<PAGE>

                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, 1999

                                       OR

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

                          Commission File Number 1-2499

                       CORNERSTONE PROPANE PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                      77-0439862
(State or other jurisdiction of                 (I.R.S. Employer Identification
incorporation or organization)                  Number)

432 WESTRIDGE DRIVE\WATSONVILLE, CALIFORNIA                   95076
(Address of principal executive officers)                   (Zip Code)

       Registrant's telephone number, including area code: (831) 724-1921

                                      NONE
   (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 the number of shares outstanding of each of the issuer's classes of
common stock, as of May 14, 1999: 16,788,889 - Common Units
                                   6,597,619 - Subordinated Units

<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                           PAGES
                                                                                                           -----
                          Part I. Financial Information
<S>       <C>                                                                                            <C>
Item 1.      Financial Statements

             CORNERSTONE PROPANE PARTNERS, L.P.

             Consolidated Balance Sheets as of March 31, 1999 and 1998,                                     1
             and June 30, 1998

             Consolidated Statements of Operations for the Three Months and Nine Months                     2
             Ended March 31, 1999 and 1998

             Consolidated Statements of Cash Flows for the Nine Months Ended
             March 31, 1999 and 1998                                                                        3

             Notes to Consolidated Financial Statements                                                     4

Item 2.      Management's Discussion and Analysis of Financial Condition and
             Results of Operations of Cornerstone Propane Partners, L.P.
             for the Three Months Ended March 31, 1999 compared to the three months
             ended March 31, 1998 and for the Nine Months ended March 31, 1999
             compared to the Nine Months Ended March 31, 1998.                                             7

                           Part II. Other Information

Item 6.      Exhibits and Reports on Form 8-K                                                              15

             Signature                                                                                     16

</TABLE>


                                      ii
<PAGE>

                CORNERSTONE PROPANE PARTNERS, L.P. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                             ASSETS

                                                                    March 31, 
                                                              ---------------------     June 30,
                                                                1999         1998        1998
                                                              --------     --------     --------
<S>                                                       <C>           <C>         <C>
Current assets:
   Cash and cash equivalents                                  $ 11,717     $  6,025     $  9,366
   Trade receivables, net                                       48,218       34,729       18,467
   Inventories                                                  36,019       16,031       18,238
   Prepaid expenses and other current assets                    13,049        7,120        7,150
                                                              --------     --------     --------
         Total current assets                                  109,003       63,905       53,221

Property, plant and equipment, net                             328,303      271,256      275,288
Goodwill, net                                                  309,732      227,317      224,064
Other assets, net                                               37,592       17,746       19,938
                                                              --------     --------     --------
         Total assets                                         $784,630     $580,224     $572,511
                                                              ========     ========     ========

                                 LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
   Current portion of long-term debt                          $  3,214     $  4,184     $  3,800
   Trade accounts payable                                       44,735       20,202       18,460
   Accrued expenses                                             29,933       22,774       29,335
                                                              --------     --------     --------
         Total current liabilities                              77,882       47,160       51,595

Long-term debt, less current portion                           360,812      232,905      237,138
Due to related party                                               689        1,621        1,684
Other noncurrent liabilities                                     9,096        4,254        2,500
                                                              --------     --------     --------
         Total liabilities                                     448,479      285,940      292,917
                                                              --------     --------     --------

Commitments and contingencies

Partners' capital:
   Common unitholders                                          237,113      197,776      185,803
   Subordinated unitholders                                     92,140       90,538       88,117
   General partners                                              6,898        5,970        5,674
                                                              --------     --------     --------
         Total partners' capital                               336,151      294,284      279,594
                                                              --------     --------     --------

         Total liabilities and partners' capital              $784,630     $580,224     $572,511
                                                              ========     ========     ========

</TABLE>

    The accompanying notes are an integral part of these consolidated balance
                                     sheets.


