for the six months ended March 26, 2005 decreased $22.3 million, or 19.8%, compared to $112.7 million in the prior year period. We reported EBITDA of $129.2 million for the six months ended March 26, 2005, compared to $149.8 million for the prior year period, a decrease of $20.6 million, or 13.8%. Net income and EBITDA for the first half of fiscal 2005, while favorably impacted by the operations of Agway Energy for the full six months in fiscal 2005, were negatively impacted by the highly volatile commodity price environment and warm weather experienced during the period.

EBITDA and net income for the first six months of the prior year were favorably impacted by the net result of certain significant items, mainly relating to: (i) a $14.2 million gain from the sale of ten customer service centers in Texas, Oklahoma, Missouri and Kansas considered to be non-strategic; (ii) a non-cash charge of $5.6 million included within cost of products sold within the fuel oil and refined fuels segment relating to the settlement of futures contracts which were marked-to-market under purchase accounting for the Agway Acquisition; and, (iii) a $2.2 million restructuring charge related to our initial efforts to integrate certain management and back office functions of Agway Energy. These significant items had a net positive impact of $6.4 million on the prior year EBITDA and net income.

EBITDA represents net income before deducting interest expense, income taxes, depreciation and amortization. Our management uses EBITDA as a measure of liquidity and we are including it because we believe that it provides our investors and industry analysts with additional information to evaluate our ability to meet our debt service obligations and to pay our quarterly distributions to holders of our Common Units. Moreover, certain of our debt agreements require us to use EBITDA as a component in calculating our leverage and interest coverage ratios. EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income or net cash provided by operating activities determined in accordance with GAAP. Because EBITDA as determined by us excludes some, but not all, items that affect net income, it may not be comparable to EBITDA or similarly titled measures used by other companies. The following table sets forth (i) our calculation of EBITDA and (ii) a reconciliation of EBITDA, as so calculated, to our net cash provided by operating activities:

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(Dollars in thousands)				Six Months Ended
				March 26, 2005				March 27, 2004
Net income				$	90,358			$	112,651
Add:
Provision for income taxes					198				166
Interest expense, net					20,343				20,481
Depreciation and amortization					18,317				16,452
EBITDA					129,216				149,750
Add (subtract):
Provision for income taxes					(198	)			(166	)
Interest expense, net					(20,343	)			(20,481	)
Gain on disposal of property, plant and equipment, net					(1,067	)			(161	)
Gain on sale of customer service centers					(976	)			(14,205	)
Changes in working capital and other assets and liabilities					(128,728	)			(91,403	)
Net cash (used in) provided by
Operating activities				$	(22,096	)		$	23,334
Investing activities				$	(12,944	)		$	(199,640	)
Financing activities				$	(1,539	)		$	221,967

Liquidity and Capital Resources

Analysis of Cash Flows

Operating Activities.    Due to the seasonal nature of the propane and fuel oil businesses, cash flows from operating activities are greater during the winter and spring seasons, our second and third fiscal quarters, as customers pay for products purchased during the heating season. For the six months ended March 26, 2005, net cash used in operating activities was $22.1 million compared to net cash provided by operating activities of $23.3 million for the first half of the prior year. The $45.4 million decrease in operating cash flows was attributable to a $46.2 million increased investment in working capital in comparison to the prior year first half, particularly in the areas of accounts receivable and inventories as a result of the significant rise in commodity prices, coupled with $7.6 million lower income, after adjusting for non-cash items in both periods (depreciation, amortization and gains on disposal of assets and customer service centers); offset to an extent by an increase in other long-term liabilities. The continued high commodity price environment in both propane and fuel oil has resulted in a significant increase in average selling prices and, in turn, higher receivable balances in relation to the prior year, as well as higher average inventory costs.

Investing Activities.    Net cash used in investing activities of $12.9 million for the six months ended March 26, 2005 consists of capital expenditures of $16.2 million (including $3.5 million for maintenance expenditures and $12.7 million to support the growth of operations), partially offset by the net proceeds from the sale of property, plant and equipment of $3.3 million. Net cash used in investing activities of $199.6 million during the six months ended March 27, 2004 consisted of the net impact of the total cost of the Agway Acquisition of $211.2 million and capital expenditures of $12.9 million, offset by net proceeds of $24.0 million from the sale of ten customer service centers during the second quarter of fiscal 2004. Capital expenditures during the first half of fiscal 2005 increased $3.3 million, or 25.6%, compared to the prior year period as a result of anticipated increased spending for systems and facility integration efforts related to the Agway Acquisition.

