UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended July 31, 2000
                                       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 numbers   1-11331
                          333-06693
                           Ferrellgas Partners, L.P.
                        Ferrellgas Partners Finance Corp.

           (Exact name of registrants as specified in their charters)

      Delaware                                             43-1698480
      Delaware                                             43-1742520
------------------------------                 ------------------------------
(State or other jurisdictions of           (I.R.S. Employer Identification Nos.)
incorporation or organization)

                   One Liberty Plaza, Liberty, Missouri 64068

               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (816) 792-1600

Securities registered pursuant to Section 12(b) of the Act:

                                                    Name of each exchange on
         Title of each class                        which registered

         Common Units                               New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:   None

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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value as of October 5, 2000, of the  registrant's  Common
Units held by  nonaffiliates  of the registrant,  based on the reported  closing
price  of  such  units  on the  New  York  Stock  Exchange  on  such  date,  was
approximately $218,305,000.

At October 5, 2000, Ferrellgas Partners, L.P. had units outstanding as follows:
                    31,307,116  Common Units
                    4,652,691  Senior Common Units
Documents Incorporated by Reference:   None


<PAGE>


                            FERRELLGAS PARTNERS, L.P.
                        FERRELLGAS PARTNERS FINANCE CORP.

                          2000 FORM 10-K ANNUAL REPORT

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                                               Page
                                     PART I
<S>      <C>                                                                                                  <C>
ITEM     1.     BUSINESS.......................................................................................1
ITEM     2.     PROPERTIES.....................................................................................8
ITEM     3.     LEGAL PROCEEDINGS..............................................................................9
ITEM     4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................10

                                     PART II

ITEM     5.     MARKET FOR REGISTRANT'S UNITS AND
                RELATED UNITHOLDER MATTERS....................................................................10
ITEM     6.     SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA..............................................11
ITEM     7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................12
ITEM    7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................21
ITEM     8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................................................22
ITEM     9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE...........................................................22

                                    PART III

ITEM    10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS...........................................22
ITEM    11.     EXECUTIVE COMPENSATION........................................................................24
ITEM    12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT................................................................................29
ITEM    13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................30

                                     PART IV

ITEM    14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                REPORTS ON FORM 8-K...........................................................................31

</TABLE>


<PAGE>
                                                      PART I

ITEM 1.       BUSINESS.

Business of Ferrellgas Partners, L.P.


          Ferrellgas  Partners,  L.P. is a Delaware limited partnership that was
formed on April 19, 1994. The common units of Ferrellgas  Partners are listed on
the New York Stock Exchange and its activities are primarily  conducted  through
its subsidiary Ferrellgas,  L.P. Ferrellgas Partners is the sole limited partner
of Ferrellgas, L.P. with a 99% limited partner interest. Ferrellgas Partners and
Ferrellgas, L.P. are together referred to as the Partnership.


Business of Ferrellgas, L.P.

     Ferrellgas,  L.P., a Delaware limited partnership,  was formed on April 22,
1994, to acquire, own and operate the propane business and assets of Ferrellgas,
Inc.   Ferrellgas,   L.P.  accounts  for  nearly  all  of  Ferrellgas  Partner's
consolidated assets,  sales and operating earnings,  except for interest expense
related to $160  million of 9 3/8% Senior  Secured  Notes  issued by  Ferrellgas
Partners in April 1996 and a related  interest rate swap agreement  entered into
in April 2000.


          Ferrellgas,  Inc.  owns  general  partner  units that  represent  a 1%
interest  in  Ferrellgas  Partners  and a 1.0101%  general  partner  interest in
Ferrellgas, L.P. The combined ownership represents a 2% general partner interest
in the Partnership. As general partner, Ferrellgas, Inc. performs all management
functions for the Partnership.  All historical references prior to July 5, 1994,
relate to operations as conducted by Ferrellgas, Inc. and its predecessors.


General

     The  Partnership  is engaged in the sale,  distribution  and  marketing  of
propane and other  natural  gas  liquids.  Natural gas liquids are derived  from
petroleum  products and are sold in compressed or liquefied form.  Propane,  the
predominant type of natural gas liquid, is typically  extracted from natural gas
or separated  during crude oil refining.  Although  propane is gaseous at normal
pressures,  it is compressed  into liquid form at  relatively  low pressures for
storage and transportation. Propane is a clean-burning energy source, recognized
for its  transportability and ease of use relative to alternative forms of stand
alone energy sources.

     In the  residential and commercial  markets,  propane is primarily used for
space heating, water heating and cooking. In the agricultural market, propane is
primarily used for crop drying,  space heating,  irrigation and weed control. In
addition, propane is used for certain industrial applications,  including use as
an engine  fuel  which is burned  in  internal  combustion  engines  that  power
vehicles and forklifts,  and as a heating or energy source in manufacturing  and
drying processes.

     The Partnership  believes that it is the largest retail marketer of propane
in the United  States as measured by gallons sold,  serving more than  1,100,000
residential,  industrial/commercial  and agricultural customers in 45 states and
the District of Columbia  through 604 retail outlets in 40 states.  Some outlets
serve  interstate  markets.   Based  upon  information   contained  in  industry
publications  for calendar year 1999, the  Partnership  believes that its retail
operations  account for  approximately 11% of the retail propane gallons sold in
the United States. For the Partnership's fiscal years ended July 31, 2000, 1999,
and 1998, annual retail propane sales volumes were 847 million, 680 million, and
660 million gallons, respectively.


<PAGE>



Formation and History


          Ferrell Companies, Inc. is the parent entity of Ferrellgas,  Inc., was
founded in 1939 as a single retail  propane  outlet in Atchison,  Kansas and was
incorporated in 1954. Ferrellgas,  Inc. was formed in 1984 to operate the retail
propane business  previously  conducted by Ferrell Companies.  In July 1994, the
propane  business  and  assets  of  Ferrellgas,  Inc.  were  contributed  to the
Partnership in connection with Ferrellgas  Partner's  initial public offering of
common units.  Ferrell  Companies  was  previously  owned  primarily by James E.
Ferrell and his family but was sold in July 1998 to the Ferrell Companies,  Inc.
Employee Stock Ownership Trust.

     Ferrellgas,  Inc.'s initial growth largely resulted from small acquisitions
in the rural  areas of eastern  Kansas,  northern  and central  Missouri,  Iowa,
western  Illinois,  southern  Minnesota,  South Dakota and Texas.  In July 1984,
Ferrellgas, Inc. acquired propane operations with annual retail sales volumes of
approximately   33  million  gallons  and  in  December  1986  acquired  propane
operations  with  annual  retail  sales  volumes of  approximately  395  million
gallons.  These two  major  acquisitions  and many  other  smaller  acquisitions
significantly expanded and diversified  Ferrellgas,  Inc.'s geographic coverage.
Since 1986,  Ferrellgas,  Inc. and the  Partnership  have acquired more than 100
smaller independent  propane retailers,  the largest of which were Thermogas LLC
acquired in December 1999, Skelgas Propane, Inc. acquired in May 1996 and Vision
Energy  Resources,  Inc.  acquired in November  1994. For the fiscal years ended
July 31, 2000 to 1996, the Partnership  invested  approximately  $310.3 million,
$48.7 million, $13.0 million,  $38.8 million, and $108.8 million,  respectively,
to acquire  operations with annual retail sales of approximately  302.4 million,
21.5 million,  4.4 million,  20.5 million, and 111.8 million gallons of propane,
respectively.


Retail Operations

     The retail business of the Partnership consists principally of transporting
propane  purchased in the contract  and spot  markets  primarily  from major oil
companies to its retail  distribution  outlets and then to tanks  located on its
customers' premises, as well as to portable cylinders.

   Business Strategy

     The Partnership's  business strategy is to continue its historical focus on
residential   and  commercial   retail  propane   operations.   The  Partnership
anticipates  that its future  growth  will be  achieved  primarily  through  the
acquisition of smaller retail  propane  operations  throughout the United States
and to a lesser extent  through the  expansion of its existing  customer base by
increased  competitiveness and investment in internal growth opportunities.  The
Partnership  believes that it has obtained a competitive  advantage by promoting
an  entrepreneurial  culture that  empowers its  employees to be  responsive  to
individual customer needs. In addition, the Partnership believes this culture is
supported  and enhanced by the  ownership  of Ferrell  Companies by the Employee
Stock Ownership Trust for the sole benefit of Ferrellgas, Inc.'s employees.

     The  Partnership  intends to  concentrate  its  acquisition  activities  in
geographical areas in close proximity to the Partnership's  existing  operations
and to acquire  propane  retailers  that can be  efficiently  combined with such
existing  operations to provide an attractive  return on investment after taking
into account the efficiencies  which may result from such combination.  However,
the  Partnership  will also pursue  acquisitions  that  broaden  its  geographic
coverage.  The  Partnership's  goal in any  acquisition  will be to improve  the
operations and profitability of these smaller companies by integrating them into
the  Partnership's   established  supply  network.  The  Partnership   regularly
evaluates a number of propane distribution  companies that may be candidates for
acquisition.  The  Partnership  believes  that there are  numerous  local retail
propane distribution  companies that are possible candidates for acquisition and
that its  geographic  diversity of  operations  helps to create many  attractive
acquisition opportunities.  The Partnership intends to fund acquisitions through
internal cash flow,  external  borrowings  or the issuance of


                                       2

<PAGE>
additional  common  units or other  securities.  The  Partnership's  ability  to
accomplish  these  goals  will  be  subject  to the  continued  availability  of
acquisition   candidates  at  prices   attractive  to  the  Partnership  and  to
availability of funds for that purpose to the Partnership. There is no assurance
the   Partnership   will  be  successful  in  sustaining  the  recent  level  of
acquisitions or that any acquisitions that are made will prove beneficial to the
Partnership.

         In addition to growth through  acquisitions,  the Partnership  believes
that it may also achieve  growth within its existing  propane  operations.  As a
result of its experience in responding to competition and in  implementing  more
efficient operating  standards,  the Partnership believes that it has positioned
itself to be successful in direct  competition  for customers.  The  Partnership
currently  has  marketing  programs that focus  specific  resources  toward this
effort.

   Recent Initiatives


     During fiscal 2000, the  Partnership  began an assessment of its operations
to reduce operating costs to offset the impact of future potential challenges to
its  operations  such as warmer than normal  weather and  volatile  product cost
environments.  This operational  assessment  resulted in the  implementation  of
several expense savings  and customer  satisfaction  initiatives,  including the
elimination  of  redundancies  in  overlapping  Thermogas and  Ferrellgas,  L.P.
operations,  the review of staffing and asset utilization levels in the existing
Ferrellgas,  L.P. base business,  and improvements to the routing and scheduling
of customers' deliveries.

     The  majority of the  integration  of the  Thermogas  acquisition  into the
existing  Ferrellgas,  L.P.  operations occurred during the spring and summer of
fiscal 2000. Over 65 of the approximately  180 Thermogas  locations were blended
together with existing Ferrellgas,  L.P. locations.  The Partnership  eliminated
duplicate  personnel  and  assets  in  these  locations.  The  Partnership  also
identified cost reduction opportunities in approximately 65 additional locations
in which the  Partnership  transferred  customers  and assets  between  existing
Ferrellgas,  L.P. and Thermogas  locations in a manner that allowed the customer
to be  serviced  from a more  cost  effective  location.  Since  completing  the
Thermogas  acquisition  in  December  1999,  the  Partnership  has  reduced  its
workforce by approximately 180 full time equivalent positions and has eliminated
over 175 excess vehicles from these  overlapping  locations.  A portion of these
cost savings was realized during the integration that occurred in the spring and
summer of fiscal 2000.  The  Partnership  believes  these actions will result in
savings of approximately $7 million of expenses during fiscal 2001.

     In addition to savings  resulting from the  integration  of Thermogas,  the
Partnership reduced additional operating costs by the assessment of its existing
operations.  This  assessment  involved  the  review of the  staffing  and asset
utilization levels of the 520 existing Ferrellgas,  L.P. locations,  through the
using  of  productivity   and  benchmark   measurements   to  identify   savings
opportunities.  The review was similar to the review used to establish  optimal
staff and  asset  levels  in the  overlapping  Ferrellgas,  L.P.  and  Thermogas
locations.  As a result,  the  Partnership  reduced  its  workforce  by over 500
additional full time equivalent positions, eliminated over 250 additional excess
vehicles,  merged  approximately  30  retail  locations  and  divested  2 retail
locations.  The majority of these actions were taken  throughout the latter half
of fiscal 2000,  therefore some of this cost savings was realized  during fiscal
2000.  The  Partnership  believes  that these  actions will result in savings of
approximately $12 million of expenses during fiscal 2001.

     During  the fourth  quarter  of fiscal  2000,  the  Partnership  introduced
significant improvements to its existing routing and scheduling process used for
planning  customer  deliveries.  The Partnership  expects these  improvements to
increase   customer   satisfaction   and  also  reduce  delivery  costs.   These
improvements  resulted from a pilot program that was in place throughout  fiscal
2000 that involved  several  locations in Ohio. This pilot program  assisted the
Partnership  in  the  improvement  of the  technology,  training  and  reporting
associated with the routing and scheduling of customer propane  deliveries.  The
existing  technology  has been  improved to better  predict  customer  inventory

                                       3
<PAGE>


levels and more efficiently plan deliveries.  The  Partnership's  employees were
recently  extensively trained on these routing and scheduling  improvements.  In
addition,  incentive  programs  for  fiscal  2001  were  modified  to  encourage
employees  to achieve  success  measurements  related to  improved  routing  and
scheduling  and  improved  customer  satisfaction.  A large  portion  of the new
incentive program is based on each location reducing  operating  expenses by 1.5
cents per gallon  delivered.  The  Partnership  expects the vast majority of its
locations will utilize these routing and scheduling improvements by the start of
the fiscal 2001 heating season.


   Marketing

     The retail propane marketing  business  generally involves large numbers of
small volume  deliveries  averaging  approximately  200 gallons each. The market
areas are  generally  rural,  but also  include  suburban  areas for  industrial
applications.

     The Partnership utilizes marketing programs targeting both new and existing
customers by emphasizing  its  efficiency in delivering  propane to customers as
well as its employee training and safety programs. The Partnership sells propane
primarily to four markets: residential, industrial/commercial,  agricultural and
other,  with other being  principally  to other propane  retailers and as engine
fuel. During the fiscal year ended July 31, 2000, sales to residential customers
accounted  for 63% of  retail  gross  profit,  sales  to  industrial  and  other
commercial  customers  accounted  for 27% of retail gross  profit,  and sales to
agricultural  and other  customers  accounted  for 10% of retail  gross  profit.
Residential  sales have a greater profit margin,  more stable  customer base and
tend to be less  sensitive to price changes than the other markets served by the
Partnership.  No single customer of the Partnership accounted for 10% or more of
the Partnership's consolidated revenues in fiscal 2000.


     Profits in the retail propane business are primarily based on margins,  the
cents-per-gallon  difference  between the purchase  price and the sales price of
propane.  The Partnership  generally  purchases propane in the contract and spot
markets.  These  purchases  are  primarily  from  major oil  companies  and on a
short-term  basis.  Therefore,  the  Partnership's  supply costs  fluctuate with
market price  fluctuations  that subject the  Partnership to price and inventory
risk. Should wholesale  propane prices decline in the future,  the Partnership's
margins on its retail  propane  distribution  business  should  increase  in the
short-term  because  retail  prices tend to change less rapidly  than  wholesale
prices.  Should the  wholesale  cost of propane  increase,  for similar  reasons
retail  margins and  profitability  would  likely be  reduced,  at least for the
short-term,  until retail  prices can be  increased.  Retail  propane  customers
typically lease their storage tanks from their propane distributors. Over 70% of
the  Partnership's  customers lease their tanks from the Partnership.  The lease
terms and fire safety  regulations  in some states  require  leased  tanks to be
filled  only  by  the  propane  supplier  that  owns  the  tank.  The  cost  and
inconvenience  of  switching  tanks  minimizes a  customer's  tendency to switch
suppliers of propane on the basis of minor variations in price.

     The retail market for propane is seasonal because propane is used primarily
for heating in residential  and commercial  buildings.  Consequently,  sales and
operating  profits are  concentrated  in the second and third fiscal quarters or
November through April. In addition,  sales volume traditionally fluctuates from
year to year in response to variations in weather,  price and other factors. The
Partnership  believes that the broad  geographic  distribution of its operations
helps to minimize exposure to regional weather or economic patterns.  Long-term,
historic weather data from the National  Climatic Data Center indicates that the
average  annual  temperatures  have remained  relatively  constant over the last
thirty years with fluctuations  occurring on a year-to-year  basis. During times
of  colder-than-normal  winter  weather,  the  Partnership has been able to take
advantage  of its large,  efficient  distribution  network to help avoid  supply
disruptions  such as  those  experienced  by some  of its  competitors,  thereby
broadening its long-term customer base.


                                       4
<PAGE>


   Supply, Distribution and Risk Management

     The  Partnership  purchases  propane  primarily  from  major  domestic  oil
companies.  Supplies  of propane  from these  sources  have  traditionally  been
readily  available,  although no assurance can be given that supplies of propane
will be  readily  available  in the  future.  As a result  of the  Partnership's
ability to:

o    buy large volumes of propane,
o    utilize various risk management strategies, and
o    utilize its large distribution system and underground storage capacity,

the Partnership believes it is in a position to achieve product cost savings and
avoid  shortages  during  periods  of tight  supply to an extent  not  generally
available to other retail propane distributors. The Partnership is not dependent
upon any single  supplier or group of suppliers,  the loss of which would have a
material adverse effect on the Partnership. For the year ended July 31, 2000, no
supplier provided more than 10% of the Partnership's total propane purchases.


    A portion of the  Partnership's  propane inventory is purchased under supply
contracts that typically have a one-year term and a price that fluctuates  based
on the spot market prices.  Additionally,  the Partnership will enter into fixed
price  contracts  that  have  a  term  of  less  than  one  year.  Some  of  the
Partnership's  contracts  specify  minimum and maximum  amounts of propane to be
purchased.


    The  Partnership  may  purchase  and store  inventories  of propane to avoid
delivery  interruptions during periods of increased demand. The Partnership owns
three underground storage facilities with an aggregate capacity of approximately
192  million  gallons.  Currently,  approximately  141  million  gallons of this
capacity is leased to third  parties.  The remaining  space is available for the
Partnership's use.

         In addition,  the  Partnership's  risk  management  activities  utilize
certain  types of energy  commodity  forward  contracts  and swaps traded on the
over-the-counter financial markets and futures traded on the New York Mercantile
Exchange.  These activities are utilized to anticipate market movements,  manage
and hedge the  Partnership's  exposure to the  volatility of floating  commodity
prices and to protect the  Partnership's  inventory  positions.  The Partnership
also utilizes certain over-the-counter energy commodity options to limit overall
price risk and to hedge its exposure to inventory price movements.


     Propane is generally  transported  from natural gas  processing  plants and
refineries,  pipeline  terminals and storage  facilities to retail  distribution
outlets and wholesale  customers by railroad tank cars leased by the Partnership
and by  highway  transport  trucks  owned or leased by the  Partnership.  Common
carrier  transport  trucks may be used  during the peak  delivery  season in the
winter months or to provide service in areas where economic considerations favor
common carrier use. Propane is then transported  from the  Partnership's  retail
distribution  outlets  to  customers  by the  Partnership's  fleet of 2,201 bulk
delivery  trucks,  which are fitted generally with 2,000 to 3,000 gallon propane
tanks.  Propane storage tanks located on the customers' premises are then filled
from the  delivery  truck.  Propane is also  delivered  to customers in portable
cylinders.


Industry and Competition

   Industry

     Based upon industry publications,  propane accounts for approximately 3% to
4% of household energy  consumption in the United States, an average level which
has remained  relatively  constant for the past two  decades.  Propane  competes
primarily  with  natural  gas,  electricity  and  fuel oil as an  energy  source
principally on the basis of price, availability and portability.  Propane serves
as an  alternative  to natural gas in rural and suburban areas where natural gas
is unavailable or portability of product is required.  Propane is generally more
expensive  than  natural  gas on an  equivalent  British  Thermal  Unit basis in
locations served by natural gas, although propane is often sold in such areas as


                                       5
<PAGE>

a standby  fuel for use during peak demands and during  interruption  in natural
gas service.  The expansion of natural gas into traditional  propane markets has
historically been inhibited by the capital costs required to expand distribution
and pipeline  systems.  Although the extension of natural gas pipelines tends to
displace propane  distribution in the  neighborhoods  affected,  the Partnership
believes that new opportunities  for propane sales arise as more  geographically
remote neighborhoods are developed.


    Propane  is  generally  less  expensive  to use than  electricity  for space
heating,  water heating and cooking and competes effectively with electricity in
those parts of the  country  where  propane is cheaper  than  electricity  on an
equivalent BTU basis.  Although  propane is similar to fuel oil in  application,
market demand and price, propane and fuel oil have generally developed their own
distinct  geographic markets.  Because residential  furnaces and appliances that
burn  propane  will not operate on fuel oil, a  conversion  from one fuel to the
other requires the installation of new equipment. The Partnership's  residential
retail  propane  customers  will have an incentive to switch to fuel oil only if
fuel oil becomes  significantly  less  expensive  than  propane.  Likewise,  the
Partnership may be unable to expand its customer base in areas where fuel oil is
widely used,  particularly the Northeast  United States,  unless propane becomes
significantly less expensive than fuel oil. However,  many industrial  customers
who use propane as a heating  fuel have the  capacity to switch to other  fuels,
such as fuel oil, on the basis of availability or minor variations in price.


   Competition

     In addition to competing  with  marketers of other fuels,  the  Partnership
competes  with  other  companies  engaged  in the  retail  propane  distribution
business.  Competition within the propane  distribution  industry stems from two
types of participants:  the larger multi-state marketers, and the smaller, local
independent marketers,  including recent entrants such as certain rural electric
cooperatives.  Based upon industry  publications,  the Partnership believes that
the  ten  largest  multi-state  retail  marketers  of  propane,   including  the
Partnership,  account for approximately 45% of the total retail sales of propane
in the United  States and that there are  approximately  5,000 local or regional
distributors.  Based upon  information  contained in industry  publications  for
calendar year 1998, the Partnership  also believes no single marketer other than
itself has a greater  than 10% share of the total  market in the United  States.
The  Partnership  believes that it is the largest retail  marketer of propane in
the United States with a market share of approximately 11% as measured by volume
of national retail propane sales.

     Most of the Partnership's retail distribution outlets compete with three or
more marketers or distributors,  the principal  factors being price and service.
The Partnership  competes with other retail marketers  primarily on the basis of
reliability of service and  responsiveness to customer needs,  safety and price.
Each retail  distribution  outlet  operates in its own  competitive  environment
because  retail  marketers  locate in close  proximity to customers to lower the
cost of  providing  service.  The  typical  retail  distribution  outlet  has an
effective marketing radius of approximately 25 miles.

Other Operations

     The other  operations of the Partnership  consist  principally of wholesale
propane  marketing  and other  smaller  operations,  e.g.,  chemical  feedstocks
marketing, natural gas liquids storage, a wholesale propane appliance operation,
retail  refined  fuels sales,  truck  maintenance  centers,  tank  refurbishment
centers, transport hauling and others.

     The  Partnership  engages in the wholesale  marketing and  distribution  of
propane to other retail propane distributors. During the fiscal years ended July
31, 2000,  1999 and 1998, the Partnership  sold 99 million,  103 million and 136
million  gallons,  respectively,  of  propane  to  wholesale  customers  and had
revenues  attributable  to such sales of $43.4 million,  $33.8 million and $49.9
million, respectively.

                                       6
<PAGE>


Employees

     The  Partnership  has no  employees  and is  managed  by  Ferrellgas,  Inc.
pursuant to its partnership agreement.  At September 30, 2000, Ferrellgas,  Inc.
had  4,532  full-time  employees  and 882  temporary  and  part-time  employees.
Ferrellgas,  Inc.'s  full-time  employees were employed in the following  areas:

<TABLE>
<CAPTION>

<S>                                                                                                   <C>
                    Retail Locations                                                                  3,896
                    Transportation and Storage                                                          265
                    Corporate Offices in Liberty, MO and Houston, TX                                    371
                                                                                                 -----------
                            Total                                                                     4,532
                                                                                                 ===========
</TABLE>

Less than one percent of Ferrellgas,  Inc.'s  employees are  represented by four
local labor unions, which are all affiliated with the International  Brotherhood
of  Teamsters.  Ferrellgas,  Inc.  has  not  experienced  any  significant  work
stoppages or other labor problems.

     The   Partnership's   supply,   risk   management,   wholesale   marketing,
distribution  scheduling and product accounting functions are operated primarily
out of the  Partnership's  offices  located  in  Houston,  by a total  full-time
corporate staff of 82 people.

Governmental Regulation - Environmental and Safety Matters

     The  Partnership  is not subject to any price or  allocation  regulation of
propane.

     Propane is not a  hazardous  substance  within the  meaning of federal  and
state  environmental laws. In connection with all acquisitions of retail propane
businesses that involve the purchase of real estate, the Partnership  conducts a
due diligence  investigation to attempt to determine whether any substance other
than  propane has been sold from or stored on any such real estate  prior to its
purchase.  That  due  diligence  includes  questioning  the  sellers,  obtaining
representations   and  warranties   concerning  the  sellers'   compliance  with
environmental laws and visual inspections of the properties.