                                      1
<PAGE>

                CORNERSTONE PROPANE PARTNERS, L.P. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per unit data)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                   Three Months Ended         Nine Months Ended 

                                                                        March 31,                March 31,
                                                                 ---------------------     ---------------------
                                                                   1999         1998         1999         1998   
                                                                 --------     --------     --------     --------
<S>                                                           <C>          <C>          <C>          <C>
Revenues                                                         $338,536     $229,332     $732,579     $623,267

Cost of sales                                                     268,189      179,362      589,273      505,302
                                                                 --------     --------     --------     --------

    Gross profit                                                   70,347       49,970      143,306      117,965
                                                                 --------     --------     --------     --------

Expenses:
    Operating, general and administrative                          34,406       25,340       90,372       72,757

    Depreciation and amortization                                   7,848        4,714       18,657       13,615
                                                                 --------     --------     --------     --------
                                                                   42,254       30,054      109,029       86,372
                                                                 --------     --------     --------     --------

    Operating income                                               28,093       19,916       34,277       31,593

Interest expense                                                    6,863        4,824       17,788       14,641
                                                                 --------     --------     --------     --------
    Income before provision for
    income taxes                                                   21,230       15,092       16,489       16,952
Provision for income taxes                                             --           43           67           95
                                                                 --------     --------     --------     --------

Net income                                                       $ 21,230     $ 15,049     $ 16,422     $ 16,857
                                                                 ========     ========     ========     ========

General partner's interest in net income                         $    425     $    301     $    328     $    337
                                                                 ========     ========     ========     ========

Limited partners' interest in net income                         $ 20,805     $ 14,748     $ 16,094     $ 16,520
                                                                 ========     ========     ========     ========

Limited partners' net income per unit                            $    .89     $    .76     $    .76     $    .92
                                                                 ========     ========     ========     ========

Weighted average number of units outstanding                       23,378       19,407       21,280       17,962
                                                                 ========     ========     ========     ========

</TABLE>

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


                                      2
<PAGE>

                CORNERSTONE PROPANE PARTNERS, L.P. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                              Nine Months Ended          
                                                                                                  March 31,
                                                                                    ---------------------------------
                                                                                            1999              1998        
                                                                                      -------------       -----------
<S>                                                                           <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                                   $         16,422     $       16,857
    Adjustments to reconcile net income to net cash used in operating
    activities:
      Depreciation and amortization                                                        18,657             13,615
      Loss or (gain) on sale of assets                                                        720               (676)
      Changes in assets and liabilities, net of effect of acquisitions:
           Trade receivables, net                                                         (21,223)             8,181
           Inventories                                                                      7,091             (2,004)
           Prepaid expenses and other current assets                                       (7,183)            (5,380)
           Trade accounts payable and accrued expenses                                     (4,298)           (19,028)
                                                                                   ---------------    ---------------
                   Net cash provided by operating activities                               10,186             11,565
                                                                                   --------------     --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Expenditures for property, plant and equipment, net                                   (13,724)           (11,916)
    Acquisitions, net of cash received                                                   (120,150)           (13,162)
    Other investments                                                                        (148)               ---
                                                                                   ---------------    --------------
                   Net cash used in investing activities                                 (134,022)           (25,078)
                                                                                   ---------------    ---------------


CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings (repayments) on Working Capital Facility                                24,730               (122)
    Payments on purchase obligations                                                      (13,215)            (3,117)
    Proceeds from Senior Note Offering                                                     85,000                 --
    Payments for debt financing                                                              (662)            (2,420)
    Proceeds from additional unit offering                                                 58,900             40,795
    Payments for additional unit offering                                                  (5,058)                --
    General Partners' contribution and payments, net                                          379              2,066
    Partnership distributions                                                             (23,887)           (26,070)
                                                                                   ---------------    ---------------
                   Net cash provided by financing activities                              126,187             11,132
                                                                                   --------------     --------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                       2,351             (2,381)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                              9,366              8,406
                                                                                   --------------     --------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                         $         11,717   $          6,025
                                                                                   ==============     ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for interest                                                       $         20,977   $         10,429
                                                                                   ==============     ==============

NON INVESTING & FINANCING ACTIVITIES
    Assets acquired in exchange for Common Units                                 $          8,805   $         17,588
                                                                                   ==============     ==============
    Assets acquired in exchange for debt                                         $         30,041   $          6,054
                                                                                   ==============     ==============

</TABLE>

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

                                      3
<PAGE>

               CORNERSTONE PROPANE PARTNERS, L.P. AND SUBSIDIDARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                        (In thousands, except unit data)
                                   (Unaudited)

1.   BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of 
Cornerstone Propane Partners, L.P. ("Cornerstone Partners") and its 
subsidiary, Cornerstone Propane L.P. (the "Operating Partnership") and the 
Operating Partnership's corporate subsidiaries, Cornerstone Sales and Service 
Corporation ("Sales and Service"), Propane Continental, Inc., Flame, Inc., 
and Coast Energy Global Services, Inc. after elimination of all material 
intercompany balances and transactions. Cornerstone Partners, the Operating 
Partnership, Sales and Service, Propane Continental, Inc., Flame, Inc., and 
Coast Energy Global Services, Inc. are collectively referred to as the 
"Partnership."

