##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from             to
            .

COMMISSION FILE NUMBER: 0-32453





Inergy Holdings, L.P.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 43-1792470                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



|                                                       |  |           
|------------------------------------------------------ |  | ----------
|Two Brush Creek Blvd., Suite 200 Kansas City, Missouri |  | 64112     
|(Address of principal executive offices)               |  | (Zip code)

(816) 842-8181

(Registrants telephone number, including area code)



(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ̈    Accelerated filer  x    Non-accelerated filer   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files).    Yes   ̈    No   ̈

The following units were
outstanding at May 1, 2009:

Common
units                                 20,247,111









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##### Table of Contents

INERGY HOLDINGS, L.P.

INDEX TO FORM 10-Q



|                                                                                                           |  |     
|---------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                           |  | Page
|Part I  Financial Information                                                                             |  |     
|Item 1  Financial Statements of Inergy Holdings, L.P.:                                                    |  |     
|Consolidated Balance Sheets as of March 31, 2009 (unaudited) and September 30, 2008                        |  | 3   
|Unaudited Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2009 and
2008 |  | 4   
|Unaudited Consolidated Statement of Partners Capital for the Six Months Ended March 31,
2009              |  | 5   
|Unaudited Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2009 and 2008           |  | 6   
|Unaudited Notes to Consolidated Financial Statements                                                       |  | 8   
|                                                                                                           | 
|Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations             |  | 24  
|                                                                                                           | 
|Item 3  Quantitative and Qualitative Disclosures About Market Risk                                        |  | 36  
|                                                                                                           | 
|Item 4  Controls and Procedures                                                                           |  | 37  
|                                                                                                           | 
|Part II  Other Information                                                                                |  |     
|                                                                                                           | 
|Item 1  Legal Proceedings                                                                                 |  | 38  
|                                                                                                           | 
|Item 1A  Risk Factors                                                                                     |  | 38  
|                                                                                                           | 
|Item 2  Unregistered Sales of Equity Securities and Use of Proceeds                                       |  | 38  
|                                                                                                           | 
|Item 3  Defaults Upon Senior Securities                                                                   |  | 38  
|                                                                                                           | 
|Item 4  Submission of Matters to a Vote of Security Holders                                               |  | 38  
|                                                                                                           | 
|Item 5  Other Information                                                                                 |  | 38  
|                                                                                                           | 
|Item 6  Exhibits                                                                                          |  | 38  
|                                                                                                           | 
|Signature                                                                                                  |  | 40  



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements of Inergy Holdings, L.P.
|------- | ---------------------------------------------

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except unit information)



|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                  |  | March 31,2009 |         |   | September 30,2008 |  
|                                                                                                                                                  |  | (unaudited)   |         |   |                   |  
|Assets                                                                                                                                            |  |               |         |   |                   |   |         |  
|Current assets:                                                                                                                                   |  |               |         |   |                   |   |         |  
|Cash                                                                                                                                              |  | $             | 18.2    |   |                   | $ | 17.4    |  
|Accounts receivable, less allowance for doubtful accounts of $4.4 million and $6.4 million at March 31, 2009 and September 30, 2008,
respectively |  |               | 143.9   |   |                   |   | 128.5   |  
|Inventories (Note 3)                                                                                                                              |  |               | 55.8    |   |                   |   | 99.9    |  
|Assets from price risk management activities                                                                                                      |  |               | 34.3    |   |                   |   | 33.3    |  
|Prepaid expenses and other current assets                                                                                                         |  |               | 21.5    |   |                   |   | 22.7    |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|Total current assets                                                                                                                              |  |               | 273.7   |   |                   |   | 301.8   |  
|                                                                                                                                                  |  |              
|Property, plant and equipment (Note 3)                                                                                                            |  |               | 1,372.1 |   |                   |   | 1,275.0 |  
|Less: accumulated depreciation                                                                                                                    |  |               | 282.8   |   |                   |   | 244.7   |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|Property, plant and equipment, net                                                                                                                |  |               | 1,089.3 |   |                   |   | 1,030.3 |  
|Intangible assets (Note 3):                                                                                                                       |  |               |         |   |                   |   |         |  
|Customer accounts                                                                                                                                 |  |               | 269.4   |   |                   |   | 266.7   |  
|Other intangible assets                                                                                                                           |  |               | 133.0   |   |                   |   | 127.4   |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|                                                                                                                                                  |  |               | 402.4   |   |                   |   | 394.1   |  
|Less: accumulated amortization                                                                                                                    |  |               | 117.9   |   |                   |   | 105.8   |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|                                                                                                                                                  |  |              
|Intangible assets, net                                                                                                                            |  |               | 284.5   |   |                   |   | 288.3   |  
|                                                                                                                                                  |  |              
|Goodwill                                                                                                                                          |  |               | 465.0   |   |                   |   | 463.2   |  
|Other assets                                                                                                                                      |  |               | 9.8     |   |                   |   | 4.0     |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|Total assets                                                                                                                                      |  | $             | 2,122.3 |   |                   | $ | 2,087.6 |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|                                                                                                                                                  |  |              
|Liabilities and partners capital                                                                                                                 |  |               |         |   |                   |   |         |  
|Current liabilities:                                                                                                                              |  |               |         |   |                   |   |         |  
|Accounts payable                                                                                                                                  |  | $             | 87.6    |   |                   | $ | 104.0   |  
|Accrued expenses                                                                                                                                  |  |               | 69.5    |   |                   |   | 69.0    |  
|Customer deposits                                                                                                                                 |  |               | 29.3    |   |                   |   | 87.7    |  
|Liabilities from price risk management activities                                                                                                 |  |               | 20.1    |   |                   |   | 57.0    |  
|Current portion of long-term debt (Note 7)                                                                                                        |  |               | 10.4    |   |                   |   | 60.5    |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|Total current liabilities                                                                                                                         |  |               | 216.9   |   |                   |   | 378.2   |  
|                                                                                                                                                  |  |              
|Long-term debt, less current portion (Note 7)                                                                                                     |  |               | 1,105.7 |   |                   |   | 1,078.7 |  
|Other long-term liabilities                                                                                                                       |  |               | 1.0     |   |                   |   | 1.0     |  
|Deferred income taxes                                                                                                                             |  |               | 21.1    |   |                   |   | 20.6    |  
|Interest of non-controlling partners in Inergy, L.P.                                                                                              |  |               | 726.4   |   |                   |   | 568.6   |  
|Interest of non-controlling partners in ASCs subsidiaries                                                                                        |  |               | 4.4     |   |                   |   | 3.6     |  
|                                                                                                                                                  |  |              
|Partners capital (Note 8):                                                                                                                       |  |               |         |   |                   |   |         |  
|Common unitholders (20,247,111 and 20,239,657 units issued and outstanding as of March 31, 2009 and September 30, 2008,
respectively)             |  |               | 47.3    |   |                   |   | 38.8    |  
|Accumulated other comprehensive loss                                                                                                              |  |               | (0.5    | ) |                   |   | (1.9    | )
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|Total partners capital                                                                                                                           |  |               | 46.8    |   |                   |   | 36.9    |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  
|Total liabilities and partners capital                                                                                                           |  | $             | 2,122.3 |   |                   | $ | 2,087.6 |  
|                                                                                                                                                  |  |               |         |   |                   |   |         |  

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



3



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except unit and per unit data)

(unaudited)



|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                                       |  | Three Months EndedMarch 31, |        |   | Six Months EndedMarch 31, |  
|                                                                                                                                       |  | 2009                        |        |   | 2008                      |   |        | 2009 |  |   | 2008    |  
|Revenue:                                                                                                                               |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Propane                                                                                                                                |  | $                           | 443.9  |   |                           | $ | 526.1  |      |  | $ | 853.1   |   |  | $ | 928.7   |  
|Other                                                                                                                                  |  |                             | 126.2  |   |                           |   | 122.1  |      |  |   | 251.0   |   |  |   | 234.1   |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                                                                       |  |                             | 570.1  |   |                           |   | 648.2  |      |  |   | 1,104.1 |   |  |   | 1,162.8 |  
|Cost of product sold (excluding depreciation and amortization as shown below):                                                         |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Propane                                                                                                                                |  |                             | 283.6  |   |                           |   | 381.6  |      |  |   | 566.8   |   |  |   | 688.9   |  
|Other                                                                                                                                  |  |                             | 74.4   |   |                           |   | 78.0   |      |  |   | 150.9   |   |  |   | 148.1   |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                                                                       |  |                             | 358.0  |   |                           |   | 459.6  |      |  |   | 717.7   |   |  |   | 837.0   |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Gross profit                                                                                                                           |  |                             | 212.1  |   |                           |   | 188.6  |      |  |   | 386.4   |   |  |   | 325.8   |  
|Expenses:                                                                                                                              |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Operating and administrative                                                                                                           |  |                             | 73.7   |   |                           |   | 68.6   |      |  |   | 146.7   |   |  |   | 132.0   |  
|Depreciation and amortization                                                                                                          |  |                             | 26.6   |   |                           |   | 23.2   |      |  |   | 52.9    |   |  |   | 46.0    |  
|Gain (loss) on disposal of assets                                                                                                      |  |                             | (2.3   | ) |                           |   | 0.1    |      |  |   | (3.0    | ) |  |   | 1.2     |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Operating income                                                                                                                       |  |                             | 109.5  |   |                           |   | 96.9   |      |  |   | 183.8   |   |  |   | 149.0   |  
|                                                                                                                                       |  |                             |        |  
|Other income (expense):                                                                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Interest expense, net                                                                                                                  |  |                             | (18.2  | ) |                           |   | (15.3  | )    |  |   | (35.4   | ) |  |   | (30.8   | )
|Other income                                                                                                                           |  |                             |       |   |                           |   |       |      |  |   |        |   |  |   | 0.1     |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income before gain on issuance of units in Inergy, L.P., income taxes and interest of non-controlling partners in Inergy, L.P. and
ASC |  |                             | 91.3   |   |                           |   | 81.6   |      |  |   | 148.4   |   |  |   | 118.3   |  
|Gain on issuance of units in Inergy, L.P.                                                                                              |  |                             | 2.9    |   |                           |   |       |      |  |   | 3.2     |   |  |   |        |  
|Provision for income taxes                                                                                                             |  |                             | (0.8   | ) |                           |   | (0.7   | )    |  |   | (1.3    | ) |  |   | (1.2    | )
|Interest of non-controlling partners in Inergy, L.P.s net income                                                                      |  |                             | (72.3  | ) |                           |   | (65.7  | )    |  |   | (114.4  | ) |  |   | (91.4   | )
|Interest of non-controlling partners in ASCs consolidated net income                                                                  |  |                             | (0.3   | ) |                           |   | (0.2   | )    |  |   | (0.7    | ) |  |   | (0.5    | )
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income                                                                                                                             |  | $                           | 20.8   |   |                           | $ | 15.0   |      |  | $ | 35.2    |   |  | $ | 25.2    |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                                                                       |  |                             |        |  
|Partners interest information:                                                                                                        |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Less distribution paid on restricted units                                                                                             |  | $                           | 0.1    |   |                           | $ |       |      |  | $ | 0.3     |   |  | $ |        |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income available to limited partners units                                                                                        |  | $                           | 20.7   |   |                           | $ | 15.0   |      |  | $ | 34.9    |   |  | $ | 25.2    |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income per limited partner unit:                                                                                                   |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Basic                                                                                                                                  |  | $                           | 1.03   |   |                           | $ | 0.74   |      |  | $ | 1.74    |   |  | $ | 1.25    |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Diluted                                                                                                                                |  | $                           | 1.03   |   |                           | $ | 0.73   |      |  | $ | 1.74    |   |  | $ | 1.23    |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                                                                                                                                       |  |                             |        |  
|Weighted average limited partners units outstanding (in thousands):                                                                   |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Basic                                                                                                                                  |  |                             | 20,027 |   |                           |   | 20,008 |      |  |   | 20,025  |   |  |   | 20,008  |  
|Dilutive units                                                                                                                         |  |                             | 63     |   |                           |   | 240    |      |  |   | 32      |   |  |   | 259     |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Diluted                                                                                                                                |  |                             | 20,090 |   |                           |   | 20,248 |      |  |   | 20,057  |   |  |   | 20,267  |  
|                                                                                                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  

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



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF PARTNERS CAPITAL

(in millions)

(unaudited)



|                                                                                 |  |                          |       |   |                                     |   |      |                        |  |   |       |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ----- | - | ----------------------------------- | - | ---- | ---------------------- |  | - | ----- | -
|                                                                                 |  | Partners CommonInterest |       |   | Accumulated OtherComprehensive Loss |   |      | Total PartnersCapital | 
|Balance at September 30, 2008                                                    |  | $                        | 38.8  |   |                                     | $ | (1.9 | )                      |  | $ | 36.9  |  
|Net proceeds from common unit options exercised                                  |  |                          | 0.1   |   |                                     |   |     |                        |  |   | 0.1   |  
|Distributions                                                                    |  |                          | (26.8 | ) |                                     |   |     |                        |  |   | (26.8 | )
|Comprehensive income:                                                            |  |                          |       |   |                                     |   |      |                        |  |   |       |  
|Net income                                                                       |  |                          | 35.2  |   |                                     |   |     |                        |  |   | 35.2  |  
|Allocation of Inergy, L.P.s change in unrealized fair value on cash flow hedges |  |                          |      |   |                                     |   | 1.4  |                        |  |   | 1.4   |  
|                                                                                 |  |                          |       |   |                                     |   |      |                        |  |   |       |  
|Comprehensive income                                                             |  |                          |       |   |                                     |   |      |                        |  |   | 36.6  |  
|                                                                                 |  |                          |       |   |                                     |   |      |                        |  |   |       |  
|Balance at March 31, 2009                                                        |  | $                        | 47.3  |   |                                     | $ | (0.5 | )                      |  | $ | 46.8  |  
|                                                                                 |  |                          |       |   |                                     |   |      |                        |  |   |       |  

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



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)



|                                                                                  |  |                           |        |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                  |  | Six Months EndedMarch 31, |       
|                                                                                  |  | 2009                      |        |   | 2008 |  
|Operating activities                                                              |  |                           |        |   |      |   |        |  
|Net income                                                                        |  | $                         | 35.2   |   |      | $ | 25.2   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |        |   |      |   |        |  
|Depreciation                                                                      |  |                           | 39.6   |   |      |   | 34.6   |  
|Amortization                                                                      |  |                           | 13.3   |   |      |   | 11.4   |  
|Amortization of deferred financing costs                                          |  |                           | 1.5    |   |      |   | 1.1    |  
|Amortization of net bond discount                                                 |  |                           | 0.3    |   |      |   |       |  
|Unit-based compensation charges                                                   |  |                           | 1.4    |   |      |   | 0.8    |  
|Provision for doubtful accounts                                                   |  |                           | 0.8    |   |      |   | 1.2    |  
|(Gain) loss on disposal of assets                                                 |  |                           | 3.0    |   |      |   | (1.2   | )
|Gain on issuance of units in Inergy, L.P.                                         |  |                           | (3.2   | ) |      |   |       |  
|Interest of non-controlling partners in Inergy, L.P.s net income                 |  |                           | 114.4  |   |      |   | 91.4   |  
|Interest of non-controlling partners in ASCs consolidated net income             |  |                           | 0.7    |   |      |   | 0.5    |  
|Deferred income taxes                                                             |  |                           | 0.5    |   |      |   | 0.3    |  
|Changes in operating assets and liabilities, net of effects from acquisitions:    |  |                           |        |   |      |   |        |  
|Accounts receivable                                                               |  |                           | (15.7  | ) |      |   | (72.8  | )
|Inventories                                                                       |  |                           | 44.1   |   |      |   | 30.0   |  
|Prepaid expenses and other current assets                                         |  |                           | 1.0    |   |      |   | 5.0    |  
|Other liabilities                                                                 |  |                           | (0.3   | ) |      |   | (0.4   | )
|Accounts payable                                                                  |  |                           | (16.2  | ) |      |   | (4.8   | )
|Accrued expenses                                                                  |  |                           | 1.9    |   |      |   | (6.6   | )
|Customer deposits                                                                 |  |                           | (58.4  | ) |      |   | (42.9  | )
|Net liabilities from price risk management activities                             |  |                           | (23.3  | ) |      |   | (9.3   | )
|                                                                                  |  |                           |        |   |      |   |        |  
|Net cash provided by operating activities                                         |  |                           | 140.6  |   |      |   | 63.5   |  
|                                                                                  |  |                          
|Investing activities                                                              |  |                           |        |   |      |   |        |  
|Acquisitions, net of cash acquired                                                |  |                           | (1.5   | ) |      |   | (43.7  | )
|Purchases of property, plant and equipment                                        |  |                           | (104.1 | ) |      |   | (101.5 | )
|Proceeds from sale of assets                                                      |  |                           | 3.9    |   |      |   | 24.7   |  
|Other                                                                             |  |                           |       |   |      |   | (0.5   | )
|                                                                                  |  |                           |        |   |      |   |        |  
|Net cash used in investing activities                                             |  |                           | (101.7 | ) |      |   | (121.0 | )

