ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Forward-Looking Statements
Information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements use forward-looking words such as "believe," "plan," "anticipate," "continue," "estimate," "expect," "may," "will," or other similar words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future.
A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, we caution you that actual results almost always vary from assumed facts or bases, and the differences between actual results and assumed facts or bases can be material, depending on the circumstances. When considering forward-looking statements, you should keep in mind the following important factors which could affect our future results and could cause those results to differ materially from those expressed in our forward-looking statements: (1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability of propane and other LPG, oil, electricity and natural gas and the capacity to transport product to our market areas; (3) changes in domestic and foreign laws and regulations, including safety, tax and accounting matters; (4) inability to timely recover costs through utility rate proceedings; (5) the impact of pending and future legal proceedings; (6) competitive pressures from the same and alternative energy sources; (7) failure to acquire new customers thereby reducing or limiting any increase in revenues; (8) liability for environmental claims; (9) increased customer conservation measures due to high energy prices and improvements in energy efficiency and technology resulting in reduced demand; (10) adverse labor relations; (11) large customer, counterparty or supplier defaults; (12) liability in excess of insurance coverage for personal injury and property damage arising from explosions and other catastrophic events, including acts of terrorism, resulting from operating hazards and risks incidental to generating and distributing electricity and transporting, storing and distributing natural gas, propane and other LPG; (13) political, regulatory and economic conditions in the United States and in foreign countries, including foreign currency rate fluctuations, particularly in the euro; (14) capital market conditions, including reduced access to capital markets and interest rate fluctuations; (15) changes in commodity market prices resulting in significantly higher cash collateral requirements; (16) reduced distributions from subsidiaries; and (17) the timing and success of the Company's efforts to develop new business opportunities.
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. We undertake no obligation to update publicly any forward-looking statement whether as a result of new information or future events except as required by the federal securities laws.

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UGI CORPORATION AND SUBSIDIARIES ANALYSIS OF RESULTS OF OPERATIONS The following analyses compare our results of operations for the three months ended June 30, 2009 ("2009 three-month period") with the three months ended June 30, 2008 ("2008 three-month period") and the nine months ended June 30, 2009 ("2009 nine-month period") with the nine months ended June 30, 2008 ("2008 nine-month period"). Our analyses of results of operations should be read in conjunction with the segment information included in Note 3 to the condensed consolidated financial statements.
Executive Overview
Because most of our businesses sell energy products used in large part for heating purposes, our results are significantly influenced by temperatures in our service territories, particularly during the peak-heating season months of November through March. As a result, our earnings are generally higher in the first and second fiscal quarters.
We recorded a net loss of $3.6 million for the 2009 three-month period, reflecting a $10.0 million after-tax charge related to the Antargaz Competition Matter (further described below), compared to net income of $15.7 million in the prior-year three-month period. The decrease in net income, excluding the $10.0 million charge at Antargaz, largely reflects lower net income contributions from our Energy Services and Electric Utility segments. Energy Services' net income declined in the 2009 three-month period reflecting in large part lower electric generation and asset management results and higher borrowing costs. Electric Utility results declined principally due to lower margin resulting in large part from the absence of income from financial transmission rights ("FTRs") recorded in the prior year, higher current year purchased power costs and the impact of lower volumes sold. Although temperature variances in our third fiscal quarter do not have as significant an impact on results as such variances in our first and second fiscal quarters, each of our business units experienced Fiscal 2009 spring temperatures that were warmer than normal and warmer than the prior-year three-month period. International Propane and AmeriGas Propane retail volumes sold were lower than in the prior year principally as a result of the effects of recessionary economic conditions, customer conservation and warmer spring weather. Notwithstanding the effects on AmeriGas Propane and International Propane results from the lower volumes sold, both business segments benefited from higher average retail unit margins as a result of lower LPG commodity costs. Our Gas Utility results in the 2009 three-month period include the operations of CPG acquired in October 2008. Our net income for the 2009 nine-month period increased to $269.5 million from net income of $221.8 million in the prior-year nine-month period principally reflecting greater net income from our International Propane and AmeriGas Propane segments and, to a much lesser extent, greater net income from Gas Utility. International Propane LPG volumes were slightly lower, notwithstanding colder heating season weather, due to a decline in general economic conditions, customer conservation and competition from other energy sources. Notwithstanding the benefits from the acquisition of the assets of Penn Fuel Propane, LLC ("Penn Fuel Acquisition"), AmeriGas Propane volumes were lower principally due to the effects of recessionary economic conditions and customer conservation. As was the case in the 2009 three-month period, our International Propane and AmeriGas Propane results benefited from higher average retail unit margins resulting from significantly lower LPG product costs as a result of a rapid and precipitous decline in wholesale LPG commodity prices earlier in Fiscal 2009. AmeriGas Propane's net income in the 2009 nine-month period includes an after-tax gain of $10.4 million associated with the November 2008 sale of its California storage facility while net income from International Propane includes the $10.0 million charge for the Antargaz Competition Authority matter. Our Gas Utility 2009 nine-month period results benefited from the results of CPG subsequent to its acquisition on October 1, 2008. Energy Services' net income was less than the prior-year period as greater natural gas unit margins and higher peaking services income were more than offset by lower electric generation net income and higher borrowing costs.