     With respect to the  transportation of propane by truck, the Partnership is
subject to regulations  promulgated  under the Federal Motor Carrier Safety Act.
These  regulations  cover the  transportation  of  hazardous  materials  and are
administered  by the United States  Department of  Transportation.  The National
Fire Protection Association has issued Pamphlet No. 58 that established a set of
rules and  procedures  governing the safe  handling of propane.  Those rules and
procedures  have been  adopted as the  industry  standard  in a majority  of the
states in which the Partnership operates.

     The Partnership believes it is in material compliance with all governmental
regulations  and  industry  standards  applicable  to  environmental  and safety
matters. The Department of Transportation established new regulations addressing
emergency  discharge  control issues that became  effective on July 1, 1999 with
various  requirements phased in over the next seven years. The Partnership is in
full  compliance  in  all  material  respects  with  those  current   regulatory
requirements  and is working  with both the  Department  of  Transportation  and
outside  experts to fully test emergency  discharge  control systems that comply
with the new requirements as they become effective.

Service Marks and Trademarks

     The Partnership markets retail propane under the "Ferrellgas," "Thermogas,"
"Puget Propane,"  "Seacrist  Fuels," and "Elk Grove Gas & Oil"  tradenames.  The
Partnership  uses the tradenames  "Ferrell  North America" and "American  Energy
Incorporated" for its wholesale operations,  the tradename "NRG" for its propane
appliance wholesale operation, the tradename "Ferrell Transport" for most of its
third  party  hauling  and oil  field  services  operations  and  the  tradename
"bluebuzz.com" for its internet service provider  operations.  In addition,  the
Partnership  has a trademark on the name  "FerrellMeter,"  its patented gas leak



                                       7
<PAGE>

detection device. Ferrellgas,  Inc. has an option to purchase the tradenames and
trademark  that  it  contributed  to the  Partnership  for a  nominal  value  if
Ferrellgas, Inc. is removed as general partner of the Partnership other than for
cause.  If  Ferrellgas,  Inc.  ceases  to serve as the  general  partner  of the
Partnership  for any other  reason,  it will have the  option  to  purchase  the
tradenames and trademark from the Partnership for fair market value.

Businesses of Other Subsidiaries

          Ferrellgas Partners Finance Corp. is a Delaware  corporation formed in
1996  and  is a  wholly-owned  subsidiary  of  Ferrellgas  Partners.  Ferrellgas
Partners  Finance Corp. has nominal assets and does not conduct any  operations,
but  serves  as a  co-obligor  for  securities  issued by  Ferrellgas  Partners.
Accordingly,  a discussion of the results of  operations,  liquidity and capital
resources  of  Ferrellgas  Partners  Finance  Corp.  is not  presented.  Certain
institutional  investors  that might  otherwise  be limited in their  ability to
invest in  securities  issued by  Ferrellgas  Partners  by  reasons of the legal
investment laws of their states of organization or their charter documents,  may
be able to invest in Ferrellgas Partner's securities because Ferrellgas Partners
Finance  Corp. is a co-obligor.  See the notes to  Ferrellgas  Partners  Finance
Corp.'s financial  statements for a discussion of the securities with respect to
which Ferrellgas Partners Finance Corp. is serving as a co-obligor.

         Bluebuzz.com,  Inc., is the Partnership's internet service provider and
a wholly-owned  subsidiary of Ferrellgas,  L.P. Bluebuzz.com was incorporated in
Delaware in April 2000 and provides  internet  service to subscribers in some of
the locations where Ferrellgas, L.P. has retail propane locations.  Bluebuzz.com
currently  does not own  significant  assets,  nor has it generated  significant
operating  income  or  loss.  Accordingly,   a  discussion  of  the  results  of
operations, liquidity and capital resources of Bluebuzz.com is not presented.

     Ferrellgas  Receivables,  LLC  is a  newly  created  wholly-owned,  special
purpose  subsidiary of Ferrellgas,  L.P.,  and was organized in September  2000.
Ferrellgas,  L.P.,  contributed  and  sold  interests  in  a  pool  of  accounts
receivable  to  Ferrellgas  Receivables.  Ferrellgas  Receivables  then sold the
interests to a commercial paper conduit of Banc One, NA. Ferrellgas  Receivables
does not conduct any other activities. In accordance with Statement of Financial
Accounting  Standard No. 125  "Accounting  for Transfers of Assets,"  Ferrellgas
Receivables  will not be  consolidated  into the results of the  Partnership and
thus  will  be  accounted  for  using  the  equity   method  of   accounting.See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources."


ITEM 2.       PROPERTIES.

     The Partnership owns or leases the following  transportation equipment that
is utilized primarily in retail operations.
<TABLE>
<CAPTION>
                                                                              Owned       Leased      Total
<S>                                                                             <C>         <C>          <C>
         Truck tractors ...................................................     107         124          231
         Transport trailers................................................      362         49          411
         Bulk delivery trucks..............................................    1,256        945        2,201
         Pickup and service trucks.........................................    1,713        643        2,356
         Railroad tank cars................................................     -           222          222
</TABLE>

     The transport  trailers  have an average  capacity of  approximately  9,000
gallons.  The bulk  delivery  trucks are  generally  fitted  with 2,000 to 3,000
gallon  propane  tanks.  Each railroad tank car has a capacity of  approximately
30,000 gallons.

     A typical  retail  distribution  outlet is located on one to three acres of
land and includes a small office,  a workshop,  bulk storage  capacity of 18,000
gallons to 60,000 gallons and a small inventory of stationary  customer  storage
tanks and portable propane cylinders that the Partnership provides to its retail




                                       8
<PAGE>

customers for propane  storage.  The Partnership  owns the land and buildings in
the  applicable  local markets of  approximately  50% of its retail  outlets and
leases the remaining facilities on terms customary in the industry.

     Approximately  1,012,000  propane  tanks are either  owned or leased by the
Partnership,  most of which are located on customer property and leased to those
customers.  The Partnership  also owns  approximately  829,000  portable propane
cylinders,  most of which are leased to industrial and commercial customers. See
"Management's  Discussion  and Analysis of Financial  Condition - Liquidity  and
Capital  Resources and Results of Operations"  for a discussion of the operating
tank lease involving a portion of the Partnership's customer tanks.

     The Partnership owns underground storage facilities at Hutchinson,  Kansas;
Adamana,  Arizona;  and Moab,  Utah.  At July 31,  2000,  the  capacity of these
facilities  approximated 86 million gallons,  98 million gallons,  and 8 million
gallons,  respectively  for an aggregate of  approximately  192 million gallons.
Currently, approximately 141 million gallons of this capacity is leased to third
parties. The remaining space is available for the Partnership's use.

     The  Partnership  owns land and two  buildings  with 50,245  square feet of
office space and leases 6,250 square feet of office space that together comprise
its corporate  headquarters in Liberty,  Missouri, and leases 27,696 square feet
of office  space in  Houston,  Texas,  where  its risk  management,  supply  and
wholesale marketing operations are primarily located.


     The Partnership  believes that it has satisfactory title to or valid rights
to use all of its material properties.  Although some of those properties may be
subject to  liabilities  and leases, liens for taxes not yet currently due and
payable and immaterial encumbrances, easements and restrictions, the Partnership
does not  believe  that any such  burdens  will  materially  interfere  with the
continued use of such properties in its business.  The Partnership believes that
it  has  made, or is in the  process  of  obtaining,  all  required  material:
approvals,  authorizations,  orders, licenses, permits, franchises, consents of,
registrations,  qualifications  and filings  with,  the various  state and local
governmental  and  regulatory  authorities  which  relate  to  ownership  of the
Partnership's properties or the operations of its business.



ITEM 3.       LEGAL PROCEEDINGS.


     Propane  is a  flammable,  combustible  gas.  Serious  personal  injury and
property damage can occur in connection with its transportation, storage or use.
In the ordinary  course of business,  the  Partnership is threatened  with or is
named as a defendant  in various  lawsuits  which may seek  actual and  punitive
damages  for  product  liability,  personal  injury  and  property  damage.  The
Partnership  maintains liability insurance policies with insurers in amounts and
with  coverages  and  deductibles  as it believes  is  reasonable  and  prudent.
However,  there can be no  assurance  that the  insurance  will be  adequate  to
protect the  Partnership  from material  expenses  related to personal injury or
property  damage  or that  current  levels  of  insurance  will  continue  to be
available in the future at  economical  prices.  It is not possible to determine
the  ultimate  disposition  of these  lawsuits.  However,  management  is of the
opinion  that  there are no known  claims or known  contingent  claims  that are
likely to have a material adverse effect on the results of operations, financial
condition or cash flows of the Partnership.

                                       9
<PAGE>

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     A special  meeting  of common  unitholders  was held on June 5,  2000.  The
common  unitholders  voted in favor of two  proposals at the special  meeting as
follows:

           1. A proposal to approve  the  conversion  provisions  related to the
           Partnership's  recently  issued  senior units to allow the holders of
           the  senior  units to elect to  convert  into  common  units upon the
           earlier of February 1, 2002 or the occurrence of a material event, as
           defined in our partnership agreement:

                   FOR                     AGAINST                    ABSTAIN

               22,932,167                  254,008                    171,954

           2. A  proposal  to  amend  the  definition  of  "outstanding"  in the
           partnership  agreement to provide that Williams  Natural Gas Liquids,
           Inc., its successors or The Williams  Companies,  Inc., as holders of
           common units  obtained upon the  conversion of the senior units,  may
           vote their  common units and shall be entitled to all other rights as
           common unitholders:

                  FOR                       AGAINST                    ABSTAIN

               22,989,138                   209,331                    159,660

                                     PART II

ITEM 5.       MARKET FOR REGISTRANT'S UNITS AND RELATED UNITHOLDER MATTERS.

     The common  units  representing  common  limited  partner  interests in the
Partnership  are  listed and  traded on the New York  Stock  Exchange  under the
symbol FGP. As of October 5, 2000, there were 788 common  unitholders of record.
The  following  table  sets  forth the high and low sales  prices for the common
units on the New York Stock  Exchange  and the cash  distributions  declared per
common unit for the periods indicated.



                                    Common Unit Price      Distributions
                                          Range               Declared
                                   --------------------------------------
                                     High       Low           Per Unit
                                                      1999
                                   ---------------------------------------
First Quarter                        $20.94     $19.13           $0.50
Second Quarter                        21.75      17.00            0.50
Third Quarter                         18.88      16.00            0.50
Fourth Quarter                        17.94      16.69            0.50

                                                      2000
                                   ---------------------------------------
First Quarter                        $17.75     $15.06           $0.50
Second Quarter                        15.63      12.00            0.50
Third Quarter                         14.56      13.25            0.50
Fourth Quarter                        14.63      13.31            0.50

     During 1994, the Partnership issued  subordinated  units, all of which were
held by Ferrell  Companies  for which there was no  established  public  trading
market.  Effective August 1, 1999, the subordinated  units converted into common
units  and  were  subsequently  listed  on the  New  York  Stock  Exchange.  The
subordinated  units and the conversion to common units are more fully  described
in Note F to the Consolidated Financial Statements provided herein.


                                       10
<PAGE>

     The Partnership  makes quarterly cash  distributions of its available cash,
as defined by the applicable partnership agreement.  Available cash is generally
defined as consolidated cash receipts less  consolidated cash  disbursements and
changes  in  cash  reserves   established   by   Ferrellgas,   Inc.  for  future
requirements. To the extent necessary, the Partnership will reserve cash inflows
from the  second and third  quarters  for  distribution  in the first and fourth
fiscal  quarters.  See  "Management's   Discussion  and  Analysis  of  Financial
Condition  and  Results of  Operations-Liquidity  and Capital  Resources"  for a
discussion of the financial tests and covenants which place limits on the amount
of cash that can be used by the Partnership to pay distributions.

     The   Partnership  is  not  subject  to  federal  income  taxes.   Instead,
unitholders are required to report their  allocable  share of the  Partnership's
income,  gains,  losses,  deductions  and  credits,  regardless  of whether  the
Partnership makes distributions.

ITEM 6.       SELECTED HISTORICAL FINANCIAL DATA.

     The following table presents  selected  consolidated  historical  financial
data of the Partnership.
<TABLE>
<CAPTION>

                                       (in thousands, except per unit data)

                                                          Ferrellgas Partners, L.P.
                                         -------------------------------------------------------------
                                                              Year Ended July 31,
                                         --------------------------------------------------------------
                                             2000         1999          1998         1997        1996
                                          ------------ ------------ ------------ ------------ -----------
<S>                                       <C>            <C>           <C>          <C>         <C>
Income Statement Data:
Total revenues                             $ 952,199    $ 624,149    $ 667,353    $ 804,298   $ 653,640
Depreciation and amortization                 61,633       47,257       45,009       43,789      37,024
ESOP compensation charge                       3,733        3,295          350       -           -
Operating income                              56,735       62,339       52,760       68,819      62,506
Interest expense                              58,298       46,621       49,129       45,769      37,983
Earnings before extraordinary loss               860       14,783        4,943       23,218      24,312
Basic and diluted earnings (loss) per
common and subordinated unit
 - Earnings (loss) before extraordinary
  loss and after paid-in-kind distribution    (0.32)        0.47         0.16         0.74        0.77
Cash distributions declared per
  common and subordinated unit                 2.00         2.00         2.00         2.00        2.00

Balance Sheet Data at end of period:
Working capital                             $(6,344)    $ (4,567)      $ (443)     $ 18,111    $ 15,294
Total assets                                 967,907      656,745      621,223      657,076     654,295
Long-term debt                               718,118      583,840      507,222      487,334     439,112

Partners' Capital:
Senior Common Unitholder                   $ 179,786      $ -          $ -          $ -         $ -
Common Unitholders                          (80,931)        1,215       27,985       52,863      71,323
Subordinated Unitholder                       -          (10,516)       19,908       50,337      71,302
General Partner Unitholder                  (58,511)     (59,553)     (58,976)     (58,417)    (58,016)
Accumulated other comprehensive income             -        (797)       -            -           -


</TABLE>
                                       11
<PAGE>

<TABLE>
<CAPTION>

                                 (in thousands)

                                                          Ferrellgas Partners, L.P.
                                         -------------------------------------------------------------
                                                              Year Ended July 31,
                                         ---------------------------------------------------------------
                                            2000         1999          1998         1997        1996
                                         ------------ ------------ ------------ ------------ -----------
Operating Data:
<S>                                          <C>          <C>          <C>          <C>         <C>
Retail propane sales volumes (in             846,664      680,477      659,932      693,995     650,214
gallons)

Capital expenditures:
        Maintenance                          $ 8,917     $ 10,505     $ 10,569    $ 10,137      $ 6,657
        Growth                                11,838       15,238       10,060       6,055        6,654
        Acquisition                          310,260       48,749       13,003      38,780      108,803
                                         ------------ ------------ ------------ ----------- ------------
            Total                           $331,015     $ 74,492     $ 33,632    $ 54,972    $ 122,114
                                         ============ ============ ============ =========== ============
Supplemental Data:
Adjusted earnings before
  income taxes, depreciation and          $122,101     $112,891     $  98,119    $112,608     $99,530
  amortization:

Net cash provided by operating               $53,352      $92,494      $74,337     $75,087      $65,096
activities


</TABLE>

The Partnership's capital expenditures fall generally into three categories:


 o        maintenance   capital   expenditures,    which   include   capitalized
expenditures for repair and replacement of property, plant and equipment,

 o        growth capital expenditures,  which include expenditures for purchases
of new  propane  tanks  and  other  equipment  to  facilitate  expansion  of the
Partnership's customer base and operating capacity, and

 o        acquisition capital  expenditures,  which include expenditures related
to  the  acquisitions  of  retail  propane   operations.   Acquisition   capital
expenditures  represent total cost of acquisition less working capital acquired.
The Partnership  acquired  Thermogas LLC and Skelgas  Propane,  Inc. in December
1999 and May 1996, respectively

Adjusted earnings before interest, taxes, depreciation and amortization is:

 o       calculated as operating income less  depreciation and amortization and
an Employee Stock Ownership Plan related non-cash compensation charge,

 o        not intended to represent cash flow and does not represent the measure
of cash  available  for  distribution,

 o        a non-generally  accepted accounting  principle measure,  but provides
additional  information  for  evaluating the  Partnership's  ability to make its
minimum quarterly distribution,

 o        as defined by the  Partnership,  may not be  comparable  to  similarly
reported measures reported by other companies,

 o        not intended as an alternative to earnings from continuing  operations
or net  earnings,  and

 o        may not be comparable to similarly titled measures reported by
other companies.


ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

     The following is a discussion  of the  historical  financial  condition and
results of operations for Ferrellgas Partners and its subsidiaries and should be
read in conjunction with the historical  consolidated  financial  statements and
accompanying notes thereto included elsewhere in this Form 10-K.




                                       12
<PAGE>

Forward-looking statements


     Statements  included  in this  report  that are not  historical  facts  are
forward-looking statements.  These statements include whether or not Ferrellgas,
L.P.  will have  sufficient  funds to meet its  obligations  and to enable it to
distribute to Ferrellgas Partners sufficient funds to permit Ferrellgas Partners
to meet its obligations  with respect to the $160,000,000 of Senior Notes issued
by Ferrellgas  Partners in April 1996, and to pay the required  distribution  on
its senior common units, and to pay the minimum quarterly  distribution of $0.50
per common unit.


     The forward-looking  statements are subject to risks and uncertainties that
could cause  actual  results to differ  materially  from those  expressed  in or
implied by the statements.  The risks and  uncertainties and their effect on the
Partnership's operations include but are not limited to the following:

o the  effect  of  weather  conditions  on  demand  for  propane,  o  price  and
availability  of  propane  supplies,  o price  and  inventory  risk  of  propane
supplies,
o  the effect of increasing volatility in commodity prices on the Partnership's
   liquidity,
o  the timing of collection of accounts receivable,
o  the availability of capacity to transport propane to market areas,
o  competition from other energy sources and within the propane industry,
o  operating risks incidental to transporting, storing, and distributing
   propane,
o  changes in interest rates,
o  governmental legislation and regulations,
o  energy efficiency and technology trends,
o  the condition of the capital markets in the United States,
o  the political and economic stability of the oil producing nations,
o  the  expectation  that the senior  common units will be redeemed in the
     future with proceeds from an offering of equity at a price satisfactory to
     the Partnership, and
o  expected  savings  from  the  integration  of  the  Thermogas  acquisition,
     reductions made in personnel and assets related to the existing Ferrellgas,
     L.P.   locations  and  savings   related  to  the  routing  and  scheduling
     improvements, all discussed in "Business - Recent Initiatives".

Selected Quarterly Financial Data

     Due to the  seasonality  of the retail propane  business,  first and fourth
quarter  revenues,  gross profit and net earnings are consistently less than the
comparable second and third quarter results. Other factors affecting the results
of operations  include  competitive  conditions,  demand for product,  timing of
acquisitions, variations in the weather and fluctuations in propane prices.

On December 17, 1999,  the  Partnership  purchased  Thermogas  LLC from Williams
Natural Gas Liquids, Inc., a subsidiary of The Williams Companies, Inc. Thus the
second,  third and fourth  quarters of fiscal year 2000 will vary  significantly
from those same  quarters in fiscal  1999.  During the second  quarter of fiscal
2000,  the  Partnership  was  able  to  identify  the  effect  of the  Thermogas
acquisition  on the  results of  operations,  because the  Thermogas  operations
acquired  were  being  operated   separately   from  the  existing   Partnership
operations. Beginning in the third quarter of fiscal 2000, the Partnership began
to implement its strategic and operating  plans for the integration of Thermogas
into the Partnership's  existing operations.  These integration actions resulted
in the merging of retail locations and the related  customer groups.  Due to the
extent of this integration, the Partnership is unable to quantify separately the
effect of the Thermogas  acquisition  in the discussion of results of operations
in the third quarter of fiscal 2000 and future quarters.


     During fiscal 2000, the wholesale cost of propane  increased  significantly
compared to fiscal 1999.  The wholesale  market price at one of the major supply
points,  Mt.  Belvieu,  Texas,  ranged from a per gallon monthly  average low of
$0.405 to a high of  $0.597 in fiscal  2000.  In  fiscal  1999,  the per  gallon
monthly  average  low and high  price for the same  supply  point was $0.209 and


                                       13
<PAGE>

$0.373, respectively. Other major supply points in the United States experienced
similar  increases.  This significant cost increase  together with the Thermogas
acquisition  were the major  factors  causing the increase in the  Partnership's
revenues,  accounts  receivable,  inventory,  accounts payable and cost of goods
sold in each quarter of fiscal 2000 as compared to fiscal 1999.


     The following presents the Partnership's  selected quarterly financial data
for the two years ended July 31, 2000.

<TABLE>
<CAPTION>


Fiscal year ended July 31, 2000
(in thousands, except per unit data)
                                          First Quarter       Second Quarter        Third Quarter         Fourth Quarter
                                         ----------------     ----------------      ---------------      -----------------

<S>                                             <C>                  <C>                  <C>                  <C>
Revenues                                        $162,739             $340,995             $300,240             $148,225
Gross profit                                      77,414              162,967              123,966               63,697
Net earnings (loss)                             (14,222)               52,186                5,378             (42,482)
Net earnings (loss) per
limited partner unit - basic
and diluted                                      $(0.45)                $1.58                $0.03              $(1.49)


Fiscal year ended July 31, 1999
(in thousands, except per unit data)
                                          First Quarter             Second           Third Quarter        Fourth Quarter
                                                                    Quarter
                                         -----------------       --------------     -----------------     ----------------

Revenues                                         $130,339             $230,077              $169,892              $93,841
Gross profit                                       71,627              128,749                99,721               50,664
Earnings (loss) before
   extraordinary loss                            (11,221)               39,915                13,629             (27,540)
Earnings (loss) before
   extraordinary loss per
   limited partners unit - basic
   and diluted                                     (0.35)                 1.26                  0.43               (0.87)
Net earnings (loss)                             $(24,007)              $39,915               $13,629            $(27,540)

The net  earnings  (loss) for the first  quarter  of fiscal  year ended July 31,
1999, reflects a $12,786  extraordinary loss on early retirement of debt, net of
minority interest of $130.

</TABLE>


Results of Operations

Fiscal Year Ended July 31, 2000 versus Fiscal Year Ended July 31, 1999

     Total Revenues. Total gas liquids and related product sales increased 50.1%
to  $867,779,000  in fiscal 2000 as compared to  $578,025,000  for fiscal  1999,
primarily due to the addition of Thermogas  sales and increased  sales price per
gallon.  The fiscal 2000 winter was  reported as the warmest  winter in recorded
history.  For the year,  temperatures  were 14% warmer than normal and 6% warmer
than last year as reported by the American Gas Association.


     Sales  price per  gallon  increased  due to the  effect of the  significant
increase in the  wholesale  cost of propane as compared to fiscal  1999.  Retail
volumes  increased  24.4% to  846,664,000  gallons in fiscal 2000 as compared to
680,477,000  gallons  for  fiscal  1999,  primarily  due to the  acquisition  of


                                       14
<PAGE>

Thermogas and partially  offset by the effect of warmer weather.  Other revenues
increased by $38,296,000 primarily due to favorable results from risk management
operations and increased other retail sales. Other retail sales, which includes,
among  others,  tank  rental,  service  labor,  appliance  and  material  sales,
increased primarily due to the acquisition effect of Thermogas.


                                       15
<PAGE>



     Gross Profit.  Gross profit  increased 22.0% to $428,044,000 in fiscal 2000
as compared to  $350,761,000  during fiscal 1999,  primarily due to gross profit
generated  from the  acquired  Thermogas  operations  and,  to a lesser  extent,
increased  favorable  results  from the risk  management  operations,  partially
offset  by  lower  retail  margins.   Fiscal  1999's  retail  margins  benefited
significantly  from a low wholesale cost environment.  That cost environment was
not repeated  during  fiscal  2000.  In addition,  while the  wholesale  cost of
propane  rapidly  increased  during the year,  the retail sales price lagged the
cost increase which caused retail margins to decrease.


     Operating  Expenses.  Operating expenses increased 24.4% to $255,838,000 in
fiscal  2000 as  compared  to  $205,720,000  for fiscal  1999  primarily  due to
personnel,  plant and office,  vehicle and other operating expenses incurred due
to the acquired Thermogas operations.

     Depreciation  and  Amortization.   Depreciation  and  amortization  expense
increased  30.4% in fiscal 2000 to $61,633,000  as compared to  $47,257,000  for
fiscal 1999 primarily due to the addition of intangibles and property, plant and
equipment from the Thermogas acquisition.

     Equipment Lease Expense. Vehicle, tank and computer lease expense increased
by  $12,542,000  in fiscal 2000 due primarily to the addition of operating  tank
leases,  and to a lesser  extent to increased  operating  leases  related to new
vehicles  and  computers  acquired  for  retail  locations.  See  Note  H to the
Consolidated   Financial  Statements  included  elsewhere  in  this  report  for
additional information regarding the operating tank leases.

