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, 2001

                                       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 and
                           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. [ X ]

The aggregate market value as of September 28, 2001, 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 $345,719,000.

At September 28, 2001,  Ferrellgas  Partners,  L.P. had  outstanding  35,921,966
Common Units and 2,801,622  Senior Units
Documents  Incorporated  by Reference:
None

<PAGE>


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

                          2001 FORM 10-K ANNUAL REPORT

                                Table of Contents

                                                                            Page
                                     PART I
ITEM     1.     BUSINESS.......................................................1
ITEM     2.     PROPERTIES.....................................................8
ITEM     3.     LEGAL PROCEEDINGS..............................................9
ITEM     4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............9

                                     PART II

ITEM     5.     MARKET FOR REGISTRANT'S UNITS AND
                RELATED UNITHOLDER MATTERS.....................................9
ITEM     6.     SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA..............10
ITEM     7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................12
ITEM    7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....22
ITEM     8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................23
ITEM     9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE...........................23

                                    PART III

ITEM    10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS...........24
ITEM    11.     EXECUTIVE COMPENSATION........................................26
ITEM    12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT................................................30
ITEM    13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................31

                                     PART IV

ITEM    14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                REPORTS ON FORM 8-K...........................................33



<PAGE>

                                     PART I

ITEM 1.       BUSINESS.

     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.

     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 earnings,  except for interest expense related to
$160 million of 9 3/8% Senior  Secured  Notes issued by  Ferrellgas  Partners in
April 1996.

     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 an effective 2% general partner  interest in
the Partnership.  As general partner,  Ferrellgas,  Inc. performs all management
functions for the Partnership.  Ferrell  Companies,  Inc., the parent company of
Ferrellgas, Inc., owns approximately 50% of the Ferrellgas Partners' outstanding
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.


General

     The Partnership is engaged primarily in the retail  distribution of propane
and  related  equipment  and  supplies  in the United  States.  The  Partnership
believes that it is the second largest retail  marketer of propane in the United
States, accounting for approximately 11% of the retail propane gallons sold. The
Partnership    currently    serves    approximately    1,100,000    residential,
industrial/commercial   and  agricultural  customers  in  45  states  through  a
nationwide  network of  approximately  600 retail  locations.  These  operations
extend  from  coast to  coast  with  concentration  in the  Midwest,  Southeast,
Southwest and Northwest regions of the country.

     The Partnership's retail propane distribution business consists principally
of transporting  propane to retail  distribution  locations and then to tanks on
customers'  premises,  as  well  as  to  portable  propane  cylinders.   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.

     In the past three fiscal years,  the Partnership has reported annual retail
propane sales volumes as follows:

<TABLE>
               <S>                                <C>

               Fiscal year ended                  Retail propane sales (gallons)
               -----------------                  ------------------------------
                 July 31, 2001                              957 million
                 July 31, 2000                              847 million
                 July 31, 1999                              680 million
</TABLE>


     Fiscal  2001  retail   propane  sales   volumes   included  a  full  year's
contribution from the Thermogas  operations acquired in December 1999. With this
acquisition, the Partnership acquired over 180 retail locations primarily in the
Midwest,  complimenting the Partnership's  historically  strong presence in that
region.  Over 65 of the approximately 180 Thermogas  locations were blended with
existing Partnership locations.

<PAGE>

Formation and History

     The Partnership is a Delaware  limited  partnership that was formed in 1994
in connection with its initial public offering.  Its operations began in 1939 as
a single retail propane location in Atchison,  Kansas. The Partnership has since
grown to nearly 600 retail  locations  primarily  through  acquisitions of other
propane companies.  The Partnership's initial growth largely resulted from small
acquisitions  in rural areas of eastern Kansas,  northern and central  Missouri,
Iowa, western Illinois,  southern Minnesota, South Dakota and Texas. Since 1986,
the  Partnership  has acquired more than 100 propane  retailers,  the largest of
which were:

<TABLE>
     <S>              <C>                  <C>
                                           Estimated Retail
     Company          Date Acquired        Gallons Acquired
     -------          -------------        ----------------
     Vision Energy    November 1994          47 million
     Skelgas          May 1996               93 million
     Thermogas        December 1999         270 million

</TABLE>

Business Strategy

     The  Partnership's  business strategy is to manage its business in a manner
that provides for a secure  quarterly  distribution  to its  unitholders  and to
continue to expand its operations and improve its financial performance.

The Partnership intends to execute this strategy by:

     Using  technology  to improve  operations.  The  Partnership  has  recently
completed a review of its key business  processes to identify areas where it can
use technology and process enhancements to improve its operations. Specifically,
the Partnership has identified areas where it can reduce operating  expenses and
improve  customer   satisfaction  in  the  near  future.   These  areas  include
improvements  to the routing and  scheduling  of customer  deliveries,  customer
administration  and  operational  workflow.  During fiscal 2002, the Partnership
expects to allocate considerable resources toward these improvements.

     Employing a disciplined  acquisition  strategy.  The Partnership expects to
continue the  expansion of its customer  base through the  acquisition  of other
retail  propane   distributors.   The  Partnership  intends  to  concentrate  on
acquisition  activities  in  geographical  areas near its  existing  operations,
although it may pursue  acquisitions  that broaden its geographic  coverage on a
selected basis. The Partnership  also intends to acquire propane  retailers that
can  be  efficiently  combined  with  its  existing  operations  to  provide  an
attractive  return on investment after taking into account the cost savings that
may result from those  combinations.  The  Partnership's  goal is to improve the
operations and  profitability  of the businesses it acquires by integrating them
into its established national  organization.  The Partnership believes there are
numerous retail propane distribution companies that are potential candidates for
acquisition and that the geographic  diversity of its operations helps to create
many attractive acquisition opportunities. The Partnership continually seeks and
is presented with these types of opportunities.

     Achieving  internal  growth.  The  Partnership  believes  that it can  also
achieve  growth  within  its  existing  propane  operations.  As a result of its
industry  leadership and implementation of more efficient  operating  standards,
the Partnership  believes that it has positioned itself to successfully  compete
for these growth opportunities. The Partnership currently has marketing programs
that focus specific resources towards internal growth.


                                       2
<PAGE>

     Capitalizing  on  our  national   presence  and  economies  of  scale.  The
Partnership believes its national presence of approximately 600 retail locations
and an  estimated  11%  market  share  gives  it  advantages  over  its  smaller
competitors. These advantages include economies of scale in areas such as:

o  product procurement;
o  transportation;
o  fleet purchases;
o  customer administration; and
o  general administration.

     The  Partnership's  national  presence  also allows it to be one of the few
propane  retailers  that  can  competitively  serve  commercial  customers  on a
nationwide basis. In addition,  the Partnership believes that its presence in 45
states provides more  opportunities to make  acquisitions  that overlap with its
existing  operations and provide  economies of scale in those markets.  This was
true with the  acquisition  of Thermogas in December 1999 where the  Partnership
had direct  and  indirect  overlaps  with over 70% of the 180  Thermogas  retail
locations acquired.

     Aligning  employee  interests  with  common   unitholders.   In  1998,  the
Partnership  established  an employee  benefit plan that aligns the interests of
its employees with those of its public common  unitholders.  Through the Ferrell
Companies,  Inc. Employee Stock Ownership Trust, employees own approximately 50%
of the  Partnership's  outstanding  common units,  allowing them to  participate
directly in the Partnership's overall success. This plan is unique in the retail
propane   distribution   industry  and  the   Partnership   believes   that  the
entrepreneurial  culture fostered by employee owners provides it with a distinct
competitive advantage.

Retail Distribution of Propane and Related Equipment and Supplies

     The retail  distribution  of propane  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.  During the
fiscal year ended July 31, 2001,  the gross profit derived from these sales were
as follows:

o  63% from sales to residential customers

o  27% from sales to industrial and other commercial customers

o  10% from sales to agricultural and other customers.