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UGI CORPORATION AND SUBSIDIARIES The U.S. dollar was stronger versus the euro in the 2009 three and nine-month periods compared with such periods in Fiscal 2008. However, the adverse effects of the stronger dollar on reported International Propane net income were substantially offset by the effects of gains on forward currency contracts used to hedge purchases of dollar-denominated LPG. Net income (loss) by business unit: Three Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009 2008 (Millions of dollars) (Millions of dollars) Net income (loss): AmeriGas Propane (a) $ (2.9 ) $ (2.5 ) $ 71.6 (b) $ 48.5 International Propane (8.0 ) 2.6 86.7 57.7 Gas Utility 1.3 2.1 71.4 65.9 Electric Utility 1.7 4.1 7.3 11.6 Energy Services 5.1 9.4 35.4 39.7 Corporate & Other (0.8 ) - (2.9 ) (1.6 ) Total net (loss) income $ (3.6 ) $ 15.7 $ 269.5 $ 221.8

(a) Amounts are net of minority interests in AmeriGas Partners, L.P.

(b) Includes net income of $10.4 million from sale of the Partnership's California LPG storage facility.

2009 three-month period compared to the 2008 three-month period AmeriGas Propane:

For the three months ended June 30, 2009 2008 Decrease (Millions of dollars) Revenues $ 372.7 $ 535.2 $ (162.5 ) (30.4 )% Total margin (a) $ 162.4 $ 172.2 $ (9.8 ) (5.7 )% Partnership EBITDA (b) $ 25.4 $ 29.7 $ (4.3 ) (14.5 )% Operating income $ 4.4 $ 9.6 $ (5.2 ) (54.2 )% Retail gallons sold (millions) 160.0 180.7 (20.7 ) (11.5 )% Degree days - % (warmer) colder than normal (c) (3.1 )% 8.1 % - -

(a) Total margin represents total revenues less total cost of sales.

(b) Partnership
EBITDA (earnings before interest expense, income taxes and depreciation and amortization) should not be considered as an alternative to net income (as an indicator of operating performance) and is not a measure of performance or financial condition under accounting principles generally accepted in the United States of America. Management uses Partnership EBITDA as the primary measure of segment profitability for the AmeriGas Propane segment (see Note 3 to condensed consolidated financial statements).

(c) Deviation from average heating degree-days for the 30-year period 1971-2000 based upon national weather statistics provided by the National Oceanic and Atmospheric Administration ("NOAA") for 335 airports in the United States, excluding Alaska. Prior-year data has been adjusted to correct a NOAA error.