     Interest Expense. Interest expense increased 25.0% to $58,298,000 in fiscal
2000 as compared to $46,621,000  in fiscal 1999.  This increase is primarily the
result of increased  borrowings  related to the Thermogas  acquisition and, to a
lesser  extent,  an increase in the overall  average  interest  rate paid by the
Partnership. As a result of the Thermogas acquisition,  Ferrellgas, L.P. assumed
$183,000,000  in debt and also  refinanced a portion of its  existing  revolving
credit  facility  balances.  On  February  28,  2000,  Ferrellgas,  L.P.  issued
$184,000,000 of fixed rate senior notes which have maturities  ranging from 2006
to 2009 and an average  interest rate of 8.8% in order to repay the $183,000,000
in assumed debt. The  additional  $1,000,000 in borrowings was used to fund debt
issuance costs.

   Fiscal Year Ended July 31, 1999 versus Fiscal Year Ended July 31, 1998

     Total Revenues.  Total gas liquids and related product sales decreased 7.1%
to  $578,025,000  in fiscal  1999 as compared to  $622,423,000  in fiscal  1998,
primarily  due to a decrease  in sales price per gallon as a result of the lower
wholesale  cost of propane  experienced  in fiscal  1999,  the effects of warmer
weather and a decrease in revenues from wholesale propane  marketing,  partially
offset by the effect of acquisitions of propane businesses. The winter of fiscal
1999 was reported as the third warmest winter in recorded history. For the year,
temperatures  were 9% warmer  than  normal and 1% warmer than the same period in
1998 as reported by the American Gas Association.

     A generally lower wholesale  product cost  environment  experienced  during
fiscal  1999  caused a  significant  decrease  in the sales  price per gallon as
compared to fiscal 1998. Retail volumes increased by 3.1% or 20,545,000 gallons,
primarily due to acquisitions.

     Gross Profit. Gross profit increased 8.0% to $350,761,000 in fiscal 1999 as
compared to $324,753,000 in fiscal 1998.  Retail  operations  results  increased
primarily due to increased retail margins and an increase in volumes  attributed
to  acquisitions,  partially  offset by decreased  volumes  attributed to warmer
weather.

     Operating  Expenses.  Operating  expenses increased 3.4% to $205,720,000 in
fiscal 1999 as compared to $199,010,000 in fiscal 1998.  Fiscal 1999's operating
expenses  increased  due to  acquisition-related  increases in personnel  costs,
plant  and  office  expenses,  vehicle  and  other  expenses  and  also  due  to
performance and merit compensation increases.


                                       16
<PAGE>

     Equipment  Lease  Expense.  Vehicle  and tank lease  expense  increased  by
$2,849,000 in fiscal 1999 due to the utilization of operating lease financing to
fund fleet upgrades and replacements.

     Interest  Expense.  Interest  expense  decreased  5.1%  in  fiscal  1999 as
compared  to the  fiscal  1998.  This  decrease  was  primarily  the result of a
decrease in the overall  average  interest rate paid by the  Partnership  on its
borrowings  as a result  of the  refinancing  of fixed  rate  debt and  existing
revolving credit facility balances,  partially offset by the effect of increased
borrowings for  acquisition and growth capital  expenditures  (see Liquidity and
Capital Resources-Financing Activities following).

     Extraordinary item. During fiscal year 1999, the Partnership  recognized an
extraordinary  loss of $12,786,000 net of a minority  interest of $130,000.  The
gross  extraordinary  loss included a payment of a 5% premium and a write-off of
unamortized  financing costs of $2,916,000,  resulting  primarily from the early
extinguishment of $200,000,000 of its fixed rate senior notes.


Liquidity and Capital Resources


     The ability of the Partnership to satisfy its obligations is dependent upon
future  performance,  which will be subject to prevailing  economic,  financial,
business and weather conditions and other factors,  many of which are beyond its
control.  Due to the seasonality of the Partnership's retail propane business, a
significant  portion of the Partnership's cash flow from operations is typically
generated during the winter heating season and the  Partnership's  corresponding
second  and  third  fiscal   quarters.   During  the  non-peak  season  and  the
Partnership's  first and  fourth  fiscal  quarters,  it is not  unusual  for the
Partnership to generate  negative cash flow from  operations due to lower retail
sales and fixed expenses  impact during the non-peak  season.  As experienced in
previous  fiscal  years,  the next fiscal  quarter  ending  October 31, 2000, is
expected to generate  negative cash flows from operations,  and is typically the
time period when the  Partnership  utilizes  other  sources of funds to meet its
obligations.  Subject  to  meeting  certain  financial  tests  discussed  below,
Ferrellgas,  Inc.  believes that  Ferrellgas,  L.P. will have  sufficient  funds
available  to  meet  its  obligations,  to  distribute  to  Ferrellgas  Partners
sufficient  funds to permit  Ferrellgas  Partners to meet its  obligations  with
respect to the  $160,000,000  senior  secured  notes issued in April 1996 and to
distribute to Ferrellgas  Partners  sufficient  funds to distribute  the minimum
quarterly distribution on all common units for the fiscal quarter ending October
31, 2000.

     The Partnership's  credit facilities,  public debt, private debt,  accounts
receivable  securitization  facility and operating tank leases  contain  several
financial  tests and covenants which restrict the  Partnership's  ability to pay
distributions,  incur debt and engage in certain other business transactions. In
general,  these tests are based on the Partnership's debt to cash flow ratio and
cash flow to interest  expense ratio.  Ferrellgas,  Inc.  believes that the most
restrictive of these tests currently are debt incurrence  limitations within the
credit facility, tank leases and accounts receivable securitization facility and
limitations  on the  payment of  distributions  within the  Ferrellgas  Partners
senior secured notes. The credit facility,  tank leases and accounts  receivable
securitization  facility  limit  Ferrellgas,  L.P.'s  ability  to incur  debt if
Ferrellgas,  L.P. exceeds  prescribed ratios of either debt to cash flow or cash
flow to interest expense.  The Ferrellgas Partners senior secured notes restrict
payments if a minimum  ratio of cash flow to interest  expense is not met.  This
restriction  places  limitations  on the  Partnership's  ability to make certain
restricted  payments such as the payment of cash  distributions  to unitholders.
The cash flow used to determine  these  financial  tests generally is based upon
the Partnership's  most recent cash flow performance giving pro forma effect for
acquisitions and divestitures made during the test period.

     The  Partnership's  financial  performance  during the 2000,  1999 and 1998
fiscal  years has been  adversely  impacted  by average  temperatures  that were
reported by the National Oceanic  Atmospheric  Administration  as the warmest in
recorded  history.  In  addition,   during  fiscal  2000,  the  Partnership  has
experienced  high product costs which has negatively  impacted  retail  margins.
Despite  these  challenges,  the  Partnership  has  continued to meet all of its
financial tests and covenants.  These include the debt  incurrence  tests within


                                       17
<PAGE>

the credit facility, tank leases and accounts receivable securitization facility
and the Ferrellgas  Partners  senior secured notes  restricted  payment test, as
well as other  financial  tests and covenants in the Ferrellgas  Partners senior
secured notes, the $350 million senior notes, the $184 million senior notes, the
credit  facility, the tank leases and the accounts  receivable  securitization
facility.

     Based upon current  estimates of the Partnership's  cash flow,  Ferrellgas,
Inc.  believes  that the  Partnership  will be able to meet all of the  required
financial  tests and covenants for the fiscal  quarter  ending October 31, 2000.
However,  due to the lower than expected  operating results  experienced  during
fiscal  2000,  if  the  Partnership  were  to  encounter  additional  unexpected
downturns  in  business  operations,  such as  significantly  warmer than normal
weather or a volatile cost  environment,  the  Partnership  may not meet certain
financial  tests  during  immediate   future   quarters.   These  factors  could
temporarily restrict the ability of Ferrellgas, L.P. to incur debt or Ferrellgas
Partner's  ability  to  make  cash  distributions  to  its  common  unitholders.
Depending on the circumstances,  the Partnership could consider  alternatives to
permit the  incurrence of debt at Ferrellgas,  L.P. or the continued  payment by
Ferrellgas   Partners  of  the  quarterly  cash   distribution   to  its  common
unitholders.  No assurances can be given, however, that such alternatives can or
will be implemented with respect to any given quarter.

     Future  maintenance  and  working  capital  needs  of the  Partnership  are
expected to be provided by cash generated from future operations,  existing cash
balances,  the  credit  facility  and  the  accounts  receivable  securitization
facility.   To  fund  expansive   capital  projects  and  future   acquisitions,
Ferrellgas, L.P. may borrow on the existing credit facility, Ferrellgas Partners
or Ferrellgas,  L.P. may issue  additional  debt to the extent  permitted  under
existing  debt  agreements or Ferrellgas  Partners may issue  additional  equity
securities, including, among others, common units.

     Toward this purpose, on February 5, 1999, Ferrellgas Partners filed a shelf
registration  statement  with the  Securities  and Exchange  Commission  for the
periodic  sale of up to  $300,000,000  in debt  and/or  equity  securities.  The
registered  securities  would be available  for sale by the  Partnership  in the
future to fund acquisitions, reductions in indebtedness or for general corporate
purposes.

     Ferrellgas   Partners  also  maintains  an  additional  shelf  registration
statement  with the  Securities  and Exchange  Commission  for 2,010,484  common
units.  These common units may be issued by  Ferrellgas  Partners in  connection
with the Partnership's acquisition of other businesses, properties or securities
in business combination transactions.


     On August 1, 1999,  the  subordination  period  ended and all  subordinated
units converted to common units. This conversion is more fully described in Note
F of the Consolidated Financial Statements provided herein.


     Operating Activities. Cash provided by operating activities was $53,352,000
for the twelve months ended July 31, 2000,  compared to  $92,494,000  for fiscal
1999.  This decrease in cash  provided  from  operations is primarily due to the
higher  working  capital  requirements  resulting  from the  increased  costs of
propane during fiscal 2000.


     Investing Activities.  During the twelve months ended July 31, 2000, before
the effect of the Thermogas acquisition,  the Partnership made total acquisition
capital expenditures of $7,183,000. This amount was funded by $6,338,000 of cash
payments,  $601,000 of  noncompete  notes,  $46,000 of common  units  issued and
$198,000 of other costs and consideration.


                                       18
<PAGE>


     On December 17, 1999, the Partnership purchased Thermogas from a subsidiary
of The Williams Companies. At closing the Partnership entered into the following
noncash transactions:

o  issued $175,000,000 in senior common units to the seller,
o  assumed a $183,000,000  bridge loan, which was refinanced from the proceeds
     of the $184,000,000 senior notes issued on February 28, 2000, and
o  assumed a $135,000,000 operating tank lease.


     As a result of the  transaction,  the Partnership  acquired  $61,842,000 of
cash which  remained on the Thermogas  balance  sheet.  Since the closing of the
acquisition,  the Partnership has paid  $15,893,000 in additional costs and fees
related to the  transaction  between  December 17, 1999 and July 31,  2000.  The
Partnership  reimbursed The Williams Companies $5,652,500 as final settlement of
its working capital reimbursement obligation.

     The Partnership has accrued  $7,033,000 in exit costs,  which it expects to
incur  within  twelve  months from the  acquisition  date as it  implements  the
integration of the Thermogas  operations.  This accrual  included  $5,870,000 of
termination benefits and $1,163,000 of costs to exit Thermogas activities.  Exit
costs are generally those costs incurred to terminate  employees  pursuant to an
acquisition and to exit an activity of an acquired company. As of July 31, 2000,
the Partnership  has paid  $1,306,000 for termination  benefits and $890,000 for
exit costs. The Partnership does not have any material  commitments of funds for
capital  expenditures other than to support the current level of operations.  In
fiscal 2001, the  Partnership  does not expect a significant  increase in growth
and maintenance capital expenditures resulting from the Thermogas acquisition as
compared to fiscal 2000 levels.


     During the twelve months ended July 31, 2000, the  Partnership  made growth
and maintenance capital expenditures of $20,755,000  consisting primarily of the
following:


o  additions  to  Partnership-owned  customer  storage  tanks and  cylinders,
o  relocating  and  upgrading  district  plant  facilities,
o  upgrading  computer equipment and software, and
o  vehicle lease buyouts.

     The  Partnership's  capital  requirements  for  repair and  maintenance  of
property,  plant and equipment are relatively  low due to limited  technological
change and long useful lives of propane tanks and cylinders.

     The Partnership leases light and medium duty trucks, tractors and trailers.
The Partnership believes vehicle leasing is a cost-effective  method for meeting
its  transportation  equipment needs. The Partnership plans to purchase vehicles
at the end of their lease term totaling $1,364,000 in 2001, $203,000 in 2002 and
$143,000 in 2003.  The  Partnership  intends to renew other vehicle  leases that
would have had buyouts of $452,000 in 2001, $7,057,000 in 2002,  $162,569,000 in
2003, $4,981,000 in 2004 and $4,086,000 in 2005.  Historically,  the Partnership
has been  successful in renewing  vehicle  leases  subject to buyouts.  However,
there is no assurance that it will be successful in the future.

     The  Partnership  continues  to  seek  to  expand  its  operations  through
strategic  acquisitions of smaller retail propane  operations located throughout
the United States. These acquisitions will be funded through internal cash flow,
external borrowings or the issuance of additional Partnership interests.

     Financing  Activities.  On August 4,  1998,  Ferrellgas,  L.P.  issued  the
privately  placed  unsecured $350 million senior notes and entered into a credit
facility  with its existing  banks.  The senior  notes  include five series with
maturities ranging from year 2005 through 2013 at an average fixed interest rate
of 7.16%.  The proceeds of the senior notes were used to redeem  $200,000,000 of
Ferrellgas,  L.P.  fixed rate senior notes  issued in July 1994,  including a 5%
call premium, and to repay outstanding indebtedness under the former Ferrellgas,
L.P.  revolving  credit  facility.  On  December  17,  1999,  Ferrellgas,   L.P.
terminated its additional credit facility  agreement that it had entered into on
April 30,  1999.  This  facility  had  provided  for an  unsecured  facility for




                                       19
<PAGE>

acquisitions,   capital  expenditures,   and  general  corporate  purposes.  The
outstanding  additional  credit  facility before its termination on December 17,
1999 was $35,000,000.

     On December 6, 1999, Ferrellgas,  L.P. entered into a $25,000,000 operating
tank lease involving the  sale-leaseback of a portion of its customer tanks with
Banc of America  Leasing & Capital,  LLC. This  operating  lease has a term that
expires June 30, 2003 and may be extended for two additional one-year periods at
the option of Ferrellgas,  L.P., if such extension is approved by the lessor. On
December  17,  1999,   immediately   prior  to  the  closing  of  the  Thermogas
acquisition,   Thermogas  entered  into  a  $135,000,000  operating  tank  lease
involving  a portion  of its  customer  tanks,  with Banc of  America  Leasing &
Capital, LLC. In connection with the acquisition of Thermogas,  Ferrellgas, L.P.
assumed all obligations under the $135,000,000  operating tank lease, which have
terms and conditions similar to the December 6, 1999, $25,000,000 operating tank
lease discussed above. The Partnership  intends to renew both leases for the two
additional one-year periods,  subject to lessor approval.  Following the renewal
periods, the Partnership intends to refinance these leases,  however,  there can
be no assurance  that the  Partnership  will be  successful  in  obtaining  this
refinancing or lessor approval for the renewals.


     On February 28,  2000,  Ferrellgas,  L.P.  issued $184 million of privately
placed  unsecured  senior notes.  The proceeds of the $184 million senior notes,
which include three series with  maturities  ranging from year 2006 through 2009
and an average fixed interest rate of 8.8%, were used to retire  $183,000,000 of
Ferrellgas, L.P. bridge loan financing assumed in connection with the Thermogas
acquisition.

     On April 18, 2000,  Ferrellgas,  L.P. completed the syndication of both the
$25,000,000 and $135,000,000  operating tank lease to a group of banks and other
financial institutions.

     On April 18, 2000,  Ferrellgas,  L.P.  entered into an amended and restated
credit facility.  This $157,000,000  credit facility,  which expires on June 30,
2003, replaces the previous $145,000,000 credit facility.

     Ferrellgas,  L.P.'s credit  facility  consists of a $117,000,000  unsecured
working capital, general corporate and acquisition facility,  including a letter
of credit facility,  and a $40,000,000 revolving working capital facility.  This
$40,000,000  facility is subject to an annual reduction in outstanding  balances
to zero for thirty  consecutive  days. All borrowings  under the credit facility
bear  interest,  at the  borrower's  option,  at a rate  equal to either  London
Interbank  Offered Rate plus an applicable  margin  varying from 1.25 percent to
2.25 percent or the bank's base rate plus an applicable margin varying from 0.25
percent to 1.25 percent. The bank's base rate at July 31, 2000 and 1999 was 9.5%
and 8.0%, respectively. To offset the variable rate characteristic of the credit
facility,  Ferrellgas,  L.P.  entered  into a interest  rate  collar  agreement,
expiring  January 2001,  with a major bank limiting the floating rate portion of
London Interbank Offered Rate -based loan interest rates on a notional amount of
$25,000,000 to between 5.05% and 6.5%.  During the year ended July 31, 2000, the
Partnership  repaid  $48,800,000  to its  credit  facility  as it related to the
funding of working capital, business acquisitions and capital expenditure needs.

     Effective April 27, 2000, Ferrellgas Partners entered into an interest rate
swap agreement with Bank of America, related to the semi-annual interest payment
due on the  $160,000,000  fixed rate  senior  secured  notes due 2006.  The swap
agreement,  which  expires  June 15, 2006,  requires  Bank of America to pay the
stated fixed  interest  rate (annual rate 9.375%)  pursuant to the  $160,000,000
senior secured notes,  equaling  $7,500,000 every six months due on each June 15
and December  15. In exchange,  the  Partnership  is required to make  quarterly
floating  interest  rate  payments  on the 15th of March,  June,  September  and
December based on an annual interest rate equal to the 3 month London  Interbank
Offered Rate  interest rate plus 1.655%  applied to the same notional  amount of
$160,000,000.

     Effective June 2, 2000, Ferrellgas,  L.P. entered into an interest rate cap
agreement with Bank of America,  related to variable quarterly rent payments due
pursuant to two operating  tank lease  agreements.  The variable  quarterly rent
payments are  determined  based upon a floating  London  Interbank  Offered Rate
based interest rate.  The cap agreement,  which expires June 30, 2003,  requires
Bank of  America  to pay  Ferrellgas,  L.P.,  at the end of  each  March,  June,




                                       20
<PAGE>

September and December,  the excess,  if any, of the applicable 3 month floating
London Interbank  Offered Rate interest rate over a cap of 9.3%,  applied to the
unamortized  amount  outstanding each quarter under the two operating tank lease
agreements. The total obligation under these two operating tank lease agreements
as of July 31, 2000 was $159,200,000.


     On September 26, 2000,  Ferrellgas,  L.P.  received  $20,000,000 in cash in
exchange for the sale and  contribution  of a $25,000,000  interest in a pool of
its trade  accounts  receivable to its recently  created  wholly-owned,  special
purpose subsidiary, Ferrellgas Receivables. Ferrellgas Receivables then sold the
interest to a commercial paper conduit of Banc One, NA according to the terms of
a 364-day  agreement.  The level of funding  available  from this  agreement  is
limited  to  $60,000,000.  In  accordance  with SFAS No.  125,  "Accounting  for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
this transaction will be reflected on the Partnership's  financial statements as
a sale of accounts  receivable and  contribution of capital in the first quarter
of fiscal  2001.  The  proceeds  of these sales are less than the face amount of
accounts  receivable  sold  by  an  amount  that  approximates  the  purchaser's
financing  cost of issuing its own  commercial  paper  backed by these  accounts
receivable.  This loss on the September,  2000 transaction will be approximately
$300,000 in the first quarter of fiscal 2001 and represents the difference
between the fair market value and the book value of the receivables contributed
and sold.

     At September 30, 2000, $60,000,000 of borrowings and $47,865,000 of letters
of credit were outstanding  under the Ferrellgas,  L.P. credit  facility.  These
borrowings  currently  carry  interest  rates  ranging  from 8.88% to 8.94%.  At
September  30, 2000,  Ferrellgas,  L.P. had  $89,135,000  available  for general
corporate,  acquisition and working  capital  purposes under the credit facility
and the accounts receivable facility. Based on the pricing grid contained in the
credit  facility,  the current  borrowing rate for future  borrowings  under the
credit  facility is London  Interbank  Offered Rate plus 2.25%.  The Partnership
believes that during fiscal 2001 these facilities will be sufficient to meet its
working  capital  needs.  However,  if the  Partnership  were to  experience  an
unexpected significant increase in working capital requirements,  it could cause
the Partnership to exceed its immediately available resources. Events that could
cause increases in working capital  requirements  include a significant increase
in the cost of propane  compared to current levels,  a significant  delay in the
collections of accounts  receivable or increased  volatility in commodity prices
related  to  risk  management   activities.   The  Partnership   would  consider
alternatives to provide increased  working capital.  No assurances can be given,
however, that such alternatives can or will be implemented.


     Although The Williams  Companies  has the right to convert any  outstanding
senior  common  units into common units at a premium on February 1, 2002 or upon
the occurrence of a material event, the Partnership intends to redeem the senior
common units at par value prior to the date of conversion.  No assurances can be
given that the  Partnership  will be  successful  in securing  the  financing to
redeem the senior common units.

     On August 17, 2000, the  Partnership  declared an in-kind  distribution  of
$1.00 per senior common unit payable by the issuance of additional senior common
units  and a cash  distribution  of  $0.50  per  common  unit,  that was paid on
September 14, 2000. See Notes C and F in the Consolidated  Financial  Statements
included  elsewhere  in this report for  additional  information  regarding  the
in-kind distributions to the senior common unitholders.

     New Accounting  Pronouncements.  The Financial  Accounting  Standards Board
recently issued Statement of Financial  Accounting Standards No. 133 "Accounting
for Derivative  Instruments and Hedging Activities." SFAS No. 133, as amended by
SFAS No. 137 and No. 138 is  required to be adopted by the  Partnership  for the
first  quarter  of  fiscal  2001.  SFAS No.  133  requires  that all  derivative
instruments  be recorded in the balance sheet at fair value.  The  provisions of
SFAS No. 133 will  impact  the  Partnership's  accounting  for  certain  options
hedging  overall  purchase  price risk.  Under the  provisions  of SFAS No. 133,
changes in the fair value of certain  positions  qualifying  as cash flow hedges
will be recorded in accumulated other comprehensive income.  Changes in the fair
value of certain  other  positions  not  qualifying as hedges under SFAS No. 133




                                       21
<PAGE>

will be recorded in the  statement of earnings.  As a result of these changes in
classification,  the  Partnership  will recognize in its first quarter of fiscal
2001 gains totaling  approximately  $709,000 and $299,000 in  accumulated  other
comprehensive income and the statement of earnings,  respectively.  In addition,
beginning  in the first  quarter of fiscal  2001,  the  Partnership  will record
subsequent changes in the fair value of positions qualifying as cash flow hedges
in accumulated other comprehensive income and changes in the fair value of other
positions in the statement of earnings.


     In December  1999,  the staff of the  Securities  and  Exchange  Commission
issued Staff Accounting  Bulletin No. 101 entitled  "Revenue  Recognition".  The
bulletin,  as  amended,  is to be adopted,  if needed,  no later than the fourth
fiscal  quarter  of fiscal  years  commencing  after  December  15,  1999,  with
retroactive adjustment to the first fiscal quarter of that year. Management will
implement this bulletin in the first quarter of fiscal 2001 and believes that it
will have no material affect on the Partnership's financial position, results of
operations or cash flows.



ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


     The  market  risk  inherent  in the  Partnership's  market  risk  sensitive
instruments  and positions is the potential loss arising from adverse changes in
commodity prices.  Additionally,  the Partnership seeks to mitigate its interest
rate risk exposure on variable  rate debt and  operating leases by interest rate
collar and cap agreements. At July 31, 2000, the Partnership had $190,000,000 in
variable  rate debt and  $25,000,000  notional  amount of  interest  rate collar
agreements  outstanding,  after  considering the effect of the swap transaction.
The variable rate debt increased in fiscal 2000 by $160,000,000  due to the swap
transaction.  At July 31, 2000, the Partnership had $159,200,000  outstanding in
variable rate operating leases and $159,200,000 notional amount of interest rate
collar  agreements  outstanding to mitigate the related  variable rate exposure.
Both the operating leases and interest rate collar  agreements were entered into
in fiscal  2000.  Thus,  assuming a 100 basis  point  increase  in the  variable
interest  rate to the  Partnership  during  fiscal 2001,  the interest rate risk
related  to the  variable  rate  debt,  the  operating  tank  leases,  the  swap
transaction and the associated  interest rate collar and cap agreements would be
an increase of $3,370,000.


     The  Partnership's  risk  management  activities  utilize  certain types of
energy  commodity  forward  contracts  and swaps traded on the  over-the-counter
financial  markets and  futures  traded on the New York  Mercantile  Exchange to
anticipate market movements,  manage and hedge its exposure to the volatility of
floating  commodity  prices  and  to  protect  its  inventory   positions.   The
Partnership also utilizes certain  over-the-counter  energy commodity options to
limit overall price risk and to hedge its exposure to inventory price movements.


     Market risks  associated  with energy  commodities  are monitored  daily by
senior management for compliance with the Partnership's  risk management trading
policy. This policy includes specific dollar exposure limits, limits on the term
of various  contracts  and volume  limits for various  energy  commodities.  The
Partnership  also  utilizes  loss limits and daily  review of open  positions to
manage exposures to changing market prices.