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



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in millions)

(unaudited)



|                                                                                          |  |                           |        |   |      |   |        |  
|----------------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                          |  | Six Months EndedMarch 31, |       
|                                                                                          |  | 2009                      |        |   | 2008 |  
|Financing activities                                                                      |  |                           |        |   |      |   |        |  
|Proceeds from the issuance of long-term debt                                              |  | $                         | 598.1  |   |      | $ | 399.5  |  
|Principal payments on long-term debt                                                      |  |                           | (630.1 | ) |      |   | (253.5 | )
|Distributions to non-controlling partners in Inergy, L.P.                                 |  |                           | (59.5  | ) |      |   | (54.1  | )
|Distributions                                                                             |  |                           | (26.8  | ) |      |   | (22.1  | )
|Payments for deferred financing costs                                                     |  |                           | (5.5   | ) |      |   |       |  
|Net proceeds from issuance of Inergy, L.P. common units                                   |  |                           | 85.6   |   |      |   |       |  
|Net proceeds from unit options exercised                                                  |  |                           | 0.1    |   |      |   |       |  
|Net proceeds from unit options exercised of Inergy, L.P.                                  |  |                           |       |   |      |   | 1.0    |  
|                                                                                          |  |                           |        |   |      |   |        |  
|Net cash provided by (used in) financing activities                                       |  |                           | (38.1  | ) |      |   | 70.8   |  
|                                                                                          |  |                          
|Net increase in cash                                                                      |  |                           | 0.8    |   |      |   | 13.3   |  
|Cash at beginning of period                                                               |  |                           | 17.4   |   |      |   | 7.9    |  
|                                                                                          |  |                           |        |   |      |   |        |  
|                                                                                          |  |                          
|Cash at end of period                                                                     |  | $                         | 18.2   |   |      | $ | 21.2   |  
|                                                                                          |  |                           |        |   |      |   |        |  
|                                                                                          |  |                          
|Supplemental schedule of noncash investing and financing activities                       |  |                           |        |   |      |   |        |  
|Additions to covenants not to compete through the issuance of noncompete obligations      |  | $                         | 2.7    |   |      | $ | 2.3    |  
|                                                                                          |  |                           |        |   |      |   |        |  
|                                                                                          |  |                          
|Net change to property, plant and equipment through accounts payable and accrued expenses |  | $                         | (2.9   | ) |      | $ | 4.3    |  
|                                                                                          |  |                           |        |   |      |   |        |  
|                                                                                          |  |                          
|Increase in the fair value of interest rate swap liability and related long-term debt     |  | $                         | 5.8    |   |      | $ | 7.6    |  
|                                                                                          |  |                           |        |   |      |   |        |  
|                                                                                          |  |                          
|Acquisitions, net of cash acquired:                                                       |  |                           |        |   |      |   |        |  
|Current assets                                                                            |  | $                         | 0.3    |   |      | $ | 0.1    |  
|Property, plant and equipment                                                             |  |                           | 4.3    |   |      |   | 33.7   |  
|Intangible assets, net                                                                    |  |                           | 2.5    |   |      |   | 5.2    |  
|Goodwill                                                                                  |  |                           | 1.8    |   |      |   | 22.7   |  
|Other assets                                                                              |  |                           |       |   |      |   | 0.6    |  
|Current liabilities                                                                       |  |                           | (0.7   | ) |      |   | (2.3   | )
|Issuance of equity                                                                        |  |                           | (6.7   | ) |      |   |       |  
|Other liabilities                                                                         |  |                           |       |   |      |   | (16.3  | )
|                                                                                          |  |                           |        |   |      |   |        |  
|                                                                                          |  | $                         | 1.5    |   |      | $ | 43.7   |  
|                                                                                          |  |                           |        |   |      |   |        |  

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



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1  Partnership Organization and Basis of Presentation

Organization

The accompanying consolidated financial statements
include the accounts of Inergy Holdings, L.P. (Holdings or the Company), its subsidiaries, Inergy Partners, LLC (Partners), Inergy GP, LLC (GP), IPCH Acquisition Corp. (IPCHA) and its
controlled subsidiary Inergy, L.P. (Inergy or the Partnership). IPCHA is a subsidiary created as a result of transactions with Inergy. All significant intercompany transactions, including distribution income, and
balances have been eliminated in consolidation.

The consolidated financial statements of the Company include the accounts of Inergy and its subsidiaries,
including Inergy Propane, LLC (Inergy Propane), Inergy Midstream, LLC (collectively, the Operating Companies) and Inergy Finance Corp. Partners (the Non-Managing General Partner) owns the non-managing general
partner interest in Inergy. GP (the Managing General Partner) has sole responsibility for conducting Inergys business and managing Inergys operations. The Company is a holding company whose principal business, through its
subsidiaries, is its management of and ownership in Inergy. The Company has no operations of its own.

As of March 31, 2009, Holdings owns an
aggregate 9.2% interest in Inergy, inclusive of ownership of the Non-Managing General Partner and Managing General Partner. This ownership is comprised of an approximate 0.8% general partnership interest and an approximate 8.4% limited partnership
interest. The Company also owns all of the incentive distribution rights provided for in the Inergy partnership agreement, which entitles Holdings to receive increasing percentages, up to 48%, of any cash distributed by Inergy in excess
of $0.33 per unit in any quarter.

Nature of Operations

Inergy conducts all of the business activities of the consolidated group and is engaged in the sale, distribution, marketing and trading of propane, natural gas and other natural gas liquids (retail operations). Inergy is also
engaged in the storage, processing and fractionation of propane, natural gas and other natural gas liquids as well as the production and sale of salt (midstream operations). The retail propane market is seasonal because propane is used
primarily for heating in residential and commercial buildings, as well as for agricultural purposes. Inergys retail operations are primarily concentrated in the Midwest, Northeast, and South regions of the United States.

Basis of Presentation

The financial information contained herein as
of March 31, 2009 and for the three-month and six-month periods ended March 31, 2009 and 2008 is unaudited. The Company believes this information has been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information and Article 10 of Regulation S-X. The Company also believes this information includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows for the periods then ended. The retail distribution business is largely seasonal due to propanes primary use as a heating source in residential and commercial buildings. Accordingly, the results of
operations for the three-month and six-month periods ended March 31, 2009 are not indicative of the results of operations that may be expected for the entire fiscal year.

The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements of Inergy Holdings, L.P. and subsidiaries and the notes thereto included in Form 10-K as
filed with the Securities and Exchange Commission for the fiscal year ended September 30, 2008.

Reclassifications

The consolidated statements of operations for the three and six months ended March 31, 2008 reflect a reclassification of transportation costs of $2.2 million and
$4.1 million, respectively, from a component of operating and administrative expense to other cost of product sold. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no
effect on net income.



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Note 2  Summary of Significant Accounting Policies

Financial Instruments and Price Risk Management

Inergy utilizes
certain derivative financial instruments to (i) manage its exposure to commodity price risk, specifically, the related change in the fair value of inventories, as well as the variability of cash flows related to forecasted transactions;
(ii) ensure adequate physical supply of commodity will be available; and (iii) manage its exposure to interest rate risk associated with fixed rate borrowings. Inergy records all derivative instruments on the balance sheet as either assets
or liabilities measured at fair value under the provisions of Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as amended. Changes in the fair value of
these derivative financial instruments are recorded either through current earnings or as other comprehensive income, depending on the type of transaction.

Inergy is party to certain commodity derivative financial instruments that are designated as hedges of selected inventory positions, and qualify as fair value hedges, as defined in SFAS 133. Inergy is also party to certain interest rate
swap agreements designed to manage interest rate risk exposure. Inergys overall objective for entering into fair value hedges is to manage its exposure to fluctuations in commodity prices and changes in the fair market value of its inventories
and fixed rate borrowings. These derivatives are recorded at fair value on the balance sheets as price risk management assets or liabilities and the related change in fair value is recorded to earnings in the current period as cost of product sold.

Inergy also enters into derivative financial instruments that qualify as cash flow hedges, which hedge the exposure of variability in expected future cash
flows predominantly attributable to forecasted purchases to supply fixed price sale contracts. These derivatives are recorded on the balance sheet at fair value as price risk management assets or liabilities. The effective portion of the gain or
loss on these cash flow hedges is recorded in Inergys other comprehensive income in partners capital and reclassified into earnings as a component of cost of product sold in the same period in which the hedged transaction affects
earnings. Any ineffective portion of the gain or loss is recognized as cost of product sold in the current period. Inergys accumulated other comprehensive loss was $10.7 million and $25.3 million at March 31, 2009 and September 30,
2008, respectively.

Inergys policy is to offset fair value amounts of derivative instruments and cash collateral paid or received with the same
counterparty under a master netting arrangement.

The cash flow impact of derivative financial instruments is reflected as cash flows from operating
activities in the consolidated statements of cash flows.

Revenue Recognition

Sales of propane, other liquids and salt are recognized at the time product is shipped or delivered to the customer depending on the sales terms. Gas processing and fractionation fees are recognized upon delivery of
the product. Revenue from the sale of propane appliances and equipment is recognized at the later of the time of sale or installation. Revenue from repairs and maintenance is recognized upon completion of the service. Revenue from storage contracts
is recognized during the period in which storage services are provided.

Expense Classification

Cost of product sold consists of tangible products sold including all propane and other natural gas liquids, salt and all propane related appliances. Operating and
administrative expenses consist of all expenses incurred by the Company other than those described above in cost of product sold and depreciation and amortization. Certain of Inergys operating and administrative expenses and depreciation and
amortization are incurred in the distribution of product and storage sales but are not included in cost of product sold. These amounts were $32.9 million and $33.1 million for the three months ended March 31, 2009 and 2008, respectively, and
$66.0 million and $65.4 million for the six months ended March 31, 2009 and 2008, respectively.



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

Inventories

Inventories for retail operations, which mainly consist of propane gas and other liquids, are stated at
the lower of cost or market and are computed using the average-cost method. Wholesale propane and other liquids inventories are designated under a fair value hedge program and are consequently marked to market. All wholesale propane and other
liquids inventories being hedged and carried at market value at March 31, 2009 and September 30, 2008 amount to $15.5 million and $36.4 million, respectively. Inventories for midstream operations are stated at the lower of cost or market
determined using the first-in-first-out method.

Shipping and Handling Costs

Shipping and handling costs are recorded as part of cost of product sold at the time product is shipped or delivered to the customer except as discussed in Expense Classification.

Property, Plant and Equipment

Property, plant and equipment are
stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets, as follows:



|                               |  |      
|------------------------------ |  | -----
|                               |  | Years
|Buildings and improvements     |  | 25-40
|Office furniture and equipment |  | 310 
|Vehicles                       |  | 510 
|Tanks and plant equipment      |  | 530 

Identifiable Intangible Assets

The Company has recorded certain identifiable intangible assets, including customer accounts, covenants not to compete, trademarks, deferred financing costs and deferred acquisition costs. Customer accounts, covenants
not to compete, and trademarks have arisen from the various acquisitions by Inergy. Deferred financing costs represent financing costs incurred in obtaining financing and are amortized over the term of the related debt. Deferred acquisition costs
represent costs incurred on acquisitions that Inergy is actively pursuing. Additionally, an acquired intangible asset should be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirers intent to do so.

Certain intangible assets
are amortized on a straight-line basis over their estimated economic lives, as follows:



|                         |  |      
|------------------------ |  | -----
|                         |  | Years
|Customer accounts        |  | 15   
|Covenants not to compete |  | 210 
|Deferred financing costs |  | 110 

Trademarks have been assigned an indefinite economic life and are not being amortized, but are subject to an
annual impairment evaluation.



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Goodwill

Goodwill is recognized pursuant to Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, (SFAS 142) for various acquisitions by Inergy as the excess of the cost of the
acquisitions over the fair value of the related net assets at the date of acquisition. Under SFAS 142, goodwill is subject to at least an annual assessment for impairment by applying a fair-value-based test.

In connection with the goodwill impairment evaluation, Inergy identified four reporting units. The carrying value of each reporting unit is determined by assigning the
assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of the evaluation on a specific identification basis. To the extent a reporting units carrying value exceeds its fair value,
an indication exists that the reporting units goodwill may be impaired and the second step of the impairment test must be performed. In the second step, the implied fair value of the goodwill is determined by allocating the fair value to all
of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations, (SFAS 141) to
its carrying amount.

Inergy completed its annual impairment test for each of its reporting units and determined that no impairment existed as of
September 30, 2008. No indicators of impairment were identified requiring an interim impairment test during the six-month period ended March 31, 2009.

Income Taxes

The earnings of the Company, its limited liability subsidiaries and Inergy are included in the Federal and state income tax
returns of the individual members or partners. As a result, no income tax expense has been reflected in the consolidated financial statements relating to the earnings of Inergy and the limited liability subsidiaries. Federal and state income taxes
are provided on the earnings of the subsidiaries incorporated as taxable entities (IPCHA and Inergy Sales and Service, Inc.). These corporations account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes
(SFAS 109). SFAS 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or income tax returns. Under this method, deferred
tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using expected rates in effect for the year in which differences are expected to reverse.

Sales Tax

Inergy accounts for the collection and remittance of sales
tax on a net tax basis. As a result, these amounts are not reflected in the consolidated statements of operations.

Income Per Unit

The Company calculates basic net income per limited partner unit by dividing net income applicable to partners common interest, after considering priority
distributions, by the weighted average number of units outstanding. Diluted net income per limited partner unit is computed by dividing net income, after considering priority distributions, by the weighted average number of units outstanding and the
effect of dilutive units outstanding.

Accounting for Unit-Based Compensation

The Company and Inergy each have a unit-based employee compensation plan, which is accounted for under the provisions of Statement of Financial Accounting Standards (SFAS) No. 123(R),
Share-Based Payment (SFAS 123(R)). SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.

The amount of compensation expense recorded by the Company under the provisions of SFAS 123(R) during the six months ended March 31, 2009 and 2008 was approximately
$1.4 million and $0.8 million, respectively.



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Segment Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131) establishes standards for reporting information about operating segments, as well as related disclosures about
products and services, geographic areas, and major customers. Further, SFAS 131 defines operating segments as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and assessing performance. In determining reportable segments under the provisions of SFAS 131, Inergy examined the way it organizes its business internally for making operating decisions and
assessing business performance. See Note 10 for disclosures related to Inergys propane and midstream segments.

Recently Issued Accounting
Pronouncements

SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159) was issued in
February 2007 to permit entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. A business entity is required to report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each subsequent reporting date. The Company adopted SFAS 159 on October 1, 2008. The adoption of SFAS 159 did not have an impact on the Companys financial statements.

SFAS No. 157, Fair Value Measurements (SFAS 157) was issued in September 2006 to define fair value, establish a framework for measuring fair
value according to generally accepted accounting principles, and expand disclosures about fair value measurements. The Company adopted SFAS 157 on October 1, 2008. The adoption of SFAS 157 required certain additional footnote disclosures
(Note 6), however, it did not have a significant impact on any amounts comprising the Balance Sheet, Statement of Operations, Statement of Partners Capital, or the Statement of Cash Flows.