     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 2001.

     Profits in the retail propane distribution  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  domestic
energy companies and on a short-term basis. Therefore,  the Partnership's supply
costs  fluctuate with market price  fluctuations  and 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 have tended 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 distributors.  Over 70%
of the  Partnership's  retail  propane  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 owning 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,  which helps the
Partnership minimize customer loss.

                                       3
<PAGE>

     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.

     The  Partnership  purchases  propane  primarily from major domestic  energy
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, 2001, no
supplier provided 10% or more 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.

     The  Partnership  may  purchase and store  inventories  of propane to avoid
delivery  interruptions during periods of increased demand. The Partnership owns
three  underground  and four above ground storage  facilities  with an aggregate
capacity of approximately  206 million  gallons.  Currently,  approximately  160
million gallons of this capacity is leased to third parties. The remaining space
is available for the Partnership's  use. The Partnership also leases underground
and  above  ground  storage  at third  party  storage  facilities  and  pipeline
terminals.

     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
the Partnership's exposure to the volatility of floating commodity prices and to
protect the Partnership's inventory positions. The Partnership also makes use of
certain  over-the-counter  energy commodity  options to limit overall price risk
and to hedge its exposure to inventory price movements.

                                       4
<PAGE>

     The propane the Partnership sells to its customers is generally transported
from  natural gas  processing  plants and  refineries,  pipeline  terminals  and
storage  facilities  to the  Partnership's  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 its customers by the Partnership's fleet of 2,157 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.

     The   Partnership's   retail  operations  also  include  leasing  tanks  to
customers,  the sale of propane  appliances and related parts and fittings,  and
other propane related services.

Industry and Competition

   Industry

     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.

     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 (BTU) basis in
locations served by natural gas, although propane is often sold in such areas as
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.  Conversely,  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.

                                       5
<PAGE>

   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,  such  as  the
Partnership,  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 46%
of the total  retail  sales of propane  in the United  States and that there are
approximately  5,000 local or regional  distributors.  The Partnership  believes
that it is the second  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  reside in close proximity to their 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  of  wholesale  propane
marketing,  chemical  feedstocks  marketing,  natural  gas  liquids  storage,  a
wholesale  propane  appliance  operation,  transport  hauling  and other.  These
operations,  individually  and in the  aggregate,  make up less  than 10% of the
Partnership's revenue and operating income.

     The  Partnership  engages in the wholesale  marketing and  distribution  of
propane to other  retail  propane  distributors.  During  the past three  fiscal
years, the Partnership made the following sales to wholesale customers:

<TABLE>
<S>                             <C>               <C>

                                Wholesale         Wholesale
Fiscal year ended             Gallons Sold        Revenues
-----------------             ------------        ---------
July 31, 2001                  97 million       $ 65.1 million
July 31, 2000                  99 million       $ 43.4 million
July 31, 1999                 103 million       $ 33.8 million

</TABLE>

Employees

     The  Partnership  has no  employees  and is  managed  by  Ferrellgas,  Inc.
pursuant to its partnership agreement.  At September 28, 2001, Ferrellgas,  Inc.
had  4,435  full-time  employees  and 857  temporary  and  part-time  employees.
Ferrellgas, Inc.'s full-time employees were employed in the following areas:

<TABLE>
<S>                                                                        <C>

Retail Locations .................................................         3,814
Transportation and Storage .......................................           241
Corporate Offices in Liberty, MO and Houston, TX .................           380
                                                                           -----
        Total ....................................................         4,435
                                                                           =====
</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 risk management,  wholesale propane  marketing,  chemical
feedstocks  marketing,  natural gas liquid storage,  transport hauling and other
functions are operated  primarily out of the  Partnership's  offices  located in
Houston, Texas by a total full-time corporate staff of 77 people.

Governmental Regulation - Environmental and Safety Matters

     The  Partnership  is not subject to any price or  allocation  regulation of
propane and propane is not a hazardous  substance  within the meaning of federal
and state environmental laws.

                                       6
<PAGE>

     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 has
implemented the required  discharge control systems and is in full compliance in
all material respects with current regulatory requirements.

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, and the tradename "Ferrell Transport" for most of
its third party  hauling and oil field  services  operations.  In addition,  the
Partnership  has a trademark on the name  "FerrellMeter,"  its patented gas leak
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.

     Ferrellgas Receivables,  LLC is a wholly-owned,  special purpose subsidiary
of  Ferrellgas,  L.P.  and was  organized in September  2000.  Ferrellgas,  L.P.
transferred   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 Standards No.
140   "Accounting   for  Transfers   and  Servicing  of  Financial   Assets  and
Extinguishments of Liabilities,"  Ferrellgas  Receivables is accounted for using
the equity method of accounting.  The accounts receivable securitization is more
fully described in "Management's  Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital  Resources"  and Note E to the
Consolidated Financial Statements provided herein.

                                       7
<PAGE>



ITEM 2.       PROPERTIES.

     The Partnership owns or leases the following  transportation equipment that
is utilized  primarily in retail  operations.
<TABLE>
<S>                                                <C>     <C>      <C>

                                                   Owned   Leased   Total
Truck tractors .................................      71     139      210
Transport trailers .............................     354      39      393
Bulk delivery trucks ...........................   1,302     855    2,157
Pickup and service trucks ......................   1,526     716    2,242
Railroad tank cars .............................    --       287      287

</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
customers  for  propane  storage.  At  July  31,  2001,  the  Partnership  owned
approximately  40 million gallons of propane storage at its retail  distribution
outlets.  The  Partnership  owns the land and buildings in the applicable  local
markets of approximately 50% of its operating locations and leases the remaining
facilities on terms customary in the industry.

     Approximately  1,017,000  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  723,000  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 and four  above-ground  storage  facilities
primarily located in the Upper Midwest and North Carolina that together hold 206
million gallons of product.

<TABLE>
                <S>                                        <C>
                                                           Storage Capacity
                Location                                        Gallons
                --------                                   ----------------
                Adamana, Arizona                              105 million
                Hutchinson, Kansas                             92 million
                Moab, Utah and above ground storage             9 million
                                                              -----------
                      Total                                   206 million
                                                              ===========
</TABLE>

     Currently,  approximately 160 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.

                                       8
<PAGE>

     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 sometimes threatened with
or is named as a  defendant  in various  lawsuits  seeking  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 it believes are 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.

     Currently,  the Partnership is not a party to any legal  proceedings  other
than various claims and lawsuits arising in the ordinary course of business.  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.

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

     None

                                     PART II

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

     The common units representing  limited partner interests in the Partnership
are listed and traded on the New York Stock Exchange under the symbol FGP. As of
September 28, 2001, there were 768 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.

<TABLE>
<S>                                <C>                  <C>
                                    Common Unit Price      Distributions
                                          Range          Declared Per Unit
                                   -------------------- ---------------------
                                     High       Low
                                                      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
                                                      2001
                                   ---------- ---------- ---------------------
First Quarter                        $16.94    $13.00            $0.50
Second Quarter                        15.99     12.50             0.50
Third Quarter                         19.85     14.92             0.50
Fourth Quarter                        21.24     18.55             0.50

</TABLE>

                                       9
<PAGE>

     In December 1999, the Partnership  issued senior units,  none of which have
an established  public trading market.  Originally issued to a subsidiary of The
Williams Companies Inc. pursuant to the Thermogas acquisition,  the senior units
were subsequently sold to an entity owned by James E. Ferrell,  Chairman,  Chief
Executive   Officer  and  President  of  the  General  Partner.   The  issuance,
modification of terms and partial  redemption of the senior units are more fully
described in  "Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations-Liquidity  and Capital Resources" and in Notes A, C and G
to the Consolidated Financial Statements provided herein.