     The accompanying interim consolidated financial statements of the 
Partnership are unaudited; however, in the opinion of management, all 
adjustments necessary for a fair presentation of such consolidated financial 
statements have been reflected in the interim periods presented. Such 
adjustments consisted only of normal recurring items. The Partnership's 
business is seasonal and, accordingly, interim results are not indicative of 
results for a full year. The significant accounting policies and certain 
financial information which are normally included in financial statements 
prepared in accordance with generally accepted accounting principles, but 
which are not required for interim reporting purposes, have been condensed or 
omitted. The accompanying consolidated financial statements of the 
Partnership should be read in conjunction with the consolidated financial 
statements and related notes included in the Partnership's Annual Report on 
Form 10-K for the fiscal year ended June 30, 1998.

2.   DISTRIBUTIONS OF AVAILABLE CASH

     The Partnership will make distributions to its partners with respect to 
each fiscal quarter of the Partnership within 45 days after the end of each 
fiscal quarter in an aggregate amount equal to its Available Cash for such 
quarter. The Partnership will distribute 100% of its Available Cash (98% to 
Unitholders and 2% to the General Partners) until the Minimum Quarterly 
Distribution ("MQD") ($.54 per unit) for such quarter has been met. The MQD 
will be subject to the payment of incentive distributions in the event 
Available Cash exceeds the MQD of $.54 on all units. During the Subordination 
Period, to the extent there is sufficient Available Cash, the holders of 
Common Units have the right to receive the MQD, plus any arrearages, prior to 
the distribution of Available Cash to holders of Subordinated Units. 
Subordinated Units do not accrue arrearages with respect to distributions for 
any quarter.



                                      4
<PAGE>

               CORNERSTONE PROPANE PARTNERS, L.P. AND SUBSIDIDARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                    (Dollars in thousands, except unit data)
                                   (Unaudited)

The MQD for the three-month period from July 1, 1998 to September 30, 1998, 
of $.54 per common unit totaling $7,337 was paid on November 13, 1998. The 
MQD for the three-month period from October 1, 1998 to December 31, 1998, of 
$.54 per common unit totaling $9,247 was paid on February 12, 1999. On April 
27, 1999, the MQD for the period January 1, 1999 to March 31, 1999 was 
declared in the amount of $9,252 representing in the aggregate distributions 
to the Common Unitholders and General Partner at $.54 per common unit. This 
distribution was paid on May 14, 1999. No distributions have been declared 
and subsequently paid on the Subordinated Units for the period from October 
1, 1997 to March 31, 1999.

3.   ACQUISITIONS

     The Partnership acquired Propane Continental, Inc ("PCI") on December 
11, 1998. In addition, the Partnership consummated twelve other acquisitions 
during the nine months ended March 31, 1999. The total consideration for 
these acquisitions was approximately $159.0 million, of which approximately 
$8.8 million was in the form of Cornerstone Common Units, $120.2 million was 
paid in cash and $30.0 million was for liabilities assumed, with all such 
amounts principally related to the acquisition of PCI. Additional Common 
Units and Senior Notes were issued to fund the PCI acquisition and related 
expenses. All acquisitions have been accounted for using the purchase method 
of accounting with the excess of the purchase price over the preliminary 
estimates of fair value of net tangible and intangible assets acquired 
recorded as goodwill. The amount of goodwill is subject to adjustments based 
on more refined estimates of fair value. The results of operations of the 
acquired assets have been included in the financial statements from the date 
of acquisition. Due to the significance of the PCI acquisition, the following 
information is provided to present pro forma results as if PCI had been 
acquired on July 1, 1997. Proforma 1999 net income reflects a $3.3 million 
litigation settlement that was paid prior to the completion of the PCI 
acquisition.