     Market,  Credit and Liquidity  Risk. New York  Mercantile  Exchange  traded
futures are  guaranteed  by the New York  Mercantile  Exchange  and have nominal
credit risk. The  Partnership is exposed to credit risk associated with futures,
swaps and option  transactions in the event of nonperformance by counterparties.
For each counterparty, the Partnership analyzes its financial condition prior to
entering  into  an  agreement,   establishes  credit  limits  and  monitors  the
appropriateness  of each limit.  The change in market  value of  Exchange-traded
futures  contracts  requires  daily  cash  settlement  in margin  accounts  with
brokers.  Forwards and most other  over-the-counter  instruments  are  generally
settled at the  expiration of the contract  term.  The  Partnership  attempts to
balance  favorable and  unfavorable  positions with  counterparties  in order to
minimize the risk of collateral requirements for over-the-counter instruments.

                                       22
<PAGE>


     Sensitivity  Analysis.  The Partnership has prepared a sensitivity analysis
to  estimate  the  exposure to market  risk of its energy  commodity  positions.
Forward  contracts,   futures,  swaps  and  options  were  analyzed  assuming  a
hypothetical  10% change in forward prices for the delivery month for all energy
commodities.  The potential loss in future  earnings from these positions from a
10% adverse  movement in market prices of the underlying  energy  commodities is
estimated at $4,448,000 as of July 31, 2000. The preceding hypothetical analysis
is limited  because  changes in prices  may or may not equal 10%,  thus,  actual
results may differ.


ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The  Partnership's  Consolidated  Financial  Statements and the Independent
Auditors' Reports thereon and the Supplementary  Financial Information listed on
the accompanying Index to Financial Statements and Financial Statement Schedules
are  hereby  incorporated  by  reference.  See  Item  7 for  Selected  Quarterly
Financial Data.

ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
               FINANCIAL DISCLOSURE.
     None.


                                    PART III


ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS.


Partnership Management

          Ferrellgas,   Inc.   manages  and  operates  the   activities  of  the
Partnership  and  anticipates  that  its  activities  will  be  limited  to that
management and operation.  Unitholders do not directly or indirectly participate
in the management or operation of the Partnership.


          Ferrellgas,  Inc. has appointed  persons who are neither  officers nor
employees of Ferrellgas,  Inc. or any affiliate of Ferrellgas,  Inc. to serve on
its audit committee. At the request of Ferrellgas, Inc., the audit committee has
the authority to review specific matters which Ferrellgas,  Inc. believes may be
a conflict of interest with the Partnership.  The audit committee  determines if
the  resolution  of that  conflict as proposed by  Ferrellgas,  Inc. is fair and
reasonable to the Partnership. Ferrellgas, Inc. has sole discretion to determine
which matters, if any, to submit to the audit committee.  In addition, the audit
committee has the authority and  responsibility  for selecting the Partnership's
independent  public  accountants,  reviewing the Partnership's  annual audit and
resolving  accounting  policy  questions.  Any  matters  approved  by the  audit
committee are conclusively  deemed to be fair and reasonable to the Partnership,
approved by all  unitholders of the  Partnership and not a breach by Ferrellgas,
Inc. of any duties it may owe the Partnership or its Unitholders.


     The Partnership does not directly employ any of the persons responsible for
managing or operating the  Partnership.  At September 30, 2000,  4,532 full-time
and 882 temporary and part-time individuals were employed by Ferrellgas, Inc.

Directors and Executive Officers of the General Partner

     The  following  table sets forth  certain  information  with respect to the
directors and executive officers of Ferrellgas, Inc. as of October 5, 2000. Each



                                       23
<PAGE>

of the  persons  named  below is elected to their  respective  office or offices
annually.  On October 5, 2000, Danley K. Sheldon resigned as the Chief Executive
Officer, President and Director of Ferrellgas, Inc. and affiliates.


<TABLE>
<CAPTION>

                                    Director
Name                                            Age          Since       Position
<S>                                             <C>          <C>         <C>
James E. Ferrell                                61           1984        Chairman of the Board, Chief Executive
                                                                         Officer, President and a Director of
                                                                         Ferrellgas, Inc.

Patrick J. Chesterman                           50                       Executive Vice President and Chief
                                                                         Operating Officer

James M. Hake                                   40                       Senior Vice President, Corporate
                                                                         Development


Kevin T. Kelly                                  35                       Senior Vice President , Chief
                                                                         Financial Officer and Treasurer


Boyd H. McGathey                                41                       Senior Vice President, Corporate
                                                                         Administration and Chief Information
                                                                         Officer

A. Andrew Levison                               44           1994        Director of Ferrellgas, Inc.

Elizabeth T. Solberg                            61           1998        Director of Ferrellgas, Inc.

Michael F. Morrissey                           58            1999        Director of Ferrellgas, Inc.

</TABLE>

     James E.  Ferrell--Mr.  Ferrell  has been  with  Ferrell  Companies  or its
predecessors  and its  affiliates in various  executive  capacities  since 1965,
including Chairman of the Board of Ferrellgas, Inc. He was named Chief Executive
Officer and  President of  Ferrellgas,  Inc. on October 5, 2000.  He  previously
served as Ferrellgas,  Inc.'s Chief  Executive  Officer until August 1998 and as
President until October 1996.

          Patrick  J.  Chesterman--Mr.   Chesterman  was  named  Executive  Vice
President and Chief Operating  Officer of Ferrellgas,  Inc. in June 2000. He had
been Executive Vice President and Chief Operating Officer, Ferrell North America
since April 1998 after  having  served as Senior Vice  President,  Supply  since
September 1997.  After joining  Ferrellgas,  Inc. in June, 1994, he had one-year
assignments as Vice President-Retail Operations,  Director of Field Support, and
Director of Human Resources.  Prior to joining Ferrellgas,  Inc., Mr. Chesterman
was Director of Fuels Policy and Operations for the U.S. Air Force.

          James M.  Hake--Mr.  Hake was named Senior Vice  President,  Corporate
Development in June,  2000. He had been Senior Vice President or Vice President,
Acquisitions of Ferrellgas, Inc. since October, 1994. He joined Ferrellgas, Inc.
in 1986.

          Kevin T.  Kelly--Mr.  Kelly was named Senior Vice President in October
2000,  Chief Financial  Officer in May 1998 and Treasurer in August 1998.  After
joining  Ferrellgas,  Inc.  in June 1996,  he served as  Director of Finance and
Corporate  Controller  until May 1998.  Prior to joining  Ferrellgas,  Inc., Mr.
Kelly was Manager of Project Acquisitions with UtiliCorp United, Inc.

     Boyd H. McGathey--Mr.  McGathey was named Senior Vice President,  Corporate
Administration  and Chief Information  Officer in June 2000, after having served
as Vice President,  Chief Operating  Officer-Eastern  U.S. since August 1998. He
served as Regional Vice President since February 1997. After joining Ferrellgas,
Inc. in 1989, he held District Manager and Area Manager positions.



                                       24
<PAGE>

     A. Andrew Levison--Mr.  Levison was elected a Director of Ferrellgas,  Inc.
in  September  1994.  He is also a member of the Audit  Committee.  Mr.  Levison
retired in 2000 after  having been a Managing  Director of  Donaldson,  Lufkin &
Jenrette Securities Corporation since 1989.

     Elizabeth  T.  Solberg--Ms.  Solberg was elected a Director of  Ferrellgas,
Inc. in July 1998. She is also a member of the Audit  Committee.  Ms. Solberg is
Regional  President and Senior Partner of  Fleishman-Hillard,  Inc. and has been
with the firm since  1976.  She has been a member of the Board of  Directors  of
Kansas City Life Insurance Company since 1997.

     Michael F.  Morrissey--Mr.  Morrissey was elected a Director of Ferrellgas,
Inc. in November 1999. He is also Chairman of the Audit Committee. Mr. Morrissey
retired as the  Managing  Partner of Ernst & Young's  Kansas  City office in the
fall of 1999. He had been with that firm, or its predecessor, since 1975.

Compensation of the General Partner

Ferrellgas,   Inc.  receives  no  management  fee  or  similar  compensation  in
connection  with its management of the  Partnership and receives no remuneration
other than:


o distributions on its combined 2% general partner interest in the Partnership,
  and,

o    reimbursement  for all direct and indirect  costs and expenses  incurred on
     behalf of the Partnership, all selling, general and administrative expenses
     incurred by Ferrellgas,  Inc. for or on behalf of the  Partnership  and all
     other expenses  necessary or appropriate to the conduct of the business of,
     and allocable to, the Partnership.  The selling, general and administrative
     expenses  reimbursed include specific employee benefits and incentive plans
     for the benefit of the executive officers and employees of Ferrellgas, Inc.

Compliance With Section 16(a) of the Securities and Exchange Act

     Section  16(a)  of  the  Securities  and  Exchange  Act  of  1934  requires
Ferrellgas,  Inc.'s officers and directors, and persons who own more than 10% of
a registered class of the Partnership's  equity  securities,  to file reports of
beneficial  ownership and changes in beneficial  ownership with the  Commission.
Officers,  directors  and  greater  than 10%  unitholders  are  required  by the
Commission's  regulation to furnish Ferrellgas,  Inc. with copies of all Section
16(a) forms.

     Based  solely  on its  review  of the  copies  of such  forms  received  by
Ferrellgas, Inc., or written representations from certain reporting persons that
no  Annual  Statement  of  Beneficial  Ownership  of  Securities  on Form 5 were
required for those persons,  Ferrellgas,  Inc.  believes that during fiscal year
2000 all filing requirements applicable to its officers,  directors, and greater
than 10% beneficial owners were met in a timely manner.

ITEM 11.      Executive Compensation.


   Summary Compensation Table


     The following table sets forth the compensation for the past three years of
Ferrellgas,  Inc.'s Chief Executive Officer and the four most highly compensated
executive officers other than the Chief Executive  Officer,  who were serving as
executive officers at the end of the 2000 fiscal year.





                                       25
<PAGE>


<TABLE>
<CAPTION>



                                                                    Long-Term Compensation
                                                                    -------------------------------
                                           Annual Compensation          Awards         Pay-outs
                                         -------------------------  --------------- ---------------
                                                                                      Long-Term
                                                                        Stock         Incentive           All Other
            Name and                       Salary      Bonus (1)      Options(2)       Payouts           Compensation
       Principal Position         Year       ($)          ($)            (#)             ($)                 ($)
                                  ------ ------------ ------------  --------------- ---------------    -----------------
<S>                                  <C>      <C>        <C>             <C>              <C>            <C>
Danley K. Sheldon (3)              2000      381,261      ---            ---             ---                     13,880 (4)
   President and Chief             1999      344,802      123,420      937,500           ---                     12,883
     Executive Officer             1998      225,000       50,000        ---             ---                     20,104

Patrick J. Chesterman              2000      212,646      202,125       50,000           ---                     13,701 (4)
   Executive Vice President,       1999      198,338      110,000      200,000           ---                     31,197
    And Chief Operating Officer    1998      161,500       25,000        ---             ---                     15,530

James M. Hake                      2000      182,226       75,000       25,000           ---                      9,594 (4)
   Senior Vice President,          1999      181,667       55,830      200,000           ---                      8,140
    Corporate Development          1998      120,000       85,000        ---             ---                     15,887

Kevin T. Kelly                     2000      160,319       75,000       75,000           ---                      8,184 (4)
  Senior Vice President,           1999      142,808       25,000      150,000           ---                      5,001
  Chief Financial Officer          1998       99,014       50,000        ---             ---                      9,376

Boyd H. McGathey                   2000      153,659       75,000       25,000           ---                      7,053 (4)
  Senior Vice President, Corp      1999      140,003       24,348      200,000           ---                     37,038
    Administration and
    Chief Information Officer

</TABLE>


(1)      Mr.  Sheldon  received a bonus in fiscal 1998 and 1999  pursuant to his
employment agreement.  All other named executives  participate in the Ferrellgas
Annual  Incentive  Plan.  Awards  under  both  plans are for the year  reported,
regardless of the year paid.

(2)  The awards are to grants of stock options from the  Incentive  Compensation
     Plan, a non-qualified stock option plan of Ferrell Companies.

(3)  On October 5,  2000,  Danley K.  Sheldon  resigned  as the Chief  Executive
     Officer, President and Director of Ferrellgas, Inc. and affiliates.


(4)  Includes for Mr. Sheldon  contributions of $12,674 to the employee's 401(k)
     and profit  sharing plans and  compensation  of $1,206  resulting  from the
     payment  of  life   insurance   premiums.   Includes  for  Mr.   Chesterman
     contributions of $13,033 to the employee's  401(k) and profit sharing plans
     and  compensation  of $668  resulting  from the  payment of life  insurance
     premiums.  Includes for Mr. Hake  contributions of $9,077 to the employee's
     401(k) and profit sharing plans and compensation of $517 resulting from the
     payment of life insurance premiums. Includes for Mr. Kelly contributions of
     $8,184 to the employee's 401(k) and profit sharing plans.  Includes for Mr.
     McGathey  contributions  of  $6,513 to the  employee's  401(k)  and  profit
     sharing plans and  compensation  of $540 resulting from the payment of life
     insurance premiums.



     Unit Options

     On October 14, 1994,  Ferrellgas,  Inc.  adopted the Ferrellgas,  Inc. Unit
Option Plan  pursuant  to which key  employees  are granted  options to purchase
Ferrellgas Partner's  subordinated units. The purpose of the Unit Option Plan is
to encourage  certain  employees of  Ferrellgas,  Inc. to develop a  proprietary
interest  in the growth and  performance  of the  Partnership,  to  generate  an
increased  incentive  to  contribute  to the  Partnership's  future  success and
prosperity,  thus enhancing the value of the  Partnership for the benefit of its
Unitholders,  and to enhance  the  ability of  Ferrellgas,  Inc.  to attract and
retain key individuals who are essential to progress,  growth and  profitability
of the Partnership.

     Ferrellgas,  Inc. has granted options to purchase  units,  720,525 of which




                                       26
<PAGE>

are  outstanding  at July 31, 2000, at prices  ranging from $16.80 to $21.67 per
unit, which was an estimate of the fair market value of the units at the time of
the grant. The options vest  immediately or over a one to five year period,  and
expire on the tenth  anniversary of the date of the grant.  As of July 31, 2000,
720,525 options were outstanding.  On July 31, 2000, 546,875 of the unit options
were  exercisable.  Effective  August  1,  1999,  with  the  conversion  of  the
subordinated units, the units covered by the options are common units.


     There were no grants of unit options during the 2000 fiscal year.

     The  following  table  lists  information  on the CEO and  named  executive
officers' exercised/unexercised unit options as of October 16, 2000.

<TABLE>
<CAPTION>

                  AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

                                                                       Number of
                                                                 Securities Underlying       Value of Unexercised
                                                                  Unexercised Options      In-The-Money Options at
                                                                 At Fiscal Year-End (#)      Fiscal Year-End ($)
                                                                ------------------------- ---------------------------
                                  Shares
                                Acquired on       Value             Exercisable/                Exercisable/
Name                           Exercise (#)   Realized ($)          Unexercisable              Unexercisable
------------------------------ -------------- --------------    ---------------------- --- -----------------------
<S>               <C>                <C>            <C>              <C>    <C>                         <C>
Danley K. Sheldon (1)                0              0                88,000/12,000                      0/0
Patrick J. Chesterman                0              0                19,200/10,800                      0/0
James M. Hake                        0              0                 45,000/6,000                      0/0
Kevin T. Kelly                       0              0                  6,000/4,000                      0/0
Boyd H. McGathey                     0              0                      7,500/0                      0/0

(1)  On October 5, 2000,  Danley K. Sheldon  resigned as the Chief  Executive  Officer,  President  and Director of
     Ferrellgas, Inc. and affiliates.

   Employee Stock Ownership Plan
</TABLE>

         On July 17,  1998,  pursuant to the Ferrell  Companies,  Inc.  Employee
Stock  Ownership Plan, an employee stock  ownership  trust  purchased all of the
outstanding common stock of Ferrell. The purpose of the Employee Stock Ownership
Plan is to provide employees of Ferrellgas, Inc. an opportunity for ownership in
Ferrell  Companies and indirectly in the  Partnership.  Ferrell  Companies makes
contributions to the Employee Stock Ownership Plan which allows a portion of the
shares of Ferrell  Companies  owned by the Employee  Stock  Ownership Plan to be
allocated to employees' accounts over time.

   Incentive Compensation Plan

         On July 17, 1998, a nonqualified  stock option plan was  established by
Ferrell Companies to allow upper-middle and senior level managers of Ferrellgas,
Inc. to participate in the equity growth of Ferrell Companies, and indirectly in
the equity growth of the  Partnership.  The shares  underlying the stock options
are common shares of Ferrell Companies. The following table lists information on
the named  executive  officers'  stock options  granted in the fiscal year ended
July 31, 2000.

                                       27
<PAGE>




<TABLE>
<CAPTION>

                                         OPTION GRANTS IN LAST FISCAL YEAR

                                                                 Individual Grant
                              ---------------------------------------------------------------------------------------
                               Number of
                               Securities   % of Total Options
                               Underlying       Granted to       Exercise
                                Options        Employees in      Price       Expiration             Grant date
Name                            Granted         Fiscal Year      ($/Share)      Date             Present value $
--------------------------    ------------- -------------------- ----------- ------------     -----------------------
<S>                              <C>                <C>             <C>        <C>   <C>              <C>
Patrick J. Chesterman            50,000             8.5             4.12       01-31-18               90,284
James M. Hake                    25,000             4.3             4.12       01-31-18               45,142
Kevin T. Kelly                   75,000             4.3           4.12-4.75    01-31-18              138,811
Boyd H. McGathey                 25,000            12.8           4.12-4.75    01-31-18               47,678

</TABLE>

     The Ferrell  Companies  stock options vest ratably in 5% to 10%  increments
over 12 years or 100% upon a change of control,  death, disability or retirement
of the  participant.  Vested options are exercisable in increments  based on the
timing of the payoff of Ferrell  Companies  debt,  but in no event later than 20
years from the date of issuance.


     The grant date present value is based on a binomial option valuation model.
The key  input  variables  used in  valuing  the  options  were  the  following:
risk-free interest rate of 6.4%;  dividend amount of $0; Ferrell Companies stock
price volatility of 10.1%; options exercised 25% in 2006, 25% in 2007 and 10% in
years 2009  through  2013,  because  this is most  likely  assuming  the Ferrell
Companies  debt is retired as scheduled.  Only two stock values were used in the
computation  of  volatility  as Ferrell  Companies  common stock is not publicly
traded and has only had two valuations  since the grant date. No adjustments for
non-transferability or risk of forfeiture were made. The actual value, if any, a
grantee may realize  will  depend on the excess of the Ferrell  Companies  stock
price over the exercise price on the date the option is exercised, so that there
is no assurance the value realized will be at or near the value estimated by the
binomial option valuation model.


     The  following  table  lists  information  on the CEO and  named  executive
officers'  exercised/unexercised  nonqualified  stock  options as of October 16,
2000.

<TABLE>
<CAPTION>

                  AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

                                                                       Number of
                                                                 Securities Underlying       Value of Unexercised
                                                                  Unexercised Options      In-The-Money Options at
                                                                 At Fiscal Year-End (#)      Fiscal Year-End ($)
                                                                ------------------------- ---------------------------
                                  Shares
                                Acquired on       Value             Exercisable/                Exercisable/
Name                           Exercise (#)   Realized ($)          Unexercisable              Unexercisable
------------------------------ -------------- --------------    ---------------------- --- -----------------------
<S>               <C>                <C>            <C>                  <C>                       <C>
Danley K. Sheldon (1)                0              0                    0/937,500                 0/18,750
Patrick J. Chesterman                0              0                    0/250,000                  0/4,000
James M. Hake                        0              0                    0/225,000                  0/4,000
Kevin T. Kelly                       0              0                    0/225,000                  0/3,000
Boyd H. McGathey                     0              0                    0/225,000                  0/4,000




(1)  On October 5, 2000,  Danley K. Sheldon  resigned as the Chief  Executive  Officer,  President  and Director of
     Ferrellgas, Inc. and affiliates.

   </TABLE>
                                    28
<PAGE>

   Profit Sharing Plan


     The Ferrell Companies,  Inc. Profit Sharing and 401(k) Investment Plan is a
qualified  defined   contribution  plan.  All  full-time  employees  of  Ferrell
Companies  or any of its direct or indirect  wholly-owned  subsidiaries  with at
least one year of service are  eligible  to  participate  in the profit  sharing
plan. The Board of Directors of Ferrell  Companies  determines the amount of the
annual  contribution to the profit sharing plan, which is purely  discretionary.
This  decision is based on the  operating  results of Ferrell  Companies for the
previous fiscal year and anticipated  future cash needs of Ferrellgas,  Inc. and
Ferrell  Companies.  The  contributions are allocated to the profit sharing plan
participants  based on each  participant's  wages or salary as  compared  to the
total of all participants' wages and salaries.

     Historically,  the annual  contribution to the profit sharing plan has been
1% to 7% of each participant's  annual wage or salary. With the establishment of
the employee stock ownership plan in July 1998, the Partnership suspended future
contributions  to the profit  sharing plan  beginning with fiscal year 1998. The
profit sharing plan also has a 401(k) feature  allowing all full-time  employees
to  specify a portion  of their  pre-tax  and/or  after-tax  compensation  to be
contributed  to the profit  sharing plan.  The profit sharing plan also provides
for  matching  contributions  under a cash or  deferred  arrangement  based upon
participant salaries and employee contributions to the plan.


   Supplemental Savings Plan

     The Ferrell  Supplemental  Savings Plan was established  October 1, 1994 in
order to  provide  certain  management  or  highly  compensated  employees  with
supplemental  retirement  income which is  approximately  equal in amount to the
retirement  income that would have been  provided to members of the select group
of employees  under the terms of the 401(k)  feature of the profit  sharing plan
based on such members'  deferral  elections  thereunder,  but which could not be
provided  under  the  401(k)  feature  of the  profit  sharing  plan  due to the
application of certain IRS rules and regulations.

   Employment Agreements

     On July 17,  1998,  Mr.  James E.  Ferrell,  as  Chairman  of the  Board of
Ferrellgas,  Inc., entered into a five year employment  agreement with automatic
one year  renewals.  He receives a monthly salary of not less than $10,000 and a
bonus based on the annual  increase in the equity value of Ferrell.  In addition
to his  compensation,  Mr. Ferrell  participates  in the  Partnership's  various
employee benefit plans,  with the exception of the employee stock ownership plan
and the nonqualified stock option plan of Ferrell.

     Pursuant to the terms of Mr. Ferrell's employment  agreement,  in the event
of a termination without cause,  resignation for cause or a change of control of
Ferrell Companies or Ferrellgas,  Inc., Mr. Ferrell is entitled to a cash amount
equal to three  times the  greater  of 125% of his  current  base  salary or the
average compensation paid for the prior three fiscal years.

     Mr. Ferrell's agreement contains a non-compete  provision for the period of
time equal to the greater of five years or the time in which certain outstanding
debt of Ferrell  Companies is paid in full. The non-compete  provision  provides
that he shall not directly or indirectly own, manage,  control, or engage in any
business with any person whose business is substantially similar to the business
of the Partnership.

During the first quarter of fiscal 2001,  Patrick J. Chesterman,  James M. Hake,
Boyd H.  McGathey  and Kevin T. Kelly each  entered  into three year  employment
agreements.  In addition to receiving an annual  salary,  each are entitled to a
bonus based on the earnings of the Partnership and individual performance.

     Pursuant  to the  terms of each  employment  agreement,  in the  event of a
termination  without cause or resignation for cause, each are entitled to a cash
amount equal to two times their  current base salary.  If a change of control of
Ferrell  Companies  or  Ferrellgas,  Inc.  occurs,  each  will  receive  a  cash
termination  benefit  equal to two and a half  times the  greater of 125% of his
current  base  salary or the  average  three  year  compensation  paid.  Messrs.
Chesterman,  Hake,  McGathey and Kelly will receive an annual salary of not less
than $285,000, $192,000, $180,000 and $180,000, respectively.

                                       29
<PAGE>

     Messrs.   Chesterman,   Hake,   McGathey  and  Kelly's  agreements  contain
non-compete  provisions for a period of two years following their termination of
employment.  The non-compete  provisions provide that they shall not directly or
indirectly own, manage, control, or engage in any business with any person whose
business is substantially similar to the business of the Partnership.

On October 5, 2000,  Danley K. Sheldon resigned as the Chief Executive  Officer,
President and Director of Ferrellgas,  Inc. and  affiliates.  In accordance with
his employment agreement, Mr. Sheldon will receive 60 days pay after the date of
his resignation.

Compensation of Directors

     Ferrellgas,  Inc. does not pay any additional remuneration to its employees
for serving as directors, except for the monthly salary of not less than $10,000
paid to Mr. Ferrell  pursuant to his employment  agreement as discussed above in
"Employment  Agreements".  Beginning  in  fiscal  1999,  directors  who  are not
employees of Ferrellgas,  Inc. receive an annual retainer of $16,000.  They also
currently  receive a fee per meeting of $1,000 if they attend in person and $500
if they participate by telephone, plus reimbursement for out-of-pocket expenses.

ITEM 12.      Security Ownership of Certain Beneficial Owners and Management.