Financing Activities.    Net cash used in financing activities for the six months ended March 26, 2005 of $1.5 million reflects the net result of borrowings of $38.0 million under our Revolving Credit Agreement in order to fund increased working capital needs during the heating season, offset by our quarterly distribution of $0.6125 per Common Unit for each of the first two quarters of fiscal 2005

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amounting to $38.3 million and $1.3 million in fees associated with closing of the Third Amended and Restated Credit Agreement in October 2004.

Net cash provided by financing activities in the prior year first half was $222.0 million as a result of (i) the issuance of $175.0 million aggregate principal amount of 6.875% senior notes due 2013, a portion of which was used to fund a portion of the Agway Acquisition and, (ii) the net proceeds of $87.6 million from a public offering of 2,990,000 Common Units (including full exercise of the underwriters' over-allotment option) during December 2003 to fund a portion of the Agway Acquisition; offset by (i) the payment of our quarterly distributions during the first half of fiscal 2004 amounting to $34.7 million and, (ii) $5.9 million in fees associated with the issuance of the senior notes described above.

Summary of Long-Term Debt Obligations and Revolving Credit Lines

On October 20, 2004, our Operating Partnership completed the Third Amended and Restated Credit Agreement (the "Revolving Credit Agreement") which replaced the Second Amended and Restated Credit Agreement, which would have expired in May 2006. The Revolving Credit Agreement expires on October 20, 2008 and provides available credit of $150.0 million in the form of a $75.0 million revolving working capital facility, of which $15.0 million may be used to issue letters of credit, and a separate $75.0 million letter of credit facility. Borrowings under the Revolving Credit Agreement bear interest at a rate based upon either LIBOR or Wachovia National Bank's prime rate, plus, in each case, the applicable margin; or the Federal Funds rate plus 1/2 of 1%. An annual facility fee ranging from 0.375% to 0.50%, based upon certain financial tests, is payable quarterly whether or not borrowings occur. These fees and the other terms of the Revolving Credit Agreement are substantially the same as the terms under the Second Amended and Restated Credit Agreement, which provided a $75.0 million working capital facility and a $25.0 million acquisition facility. In connection with the Third Amended and Restated Credit Agreement, our leverage ratio was reduced from 5.0 to 1 to a requirement to maintain a ratio of less than 4.5 to 1. As a result of the change in the leverage ratio under the Revolving Credit Agreement, the applicable leverage ratios under the 1996 Senior Notes and the 2002 Senior Notes were also reduced to 4.5 to 1. As of March 26, 2005, there was $38.0 million outstanding under the working capital facility of the Revolving Credit Agreement that was used to fund working capital requirements during the heating season. We expect to repay the $38.0 million by the end of June 2005.

On March 31, 2005 (subsequent to the end of the second quarter of fiscal 2005), we completed a refinancing (the "Refinancing") of our Operating Partnership's $297.5 million outstanding principal amount of 1996 Senior Notes due 2011 and $42.5 million outstanding principal amount of 2002 Senior Notes due 2012 (collectively, the "Redeemed Notes"). Under the Refinancing, we issued $250.0 million of additional notes under the indenture governing our 2003 Senior Notes and received proceeds of approximately $246.9 million, net of a $2.0 million discount on sale and related underwriter fees. In addition, our Operating Partnership entered into an amendment to the Third Amended and Restated Credit Agreement to provide, among other things, for a five-year $125.0 million term loan facility (the "Term Loan"). The total net proceeds of approximately $370.9 million from the issuance of additional senior notes under the indenture governing the 2003 Senior Notes and from the $125.0 million of borrowings under the Term Loan, together with cash of approximately $7.3 million, were used to prepay the Redeemed Notes, including a prepayment premium of approximately $31.9 million and interest accrued on the Redeemed Notes of approximately $6.4 million from the last interest payment date through the date of redemption.