     The Partnership  makes quarterly cash  distributions of its available cash,
as defined by the partnership agreement.  Available cash is generally defined as
consolidated cash receipts less  consolidated cash  disbursements and changes in
cash reserves  established for future  requirements  by Ferrellgas,  Inc. To the
extent  necessary,  the Partnership will generally 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>

(in thousands, except per unit data)
                                                                Ferrellgas Partners, L.P.
                                                  ---------------------------------------------------------------
                                                                   Year Ended July 31,
                                                  ---------------------------------------------------------------
<S>                                               <C>           <C>          <C>          <C>          <C>
                                                     2001         2000          1999         1998         1997
                                                  ----------    ----------   ----------   ----------   ----------
Income Statement Data:
Total revenues .................................. $1,468,670    $  959,023   $  633,349   $  623,775   $  811,337
Depreciation and amortization ...................     56,523        61,633       47,257       45,009       43,789
ESOP compensation charge ........................      4,843         3,733        3,295          350         --
Operating income ................................    126,691        57,091       60,497       52,586       67,380
Interest expense ................................     61,544        58,298       46,621       49,129       45,769
Earnings before extraordinary loss ..............     64,068           860       14,783        4,943       23,218

Basic and diluted earnings (loss) per
 common and subordinated unit-
   Earnings (loss) before extraordinary loss ....       1.43         (0.32)        0.47         0.16         0.74
Cash distributions declared per common ..........       2.00          2.00         2.00         2.00         2.00
 and subordinated unit

Balance Sheet Data at end of period:
Working capital                                   $   22,062    $   (6,344)  $   (4,567)  $     (443)  $  18,111
Total assets                                         896,159       967,907      656,745      621,223     657,076
Long-term debt                                       704,782       718,118      583,840      507,222     487,334

Partners' Capital:
Senior Unitholder                                 $  112,065    $  179,786   $    -       $    -       $   -
Common Unitholders                                   (12,959)      (80,931)       1,215       27,985      52,863
Subordinated Unitholder                                  -           -          (10,516)      19,908      50,337
General Partner                                      (58,738)      (58,511)     (59,553)     (58,976)    (58,417)
Accumulated other comprehensive income                (2,381)        -             (797)       -           -

</TABLE>

                                       10
<PAGE>

<TABLE>
                                                                Ferrellgas Partners, L.P.
                                                  ---------------------------------------------------------------
                                                                   Year Ended July 31,
                                                  ---------------------------------------------------------------
<S>                                               <C>           <C>          <C>          <C>          <C>
                                                     2001         2000          1999         1998         1997
                                                  ----------    ----------   ----------   ----------   ----------
(in thousands)

Operating Data:
Retail propane sales volumes (in gallons)            956,718       846,664      680,477      659,932      693,995

Capital expenditures:
        Maintenance                                 $ 12,096      $  8,917     $ 10,505     $ 10,569     $ 10,137
        Growth                                         3,152        11,838       15,238       10,060        6,055
        Acquisition                                    1,417       310,260       48,749       13,003       38,780
                                                ------------  ------------ ------------   ----------    ---------
            Total                                   $ 16,665      $331,015     $ 74,492     $ 33,632     $ 54,972
                                                ============  ============ ============   ==========    =========
Supplemental Data:
EBITDA:                                             $193,801      $122,101     $112,891      $98,119     $112,608
Net cash provided by operating activities           $ 99,859      $ 53,352     $ 92,494      $74,337     $ 75,087

<FN>
     The Partnership  defines EBITDA as earnings before interest,  income taxes,
depreciation,  amortization,  other charges and non-cash  items such as employee
stock ownership plan compensation  charge and gain or loss on disposal of assets
and  other.   EBITDA   provides   additional   information  for  evaluating  the
Partnership's ability to make quarterly distributions and is presented solely as
a  supplemental  measure.  You should not consider  EBITDA as an  alternative to
operating income, net cash provided by operating activities or any other measure
of  financial  performance  presented  in  accordance  with  generally  accepted
accounting principles.  The Partnership's EBITDA may not be comparable to EBITDA
or  similarly  titled  measures  of other  entities  as other  entities  may not
calculate EBITDA in the same manner as the Partnership.

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
     acquisition of retail propane operations.  Acquisition capital expenditures
     represent total cost of acquisitions  less working capital  acquired and in
     fiscal 2001 does not include a  $4,638,000  adjustment  to working  capital
     related  to  a  final   valuation   adjustment   to  record  the  Thermogas
     acquisition. The Partnership acquired Thermogas in December 1999.

     In fiscal 2001, the  Partnership  applied the provisions of Emerging Issues
Task Force (EITF) Issue No. 99-19 "Reporting Revenue Gross as a Principal versus
Net as an Agent",  which impacts the presentation of certain revenue and cost of
product  sold items.  Prior to fiscal  2001,  the  Partnership  had reported the
results  of certain  activities  on a net margin  basis in other  revenue.  This
included the  reporting of appliance  sales,  material and parts sales,  refined
fuel sales and  certain  risk  management  activities.  In fiscal  2001 with the
application of EITF No. 99-19, the Partnership  began reporting these activities
either  gross  as other  revenues  and  cost of  product  sold or net as cost of
product  sold.  Certain  amounts  included in prior fiscal  years'  consolidated
financial  statements have been reclassified to conform to EITF No. 99-19. These
reclassifications had no effect on gross profit or net income in any fiscal year
previously reported.
</FN>
</TABLE>

                                       11
<PAGE>


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.

Forward-looking statements

     Statements  included  in this  report  include  forward-looking  statements
within the  meaning of Section  21E of the  Exchange  Act and Section 27A of the
Securities Act. These forward-looking statements are identified as any statement
that does not relate  strictly to  historical or current  facts.  They use words
such as "anticipate,"  "believe,"  "intend," "plan,"  "projection,"  "forecast,"
"strategy,"  "position," "continue," "estimate," "expect," "may," "will," or the
negative  of  those  terms  or  other   variations  of  them  or  by  comparable
terminology.  In particular,  statements,  express or implied, concerning future
operating  results,  or the ability to generate  sales,  income or cash flow are
forward-looking  statements.  Forward-looking  statements  are not guarantees of
performance.   They  involve   risks,   uncertainties   and   assumptions.   The
Partnership's future results may differ materially from those expressed in these
forward-looking  statements.  Many of the  factors  that  will  determine  these
results  are beyond the  Partnership's  ability  to  control or  predict.  These
statements include, but are not limited to, the following:

o    whether 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  its
     $160,000,000 senior secured notes, to pay the required  distribution on its
     senior units,  and to pay the minimum  quarterly  distribution of $0.50 per
     common unit,
o    whether or not the  Partnership  will continue to meet all of the quarterly
     financial tests required by various financing instruments, and
o    whether the percentage growth in retail volumes, revenue, cost of sales and
     expenses will be less than the percentage growth in 2001.

     Readers of this report should not put undue reliance on any forward-looking
statements.   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 risks,  which are more fully described in the  Partnership's  1933 Act
filings:

o    the retail propane industry is a mature one,
o    the effect of weather conditions on demand for propane,
o    increases in propane prices may cause higher levels of  conservation by the
     Partnership's  customers,  o  price,  availability  and  inventory  risk of
     propane supplies,
o    the timing of  collections  of the  Partnership's  accounts  receivable and
     increases  in product  costs and demand may  decrease  its working  capital
     availability,
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,  including  the  litigation  risks  which  may not be  covered  by
     insurance,
o    the Partnership may not be successful in making acquisitions,
o    changes in interest rates, including the refinancing of long-term financing
     at favorable interest rates,
o    governmental legislation and regulations,
o    energy  efficiency and technology  trends may affect demand for propane,  o
     the condition of the capital markets in the United States,
o    the political and economic stability of the oil producing nations,
o    the  Partnership  may  sell  additional  limited  partner  interests,  thus
     diluting existing interests of unitholders,

                                       12
<PAGE>

o    the distribution  priority to the  Partnership's  common units owned by the
     public terminates no later than December 31, 2005,
o    the  holder  of the  Partnership's  senior  units may have the right in the
     future to convert the senior units into common units;
o    the holder of the Partnership's senior units may be able to sell the senior
     units or convert  into common  units with  special  indemnification  rights
     available to the holder,
o    a  redemption  of the senior  units may be  dilutive  to the  Partnership's
     common unitholders, o the terms of the senior units limit the Partnership's
     use of  proceeds  from  sales  of  equity  and  the  rights  of the  common
     unitholders,
o    the current  holder of the senior units has a special  voting  exemption if
     the senior units convert into common units, and
o    the  expectation  that the  remaining  senior units will be redeemed in the
     future with proceeds from an offering of equity at a price  satisfactory to
     the Partnership.