     The following  table sets forth certain  information as of October 5, 2000,
regarding the beneficial ownership of the common units of Ferrellgas Partners by
beneficial owners that are directors and named executive officers of Ferrellgas,
Inc., and all directors and executive  officers of Ferrellgas,  Inc. as a group.
All  subordinated  units  converted  to common units  effective  August 1, 1999.
Ferrellgas,  Inc. knows of no other person  beneficially  owning more than 5% of
the common units. The senior common units currently are not voting securities of
the Partnership and therefore are not presented in the table below.
<TABLE>
<CAPTION>

Ferrellgas Partners, L.P.
                                                                  Units
                          Name and Address of Beneficial      Beneficially         Percentage of
Title of Class            Owner                                   Owned                Class
------------------------  ---------------------------------------------------     ----------------
<S>                       <C>                                           <C>                     <C>
Common Units              Employee Stock Ownership
                             Trust                                17,817,600                 56.9
                          James E. Ferrell                            10,000                    *
                          Patrick J. Chesterman                       19,400                    *
                          James M. Hake                               45,400                    *
                          Kevin T. Kelly                               6,265                    *
                          Boyd H. McGathey                             7,700                    *
                          Elizabeth T. Solberg                         8,200                    *
                          A. Andrew Levison                           35,300                    *
                          Michael F. Morrissey                           775                    *

                          All Directors and Officers as a
                          Group                                      133,040                    *
*    Less than one percent
</TABLE>

                                       30
<PAGE>

     Beneficial  ownership for the purposes of the foregoing table is defined by
Rule 13d-3 under the Securities  Exchange Act of 1934. Under that rule, a person
is generally  considered to be the  beneficial  owner of a security if he has or
shares the power to vote or direct  the  voting  thereof or to dispose or direct
the  disposition  thereof  or has the right to  acquire  either of those  powers
within 60 days.  See the  Aggregated  Option  Exercises  In Last Fiscal Year And
Fiscal  Year-End  Option  Values table above for the number of common units that
could be acquired by named executive  officers  through  exercising  common unit
options.

     The  address  for  LaSalle  National  Bank,  the  trustee  for the  Ferrell
Companies,  Inc.  Employee Stock Ownership Trust is 125 S. LaSalle Street,  17th
Floor,  Chicago,  Illinois,  60603. The common units owned by the Employee Stock
Ownership  Trust  includes  17,803,883  Common Units owned by Ferrell  Companies
which is 100% owned by the  Employee  Stock  Ownership  Trust and 13,717  common
units owned by Ferrell Propane,  Inc., a wholly-owned  subsidiary of Ferrellgas,
Inc.



ITEM 13.      Certain Relationships and Related Transactions.

     Set forth  below is a  discussion  of  certain  relationships  and  related
transactions among affiliates of the Partnership.

     The  Partnership  has  no  employees  and  is  managed  and  controlled  by
Ferrellgas,  Inc.  Pursuant to the partnership  agreement,  Ferrellgas,  Inc. is
entitled  to  reimbursement  for all direct and  indirect  expenses  incurred or
payments  made  on  behalf  of the  Partnership,  and  all  other  necessary  or
appropriate  expenses  allocable  to the  Partnership  or  otherwise  reasonably
incurred by  Ferrellgas,  Inc. in connection  with  operating the  Partnership's
business.  These costs,  which totaled  $179,033,000 for the year ended July 31,
2000,  include  compensation  and  benefits  paid to officers  and  employees of
Ferrellgas,  Inc.  and  general  and  administrative  costs.  In  addition,  the
conveyance of the net assets of  Ferrellgas,  Inc. to the  Partnership  upon the
formation of the  Partnership  included the  assumption of specific  liabilities
related to employee  benefit and incentive plans for the benefit of the officers
and employees of Ferrellgas, Inc.


     During   fiscal  2000   two   affiliates  of  the   Partnership,   Ferrell
International  Limited.  and  Ferrell  Resources,  LLC,  which  are owned by the
chairman  of the  board,  James  E.  Ferrell,  paid the  Partnership  a total of
$313,000 for accounting and administration services. In connection with its risk
management activities,  the Partnership entered into, with Ferrell International
Limited as a  counterparty,  certain  forward,  futures and swaps  contracts for
trading  purposes and certain option  contracts for purposes other than trading.
During fiscal 2000,  the  Partnership  recognized  net purchases of  $8,508,000,
recorded  in other  revenue  related  to these  transactions.  Amounts  due from
Ferrell International  Limited at July 31, 2000 were $1,826,000.  Amounts due to
Ferrell International Limited at July 31, 2000 were $1,484,000.  The Partnership
also  leased  propane  tanks  from  Ferrell  Propane,   Inc.,  a  subsidiary  of
Ferrellgas,  Inc. The  Partnership  recognized  $515,000 of lease expense during
fiscal year 2000. The Partnership  believes these  transactions were under terms
that were no less  favorable to the  Partnership  than those arranged with third
parties.


     During fiscal 2000,  The Williams  Companies  became a related party to the
Partnership  due to the  Partnership's  issuance  of senior  common  units.  See
further discussion of senior common units and the Thermogas acquisition in Notes
F  and  L  of  the  Consolidated   Financial  Statements  provided  herein.  The
Partnership  recognized  wholesale sales of $2,091,000 to The Williams Companies
and purchases of  $13,175,000  from The Williams  Companies  and its  affiliates
related  to  the  Partnership's  wholesale  and  risk  management  activity.  In
connection with its risk management  activities,  the Partnership  entered into,
with The Williams  Companies as a  counterparty,  certain  forward,  futures and
swaps contracts for trading  purposes and certain option  contracts for purposes
other than trading.  During fiscal 2000,  the  Partnership  recognized net sales
(purchases) related to these transactions of $9,530,000, which are classified in
other  revenue on the  statement of earnings.  The  Partnership  believes  these
transactions  were under terms that were no less  favorable  to the  Partnership
than those arranged with third parties.




                                       31
<PAGE>




     The   Williams   Companies   provided   propane   supply  and  general  and
administrative  services to the  Partnership to assist in the integration of the
acquisition. The Partnership recognized $67,547,000,  $4,062,000 and $176,000 to
The  Williams  Companies  in fiscal 2000 and  classified  these costs in cost of
goods  sold,  general  and  administrative   expenses  and  operating  expenses,
respectively.  The Partnership believes these transactions were under terms that
were no less  favorable  to the  Partnership  than  those  available  with other
parties.  Amounts due to The Williams Companies at July 31, 2000 was $5,045,000.
Amounts due from The Williams Companies at July 31, 2000 was $13,000.

     See  Note  L to  the  Consolidated  Financial  Statements  in  Item  14 for
discussion of transactions  involving  acquisitions related to Ferrellgas,  Inc.
and the Partnership.


                                                      PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
              FORM 8-K.

     (a) 1.   Financial Statements.
              See "Index to Financial Statements" set forth on page F-1.
         2.   Financial Statement Schedules.
              See "Index to  Financial  Statement  Schedules"  set forth on page
S-1.
         3.   Exhibits.
              See "Index to Exhibits" set forth on page E-1.


     (b) Reports on Form 8-K.

The Partnership did not file a Form 8-K during the quarter ended July 31, 2000.




                                       32
<PAGE>


                                INDEX TO EXHIBITS


     The exhibits listed on the accompanying  Exhibit Index are filed as part of
this report.  Exhibits  required by Item 601 of  Regulation  S-K,  which are not
listed, are not applicable.

Exhibit
Number    Description


2.1       Purchase  Agreement  by  and  among  Ferrellgas  Partners,  L.P.,  and
          Williams Natural Gas Liquids, Inc., November 7, 1999.  Incorporated by
          reference to the same  numbered  Exhibit to the  Registrant's  Current
          Report on Form 8-K filed November 12, 1999.

2.2       Amendment  No.  1  to  Purchase  Agreement  by  and  among  Ferrellgas
          Partners,  L.P.,  Ferrellgas  L.P., and Williams  Natural Gas Liquids,
          Inc., dated as of December 17, 1999.  Incorporated by reference to the
          same numbered Exhibit to the  Registrant's  Current Report on Form 8-K
          filed December 29, 1999.

2.3       Amendment  No. 2 to Purchase  Agreement as of March 14,  2000,  by and
          among Ferrellgas Partners, L.P., Ferrellgas L.P., and Williams Natural
          Gas  Liquids,  Inc.  Incorporated  by  reference  to  Exhibit  2.1  to
          Registrant's Quarterly Report on Form 10-Q filed March 16, 2000.

3.1       Second  Amended  and  Restated  Agreement  of Limited  Partnership  of
          Ferrellgas Partners,  L.P., dated as of June 5, 2000.  Incorporated by
          reference  to the same  numbered  Exhibit  to  Registrant's  Quarterly
          Report on Form 10-Q filed June 15, 2000.

3.2       Articles  of  Incorporation  for  Ferrellgas  Partners  Finance  Corp.
          Incorporated by reference to the same numbered Exhibit to Registrant's
          Quarterly Report on Form 10-Q filed June 13, 1997.

3.3       Bylaws of Ferrellgas Partners Finance Corp.  Incorporated by reference
          to the same numbered Exhibit to Registrant's  Quarterly Report on Form
          10-Q filed June 13, 1997.

4.1       Indenture dated as of April 30, 1996, among Ferrellgas Partners, L.P.,
          Ferrellgas Partners Finance Corp., Ferrellgas,  L.P. as guarantor, and
          American  Bank   National   Association,   as  Trustee,   relating  to
          $160,000,000  9 3/8% Senior  Secured Notes due 2006.  Incorporated  by
          reference to Exhibit 4.1 to  Registrant's  Current  Report on Form 8-K
          filed on May 6, 1996.



                                      E-1
<PAGE>

4.2       Ferrellgas, L.P., Note Purchase Agreement dated as of July 1, 1998 Re:
          $109,000,000  6.99%  Senior  Notes,  Series  A, due  August  1,  2005,
          $37,000,000  7.08%  Senior  Notes,  Series  B,  due  August  1,  2006,
          $52,000,000  7.12%  Senior  Notes,  Series  C,  due  August  1,  2008,
          $82,000,000  7.24%  Senior  Notes,  Series  D,  due  August  1,  2010,
          $70,000,000  7.42%  Senior  Notes,  Series  E,  due  August  1,  2013.
          Incorporated  by reference to the Exhibit 4.4 to  Registrant's  Annual
          Report on Form 10-K filed October 29, 1998

4.3      Registration  Rights  Agreement  dated as of December  17, 1999 by and
          between  Ferrellgas  Partners,  L.P. and Williams Natural Gas Liquids,
          Inc.  Incorporated by reference to Exhibit 4.2 to Registrant's Current
          Report on Form 8-K filed December 29, 2000.

4.4       First Amendment to the Registration Rights Agreement dated as of March
          14,  2000,  by and between  Ferrellgas  Partners,  L.P.  and  Williams
          Natural Gas Liquids,  Inc. Incorporated by reference to Exhibit 4.1 to
          Registrant's Quarterly Report on Form 10-Q filed March 16, 2000.

4.5       Ferrellgas,  L.P.,  Note Purchase  Agreement  dated as of February 28,
          2000 Re: $21,000,000 8.68% Senior Notes, Series A, due August 1, 2006,
          $70,000,000  8.78%  Senior  Notes,  Series B, due August 1, 2007,  and
          $93,000,000  8.87%  Senior  Notes,  Series  C,  due  August  1,  2009.
          Incorporated  by  reference to Exhibit 4.2 to  Registrant's  Quarterly
          Report on Form 10-Q filed March 16, 2000.

# 10.1    Ferrell Companies,  Inc. Supplemental Savings Plan.  Incorporated
          by reference to the Exhibit 10.7 to Registrant's Annual Report on Form
          10-K filed October 17, 1995.

# 10.2    Amended  and  Restated   Ferrellgas,   Inc.  Unit  Option  Plan.
          Incorporated   by  reference  to  the  Exhibit  10.1  to  Registrant's
          Registration  Statement on Form S-8 File No.  333-87633 filed with the
          Commission on September 23, 1999.

10.3      Second  Amended  and  Restated  Agreement  of Limited  Partnership  of
          Ferrellgas,  L.P.  dated  as of  October  14,  1998.  Incorporated  by
          reference to Exhibit  10.1 to  Registrant's  Quarterly  Report on Form
          10-Q filed March 17, 1999.

10.4      Pledge  and  Security  Agreement  dated as of April  26,  1996,  among
          Ferrellgas  Partners,  L.P.,  Ferrellgas,   Inc.,  and  American  Bank
          National Association,  as collateral agent.  Incorporated by reference
          to Exhibit 10.2 to  Registrant's  Current Report on Form 8-K filed May
          6, 1996.

# 10.5    Ferrell  Companies,  Inc.  1998  Incentive  Compensation  Plan -
          Incorporated by reference to the Exhibit 10.12 to Registrant's  Annual
          Report on Form 10-K filed October 29, 1998.

# 10.6    Employment  agreement  between James E. Ferrell and  Ferrellgas,
          Inc.  dated July 31,  1998.  Incorporated  by reference to the Exhibit
          10.13 to  Registrant's  Annual  Report on Form 10-K filed  October 29,
          1998.

                                      E-2



<PAGE>

10.7      Lease  Intended  as Security  dated as of  December  1, 1999,  between
          Ferrellgas,   L.P.,  as  Lessee  and  First  Security  Bank,  National
          Association, solely as Certificate Trustee, as Lessor. Incorporated by
          reference to Exhibit  10.1 to  Registrant's  Quarterly  Report on Form
          10-Q filed December 13, 1999.

10.8      Lease  Intended as Security  dated as of December  15,  1999,  between
          Thermogas   L.L.C.  as  Lessee  and  First  Security  Bank,   National
          Association, solely as Certificate Trustee, as Lessor. Incorporated by
          reference to Exhibit 10.1 to  Registrant's  Current Report on Form 8-K
          filed December 29, 2000.

10.9      Participation   Agreement   dated  as  of  December  1,  1999,   among
          Ferrellgas,  L.P.,  as Lessee,  Ferrellgas,  Inc. as General  Partner,
          First  Security  Bank,  National  Association,  solely as  Certificate
          Trustee,  First Security Trust Company of Nevada, solely as Agent, and
          the  persons  named on  Schedule  I-B,  as Lenders  and  Appendix I to
          Participation Agreement.  Incorporated by reference to Exhibit 10.2 to
          Registrant's Quarterly Report on Form 10-Q filed December 13, 1999.

10.10     Participation Agreement dated as of December 15, 1999, among Thermogas
          L.L.C., as Lessee, The Williams Companies,  Inc., First Security Bank,
          National  Association,  solely as Certificate Trustee,  First Security
          Trust Company of Nevada,  solely as Agent,  and the  purchasers  named
          therein.  Incorporated  by reference  to Exhibit 10.2 to  Registrant's
          Current Report on Form 8-K filed December 29, 2000

10.11     Omnibus  Amendment  Agreement  No.2,  Dated as of April 18,  2000,  In
          respect of Ferrellgas,  L.P. Trust No. 1999-A Participation  Agreement
          Lease Intended as Security Loan Agreement each dated as of December 1,
          1999.  Incorporated  by  reference  to  Exhibit  10.3 to  Registrant's
          Quarterly Report on Form 10-Q filed June 14, 2000.

10.12     Omnibus  Amendment  Agreement  No.2,  Dated as of April 18,  2000,  In
          respect of Ferrellgas,  L.P. Trust No. 1999-A Participation  Agreement
          Lease  Intended as Security Loan  Agreement  each dated as of December
          15, 1999.  Incorporated  by reference to Exhibit 10.4 to  Registrant's
          Quarterly Report on Form 10-Q filed June 14, 2000.

10.13     Assumption  Agreement  dated  as of  December  17,  1999  executed  by
          Ferrellgas,  L.P. and  Ferrellgas,  Inc., for the benefit of the First
          Security  Trust  Company  of  Nevada as agent,  First  Security  Bank,
          National  Association solely as Certificate Trustee and the purchasers
          and lenders named therein.  Incorporated  by reference to Exhibit 10.3
          to Registrant's Current Report on Form 8-K filed December 29, 2000.

10.14     First  Amendment  to the Second  Amended  and  Restated  Agreement  of
          Limited Partnership of Ferrellgas,  L.P.  Incorporated by reference to
          Exhibit 10.2 to Registrant's  Quarterly Report on Form 10-Q filed June
          14, 2000.

10.15     Third  Amended and  Restated  Credit  Agreement  dated as of April 18,
          2000,  among  Ferrellgas,  L.P.,  Ferrellgas,  Inc.,  Bank of  America
          National  Trust  and  Savings  Association,  as  agent,  and the other
          financial  institutions  party thereto.  Incorporated  by reference to
          Exhibit 10.1 to Registrant's  Quarterly Report on Form 10-Q filed June
          14, 2000



                                       E-3
<PAGE>

* 10.17   Receivable  Interest  Sale  Agreement  dated as of September  26, 2000
          between Ferrellgas,  L.P., as Originator,  and Ferrellgas Receivables,
          L.L.C., as buyer.

* 10.18  Receivables  Purchase  Agreement  dated as of September 26, 2000 among
          Ferrellgas  Receivables,  L.L.C.,  as  seller,  Ferrellgas,  L.P.,  as
          Servicer,   Jupiter   Secruritization   Corporation,   the   financial
          institutions from time to time party hereto,  and Bank One, N.A., main
          office Chicago, as agent.

*# 10.19  Employment  agreement between Patrick Chesterman and Ferrellgas,
          Inc. dated July 31, 2000.

*# 10.20  Employment  agreement  between James Hake and Ferrellgas,  Inc.
          dated July 31, 2000.

*# 10.21  Employment agreement between Boyd McGathey and Ferrellgas,  Inc.
          dated July 31, 2000.

*# 10.22  Employment  agreement  between Kevin Kelly and Ferrellgas,  Inc.
          dated July 31, 2000.

*21.1     List of subsidiaries.

*23.1     Consent of Deloitte & Touche, LLP, Independent Auditors.

---------------------------------------------------------------------------
#         Management contracts or compensatory plans.
*         Included herewith.

                                      E-4


<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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.


FERRELLGAS PARTNERS, L.P.

By Ferrellgas, Inc. (General Partner)




                                                  By /s/ James E. Ferrell
                                                  ------------------------
                                                  James E. Ferrell
                                                  Chariman, President and
                                                  Chief Executive Officer



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following  persons in the  capacities  and on
the dates indicated:


Signature                          Title                                  Date



/s/  James E. Ferrell
-----------------------
James E. Ferrell               Chairman, President and                  10/23/00
                               Chief Executive Officer
                              (Principal Executive Officer)



/s/ A. Andrew  Levison
------------------------
A. Andrew Levison                     Director                          10/23/00


/s/ Elizabeth T. Solberg              Director                          10/23/00
------------------------
Elizabeth T. Solberg


/s/ Michael F. Morrissey              Director                          10/23/00
-----------------------
Michael F. Morrissey


/s/ Kevin T. Kelly                    Senior Vice President and Chief   10/23/00
------------------------              Financial Officer (Principal
Kevin T. Kelly                        Financial and Accounting Officer)


<PAGE>


                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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.


                                    FERRELLGAS PARTNERS FINANCE CORP.




                                    By     /s/ James E. Ferrell
                                           --------------------
                                           James E. Ferrell
                                           Chairman and Chief Executive Officer


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following  persons in the  capacities  and on
the dates indicated:


       Signature                  Title                                 Date




   /s/ James E. Ferrell          Chief Executive Officer and            10/23/00
  ---------------------          Sole Director (Principal
   James E. Ferrell              Executive Officer)







/s/ Kevin T. Kelly               Chief Financial Officer                10/23/00
----------------------          (Principal Financial and
Kevin T. Kelly                   Accounting Officer)





<PAGE>


                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                                                                                                              Page

Ferrellgas Partners, L.P. and Subsidiaries
<S>                                                                                                              <C>
         Independent Auditors' Report..........................................................................F-2
         Consolidated Balance Sheets - July 31, 2000 and 1999..................................................F-3
         Consolidated Statements of Earnings - Year ended July 31, 2000, 1999 and 1998.........................F-4
         Consolidated Statements of Partners' Capital and Other Comprehensive Income
              - Year ended July 31, 2000, 1999 and 1998........................................................F-5
         Consolidated Statements of Cash Flows - Year ended July 31, 2000, 1999 and 1998.......................F-6
         Notes to Consolidated Financial Statements............................................................F-7


Ferrellgas Partners Finance Corp.
         Independent Auditors' Report.........................................................................F-23
         Balance Sheets - July 31, 2000 and 1999..............................................................F-24
         Statements of Earnings - Year ended July 31, 2000, 1999 and 1998.....................................F-25
         Statements of Stockholder's Equity - Year ended July 31, 2000, 1999 and 1998.........................F-26
         Statements of Cash Flows - Year ended July 31, 2000, 1999 and 1998...................................F-27
         Notes to Financial Statements........................................................................F-28

</TABLE>



                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Partners of
Ferrellgas Partners, L.P. and Subsidiaries
Liberty, Missouri

We have  audited the  accompanying  consolidated  balance  sheets of  Ferrellgas
Partners,  L.P. and  subsidiaries  ("the  Partnership")  as of July 31, 2000 and
1999, and the related consolidated statements of earnings, partners' capital and
other  comprehensive  income and cash  flows for each of the three  years in the
period ended July 31, 2000. These financial statements are the responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  financial  position of Ferrellgas  Partners,  L.P. and
subsidiaries  as of July 31, 2000 and 1999, and the results of their  operations
and their  cash flows for each of the three  years in the period  ended July 31,
2000, in conformity with accounting  principles generally accepted in the United
States of America.





/s/ DELOITTE & TOUCHE LLP
-------------------------
DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 2000


                                      F-2

<PAGE>

                            FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS
                                 (in thousands, except unit data)
<TABLE>
<CAPTION>
                                                                  July 31,         July 31,
ASSETS                                                              2000             1999
---------------------------------------------------------       -------------    --------------

Current Assets:
<S>                                                                 <C>               <C>
  Cash and cash equivalents                                         $ 14,838          $ 35,134
  Accounts and notes receivable (net of
    allowance for doubtful accounts of $2,388 and
    $1,296 in 2000 and 1999, respectively)                            89,801            58,380
  Inventories                                                         71,979            24,645
  Prepaid expenses and other current assets                            8,275             6,780
                                                                -------------    --------------
    Total Current Assets                                             184,893           124,939

Property, plant and equipment, net                                   516,183           405,292
Intangible assets, net                                               256,476           118,117
Other assets, net                                                     10,355             8,397
                                                                -------------    --------------
    Total Assets                                                    $967,907          $656,745
                                                                =============    ==============



LIABILITIES AND PARTNERS' CAPITAL
---------------------------------------------------------
Current Liabilities:
  Accounts payable                                                   $95,264           $60,754
  Other current liabilities                                           77,631            48,266
  Short-term borrowings                                               18,342            20,486
                                                                -------------    --------------
    Total Current Liabilities                                        191,237           129,506

Long-term debt                                                       718,118           583,840
Other liabilities                                                     16,176            12,144
Contingencies and commitments (Note H)                               -                 -
Minority interest                                                      2,032               906

Partners' Capital:
  Senior common unitholder (4,652,691 units outstanding
    at July 2000 - liquidation preference $186,108)                  179,786           -
  Common unitholders (31,307,116 and 14,710,765 units
    outstanding at July 2000 and 1999, respectively)                 (80,931)            1,215
  Subordinated unitholder (16,593,721 units outstanding
    at July 1999)                                                    -                 (10,516)
  General partner unitholder(316,233 units outstanding
    at July 2000)                                                    (58,511)          (59,553)
  Accumulated other comprehensive income                             -                    (797)
                                                                -------------    --------------
    Total Partners' Capital                                           40,344           (69,651)
                                                                -------------    --------------
    Total Liabilities and Partners' Capital                         $967,907          $656,745
                                                                =============    ==============

</TABLE>
                          See notes to consolidated financial statements.

                                                F-3





<PAGE>
                       FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF EARNINGS
                          (in thousands, except per unit data)
<TABLE>
<CAPTION>



                                                         For the year ended July 31,
                                                      -----------------------------------
                                                         2000        1999        1998
                                                      -----------  ----------  ----------

Revenues:
<S>                                                     <C>         <C>         <C>
  Gas liquids and related product sales                 $867,779    $578,025    $622,423
  Other                                                   84,420      46,124      44,930
                                                      -----------  ----------  ----------
    Total revenues                                       952,199     624,149     667,353

Cost of product sold (exclusive of
  depreciation, shown separately below)                  524,155     273,388     342,600
                                                      -----------  ----------  ----------

Gross profit                                             428,044     350,761     324,753

Operating expense                                        255,838     205,720     199,010
Depreciation and amortization expense                     61,633      47,257      45,009
Employee stock ownership plan compensation charge          3,733       3,295         350
General and administrative expense                        24,587      19,174      17,497
Equipment lease expense                                   25,518      12,976      10,127
                                                      -----------  ----------  ----------

Operating income                                          56,735      62,339      52,760

Interest expense                                         (58,298)    (46,621)    (49,129)
Interest income                                            2,229       1,216       1,695
Gain (loss) on disposal of assets                            356      (1,842)       (174)
                                                      -----------  ----------  ----------
Earnings before minority interest
  and extraordinary loss                                   1,022      15,092       5,152

Minority interest                                            162         309         209
                                                      -----------  ----------  ----------

Earnings before extraordinary loss                           860      14,783       4,943

Extraordinary loss on early extinguishment of debt,
   net of minority interest of $130                       -          (12,786)      -
                                                      -----------  ----------  ----------

Net earnings                                                 860       1,997       4,943

Paid in kind distribution to senior common unitholders    11,108         N/A         N/A
General partner's interest in net earnings (loss)
     after paid in kind distribution                        (102)         20          49
                                                      -----------  ----------  ----------
Common and subordinated unitholder's interest in
net earnings (loss) after paid in kind distribution     $(10,146)    $ 1,977     $ 4,894
                                                      ===========  ==========  ==========

Basic and diluted earnings (loss) per
  common and subordinated unit:
Earnings (loss) before extraordinary loss                $ (0.32)     $ 0.47      $ 0.16
Extraordinary loss                                        -          $ (0.41)      -
                                                      -----------  ----------  ----------
Net earnings (loss) after paid in kind distribution      $ (0.32)     $ 0.06      $ 0.16
                                                      ===========  ==========  ==========

</TABLE>







                 See notes to consolidated financial statements.