<TABLE>
<CAPTION>

                                                                 Pro Forma
                                                             Nine Months Ended 
                                               ----------------------------------------------
                                                      March 1999          March 1998 
                                                     ------------        -------------
  <S>                                             <C>                       <C>
    Revenue                                          $  795,873                784,281
    Net income                                           12,526                 20,341
    Limited partners' net income per unit                   .52                    .95

</TABLE>

4.   LIMITED PARTNER NET INCOME PER UNIT

     Basic net income per unit is computed by dividing net income, after 
considering the General Partners 2% interest, by the weighted average number 
of Common and Subordinated Units outstanding during the period.


                                       5
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the historical financial condition and results of 
operations for the Partnership should be read in conjunction with the 
historical financial statements and notes thereto included elsewhere in this 
Quarterly Report on Form 10-Q.

GENERAL

The Partnership is a Delaware limited partnership initially formed to own and 
operate the propane business and assets of SYN Inc., Empire Energy 
Corporation and CGI Holdings, Inc. The Partnership's management believes that 
it is the fourth largest retail marketer of propane in the United States, 
serving more than 440,000 residential, commercial, industrial and 
agricultural customers from 307 customer service centers in 34 states.

Because a substantial portion of the Partnership's propane is used in the 
weather-sensitive residential markets, the temperatures in the Partnership's 
area of operations, particularly during the six-month peak heating season, 
have a significant effect on the financial performance of the Partnership. 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, information on normal 
temperatures is used by the Partnership 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 the 
Partnership's regions.

Gross profit margins are not only affected by weather patterns but also by 
changes in customer mix. For example, sales to residential customers 
ordinarily generate higher margins than sales to other customer groups, such 
as commercial or agricultural customers. In addition, gross profit margins 
vary by geographic region. Accordingly, profit margins could vary 
significantly from year to year in a period of identical sales volumes.



                                      6
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


ANALYSIS OF HISTORICAL RESULTS OF OPERATIONS - THREE MONTH PERIOD ENDED 
MARCH 31

The following discussion compares the results of operations and other data of 
the Partnership for the three-month period ended March 31, 1999, to the 
three-month period ended March 31, 1998.

VOLUME. During the three months ended March 31, 1999, the Partnership sold 
107.8 million retail propane gallons, an increase of 24.3 million gallons or 
29.1% from the 83.5 million retail propane gallons sold during the three 
months ended March 31, 1998. Retail volumes were driven by acquisitions and 
customer increases at "same store" locations, partially offset by the 
unfavorable impact of warmer temperatures on residential customers' usage. 
Newly acquired businesses accounted for approximately 87% of the increase 
over prior year's comparable quarter.

Based on the average number of heating degree days in the markets served by 
the Partnership, for the January to March 1999 period, temperatures were 
approximately 13% and 3% warmer than normal and last year, respectively. 
While this indicator generally measures the impact of temperatures on the 
Partnership's business, other factors such as geographic mix, magnitude and 
duration of temperature and weather conditions can also impact sales volumes. 
The overall impact of weather had an adverse impact on the Partnership's 
retail sales volume (excluding acquisitions) and earnings compared to normal 
levels for the three months ended March 31, 1999. The three months ended 
March 31 historically accounts for approximately 50% of the Partnership's 
annual earnings before interest, taxes, depreciation and amortization 
("EBITDA").

REVENUES. Revenues increased by $109.2 million or 47.6% to $338.5 million for 
the three months ended March 31, 1999, as compared to $229.3 million for the 
three months ended March 31, 1998. Wholesale revenues increased $91.0 million 
or 63.8% to $233.5 million for the three months ended March 31, 1999, as 
compared to $142.5 million for the three months ended March 31, 1998. This 
increase was primarily attributable to acquisitions of wholesale businesses 
at the beginning of the quarter. The revenues for the retail business 
increased by $18.3 million or 21.0% to $105.1 million for the three months 
ended March 31, 1999, as compared to $86.8 million for the three months ended 
March 31, 1998. The increase in retail revenues reflects the impact of sales 
from newly acquired retail businesses, which added approximately $20.8 
million in revenue during the quarter, offset by reduced sales volumes 
attributable to warmer weather and decreased selling prices related to lower 
supply costs.