In April 2007, the FASB issued FASB Staff Position No. FIN 39-1, Amendment of FASB Interpretation No. 39 (FSP 39-1). FSP 39-1
permits companies to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with
the same counterparty under a master netting agreement. In addition, upon the adoption, companies are permitted to change their accounting policy to offset or not offset fair value amounts recognized for derivative instruments under master netting
arrangements. The Company adopted FSP 39-1 on October 1, 2008 and elected to change its accounting policy for derivative instruments executed with the same counterparty under a master netting agreement. Inergys policy is to offset fair
value amounts of derivative instruments and cash collateral paid or received with the same counterparty under a master netting arrangement. This change in accounting policy has been presented retroactively. The adoption of FSP 39-1 had the following
impact on the September 30, 2008 balance sheet (in millions):



|                                                  |  |                |      |            |   |       |                |  |   |     
|------------------------------------------------- |  | -------------- | ---- | ---------- | - | ----- | -------------- |  | - | ----
|                                                  |  | Original Value |      | Adjustment |   |       | Adjusted Value
|Assets from price risk management activities      |  | $              | 79.2 |            | $ | (45.9 | )              |  | $ | 33.3
|Prepaid expenses and other current assets         |  |                | 46.9 |            |   | (24.2 | )              |  |   | 22.7
|Accrued expenses                                  |  |                | 89.6 |            |   | (20.6 | )              |  |   | 69.0
|Customer deposits                                 |  |                | 96.5 |            |   | (8.8  | )              |  |   | 87.7
|Liabilities from price risk management activities |  |                | 97.7 |            |   | (40.7 | )              |  |   | 57.0

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 applies to all derivative instruments and related hedged items accounted for under SFAS 133. SFAS 161 requires entities to provide greater
transparency about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and
related hedged items affect an entitys financial position, results of operations, and cash flows. The Company adopted SFAS 161 on March 31, 2009. The adoption of SFAS 161 required certain additional disclosures (Note 5), however,
it did not impact any amounts comprising the Balance Sheet, Statement of Operations, Statement of Partners Capital, or the Statement of Cash Flows.



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS
141R), which replaces FASB Statement No. 141. SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any
non-controlling interest in the acquiree and the goodwill acquired. The Statement also establishes disclosure requirements designed to enable users to evaluate the nature and financial effects of the business combination. SFAS 141R is required to be
adopted by the Company for business combinations for which the acquisition date is on or after October 1, 2009.

In December 2007, the FASB issued
SFAS No. 160, Non-controlling Interests in Consolidated Financial Statementsan amendment of ARB No. 51 (SFAS 160). SFAS 160 requires that accounting and reporting for minority interests will be recharacterized
as non-controlling interests and classified as a component of equity. SFAS 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of
the non-controlling owners. SFAS 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more
subsidiaries or that deconsolidate a subsidiary. SFAS 160 is required to be adopted by the Company for the fiscal year ended September 30, 2010. The Company is evaluating the potential financial statement impact of SFAS 160 to its consolidated
financial statements.

In June 2008, the FASB ratified FSP EITF Issue No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities (FSP EITF 03-6-1). FSP EITF 03-6-1 applies to the calculation of earnings per share (EPS) under SFAS 128, Earnings Per Share for share-based payment awards with
rights to dividends or dividend equivalents. FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the
computation of EPS pursuant to the two-class method. FSP EITF 03-6-1 is required to be adopted by the Company for the fiscal year ended September 30, 2010. The Company is evaluating the potential financial statement impact of FSP EITF 03-6-1 to
its consolidated financial statements.

Note 3  Certain Balance Sheet Information

Inventories consist of the following at March 31, 2009 and September 30, 2008, respectively (in millions):



|                               |  |                |      |                    |   |     
|------------------------------ |  | -------------- | ---- | ------------------ | - | ----
|                               |  | March 31, 2009 |      | September 30, 2008
|Propane gas and other liquids  |  | $              | 39.4 |                    | $ | 83.9
|Appliances, parts and supplies |  |                | 15.8 |                    |   | 15.3
|Salt finished goods            |  |                | 0.6  |                    |   | 0.7 
|                               |  |                |      |                    |   |     
|Total inventory                |  | $              | 55.8 |                    | $ | 99.9
|                               |  |                |      |                    |   |     

Property, plant and equipment consists of the following at March 31, 2009 and September 30, 2008,
respectively (in millions):



|                                         |  |                |         |                    |   |        
|---------------------------------------- |  | -------------- | ------- | ------------------ | - | -------
|                                         |  | March 31, 2009 |         | September 30, 2008
|Tanks and plant equipment                |  | $              | 715.2   |                    | $ | 713.8  
|Buildings and improvements               |  |                | 297.9   |                    |   | 265.6  
|Vehicles                                 |  |                | 105.5   |                    |   | 104.5  
|Construction in process                  |  |                | 227.9   |                    |   | 166.5  
|Office furniture and equipment           |  |                | 25.6    |                    |   | 24.6   
|                                         |  |                |         |                    |   |        
|                                         |  |                | 1,372.1 |                    |   | 1,275.0
|Less: accumulated depreciation           |  |                | 282.8   |                    |   | 244.7  
|                                         |  |                |         |                    |   |        
|Total property, plant and equipment, net |  | $              | 1,089.3 |                    | $ | 1,030.3
|                                         |  |                |         |                    |   |        



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Intangible assets consist of the following at March 31, 2009 and September 30, 2008, respectively (in
millions):



|                                   |  |                |       |                    |   |      
|---------------------------------- |  | -------------- | ----- | ------------------ | - | -----
|                                   |  | March 31, 2009 |       | September 30, 2008
|Customer accounts                  |  | $              | 269.4 |                    | $ | 266.7
|Covenants not to compete           |  |                | 72.5  |                    |   | 72.2 
|Deferred financing and other costs |  |                | 34.2  |                    |   | 28.9 
|Trademarks                         |  |                | 26.3  |                    |   | 26.3 
|                                   |  |                |       |                    |   |      
|                                   |  |                | 402.4 |                    |   | 394.1
|Less: accumulated amortization     |  |                | 117.9 |                    |   | 105.8
|                                   |  |                |       |                    |   |      
|Total intangible assets, net       |  | $              | 284.5 |                    | $ | 288.3
|                                   |  |                |       |                    |   |      

Note 4  Business Acquisitions

In October 2008, Inergy acquired the assets of the Blu-Gas group of companies (Blu-Gas) headquartered in Denver, North Carolina. Blu-Gas delivers propane to approximately 9,300 customers. In conjunction
with the acquisition, Inergy issued 309,194 common units to Blu-Gas in a private placement as a portion of the purchase price.

The purchase price
allocation for this acquisition as well as the acquisition of US Salt, LLC in August 2008 have been prepared on a preliminary basis pending final asset valuation and asset rationalization, and changes are expected when additional information becomes
available.Changes to reflect final asset valuation of prior fiscal year acquisitions have been included in the Companys consolidated financial statements but are not material.

US GAAP requires that for any material business combination or disposition of assets, pro-forma information must be disclosed.

The fiscal 2009 acquisition was not considered material.

The operating
results for this acquisition are included in the consolidated results of operations from the date of acquisition through March 31, 2009.

Note 5
 Risk Management

Inergy is exposed to certain market risks related to its ongoing business operations. These risks include exposure to changing
commodity prices as well as fluctuations in interest rates. Inergy utilizes derivative instruments to manage its exposure to fluctuations in commodity prices, which is discussed more fully below. Inergy also utilizes derivative instruments to manage
its exposure to fluctuations in interest rates, which is discussed more fully in Note 7.

Commodity Derivative Instruments and Price Risk Management

Risk Management Activities

Inergy sells propane
and other commodities to energy related businesses and may use a variety of financial and other instruments including forward contracts involving physical delivery of propane. Inergy will enter into offsetting positions to hedge against the exposure
its customer contracts create. Inergy does not designate these instruments as hedging instruments in accordance with SFAS 133. These instruments are marked to market with the changes in the market value reflected in cost of product sold. Inergy
attempts to balance its contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. This balance in the contractual portfolio significantly reduces the volatility in cost of product sold related to these
instruments. However, immaterial net unbalanced positions can exist or are established based on assessment of anticipated short-term needs or market conditions.



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Cash Flow Hedging Activity

Inergy sells propane and heating oil to retail customers at fixed prices. Inergy will enter into derivative instruments to hedge a significant portion of its exposure to fluctuations in commodity prices as a result of
selling the fixed price contracts. These instruments are identified and qualify to be treated as cash flow hedges in accordance with SFAS 133. This accounting treatment requires the effective portion of the gain or loss on the derivative to be
reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or
hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Fair Value Hedging Activity

Inergy will enter into derivative instruments to hedge its exposure to fluctuating commodity prices that results from maintaining its wholesale inventory. The instruments
hedging wholesale inventory qualify to be treated as fair value hedges in accordance with SFAS 133. This accounting treatment requires the fair value changes in both the derivative instruments and the hedged inventory to be recorded in cost of
product sold.

A significant amount of inventory held in bulk storage facilities is hedged as it is not expected to be sold in the immediate future and is
therefore exposed to fluctuations in commodity prices. Commodity inventory held at retail locations is not hedged as this inventory is expected to be sold in the immediate future and is therefore not exposed to fluctuations in commodity prices over
an extended period of time.

Commodity Price and Credit Risk

Notional Amounts and Terms

The notional amounts and terms of Inergys derivative financial instruments include the following at
March 31, 2009 and September 30, 2008 (in millions):



|                                         |  |                  |  |                     |  |                  |  |                    
|---------------------------------------- |  | ---------------- |  | ------------------- |  | ---------------- |  | -------------------
|                                         |  | March 31, 2009   |  | September 30, 2008 
|                                         |  | Fixed PricePayor |  | Fixed PriceReceiver |  | Fixed PricePayor |  | Fixed PriceReceiver
|Propane, crude and heating oil (barrels) |  | 5.8              |  | 5.4                 |  | 8.9              |  | 7.5                
|Natural gas (MMBTUs)                    |  | 0.5              |  |                    |  | 0.7              |  |                   

Notional amounts reflect the volume of transactions, but do not represent the amounts exchanged by the parties to
the financial instruments. Accordingly, notional amounts do not reflect Inergys monetary exposure to market or credit risks.

Fair Value of
Derivative Instruments

The following tables detail the amount and location on the Companys Balance Sheet and Statement of Operations related to
all of its commodity derivatives (in millions):



|                                                 |  |                                                               |      |                                                                   |                 |   |                   |  |                 |     |  |   |       |  
|------------------------------------------------ |  | ------------------------------------------------------------- | ---- | ----------------------------------------------------------------- | --------------- | - | ----------------- |  | --------------- | --- |  | - | ----- | -
|                                                 |  | Amount of Gain (Loss)Recognized in Net Incomefrom Derivatives |      | Amount of Gain (Loss)Recognized in Net Incomeon Item Being Hedged |                
|                                                 |  | March 31, 2009                                                |      | March 31, 2009                                                    |                
|                                                 |  | Three MonthsEnded                                             |      |                                                                   | Six MonthsEnded |   | Three MonthsEnded |  | Six MonthsEnded |    
|Derivatives in fair value hedging relationships: |  |                                                               |      |                                                                   |                 |   |                   |  |                 |     |  |   |       |  
|Commodity(a)                                     |  | $                                                             | (2.8 | )                                                                 |                 | $ | 6.7               |  | $               | 2.5 |  | $ | (6.5  | )
|Debt(b)                                          |  |                                                               | (0.6 | )                                                                 |                 |   | 5.8               |  |                 | 0.6 |  |   | (5.8  | )
|                                                 |  |                                                               |      |                                                                   |                 |   |                   |  |                 |     |  |   |       |  
|Total fair value of derivatives                  |  | $                                                             | (3.4 | )                                                                 |                 | $ | 12.5              |  | $               | 3.1 |  | $ | (12.3 | )
|                                                 |  |                                                               |      |                                                                   |                 |   |                   |  |                 |     |  |   |       |  



15



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



|                                                |  |                                                                                   |      |   |                                                                  |   |      |                                                                                                                 |  |   |                 |   |  |                   |       |                 |  |   |     |  |   |  
|----------------------------------------------- |  | --------------------------------------------------------------------------------- | ---- | - | ---------------------------------------------------------------- | - | ---- | --------------------------------------------------------------------------------------------------------------- |  | - | --------------- | - |  | ----------------- | ----- | --------------- |  | - | --- |  | - | -
|                                                |  | Amount of Gain (Loss)Recognized in Inergys OCIon Effective Portion ofDerivatives |      |   | Amount of Gain (Loss)Reclassified from InergysOCI to Net Income |   |      | Amount of Gain (Loss)Recognized in Net Incomeon Ineffective Portion ofDerivatives & AmountExcluded
from Testing
|                                                |  | March 31, 2009                                                                    |      |   | March 31, 2009                                                   |   |      | March 31, 2009                                                                                                 
|                                                |  | Three MonthsEnded                                                                 |      |   | Six MonthsEnded                                                  |   |      | Three MonthsEnded                                                                                               |  |   | Six MonthsEnded |   |  | Three MonthsEnded |       | Six MonthsEnded
|Derivatives in cash flow hedging relationships: |  |                                                                                   |      |   |                                                                  |   |      |                                                                                                                 |  |   |                 |   |  |                   |       |                 |  |   |     |  |   |  
|Commodity(c)                                    |  | $                                                                                 | (1.6 | ) |                                                                  | $ | (8.2 | )                                                                                                               |  | $ | (54.9           | ) |  | $                 | (22.8 | )               |  | $ | 0.1 |  | $ | 
|                                                |  |                                                                                   |      |   |                                                                  |   |      |                                                                                                                 |  |   |                 |   |  |                   |       |                 |  |   |     |  |   |  





|                                                   |  |                                                               |     |                 |   |    
|-------------------------------------------------- |  | ------------------------------------------------------------- | --- | --------------- | - | ---
|                                                   |  | Amount of Gain (Loss)Recognized in Net Incomefrom Derivatives
|                                                   |  | March 31, 2009                                               
|                                                   |  | Three MonthsEnded                                             |     | Six MonthsEnded
|Derivatives not designated as hedging instruments: |  |                                                               |     |                 |   |    
|Commodity(d)                                       |  | $                                                             | 4.5 |                 | $ | 7.1
|                                                   |  |                                                               |     |                 |   |    
|                                                  

|(a) | The gain (loss) on both the derivative and the item being hedged are located in cost of goods sold in the Statement of
Operations.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(b) | The gain (loss) on both the derivative and the item being hedged are located in interest expense in the Statement of
Operations.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(c) | The gain (loss) on the amount reclassified from Inergys OCI into income, the ineffective portion and the amount
excluded from effectiveness testing are included in cost of goods sold.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | The gain (loss) is recognized in cost of goods sold.
|--- | ----------------------------------------------------

The following table summarizes the change in the unrealized fair value of energy derivative contracts related to risk management activities for the six months ended
March 31, 2009 and 2008 where settlement has not yet occurred (in millions):



|                                                                                    |  |                           |       |   |      |   |      |  
|----------------------------------------------------------------------------------- |  | ------------------------- | ----- | - | ---- | - | ---- | -
|                                                                                    |  | Six Months EndedMarch 31, |      
|                                                                                    |  | 2009                      |       |   | 2008 |  
|Net fair value gain (loss) of contracts outstanding at beginning of period          |  | $                         | (23.7 | ) |      | $ | 0.7  |  
|Net change in physical exchange contracts                                           |  |                           | 0.9   |   |      |   | (0.3 | )
|Net changes in cash paid against outstanding positions                              |  |                           | 21.7  |   |      |   | 5.1  |  
|Change in fair value of contracts attributable to market movement during the period |  |                           | (2.7  | ) |      |   | (6.3 | )
|Realized losses                                                                     |  |                           | 18.0  |   |      |   | 1.2  |  
|                                                                                    |  |                           |       |   |      |   |      |  
|Net fair value of contracts outstanding at end of period                            |  | $                         | 14.2  |   |      | $ | 0.4  |  
|                                                                                    |  |                           |       |   |      |   |      |  

All contracts subject to price risk had a maturity of twenty-six months or less, however, virtually all of the
contracts will mature within twelve months.



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Credit Risk

Inherent in Inergys contractual portfolio are certain credit risks. Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. Inergy takes an active role in managing credit
risk and has established control procedures, which are reviewed on an ongoing basis. Inergy attempts to minimize credit risk exposure through credit policies and periodic monitoring procedures as well as through customer deposits, letters of credit
and entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed appropriate. The counterparties associated with assets from price risk management activities as
of March 31, 2009 and September 30, 2008 were propane retailers, resellers, energy marketers and dealers.