                                       F-4




<PAGE>
                   FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL AND OTHER COMPREHENSIVE INCOME
                                 (in thousands)
<TABLE>
<CAPTION>
                          Number of units                                                                        Accumulated
                         ------------------------------------------------------                                    other
                         Senior                     Sub-      General      Senior    Common    Sub-      General  compre-   Total
                         common      Common      ordinated    partner      common    Unit-   ordinated   partner  hensive partners'
                         unitholder  unitholders unitholder  unitholder  unitholder holders unitholder  unitholder income  capital
                         ----------  ----------- -----------  -----------  -------  ------   ------------ ------   ------  --------
<S>    <C>                             <C>        <C>                       <C>     <C>        <C>      <C>         <C>   <C>
August 1, 1997              -          14,612.6   16,593.7      -           $  -    $52,863    $50,337  $(58,417)   $ -   $44,783

Common units issued in
commection with
acquisitions                               87.1    -            -              -      2,000     -             20      -     2,020

   Contribution in
connection with ESOP
compensation-charge         -          -           -             -             -         23        320         4      -       347

  Quarterly distributions   -          -           -             -             -    (29,356)   (33,188)     (632)     -   (63,176)

  Net earnings              -          -           -             -             -      2,455      2,439        49      -     4,943

                         ----------  ----------- -----------  -----------  -------  ------   ------------ ------   ------  --------
 July 31, 1998              -          14,699.7    16,593.7                          27,985      19,908  (58,976)     -   (11,083)

  Common units
issued in connection
with acquisitions                          11.1     -             -            -        197      -             2      -       199

   Contribution in
connection with ESOP
compensation-charge         -           -           -             -            -        219       3,010       33      -      3,262

  Quarterly distributions   -           -           -             -            -    (29,409)    (33,188)    (632)     -     (63,229)

  Other comprehensive
income:
  Net earnings              -            -           -             -           -      2,223        (246)       20     -       1,997
  Other comprehensive
income- Pension
liability adjustment        -            -           -             -           -      -          -           -        (797)    (797)
                                                                                                                              ------
  Comprehensive income                                                                                                        1,200
                         ----------  ----------- -----------  -----------  -------  ------   ------------  --------   ------  ------
July 31, 1999               -         14,710.7    16,593.7         -           -      1,215     (10,516)   (59,553)   (797) (69,651)

Conversion of
subordinated units
into common units           -         16,593.7   (16,593.7)        -           -    (10,516)     10,516        -       -    -

Units issued in
connection with
acquisitions:
 Common units               -              2.6     -               -           -         45           -         -       -         45
 Senior common units        4,375.0    -           -               -        175,000  -                -       1,768     -    176,768
 Fees paid to issue senior
 common units               -          -           -               -         (8,925) -                -         -       -    (8,925)

 General partner
interest conversion
to general partner units    -           -          -             316.2         -     -                -         -       -     -

Accretion of discount
on senior common units      -           -          -               -           2,603  (2,575)         -          (28)    -    -

 Contribution in
connection with  ESOP
compensation charge         -           -           -              -          -        3,661          -           36     -    3,697

 Quarterly cash
distribution                -           -           -              -           -     (62,615)         -         (632)    -  (63,247)

 Accrued paid in kind
   distributions           277.7        -           -              -         11,108  (10,997)         -         (111)   -       -

Other comprehensive
income:
Net earnings                -           -           -              -           -         851          -            9    -       860
Other comprehensive
income-
Pension liability
adjustment                  -           -            -             -           -            -        -             -    797     797
                                                                                                                               ----
  Comprehensive income                                                                                                         1657
                        ----------  ----------- -----------  -----------  --------  --------  -----------    ------  ------ -------
July 31, 2000            4,652.7      31,307.1       -           316.2    $179,786  $(80,931) $ -          $(58,511)  $ -   $40,344
                        ==========  =========== ===========  ===========  ========  ========  ===========    ======  ====== =======
             See notes to consolidated financial statements.
                                       F-5
<PAGE>
                   FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)



                                                                  For the year ended July 31,
                                                           ------------------------------------------
                                                               2000          1999           1998
                                                           -------------  ------------  -------------

Cash Flows From Operating Activities:
 Net earnings                                                    $  860       $ 1,997        $ 4,943
 Reconciliation of net earnings to net
  cash from operating activities:
  Depreciation and amortization                                  61,633        47,257         45,009
  Employee stock ownership plan compensation charge               3,733         3,295            350
  Minority interest                                                 162           301            209
  Extraordinary loss, net of minority interest                  -              12,786        -
  Other                                                           2,759         4,487          5,236
  Changes in operating  assets and  liabilities,
   net of effects  from  business acquisitions:
    Accounts and notes receivable                               (12,609)       (9,565)         9,313
    Inventories                                                 (25,423)       11,382          8,052
    Prepaid expenses and other current assets                      (731)        1,926            200
    Accounts payable                                             10,418        12,737          8,695
    Accrued interest expense                                      6,594         2,152           (157)
    Other current liabilities                                     7,140         4,235         (7,799)
    Other liabilities                                            (1,184)         (496)           286
                                                           -------------  ------------  -------------
      Net cash provided by operating activities                  53,352        92,494         74,337
                                                           -------------  ------------  -------------

Cash Flows From Investing Activities:
 Business acquisitions, net of cash acquired                     47,656       (43,838)        (9,839)
 Cash paid for acquisition transaction fees                     (15,893)       -             -
 Capital expenditures                                           (20,755)      (25,743)       (20,629)
 Proceeds from sale leaseback transaction                        25,000        -             -
 Other                                                            5,743         3,286          4,539
                                                           -------------  ------------  -------------
      Net cash provided by (used in) investing activities        41,751       (66,295)       (25,929)
                                                           -------------  ------------  -------------

Cash Flows From Financing Activities:
 Distributions                                                  (63,247)      (63,229)       (63,176)
 Additions to long-term debt                                    226,490       408,113         21,094
 Reductions of long-term debt                                  (276,111)     (338,613)        (2,759)
 Cash paid for debt and lease financing costs                    (3,163)      (12,827)       -
 Net reductions to short-term borrowings                         (2,144)         (664)          (636)
 Minority interest activity                                       1,008          (810)          (798)
 Cash contribution from general partner                           1,768        -             -
 Other                                                          -                   4             40
                                                           -------------  ------------  -------------
      Net cash used in financing activities                    (115,399)       (8,026)       (46,235)
                                                           -------------  ------------  -------------

Increase (decrease) in cash and cash equivalents                (20,296)       18,173          2,173
Cash and cash equivalents - beginning of period                  35,134        16,961         14,788
                                                           -------------  ------------  -------------
Cash and cash equivalents - end of period                       $14,838       $35,134        $16,961
                                                           =============  ============  =============

Cash paid for interest                                          $49,176       $42,310        $46,546
                                                           =============  ============  =============
</TABLE>

                 See notes to consolidated financial statements.

                                      F-6


<PAGE>
                            FERRELLGAS PARTNERS, L.P.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  Partnership Organization and Formation

    Ferrellgas  Partners,  L.P. (the "MLP") was formed April 19, 1994,  and is a
    publicly traded limited  partnership,  owning a 99% limited partner interest
    in Ferrellgas,  L.P. (the "Operating Partnership" or "OLP"). The MLP and the
    OLP are both Delaware limited partnerships, and are collectively referred to
    as the Partnership. Ferrellgas Partners, L.P. was formed to acquire and hold
    a limited  partner  interest in the  Operating  Partnership.  The  Operating
    Partnership was formed to acquire,  own and operate the propane business and
    assets  of  Ferrellgas,   Inc.  (the  "Company"  or  "General  Partner"),  a
    wholly-owned subsidiary of Ferrell Companies, Inc. ("Ferrell").  Ferrell has
    a 50% limited partnership interest in Ferrellgas Partners,  L.P. The Company
    has retained a 1% general partner interest in Ferrellgas Partners,  L.P. and
    also holds a 1.0101% general partner interest in the Operating  Partnership,
    representing a 2% general partner  interest in the Partnership on a combined
    basis.  As General  Partner of the  Partnership,  the Company  performs  all
    management functions required for the Partnership.

    On July 17,  1998,  100% of the  outstanding  common  stock of  Ferrell  was
    purchased  primarily  from Mr.  James E.  Ferrell  and his family by a newly
    established  leveraged  employee stock ownership trust ("ESOT")  established
    pursuant  to the Ferrell  Companies,  Inc.  Employee  Stock  Ownership  Plan
    ("ESOP").  The purpose of the ESOP is to provide employees of the Company an
    opportunity for ownership in Ferrell and indirectly in the  Partnership.  As
    contributions  are made by  Ferrell  to the ESOP in the  future,  shares  of
    Ferrell are allocated to employees' ESOP accounts.

    On June 5, 2000,  the MLP's  Partnership  Agreement was amended to allow the
    General  Partner to have an option in  maintaining  its 1%  general  partner
    interest   concurrent  with  the  issuance  of  other   additional   equity.
    Additionally,  the General Partner's  interest in the MLP's Common Units was
    converted from a General Partner interest to General Partner units.

B.  Summary of Significant Accounting Policies

    (1) Nature of operations:  The Partnership is engaged primarily in the sale,
    distribution,  and  marketing  of  propane  and other  natural  gas  liquids
    throughout the United States.  The retail market is seasonal because propane
    is used primarily for heating in residential and commercial  buildings.  The
    Partnership  serves more than 1,100,000  residential,  industrial/commercial
    and agricultural customers.

    (2)  Accounting  estimates:  The  preparation  of  financial  statements  in
    conformity  with  accounting  principles  generally  accepted  in the United
    States  of  America  ("GAAP")  requires  management  to make  estimates  and
    assumptions  that affect the reported  amounts of assets and liabilities and
    disclosures  of  contingent  assets  and  liabilities  at  the  date  of the
    financial  statements  and the  reported  amounts of revenues  and  expenses
    during  the  reported  period.   Actual  results  could  differ  from  these
    estimates.  Significant estimates impacting the financial statements include
    reserves that have been established for product liability and other claims.

    (3) Principles of  consolidation:  The accompanying  consolidated  financial
    statements  present  the  consolidated   financial   position,   results  of
    operations  and  cash  flows  of  the  Partnership   and  its   wholly-owned
    subsidiaries,  Ferrellgas Partners Finance Corp. and Bluebuzz.com,  Inc. The
    Company's 1.0101% General Partner interest in Ferrellgas,  L.P. is accounted
    for as a minority interest. All material intercompany profits,  transactions
    and balances have been eliminated.


                                      F-7
<PAGE>


    (4) Cash and cash equivalents:  For purposes of the Consolidated  Statements
    of Cash Flows, the Partnership  considers all highly liquid debt instruments
    purchased  with an  original  maturity  of three  months  or less to be cash
    equivalents.

    (5) Inventories: Inventories are stated at the lower of cost or market
    using average cost and actual cost methods.

    (6) Property, plant and equipment and intangible assets: Property, plant and
    equipment are stated at cost less accumulated depreciation. Expenditures for
    maintenance  and routine  repairs are expensed as incurred.  Depreciation is
    calculated  using the  straight-line  method based on the  estimated  useful
    lives of the assets  ranging from two to thirty  years.  Intangible  assets,
    consisting  primarily of customer lists,  trademarks,  assembled  workforce,
    goodwill,  and noncompete  notes,  are stated at cost,  net of  amortization
    calculated using the straight-line  method over periods ranging from 5 to 40
    years.  The  Partnership,  using its best estimates  based on reasonable and
    supportable   assumptions  and   projections,   reviews  for  impairment  of
    long-lived assets and certain  identifiable  intangibles to be held and used
    whenever  events or  changes in  circumstances  indicate  that the  carrying
    amount  of its  assets  might  not be  recoverable,  and  has  concluded  no
    financial statement adjustment is required.

    (7) Accounting for derivative  commodity  contracts:  The Partnership enters
    into commodity  forward and futures  purchase/sale  agreements and commodity
    options  involving  propane  and  related  products  which are used for risk
    management purposes in connection with its trading activities. To the extent
    such  contracts  are entered  into at fixed  prices and thereby  subject the
    Partnership  to market risk,  the contracts are accounted for using the fair
    value method.  Under the fair value method,  derivatives  are carried on the
    balance  sheet at fair  value  with  changes  in that  value  recognized  in
    earnings.  The  Partnership  also enters into  commodity  options  involving
    propane and related  products to hedge its overall  purchase price risk. Any
    changes in the fair value of hedge  positions are deferred and recognized as
    an adjustment  to the overall  purchase  price of product in the  settlement
    month.  The Partnership  classifies all earnings from  derivative  commodity
    contracts  entered  into  for  trading  purposes  as  other  revenue  on the
    statement of earnings.

    (8) Revenue recognition:  Sales of propane are recognized by the Partnership
    at the time product is delivered or shipped to its  customers.  Revenue from
    the sale of propane  appliances  and  equipment is recognized at the time of
    sale or  installation.  Revenues from repairs and maintenance are recognized
    upon completion of the service.

    (9) Income taxes: The Partnership is a limited partnership. As a result, the
    Partnership's  earnings  or losses  for  Federal  income  tax  purposes  are
    included  in the tax returns of the  individual  partners.  Accordingly,  no
    recognition  has been given to income  taxes in the  accompanying  financial
    statements of the Partnership. Net earnings for financial statement purposes
    may differ  significantly from taxable income reportable to unitholders as a
    result of differences between the tax basis and financial reporting basis of
    assets and liabilities and the taxable income allocation  requirements under
    the Partnership Agreement.

    (10) Net earnings per common and subordinated  unit: Net earnings (loss) per
    common and  subordinated  unit is computed by dividing net  earnings,  after
    deducting the General Partner's 1% interest and paid-in-kind  distributions,
    by the weighted  average  number of outstanding  Common Units,  Subordinated
    Units and the dilutive effect (if any) of Unit Options.  There was no effect
    on the earnings per unit calculation due to the assumption of the conversion
    of Unit Options in the dilutive per-unit computation.


                                      F-8
<PAGE>


     (11)  Unit and  stock-based  compensation:  The  Partnership  accounts  for
     Ferrellgas,  Inc.'s Unit Option  Plan and the Ferrell  Companies  Incentive
     Compensation  Plan under the  provisions  of  Accounting  Principles  Board
     ("APB") No. 25,  "Accounting  for Stock Issued to Employees," and makes the
     pro forma information disclosures required under the provisions of SFAS No.
     123, "Accounting for Stock-Based Compensation."

    (12) Segment  information:  The  Partnership  has  determined  that it has a
    single  reportable  operating  segment which engages in the  distribution of
    propane and related  equipment and supplies.  No single customer  represents
    10% or more of consolidated  revenues. In addition, all of the Partnership's
    revenues are derived from sources within the U.S., and all of its long-lived
    assets are located in the U.S.

     (13)  Adoption  of  new  accounting  standards:  The  Financial  Accounting
     Standards  Board recently  issued SFAS No. 133  "Accounting  for Derivative
     Instruments  and Hedging  Activities"  ("SFAS No.  133").  SFAS No. 133, as
     amended by SFAS No. 137,  and SFAS No. 138 is required to be adopted by the
     Partnership  beginning in the first  quarter of fiscal  2001.  SFAS No. 133
     requires that all  derivative  instruments be recorded in the balance sheet
     at fair value. The provisions of SFAS No. 133 will impact the Partnership's
     accounting  for  certain  options  hedging  product  cost  risk.  Under the
     provisions of SFAS No. 133, changes in the fair value of certain  positions
     qualifying  as cash flow  hedges  will be  recorded  in  accumulated  other
     comprehensive income.  Changes in the fair value of certain other positions
     not  qualifying  as  hedges  under  SFAS No.  133 will be  recorded  in the
     statement of earnings. As a result of these changes in classification,  the
     Partnership  will  recognize  in its first  quarter of fiscal  2001,  gains
     totaling   approximately   $709,000  and  $299,000  in  accumulated   other
     comprehensive  income  and the  statement  of  earnings,  respectively.  In
     addition,  beginning in the first quarter of fiscal 2001,  the  Partnership
     will record subsequent changes in the fair value of positions qualifying as
     cash flow hedges in accumulated other  comprehensive  income and changes in
     the fair value of other positions in the statement of earnings.

    In December 1999, the staff of the Securities and Exchange Commission issued
    Staff  Accounting  Bulletin  No. 101  entitled  "Revenue  Recognition".  The
    bulletin,  as amended, is to be adopted, if needed, no later than the fourth
    fiscal  quarter of fiscal years  commencing  after  December 15, 1999,  with
    retroactive  adjustment to the first fiscal quarter of that year. Management
    will  implement  this  bulletin  in the first  quarter  of  fiscal  2001 and
    believes that it will have no material affect on the Partnership's financial
    position,   results   of   operations   or  cash   flows.

C.  Quarterly Distributions of Available Cash

     Ferrellgas Partners,  L.P. makes quarterly cash distributions to its Common
Unitholders of all of its "Available  Cash",  generally  defined as consolidated
cash receipts less consolidated  cash  disbursements and net changes in reserves
established  by the  General  Partner  for  future  requirements.  Reserves  are
retained in order to provide for the proper conduct of the Partnership business,
or to provide  funds for  distributions  with  respect to any one or more of the
next four fiscal quarters.  Distributions  are made within 45 days after the end
of each fiscal quarter  ending  January,  April,  July and October to holders of
record on the applicable record date.

     Distributions by the Ferrellgas  Partners,  L.P. in an amount equal to 100%
of its Available  Cash, as defined in its Second Amended and Restated  Agreement
of  Limited   Partnership  of  Ferrellgas   Partners,   L.P.  (the  "Partnership
Agreement"),  will be made to the  General  Partner  based  upon the  number  of
General Partner Units held in the Ferrellgas Partners,  L.P. and its interest in
Ferrellgas, L.P., currently an aggregate 2%, subject to the

                                       F-9
<PAGE>

   payment of incentive  distributions to the holders of Incentive Distribution
    Rights to the extent that certain  target levels of cash  distributions  are
    achieved.  The  remaining  Available  Cash will be paid to the Senior Common
    Unitholder (see Note F for discussion of the in kind  distribution paid
    to  the   Senior   Common   Unitholder)   and   Common   Unitholders   (the
    "Unitholders").  The Senior Common Units have certain preference rights over
    the Common Units.  See Note F for  additional  information  about the Senior
    Common Units.
<TABLE>
<CAPTION>

D.  Supplemental Balance Sheet Information

    Inventories consist of:

       (in thousands)                                                                     2000             1999
                                                                                      --------------   --------------
<S>                                                                                         <C>              <C>
       Liquefied propane gas and related products                                           $50,868          $15,480
       Appliances, parts and supplies                                                        21,111            9,165
                                                                                      --------------   --------------
                                                                                            $71,979          $24,645
                                                                                      ==============   ==============
</TABLE>

       In addition to inventories on hand, the Partnership enters into contracts
       to buy product for supply  purposes.  Nearly all of these  contracts have
       terms of less  than one year and most  call for  payment  based on market
       prices at the date of delivery.  All fixed price  contracts have terms of
       less than one year.  As of July 31, 2000, in addition to the inventory on
       hand,  the  Partnership  had committed to take delivery of  approximately
       98,300,000 gallons at a fixed price for its future retail propane sales.

<TABLE>
<CAPTION>

    Property, plant and equipment consist of:

       (in thousands)                                                                      2000            1999
                                                                                       -------------   --------------
<S>                                                                                         <C>              <C>
       Land and improvements                                                                $40,761          $32,776
       Buildings and improvements                                                            54,794           43,577
       Vehicles                                                                              78,490           50,897
       Furniture and fixtures                                                                32,844           28,626
       Bulk equipment and district facilities                                                88,289           71,693
       Tanks and customer equipment                                                         482,617          418,598
       Other                                                                                  3,753            4,369
                                                                                       -------------   --------------
                                                                                            781,548          650,536
       Less:  accumulated depreciation                                                      265,365          245,244
                                                                                       -------------   --------------
                                                                                           $516,183         $405,292
                                                                                       =============   ==============

</TABLE>

        Depreciation expense totaled  $37,941,000,  $30,772,000, and $30,034,000
        for the years ended July 31, 2000, 1999, and 1998, respectively.




                                      F-10
<PAGE>

<TABLE>
<CAPTION>

      Intangibles consist of:

       (in thousands)                                                                      2000            1999
                                                                                       -------------   --------------
<S>                                                                                        <C>              <C>
       Customer lists                                                                      $207,478         $145,200
       Goodwill                                                                             122,826           55,789
       Non-compete agreements                                                                59,905           56,234
       Trademark                                                                             18,500          -
       Assembled workforce                                                                    9,600          -
       Other                                                                                    391              167
                                                                                       -------------   --------------
                                                                                            418,700          257,390
       Less:  accumulated amortization                                                      162,224          139,273
                                                                                       -------------   --------------
                                                                                           $256,476         $118,117
                                                                                       =============   ==============

</TABLE>

       Amortization   expense  related  to  intangibles   totaled   $22,951,000,
$15,712,000,  and $14,375,000 for the years ended July 31, 2000, 1999, and 1998,
respectively.

<TABLE>
<CAPTION>

    Other current liabilities consist of:

       (in thousands)                                                                      2000             1999
                                                                                       --------------   -------------
<S>                                                                                          <C>             <C>
       Accrued interest                                                                      $21,659         $15,065
       Accrued payroll                                                                        15,073          11,821
       Other                                                                                  40,899          21,380
                                                                                       --------------   -------------
                                                                                              $77,631         $48,266
                                                                                       ==============   =============


E.   Long-Term Debt

     Long-term debt consists of:

    (in thousands)                                                                       2000             1999
                                                                                     -------------     ------------
    Senior Notes
      Fixed rate, 7.16% due 2005-2013 (1)                                                $350,000         $350,000
      Fixed rate, 9.375%, due 2006 (2)                                                    160,000          160,000
      Fixed rate, 8.8%, due 2006-2009 (3)                                                 184,000           -

    Credit Agreement
      Revolving credit loans, 8.9% and 6.0%, respectively, due 2003 (4)                    11,658           58,314

    Notes payable, 7.5% and 7.3% weighted average interest rates,
      respectively, due 2000 to 2010                                                       15,988           18,154
                                                                                     -------------     ------------
                                                                                          721,646          586,468
    Less:  current portion, included in other current liabilities                           3,528            2,628
                                                                                     -------------     ------------
                                                                                         $718,118         $583,840
                                                                                     =============     ============

</TABLE>

                                       F-11
<PAGE>

    (1)      The OLP fixed rate Senior  Notes  ("$350  million  Senior  Notes"),
             issued in August 1998, are general unsecured obligations of the OLP
             and rank on an equal  basis in  right of  payment  with all  senior
             indebtedness of the OLP and senior to all subordinated indebtedness
             of the OLP. The outstanding principal amount of the Series A, B, C,
             D and E Notes shall be due on August 1, 2005, 2006, 2008, 2010, and
             2013, respectively.  In general, the Notes may not be prepaid prior
             to maturity at the option of the Partnership.

  (2)       The MLP fixed rate Senior  Secured  Notes  ("MLP  Senior
          Secured  Notes"),  issued in April  1996,  will be  redeemable  at the
          option of the MLP,  in whole or in part,  at any time on or after June
          15, 2001. The notes are secured by the MLP's  partnership  interest in
          the OLP. The MLP Senior  Secured  Notes bear interest from the date of
          issuance,  payable semi-annually in arrears on June 15 and December 15
          of each  year.  Due to a change of  control  in the  ownership  of the
          General  Partner on July 17, 1998 as a result of the ESOP  transaction
          described in Note A, the MLP was  required,  pursuant to the MLP fixed
          rate  Senior  Secured  Note  Indenture,   to  offer  to  purchase  the
          outstanding  MLP fixed rate Senior Secured Notes at a price of 101% of
          the principal  amount  thereof plus accrued and unpaid  interest.  The
          offer to purchase  was made on July 27,  1998 and  expired  August 26,
          1998. Upon the expiration of the offer,  the MLP accepted for purchase
          $65,000 of the notes which were all of the notes tendered  pursuant to
          the offer. The MLP assigned its right to purchase the notes to a third
          party, thus the notes remain outstanding.