   Selected Quarterly Financial Data

     Due to the  seasonality of the retail  distribution  of propane,  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 from a subsidiary
of  Williams.  Thus the first and second  quarters  of fiscal  year 2001  varied
significantly from those same quarters in fiscal 2000.

     During fiscal 2001, the wholesale cost of propane  increased  significantly
compared to fiscal 2000.  The wholesale  market price at one of the major supply
points, Mt. Belvieu, Texas, averaged $0.62 per gallon in fiscal 2001 compared to
an average of $0.45 per gallon in fiscal 2000.  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 and cost of product sold in the first and
second  quarters  of fiscal 2001 as compared  to fiscal  2000.  The  significant
wholesale  cost  increase is the  primary  factor  causing  the  increase in the
Partnership's  revenues and cost of product sold in the third  quarter of fiscal
2001 as compared to fiscal 2000.  Fiscal 2001 included a full year effect of the
Thermogas  acquisition,  while  fiscal 2000  included  seven and one half months
results from the effect of the Thermogas acquisition.

     The following presents the Partnership's  selected quarterly financial data
for the two years  ended July 31,  2001.  Certain  amounts  included in the four
quarterly  periods  ended July 31, 2000 and the three  quarterly  periods  ended
April 30, 2001 have been  reclassified to conform to the quarterly  period ended
July 31,  2001  presentation.  Due to net  earnings  (loss)  variations  between
quarters  within a fiscal year combined with the issuance of common units in the
fourth quarter of fiscal 2001, the individual quarterly earnings per common unit
in fiscal 2001  reported  below will not sum to the earnings per common unit for
the year ended fiscal 2001  reported in the  Consolidated  Financial  Statements
included elsewhere in this report.


                                       13
<PAGE>
<TABLE>

(in thousands, except per unit data)
Fiscal year ended July 31, 2001

<S>                                      <C>                   <C>                   <C>                 <C>
                                          First Quarter         Second Quarter        Third Quarter         Fourth Quarter
                                         ---------------       ----------------      ---------------     ------------------
Revenues                                       $288,460               $641,817             $384,393               $154,000
Gross profit                                     92,141                234,150              152,801                 59,461
Net earnings (loss)                             (17,565)                94,948               30,402                (43,717)
Net earnings (loss) per
   common unit - basic and
   diluted                                        (0.70)                  2.85                 0.81                  (1.38)


Fiscal year ended July 31, 2000

                                          First Quarter         Second Quarter        Third Quarter         Fourth Quarter
                                         ---------------       ----------------      ---------------     ------------------
Revenues                                       $161,482               $340,693             $302,695               $154,153
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
   common unit - basic and
   diluted                                        (0.45)                  1.58                 0.03                  (1.49)

</TABLE>

Results of Operations

Fiscal Year Ended July 31, 2001 versus Fiscal Year Ended July 31, 2000

     Gas liquid and related product sales. Total gas liquids and related product
sales increased 57.1% to  $1,381,940,000,  primarily due to an increased average
sales price per gallon and  increased  retail sales  volumes.  The average sales
price per gallon  increased due to the effect of a  significant  increase in the
wholesale cost of propane during fiscal 2001, which was significantly  higher as
compared to fiscal 2000.  The wholesale  market price at one of the major supply
points, Mt. Belvieu, Texas, averaged $0.62 per gallon this period in fiscal 2001
as  compared  to an average of $0.45 per gallon in same  period of fiscal  2000.
Other major  supply  points in the United  States also  experienced  significant
increases.

     Retail sales volumes increased 13.0% to 956,718,000  gallons in fiscal 2001
as compared to  846,664,000  gallons  for the prior year,  primarily  due to the
acquisition  of Thermogas  completed  in December  1999 and the effect of colder
weather,  partially offset by the impact of customer  conservation caused by the
higher  product cost  environment.  During the winter  heating  season of fiscal
2001,  temperatures as reported by the American Gas  Association  were 5% colder
than normal as compared to  temperatures  14% warmer than normal during the same
period in fiscal 2000.

     Gross profit.  Gross profit increased 25.8% to $538,553,000,  primarily due
to  increased  retail  margins,  the effect on sales  related to the colder than
normal weather and the acquired Thermogas  operations,  partially offset by risk
management  gains  realized in the first half of fiscal  2000 that were  greater
than  during  the first  half of  fiscal  2001.  See Note H to the  Consolidated
Financial   Statements   included   elsewhere  in  this  report  for  additional
information   regarding  risk  management  activities  and  the  accounting  for
derivatives.

     Operating  expense.  Operating  expense  increased  12.7%  to  $288,258,000
primarily due to operating expenses related to the acquired Thermogas operations
and to a lesser  extent the  increased  cost of  incentives  resulting  from the
improved financial  performance of the Partnership.  This increase was partially
offset by favorable expense management  related to the completed  integration of
the Thermogas  acquisition and expense savings  initiatives  established late in
fiscal year 2000.

                                       14
<PAGE>

     General and  administrative  expense.  General and  administrative  expense
increased 3.7% to  $25,508,000,  primarily due to incentives  resulting from the
improved  financial  performance of the company as compared to last year and due
to  expenses  incurred  related  to  business  process  reviews.  Prior  to  the
acquisition by the Partnership,  Thermogas  incurred in excess of $20,000,000 in
general  and  administrative  expenses  per  year.  As a result  of  Ferrellgas'
acquisition  of  Thermogas  and the  complete  integration  of the  general  and
administrative services into the Ferrellgas operations, Ferrellgas has been able
to eliminate  approximately  90% of these  overhead  costs,  thus  realizing the
expected general and administrative cost reduction from the acquisition.

     Depreciation  and  amortization  expense.   Depreciation  and  amortization
expense  decreased  8.3%  to  $56,523,000  primarily  due to the  change  in the
estimated residual values of customer and storage tanks, partially offset by the
depreciation and amortization  expense from the addition of property,  plant and
equipment and  intangible  assets from the Thermogas  acquisition.  In the first
quarter of fiscal 2001, the  Partnership  increased the estimate of the residual
values of its existing customer and storage tanks. This increase in the residual
values  resulted  from a review by  management  of its tank  values  established
through an independent  tank valuation  obtained in connection  with a financing
completed  in December  1999.  Due to this change in the tank  residual  values,
depreciation  expense  decreased by approximately  $12,000,000,  compared to the
depreciation  that  would  have been  recorded  using the  previously  estimated
residual values. The change in estimated residual values will continue to affect
future depreciation expense as compared to the depreciation that would have been
recorded using the previously estimated residual values.

     Equipment  lease  expense.  Equipment  lease  expense  increased  21.4%  to
$30,986,000 due to the addition of the $160,000,000 operating leases in December
1999, and to a lesser extent to upgrades to the Partnership's truck fleet.