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UGI CORPORATION AND SUBSIDIARIES Based upon heating degree-day data, average temperatures in our service territories were 3.1% warmer than normal during the 2009 three-month period compared with temperatures in the prior-year period that were 8.1% colder than normal. Notwithstanding the benefit of the October 1, 2008 Penn Fuel Acquisition, retail gallons sold were lower than the prior-year period reflecting, among other things, the adverse effects of the significant deterioration in general economic activity which has occurred over the last year, continued customer conservation and the warmer spring weather. Retail propane revenues declined $138.1 million during the 2009 three-month period reflecting a $85.8 million decrease due to lower average selling prices and a $52.3 million decrease as a result of the lower retail volumes sold. Wholesale propane revenues declined $17.2 million principally reflecting the decrease in year-over-year wholesale selling prices. Average wholesale propane commodity prices at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 57% lower in the 2009 three-month period than such prices in the 2008 three-month period reflecting a precipitous decline in such prices during the first quarter of Fiscal 2009 following a substantial increase in prices during most of the second half of Fiscal 2008. Total cost of sales decreased $152.7 million to $210.3 million principally reflecting the effects of the lower propane product costs and lower sales.
Total margin was $9.8 million lower in the 2009 three-month period as the effects on total margin from the lower retail sales were partially offset by higher than normal retail unit margins resulting from the previously mentioned significantly lower and less volatile propane product costs.
EBITDA during the 2009 three-month period was $25.4 million compared with EBITDA of $29.7 million in the 2008 three-month period. The lower 2009 three-month period EBITDA reflects the previously mentioned $9.8 million decrease in total margin partially offset by lower operating and administrative expenses. The lower operating and administrative expenses reflect in large part lower vehicle fuel expense and lower required allowances for uncollectible accounts partially offset by greater compensation and benefits expenses including incremental expenses resulting from the Penn Fuel Acquisition.
Operating income decreased $5.2 million reflecting the $4.3 million decrease in EBITDA and slightly higher depreciation and amortization expense associated with acquisitions and plant and equipment expenditures made since the prior year.

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UGI CORPORATION AND SUBSIDIARIES International Propane: Increase For the three months ended June 30, 2009 2008 (Decrease) (Millions of euros) Revenues € 121.0 € 148.7 € (27.7 ) (18.6 )% Total margin (a) € 71.6 € 66.2 € 5.4 8.2 % Operating income € 1.2 € 7.2 € (6.0 ) (83.3 )% Income (loss) before income taxes € (3.3 ) € 2.0 € (5.3 ) (265.0 )% (Millions of dollars) Revenues $ 164.9 $ 232.8 $ (67.9 ) (29.2 )% Total margin (a) $ 97.5 $ 103.6 $ (6.1 ) (5.9 )% Operating income $ 0.3 $ 11.8 $ (11.5 ) (97.5 )% Income (loss) before income taxes $ (5.8 ) $ 3.6 $ (9.4 ) (261.1 )% Antargaz retail gallons sold 48.1 55.2 (7.1 ) (12.9 )% Degree days - % (warmer) than normal (b) (29.3 )% (14.8 )% - -

(a) Total margin represents total revenues less total cost of sales.

(b) Deviation from average heating degree days for the 30-year period 1971-2000 at more than 30 locations in our French service territory.