Certain of Inergys derivative
instruments have credit limits that require Inergy to post collateral. The amount of collateral required to be posted is a function of the net liability position of the derivative as well as Inergys established credit limit with the respective
counterparty. If Inergys credit rating were to change, the counterparties could require it to post additional collateral. The amount of additional collateral that would be required to be posted would vary depending on the extent of change in
Inergys credit rating as well as the requirements of the individual counterparty. The aggregate fair value of all commodity derivative instruments with credit-risk-related contingent features that are in a liability position on March 31,
2009, is $31.3 million for which Inergy has posted collateral of $32.5 million, which includes $7.7 million of NYMEX margin deposit, in the normal course of business. Inergy has received collateral of $10.8 million in the normal course of business.

Note 6  Fair Value Measurements

SFAS 157
establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1
measurement) and the lowest priority to unobservable inputs (level 3 measurement). The three levels of the fair value hierarchy defined by SFAS 157 are as follows:



| |  |  | Level 1  Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which
transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and US
government treasury securities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the
reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for
commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout
the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as OTC
forwards, options and repurchase agreements.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally
developed methodologies that result in managements best estimate of fair value.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of March 31, 2009, Inergy held certain
assets and liabilities that are required to be measured at fair value on a recurring basis. These included Inergys derivative instruments related to propane, heating oil, crude oil, natural gas, natural gas liquids and interest rates as well
as the portion of inventory that is hedged in a qualifying fair value hedge. Inergys derivative instruments consist of forwards, swaps, futures, and options.

Certain of Inergys derivative instruments are traded on the NYMEX. These instruments have been categorized as level 1.



17



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Inergys derivative instruments also consist of OTC contracts, which are not traded on a public exchange.
The fair values of these derivative instruments are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These instruments have been categorized as level 2.

Inergys inventory that is the hedged item in a qualifying fair value hedge is valued based on prices quoted from observable sources and verified
with broker quotes. This inventory has been categorized as level 2.

Inergys OTC options are valued based on an internal option model. The inputs
utilized in the model are based on publicly available information as well as broker quotes. These options have been categorized as level 3.

The following
table sets forth by level within the fair value hierarchy Inergys assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2009, (in millions). As required by FAS 157, the assets and
liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Inergys assessment of the significance of a particular input to the fair value measurement requires judgment,
and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.



|                                       |  |                           |     |         |   |         |  |       |     |                     |   |                        |  |                      |      |  |       |      |  |   |       |   |  |   |     
|-------------------------------------- |  | ------------------------- | --- | ------- | - | ------- |  | ----- | --- | ------------------- | - | ---------------------- |  | -------------------- | ---- |  | ----- | ---- |  | - | ----- | - |  | - | ----
|                                       |  | Fair Value of Derivatives |     |         |   |         | 
|                                       |  | Level 1                   |     | Level 2 |   | Level 3 |  | Total |     | Designatedas Hedges |   | NotDesignatedas Hedges |  | NettingAgreements(a) |      |  | Total
|Assets                                 |  |                           |     |         |   |         |  |       |     |                     |   |                        |  |                      |      |  |       |      |  |   |       |   |  |   |     
|Assets from price risk management      |  | $                         | 3.9 |         | $ | 54.8    |  | $     | 0.7 |                     | $ | 59.4                   |  | $                    | 10.9 |  | $     | 48.5 |  | $ | (25.1 | ) |  | $ | 34.3
|Inventory                              |  |                           |    |         |   | 15.5    |  |       |    |                     |   | 15.5                   |  |                      |     |  |       |     |  |   |      |   |  |   | 15.5
|Interest rate swap                     |  |                           |    |         |   | 7.7     |  |       |    |                     |   | 7.7                    |  |                      | 7.7  |  |       |     |  |   |      |   |  |   | 7.7 
|                                       |  |                           |     |         |   |         |  |       |     |                     |   |                        |  |                      |      |  |       |      |  |   |       |   |  |   |     
|Total assets at fair value             |  | $                         | 3.9 |         | $ | 78.0    |  | $     | 0.7 |                     | $ | 82.6                   |  | $                    | 18.6 |  | $     | 48.5 |  | $ | (25.1 | ) |  | $ | 57.5
|                                       |  |                           |     |         |   |         |  |       |     |                     |   |                        |  |                      |      |  |       |      |  |   |       |   |  |   |     
|                                       |  |                           |     |         |   |         |  |      
|Liabilities                            |  |                           |     |         |   |         |  |       |     |                     |   |                        |  |                      |      |  |       |      |  |   |       |   |  |   |     
|Liabilities from price risk management |  | $                         | 6.0 |         | $ | 55.0    |  | $     | 0.7 |                     | $ | 61.7                   |  | $                    | 15.7 |  | $     | 46.0 |  | $ | (41.6 | ) |  | $ | 20.1
|                                       |  |                           |     |         |   |         |  |       |     |                     |   |                        |  |                      |      |  |       |      |  |   |       |   |  |   |     



|(a) | Amounts represent the impact of legally enforceable master netting agreements that allow Inergy to settle
positive and negative positions as well as cash collateral held or placed with the same counterparties.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 7  Long-Term Debt

Long-term debt consisted of the following at March 31, 2009 and September 30, 2008, respectively (in millions):



|                                                                                                     |  |               |         |   |                   |   |        
|---------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ----------------- | - | -------
|                                                                                                     |  | March 31,2009 |         |   | September 30,2008
|Inergy credit agreement                                                                              |  | $             | 15.7    |   |                   | $ | 247.0  
|Inergy senior unsecured notes                                                                        |  |               | 1,050.0 |   |                   |   | 825.0  
|Inergy fair value adjustment on senior unsecured notes                                               |  |               | 7.7     |   |                   |   | 1.9    
|Inergy bond premium                                                                                  |  |               | 3.5     |   |                   |   | 3.8    
|Inergy bond discount                                                                                 |  |               | (21.4   | ) |                   |   |       
|ASC credit agreement                                                                                 |  |               | 9.5     |   |                   |   | 10.9   
|Inergy obligations under noncompetition agreements and notes to former owners of businesses acquired |  |               | 18.8    |   |                   |   | 18.0   
|Holdings bank facility                                                                               |  |               | 7.3     |   |                   |   | 7.6    
|Holdings term loan                                                                                   |  |               | 25.0    |   |                   |   | 25.0   
|                                                                                                     |  |               |         |   |                   |   |        
|Total debt                                                                                           |  |               | 1,116.1 |   |                   |   | 1,139.2
|Less: current portion                                                                                |  |               | 10.4    |   |                   |   | 60.5   
|                                                                                                     |  |               |         |   |                   |   |        
|Total long-term debt                                                                                 |  | $             | 1,105.7 |   |                   | $ | 1,078.7
|                                                                                                     |  |               |         |   |                   |   |        



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##### Table of Contents

INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



The Companys bank facility (the Bank Facility) consists of a $14 million working capital revolver
for Holdings and a $6 million working capital revolver for IPCHA. The maturity date of the Bank Facility is July 22, 2011 and is collateralized by certain of the Companys interests in Inergy. In addition, the Bank Facility is guaranteed
by Partners. The interest rates of these revolvers are based on prime rate and LIBOR plus the applicable spreads, which were 2.0% at March 31, 2009 for all outstanding debt under the Bank Facility. Unused borrowings under the Bank Facility
amounted to $12.7 million and $12.4 million at March 31, 2009 and September 30, 2008, respectively. The Bank Facility contains several covenants which, among other things, require the maintenance of various financial performance ratios,
restrict the payment of distributions to unitholders, and require financial reports to be submitted periodically to the financial institutions.

Inergys Credit Agreement

Inergys credit agreement (Credit Agreement) consists of a $75 million revolving working
capital facility (Working Capital Facility) and a $350 million revolving acquisition facility (Acquisition Facility). The effective amount of working capital borrowing capacity available to Inergy under the two facilities is
$200 million utilizing capacity under the acquisition credit facility for working capital needed during the winter heating season. The Credit Agreement is guaranteed by each of Inergys wholly-owned domestic subsidiaries.

At March 31, 2009, the balance outstanding under the Credit Agreement was $15.7 million, all drawn under the Working Capital Facility. At September 30, 2008,
the balance outstanding under the Credit Agreement was $247.0 million, including $182.0 million borrowed for acquisitions and growth capital expenditures and $65.0 million borrowed for working capital purposes. Lehman Commercial Paper, Inc.
(Lehman CP), a subsidiary of Lehman Brothers Holdings, Inc., holds a $25 million lender commitment within Inergys Credit Agreement and filed for Chapter 11 Bankruptcy on October 5, 2008. Inergy does not plan for the Lehman
lender commitment to be available for the remainder of the term of the Credit Agreement. The interest rates of these revolvers are based on prime rate and LIBOR plus the applicable spreads, which were 3.5% at March 31, 2009, and between 4.24%
and 5.46% at September 30, 2008, for all outstanding debt under the Credit Agreement. Unused borrowings under the Credit Agreement amounted to $385.0 million and $154.3 million at March 31, 2009 and September 30, 2008, respectively.
Outstanding standby letters of credit under the Credit Agreement amounted to $24.3 million and $23.6 million at March 31, 2009 and September 30, 2008, respectively.

In February 2009, Inergy closed on a $225 million offering of senior notes under Rule 144A to eligible purchasers.
The 8 3/4% notes mature on March 1, 2015, and were issued at 90.191% of the principal amount to yield 11%.
Inergy used the net proceeds from the private placement to repay borrowings under its existing revolving acquisition credit facility.

Steuben Gas
Storage Company, a majority-owned subsidiary of Arlington Storage Company (ASC), had a debt agreement in place at the time of Inergys acquisition of ASC (ASC Credit Agreement). The ASC Credit Agreement is secured by the
assets of Steuben and has no recourse against the assets of Inergy. The ASC Credit Agreement is scheduled to mature in December 2015. The interest rate on approximately half of the ASC Credit Agreement is at a fixed rate, while the other half is
based on LIBOR plus the applicable spreads.

Inergy is party to six interest rate swap agreements scheduled to mature in December 2014, each designed to
hedge $25 million in underlying fixed rate senior unsecured notes in order to manage interest rate risk exposure. These swap agreements, which expire on the same date as the maturity date of the related senior unsecured notes due 2014 and contain
call provisions consistent with the underlying senior unsecured notes, require the counterparty to pay the Company an amount based on the stated fixed interest rate due every six months. In exchange, Inergy is required to make semi-annual floating
interest rate payments on the same dates to the counterparty based on an annual interest rate equal to the 6-month LIBOR interest rate plus spreads between 0.92% and 2.20% applied to the same aggregate notional amount of $150 million. The swap
agreements have been recognized as fair value hedges. Amounts to be received or paid under the agreements are accrued and recognized over the life of the agreements as an adjustment to interest expense. The change in the market value of the interest
rate swaps for the six months ended March 31, 2009 was recorded as a $5.8 million decrease to interest expense. This amount was offset by a $5.8 million increase to interest expense that was recorded as a result of a change in the fair value of
the hedged fixed rate debt.



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



At March 31, 2009, the Company was in compliance with all of its debt covenants.

Note 8  Partners Capital

Quarterly Distributions of
Available Cash

A summary of the Companys limited partner quarterly distributions for the six months ended March 31, 2009 and 2008 is
presented below:



|                                |  |                   |  |               |       |                                  |   |     
|------------------------------- |  | ----------------- |  | ------------- | ----- | -------------------------------- | - | ----
|Six Months Ended March 31,
2009
|Record Date                     |  | Payment Date      |  | Per Unit Rate |       | Distribution Amount(in millions)
|November 7, 2008                |  | November 14, 2008 |  | $             | 0.650 |                                  | $ | 13.1
|February 6, 2009                |  | February 13, 2009 |  | $             | 0.675 |                                  |   | 13.7
|                                |  |                   |  |               |       |                                  |   |     
|                                |  |                   |  |               |       |                                  | $ | 26.8
|                                |  |                   |  |               |       |                                  |   |     
|                               
|Six Months Ended March 31,
2008
|Record Date                     |  | Payment Date      |  | Per Unit Rate |       | Distribution Amount(in
millions)
|November 7, 2007                |  | November 14, 2007 |  | $             | 0.535 |                                  | $ | 10.8
|February 7, 2008                |  | February 14, 2008 |  | $             | 0.560 |                                  |   | 11.3
|                                |  |                   |  |               |       |                                  |   |     
|                                |  |                   |  |               |       |                                  | $ | 22.1
|                                |  |                   |  |               |       |                                  |   |     

On April 27, 2009, the Company declared a distribution of $0.75 per limited partner unit to be paid on
May 15, 2009 to unitholders of record on May 8, 2009 for a total distribution of $15.2 million with respect to the second fiscal quarter of 2009. On May 15, 2008, a quarterly distribution of $0.585 per limited partner unit was paid to
unitholders of record on May 8, 2008 with respect to the second fiscal quarter of 2008, for a total distribution of $11.8 million.

The Companys
capital is comprised primarily of its equity in Inergy and the Companys ability to make distributions is contingent upon the distributions it receives from Inergy. While Inergy distributes all available cash, its capital is not all available
for distribution.

Note 9  Commitments and Contingencies

Inergy periodically enters into agreements with suppliers to purchase fixed quantities of propane, distillates, natural gas and liquids at fixed prices. At March 31, 2009, the total of these firm purchase commitments was approximately
$255.8 million of which $250.6 million will occur over the course of the next twelve months with the balance of $5.2 million occurring over the following twelve months. Inergy also enters into non-binding agreements with suppliers to purchase
quantities of propane, distillates, natural gas and liquids at variable prices at future dates at the then prevailing market prices.

Inergy has entered
into certain purchase commitments in connection with the identified growth projects related to the Thomas Corners and West Coast NGL midstream assets. At March 31, 2009, the total of these firm purchase commitments was approximately $20.7
million and the purchases associated with these commitments will occur over the course of the next year.

The Company is periodically involved in
litigation proceedings. The results of litigation proceedings cannot be predicted with certainty; however, management believes that the Company does not have material potential liability in connection with these proceedings that would have a
significant financial impact on its consolidated financial condition, results of operations or cash flows.



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Inergy utilizes third-party insurance subject to varying retention levels of self-insurance, which management
considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers compensation claims and general, product, vehicle, and environmental liability. Losses are accrued based upon
managements estimates of the aggregate liability for claims incurred using certain assumptions followed in the insurance industry and based on past experience. At March 31, 2009 and September 30, 2008, Inergys self-insurance
reserves were $17.8 million and $17.4 million, respectively.

Note 10  Segments

The Companys financial statements reflect two operating and reportable segments: propane operations and midstream operations. The Companys propane operations include propane sales to end users, the sale of
propane-related appliances and service work for propane-related equipment, the sale of distillate products and wholesale distribution of propane and marketing and price risk management services to other users, retailers and resellers of propane. The
Companys midstream operations include storage of natural gas for third parties, fractionation of natural gas liquids, processing of natural gas, the distribution of natural gas liquids and the production and sale of salt. Results of operations
for the acquisition that occurred during the six months ended March 31, 2009, are included in the propane segment.

The identifiable assets associated
with each reportable segment include accounts receivable and inventories. Goodwill is also presented for each segment. The net asset/liability from price risk management, as reported in the accompanying consolidated balance sheets, is primarily
related to the propane segment.