    (3)      The OLP fixed rate Senior  Notes  ("$184  million  Senior  Notes"),
             issued in February 2000, are general  unsecured  obligations of the
             OLP and rank on an equal basis in right of payment  with all senior
             indebtedness of the OLP and senior to all subordinated indebtedness
             of the OLP. The outstanding principal amount of the Series A, B and
             C  Notes   shall  be  due  on  August  1,  2006,   2007  and  2009,
             respectively.  In  general,  the Notes may not be prepaid  prior to
             maturity at the option of the Partnership.

(4)       At July 31,  2000,  the  unsecured  $157,000,000  Credit
          Facility (the "Credit Facility"),  expiring June 2003,  consisted of a
          $117,000,000   unsecured   working  capital,   general  corporate  and
          acquisition  facility,  including a letter of credit  facility,  and a
          $40,000,000  revolving  working  capital  facility.  This  $40,000,000
          facility is subject to an annual reduction in outstanding  balances to
          zero for thirty  consecutive  days.  All  borrowings  under the Credit
          Facility bear interest,  at the borrower's  option, at a rate equal to
          either a) LIBOR plus an applicable margin varying from 1.25 percent to
          2.25  percent  or, b) the bank's base rate plus an  applicable  margin
          varying  from 0.25  percent to 1.25  percent.  The bank's base rate at
          July 31, 2000 and 1999 was 9.5% and 8.0%, respectively.  To offset the
          variable rate  characteristic of the Credit Facility,  the OLP entered
          into a interest rate collar  agreement,  expiring January 2001, with a
          major bank  limiting the floating  rate  portion of  LIBOR-based  loan
          interest rates on a notional amount of $25,000,000 to
             between 5.05% and 6.5%.


    On December 17, 1999,  in  connection  with the purchase of  Thermogas,  LLC
    ("Thermogas  acquisition")  (see Note L),  the OLP  assumed  a  $183,000,000
    bridge loan that was originally  issued by Thermogas,  LLC ("Thermogas") and
    had a maturity date of June 30, 2000.  On February 28, 2000,  the OLP issued
    $184,000,000  Senior Notes at an average  interest  rate of 8.8% in order to
    refinance  the  $183,000,000  bridge  loan.  The  additional  $1,000,000  in
    borrowings was used to fund debt issuance costs.

    On December 17, 1999, in connection with the Thermogas acquisition,  the OLP
    paid off the  balance  remaining  of  $35,000,000  then  outstanding  on its
    $38,000,000  unsecured  credit  facility  used  for  acquisitions,   capital
    expenditures,  and  general  corporate  purposes.  This  outstanding  credit
    facility was then  terminated.  On April 18,  2000,  the OLP entered into an
    amended and restated Credit Facility with a group of financial institutions.

                                       F-12
<PAGE>

    Effective April 27, 2000, the Partnership entered into an interest rate swap
    agreement  ("Swap   Agreement")  with  Bank  of  America,   related  to  the
    semi-annual  interest  payment due on the MLP Senior Secured Notes. The Swap
    Agreement,  which expires June 15, 2006,  requires Bank of America to pay an
    amount based on the stated fixed interest rate (annual rate 9.375%) pursuant
    to the MLP Senior Secured Notes equaling  $7,500,000 every six months due on
    each June 15 and December 15. In exchange,  the  Partnership  is required to
    make quarterly  floating interest rate payments on the 15th of March,  June,
    September and December based on an annual interest rate equal to the 3 month
    LIBOR  interest  rate plus  1.655%  applied to the same  notional  amount of
    $160,000,000.

     At July 31, 2000 and 1999,  $18,342,000 and $20,486,000,  respectively,  of
     short-term  borrowings  were  outstanding  under the  credit  facility  and
     letters of credit  outstanding,  used primarily to secure obligations under
     certain  insurance  arrangements,   totaled  $36,892,000  and  $32,178,000,
     respectively.

     The MLP Senior  Secured  Notes,  the $350 million and $184  million  Senior
     Notes  and  the  Credit  Facility  Agreement  contain  various  restrictive
     covenants  applicable  to the MLP and OLP and its  subsidiaries,  the  most
     restrictive  relating to additional  indebtedness,  sale and disposition of
     assets, and transactions with affiliates.  In addition,  the Partnership is
     prohibited  from  making  cash   distributions  of  the  Minimum  Quarterly
     Distribution  if a default or event of default  exists or would  exist upon
     making  such  distribution,  or if the  Partnership  fails to meet  certain
     coverage tests.  The  Partnership is in compliance  with all  requirements,
     tests,  limitations  and  covenants  related  to the  Senior  Secured  Note
     Indenture and the Senior Note  Indentures.  The Senior Notes and the Credit
     Facility  agreement have similar  restrictive  covenants to the Senior Note
     Indenture and credit facility agreement that were replaced.

     The annual  principal  payments on long-term debt for each of the next five
     fiscal years are  $3,528,000  in 2001,  $2,126,000  in 2002,  $1,943,000 in
     2003, $2,086,000 in 2004, $2,234,000 in 2005 and $709,729,000 thereafter.

     During fiscal year 1999, the Partnership  recognized an extraordinary  loss
     of   $12,786,000   net  of  minority   interest  of  $130,000.   The  gross
     extraordinary  loss  included a payment of a 5% premium and a write-off  of
     unamortized  financing  costs of $2,916,000,  resulting  primarily from the
     early extinguishment of $200,000,000 of its fixed rate senior notes.


F.       Partners' Capital

     The  Partnership's  capital (after  including the effect of an aggregate of
     277,691 Senior Common Units issued in order to pay the  applicable  in-kind
     quarterly   distributions)  consists  of  4,652,691  Senior  Common  Units,
     31,307,116  Common Units,  316,233 General Partner Units  representing a 1%
     General  Partner  interest  related to the Common  Units,  and a 1% General
     Partner  interest  related  to the Senior  Common  Units.  The  Partnership
     Agreement  contains specific  provisions for the allocation of net earnings
     and loss to each of the partners for  purposes of  maintaining  the partner
     capital accounts.

     In connection with the Thermogas  acquisition  (See Note L) on December 17,
     1999,  the  Partnership  issued  4,375,000  Senior Common Units to Williams
     Natural Gas  Liquids,  Inc.a  subsidiary  of The Williams  Companies,  Inc.
     ("Williams" or "Seller"). As of September 14, 2000, Williams held 4,652,691
     Senior Common Units with a liquidation value of approximately  $186,108,000
     including accrued and unpaid distributions. The Senior Common Units entitle
     the holder to quarterly distributions from the MLP equivalent to 10 percent
     per annum of the liquidating  value.  Distributions are payable  quarterly,
     in-kind, through issuance of


                                       F-13
<PAGE>


     additional Senior Common Units until the earlier of February 1, 2002 or the
     occurrence of a Material  Event,  as defined in the  Partnership  Agreement
     ("Material  Event")  after which  distributions  are  payable in cash.  The
     Senior Common Units are redeemable by the Partnership at any time, in whole
     or in part,  upon  payment in cash of the face  value of the Senior  Common
     Units and the amount of any accrued but unpaid distributions.

     Williams  has the  right,  subject to certain  events  and  conditions,  to
     convert any outstanding Senior Common Units into Common Units at the end of
     two years or upon the  occurrence  of a  Material  Event.  Such  conversion
     rights are contingent upon the  Partnership  not previously  redeeming such
     securities,  among other conditions.  The Partnership also granted Williams
     demand  registration  rights at the end of two years or upon the occurrence
     of a Material Event with respect to any outstanding Senior Common Units (or
     Common  Units into which they may be  convertible).  On June 5, 2000,  at a
     special  meeting  of  its  common  unitholders,  the  Partnership's  common
     unitholders  approved  both  the  common  unit  conversion  feature  and an
     exemption  under the  Partnership  Agreement to enable Williams to vote the
     Common Units, if such a conversion were to occur.

     At July 31, 2000,  the Senior  Common  Units had a discount of  $6,321,000,
     which  includes the original  discount of $8,925,000  less the accretion of
     the discount of $2,604,000.  This discount,  which represents the fees paid
     by the Partnership related to the issuance of the Senior Common Units, will
     be amortized until February 2002.

     In  connection  with the  issuance  of  Senior  Common  Units to  Williams,
     Ferrellgas,  Inc. contributed  $1,768,000 to Ferrellgas Partners,  L.P. and
     $1,803,000  to  Ferrellgas,  L.P. in order to  maintain  its 1% and 1.0101%
     general partner interest in each respective entity.

     During 1994, the Partnership issued  Subordinated  Units, all of which were
     held by Ferrell for which there was no established  public trading  market.
     Effective August 1, 1999, the Subordinated Units converted to Common Units.
     Certain financial tests, which were primarily related to making the Minimum
     Quarterly  Distribution on all Units,  were satisfied for each of the three
     consecutive four quarter periods ending July 31, 1999.

     The Partnership  maintains a shelf registration  statement for Common Units
     representing limited partner interests in the Partnership. The Common Units
     may be issued from time to time by the  Partnership in connection  with the
     Partnership's acquisition of other businesses,  properties or securities in
     business combination  transactions.  The Partnership also maintains another
     shelf  registration  statement for the issuance of Common  Units,  Deferred
     Participation  Units,   Warrants  and  Debt  Securities.   The  Partnership
     Agreement  allows  the  General  Partner  to issue an  unlimited  number of
     additional  Partnership  general and  limited  interests  and other  equity
     securities of the Partnership for such  consideration and on such terms and
     conditions  as shall be  established  by the  General  Partner  without the
     approval of any Unitholders.

G.   Transactions with Related Parties

     The  Partnership  has no  employees  and is managed and  controlled  by the
     General Partner. Pursuant to the Partnership Agreement, the General Partner
     is entitled to reimbursement  for all direct and indirect expenses incurred
     or payments it makes on behalf of the Partnership,  and all other necessary
     or  appropriate   expenses   allocable  to  the  Partnership  or  otherwise
     reasonably incurred by the General Partner in connection with operating the
     Partnership's   business.   These  costs,   which   totaled   $179,033,000,
     $143,850,000,  and $129,808,000 for the years ended July 31, 2000, 1999 and
     1998, respectively,  include compensation and benefits paid to officers and
     employees of the General Partner, and general and administrative costs.

                                       F-14
<PAGE>

     During fiscal 2000,  Williams became a related party to the Partnership due
     to the Partnership's issuance of Senior Common Units to Williams (See Notes
     F and L). The  Partnership  recognized  wholesale  sales of  $2,091,000  to
     Williams  and  purchases  of  $13,175,000  from  Williams  related  to  the
     Partnership's  wholesale and risk management  activity.  In connection with
     its risk management activities, the Partnership entered into, with Williams
     as a counterparty, certain forward, futures and swaps contracts for trading
     purposes and certain  option  contracts  for purposes  other than  trading.
     During fiscal 2000 the Partnership recognized net sales (purchases) related
     to these  transactions of $9,530,000  which are classified in other revenue
     on the statement of earnings.

     Williams provided propane supply and general and administrative services to
     the  Partnership  to  assist in the  integration  of the  acquisition.  The
     Partnership recognized $67,547,000,  $4,062,000 and $176,000 to Williams in
     fiscal 2000 and classified  these costs in cost of goods sold,  general and
     administrative expenses and operating expenses,  respectively.  Amounts due
     to Williams at July 31, 2000, was $5,045,000.  Amounts due from Williams at
     July 31, 2000, was $13,000.

     During  fiscal  2000 and 1999,  Ferrell  International  Limited and Ferrell
     Resources,  LLC, two affiliates of the  Partnership  which are owned by the
     General  Partner's  chairman of the board,  president  and chief  executive
     officer,  James E.  Ferrell,  paid the  Partnership a total of $313,000 and
     $265,000,  respectively,  for accounting and  administration  services.  In
     connection with its risk  management  activities,  the Partnership  entered
     into,  with  Ferrell  International  Limited  as  a  counterparty,  certain
     forward,  futures  and swaps  contracts  for trading  purposes  and certain
     option contracts for purposes other than trading.  During fiscal 2000, 1999
     and 1998, the Partnership recognized net sales (purchases) of $(8,508,000),
     $20,414,000 and $3,106,000,  respectively. These net sales (purchases) with
     Ferrell International Limited are classified in other revenue.  Amounts due
     from  Ferrell  International  Limited  at  July  31,  2000  and  1999  were
     $1,826,000   and   $2,531,000,   respectively.   Amounts   due  to  Ferrell
     International  Limited  at July  31,  2000  and 1999  were  $1,484,000  and
     $3,377,000, respectively.

     The  Partnership  also leased propane tanks from Ferrell  Propane,  Inc., a
     subsidiary of Ferrellgas,  Inc. since October 1998.  Prior to October 1998,
     Ferrell  Propane,  Inc. was a  subsidiary  of Ferrell  Companies,  Inc. The
     Partnership  recognized  $515,000  of lease  expense  during each of fiscal
     years 2000, 1999 and 1998.

     Prior to the ESOP  transaction  completed  on July 17, 1998,  Ferrell,  the
     parent of the  General  Partner  and its other  wholly-owned  subsidiaries,
     engaged in various  investment  activities  including,  but not limited to,
     commodity investments and the trading thereof. The Partnership from time to
     time acted as an agent on behalf of Ferrell to purchase and market  natural
     gas liquids and enter into  certain  trading  activities.  The  Partnership
     charged all direct and indirect  expenses incurred in performing this agent
     role to Ferrell.  During the year ended July 31, 1998, the Partnership,  as
     Ferrell's  agent,  marketed  and  sold  469,820  barrels  of  propane.  The
     Partnership  charged Ferrell  $66,467 for its direct and indirect  expenses
     related to these  transactions.  All of the 469,820 barrels of propane sold
     were sold to and used by the  Partnership at the  applicable  market prices
     (an  aggregate  of  $7,405,200).  In  addition,  during  fiscal  1998,  the
     Partnership  sold to Ferrell  certain  physical  and  derivative  crude oil
     commodity  contracts  totaling  4,120,000  aggregate  barrels at a price of
     $2,548,927.  Subsequent  to the  close  of the  ESOP  transaction,  Ferrell
     divested  of its  wholly-owned  subsidiaries  that  were  engaged  in these
     commodity and trading activities.


                                      F-15

<PAGE>


H.   Contingencies and Commitments

     The  Partnership  is  threatened  with or named as a  defendant  in various
     lawsuits that, among other items, claim damages for product  liability.  It
     is not possible to determine  the ultimate  disposition  of these  matters;
     however,  management  is of the opinion  that there are no known  claims or
     contingent  claims that are likely to have a material adverse effect on the
     financial   condition,   results  of   operations  or  cash  flows  of  the
     Partnership.

     On December 6, 1999, the OLP entered into,  with Banc of America  Leasing &
     Capital LLC, a $25,000,000  operating tank lease involving a portion of the
     OLP's customer tanks. This operating lease has a term that expires June 30,
     2003 and may be extended for two additional  one-year periods at the option
     of the OLP, if such extension is approved by the lessor.

     On December 17,  1999,  immediately  prior to the closing of the  Thermogas
     acquisition  (See Note L),  Thermogas  entered  into,  with Banc of America
     Leasing & Capital  LLC, a  $135,000,000  operating  tank lease  involving a
     portion  of  its  customer   tanks.   In  connection   with  the  Thermogas
     acquisition,  the  OLP  assumed  all  obligations  under  the  $135,000,000
     operating  tank  lease,  which  has  terms and  conditions  similar  to the
     December 6, 1999, $25,000,000 operating tank lease discussed above.

     Effective June 2, 2000, the OLP entered into an interest rate cap agreement
     ("Cap Agreement") with Bank of America,  related to variable quarterly rent
     payments due pursuant to two operating tank lease agreements.  The variable
     quarterly  rent payments are  determined  based upon a floating LIBOR based
     interest  rate. The Cap  Agreement,  which expires June 30, 2003,  requires
     Bank of America to pay the OLP at the end of each  March,  June,  September
     and December the excess,  if any, of the  applicable 3 month floating LIBOR
     interest rate over 9.3%, the cap,  applied to the total obligation due each
     quarter under the two operating tank lease agreements. The total obligation
     under these two  operating  tank lease  agreements  as of July 31, 2000 was
     $159,200,000.

     Certain  property and  equipment is leased under  noncancellable  operating
     leases which  require  fixed  monthly  rental  payments and which expire at
     various  dates  through 2020.  Rental  expense  under these leases  totaled
     $35,292,000, $19,595,000 and $17,095,000 for the years ended July 31, 2000,
     1999 and 1998,  respectively.  Future  minimum lease  commitments  for such
     leases in the next five years, including the aforementioned  operating tank
     leases, are $37,166,000 in 2001,  $33,882,000 in 2002, $28,358,000 in 2003,
     $7,431,000 in 2004, and $4,868,000 in 2005.

     In addition to the future minimum lease commitments,  the Partnership plans
     to purchase vehicles at the end of their lease term totaling  $1,364,000 in
     2001,  $203,000 in 2002 and $143,000 in 2003.  The  Partnership  intends to
     renew other vehicle and tank leases that would have had buyouts of $452,000
     in 2001,  $7,057,000 in 2002,  $162,569,000 in 2003, $4,981,000 in 2004 and
     $4,086,000 in 2005.

I.   Employee Benefits

     The  Partnership  has no  employees  and is managed and  controlled  by the
     General Partner.  The Partnership  assumes all  liabilities,  which include
     specific  liabilities  related to the following  employee benefit plans for
     the benefit of the officers and employees of the General Partner.

     Ferrell  makes  contributions  to the ESOT  which  causes a portion  of the
     shares of Ferrell owned by the ESOT to be allocated to employees'  accounts
     over time. The allocation of Ferrell shares to employee  accounts  causes a
     non-cash  compensation charge to be incurred by Ferrell,  equivalent to the


                                       F-16
<PAGE>

     fair value of such shares allocated.  This non-cash  compensation charge is
     reported  separately on the statement of earnings,  and therefore  excluded
     from operating and general and administative  expenses.  The Partnership is
     not obligated to fund or make contributions to the ESOT. Nevertheless,  due
     to the benefit  received by the Company's  employees from  participating in
     the  ESOP,  the  non-cash  compensation  charge  is  also  recorded  by the
     Partnership.

     The General Partner and its parent,  Ferrell,  have a defined  contribution
     profit-sharing plan which covers substantially all employees with more than
     one year of service.  Contributions were made to the plan at the discretion
     of Ferrell's Board of Directors. With the establishment of the ESOP in July
     1998, the Company suspended future contributions to the profit sharing plan
     beginning with fiscal year 1998. The profit sharing plan,  which  qualifies
     under  section  401(k) of the  Internal  Revenue  Code,  also  provides for
     matching  contributions  under a cash or  deferred  arrangement  based upon
     participant salaries and employee contributions to the plan. These matching
     contributions   were  not  affected  by  the  establishment  of  the  ESOP.
     Contributions   for  the  years  ended  July  31,  2000,   1999  and  1998,
     respectively, were $2,869,000,  $2,110,000, and $1,693,000 under the 401(k)
     provision.


J.   Unit Options of the Partnership and Stock Options of Ferrell Companies,Inc.

     The  Ferrellgas,  Inc. Unit Option Plan (the "Unit Option Plan")  currently
     authorizes  the  issuance of options  (the "Unit  Options")  covering up to
     850,000 of the MLP's units to certain officers and employees of the General
     Partner.  Effective August 1, 1999, with the conversion of the Subordinated
     Units,  the units covered by the options are Common Units. The Unit Options
     are  exercisable at exercise prices ranging from $16.80 to $21.67 per unit,
     which was an estimate of the fair market value of the Subordinated Units at
     the time of the grant.  The options vest  immediately or over a one to five
     year period, and expire on the tenth anniversary of the date of the grant.

<TABLE>
<CAPTION>

                                                                      Number      Weighted Average      Weighted
                                                                        Of         Exercise Price     Average Fair
                                                                      Units                              Value
                                                                   ------------- ------------------- ---------------
<S>                         <C> <C>                                   <C>                  <C>               <C>
          Outstanding, July 31, 1997                                 727,600           $18.09
          Granted                                                    118,500             19.47           $0.47
          Forfeited                                                  (64,100)            19.16
                                                                   -------------
          Outstanding, July 31, 1998                                 782,000             18.21
          Granted                                                      40,000            18.54             0.39
          Forfeited                                                  (40,975)            18.15
                                                                   -------------
          Outstanding, July 31, 1999                                 781,025             18.23
          Granted                                                       -                -                 -
          Forfeited                                                  (60,500)            19.38
                                                                   -------------
          Outstanding, July 31, 2000                                 720,525             18.13
                                                                   -------------
          Options exercisable, July 31, 2000                         546,875             17.57
                                                                   -------------

                                                                         Options Outstanding at July 31, 2000
                                                                   -------------------------------------------------
          Range of option prices at end of year                                     $16.80-$21.67
          Weighted average remaining contractual life                                  5.3 Years

</TABLE>

     The Ferrell Companies,  Inc. nonqualified stock option plan (the "NQP") was
     established by Ferrell  Companies,  Inc.  ("Ferrell") to allow upper middle
     and senior  level  managers of the General  Partner to  participate  in the
     equity  growth of  Ferrell  and,  indirectly  in the  equity  growth of the
     Partnership.  The shares  underlying the stock options are common shares of
     Ferrell, therefore, there is no potential dilution of the Partnership.  The
     Ferrell NQP stock  options  vest  ratably in 5% to 10%  increments  over 12
     years or 100% upon a change of control,  death, disability or retirement of
     the participant.  Vested options are exercisable in increments based on the
     timing of the payoff of Ferrell  debt,  but in no event later than 20 years
     from the date of issuance.

                                       F-17
<PAGE>

     The Partnership  accounts for stock-based  compensation using the intrinsic
     value  method  prescribed  in  APB  No.  25  and  related  Interpretations.
     Accordingly,  no compensation  cost has been recognized for the Unit Option
     Plan, or for the NQP. Had compensation cost for these plans been determined
     based upon the fair value at the grant date for awards  under these  plans,
     consistent  with  the  methodology  prescribed  under  SFAS  No.  123,  the
     Partnership's  net income  (loss) and earnings  (loss) per share would have
     been adjusted as noted in the table below:

<TABLE>
<CAPTION>
                                                                   2000             1999             1998
                                                               -------------    -------------    -------------
          Common and subordinate unitholders' interest
            in net earnings (loss) after paid in kind
<S>                                                               <C>                 <C>              <C>
            distribution as reported                              $(10,146)           $1,977           $4,894
          Pro forma adjustment                                         (79)            (465)             (40)
                                                               =============    =============    =============
          Common and subordinate unitholders' interest
            in net earnings (loss) after paid in kind
            distribution as adjusted                              $(10,225)           $1,512           $4,854
                                                               =============    =============    =============

          Pro forma basic and diluted net earnings
            (loss) per common and subordinated unit
            after paid in kind distribution                        $ (0.32)           $ 0.05           $ 0.16
                                                               =============    =============    =============

</TABLE>

     There were no unit options  granted  during the 2000 fiscal year.  The fair
     value of the unit  options  granted  during the 1999 and 1998 fiscal  years
     were determined  using a binomial option valuation model with the following
     assumptions:  a) distribution amount of $0.50 per unit per quarter for 1999
     and 1998, b) average Common Unit price  volatilities of 18.1% and 16.2% for
     1999 and 1998, respectively, c) the risk-free interest rates used were 5.5%
     and 5.7%, for 1999 and 1998,  respectively  and d) the expected life of the
     option  used was 5 years for 1999 and 1998.  The fair value of the  Ferrell
     Companies,  Inc. NQP stock options  granted during the 2000 and 1999 fiscal
     years were  determined  using a binomial  option  valuation  model with the
     following assumptions:  a) no dividends,  b) average stock price volatility
     of 10.1% and 10.6% used in 2000 and 1999,  respectively,  c) the  risk-free
     interest rate used was 6.4% and 5.5% in 2000 and 1999,  respectively and d)
     expected life of the options between 7 and 15 years.

K.   Disclosures About Off Balance Sheet Risk, Fair Value of Financial
     Instruments and Derivatives

     The carrying  amount of current  financial  instruments  approximates  fair
     value because of the short maturity of the instruments.  The estimated fair
     value of the Partnership's long-term debt was $698,082,000 and $568,459,000
     as of July 31,  2000 and 1999,  respectively.  The fair value is  estimated
     based on quoted market prices.

     Interest Rate Collar, Cap and Swap Agreements.  The Partnership has entered
     into various interest rate collar, cap and swap agreements involving, among
     others,  the exchange of fixed and floating  interest  payment  obligations
     without   the   exchange  of  the   underlying   principal   amounts.   The
     counterparties  to these agreements are large financial  institutions.  The
     interest rate collar  agreements  subject the Partnership to financial risk
     that will vary  during the life of these  agreements  in relation to market
     interest  rates.  The fair  values for these  off-balance  sheet  financial
     instruments  at July  31,  2000  are as  follows:  Interest  rate  collar -




 $43,000;  interest  rate  cap  -  $(258,000);  and  interest  rate  swap  -
     $(561,000).

                                       F-18
<PAGE>


     Option  Commodity  Contracts.  The Partnership is a party to certain option
     contracts,   involving  various  liquefied  petroleum  products,  for  risk
     management  purposes in  connection  with its risk  management  activities.
     Certain  option  contracts  held by the  Partnership  meet the criteria for
     classi-fication  as hedges of  forecasted  transactions  that will occur in
     less than one year. Net gains deferred for option  contracts  accounted for
     as hedges were  $1,008,000 for the year ended July 31, 2000.  Contracts are
     executed  with private  counterparties  and to a lesser  extent on national
     mercantile exchanges. Open contract positions are summarized below.

