heritage propane partners, l.p. and subsidiaries

consolidated STATEMENTS OF OPERATIONS

(in thousands, except per unit and unit data)

(unaudited)

	Three Months Ended February 28,		Six Months Ended February 28,
	2003	2002	2003	2002
REVENUES:
Retail fuel	$ 212,704	$ 152,429	$ 296,754	$ 235,629
Wholesale fuel	20,218	14,534	31,565	27,127
Liquids marketing	79,587	47,326	140,317	98,146
Other	16,535	15,346	33,891	30,836
Total revenues	329,044	229,635	502,527	391,738
COSTS AND EXPENSES:
Cost of products sold	128,420	97,143	185,440	157,378
Liquids marketing	79,235	45,633	139,258	99,778
Operating expenses	45,270	34,957	78,695	66,801
Depreciation and amortization	9,447	9,606	18,713	18,664
Selling, general and administrative	4,656	3,158	7,848	6,109
Total costs and expenses	267,028	190,497	429,954	348,730
OPERATING INCOME	62,016	39,138	72,573	43,008
OTHER INCOME (EXPENSE):
Interest expense	(9,317)	(9,503)	(18,613)	(18,719)
Equity in earnings of affiliates	970	1,040	1,183	1,169
Gain on disposal of assets	88	248	155	715
Other	(2,268)	(94)	(2,546)	(192)
INCOME BEFORE MINORITY
INTERESTS AND INCOME TAXES	51,489	30,829	52,752	25,981
Minority interests	(817)	(699)	(940)	(630)
INCOME BEFORE TAXES	50,672	30,130	51,812	25,351
Income taxes	1,285	-	1,285	-
NET INCOME	49,387	30,130	50,527	25,351
GENERAL PARTNER'S INTEREST IN NET INCOME	719	518	948	686
LIMITED PARTNERS' INTEREST IN NET INCOME	$ 48,668	$ 29,612	$ 49,579	$ 24,665
BASIC NET INCOME PER LIMITED PARTNER UNIT	$ 3.01	$ 1.89	$ 3.10	$ 1.57
BASIC AVERAGE NUMBER OF UNITS OUTSTANDING	16,165,602	15,689,376	15,990,010	15,666,854

	Three Months Ended February 28,		Six Months Ended February 28,
	2003	2002	2003	2002
SUPPLEMENTAL INFORMATION:
Operating income	$ 62,016	$ 39,138	$ 72,573	$ 43,008
Depreciation and amortization	9,447	9,606	18,713	18,664
Non-cash compensation expense	675	487	1,356	974
Equity in earnings of investee before depreciation, amortization, and interest	1,188	1,193	1,639	1,471
Less : Minority interest of MP Energy Partnership	(339)	(183)	(456)	(217)
(a) EBITDA	$ 72,987	$ 50,241	$ 93,825	$ 63,900
Capital expenditures:
Maintenance	$ 3,847	$ 3,697	$ 11,394	$ 8,847
Growth	$ 22,578	$ 10,010	$ 26,286	$ 21,996
Retail gallons sold	166,622	134,458	243,343	209,248

(a) EBITDA is defined as earnings before interest, taxes, depreciation and amortization (including the EBITDA of investees, but does not include the EBITDA of the minority interest of MP Energy Partnership or any non-cash compensation expense). EBITDA should not be considered as an alternative to net income, cash flow, or any other financial performance measure presented in accordance with generally accepted accounting principles but provides additional information for evaluating the Partnership’s operating results or its ability to make quarterly distributions. Management believes that EBITDA is a meaningful non-GAAP financial measure used by investors and lenders to evaluate the Partnership’s operating performance, cash generation, and ability to service debt, as certain of the Partnership’s debt covenants include EBITDA as a performance measure. The presentation of EBITDA for the periods described herein is calculated in the same manner as presented by the Partnership in the past, and is intended to allow investors to compare performance with prior periods. The Partnership also believes that EBITDA is sometimes useful to compare the operating results of other companies within the propane industry due to the fact that such information is commonly utilized and eliminates the effects of certain financing and accounting decisions. The Partnership’s calculation of EBITDA, however, may differ from similarly titled items reported by other companies.

heritage propane partners, l.p. and subsidiaries

consolidated balance sheets

(in thousands, except unit data)

(unaudited)

	February 28, 2003	August 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$ 8,734	$ 4,596
Marketable securities	2,550	2,559
Accounts receivable, net of allowance for doubtful accounts	93,506	30,898
Inventories	29,047	48,187
Assets from liquids marketing	596	2,301
Prepaid expenses and other	5,030	6,846
Total current assets	139,463	95,387
PROPERTY, PLANT AND EQUIPMENT, net	430,913	400,044
INVESTMENT IN AFFILIATES	9,041	7,858