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



Revenues, gross profit, identifiable assets, goodwill, property, plant and equipment and expenditures for property,
plant and equipment for each of the Companys reportable segments are presented below (in millions):



|                                                    |  |                                  |       |                     |   |                        |  |   |                 |   |       |   |      |  |   |        
|--------------------------------------------------- |  | -------------------------------- | ----- | ------------------- | - | ---------------------- |  | - | --------------- | - | ----- | - | ---- |  | - | -------
|                                                    |  | Three Months EndedMarch 31, 2009
|                                                    |  | PropaneOperations                |       | MidstreamOperations |   | IntersegmentOperations |  |   | CorporateAssets |   | Total
|Retail propane revenues                             |  | $                                | 304.1 |                     | $ |                       |  | $ |                |   |       | $ |     |  | $ | 304.1  
|Wholesale propane revenues                          |  |                                  | 133.2 |                     |   | 6.6                    |  |   |                |   |       |   |     |  |   | 139.8  
|Storage, fractionation and other midstream revenues |  |                                  |      |                     |   | 49.3                   |  |   | (0.3            | ) |       |   |     |  |   | 49.0   
|Transportation revenues                             |  |                                  | 4.6   |                     |   | 4.4                    |  |   |                |   |       |   |     |  |   | 9.0    
|Propane-related appliance sales revenues            |  |                                  | 4.5   |                     |   |                       |  |   |                |   |       |   |     |  |   | 4.5    
|Retail service revenues                             |  |                                  | 4.5   |                     |   |                       |  |   |                |   |       |   |     |  |   | 4.5    
|Rental service and other revenues                   |  |                                  | 7.9   |                     |   |                       |  |   |                |   |       |   |     |  |   | 7.9    
|Distillate revenues                                 |  |                                  | 51.3  |                     |   |                       |  |   |                |   |       |   |     |  |   | 51.3   
|Gross profit                                        |  |                                  | 187.0 |                     |   | 25.4                   |  |   | (0.3            | ) |       |   |     |  |   | 212.1  
|Identifiable assets                                 |  |                                  | 173.3 |                     |   | 26.4                   |  |   |                |   |       |   |     |  |   | 199.7  
|Goodwill                                            |  |                                  | 276.0 |                     |   | 168.8                  |  |   |                |   |       |   | 20.2 |  |   | 465.0  
|Property, plant and equipment                       |  |                                  | 691.9 |                     |   | 669.4                  |  |   |                |   |       |   | 10.8 |  |   | 1,372.1
|Expenditures for property, plant and equipment      |  |                                  | 2.1   |                     |   | 49.3                   |  |   |                |   |       |   | 0.1  |  |   | 51.5   
|                                                    | 
|                                                    |  | Three Months EndedMarch 31, 2008
|                                                    |  | PropaneOperations                |       | MidstreamOperations |   | IntersegmentOperations |  |   | CorporateAssets |   | Total
|Retail propane revenues                             |  | $                                | 352.9 |                     | $ |                       |  | $ |                |   |       | $ |     |  | $ | 352.9  
|Wholesale propane revenues                          |  |                                  | 166.4 |                     |   | 6.8                    |  |   |                |   |       |   |     |  |   | 173.2  
|Storage, fractionation and other midstream revenues |  |                                  |      |                     |   | 53.3                   |  |   | (0.2            | ) |       |   |     |  |   | 53.1   
|Transportation revenues                             |  |                                  | 3.0   |                     |   | 4.4                    |  |   |                |   |       |   |     |  |   | 7.4    
|Propane-related appliance sales revenues            |  |                                  | 4.6   |                     |   |                       |  |   |                |   |       |   |     |  |   | 4.6    
|Retail service revenues                             |  |                                  | 3.7   |                     |   |                       |  |   |                |   |       |   |     |  |   | 3.7    
|Rental service and other revenues                   |  |                                  | 8.1   |                     |   |                       |  |   |                |   |       |   |     |  |   | 8.1    
|Distillate revenues                                 |  |                                  | 45.2  |                     |   |                       |  |   |                |   |       |   |     |  |   | 45.2   
|Gross profit                                        |  |                                  | 165.5 |                     |   | 23.3                   |  |   | (0.2            | ) |       |   |     |  |   | 188.6  
|Identifiable assets                                 |  |                                  | 230.0 |                     |   | 24.3                   |  |   |                |   |       |   |     |  |   | 254.3  
|Goodwill                                            |  |                                  | 262.4 |                     |   | 107.6                  |  |   |                |   |       |   | 20.2 |  |   | 390.2  
|Property, plant and equipment                       |  |                                  | 681.7 |                     |   | 423.7                  |  |   |                |   |       |   | 9.2  |  |   | 1,114.6
|Expenditures for property, plant and equipment      |  |                                  | 2.7   |                     |   | 55.5                   |  |   |                |   |       |   |     |  |   | 58.2   



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INERGY HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



|                                                    |  |                                |       |                     |   |                        |  |   |                 |   |       |   |      |  |   |        
|--------------------------------------------------- |  | ------------------------------ | ----- | ------------------- | - | ---------------------- |  | - | --------------- | - | ----- | - | ---- |  | - | -------
|                                                    |  | Six Months EndedMarch 31, 2009
|                                                    |  | PropaneOperations              |       | MidstreamOperations |   | IntersegmentOperations |  |   | CorporateAssets |   | Total
|Retail propane revenues                             |  | $                              | 571.8 |                     | $ |                       |  | $ |                |   |       | $ |     |  | $ | 571.8  
|Wholesale propane revenues                          |  |                                | 268.6 |                     |   | 12.7                   |  |   |                |   |       |   |     |  |   | 281.3  
|Storage, fractionation and other midstream revenues |  |                                |      |                     |   | 100.5                  |  |   | (0.5            | ) |       |   |     |  |   | 100.0  
|Transportation revenues                             |  |                                | 9.2   |                     |   | 8.9                    |  |   |                |   |       |   |     |  |   | 18.1   
|Propane-related appliance sales revenues            |  |                                | 11.6  |                     |   |                       |  |   |                |   |       |   |     |  |   | 11.6   
|Retail service revenues                             |  |                                | 10.6  |                     |   |                       |  |   |                |   |       |   |     |  |   | 10.6   
|Rental service and other revenues                   |  |                                | 16.1  |                     |   |                       |  |   |                |   |       |   |     |  |   | 16.1   
|Distillate revenues                                 |  |                                | 94.6  |                     |   |                       |  |   |                |   |       |   |     |  |   | 94.6   
|Gross profit                                        |  |                                | 339.3 |                     |   | 47.6                   |  |   | (0.5            | ) |       |   |     |  |   | 386.4  
|Identifiable assets                                 |  |                                | 173.3 |                     |   | 26.4                   |  |   |                |   |       |   |     |  |   | 199.7  
|Goodwill                                            |  |                                | 276.0 |                     |   | 168.8                  |  |   |                |   |       |   | 20.2 |  |   | 465.0  
|Property, plant and equipment                       |  |                                | 691.9 |                     |   | 669.4                  |  |   |                |   |       |   | 10.8 |  |   | 1,372.1
|Expenditures for property, plant and equipment      |  |                                | 6.1   |                     |   | 94.5                   |  |   |                |   |       |   | 0.6  |  |   | 101.2  
|                                                    | 
|                                                    |  | Six Months EndedMarch 31, 2008
|                                                    |  | PropaneOperations              |       | MidstreamOperations |   | IntersegmentOperations |  |   | CorporateAssets |   | Total
|Retail propane revenues                             |  | $                              | 602.8 |                     | $ |                       |  | $ |                |   |       | $ |     |  | $ | 602.8  
|Wholesale propane revenues                          |  |                                | 312.4 |                     |   | 13.5                   |  |   |                |   |       |   |     |  |   | 325.9  
|Storage, fractionation and other midstream revenues |  |                                |      |                     |   | 104.6                  |  |   | (0.3            | ) |       |   |     |  |   | 104.3  
|Transportation revenues                             |  |                                | 8.4   |                     |   | 8.4                    |  |   |                |   |       |   |     |  |   | 16.8   
|Propane-related appliance sales revenues            |  |                                | 12.0  |                     |   |                       |  |   |                |   |       |   |     |  |   | 12.0   
|Retail service revenues                             |  |                                | 9.2   |                     |   |                       |  |   |                |   |       |   |     |  |   | 9.2    
|Rental service and other revenues                   |  |                                | 14.6  |                     |   |                       |  |   |                |   |       |   |     |  |   | 14.6   
|Distillate revenues                                 |  |                                | 77.2  |                     |   |                       |  |   |                |   |       |   |     |  |   | 77.2   
|Gross profit                                        |  |                                | 282.5 |                     |   | 43.6                   |  |   | (0.3            | ) |       |   |     |  |   | 325.8  
|Identifiable assets                                 |  |                                | 230.0 |                     |   | 24.3                   |  |   |                |   |       |   |     |  |   | 254.3  
|Goodwill                                            |  |                                | 262.4 |                     |   | 107.6                  |  |   |                |   |       |   | 20.2 |  |   | 390.2  
|Property, plant and equipment                       |  |                                | 681.7 |                     |   | 423.7                  |  |   |                |   |       |   | 9.2  |  |   | 1,114.6
|Expenditures for property, plant and equipment      |  |                                | 7.2   |                     |   | 98.2                   |  |   |                |   |       |   | 0.4  |  |   | 105.8  

Note 11  Gain on Issuance of Units in Inergy

In March 2009, Inergy issued 4,000,000 common units representing Inergy limited partner interests. Excluding the underwriters option to purchase additional units,
net proceeds from the common unit offering amounted to approximately $85.6 million. As permitted by Staff Accounting Bulletin No. 51 (SAB 51), the Company recorded a gain of $2.8 million to recognize the increase in value of its
investment in Inergy.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying consolidated financial statements and Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K of Inergy Holdings, L.P. for the fiscal year ended September 30, 2008.

The statements in this Quarterly Report on Form 10-Q that are not historical facts, including most importantly, those statements preceded by, or that include the words
may, believes, expects, anticipates or the negation thereof, or similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995 (Reform Act). Such forward-looking statements include, but are not limited to, statements that: (i) we believe our wholesale supply, marketing and distribution business complements our retail distribution business,
(ii) we expect recovery of goodwill through future cash flows associated with acquisitions, and (iii) we believe that anticipated cash from operations and borrowings under our credit facility will be sufficient to meet our liquidity needs
for the foreseeable future. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: weather in our area of operations; market price of propane; availability of financing; changes in, or failure to
comply with, government regulations; the costs, uncertainties and other effects of legal and administrative proceedings and other risks and uncertainties detailed in our Securities and Exchange Commission filings. For those statements, we claim the
protections of the safe harbor for forward-looking statements contained in the Reform Act. We will not undertake and specifically decline any obligation to publicly release the result of any revisions to any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect events or circumstances after anticipated or unanticipated events.

Overview

Our cash-generating assets consist of our partnership interests, including incentive distribution rights, in Inergy, L.P. (Inergy), a
publicly traded Delaware limited partnership. Our primary objective is to increase distributable cash flow to our unitholders through our ownership of partnership interests in Inergy. Our incentive distribution rights entitle us to receive an
increasing percentage of total cash distributions made by Inergy as it reaches certain target distribution levels and have resulted in significantly increasing cash distributions to us.

Our aggregate partnership interests in Inergy consist of the following:



| |  |  | a 100% ownership interest in each of the managing general partner of Inergy, which manages Inergys business and affairs, and the non-managing general partner
of Inergy, which owns an approximate 0.8% general partner interest in Inergy;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 4,706,689 Inergy common units, representing an aggregate limited partner interest in Inergy of approximately 8.4%;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | all of the incentive distribution rights in Inergy which entitle us to receive increasing percentages, up to a maximum of 48.0%, of any cash distributed by Inergy
as certain target distribution levels are reached in excess of $0.33 per Inergy unit in any quarter.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Inergy is a growing retail and
wholesale propane supply, marketing and distribution business. Inergy also owns and operates a growing midstream business that includes two natural gas storage facilities (Stagecoach and Steuben), a liquefied petroleum gas
(LPG) storage facility, a natural gas liquids (NGL) business and a solution-mining and salt production company (US Salt). Inergy further intends to pursue its growth objectives through, among other things, future
acquisitions, operating in attractive markets and focusing its operations under established and locally recognized trade names.

Inergy has grown primarily
through acquisitions and to a lesser extent through organic expansion projects. Since the inception of its predecessor in November 1996 through March 31, 2009, Inergy has acquired 81 companies, including 75 retail propane companies and 6
midstream businesses, for an aggregate purchase price of approximately $1.7 billion, including working capital, assumed liabilities and acquisition costs.



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In October 2008, Inergy acquired the assets of the Blu-Gas group of companies (Blu-Gas) headquartered in
Denver, North Carolina. Blu-Gas delivers propane to approximately 9,300 customers. In conjunction with the acquisition, Inergy issued 309,194 common units to Blu-Gas in a private placement as a portion of the purchase price. The purchase price
allocation for this acquisition has been prepared on a preliminary basis pending final asset valuation and asset rationalization, and changes are expected when additional information becomes available. Changes to final asset valuation of prior
fiscal year acquisitions have been included in our consolidated financial statements but are not material.

Since we control the managing general partner
of Inergy, we reflect our ownership interest in Inergy on a consolidated basis, which means that our financial results are combined with Inergys financial results and the results of our other subsidiaries. The limited partner interests in
Inergy not owned by affiliates of the managing general partner are reflected as an expense in our results of operations. We have no separate operating activities apart from those conducted by Inergy, and our cash flows consist of distributions from
Inergy on the partnership interests we own. Our consolidated results of operations principally reflect the results of operations of Inergy, and also include our provision for income taxes and interest of non-controlling partners in Inergys net
income. Accordingly, the discussion of our financial position and results of operations in this Managements Discussion and Analysis of Financial Condition and Results of Operations reflects the operating activities and results of
operations of Inergy.

The retail propane distribution business is largely seasonal due to propanes primary use as a heating source in residential
and commercial buildings. As a result, cash flows from operations are generally highest from November through April when customers pay for propane purchased during the six-month peak heating season of October through March.

Because a substantial portion of Inergys propane is used in the weather-sensitive residential markets, the temperatures realized in its areas of operations,
particularly during the six-month peak heating season of October through March, have a significant effect on its financial performance. In any given area, warmer-than-normal temperatures will tend to result in reduced propane use, while sustained
colder-than-normal temperatures will tend to result in greater propane use. Therefore, Inergy uses information on normal temperatures in understanding how historical results of operations are affected by temperatures that are colder or warmer than
normal and in preparing forecasts of future operations, which are based on the assumption that normal weather will prevail in each of its operating regions. Heating degree days are a general indicator of how weather impacts propane usage
and are calculated for any given period by adding the difference between 65 degrees and the average temperature of each day in the period (if less than 65 degrees). While a substantial portion of Inergys propane is used by its customers for
heating needs, Inergys propane operations are geographically diversified and not all of its propane sales are weather sensitive. Together, these factors may make it difficult to draw definitive conclusions as to the correlation of
Inergys gallon sales to weather calculations comparing weather in a year to normal or to the prior year.

The retail propane business is a
margin-based business where the level of profitability is largely dependent on the difference between sales prices and product costs. The unit cost of propane is subject to volatile changes as a result of product supply or other market
conditions. Propane unit cost changes can occur rapidly over a short period of time and can impact margins as sales prices may not change as rapidly. There is no assurance that Inergy will be able to fully pass on product cost increases,
particularly when product costs increase rapidly. Inergy has generally been successful in passing on higher propane costs to its customers and has historically maintained or increased its gross margin per gallon in periods of rising costs. In
periods of increasing costs, Inergy has experienced a decline in its gross profit as a percentage of revenues. In addition, during those periods Inergy has historically experienced conservation of propane gallons used by its customers which has
resulted in a decline in gross profit. In periods of decreasing costs, Inergy has experienced an increase in its gross profit as a percentage of revenues. There is no assurance that because propane prices decline customers will use more propane and
thus historical gallon sales declines Inergy has attributed to customer conservation will reverse.

Inergy believes its wholesale supply, marketing and
distribution business complements its retail distribution business. Through its wholesale operations, Inergy distributes propane and also offers price risk management services to propane retailers, resellers and other related businesses as well as
energy marketers and dealers, through a variety of financial and other instruments, including:



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| |  |  | forward contracts involving the physical delivery of propane;
| | - |  | -------------------------------------------------------------



| |  |  | swap agreements which require payments to (or receipt of payments from) counterparties based on the differential between a fixed and variable price for propane; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | options, futures contracts on the New York Mercantile Exchange and other contractual arrangements.
| | - |  | --------------------------------------------------------------------------------------------------

Inergy engages in derivative transactions to reduce the effect of price volatility on its product costs and to help ensure the availability of propane during periods of
short supply. Inergy attempts to balance its contractual portfolio by purchasing volumes only when Inergy has a matching purchase commitment from its wholesale customers. However, Inergy may experience net unbalanced positions from time to time.

Inergys midstream operations primarily include the storage, processing, fractionation, and sale of natural gas and natural gas liquids and, to a
lesser extent, the sale of salt from solution mining of salt effective with the acquisition of U.S. Salt in August 2008. The cash flows from these operations are predominantly fee-based with creditworthy counterparties and, therefore, are not
significantly affected in the short-term by changing commodity prices, seasonality, or weather fluctuations.