The Redeemed Notes required an annual principal repayment of $42.5 million through 2012. The Refinancing replaces the annual cash requirement for principal amortization with the $125.0 million five-year Term Loan and the $250.0 million of additional 2003 Senior Notes due 2013, significantly extending our debt maturities and eliminating refinancing risk associated with the amortization of the Redeemed Notes. The Refinancing is expected to reduce our annual interest expense for at least the next five years. We will record a one-time charge of approximately $36.2 million during the third quarter of fiscal 2005 as a result of the Refinancing to reflect the loss on debt extinguishment

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associated with the prepayment premium and the write-off of $4.3 million of unamortized bond issuance costs associated with the Redeemed Notes.

As a result of the Refinancing, we eliminated the requirement to maintain a leverage ratio and an interest coverage ratio associated with the Redeemed Notes without adding a comparable financial covenant under the 2003 Senior Notes. Additionally, as a result of the amendment to the Third Amended and Restated Credit Agreement, our Operating Partnership's leverage ratio was reduced from 4.5 to 1 to a requirement to maintain a ratio of less than 4.0 to 1 and the interest coverage ratio was amended to require maintenance of a ratio of greater than 2.5 to 1 on a consolidated basis. The Revolving Credit Agreement and the 2003 Senior Notes both contain various restrictive and affirmative covenants applicable to our Operating Partnership and us, respectively; including (i) restrictions on the incurrence of additional indebtedness, and (ii) restrictions on certain liens, investments, guarantees, loans, advances, payments, mergers, consolidations, distributions, sales of assets and other transactions. We were in compliance with all covenants and terms of all of our debt agreements as of March 26, 2005 and March 27, 2004.

Partnership Distributions

We will make distributions in an amount equal to all of our Available Cash, as defined in the Second Amended and Restated Partnership Agreement, approximately 45 days after the end of each fiscal quarter to holders of record on the applicable record dates. The Board of Supervisors reviews the level of Available Cash on a quarterly basis based upon information provided by management. On April 21, 2005, we declared a quarterly distribution of $0.6125 per Common Unit, or $2.45 on an annualized basis, in respect of the second quarter of fiscal 2005 payable on May 10, 2005 to holders of record on May 3, 2005, which is consistent with the first quarter of fiscal 2005 and the fourth quarter of fiscal 2004 and which represents an increase compared to the quarterly distribution of $0.60 per Common Unit in respect of the second quarter of fiscal 2004.

Quarterly distributions include IDRs payable to our General Partner to the extent the quarterly distribution exceeds $0.55 per Common Unit. The IDRs represent an incentive for the General Partner (which is owned by management of the Partnership) to increase the distributions to Common Unitholders in excess of $0.55 per Common Unit. With regard to the first $0.55 of the Common Unit distribution, 98.46% of the Available Cash is distributed to the Common Unitholders and 1.54% is distributed to the General Partner. With regard to the balance of the Common Unit distributions paid, 85% of the Available Cash is distributed to the Common Unitholders and 15% is distributed to the General Partner.

Debt Obligations and Other Commitments

Short-term and long-term debt obligations and future minimum rental commitments under noncancelable operating lease agreements are due as follows (amounts in thousands):

(Dollars in thousands)				Remainder of Fiscal 2005				Fiscal 2006				Fiscal 2007				Fiscal 2008				Fiscal 2009 and thereafter				Total
Short-term and long-term debt				$	38,440			$	475			$	—			$	—			$	550,000			$	588,915
Operating leases					11,978				18,199				13,262				8,766				7,897				60,102
Total debt obligations and lease commitments				$	50,418			$	18,674			$	13,262			$	8,766			$	557,897			$	649,017

The long-term debt maturities included in the table above reflect the impact of the Refinancing which closed on March 31, 2005 (subsequent to the end of the second quarter of fiscal 2005).

We have a noncontributory, cash balance format, defined benefit pension plan for eligible participants in existence on January 1, 2000, which was frozen to new participants effective January 1, 2003. At March 26, 2005, we had accrued pension obligations of $38.2 million. We also provide postretirement health care and life insurance benefits for certain retired employees under a plan that

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was also frozen to new participants effective January 1, 2000. At March 26, 2005, we had accrued retiree health and life benefits of $34.1 million. We are self-insured for general, product, workers' compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. At March 26, 2005, we had accrued insurance liabilities of $41.2 million. Additionally, we have standby letters of credit in the aggregate amount of $53.0 million, in support of our casualty insurance coverage and certain lease obligations, which expire periodically through March 1, 2006.