                                      7
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

COST OF PRODUCT SOLD. Cost of product sold increased by $88.8 million or 
49.5% to $268.2 million for the three months ended March 31, 1999, as 
compared to $179.4 million for the three months ended March 31, 1998. The 
increase in cost of product sold was primarily due to the increased wholesale 
sales from acquired operations described above, partially offset by lower 
propane cost per gallon. As a percentage of revenues, cost of product sold 
increased to 79.2% for the three months ended March 31, 1999, as compared to 
78.2% for the three months ended March 31, 1998.

GROSS PROFIT. Gross profit increased $20.3 million or 40.8% to $70.3 million 
for the three months ended March 31, 1999, compared to $50.0 million for the 
three months ended March 31, 1998. Retail gross margins per gallon for the 
three months ended March 31, 1999 were 2% better than last year. This was 
attributable to improved margins which benefited from lower product cost per 
gallon. Per gallon retail margins increased $.01 per gallon to $.57 for the 
three months ended March 31, 1999, as compared to $.56 for the three months 
ended March 31, 1998. As a percentage of revenues, gross profit decreased to 
20.8% for the three months ended March 31, 1999, as compared to 21.8% for the 
three months ended March 31, 1998. This decrease was driven by a change in 
the wholesale and retail sales mix. For the quarter, wholesale gross profit 
is a larger component of total gross profit. Wholesale margin percentages are 
lower than retail margin percentages. Acquisitions accounted for $13.2 
million of the gross profit increase compared to last year.

OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and 
administrative expenses increased by $9.1 million or 36.0% to $34.4 million 
for the three months ended March 31, 1999, as compared to $25.3 million for 
the three months ended March 31, 1998. Approximately $4.7 million, or 51.6%, 
of this increase was attributable to increases in salaries and other 
operating expenses from recently acquired businesses. As a percentage of 
revenues, operating, general and administrative expenses decreased to 10.2% 
for the three months ended March 31, 1999, as compared to 11.0% for the three 
months ended March 31, 1998.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense 
increased by $3.1 million or 66.1% to $7.8 million for the three months ended 
March 31, 1999, as compared to $4.7 million for the three months ended March 
31, 1998. This increase is related primarily to assets purchased in 
conjunction with business acquisitions subsequent to March 31, 1998.

INTEREST EXPENSE. Interest expense increased by $2.0 million or 42.3% to $6.9 
million for the three months ended March 31, 1999, as compared to $4.8 
million for the three months ended March 31, 1998. This increase is due 
primarily to the issuance of $85.0 million of new 7.33% Senior Notes on 
December 11, 1998, in conjunction with the Propane Continental, Inc. 
acquisition.

                                      8
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


ANALYSIS OF HISTORICAL RESULTS OF OPERATIONS - NINE MONTH PERIOD ENDED 
MARCH 31

The following discussion compares the results of operations and other data of 
the Partnership for the nine-month period ended March 31, 1999, to the 
nine-month period ended March 31, 1998.

VOLUME. During the nine months ended March 31, 1999, the Partnership sold 
220.8 million retail propane gallons, an increase of 21.1 million gallons or 
10.6% from the 199.7 million retail propane gallons sold during the nine 
months ended March 31, 1998. Retail volumes were driven by acquisitions and 
customer increases at "same store" locations, partially offset by the 
unfavorable impact of warmer temperatures on residential customers' usage. 
Newly acquired businesses added approximately 29.2 million retail gallons, 
offset by the adverse impact of weather conditions that were significantly 
warmer than normal.

Based on the average number of heating degree days in the markets served by 
the Partnership, for March 1999, fiscal year to date temperatures were 
approximately 13% and 9% warmer than normal and last year, respectively. 
While this indicator generally measures the impact of temperatures on the 
Partnership's business, other factors such as geographic mix, magnitude and 
duration of temperature and weather conditions can also impact sales volumes. 
Mild seasonal weather conditions had an adverse impact on the Partnership's 
retail sales volume (excluding acquisitions) and earnings compared to normal 
levels.