Results of Operations

The results of operations discussed below principally reflect the activities of Inergy. Because our financial statements represent combined consolidated results of
Inergy, our financial statements are substantially similar to Inergys. The primary differences in our financial statements include the following amounts in the Statements of Operations:



| |  |  | Our recognition of gain on issuance of units in Inergy. In accordance with Staff Accounting Bulletin No. 51, in certain circumstances, we can
recognize an increase in the value of our investment in Inergy when Inergy issues additional common units to third parties at a unit price that exceeds the current carrying value of our investment in Inergy common units. Historically, Inergy has
grown through acquisitions funded in part through the issuance of equity. Because we expect Inergys acquisition and related financing activity to continue for the foreseeable future, it is likely that we will continue to recognize gains as a
result of future equity issuances by Inergy.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provision for Income Taxes. Our provision for income taxes is primarily related to income earned by IPCH Acquisition Corp. (IPCHA), a
wholly-owned subsidiary of the Company.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest of Non-Controlling Partners in Inergys Net Income. We adjust our net income by excluding the earnings allocated to Inergy limited partner
units that are not directly or indirectly owned by us. At March 31, 2009, we owned an approximate 8.4% limited partner interest in Inergy together with a 0.8% non-managing general partner interest; and the non-affiliated unitholders owned a
90.8% limited partner interest in Inergy.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

The following table summarizes the consolidated income statement components for the three months ended March 31, 2009 and 2008, respectively (in millions):



|                                                                                                                           |  |                             |       |   |        |   |       |            |  |   |            |   |  |       |   
|-------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ------ | - | ----- | ---------- |  | - | ---------- | - |  | ----- | --
|                                                                                                                           |  | Three Months EndedMarch 31, |       |   | Change |  
|                                                                                                                           |  | 2009                        |       |   | 2008   |   |       | In Dollars |  |   | Percentage |  
|Revenue                                                                                                                    |  | $                           | 570.1 |   |        | $ | 648.2 |            |  | $ | (78.1      | ) |  | (12.0 | )%
|Cost of product sold                                                                                                       |  |                             | 358.0 |   |        |   | 459.6 |            |  |   | (101.6     | ) |  | (22.1 | ) 
|                                                                                                                           |  |                             |       |   |        |   |       |            |  |   |            |   |  |       |   
|Gross profit                                                                                                               |  |                             | 212.1 |   |        |   | 188.6 |            |  |   | 23.5       |   |  | 12.5  |   
|Operating and administrative expenses                                                                                      |  |                             | 73.7  |   |        |   | 68.6  |            |  |   | 5.1        |   |  | 7.4   |   
|Depreciation and amortization                                                                                              |  |                             | 26.6  |   |        |   | 23.2  |            |  |   | 3.4        |   |  | 14.7  |   
|Gain (loss) on disposal of assets                                                                                          |  |                             | (2.3  | ) |        |   | 0.1   |            |  |   | (2.4       | ) |  | *     |   
|                                                                                                                           |  |                             |       |   |        |   |       |            |  |   |            |   |  |       |   
|Operating income                                                                                                           |  |                             | 109.5 |   |        |   | 96.9  |            |  |   | 12.6       |   |  | 13.0  |   
|Interest expense, net                                                                                                      |  |                             | (18.2 | ) |        |   | (15.3 | )          |  |   | (2.9       | ) |  | (19.0 | ) 
|                                                                                                                           |  |                             |       |   |        |   |       |            |  |   |            |   |  |       |   
|Income before gain on issuance of units in Inergy, income taxes and interest of non-controlling partners in Inergy and ASC |  |                             | 91.3  |   |        |   | 81.6  |            |  |   | 9.7        |   |  | 11.9  |   
|Gain on issuance of units in Inergy                                                                                        |  |                             | 2.9   |   |        |   |      |            |  |   | 2.9        |   |  | *     |   
|Provision for income taxes                                                                                                 |  |                             | (0.8  | ) |        |   | (0.7  | )          |  |   | (0.1       | ) |  | (14.3 | ) 
|Interest of non-controlling partners in Inergys net income                                                                |  |                             | (72.3 | ) |        |   | (65.7 | )          |  |   | (6.6       | ) |  | (10.0 | ) 
|Interest of non-controlling partners in ASCs consolidated net income                                                      |  |                             | (0.3  | ) |        |   | (0.2  | )          |  |   | (0.1       | ) |  | (50.0 | ) 
|                                                                                                                           |  |                             |       |   |        |   |       |            |  |   |            |   |  |       |   
|Net income                                                                                                                 |  | $                           | 20.8  |   |        | $ | 15.0  |            |  | $ | 5.8        |   |  | 38.7  | % 
|                                                                                                                           |  |                             |       |   |        |   |       |            |  |   |            |   |  |       |   



|* | not meaningful
|- | --------------

The following table summarizes revenues, including
associated volume of gallons sold, for the three months ended December 31, 2008 and 2007, respectively (in millions):



|                                     |  |                             |       |        |         |            |                             |   |         |   |  |       |    |      |       |          |       |  |         |   |  |       |   
|------------------------------------ |  | --------------------------- | ----- | ------ | ------- | ---------- | --------------------------- | - | ------- | - |  | ----- | -- | ---- | ----- | -------- | ----- |  | ------- | - |  | ----- | --
|                                     |  | Revenues                    |       |        | Gallons |           
|                                     |  | Three Months EndedMarch 31, |       | Change |         |            | Three Months EndedMarch 31, |   | Change  |  
|                                     |  | 2009                        |       | 2008   |         | In Dollars |                             |   | Percent |   |  | 2009  |    | 2008 |       | In Units |       |  | Percent |  
|Retail propane                       |  | $                           | 304.1 |        | $       | 352.9      |                             | $ | (48.8   | ) |  | (13.8 | )% |      | 124.7 |          | 138.6 |  | (13.9   | ) |  | (10.0 | )%
|Wholesale propane                    |  |                             | 139.8 |        |         | 173.2      |                             |   | (33.4   | ) |  | (19.3 | )  |      | 130.0 |          | 117.3 |  | 12.7    |   |  | 10.8  |   
|Other retail                         |  |                             | 72.8  |        |         | 64.6       |                             |   | 8.2     |   |  | 12.7  |    |      |      |          |      |  |        |   |  |      |   
|Storage, fractionation and midstream |  |                             | 53.4  |        |         | 57.5       |                             |   | (4.1    | ) |  | (7.1  | )  |      |      |          |      |  |        |   |  |      |   
|                                     |  |                             |       |        |         |            |                             |   |         |   |  |       |    |      |       |          |       |  |         |   |  |       |   
|Total                                |  | $                           | 570.1 |        | $       | 648.2      |                             | $ | (78.1   | ) |  | (12.0 | )% |      | 254.7 |          | 255.9 |  | (1.2    | ) |  | (0.5  | )%
|                                     |  |                             |       |        |         |            |                             |   |         |   |  |       |    |      |       |          |       |  |         |   |  |       |   

Volume.During the three months ended March 31, 2009, we sold approximately 124.7 million retail
gallons of propane, a decrease of 13.9 million gallons or 10.0% from the 138.6 million retail gallons sold during the same three-month period in 2008. Gallons sold during the three months ended March 31, 2009 declined as compared to
the same prior year period as a result of a 20.3 million gallon decrease in volume sold at our existing locations partially offset by a 6.4 million gallon increase from acquisition-related volume. Although the weather in our areas of
operations was approximately 2% colder than the prior year period and approximately normal when compared to our calculations using degree day data provided by NOAA, the increase in gallon sales associated with this colder weather was more than
offset by (1) continued customer conservation, which we believe resulted primarily from the current overall weak United States economic environment and to a lesser extent the lingering effects of propane cost which had been at record high
prices the past several years, and (2) volume declines from net customer losses during earlier periods of relatively high propane costs, including low margin and less profitable customers.



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##### Table of Contents

Wholesale gallons delivered increased 12.7 million gallons, or 10.8%, to 130.0 million gallons in the three
months ended March 31, 2009 from 117.3 million gallons in the three months ended March 31, 2008. The increase was due primarily to greater volumes sold to existing customers and addition of new customers, partially offset by the same
factors contributing to the decline in retail gallons previously discussed.

The total natural gas liquid gallons sold or processed by our West Coast NGL
operations increased 5.0 million gallons, or 8.9%, to 61.2 million gallons during the three months ended March 31, 2009 from 56.2 million gallons during the same three-month period in 2008. This increase was attributable to the
addition of natural gas liquid processing contracts in late fiscal 2008 and early fiscal 2009 which became effective this fiscal year.

During the three
months ended March 31, 2009 and 2008, our Northeast natural gas and LPG storage facilities were 100% contracted. The total volume available for storage was the same during each of these periods.

Revenues. Revenues for the three months ended March 31, 2009 were $570.1 million, a decrease of $78.1 million, or 12.0%, from $648.2 million during the same
three-month period in 2008.

Revenues from retail propane sales were $304.1 million for the three months ended March 31, 2009 compared to $352.9
million during the same three-month period in 2008. This $48.8 million, or 13.8%, decrease resulted primarily from a combination of lower overall average selling price of propane and lower volume sales to existing customers as described above, which
together contributed to a $64.3 million revenue decline, partially offset by acquisition-related sales, which resulted in higher revenues of $15.5 million.

Revenues from wholesale propane sales were $139.8 million in the three months ended March 31, 2009, a decrease of $33.4 million or 19.3%, from $173.2 million in the three months ended March 31, 2008. This decrease resulted
primarily from the lower average selling price of propane, which contributed $52.2 million to the decrease in revenues. The lower selling price in our wholesale division in 2009 compared to 2008 was the result of the lower cost of propane. This
decrease was partially offset by increases in volume sold to existing and new customers.

Revenues from other retail sales, which primarily includes
distillates, service, rental, appliance sales and transportation services, were $72.8 million for the three months ended March 31, 2009, an increase of $8.2 million, or 12.7%, from $64.6 million during the same three-month period in 2008.
Revenue from other retail sales increased $24.6 million as a result of acquisition-related sales, partially offset by a $16.4 million decline in distillate revenues from existing locations. Distillate revenues decreased at existing locations as a
result of lower volume sold coupled with a decline in comparable average selling price as a result of lower wholesale cost.

Revenues from storage,
fractionation and other midstream activities were $53.4 million for the three months ended March 31, 2009, a decrease of $4.1 million or 7.1% from $57.5 million during the same three-month period in 2008. Revenues from our West Coast NGL
operations decreased $18.1 million primarily as a result of decreases in commodity cost and expected changes in the variety of natural gas liquid products sold. Partially offsetting this decrease was a $12.5 million increase due to the acquisition
of US Salt. In addition, revenues at our Bath LPG Storage Facility and Stagecoach Storage Facility increased due to an increase in contractual rates and the commencement of operations on the North Lateral connecting to Millennium Pipeline in
December 2008, respectively.

Cost of Product Sold.Cost of product sold for the three months ended March 31, 2009 was $358.0 million, a
decrease of $101.6 million, or 22.1%, from $459.6 million during the same three-month period in 2008.

Retail propane cost of product sold was $152.4
million for the three months ended March 31, 2009 compared to $215.5 million for the same three-month period in 2008. This $63.1 million, or 29.3%, decrease in retail cost of product sold was driven by a 21% decline in the average per gallon
cost of propane along with lower volume sales at our existing locations as discussed above, which together reduced costs by approximately $70.6 million. These factors were partially offset by a $6.4 million increase in the cost of product sold
associated with acquisition-related volume and a $1.1 million increase due to changes in non-cash charges on derivative contracts associated with retail propane fixed price sales contracts.



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Wholesale propane cost of product sold in the three months ended March 31, 2009 was $131.2 million, a decrease of
$34.9 million or 21.0%, from wholesale cost of product sold of $166.1 million in 2008. These lower costs were primarily a result of an approximate $52.9 million decrease due to the lower average cost of propane, partially offset by an $18.0 million
increase in volume sold to existing and new customers.

Other cost of product sold was $46.0 million for the three months ended March 31, 2009
compared to $42.8 million during the same three-month period in 2008. This $3.2 million, or 7.5%, increase was primarily due to higher costs associated with acquisitions of $19.8 million and a $1.1 million increase in transportation costs, partially
offset by a $17.6 million decline in costs from distillate sales at existing locations and a decline in costs for other products and services of $0.1 million.

Storage, fractionation and other midstream cost of product sold was $28.4 million for the three months ended March 31, 2009, a decrease of $6.8 million, or 19.3%, from $35.2 million during the same three-month period in 2008. Costs
from our West Coast NGL operations were $16.5 million lower primarily as a result of decreases in commodity cost and expected changes in the variety of natural gas liquid products sold due to additional contracts. Partially offsetting this decrease
was an $8.3 million increase in cost due to the acquisition of US Salt.

Our retail and wholesale cost of product sold consists primarily of tangible
products sold including all propane, distillates and other natural gas liquids sold and all propane-related appliances sold. Other costs incurred in conjunction with the distribution of these products are included in operating and administrative
expenses and consist primarily of wages to delivery personnel, delivery vehicle costs consisting of fuel costs, repair and maintenance and lease expense, and depreciation on tanks being rented to customers. Costs associated with delivery vehicles
approximated $16.8 million and $18.0 million for the three months ended March 31, 2009 and 2008, respectively. In addition, the depreciation expense associated with the delivery vehicles and customer tanks is reported within depreciation and
amortization expense and amounted to $7.6 million for the three months ended March 31, 2009 and 2008. Since we include these costs in our operating and administrative expense and depreciation and amortization expense rather than in cost of
product sold, our results may not be comparable to other entities in our lines of business if they include these costs in cost of product sold.

Our
storage, fractionation and other midstream cost of product sold consists primarily of commodity and transportation costs. Other costs incurred in conjunction with these services are included in operating and administrative expense and depreciation
and amortization expense and consist primarily of depreciation, vehicle costs consisting of fuel costs and repair and maintenance and wages. Depreciation expense for storage, fractionation and other midstream amounted to $7.8 million and $6.8
million for the three months ended March 31, 2009 and 2008, respectively. Vehicle costs and wages for personnel directly involved in providing midstream services amounted to $0.7 million for the three months ended March 31, 2009 and 2008.
Since we include these costs in our operating and administrative expense and depreciation and amortization expense rather than in cost of product sold, our results may not be comparable to other entities in our lines of business if they include
these costs in cost of product sold.

Gross Profit.Gross profit for the three months ended March 31, 2009 was $212.1 million, an increase of
$23.5 million, or 12.5%, from $188.6 million during the same three-month period in 2008.

Retail propane gross profit was $151.7 million for the
three months ended March 31, 2009 compared to $137.4 million in the same three-month period in 2008. This $14.3 million, or 10.4%, increase in retail propane gross profit was mostly attributable to higher cash margin per gallon of approximately
$26.5 million and $9.1 million associated with acquisitions, partially offset by a $20.2 million decline in gross profit resulting from lower retail gallon sales at existing locations as discussed above and a $1.1 million decline related to changes
in non-cash charges on derivative contracts associated with retail propane fixed price sales contracts as discussed above. The increase in cash margin per gallon was primarily the result of maintaining higher selling prices in certain markets while
cost of propane declined.

Wholesale propane gross profit was $8.6 million in the three months ended March 31, 2009 compared to $7.1 million in the
three months ended March 31, 2008, an increase of $1.5 million or 21.1%. This increase was primarily the result of both increased volumes sold and higher margins that we were able to attain in a period of regional supply disruption.

Other gross profit was $26.8 million for the three months ended March 31, 2009 compared to $21.8 million for the same three-month period in 2008. This $5.0
million, or 22.9%, increase was due primarily to acquisitions.



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Storage, fractionation and other midstream gross profit was $25.0 million in the three months ended March 31, 2009
compared to $22.3 million in the same three-month period in 2008, an increase of $2.7 million, or 12.1%. Approximately $4.2 million of this increase was due to the acquisition of US Salt, which was partially offset by a decrease in gross profit from
our West Coast NGL and the Stagecoach Storage Facility.

Operating and Administrative Expenses.Operating and administrative expenses were $73.7
million for the three months ended March 31, 2009 compared to $68.6 million in the same three-month period in 2008. This $5.1 million, or 7.4%, increase in operating expenses was due primarily to acquisitions and incentive compensation, which
increased $6.3 million and $4.0 million, respectively. Offsetting these increases were lower operating expenses from existing operations of approximately $5.2 million comprised predominantly of lower salaries, vehicle expenses and casualty
insurance.