International Propane operating results in the 2009 three-month period reflect the consolidation of ZLH subsequent to FLAGA's acquisition in January 2009 of the 50% interest in ZLH it did not already own. Based upon heating degree day data, temperatures in Antargaz' service territory were approximately 29.3% warmer than normal during the 2009 three-month period compared with temperatures that were approximately 14.8% warmer than normal during the prior-year period. Temperatures in Flaga's service territory were also warmer than normal and warmer than the prior year. Wholesale propane product costs were significantly lower during the 2009 three-month period compared with such prices in the prior-year period. The average wholesale commodity price for propane in northwest Europe during the 2009 three-month period was more than 50% lower than such price during the same period last year. Wholesale butane prices were also significantly lower in the 2009 three-month period. Antargaz' 2009 three-month period retail propane volumes were lower than in the prior-year period principally as a result of the warmer spring weather, continued customer conservation and the deterioration of general economic conditions in France. Our International Propane base-currency results are translated into U.S. dollars based upon exchange rates experienced during each of the reporting periods. During the 2009 three-month period, the average currency translation rate was $1.37 per euro compared to a rate of $1.56 per euro during the prior-year three-month period. The stronger dollar resulted in lower translated International Propane operating results in the 2009 three-month period but did not have a significant effect on year-over-year net income from International Propane operations.
International Propane euro-based revenues decreased €27.7 million or 18.6% reflecting the lower Antargaz retail gallons sold as well as lower average selling prices partially offset by greater FLAGA revenues resulting from the consolidation of ZLH. The lower average selling prices reflect the effects of the previously mentioned year-over-year decrease in wholesale LPG product costs. In U.S. dollars, revenues declined $67.9 million or 29.2% reflecting the previously mentioned lower euro-based revenues and the effects of the stronger U.S. dollar. International Propane's total cost of sales decreased to €49.4 million in the 2009 three-month period from €82.5 million in the prior year reflecting the lower per-unit LPG commodity costs.

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UGI CORPORATION AND SUBSIDIARIES International Propane euro-denominated total margin increased €5.4 million or 8.2% in the 2009 three-month period principally reflecting incremental total margin from the consolidation of ZLH. Antargaz' euro-denominated total margin was essentially unchanged as the impact of the lower retail sales volumes was offset by higher than normal retail unit margins resulting from lower and less volatile LPG product costs. Antargaz was adversely affected by lower unit margins in the prior-year period as a result of the rapid increase in LPG product costs which occurred last year. In U.S. dollars, total margin decreased $6.1 million or 5.9% reflecting the effects of the stronger dollar on translated euro base-currency revenues and cost of sales.
International Propane euro-based operating income decreased €6.0 million or 83.3% as the previously mentioned increase in total margin was more than offset by a €7.1 million charge associated with the Antargaz Competition Authority matter and slightly higher total operating and administrative costs resulting from the consolidation of the operations of ZLH. On a U.S. dollar basis, operating income decreased $11.5 million or 97.5% reflecting the $10.0 million charge associated with the Antargaz Competition Authority matter and the previously-mentioned decrease in U.S. dollar-denominated total margin partially offset by lower U.S. dollar-denominated operating expenses and depreciation and amortization as a result of the stronger U.S. dollar. Euro-based income before income taxes was €5.3 million lower than in the prior year principally reflecting the lower euro-denominated operating income and the effect of lower average interest rates on Antargaz' term loan. In U.S. dollars, income before income taxes decreased $9.4 million as the lower U.S. dollar-denominated operating income was partially offset by lower interest expense including the effects of the stronger dollar.

Gas Utility: Increase For the three months ended June 30, 2009 2008 (Decrease) (Millions of dollars) Revenues $ 176.9 $ 202.2 $ (25.3 ) (12.5 )% Total margin (a) $ 67.1 $ 54.8 $ 12.3 22.4 % Operating income $ 12.9 $ 12.5 $ 0.4 3.2 % Income before income taxes $ 2.6 $ 4.1 $ (1.5 ) (36.6 )% System throughput - billions of cubic feet ("bcf") 25.8 23.4 2.4 10.3 % Degree days - % (warmer) than normal (b) (6.5 )% (2.7 )% - -

(a) Total margin represents total revenues less total cost of sales.

(b) Deviation from average heating degree days for the 15-year period 1990-2004 based upon weather statistics provided by the National Oceanic and Atmospheric Administration ("NOAA") for airports located within Gas Utility's service territory.

Temperatures in the Gas Utility service territory based upon heating degree days were 6.5% warmer than normal in the 2009 three-month period compared with temperatures that were 2.7% warmer than normal in the prior-year period. In Fiscal 2009, Gas Utility began calculating normal degree days using the 15-year period 1990-2004. Previously, normal degree days were based upon recent 30-year periods. For comparability purposes, the prior-year period weather variance has been recalculated using the new 15-year period. Total distribution system throughput increased 2.4 bcf in the 2009 three-month period reflecting the effects of the CPG Acquisition. This increase in system throughput from CPG was partially offset by the effects on volumes sold and transported from lower demand from commercial and industrial customers due to the deterioration in general economic activity which has occurred over the last year and customer conservation.