We have residual value guarantees associated with certain of our operating leases, related primarily to transportation equipment, with remaining lease periods scheduled to expire periodically through fiscal 2012. Upon completion of the lease period, we guarantee that the fair value of the equipment will equal or exceed the guaranteed amount, or we will pay the difference. Although the equipment's fair value at the end of its lease term has historically exceeded the guaranteed amounts, the maximum potential amount of aggregate future payments we could be required to make under these leasing arrangements, assuming the equipment is deemed worthless at the end of the lease term, is approximately $17.6 million. Of this amount, the fair value of residual value guarantees for operating leases entered into after December 31, 2002 was $5.2 million and $3.7 million which is reflected in other liabilities, with a corresponding amount included within other assets, in the accompanying condensed consolidated balance sheets as of both March 26, 2005 and September 25, 2004, respectively.

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements ("Forward-Looking Statements") as defined in the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, relating to the Partnership's future business expectations and predictions and financial condition and results of operations of the Partnership. Some of these statements can be identified by the use of forward-looking terminology such as "prospects," "outlook," "believes," "estimates," "intends," "may," "will," "should," "anticipates," "expects" or "plans" or the negative or other variation of these or similar words, or by discussion of trends and conditions, strategies or risks and uncertainties. These Forward-Looking Statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such Forward-Looking Statements ("Cautionary Statements"). The risks and uncertainties and their impact on the Partnership's operations include, but are not limited to, the following risks:

•	The impact of weather conditions on the demand for propane, fuel oil and other refined fuels, natural gas and electricity;

•	Fluctuations in the unit cost of propane, fuel oil and other refined fuels and natural gas;

•	The ability of the Partnership to compete with other suppliers of propane, fuel oil and other energy sources;

•	The impact on propane, fuel oil and other refined fuel prices and supply from the political, military and economic instability of the oil producing nations, global terrorism and other general economic conditions;

•	The ability of the Partnership to continue to realize, or to realize fully within the expected time frame, the expected cost savings and synergies from the Agway Acquisition;

•	The ability of the Partnership to acquire and maintain reliable transportation for its propane, fuel oil and other refined fuels;

•	The ability of the Partnership to retain customers;

•	The impact of energy efficiency and technology advances on the demand for propane and fuel oil;

•	The ability of management to continue to control expenses;

•	The impact of changes in applicable statutes and government regulations, or their interpretations, including those relating to the environment and global warming and other regulatory developments on the Partnership's business;

•	The impact of legal proceedings on the Partnership's business;

•	The Partnership's ability to implement its expansion strategy into new business lines and sectors; and

•	The Partnership's ability to integrate acquired businesses successfully.

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

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 26, 2005, we were a party to exchange-traded futures and option contracts, forward contracts and in certain instances, over-the-counter options (collectively "derivative instruments") to manage the price risk associated with future purchases of the commodities used in our operations, principally propane and fuel oil. Futures and forward contracts require that we sell or acquire propane or fuel oil at a fixed price at fixed future dates. An option contract allows, but does not require, its holder to buy or sell propane or fuel oil 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 the product to the respective party or are settled by the payment of a net amount equal to the difference between the then current price and the fixed contract price. The contracts are entered into in anticipation of market movements and to manage and hedge exposure to fluctuating prices of propane and fuel oil, as well as to help ensure the availability of product during periods of high demand. Additionally, typically 60% of our fuel oil sales are made to individual customers under agreements pre-establishing a fixed or maximum price per gallon over a twelve-month period. We enter into derivative instruments in the form of futures and options traded on the NYMEX typically covering a significant portion of the fuel oil we expect to sell to customers under these fixed or maximum price plans in an effort to protect the margins under these programs, although we evaluate the cost of this protection prior to entering into the derivative instruments.

Market risks associated with the trading of futures, options and forward contracts are monitored daily for compliance with our Hedging and Risk Management 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

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

Credit Risk

Futures and fuel oil options are guaranteed by the NYMEX and, as a result, have minimal credit risk. We are subject to credit risk with forward and propane option contracts to the extent the counterparties do not perform. We evaluate the financial condition of each counterparty with which we conduct business and establish credit limits to reduce exposure to credit risk of non-performance.

Derivative Instruments and Hedging Activities

We account for derivative instruments in accordance with the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137, 138 and 149 ("SFAS 133"). All derivative instruments are reported on the balance sheet, within other current assets or other current liabilities, at their fair values. Fair values for forward contracts and futures are derived from quoted market prices for similar instruments traded on the NYMEX. On the date that futures, forward and option contracts are entered into, we make a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or other comprehensive income/(loss) ("OCI"), depending on whether a derivative instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, we formally assess, both at the hedge contract's inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into cost of products sold during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of hedges are recognized in operating expenses immediately.