     Loss (gain) on disposal of assets and other. Loss on disposal of assets and
other increased $6,100,000 primarily due to the loss on disposal of fixed assets
and losses  related to the  transfer  of  accounts  receivables  pursuant to the
accounts  receivable  securitization.  See Note E in the Consolidated  Financial
Statements  included  elsewhere  in  this  report  for  additional   information
regarding the accounts receivable securitization.

     Other charges. On April 6, 2001,  Ferrellgas Partners announced a series of
transactions  that  increased  the  cash  distribution  coverage  to its  public
unitholders  and modified the structure of its  outstanding  senior  units.  See
additional  discussion  of this  transaction  in  "Management's  Discussion  and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital   Resources-Financing   Activities."   Ferrellgas   Partners  recognized
$3,277,000 in banking, legal and other fees related to these transactions.

     Interest  expense.  Interest  expense  increased 5.6% to $61,544,000.  This
increase  is  primarily  the  result  of  increased  borrowings  related  to the
Thermogas  acquisition,  partially  offset by the effect of the  reduced  credit
facility  borrowings  during fiscal 2001 and the interest rate savings resulting
from an interest rate swap arrangement in effect during most of the fiscal year.
In  June  2001,   the  interest  rate  swap  agreement  was  terminated  by  the
counterparty. The reduced credit facility borrowings resulted primarily from the
funds  generated  from the  accounts  receivable  securitization  facility.  See
discussion  of  the   transactions   between  the   Partnership  and  Ferrellgas
Receivables in "Management's  Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."

     Forward  looking  statements.  The  Partnership  does not  expect a similar
magnitude of percentage  increase in retail volumes,  revenues,  cost of product
sold or expenses in fiscal 2002. These percentage increases  experienced in this
fiscal year compared to the prior year were  primarily a result of the impact of
the acquisition of Thermogas,  the significantly higher wholesale propane prices
experienced  during  fiscal  2001  compared  to last  year,  and  colder  winter
temperatures  this year compared to last year.  Also  contributing  to the gross
profit  percentage  increases this fiscal year were a strong margin  environment
and favorable product  purchasing and risk management  operations.  The interest
rate swap was  terminated in the fourth quarter of fiscal 2001,  therefore,  the
related interest expense savings may not be repeated.

                                       15
<PAGE>

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

     Gas liquid and related product sales. Total gas liquids and related product
sales  increased  51.1% to  $879,380,000  in fiscal 2000,  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 the fiscal
1999 winter 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
Thermogas  partially  offset by the  effect of warmer  weather.  Other  revenues
increased by $28,136,000 primarily due to the acquisition effect of Thermogas on
increased appliance and material sales, tank rental and service labor.

     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 risk management  results,  partially offset by lower retail
margins. See Note H to the Consolidated  Financial Statements included elsewhere
in this report for additional  information  regarding risk management activities
and the  accounting  for  derivatives.  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  Expense.  Operating  expense  increased 24.4% to $255,838,000 in
fiscal 2000 compared to  $205,720,000 in fiscal 1999 primarily due to personnel,
plant and office,  vehicle and other operating expenses incurred by 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.  Equipment lease expense  increased by $12,542,000
in fiscal 2000 due  primarily  to the  addition of  operating  leases,  and to a
lesser  extent  to  increased  operating  leases  related  to new  vehicles  and
computers  acquired  for  retail  locations.  See  Note  J to  the  Consolidated
Financial   Statements   included   elsewhere  in  this  report  for  additional
information regarding the operating 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.

                                       16
<PAGE>

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 retail propane  distribution  business, a
significant  portion of the Partnership's cash flow from operations is typically
generated during the winter heating season which occurs during the Partnership's
second  and  third  fiscal  quarters.   Typically,   the  Partnership  generates
significantly  lower cash flows from  operations  in its first and fourth fiscal
quarters  as  compared  to the second and third  quarters,  because  fixed costs
exceed gross profit during the non-peak  season.  However,  the third and fourth
quarters  of  fiscal  2001  generated  higher  than  historical  cash  flow from
operating  activities and the second quarter of fiscal 2001 generated lower than
historical  cash flow from  operating  activities.  This variance  between these
quarters  in the  amount of cash  flow from  operating  activities  compared  to
historical  levels was  primarily  caused by  significant  increases in customer
receivables  related to the significantly  higher than historical retail prices,
increases in retail volumes,  and, to a lesser extent,  by increases in the cost
of propane inventory during the first half of the year. As a result of the lower
cash flow from  operating  activities  in the second  quarter,  the  Partnership
generated  higher than normal cash flow from  operating  activities in the third
and fourth quarters as customers  remitted  payment of the receivables  invoiced
during the second quarter of fiscal 2001.  Subject to meeting certain  financial
tests discussed below,  the General Partner believes that Ferrellgas,  L.P. will
have sufficient  funds available to meet its  obligations,  and 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. In addition,
the General Partner  believes that  Ferrellgas,  L.P. will have sufficient funds
available  to  distribute  to  Ferrellgas  Partners  sufficient  cash to pay the
required  quarterly  distribution on the senior units and the minimum  quarterly
distribution  on all common units during fiscal 2002.  See Financing  Activities
for additional  information  about the increased cash  distribution  coverage to
Ferrellgas Partners' publicly held common unitholders.

     The Partnership's  credit facilities,  public debt, private debt,  accounts
receivable  securitization  facility and operating tank leases  contain  several
financial  tests and  covenants  restricting  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,  operating tank leases and accounts  receivable  securitization
facility and limitations on the payment of  distributions  within the Ferrellgas
Partners senior secured notes.  The credit  facility,  operating 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. 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.

     Although fiscal 2001 financial performance was favorably impacted by colder
temperatures,  the Partnership's financial performance during the 2000, 1999 and
1998  fiscal  years was  adversely  impacted by average  temperatures  that were
reported by the National Oceanic  Atmospheric  Administration  as the warmest in
recorded   history.   Despite  these  challenges  in  prior  fiscal  years,  the
Partnership met all of its financial  tests and covenants  during these previous
years and fiscal 2001.

     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
quarterly  financial tests and covenants.  However,  if the Partnership  were to
encounter  unexpected  downturns in business  operations in the future,  such as
significantly  warmer than normal  weather or a volatile cost  environment,  the
Partnership  may not meet  certain  financial  tests in 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 unitholders.
Depending on the  circumstances,  the Partnership  may 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 unitholders.  No
assurances  can be  given,  however,  that  such  alternatives  can or  will  be
implemented with respect to any given quarter.

                                       17
<PAGE>

     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  permitting
the delayed sale of up to $300,000,000 in equity and/or debt  securities.  These
registered  securities would be available for issuance by the Partnership in the
future to fund acquisitions, to reduce indebtedness or to fund general corporate
purposes.  On June 8, 2001,  Ferrellgas  Partners  received  $84,865,000,  after
underwriting discounts,  commission and expenses, from the issuance of 4,500,000
common  units  to  the  public  from  this  shelf  registration  statement.  See
"Financing   Activities"  for  additional   information  regarding  this  equity
offering.

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

     Operating   Activities.   Cash   provided  by  operating   activities   was
$99,859,154,000  for fiscal 2001,  compared to $53,352,000 for fiscal 2000. This
increased cash provided by operations is primarily due to the increased earnings
in fiscal 2001.

     Investing Activities. On September 25, 2000, Ferrellgas,  L.P. entered into
an account receivable securitization facility with Bank One, NA. As part of this
364-day facility,  Ferrellgas, L.P. transfers an interest in a pool of its trade
accounts receivable to its wholly-owned,  special purpose subsidiary, Ferrellgas
Receivables,  LLC. Ferrellgas Receivables then sold its interest to a commercial
paper  conduit of Banc One, NA.  Ferrellgas,  L.P.  remits  daily to  Ferrellgas
Receivables  funds  collected on the pool of trade  receivables  held by Ferrell
Receivables.  This facility was renewed  effective  September 25, 2001 for a one
year  commitment  with Banc One,  N.A. At July 31,  2001,  Ferrellgas,  L.P. had
collected  and remitted to Ferrellgas  Receivables  all but  $31,000,000  of the
receivables previously sold to it. Additionally,  Ferrellgas,  L.P. had invested
$3,399,000 of cash into  Ferrellgas  Receivables  related to this facility.  The
level of funding available from this accounts  receivable  facility agreement is
currently  limited  to  $60,000,000.  See Note E in the  Consolidated  Financial
Statements  included  elsewhere  in  this  report  for  additional   information
regarding these transactions.