Depreciation and Amortization.Depreciation and amortization was $26.6 million for the three months ended March 31, 2009 compared
to $23.2 million during the same three-month period in 2008. This $3.4 million, or 14.7%, increase resulted primarily from acquisitions and the expansion projects completed in Inergys midstream segment.

Interest Expense.Interest expense was $18.2 million for the three months ended March 31, 2009 compared to $15.3 million during the same three-month period
in 2008. This $2.9 million, or 19.0%, increase was due to an increase in the average debt outstanding associated with acquisitions, capital improvement projects and working capital needs, partially offset by lower average interest rates.
Additionally, during the three months ended March 31, 2009 and 2008, Inergy capitalized $2.9 million and $0.9 million, respectively, of interest related to certain capital improvement projects in its midstream segment as further described below
in Liquidity and Sources of Capital  Capital Resource Activities.

Gain on Issuance of Units in Inergy. We recorded a gain of
$2.9 million for the three months ended March 31, 2009, whereas no gain was recorded during the same period of the prior year. This increase was primarily attributable to Inergys 4,000,000 common unit issuance in March 2009.

Provision for Income Taxes.The provision for income taxes for the three months ended March 31, 2009 was $0.8 million compared to $0.7 million in the
same three-month period in 2008. The provision for income taxes for the three months ended March 31, 2009 was composed of $0.4 million of current income tax expense together with $0.4 million of deferred income tax expense.

Interest of non-controlling partners in Inergys net income. We recorded expense of $72.3 million in the three months ended March 31, 2009, as
compared to an expense of $65.7 million in the same three-month period of 2008 associated with the interests of non-controlling partners in Inergy. This $6.6 million, or 10.0%, change resulted primarily from a $9.3 million increase in Inergys
net income, which had the effect of increasing the interest of non-controlling partners in Inergys net income. Also contributing to the change was a $2.2 million increase in incentive distribution rights received by the Company from Inergy, to
which the non-controlling partners are not entitled.

Net Income.Net income was $20.8 million for the three months ended March 31, 2008
compared to net income of $15.0 million for the same three-month period in 2008. The $5.8 million, or 38.7%, increase in net income was primarily attributable to the higher net income at Inergy in the three months ended March 31, 2009 and the
gain on issuance of units in Inergy of $2.9 million, partially offset by the increase in expense related to the interest of non-controlling partners in Inergys net income.



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Six Months Ended March 31, 2009 Compared to Six Months Ended March 31, 2008

The following table summarizes the consolidated income statement components for the six months ended March 31, 2009 and 2008, respectively (in millions):



|                                                                                                                           |  |                           |         |   |        |   |         |            |  |   |            |   |  |        |   
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ------ | - | ------- | ---------- |  | - | ---------- | - |  | ------ | --
|                                                                                                                           |  | Six Months EndedMarch 31, |         |   | Change |  
|                                                                                                                           |  | 2009                      |         |   | 2008   |   |         | In Dollars |  |   | Percentage |  
|Revenue                                                                                                                    |  | $                         | 1,104.1 |   |        | $ | 1,162.8 |            |  | $ | (58.7      | ) |  | (5.0   | )%
|Cost of product sold                                                                                                       |  |                           | 717.7   |   |        |   | 837.0   |            |  |   | (119.3     | ) |  | (14.3  | ) 
|                                                                                                                           |  |                           |         |   |        |   |         |            |  |   |            |   |  |        |   
|Gross profit                                                                                                               |  |                           | 386.4   |   |        |   | 325.8   |            |  |   | 60.6       |   |  | 18.6   |   
|Operating and administrative expenses                                                                                      |  |                           | 146.7   |   |        |   | 132.0   |            |  |   | 14.7       |   |  | 11.1   |   
|Depreciation and amortization                                                                                              |  |                           | 52.9    |   |        |   | 46.0    |            |  |   | 6.9        |   |  | 15.0   |   
|Gain (loss) on disposal of assets                                                                                          |  |                           | (3.0    | ) |        |   | 1.2     |            |  |   | (4.2       | ) |  | (350.0 | ) 
|                                                                                                                           |  |                           |         |   |        |   |         |            |  |   |            |   |  |        |   
|Operating income                                                                                                           |  |                           | 183.8   |   |        |   | 149.0   |            |  |   | 34.8       |   |  | 23.4   |   
|Interest expense, net                                                                                                      |  |                           | (35.4   | ) |        |   | (30.8   | )          |  |   | (4.6       | ) |  | (14.9  | ) 
|Other income                                                                                                               |  |                           |        |   |        |   | 0.1     |            |  |   | (0.1       | ) |  | (100.0 | ) 
|                                                                                                                           |  |                           |         |   |        |   |         |            |  |   |            |   |  |        |   
|Income before gain on issuance of units in Inergy, income taxes and interest of non-controlling partners in Inergy and ASC |  |                           | 148.4   |   |        |   | 118.3   |            |  |   | 30.1       |   |  | 25.4   |   
|Gain on issuance of units in Inergy                                                                                        |  |                           | 3.2     |   |        |   |        |            |  |   | 3.2        |   |  | *      |   
|Provision for income taxes                                                                                                 |  |                           | (1.3    | ) |        |   | (1.2    | )          |  |   | (0.1       | ) |  | (8.3   | ) 
|Interest of non-controlling partners in Inergys net income                                                                |  |                           | (114.4  | ) |        |   | (91.4   | )          |  |   | (23.0      | ) |  | (25.2  | ) 
|Interest of non-controlling partners in ASCs consolidated net income                                                      |  |                           | (0.7    | ) |        |   | (0.5    | )          |  |   | (0.2       | ) |  | (40.0  | ) 
|                                                                                                                           |  |                           |         |   |        |   |         |            |  |   |            |   |  |        |   
|Net income                                                                                                                 |  | $                         | 35.2    |   |        | $ | 25.2    |            |  | $ | 10.0       |   |  | 39.7   | % 
|                                                                                                                           |  |                           |         |   |        |   |         |            |  |   |            |   |  |        |   



|* | not meaningful
|- | --------------

The following table summarizes revenues, including
associated volume of gallons sold, for the six months ended March 31, 2009 and 2008, respectively (in millions):



|                                     |  |                           |         |        |         |            |                           |   |         |   |  |       |    |      |       |          |       |  |         |   |  |      |   
|------------------------------------ |  | ------------------------- | ------- | ------ | ------- | ---------- | ------------------------- | - | ------- | - |  | ----- | -- | ---- | ----- | -------- | ----- |  | ------- | - |  | ---- | --
|                                     |  | Revenues                  |         |        | Gallons |           
|                                     |  | Six Months EndedMarch 31, |         | Change |         |            | Six Months EndedMarch 31, |   | Change  |  
|                                     |  | 2009                      |         | 2008   |         | In Dollars |                           |   | Percent |   |  | 2009  |    | 2008 |       | In Units |       |  | Percent |  
|Retail propane                       |  | $                         | 571.8   |        | $       | 602.8      |                           | $ | (31.0   | ) |  | (5.1  | )% |      | 229.1 |          | 243.0 |  | (13.9   | ) |  | (5.7 | )%
|Wholesale propane                    |  |                           | 281.3   |        |         | 325.9      |                           |   | (44.6   | ) |  | (13.7 | )  |      | 249.9 |          | 225.9 |  | 24.0    |   |  | 10.6 |   
|Other retail                         |  |                           | 142.1   |        |         | 121.4      |                           |   | 20.7    |   |  | 17.1  |    |      |      |          |      |  |        |   |  |     |   
|Storage, fractionation and midstream |  |                           | 108.9   |        |         | 112.7      |                           |   | (3.8    | ) |  | (3.4  | )  |      |      |          |      |  |        |   |  |     |   
|                                     |  |                           |         |        |         |            |                           |   |         |   |  |       |    |      |       |          |       |  |         |   |  |      |   
|Total                                |  | $                         | 1,104.1 |        | $       | 1,162.8    |                           | $ | (58.7   | ) |  | (5.0  | )% |      | 479.0 |          | 468.9 |  | 10.1    |   |  | 2.2  | % 
|                                     |  |                           |         |        |         |            |                           |   |         |   |  |       |    |      |       |          |       |  |         |   |  |      |   

Volume.During the six months ended March 31, 2009, we sold approximately 229.1 million retail
gallons of propane, a decrease of 13.9 million gallons or 5.7% from the 243.0 million retail gallons sold during the same six-month period in 2008. This decline in gallons sold during the six months ended March 31, 2009 compared to
the same prior year period resulted from a 25.1 million gallon decline in volume sold at our exiting locations partially offset by an 11.2 million increase from acquisition-related volume. Although the weather in our areas of operations
was approximately 7% colder than the prior year period and approximately normal when compared to our calculations using degree day data provided by NOAA, the increase in gallon sales associated with this colder weather was more than offset by
(1) continued customer conservation, which we believe resulted primarily from the lingering effects of the higher cost of propane that existed at the end of our fiscal year 2008 and into the early part of our first fiscal quarter of 2009 before
costs declined substantially, as well as the current overall weak United States economic environment, and (2) volume declines from net customer losses during these periods of high propane costs, including low margin and less profitable
customers.



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Wholesale gallons delivered increased 24.0 million gallons, or 10.6%, to 249.9 million gallons in the six
months ended March 31, 2009 from 225.9 million gallons in the six months ended March 31, 2008. The increase was due primarily to greater volumes sold to existing customers and addition of new customers.

The total natural gas liquid gallons sold or processed by our West Coast NGL operations increased 15.2 million gallons, or 13.7%, to 126.2 million gallons
during the six months ended March 31, 2009 from 111.0 million gallons during the same six-month period in 2008. This increase was attributable to the addition of natural gas liquid processing contracts in late fiscal 2008 and early fiscal
2009 which became effective this fiscal year.

During the six months ended March 31, 2009 and 2008, our Northeast natural gas and LPG storage
facilities were 100% contracted. The total volume available for storage was the same during each of these periods.

Revenues. Revenues for the six
months ended March 31, 2009 were $1,104.1 million, a decrease of $58.7 million, or 5.0%, from $1,162.8 million during the same six-month period in 2008.

Revenues from retail propane sales were $571.8 million for the six months ended March 31, 2009 compared to $602.8 million during the same six-month period in 2008. This $31.0 million, or 5.1%, decrease resulted primarily from a $62.3
million reduction in retail propane revenues arising from lower retail volume sales at our existing locations as discussed above, partially offset by a slightly higher overall average selling price of propane and acquisition-related sales, which
resulted in higher revenues of $3.5 million and $27.8 million, respectively.

Revenues from wholesale propane sales were $281.3 million in the six months
ended March 31, 2009, a decrease of $44.6 million or 13.7%, from $325.9 million in the six months ended March 31, 2008. This decrease resulted primarily from the lower average selling price of propane, which contributed $79.3 million to
the decrease in revenues. The lower selling price in our wholesale division in 2009 compared to 2008 was the result of the lower cost of propane. This decrease was partially offset by increases in volume sold to existing and new customers.

Revenues from other retail sales, which primarily includes distillates, service, rental, appliance sales and transportation services, were $142.1 million
for the six months ended March 31, 2009, an increase of $20.7 million, or 17.1%, from $121.4 million during the same six-month period in 2008. Revenues from other retail sales increased approximately $47.1 million due to acquisition-related
sales, partially offset by a decline in distillate revenues from existing locations of approximately $24.9 million and a decline in other revenues of $1.5 million. Distillate revenues decreased at existing locations as a result of lower volume sold
coupled with a decline in our average selling price as a result of lower wholesale cost.

Revenues from storage, fractionation and other midstream
activities were $108.9 million for the six months ended March 31, 2009, a decrease of $3.8 million or 3.4% from $112.7 million during the same six-month period in 2008. Revenues from our West Coast NGL operations decreased $29.1 million
primarily as a result of decreases in commodity cost and expected changes in the variety of natural gas liquid products sold. Partially offsetting this decrease was a $23.4 million increase due to the acquisition of US Salt. In addition, revenues at
our Bath LPG Storage Facility and Stagecoach Storage Facility increased due to an increase in contractual rates and the commencement of operations on the North Lateral connecting to Millennium Pipeline in December 2008, respectively.

Cost of Product Sold.Cost of product sold for the six months ended March 31, 2009 was $717.7 million, a decrease of $119.3 million, or 14.3%, from $837.0
million during the same six-month period in 2008.

Retail propane cost of product sold was $299.8 million for the six months ended March 31, 2009
compared to $373.3 million for the same six-month period in 2008. This $73.5 million, or 19.7%, decrease in retail cost of product sold was driven by a 15% decline in the average per gallon cost of propane along with lower volume sales at our
existing locations as discussed above, which together reduced costs by approximately $87.0 million. These factors were partially offset by a $12.1 million increase in the cost of product sold associated with acquisition-related volume and a $1.4
million increase in cost of product sold related to changes in non-cash charges on derivative contracts associated with retail propane fixed price sales contracts.



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Wholesale propane cost of product sold in the six months ended March 31, 2009 was $267.0 million, a decrease of
$48.6 million or 15.4%, from wholesale cost of product sold of $315.6 million in 2008. These lower costs were primarily a result of an approximate $82.2 million decrease due to the lower average cost of propane, partially offset by a $33.6 million
increase in volume sold to existing and new customers.

Other cost of product sold was $89.0 million for the six months ended March 31, 2009 compared
to $77.8 million during the same six-month period in 2008. This $11.2 million, or 14.4%, increase was primarily due to higher costs associated with acquisitions of $36.8 million and an increase in costs for other products and services of $0.5
million, partially offset by lower costs from distillate sales at existing locations of $26.1 million due to both declines in volume sales and average cost of product.

Storage, fractionation and other midstream cost of product sold was $61.9 million for the six months ended March 31, 2009, a decrease of $8.4 million, or 11.9%, from $70.3 million during the same six-month period
in 2008. Costs from our West Coast NGL operations were $27.1 million lower primarily as a result of decreases in commodity cost and expected changes in the variety of natural gas liquid products sold due to additional contracts. Partially offsetting
this decrease was a $15.9 million increase in cost due to the acquisition of US Salt.

Our retail and wholesale cost of product sold consists primarily of
tangible products sold including all propane, distillates and other natural gas liquids sold and all propane-related appliances sold. Other costs incurred in conjunction with the distribution of these products are included in operating and
administrative expenses and consist primarily of wages to delivery personnel, delivery vehicle costs consisting of fuel costs, repair and maintenance and lease expense, and depreciation on tanks being rented to customers. Costs associated with
delivery vehicles approximated $34.1 million and $35.9 million for the six months ended March 31, 2009 and 2008, respectively. In addition, the depreciation expense associated with the delivery vehicles and customer tanks is reported within
depreciation and amortization expense and amounted to $15.2 million for the six months ended March 31, 2009 and 2008. Since we include these costs in our operating and administrative expense and depreciation and amortization expense rather than
in cost of product sold, our results may not be comparable to other entities in our lines of business if they include these costs in cost of product sold.

Our storage, fractionation and other midstream cost of product sold consists primarily of commodity and transportation costs. Other costs incurred in conjunction with these services are included in operating and administrative expense and
depreciation and amortization expense and consist primarily of depreciation, vehicle costs consisting of fuel costs and repair and maintenance and wages. Depreciation expense for storage, fractionation and other midstream amounted to $15.2 million
and $13.0 million for the six months ended March 31, 2009 and 2008, respectively. Vehicle costs and wages for personnel directly involved in providing midstream services amounted to $1.5 million and $1.3 million for the six months ended
March 31, 2009 and 2008, respectively. Since we include these costs in our operating and administrative expense and depreciation and amortization expense rather than in cost of product sold, our results may not be comparable to other entities
in our lines of business if they include these costs in cost of product sold.

Gross Profit.Gross profit for the six months ended March 31,
2009 was $386.4 million, an increase of $60.6 million, or 18.6%, from $325.8 million during the same six-month period in 2008.

Retail propane gross
profit was $272.0 million for the six months ended March 31, 2009 compared to $229.5 million in the same six-month period in 2008. This $42.5 million, or 18.5%, increase in retail propane gross profit was mostly attributable to higher cash
margin per gallon of approximately $52.0 million and an increase of $15.7 million associated with acquisitions, partially offset by a $23.8 million decline in gross profit resulting from lower retail gallon sales at existing locations as discussed
above and a $1.4 million decline related to changes in non-cash charges on derivative contracts associated with retail propane fixed price sales contracts. The increase in cash margin per gallon was primarily the result of higher selling prices in
certain markets in excess of the declining cost of propane.