     Forward, Futures and Swaps Commodity Contracts. In connection with its risk
     management  activities,  the  Partnership  is a party to  certain  forward,
     futures and swaps  contracts for trading  purposes.  Such  contracts do not
     meet the criteria for classification as hedge transactions.  Net gains from
     risk management  activities were $28,413,000,  $7,699,000,  and $7,464,000,
     for the years  ended July 31,  2000,  1999,  and 1998,  respectively.  Such
     contracts  permit  settlement by delivery of the  commodity.  Open contract
     positions  are  summarized  below  (assets are defined as purchases or long
     positions and liabilities are sales or short positions).

<TABLE>
<CAPTION>
                                                   As of July 31
                                   (In thousands, except price per gallon data)

                    Derivative Commodity Instruments Held for                     Derivative Commodity
                           Purposes Other than Trading                            Instruments Held for
                                     (Options)                                      Trading Purposes
                                                                              (Forward, Futures and Swaps)
                    -------------------------------------------    ---------------------------------------------------
                                                                                               -----------------------
                           2000                    1999                     2000                        1999
                    --------------------    -------------------    -----------------------
                                                                                               ---------- ------------
                     Asset      Liab.        Asset     Liab.         Asset       Liab.           Asset       Liab.
                    --------- ----------    -------- ----------    ----------- -----------     ---------- ------------


<S>                 <C>       <C>            <C>      <C>           <C>        <C>             <C>         <C>
 Volume (gallons)    107,069   (50,526)       3,245    (22,648)      6,056,726  (5,903,184)     2,814,698   (2,720,295)

 Price ((cent)/gal)    37-62     37-75        23-39      27-55         42-84      45-95           19-49        19-49


 Maturity             8/00-      8/00-       8/99-3/00  8/99-3/00      8/00-    8/00-12/01      8/99-12/01     8/99-
 Dates                12/01      12/01                                 12/01                                   12/01

 Contract Amounts
 ($)                111,688   (63,193)       10,775   (13,973)      4,528,216  (4,476,361)     1,232,209   (1,215,341)

 Fair Value ($)     113,728   (64,168)       10,941   (15,850)      4,526,076  (4,474,314)     1,337,924   (1,318,526)

 Unrealized gain
 (loss) ($)           2,040      (975)         166      (1,877)       (2,140)     2,047          105,715     (103,185)

</TABLE>

    Risks related to these  contracts  arise from the possible  inability of the
    counterparties  to  meet  the  terms  of  their  contracts  and  changes  in
    underlying product prices. The Partnership  attempts to minimize market risk
    through  the  enforcement  of its  trading  policies,  which  include  total
    inventory  limits and loss  limits,  and  attempts to  minimize  credit risk
    through application of its credit policies.

                                       F-19
<PAGE>




L.  Business Combinations

     On December  17,  1999,  the  Partnership  purchased  Thermogas  LLC  from
     Williams Natural Gas Liquids,  Inc.,a subsidiary of The Williams Companies,
     Inc. of At closing  the  Partnership  entered  into the  following  noncash
     transactions:  a) issued $175,000,000 in Senior Common Units to the seller,
     b)  assumed a  $183,000,000  bridge  loan,  (see  Note E) and c)  assumed a
     $135,000,000  operating  tank lease (see Note H). After the  conclusion  of
     these acquisition-related transactions, including the merger of the OLP and
     Thermogas,  the Partnership acquired $61,842,000 of cash, which remained on
     the Thermogas  balance sheet at the  acquisition  date. The Partnership has
     paid  $15,893,000 in additional  costs and fees related to the  acquisition
     between  December  17,  1999 and July 31,  2000.  As part of the  Thermogas
     acquisition,  the OLP agreed to reimburse Williams for the value of working
     capital  received by the  Partnership in excess of  $9,147,500.  On June 6,
     2000, the OLP and Williams  agreed upon the amount of working  capital that
     was acquired by the  Partnership  on December 17, 1999.  The OLP reimbursed
     Williams   $5,652,500  as  final   settlement   of  this  working   capital
     reimbursement obligation.

     The total assets  contributed to the OLP (at the Partnership's  cost basis)
     have been  preliminarily  allocated  as  follows:  (a)  working  capital of
     $14,800,000,  (b)  property,  plant and equipment of  $145,711,000,  (c)
     $60,200,000  to customer  list with an  estimated  useful life of 15 years,
     (d)  $18,500,000 to trademarks  with an estimated  useful life of 15 years
     (e) $9,600,000 to assembled  workforce with an estimated  useful life of 15
     years,  (f) $3,071,000 to non-compete  agreements with an estimated useful
     life ranging from one to seven years,  and (g)  $65,589,000 to goodwill at
     an estimated  useful life of 15 years. The estimated fair values and useful
     lives of assets  acquired  are  based on a  preliminary  valuation  and are
     subject  to  final  valuation  adjustments.  The  Partnership  has  accrued
     $7,033,000 in  involuntary  employee  termination  benefits and exit costs,
     which it expects to incur within twelve months from the acquisition date as
     it implements  the  integration of the Thermogas  operations.  This accrual
     included $5,870,000 of termination benefits and $1,163,000 of costs to exit
     Thermogas  activities.  As of July  31,  2000,  the  Partnership  has  paid
     $1,306,000  for  termination  benefits  and  $890,000  for exit costs.  The
     Partnership intends to continue its analysis of the net assets of Thermogas
     to  determine  the  final  allocation  of the total  purchase  price to the
     various  assets  acquired.  The  transaction  has been  accounted  for as a
     purchase and, accordingly, the results of operations of Thermogas have been
     included  in  the  consolidated  financial  statements  from  the  date  of
     acquisition.

     The following pro forma  financial  information  assumes that the Thermogas
     acquisition occurred as of August 1, 1998 (unaudited):
<TABLE>
<CAPTION>

                                                                                                    Pro Forma


                                                                                         --------------------------------
                                                                                                     Year Ended
                                                                                            July 31,        July 31,
     (in thousands, except per unit amounts)                                                  2000            1999
                                                                                         --------------- ----------------
<S>                                                                                          <C>                <C>
     Total revenues                                                                          $1,048,207         $856,731
     Loss before extraordinary item                                                            (18,609)          (4,358)
     Net loss                                                                                  (18,609)         (17,144)
     Limited partners' interest in net loss                                                    (18,423)         (16,973)
     Basic and diluted loss per limited partner unit before extraordinary item                $  (0.59)         $ (0.14)
     Basic and diluted loss per limited partner unit after extraordinary item                 $  (0.59)         $ (0.54)

</TABLE>

     During the year ended July 31, 2000, the Partnership  made  acquisitions of
     two other  businesses  valued at  $7,183,000.  This  amount  was  funded by
     $6,338,000 cash payments,  $601,000 of noncompete notes,  $46,000 in Common
     units and $198,000 in other costs and consideration.

                                      F-20
<PAGE>

     During the year ended July 31, 1999, the Partnership  made  acquisitions of
     11 businesses valued at $50,049,000.  This amount was funded by $43,838,000
     cash payments,  $199,000 in Common units and noncash transactions  totaling
     $6,012,000  in the  issuance  of  noncompete  notes  and  other  costs  and
     consideration.

     During the year ended July 31, 1998, the Partnership  made  acquisitions of
     four businesses valued at $12,670,000. This amount was funded by $9,839,000
     cash payments, $2,000,000 in common units and noncash transactions totaling
     $831,000  in  the  issuance  of  noncompete   notes  and  other  costs  and
     consideration.

     All  transactions  have been  accounted  for using the  purchase  method of
     accounting and, accordingly,  the results of operations of all acquisitions
     have been  included in the  consolidated  financial  statements  from their
     dates of acquisition.  The pro forma effect of these  transactions,  except
     those related to the Thermogas acquisition, was not material to the results
     of operations.


M.   Earnings Per Unit

     Below  is a  calculation  of  the  basic  and  diluted  Common  Units  (and
     Subordinated  Units  prior to August 1, 1999) used to  calculate  basic and
     diluted earnings per unit on the Statements of Earnings.

(in thousands, except per unit data)
<TABLE>
<CAPTION>

                                                     For the year ended July 31,





                                           2000                 1999                  1998
                                      ----------------     ----------------      ----------------

Common and subordinated
unitholders' interest in net
earnings (loss) after paid in kind
<S>                                        <C>                     <C>                   <C>
distribution                               $ (10,146)              $ 1,977               $ 4,894
                                      ----------------     ----------------      ----------------


Weighted average common and
subordinated units outstanding
                                             31,306.7             31,298.7              31,275.3

Basic earnings (loss) per common and
subordinated unit before
extraordinary item
and after paid in kind
distribution
                                             $ (0.32)              $  0.47                $ 0.16
                                      ================     ================      ================

Basic earnings (loss) per common
and subordinated unit after paid in
kind distribution
                                             $ (0.32)              $  0.06                $ 0.16
                                      ================     ================      ================

</TABLE>


<TABLE>

<CAPTION>

                                                     For the year ended July 31,
                                           2000                 1999                  1998
                                      ----------------     ----------------      ----------------
Common and subordinated
unitholders' interest in net
earnings (loss) after paid in kind
<S>                                        <C>                     <C>                   <C>
distribution                               $ (10,146)              $ 1,977               $ 4,894

Weighted average common and
subordinated units outstanding
                                             31,306.7             31,298.7              31,275.3

Dilutive securities - options                     0.0                 39.5                  72.5
                                      ----------------     ----------------     -----------------
Weighted average common and
subordinated outstanding units +
dilutive units                               31,306.7             31,338.2              31,347.8

Diluted  earnings (loss) per
common and subordinated  unit
before  extraordinary
item and after paid in kind
distribution
                                              $(0.32)                $0.47                 $0.16
                                      ================     ================     =================

Diluted earnings (loss) per common
and subordinated unit after paid in
kind distribution
                                              $(0.32)                $0.06                 $0.16
                                      ================     ================     =================
</TABLE>
                                       F-21
<PAGE>

For  diluted  earnings  per unit  purposes,  the Senior  Common  Units have been
excluded as they are considered contingently issuable Common Units for which all
necessary conditions for their issuance have not been satisfied as of the end of
the reporting  period.  In fiscal 2000, the Unit Options were  antidilutive  and
therefore were reported as zero in the table above.


N. Subsequent Event (unaudited)

     On September 26, 2000,  Ferrellgas,  L.P.  received  $20,000,000 in cash in
     exchange for the sale and contribution of a $25,000,000  interest in a pool
     of its  trade  accounts  receivable  to its  newly  created,  wholly-owned,
     special  purpose  subsidiary,   Ferrellgas  Receivables,   LLC.  Ferrellgas
     Receivables,  LLC then sold the interest to a commercial  paper  conduit of
     Banc One, NA in accordance with the terms of a 364 day agreement. The level
     of funding available from this 364 day agreement is limited to $60,000,000.
     In accordance with SFAS No. 125, "Accounting for Transfers and Servicing of
     Financial Assets and Extinguishments of Liabilities ("SFAS No. 125")," this
     transaction  will  initially be reflected on the financial  statements as a
     sale of  accounts  receivable  and  contribution  of  capital  in the first
     quarter of fiscal  2001.  Additionally,  in  accordance  with SFAS No. 125,
     Ferrellgas Receivables, LLC will not be conslidated into the results of the
     partnership  and thus will be  accounted  for using  the  equity  method of
     accounting,  The  proceeds  of these sales are less than the face amount of
     accounts  receivable  sold by an amount that  approximates  the purchaser's
     financing cost of issuing its own commercial paper backed by these accounts
     receivable.   This  loss  on  the  September,   2000  transaction  will  be
     approximately  $300,000 in the first quarter of fiscal 2001, and represents
     the  difference  between  the  fair market value  and the  book  value  of
     the receivable contibuted and sold.
 <PAGE>

                                       F-22


                          INDEPENDENT AUDITORS' REPORT

Board of Directors
Ferrellgas Partners Finance Corp.
Liberty, Missouri


     We have audited the  accompanying  balance  sheets of  Ferrellgas  Partners
Finance Corp. (a wholly-owned  subsidiary of Ferrellgas  Partners,  L.P.), as of
July 31, 2000,  and 1999 and the related  statements of earnings,  stockholder's
equity and cash flows for each of the three  years in the period  ended July 31,
2000. These financial  statements are the responsibility of Ferrellgas  Partners
Finance Corp.'s management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects, the financial position of Ferrellgas Partners Finance Corp. as of July
31, 2000 and 1999, and the results of its operations and its cash flows for each
of the  three  years in the  period  ended  July  31,  2000 in  conformity  with
accounting principles generally accepted in the United States of America.








/s/ DELOITTE & TOUCHE LLP
-------------------------
DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 2000

                                       F-23
<PAGE>





                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly owned subsidiary of Ferrellgas Partners, L.P.)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                    July 31,         July 31,
      ASSETS                                                          2000             1999
      -------------------------------------------------------    ---------------   --------------

<S>                                                                      <C>              <C>
      Cash                                                               $1,000           $1,000
                                                                 ---------------   -------------
      Total Assets                                                       $1,000           $1,000
                                                                 ===============   ==============



      STOCKHOLDER'S EQUITY
      -------------------------------------------------------

      Common stock, $1.00 par value; 2,000 shares
      authorized; 1,000 shares issued and outstanding                    $1,000           $1,000

      Additional paid in capital                                          1,237              774

      Accumulated deficit                                                (1,237)            (774)
                                                                 ---------------   --------------
      Total Stockholder's Equity                                         $1,000           $1,000
                                                                 ===============   ==============

</TABLE>





                       See notes to financial statements
                                         F-24


<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly owned subsidiary of Ferrellgas Partners, L.P.)

                             STATEMENTS OF EARNINGS



<TABLE>
<CAPTION>


                                                         For the year ended July 31,
                                              -------------------------------------------------
                                                 2000              1999              1998
                                              -------------     -------------     -------------

<S>                                                   <C>               <C>               <C>
Revenues                                              $ -               $ -               $ -

General and administrative expense                    463               226               221
                                             -------------     -------------     -------------
Net loss                                           $ (463)           $ (226)           $ (221)
                                             =============     =============     =============

</TABLE>





                       See notes to financial statements
                                      F-25

<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly owned subsidiary of Ferrellgas Partners, L.P.)

                       STATEMENTS OF STOCKHOLDER'S EQUITY




<TABLE>
<CAPTION>


                             Common stock          Additional       Accum            Total
                         -------------------------   paid in       ulated        stockholder's
                           Shares      Dollars       capital       deficit          equity
                         -----------  ----------  --------------  -----------  -----------------
<S>                            <C>        <C>              <C>         <C>               <C>
   August 1, 1998             1,000      $1,000           $ 548       $ (548)           $ 1,000

   Capital contribution           -           -             226            -                226

   Net loss                       -           -               -         (226)              (226)
                         -----------  ----------  --------------  -----------  -----------------
   July 31, 1999              1,000       1,000             774         (774)             1,000

   Capital contribution           -           -             463            -                463

   Net loss                       -           -               -         (463)              (463)
                         -----------  ----------  --------------  -----------  -----------------
   July 31, 2000              1,000      $1,000         $ 1,237      $(1,237)           $ 1,000
                         ===========  ==========  ==============  ===========  =================


</TABLE>



                       See notes to financial statements
                                      F-26
<PAGE>
                       FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly owned subsidiary of Ferrellgas Parnters, L.P.)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                      From Inception to
                                                                 For the year ended July 31,
                                                       --------------------------------------------
                                                            2000           1999           1998
                                                       -------------   -------------   -------------
Cash Flows From Operating Activities:
<S>                                                          <C>             <C>             <C>
  Net loss                                                   $ (463)         $ (226)         $ (221)
                                                       -------------   -------------   -------------
       Cash used by operating activities                        (463)           (226)          (221)
                                                       -------------   -------------   -------------

Cash Flows From Financing Activities:
  Capital contribution                                          463             226             221
                                                       -------------   -------------   -------------
      Cash provided by financing activities                     463             226             221
                                                       -------------   -------------   -------------

Change in cash                                                  0               0               0
Cash - beginning of period                                    1,000           1,000           1,000
                                                       -------------   -------------   -------------
Cash - end of period                                        $ 1,000         $ 1,000         $ 1,000
                                                       =============   =============   =============


</TABLE>
                       See notes to financial statements
                                      F-27




<PAGE>

                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                          NOTES TO FINANCIAL STATEMENTS



A.       Formation

     Ferrellgas  Partners,  Finance  Corp.  (the  "Finance  Corp."),  a Delaware
corporation,  was formed on March 28, 1996 and is a  wholly-owned  subsidiary of
Ferrellgas Partners, L.P. (the "Partnership").

         The  Partnership  contributed  $1,000 to the Finance  Corp. on April 8,
         1996 in exchange for 1,000 shares of common stock.

B.       Commitment

         On April 26, 1996, the Partnership issued $160,000,000 of 9 3/8% Senior
         Secured Notes due 2006 (the "Senior  Notes").  The Senior Notes will be
         redeemable  at the option of the  Partnership,  in whole or in part, at
         any time on or after June 15, 2001.


         Effective April 27, 2000, the Partnership entered into an interest rate
         swap agreement ("Swap Agreement") with Bank of America,  related to the
         semi-annual  interest  payment  due  on  the  Senior  Notes.  The  Swap
         Agreement, which expires June 15, 2006, requires Bank of America to pay
         the stated fixed  interest  rate  (annual rate 9 3/8%)  pursuant to the
         Senior Notes equaling  $7,500,000  every six months due on each June 15
         and  December  15. In  exchange,  the  Partnership  is required to make
         quarterly  floating interest rate payments on the 15th of March,  June,
         September and December based on an annual  interest rate equal to the 3
         month  LIBOR  interest  rate plus 1.655%  applied to the same  notional
         amount of $160,000,000.


         The Finance Corp. serves as a co-obligor for the Senior Notes.

C.       Income Taxes

         Income  taxes have been  computed as though the  Company  files its own
         income tax return.  Deferred  income  taxes are provided as a result of
         temporary  differences  between  financial and tax reporting  using the
         asset/liability  method.  Deferred  income taxes are recognized for the
         tax  consequences  of  temporary   differences  between  the  financial
         statement  carrying  amounts  and tax  basis  of  existing  assets  and
         liabilities.


         Due to the inability of the Company to utilize the deferred tax benefit
         of  $500   associated   with  the  current  year  net  operating   loss
         carryforward of $1,286,  which expire at various dates through July 31,
         2015, a valuation allowance has been provided on the full amount of the
         deferred tax asset.  Accordingly,  there is no net deferred tax benefit
         for the year ended July 31,  2000 or 1999 and there is no net  deferred
         tax asset as of July 31, 2000 or July 31, 1999.



                                       F-28
<PAGE>

<TABLE>
<CAPTION>

                     ITEM 14(A) 2 INDEX TO FINANCIAL STATEMENT SCHEDULES
                                                                                                                 Page
Ferrellgas Partners, L.P. and Subsidiaries
<S>                                                                                                              <C>
Independent Auditors' Report on Schedules......................................................................S-2

Schedule I        Parent  Company Only Balance  Sheets as of July 31, 2000 and
                  1999 and  Statements  of Earnings and Cash Flows for the years
                  ended July 31, 2000,1999 and 1998............................................................S-3


Schedule II       Valuation and Qualifying Accounts for the years ended July 31, 2000, 1999
                  and 1998.....................................................................................S-6


</TABLE>


                                      S-1



<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Partners of
Ferrellgas Partners, L.P. and Subsidiaries
Liberty, Missouri

We have audited the consolidated  financial  statements of Ferrellgas  Partners,
L.P., and  subsidiaries  as of July 31, 2000 and 1999, and for each of the three
years in the period  ended July 31,  2000,  and have  issued our report  thereon
dated  September  14,  2000.  Our audit also  included the  financial  statement
schedules  listed in Item 14(a)2.  These financial  statement  schedules are the
responsibility of the Partnership's management. Our responsibility is to express
an  opinion  based on our  audits.  In our  opinion,  such  financial  statement
schedules,  when  considered  in  relation to the basic  consolidated  financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.




/s/ DELOITTE & TOUCHE LLP
-------------------------
DELOITTE & TOUCHE LLP

Kansas City, Missouri
September 14, 2000




                                      S-2



<PAGE>
                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                                 BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>



 ASSETS                                                   July 31, 2000     July 31, 1999
-----------------------------------------------------    ----------------  ----------------

<S>                                                                  <C>               <C>
 Cash and cash equivalents                                           $ 1               $ 1
 Investment in Ferrellgas, L.P.                                  199,086            88,758
 Other assets, net                                                 2,962             3,466
                                                         ----------------  ----------------
    Total Assets                                               $ 202,049          $ 92,225
                                                         ================  ================

</TABLE>
<TABLE>
<CAPTION>


LIABILITIES AND PARTNERS' CAPITAL
-----------------------------------------------------

<S>                                                              <C>               <C>
Other current liabilities                                        $ 1,705           $ 1,876

Long term debt                                                   160,000           160,000

Partners' Capital
  Senior common unitholders                                      179,786               -
  Common unitholders                                             (80,931)            1,215
  Subordinated unitholders                                          -              (10,516)
  General partner                                                (58,511)          (59,553)
  Accumulated other comprehensive income                               0              (797)
                                                         ----------------  ----------------
    Total Partners' Capital                                       40,344           (69,651)
                                                         ----------------  ----------------

    Total Liabilities and Partners' Capital                    $ 202,049          $ 92,225
                                                         ================  ================

</TABLE>
                                      S-3
<PAGE>
                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                             STATEMENTS OF EARNINGS
                                 (in thousands)
<TABLE>
<CAPTION>



                                                                  For the Year Ended July 31
                                                  ---------------------------------------------------------
                                                       2000                  1999                 1998
                                                  ----------------    -----------------   -----------------
 <S>                                                      <C>                  <C>                 <C>
Equity in earnings of Ferrellgas, L.P.                   $ 15,907             $ 17,511            $ 20,462
Operating expense                                               -                    -                   5
Interest expense                                           15,047               15,514              15,514
                                                  ----------------    -----------------   -----------------
  Net earnings                                              $ 860              $ 1,997             $ 4,943
                                                  ================    =================   =================
</TABLE>

                                      S-4
<PAGE>
                           FERRELLGAS PARTNERS, L.P.
                                  PARENT ONLY

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                             For the Year Ended
                                                                            -------------------------------------------------------
                                                                             July 31, 2000       July 31, 1999         July 31, 1998
                                                                            -----------------   -----------------    --------------
      Cash Flows From Operating Activities:
<S>                                                                                    <C>               <C>                   <C>
       Net earnings                                                                    $ 860             $ 1,997            $ 4,943
       Reconciliation of net earnings to
       net cash from operating activities:
          Amortization of capitalized financing costs                                    515                 513                513
          Equity in earnings of Ferrellgas, L.P.                                     (16,069)            (17,690)           (20,671)
          Other current assets                                                           (11)             (1,201)                 3
          Distributions received from Ferrellgas, L.P.                                77,962              79,430             78,176
          Increase (decrease) in other current liabilities                              (172)                  1                 (1)
                                                                            -----------------   -----------------    ---------------
            Net cash provided by operating activities                                 63,085              63,050              62,963
                                                                            -----------------   -----------------    ---------------

      Cash Flows From Financing Activities:
       Distributions to partners                                                     (63,247)            (63,229)           (63,176)
       Net advance from affiliate                                                        162                 179                213
                                                                            -----------------   -----------------    ---------------
            Net cash used by financing activities                                    (63,085)            (63,050)           (62,963)
                                                                            -----------------   -----------------    ---------------

      Increase in cash and cash equivalents                                                -                   -                  -
      Cash and cash equivalents - beginning of period                                      1                   1                  1
                                                                            -----------------   -----------------    ---------------
      Cash and cash equivalents - end of period                                          $ 1                 $ 1                $ 1
                                                                            =================   =================    ===============


</TABLE>

                                      S-5
<PAGE>

                    FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>

                                            Balance at       Charged to                           Deductions          Balance
                                             beginning          cost/             Other            (amounts           at end
                Description                  of period        expenses          Additions        charged-off)        of period
----------------------------------------   --------------   --------------    --------------    ---------------    --------------

Year ended July 31, 2000

<S>                                               <C>              <C>               <C>                <C>               <C>
Allowance for doubtful accounts                   $1,296           $2,349                $0             $1,257            $2,388

Accumulated amortization:

    Intangible assets                            139,273           22,951                 0                  0           162,224

    Other assets                                   5,005            1,906                 0                 15             6,896

Year ended July 31, 1999

Allowance for doubtful accounts                   $1,381           $1,627               $75             $1,787            $1,296

Accumulated amortization:

    Intangible assets                            123,531           15,742                 0                  0           139,273

    Other assets                                   9,054            1,716                 0              5,765             5,005


Year ended July 31, 1998

Allowance for doubtful accounts                    1,234            2,997                 6              2,856             1,381

Accumulated amortization:

    Intangible assets                            109,211           14,320                 0                  0           123,531

    Other assets                                   6,753            2,301                 0                  0             9,054
                                      S-6

</TABLE>