     During  the  twelve  months  ended  July 31,  2001,  the  Partnership  made
acquisitions  of three  businesses  with an  aggregate  value of  $418,000.  The
purchase was funded by $200,000 of cash payments and the issuance of $218,000 of
notes payable to the seller.

     In fiscal 2000,  the  Partnership  had accrued  $7,033,000  in  involuntary
employee  termination benefits and exit costs, which it expected to incur within
twelve months from the acquisition date as it implemented 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.  The  Partnership  paid
$2,788,000 and $1,306,000 for termination benefits and $491,000 and $890,000 for
exit costs in fiscal years 2001 and 2000, respectively.  The remaining liability
for termination benefits and exit costs was reduced in fiscal 2001 by $1,558,000
as an adjustment to goodwill.

                                       18
<PAGE>

     During fiscal 2001, the  Partnership  made growth and  maintenance  capital
expenditures of $15,248,000 consisting primarily of :

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

     Historically,   the  Partnership's  capital  requirements  for  repair  and
maintenance  of property,  plant and equipment  have been  relatively low due to
limited  technological  change  and long  useful  lives  of  propane  tanks  and
cylinders.  The Partnership has recently  completed a review of its key business
processes to identify areas where it can use technology and process enhancements
to improve its operations.  Specifically,  the Partnership has identified  areas
where it can reduce operating expenses and improve customer  satisfaction in the
near future.  These areas under review include  improvements  to the routing and
scheduling  of customer  deliveries,  customer  administration  and  operational
workflow.  During fiscal 2002, the Partnership expects to allocate  considerable
resources toward these  improvements  and intends to fund the necessary  capital
requirements  primarily from excess cash from operations generated during fiscal
2001.

     The Partnership leases computers and light and medium duty trucks, tractors
and trailers.  The  Partnership  believes  vehicle  leasing is a  cost-effective
method for  meeting its  transportation  and  technology  equipment  needs.  The
Partnership purchased $3,012,000 of vehicles whose lease terms expired in fiscal
2001 or would have expired in fiscal  2002.  The  Partnership  plans to purchase
additional  vehicles  and  computers  at the end of their  lease  term  totaling
$781,000 in fiscal 2002,  $1,203,000 in fiscal 2003,  $1,488,000 in fiscal 2004,
$1,342,000 in fiscal 2005 and $1,009,000 in fiscal 2006. The Partnership intends
to renew other vehicle and tank leases that would have had buyouts of $5,137,000
in  fiscal  2002,  $161,109,000  in fiscal  2003,  $3,789,000  in  fiscal  2004,
$2,744,000  in fiscal  2005 and  $815,000  in  fiscal  2006.  Historically,  the
Partnership has been successful in renewing leases subject to buyouts.  However,
there is no assurance that it will be successful in the future. The large amount
to be renewed in fiscal 2003,  primarily  relates to the  operating  tank leases
entered  into at the time of the  Thermogas  acquisition.  These two leases have
terms that  expire  June 30, 2003 and the  Partnership  intends to exercise  its
option on the two additional  one-year periods, if such extension is approved by
the lessor.  At the end of the renewal dates, the Partnership  intends to secure
additional financing in order to either lease or purchase the related tanks. See
Note J in the  Consolidated  Financial  Statements  included  elsewhere  in this
report for additional information regarding these leases.

     The  Partnership   continues  to  consider   opportunities  to  expand  its
operations  through strategic  acquisitions of retail propane operations located
throughout the United States.

     Financing   Activities.   On  June  8,  2001,  the   Partnership   received
$84,865,000, net of issuance costs, pursuant to the issuance of 4,500,000 common
units to the  public.  The  Partnership  then  used  these  proceeds  to  redeem
2,048,697 senior units, to pay the related accrued senior unit  distribution and
to pay related  issuance fees. After the completion of these  transactions,  the
exercise of 101,250  common unit options and an additional  redemption of 37,915
senior units in July 2001, the  Partnership had  outstanding  35,908,366  common
units and 2,801,622  senior units. The common units issued to the public on June
8, 2001,  and common  units issued  pursuant to options  exercised in the fourth
quarter  of fiscal  2001,  are  entitled  to a  distribution  equivalent  to the
distribution expected to be paid to the already outstanding publicly held common
units for the quarter ended July 31, 2001.

                                       19
<PAGE>

     On April 6, 2001, the Partnership  announced a series of transactions  that
increased the cash  distribution  coverage to its public common  unitholders and
modified the  structure  of its  outstanding  senior  units.  In  addition,  the
Partnership  announced that an entity owned by the General  Partner's  Chairman,
Chief  Executive  Officer and  President,  James E.  Ferrell,  purchased all its
outstanding senior units from Williams for a purchase price of $195,529,000 plus
any accrued and unpaid  distributions.  The senior units are now paid  quarterly
cash distributions from Ferrellgas  Partners  equivalent to 10 percent per annum
of the liquidating  value. The senior units are redeemable by the Partnership at
any time, in whole or in part, upon payment in cash of the liquidating  value of
the senior  units,  currently  $40 per unit,  plus the amount of any accrued and
unpaid  distributions.  The holder of the senior units has the right, subject to
certain  events and  conditions,  to convert any  outstanding  senior units into
common  units at the earlier of December  31, 2005 or upon the  occurrence  of a
material event as defined by the Partnership  Agreement.  Such conversion rights
are contingent upon the Partnership  not previously  redeeming such  securities.
Also  Ferrell  Companies  granted the  Partnership  the ability to defer  future
distributions  on the  common  units held by it up to an  aggregate  outstanding
amount of $36,000,000 until December 31, 2005.

     Ferrellgas,  L.P.'s  credit  facility,  which  expires  June 30,  2003,  is
unsecured and consists of a $117,000,000 working capital,  general corporate and
acquisition  facility,  including  a  letter  of  credit  sub-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
(LIBOR) 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, 2001 and July 31, 2000 was 6.75% and
9.5%,  respectively.  During fiscal 2001, the Partnership  repaid $30,000,000 of
its credit facility.

     At July 31, 2001, no borrowings  and  $46,660,000 of letters of credit were
outstanding under the Ferrellgas, L.P. credit facility. Effective July 16, 2001,
the credit  facility was amended to increase  the letter of credit  sub-facility
availability from $60,000,000 to $80,000,000. At July 31, 2001, Ferrellgas, L.P.
had  $110,340,000  available  for  general  corporate,  acquisition  and working
capital purposes under the credit facility.  Based on the pricing grid contained
in the credit facility,  the current  borrowing rate for future borrowings under
the credit  facility is LIBOR plus 1.50%.  The  Partnership  believes that these
facilities will be sufficient to meet its future working capital needs. However,
if the  Partnership  were to experience an  unexpected  significant  increase in
working  capital  requirements,   it  could  exceed  its  immediately  available
resources.  Events that could cause  increases in working  capital  requirements
include a significant  increase in the cost of propane,  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 could be implemented.

     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 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 Ferrellgas, L.P. at
the end of each March,  June,  September and December the excess, if any, of the
applicable three month floating LIBOR 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, 2001 was $157,600,000.