REVENUES. Revenues of $732.6 million for the nine months ended March 31, 1999 
increased $109.3 million, or 17.5% compared to $623.3 million for the nine 
months ended March 31, 1998. Wholesale revenues increased $99.8 million or 
24.0% to $515.6 million for the nine months ended March 31, 1999, as compared 
to $415.8 million for the nine months ended March 31, 1998. This increase was 
attributable to acquisitions of wholesale businesses ($110.1 million). 
Revenues for the retail business increased by $9.5 million or 4.6% to $217.0 
million for the nine months ended March 31, 1999, as compared to $207.5 
million for the nine months ended March 31, 1998. The increase in retail 
sales reflects the impact of acquisitions which added approximately $29.0 
million in revenues for the period, offset by mild winter temperatures that 
were warmer than both normal and last year. Additionally, selling prices were 
reduced in line with lower propane supply costs.


                                      9
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

COST OF PRODUCT SOLD. Cost of product sold increased by $84.0 million or 
16.6% to $589.3 million for the nine months ended March 31, 1999, as compared 
to $505.3 million for the nine months ended March 31, 1998. The increase in 
cost of product sold was due to the increased sales described above, 
partially offset by lower per gallon cost of propane. As a percentage of 
revenues, cost of product sold decreased to 80.4% for the nine months ended 
March 31, 1999, as compared to 81.1% for the nine months ended March 31, 1998.

GROSS PROFIT. Gross profit increased $25.3 million or 21.5% to $143.3 million 
for the nine months ended March 31, 1999, compared to $118.0 million for the 
nine months ended March 31, 1998. Retail gross margins per gallon for the 
nine months ended March 31, 1999 were 8% better than last year. This was 
attributable to improved margins related to decreases in the cost of propane 
on a per gallon basis. Per gallon retail margins increased $.04 per gallon to 
$.57 for the nine months ended March 31, 1999, as compared to $.53 for the 
nine months ended March 31, 1998. As a percentage of revenues, gross profit 
increased to 19.6% for the nine months ended March 31, 1999, as compared to 
18.9% for the nine months ended March 31, 1998. Acquisitions accounted for 
$18.3 million of the gross profit increase compared to last year.

OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and 
administrative expenses increased by $17.6 million or 24.2% to $90.4 million 
for the nine months ended March 31, 1999, as compared to $72.8 million for 
the nine months ended March 31, 1998. Approximately $7.9 million, or 44.9%, 
of this increase was attributable to increases in salaries and other 
operating expenses from recently acquired businesses. Other increases were 
due to compensation programs to add new customers, vehicle repair and 
maintenance costs, tax and license cost, increased staffing and systems 
investments. As a percentage of revenues, operating, general and 
administrative expenses increased to 12.3% for the nine months ended March 
31, 1999, as compared to 11.7% for the nine months ended March 31, 1998.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense 
increased by $5.1 million or 37.1% to $18.7 million for the nine months ended 
March 31, 1999, as compared to $13.6 million for the nine months ended March 
31, 1998. This increase is related primarily to assets purchased in 
conjunction with business acquisitions subsequent to March 31, 1998.

INTEREST EXPENSE. Interest expense increased by $3.2 million or 21.5% to 
$17.8 million for the nine months ended March 31, 1999, as compared to $14.6 
million for the nine months ended March 31, 1998. This increase is due 
primarily to the issuance of $85.0 million of new 7.33% Senior Notes on 
December 11, 1998, in conjunction with the Propane Continental, Inc. 
acquisition and debt incurred in conjunction with other acquisitions 
consummated subsequent to March 31, 1998.

                                      10
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES. Cash provided from operating activities during the 
nine-month period ended March 31, 1999 was $10.2 million. Cash flow from 
operations included a net income of $16.4 million and non-cash charges of 
$19.4 million for the period, comprised of depreciation and amortization 
expense, and loss on sale of assets. The impact of working capital changes 
decreased cash flow by approximately $25.6 million.

INVESTING ACTIVITIES. Cash used in investment activities for the nine-month 
period ended March 31, 1999 totaled $134.0 million, which was principally 
related to Partnership acquisitions ($120.2 million) and to a lesser extent 
related to purchases of plant and equipment ($13.7 million).

FINANCING ACTIVITIES. Cash provided by financing activities totaled $126.2 
million for the nine months ended March 31, 1999. Components included $24.7 
million borrowings on the partnership's working capital facility, payments on 
purchase obligations of $13.2 million, net proceeds from placement of senior 
notes of $84.3 million and net proceeds from a common unit offering combined 
with General Partner net proceeds of $54.3 million. This financing was 
principally used to fund the purchase of PCI and other acquisitions. Cash 
distributions for the period paid to Common Unitholders and the General 
Partner 2% interest totaled $23.9 million.