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UGI CORPORATION AND SUBSIDIARIES Gas Utility revenues decreased $25.3 million principally reflecting a decline in low-margin off-system sales revenues and to a lesser extent lower average purchased gas cost ("PGC") rates partially offset by $32.5 million in incremental revenues from CPG. Under the PGC recovery mechanism, Gas Utility records the cost of gas associated with sales to firm- residential, commercial and industrial ("retail core market")customers at amounts included in PGC rates. The difference between actual gas costs and the amounts included in rates is deferred on the balance sheet as a regulatory asset or liability and represents amounts to be collected from or refunded to customers in a future period. As a result of this PGC recovery mechanism, increases or decreases in the cost of gas associated with retail core-market customers have no direct effect on retail core-market margin. Deferred fuel costs included on the Condensed Consolidated Balance Sheet at June 30, 2009 principally reflect the effects of significantly higher unrealized losses on natural gas futures contracts due to Fiscal 2009 declines in wholesale natural gas prices. Gas Utility's cost of gas was $109.8 million in the 2009 three-month period compared with $147.4 million in the prior- year period principally reflecting the effects on cost of sales from the lower off-system sales and lower average PGC rates partially offset by incremental cost of sales of $19.9 million associated with CPG.
Gas Utility total margin increased $12.3 million in the 2009 three-month period. The increase principally reflects incremental margin resulting from the acquisition of CPG.
The slight increase in Gas Utility operating income during the 2009 three-month period principally reflects the previously mentioned greater total margin substantially offset by higher operating, administrative and depreciation expenses, including incremental expenses associated with CPG and, to a lesser extent, higher provisions for environmental matters, pension expense and distribution system maintenance expenses. The decrease in income before income taxes reflects the previously mentioned slightly higher operating income more than offset by interest expense associated with the $108 million face value of 6.375% Senior Notes issued to finance a portion of the CPG acquisition. Electric Utility:

For the three months ended June 30, 2009 2008 Decrease (Millions of dollars) Revenues $ 30.8 $ 32.8 $ (2.0 ) (6.1 )% Total margin (a) $ 9.4 $ 13.2 $ (3.8 ) (28.8 )% Operating income $ 3.3 $ 7.5 $ (4.2 ) (56.0 )% Income before income taxes $ 2.8 $ 7.1 $ (4.3 ) (60.6 )% Distribution sales - millions of kilowatt hours ("gwh") 209.8 224.9 (15.1 ) (6.7 )%

(a) Total margin represents total revenues less total cost of sales and revenue-related taxes, i.e. Electric
Utility gross
receipts taxes,
of $1.7 million
and
$1.9 million
during the
three-month
periods ended
June 30, 2009
and 2008,
respectively.
For financial
statement
purposes,
revenue-related
taxes are
included in
"Utility taxes
other than
income taxes"
on the
Condensed
Consolidated
Statements of
Income.

Electric Utility's kilowatt-hour sales in the 2009 three-month period were lower than in the prior year. The decline in sales principally reflects lower sales to commercial and industrial customers as a result of the deterioration in general economic activity over the last year and the effects of a cool Fiscal 2009 early summer on air-conditioning sales. Electric Utility revenues decreased $2.0 million principally as a result of the lower sales partially offset by higher Provider of Last Resort ("POLR") rates. In accordance with the terms of its June 2006 POLR Settlement, Electric Utility increased its POLR rates effective January 1, 2009. This increase raised the average cost to a residential heating customer by approximately 1.5% over costs in effect during calendar year 2008. Notwithstanding the lower sales volumes, Electric Utility cost of sales were $19.7 million in the 2009 three-month period compared to $17.7 million in the 2008 three-month period principally reflecting the effects on cost of sales from the absence of income from changes in the fair value of FTRs recorded in the prior-year period.

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