     The Ferrellgas Partners  $160,000,000 senior secured notes, issued in April
1996 and due June 2006, became redeemable at the option of Ferrellgas  Partners,
in whole or in part, at any time after June 15, 2001. The  Partnership  does not
currently  plan to exercise  its option to redeem  these  notes,  in whole or in
part, however,  there can be no assurance the Partnership will not exercise this
option.  Effective April 27, 2000, the Partnership entered into an interest rate
swap agreement with Bank of America, related to the semi-annual interest payment
due on these notes.  The swap  agreement,  which was terminated at the option of
Bank of America  on June 15,  2001,  required  Bank of America to pay the stated
fixed interest rate (annual rate 9.375%)  equaling  $7,500,000  every six months
due on each June 15 and December 15. In exchange,  the  Partnership was 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 three month
LIBOR  interest  rate  plus  1.655%  applied  to the  same  notional  amount  of
$160,000,000.  The  Partnership  resumed  paying the stated fixed  interest rate
(annual rate 9.375%) effective June 15, 2001.

                                       20
<PAGE>

     On February 28, 2000,  Ferrellgas,  L.P.  issued  $184,000,000 of privately
placed unsecured senior notes. The proceeds of these 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 December 17, 1999, the Partnership purchased Thermogas from a subsidiary
of  Williams.  Part of the  consideration  paid to  Williams  at  closing by the
Partnership  was  $175,000,000  in newly issued senior units.  On April 6, 2001,
these units were  acquired by an entity owned by James E.  Ferrell,  the General
Partner's  Chairman,  Chief Executive  Officer and President.  During the fourth
quarter of fiscal 2001,  Ferrellgas  Partners,  L.P.  redeemed  2,086,612 senior
units  and  intends  to  redeem  the  remaining  2,801,622  senior  units at the
redemption  value prior to the date of  conversion.  No assurances  can be given
that the Partnership will be successful in selling additional equity or securing
the financing to redeem the remaining senior units.

     On December 6, 1999, Ferrellgas,  L.P. entered into a $25,000,000 operating
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 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  lease,  which  have  terms and
conditions  similar  to  the  December  6,  1999,  $25,000,000  operating  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.  See related  discussion in the
Investing  Activities  section  of  Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations - Liquidity and Capital Resources.

     On August 4, 1998,  Ferrellgas,  L.P. issued the privately placed unsecured
$350,000,000  senior notes. The senior notes include five series with maturities
ranging from year 2005 through 2013 at an average fixed interest rate of 7.16%.

     On September 14, 2001, the Partnership paid cash distributions of $1.00 per
senior unit and $0.50 per common unit.

     Adoption of New Accounting  Standards.  The Financial  Accounting Standards
Board (FASB) recently issued Statement of Financial  Accounting Standards (SFAS)
No. 141 "Business  Combinations",  SFAS No. 142  "Goodwill and Other  Intangible
Assets", SFAS No. 143 "Accounting for Asset Retirement Obligations" and SFAS No.
144 "Accounting for the Impairment or Disposal of Long-Lived Assets."

     SFAS No. 141 requirements  include,  among other things,  that all business
combinations  be  accounted  for by a single  method - the purchase  method.  It
applies  to all  business  combinations  initiated  after  June  30,  2001.  The
Partnership  has  historically  accounted  for business  combinations  using the
purchase method, therefore, this new standard will not have a substantial impact
on how the Partnership accounts for future combinations.

     SFAS No. 142 modifies the financial  accounting  and reporting for acquired
goodwill and other  intangible  assets,  including the requirement that goodwill
and some intangible assets no longer be amortized. Also some intangibles will be
reclassified  to  goodwill.  The  Partnership  has elected to adopt SFAS No. 142
beginning in the first  quarter of fiscal 2002.  Although  there will be no cash

                                       21
<PAGE>

flow effect, the Partnership  believes its amortization expense will decrease by
$10,600,000 in fiscal 2002,  compared to the  amortization  that would have been
recorded had the new accounting standard not been issued. This new standard also
requires  the  Partnership  to test  goodwill  for  impairment  at the  time the
standard is adopted and also on an annual basis.  The Partnership  believes that
the results of the initial impairment test of goodwill performed at the time the
standard is adopted will not have a material  effect on its financial  position,
results of operations or cash flows.

     SFAS No. 143  requires  the  recognition  of a liability if a company has a
legal or contractual financial obligation in connection with the retirement of a
tangible  long-lived  asset.  The Partnership  expects to implement SFAS No. 143
beginning  in the fiscal year ending July 31, 2003,  and is currently  assessing
its effect on the Partnership's  financial  position,  results of operations and
cash flows.

     SFAS No. 144 modifies the financial accounting and reporting for long-lived
assets  to  be  disposed  of  by  sale  and  it  broadens  the  presentation  of
discontinued  operations to include more disposal transactions.  The Partnership
expects to implement  SFAS No. 144  beginning in the fiscal year ending July 31,
2003,  and is  currently  assessing  its effect on the  Partnership's  financial
position, results of operations and 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.  The Partnership's  risk management trading activities utilize
certain types of energy commodity forward contracts,  options,  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's risk management  activities,  other than
trading,  also  utilizes  certain   over-the-counter  energy  commodity  forward
contracts  and 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  trading and other than
trading  risk  management  policies.  These  policies  include  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 forwards,
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.  In order to  minimize  the
liquidity risk of cash, margin or collateral  requirements of counterparties for
over-the-counter instruments, the Partnership attempts to balance maturities and
positions with individual counterparties.

     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  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 $8,000,000  and  $4,448,000 for trading and $1,400,000 and $940,000
for other than trading  activities  as of July 31, 2001 and 2000,  respectively.
The preceding  hypothetical analysis is limited because changes in prices may or
may not equal 10%, thus, actual results may differ.

                                       22
<PAGE>

     Additionally,  the Partnership seeks to mitigate its variable rate interest
rate risk  exposure on  operating  leases by  entering  into  interest  rate cap
agreements.  At July 31,  2001,  the  Partnership  had no  variable  rate  debt,
$157,600,000  outstanding in variable rate operating  leases and an equal amount
of interest rate cap agreements  outstanding to hedge the related  variable rate
exposure.  The  operating  leases were  entered into during  fiscal 2000.  Thus,
assuming  a 100  basis  point  increase  in the  variable  interest  rate to the
Partnership  during fiscal 2002, the interest rate risk related to the operating
leases and the associated  interest rate cap  agreements  would be a decrease to
earnings of $1,569,000.

     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 then  outstanding  swap  transaction.  The
variable rate debt included  $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 an equal amount of interest rate cap agreements outstanding
to mitigate the related  variable rate exposure.  Both the operating  leases and
interest rate cap 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 leases,  the swap transaction and the associated  interest rate collar
and cap agreements would have been a decrease to earnings of $3,370,000.

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.

                                       23
<PAGE>

                                    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. nor an 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, rather, these individuals are employed by
Ferrellgas,  Inc. At September 28, 2001,  4,435  full-time and 857 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 September 28, 2001.
Each of the persons named below is elected to their respective office or offices
annually.

<TABLE>
<S>                            <C>         <C>          <C>
                                           Director
Name                           Age          Since       Position
----                           ---         --------     --------
James E. Ferrell                62           1984       Chairman of the Board,
                                                        Chief Executive Officer,
                                                        President and a Director
                                                        of Ferrellgas, Inc.

Patrick J. Chesterman           51                      Executive Vice President
                                                        and Chief Operating
                                                        Officer

James M. Hake                   41                       Senior Vice President,
                                                         Administration

Kevin T. Kelly                  36                       Senior Vice President
                                                         and Chief Financial
                                                         Officer

A. Andrew Levison               45           1994        Director of
                                                         Ferrellgas, Inc.

Elizabeth T. Solberg            62           1998        Director of
                                                         Ferrellgas, Inc.

Michael F. Morrissey            59           1999        Director of
                                                         Ferrellgas, Inc.

</TABLE>

                                       24
<PAGE>

     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.