FINANCING AND SOURCES OF LIQUIDITY

    The Operating Partnership's obligations under its Senior Note Agreements 
and Bank Credit Agreement are secured by a security interest in the Operating 
Partnership's inventory, accounts receivable and certain customer storage 
tanks. The Senior Note and Bank Credit Agreements contain various terms and 
covenants including financial ratio covenants with respect to debt and 
interest coverage and limitations, among others, on the ability of the 
Operating Partnership and its subsidiaries to incur additional indebtedness, 
create liens, make investments and loans, or enter into mergers, 
consolidations or sales of all or substantially all assets. Generally, so 
long as no default exists or would result, the Partnership is permitted to 
make distributions during each fiscal quarter in an amount not in excess of 
Available Cash with respect to the immediately preceding quarter. The 
Operating Partnership was in compliance with all terms and covenants of the 
Senior Note Agreements and Bank Credit Agreement at March 31, 1999.



                                      11
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


YEAR 2000 READINESS DISCLOSURE

    The Year 2000 issue is the result of computer programs using only the 
last two digits to indicate the year. If uncorrected, such computer programs 
will not be able to interpret dates correctly beyond the year 1999 and, in 
some cases prior to that time (as some computer experts believe), which could 
cause computer system failures or other computer errors disrupting business 
operations. Recognizing the potentially severe consequences of the failure to 
be Year 2000 compliant, the Partnership's management has developed and 
implemented a company-wide program to identify and remedy the Year 2000 
issues. A project team, consisting of the Partnership's Director of 
Information Systems and the Partnership's key IS managers who supervise 
operations at each of the Partnership's three main regional facilities in 
California, Missouri and Texas, together with the Chief Information Officer 
of Northwestern Corporation, the Managing General Partner's parent 
corporation, was created to manage the company's Year 2000 problems, enabling 
a smooth transition into the Year 2000. The project team reports directly to 
executive management who have assigned a high priority to such efforts within 
the Partnership.

    The scope of the Partnership's Year 2000 readiness program includes the 
review and evaluation of (i) the Partnership's information technology (IT) 
such as hardware and software utilized in the operation of the Partnership's 
business; (ii) the Partnership's non-IT systems or embedded technology such 
as micro-controllers contained in various equipment and facilities; and (iii) 
the readiness of third parties, including customers, suppliers and other key 
vendors to the company, and the electronic data interchange (EDI) with those 
key third parties. If needed modifications and conversions are not made on a 
timely basis, the Year 2000 issue could have a material adverse effect on the 
Partnership's operations.

     The Partnership is currently using internal and external resources to 
identify, correct and test large quantities of lines of application software 
code for systems that were developed internally. Remediation of these systems 
is expected to be completed by June 1999 except for the Partnership's Retail 
Information System, consisting principally of its billing and accounts 
receivable systems, which is already Year 2000 compliant. Since January 1997, 
the Partnership has been converting its old billing system installed at each 
customer service center to the new Retail Information System. Currently, 
approximately two-thirds of the Partnership's customer service centers are 
running the new system, with the roll-out to the balance of the centers 
scheduled to be completed in the fall of 1999.



                                      12
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Software developed externally is being evaluated for Year 2000 
compliance and will be upgraded or replaced. In the case of the Partnership's 
existing NT-platform-based financial systems and oil and gas applications, it 
is anticipated that solutions will be acquired from third party vendors. In 
addition, these systems are being evaluated for meeting current and future 
business needs (which is an on-going process), and the Partnership is using 
this process as an opportunity to upgrade and enhance its information 
systems. The Partnership has recently installed a new financial system that 
is Year 2000 compliant that encompasses general ledger, accounts payable and 
fixed assets. Other systems integrated with the financial systems are 
anticipated to be upgraded or replaced by June 1999.