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Changes in the fair value of derivative instruments that are not designated as hedges are recorded in current period earnings within operating expenses and reclassified to cost of products sold once realized. A portion of our option contracts are not classified as hedges and, as such, changes in the fair value of these derivative instruments are recognized within operating expenses as they occur. The value of certain option contracts that do qualify as hedges and are designated as cash flow hedges under SFAS 133 have two components of value: time value and intrinsic value. The intrinsic value is the value by which the option is in the money (i.e., the amount by which the value of the commodity exceeds the exercise or "strike" price of the option). The remaining amount of option value is attributable to time value. We do not include the time value of option contracts in our assessment of hedge effectiveness and, therefore, record changes in the time value component of the options currently in earnings.

At March 26, 2005, the fair value of derivative instruments described above resulted in derivative assets (unrealized gains) of $1.9 million included within prepaid expenses and other current assets and derivative liabilities (unrealized losses) of $5.3 million included within other current liabilities. For the three months ended March 26, 2005, operating expenses include unrealized (non-cash) gains in the amount of $2.8 million compared to unrealized gains in the amount of $1.1 million for the three months ended March 27, 2004 attributable to the change in the fair value of derivative instruments not designated as hedges. Operating expenses include unrealized losses in the amount of $0.3 million for the six months ended March 26, 2005 and unrealized gains in the amount of $0.3 million for the six months ended March 27, 2004 attributable to the change in fair value of derivative instruments not designated as hedges. At March 26, 2005, unrealized gains on derivative instruments designated as cash flow hedges in the amount of $1.2 million were included in OCI and are expected to be recognized in earnings during the next 12 months as the hedged transactions occur. However, due to the volatility of the commodities market, the corresponding value in OCI is subject to change prior to its impact on earnings.

Sensitivity Analysis

In an effort to estimate our exposure to unfavorable market price changes in propane or fuel oil, a sensitivity analysis of open positions as of March 26, 2005 was performed. Based on this analysis, a hypothetical 10% adverse change in market prices for each of the future months for which a future, forward and/or option contract exists indicate either a reduction in potential future gains or potential losses in future earnings of $0.2 million and $1.3 million as of March 26, 2005 and March 27, 2004, respectively. See also Item 7A of our Annual Report on Form 10-K for the fiscal year ended September 25, 2004.

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 at any given point in time.

ITEM 4.    CONTROLS AND PROCEDURES

(a) The Partnership maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in the Partnership's filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to the Partnership's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

On May 2, 2005, before filing this Quarterly Report, the Partnership completed an evaluation under the supervision and with participation of the Partnership's management, including the Partnership's principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures as of March 26, 2005. Based on this evaluation, the Partnership's principal executive officer and principal financial officer have concluded that as of March 26, 2005, such disclosure controls and procedures were effective at the reasonable assurance level.

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(b) There have not been any changes in the Partnership's internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) during the quarter ended March 26, 2005 that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

As a result of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules issued thereunder, the Partnership will be required to include in its Annual Report on Form 10-K for the fiscal year ending September 24, 2005 a report on management's assessment of the effectiveness of the Partnership's internal control over financial reporting. The Partnership's independent registered public accountants will also be required to attest to and report on management's assessment. As part of the process of preparing for compliance with these requirements, the Partnership has initiated a review of its internal control over financial reporting and has been engaged in documenting, evaluating and testing its internal controls. As a result of this ongoing process, management has made improvements to the Partnership's internal control through the date of the filing of this Quarterly Report on Form 10-Q and anticipates that further improvements will be made.

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PART II

ITEM 1.    LEGAL PROCEEDINGS

None.

ITEM 6.    EXHIBITS

(a)	Exhibits

31.1				Certification of the President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2				Certification of the Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1				Certification of the President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2				Certification of the Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				Suburban Propane Partners, L.P.
May 5, 2005				/s/ ROBERT M. PLANTE
Date				Robert M. Plante Vice President and Chief Financial Officer
May 5, 2005				/s/ MICHAEL A. STIVALA
Date				Michael A. Stivala Controller (Principal Accounting Officer)

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