Wholesale propane gross profit was $14.3 million in the six months ended March 31, 2009
compared to $10.3 million in the six months ended March 31, 2008, an increase of $4.0 million or 38.8%. This increase was primarily the result of both increased volumes sold and higher margins that we were able to attain in a period of regional
supply disruption.

Other gross profit was $53.1 million for the six months ended March 31, 2009 compared to $43.6 million for the same six-month
period in 2008. This $9.5 million, or 21.8%, increase was due primarily to acquisitions.



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Storage, fractionation and other midstream gross profit was $47.0 million in the six months ended March 31, 2009
compared to $42.4 million in the same six-month period in 2008, an increase of $4.6 million, or 10.8%. Approximately $7.5 million of this increase was due to the acquisition of US Salt, which was partially offset by a decrease in gross profit from
our West Coast NGL operations and the Stagecoach Storage Facility.

Operating and Administrative Expenses.Operating and administrative expenses
were $146.7 million for the six months ended March 31, 2009 compared to $132.0 million in the same six-month period in 2008. This $14.7 million, or 11.1%, increase in operating expenses was due primarily to acquisitions and incentive
compensation, which increased $12.4 million and $8.3 million, respectively. Offsetting these increases were lower operating expenses from existing operations of approximately $6.0 million comprised predominantly of lower salaries, vehicle expenses
and casualty insurance.

Depreciation and Amortization.Depreciation and amortization was $52.9 million for the six months ended March 31, 2009
compared to $46.0 million during the same six-month period in 2008. This $6.9 million, or 15.0%, increase resulted primarily from acquisitions and the expansion projects in Inergys midstream segment.

Interest Expense.Interest expense was $35.4 million for the six months ended March 31, 2009 compared to $30.8 million during the same six-month period in
2008. This $4.6 million, or 14.9%, increase was due to an increase in the average debt outstanding associated with acquisitions, capital improvement projects and working capital needs, partially offset by lower average interest rates. Additionally,
during the six months ended March 31, 2009 and 2008, Inergy capitalized $5.2 million and $1.7 million, respectively, of interest related to certain capital improvement projects at its midstream segment as further described below in
Liquidity and Sources of Capital  Capital Resource Activities.

Gain on Issuance of Units in Inergy. We recorded a gain of
$3.2 million for the six months ended March 31, 2009, whereas no gain was recorded during the same period of the prior year. This increase was primarily attributable to Inergys 4,000,000 common unit issuance in March 2009.

Provision for Income Taxes.The provision for income taxes for the six months ended March 31, 2009 was $1.3 million compared to $1.2 million in the same
six-month period in 2008. The provision for income taxes for the six months ended March 31, 2009 was composed of $0.8 million of current income tax expense together with $0.5 million of deferred income tax expense.

Interest of non-controlling partners in Inergys net income. We recorded expense of $114.4 million in the six months ended March 31, 2009, as
compared to an expense of $91.4 million in the same six-month period of 2008 associated with the interests of non-controlling partners in Inergy. The $23.0 million, or 25.2%, change resulted primarily from a $29.6 million increase in Inergys
net income, which had the effect of increasing the interest of non-controlling partners in Inergys net income. Also contributing to the change was a $4.3 million increase in incentive distribution rights received by the Company from Inergy, to
which the non-controlling partners are not entitled.

Net Income.Net income was $35.2 million for the six months ended March 31, 2009 compared
to net income of $25.2 million for the same six-month period in 2008. The $10.0 million, or 39.7%, increase in net income was primarily attributable to the higher net income at Inergy in the six months ended March 31, 2009, partially offset by
the increase in expense related to the interest of non-controlling partners in Inergys net income.

Seasonality

The retail market for propane is seasonal because it is used primarily for heating in residential and commercial buildings. Approximately three-quarters of our retail
propane volume is sold during the peak heating season from October through March. Consequently, sales and operating profits are generated mostly in the first and fourth calendar quarters of each year.



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Liquidity and Sources of Capital

Cash Flows and Contractual Obligations

Historically, we have relied on distributions from Inergy and on borrowings
under our existing credit agreement to fund any cash requirements for our operations. We are, and have been for all periods presented, in compliance with all material financial covenants.

Net operating cash inflows were $140.6 million and $63.5 million for the six-month periods ending March 31, 2009 and 2008, respectively. The $77.1 million increase
in operating cash flows was primarily attributable to increases in the interest of non-controlling partners in Inergys net income as well as net changes in working capital balances.

Net investing cash outflows were $101.7 million and $121.0 million for the six-month periods ending March 31, 2009 and 2008, respectively. Net cash outflows were
primarily impacted by a $42.2 million decrease in cash outlays related to acquisitions, partially offset by a $20.8 million decrease in proceeds from the sale of assets and a $2.6 million increase in capital expenditures.

Net financing cash inflows (outflows) were $(38.1) million and $70.8 million for the six-month periods ending March 31, 2009 and 2008, respectively. Net cash
inflows were primarily impacted by a $178.0 million decrease in proceeds from the issuance of long-term debt, net of payments on long-term debt, a $5.4 million increase in distributions to non-controlling partners in Inergy, L.P., a $4.7 million
increase in distributions, and a $5.5 million increase in payments for deferred financing costs, partially offset by an $85.6 million increase in proceeds from the issuance of Inergy common units.

We believe that anticipated cash from operations and borrowings under the credit facilities described below will be sufficient to meet our liquidity needs for the
foreseeable future. If our plans or assumptions change or are inaccurate, or we make acquisitions, we may need to raise additional capital. We give no assurance that we can raise additional capital to meet these needs. Global financial markets and
economic conditions have been, and continue to be, disrupted and volatile. The debt and equity capital markets have been distressed. These issues, along with significant write-offs in the financial services sector, the re-pricing of credit risk and
the current weak economic conditions, may make it difficult to obtain necessary funding. Inergy has identified capital expansion project opportunities in its midstream operations. As of March 31, 2009, Inergy has firm purchase commitments
totaling approximately $20.7 million related to certain of these projects. Additional commitments or expenditures, if any, Inergy may make toward any one or more of these projects is at the discretion of the Partnership. Any discontinuation of the
construction of these projects will likely result in less future cash flow and earnings than we have previously indicated.

In February 2009, Inergy closed on a $225 million offering of senior notes under Rule 144A to eligible purchasers. The 83/4% notes mature on March 1, 2015, and were issued at 90.191% of the principal amount to yield 11%. Inergy used the net proceeds from the private placement to repay borrowings under its existing revolving
acquisition credit facility.

In March 2009, Inergy issued 4,000,000 common units representing limited partner interests. Excluding the
underwriters option to purchase additional units, net proceeds from the common unit offering amounted to approximately $85.6 million.

In April 2009,
the underwriters exercised their option to purchase additional Inergy units. Inergy issued 418,000 common units representing limited partner interests. Net proceeds from the exercise of the underwriters option amounted to approximately $9.0
million.

Description of Credit Facilities

Inergy
Holdings, L.P.

Our bank facility (the Bank Facility) consists of a $14 million working capital revolver for Holdings and a $6 million
working capital revolver for IPCHA. The maturity date of the Bank Facility is July 22, 2011 and is collateralized by certain of the our interests in Inergy. In addition, the Bank Facility is guaranteed by Inergy Partners, LLC. The interest
rates of these revolvers are based on prime rate and LIBOR plus the applicable spreads, which were 2.0% at March 31, 2009 for all outstanding debt under the Bank Facility. Unused borrowings under the Bank Facility amounted to $12.7 million and
$12.4 million at March 31, 2009 and September 30, 2008, respectively. The Bank Facility contains several covenants which, among other things, require the maintenance of various financial performance ratios, restrict the payment of
distributions to unitholders, and require financial reports to be submitted periodically to the financial institutions.



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Inergy, L.P.

Inergy
maintains borrowing capacity under a credit facility (Credit Agreement), which consists of a $75 million revolving working capital facility (Working Capital Facility) and a $350 million revolving acquisition facility
(Acquisition Facility). The effective amount of working capital borrowing capacity available to Inergy under the two facilities is $200 million utilizing capacity under the acquisition credit facility for working capital needed during
the winter heating season. Lehman Commercial Paper, Inc. (Lehman CP), a subsidiary of Lehman Brothers Holdings, Inc., holds a $25 million lender commitment within our Credit Agreement and filed for Chapter 11 Bankruptcy on
October 5, 2008. Inergy does not plan for the Lehman lender commitment to be available for the remainder of the term of the Credit Agreement. The Credit Agreement accrues interest at either prime rate or LIBOR plus applicable spreads, resulting
in an interest rate of 3.5% at March 31, 2009. At March 31, 2009, borrowings outstanding under the Credit Agreement were $15.7 million, all drawn under the Working Capital Facility. The Credit Agreement is guaranteed by each of
Inergys wholly-owned domestic subsidiaries.

During each fiscal year beginning October 1, the outstanding balance of the Working Capital
Facility must be reduced to $10.0 million or less for a minimum of 30 consecutive days during the period commencing March 1 and ending September 30 of each calendar year.

At Inergys option, loans under the Credit Agreement bear interest at either the prime rate or LIBOR (preadjusted for reserves), plus, in each case, an applicable margin. The applicable margin varies quarterly
based on its leverage ratio. Inergy also pays a fee based on the average daily unused commitments under the Credit Agreement.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Interest Rate Risk

Together with Inergy, we have long-term debt and revolving lines of credit subject to the risk of loss associated with
movements in interest rates. At March 31, 2009, we had floating rate obligations totaling approximately $202.7 million for amounts borrowed under credit agreements and interest rate swaps, which convert a portion of Inergys fixed rate
senior unsecured notes due 2014 to floating, with aggregate notional amounts of $150 million. The floating rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates.

If the floating rate were to fluctuate by 100 basis points from March 2009 levels, our interest expense would change by a total of approximately $2.0 million per year.

Commodity Price, Market and Credit Risk

Inherent in
Inergys contractual portfolio are certain business risks, including market risk and credit risk. Market risk is the risk that the value of the portfolio will change, either favorably or unfavorably, in response to changing market conditions.
Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. Inergy takes an active role in managing and controlling market and credit risk and has established control procedures, which are
reviewed on an ongoing basis. Inergy monitors market risk through a variety of techniques, including daily reporting of the portfolios position to senior management. Inergy attempts to minimize credit risk exposure through credit policies and
periodic monitoring procedures as well as through customer deposits, letters of credit and entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed
appropriate. The counterparties associated with assets from price risk management activities as of March 31, 2009 and 2008 were propane retailers, resellers, energy marketers and dealers.

The propane industry is a margin-based business in which gross profits depend on the excess of sales prices over supply costs. As a result, Inergys
profitability will be sensitive to changes in wholesale prices of propane caused by changes in supply or other market conditions. When there are sudden and sharp increases in the wholesale cost of propane, Inergy may not be able to pass on these
increases to its customers through retail or wholesale prices. Propane is a commodity and the price Inergy pays for it can fluctuate significantly in response to supply or other market conditions. Inergy has no control over supply or market
conditions. In addition, the timing of cost pass-throughs can significantly affect margins. Sudden and extended wholesale price increases could reduce gross profits and could, if continued over an extended period of time, reduce demand by
encouraging Inergys retail customers to conserve or convert to alternative energy sources.



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Inergy engages in hedging and risk management transactions, including various types of forward contracts, options, swaps
and futures contracts, to reduce the effect of price volatility on Inergys product costs, protect the value of its inventory positions, and to help ensure the availability of propane during periods of short supply. Inergy attempts to balance
its contractual portfolio by purchasing volumes only when it has a matching purchase commitment from its wholesale customers. However, Inergy may experience net unbalanced positions from time to time which it believes to be immaterial in amount. In
addition to Inergys ongoing policy to maintain a balanced position, for accounting purposes Inergy is required, on an ongoing basis, to track and report the market value of its derivative portfolio.

Fair Value

The fair value of the derivatives and inventory exchange
contracts related to price risk management activities as of March 31, 2009 and September 30, 2008 was assets of $34.3 million and $33.3 million, respectively, and liabilities of $20.1 million and $57.0 million, respectively.

Inergy uses observable market values for determining the fair value of its trading instruments. In cases where actively quoted prices are not available, other external
sources are used which incorporate information about commodity prices in actively quoted markets, quoted prices in less active markets and other market fundamental analysis. Inergys risk management department regularly compares valuations to
independent sources and models on a quarterly basis.

All contracts subject to price risk had a maturity of twenty-six months or less, however, virtually
all of the contracts will mature within twelve months.

Sensitivity Analysis

A theoretical change of 10% in the underlying commodity value would result in a negligible change in the market value of the contracts as there were approximately (0.4) million gallons of net unbalanced positions at
March 31, 2009.



|Item 4. | Controls and Procedures
|------- | -----------------------

We maintain controls and procedures
designed to provide a reasonable assurance that information required to be disclosed in our reports that we file or submit under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified
by the rules and forms of the SEC, and that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. An
evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures (as such terms are defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, management, including the Chief Executive Officer and the Chief Financial Officer, concluded that our disclosure controls and
procedures were effective as of March 31, 2009 at the reasonable assurance level. There have been no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or Rule 15d-15(f) of the Exchange Act) or in other
factors during the period ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



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PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

Part I, Item 1. Financial
Statements, Note 9 to the Consolidated Financial Statements of this Form 10-Q is hereby incorporated herein by reference.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes
to the risk factors disclosed in Item 1A, Risk Factors in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2008.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                                                                                                       
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Certificate of Conversion of Inergy Holdings, L.P. (incorporated herein by reference to Exhibit 3.1 to Inergy Holdings, L.P.s Registration Statement on Forms S-1/A (Registration No.
333-122466) filed on April 29, 2005).          
|3.2  |  | Agreement of Limited Partnership of Inergy Holdings, L.P. (incorporated herein by reference to Exhibit 3.2 to Inergy Holdings, L.P.s Registration Statement on Form S-1/A (Registration
No. 333-122466) filed on June 2, 2005).      
|     | 
|3.3  |  | Certificate of Formation of Inergy Holdings GP, LLC (incorporated herein by reference to Exhibit 3.3 to Inergy Holdings L.P.s Registration Statement on Form S-1/A (Registration No.
333-122466) filed on April 29, 2005).           
|     | 
|3.4  |  | Limited Liability Company Agreement of Inergy Holdings GP, LLC (incorporated herein by reference to Exhibit 3.4 to Inergy Holdings L.P.s Registration Statement on Form S-1/A
(Registration No. 333-122466) filed on March 14, 2005).
|     | 
|3.5  |  | Certificate of Limited Partnership of Inergy Holdings, L.P. (incorporated herein by reference to Exhibit 3.5 to Inergy Holdings, L.P.s Registration Statement on Form S-1/A (Registration
No. 333-122466) filed on April 29, 2005).  
|     | 
|3.6  |  | Amended and Restated Agreement of Limited Partnership of Inergy Holdings, L.P. (incorporated herein by reference to Exhibit A to Inergy Holdings L.P.s Prospectus (Registration No.
333-122466) filed on June 21, 2005).             
|     | 
|31.1 |  | Certification of Chief Executive Officer of Inergy Holdings, L.P. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                          



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|     |  |                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.2 |  | Certification of Chief Financial Officer of Inergy Holdings, L.P pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|     | 
|32.1 |  | Certification of Chief Executive Officer of Inergy Holdings, L.P. 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 Chief Financial Officer of Inergy Holdings, L.P. 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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SIGNATURE

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.



|                  |  |                       |  |                                                                                           
|----------------- |  | --------------------- |  | ------------------------------------------------------------------------------------------
|                  |  | INERGY HOLDINGS, L.P.
|                  |  |                      
|                  |  | By:                   |  | INERGY HOLDINGS GP, LLC                                                                   
|                  |  |                       |  | (its general partner)                                                                     
|                  |  |                      
|Date: May 7, 2009 |  | By:                   |  | /s/ R. Brooks Sherman, Jr.                                                                
|                  |  |                       |  | R. Brooks Sherman, Jr.                                                                    
|                  |  |                       |  | Executive Vice President and Chief Financial Officer                                      
|                  |  |                       |  | (Duly Authorized Officer and Principal Financial Officer and Principal Accounting Officer)



40