     In addition to internal Year 2000 remediation activities, the 
Partnership is in contact with key suppliers, vendors and customers to assure 
no interruption from activities with important third parties. While none of 
the Partnership's products are directly date sensitive, the supply and 
transportation of propane gas products are dependent upon companies whose own 
systems may need to be Year 2000 compliant. If third parties do not convert 
their systems in a timely manner and in a way compatible with the 
Partnership's systems, the arrival of the Year 2000 could have an adverse 
effect on Partnership operations. The Partnership believes that its actions 
with key suppliers, vendors and customers will minimize these risks. 
Furthermore, no single customer accounts for more than 10% of the 
Partnership's consolidated gross profits, thus mitigating the adverse risk to 
the Partnership's business if some but not all customers are not Year 2000 
compliant. Also, only a minimal number of transactions are conducted through 
EDI.

     The Partnership's primary focus has been directed at resolving the Year 
2000 problem. While the Partnership expects its internal IT and non-IT 
systems to be Year 2000 compliant by the dates specified, the Partnership has 
developed a contingency plan specifying what the Partnership will do if it or 
important third parties are not Year 2000 compliant by the required dates. A 
majority of such contingency plan is based on manual back-up systems, 
procedures and practices. The contingency plan was completed in March 1999.

     Through March 31, 1999, the Partnership estimates that incremental costs 
of approximately $1.5 million have been incurred and expensed related to Year 
2000 issues. Since many systems are being modified to provide significant 
enhanced capabilities, the Year 2000 expenses have not been nor are planned 
to be specifically tracked. The current estimated additional cost to complete 
remediation is expected to be less than $0.5 million. The Partnership expects 
that a portion of these costs will be capitalized, as they are principally 
related to adding new software applications and functionality. Other costs 
will continue to be expensed as incurred.

                                      13
<PAGE>

                       CORNERSTONE PROPANE PARTNERS, L.P.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The Partnership's current estimates of the amount of time and costs 
necessary to remediate and test its computer systems are based on the facts 
and circumstances existing at this time. The estimates were made using 
assumptions of future events including the continued availability of existing 
resources, Year 2000 modification plans, implementation success by 
third-parties, and other factors. New developments may occur that could 
affect the Partnership's estimates of the amount of time and costs necessary 
to modify and test its IT and non-IT systems for Year 2000 compliance. These 
developments include, but are not limited to: (i) the availability and cost 
of personnel trained in this area, (ii) the ability to locate and correct all 
relevant computer codes and equipment and (iii) the planning and Year 2000 
compliance success that key suppliers, vendors and customers attain.

     In October, 1998, President Clinton signed into law the Year 2000 
Readiness Disclosure Act. The Partnership intends to obtain the benefits of 
the Act's protections by implementing certain procedures described in that 
Act.

FORWARD-LOOKING STATEMENTS

     The information presented herein may contain certain "forward-looking 
statements" within the meaning of the federal securities laws. The 
Partnership's actual future performance will be affected by a number of 
factors, risks and uncertainties, including without limitation, weather 
conditions, regulatory changes, competitive factors, the Partnership's 
success in dealing with the Year 2000 issues and the operations of vendors, 
suppliers and customers, many of which are beyond the Partnership's control. 
Future events and results may vary substantially from what the Partnership 
currently foresees, and there can be no assurance that the Partnership's 
actual results will not differ materially from its expectations. The 
Partnership undertakes no obligation to publicly release any revision to 
these forward-looking statements to reflect events or circumstances after the 
date of such statements or to reflect the occurrence of anticipated or 
unanticipated events.


                                      14
<PAGE>

                        CORNERSTONE PROPANE PARTNERS,L.P.



                           PART II. OTHER INFORMATION

Item 6 Exhibits and Reports on Form 8-K

     a)   Exhibits:

              (27) Financial Data Schedule

     b)   Reports on Form 8-K

             No reports on Form 8-K were filed during the quarter for which this
             report is filed.



                                      15
<PAGE>

                                    SIGNATURE

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

                              Cornerstone Propane Partners, L.P.
                              -------------------------------------
                                          (Registrant)

                              By:  Cornerstone Propane GP, Inc.
                                   as Managing General Partner

                              By:  /s/ Ronald J. Goedde            
                                 ----------------------------------
                                   Name:  Ronald J. Goedde
                                   Title: Executive Vice President
                                   and Chief Financial Officer

                              By:  /s/ Richard D. Nye              
                                 ----------------------------------
                                   Name:  Richard D. Nye
                                   Title: Vice President of
                                   Finance and Administration

Date:  May 14, 1999

                                      16