     James M. Hake--Mr. Hake was named Senior Vice President,  Administration in
January,  2001. He had been Senior Vice President or Vice  President,  Corporate
Development/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
and Chief Financial Officer in May 1998. After joining Ferrellgas,  Inc. in June
1996, he served as Director of Finance and Corporate Controller until May 1998.

     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 and Midwest Express Holdings since
2001.

     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.


                                       25
<PAGE>

Officers, directors and unitholders with greater than 10% ownership 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
2001  all  filing  requirements  applicable  to  its  officers,  directors,  and
beneficial owners with greater than 10% ownership were met in a timely manner.

ITEM 11.      Executive Compensation.


   Summary Compensation Table


     The following table sets forth the  compensation  for the past three fiscal
years of Ferrellgas,  Inc.'s chief  executive  officer and the three most highly
compensated  executive officers other than the chief executive officer, who were
serving as executive officers at the end of the 2001 fiscal year.

<TABLE>

<S>                              <C>      <C>         <C>           <C>             <C>             <C>

                                                                    Long-Term Compensation
                                                                    -------------------------------
                                           Annual Compensation          Awards         Pay-outs
                                         -------------------------  --------------- ---------------
                                                                      Securities      Long-Term
                                                                      Underlying      Incentive          All Other
            Name and                       Salary      Bonus (1)      Options(2)       Payouts         Compensation
       Principal Position         Year       ($)          ($)            (#)             ($)                ($)
--------------------------------- ------ ------------ ------------  --------------- --------------- --------------------
James E. Ferrell (3)               2001      431,075   1,000,000         1,050,000       ---                      9,682 (4)
   Chairman, Chief Executive
    Officer and President

Patrick J. Chesterman              2001      285,900      425,000           90,000       ---                      8,714 (4)
   Executive Vice President,       2000      212,646      202,125           50,000       ---                     13,701
    And Chief Operating Officer    1999      198,338      110,000          200,000       ---                     31,197

James M. Hake                      2001      192,000      115,000          115,000       ---                      6,306 (4)
   Senior Vice President,          2000      182,226       75,000           25,000       ---                      9,594
    Administration                 1999      181,667       55,830          200,000       ---                      8,140

Kevin T. Kelly                     2001      180,000      208,000          120,000       ---                      9,619 (4)
  Senior Vice President and        2000      160,319       75,000           75,000       ---                      8,184
  Chief Financial Officer          1999      142,808       25,000          150,000       ---                      5,001


<FN>

(1)  Awards under bonus plans are for the year reported,  regardless of the year
     paid.
(2)  The awards are grants of unit options from the Ferrellgas, Inc. Unit Option
     Plan and stock options from the Incentive Compensation Plan, a stock option
     plan of Ferrell Companies (see below for unit option and stock option grant
     tables).
(3)  On October 5, 2000, James E. Ferrell was named the Chief Executive Officer,
     President and Director of Ferrellgas, Inc. and affiliates.
(4)  Includes for Mr. Ferrell  contributions of $9,682 to the employee's  401(k)
     and profit  sharing plans.  Includes for Mr.  Chesterman  contributions  of
     $8,065 to the profit sharing plans and  compensation of $649 resulting from
     the payment of life insurance premiums. Includes for Mr. Hake contributions
     of  $5,766  to  the   employee's   401(k)  and  profit  sharing  plans  and
     compensation of $540 resulting from the payment of life insurance premiums.
     Includes for Mr. Kelly contributions of $9,619 to the employee's 401(k) and
     profit sharing plans.

</FN>
</TABLE>


                                       26
<PAGE>


     Unit Options

     The  Amended  and  Restated  Ferrellgas,  Inc.  Unit Option Plan grants key
employees  options to purchase  Ferrellgas  Partner's common units. The original
Unit  Option Plan was  adopted in October  1994.  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 1,229,200 options to purchase common units as
of July 31, 2001, 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  generally  vest  over a  five-year  period,  and  expire  on the  tenth
anniversary  of the date of the  grant.  On July 31,  2001,  503,543 of the unit
options outstanding were exercisable.

     The following table lists information on the named executive officers' unit
options granted during the fiscal year ended July 31, 2001.

<TABLE>
<S>                          <C>            <C>                  <C>          <C>            <C>

                                         OPTION GRANTS IN LAST FISCAL YEAR

                                                               Individual Grant (1)
                              ---------------------------------------------------------------------------------------
                               Number of
                               Securities   % of Total Options
                               Underlying       Granted to       Exercise
                                Options        Employees in      Price       Expiration             Grant date
Name                            Granted         Fiscal Year       ($/Unit)      Date           Present value $ (2)
--------------------------    ------------- -------------------- ----------- ------------     -----------------------
James E. Ferrell                300,000            46.0             17.90      04-19-11              767,000
Patrick J. Chesterman            90,000            13.8             17.90      04-19-11              230,000
James M. Hake                    90,000            13.8             17.90      04-19-11              230,000
Kevin T. Kelly                   95,000            14.6             17.90      04-19-11              243,000
<FN>

(1)  Unit Options vest over five years.

(2)  Based on a binomial option valuation model. The key input variables used in
     valuing the options were the  following:  risk-free  interest  rate - 4.4%;
     distribution  amount  of $0.50  per unit per  quarter;  common  unit  price
     volatility of 23.2%;  options exercised on earliest  possible dates,  i.e.,
     April, 2002,  assuming certain financial tests are achieved.  Additionally,
     it was  assumed  that  the  Partnership  will  make its  Minimum  Quarterly
     Distribution  each quarter.  The New York Stock  Exchange  "Monthly  Market
     Statistics Report" was used and the volatility  variable reflected over six
     years of historical  common unit price trading  data.  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 common unit
     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.
</FN>
</TABLE>


     The  following  table  lists  information  on the CEO and  named  executive
officers' exercised/unexercised unit options as of September 28, 2001.


                                       27
<PAGE>


<TABLE>
<S>                            <C>            <C>              <C>                         <C>

                  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
----------------------------- --------------- --------------    ----------------------     -----------------------
James E. Ferrell                    0               0                    0/300,000                0/300,000
Patrick J. Chesterman               0               0                30,000/90,000             6,300/90,000
James M. Hake                       0               0                51,000/90,000            75,600/90,000
Kevin T. Kelly                      0               0                10,000/95,000                 0/95,000


</TABLE>

   Employee Stock Ownership Plan

     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 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 during the fiscal year ended
July 31, 2001.

<TABLE>
<S>                            <C>          <C>                 <C>          <C>              <C>



                                         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 $
--------------------------    ------------- -------------------- ----------- ------------     -----------------------
James E. Ferrell                 750,000           60.5             4.28       01-31-20               756,000
James M. Hake                     25,000            0.2             4.28       01-31-20                25,200
Kevin T. Kelly                    25,000            0.2             4.28       01-31-20                25,200
</TABLE>

     The Ferrell  Companies  stock options vest ratably in 5% to 10%  increments
over 12 years or 100% upon a change of  control  of  Ferrell  Companies,  or the
death,  disability  or retirement  at the age of 65 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 5.2%;  dividend amount of $0; Ferrell Companies stock
price volatility of 13.2%; options exercised 25% in 2006, 25% in 2007 and 10% in

                                       28
<PAGE>

years 2009  through  2013,  because  this is most  likely  assuming  the Ferrell
Companies debt is retired as scheduled.  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 stock options as of July 31, 2001.
<TABLE>
<S>                            <C>            <C>               <C>                        <C>

                  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
------------------------------ -------------- --------------    ----------------------     -----------------------
James E. Ferrell                     0              0                    0/750,000                0/885,300
Patrick J. Chesterman                0              0                    0/250,000                0/292,000
James M. Hake                        0              0                    0/250,000                0/264,000
Kevin T. Kelly                       0              0                    0/250,000                0/295,100

</TABLE>

   Profit Sharing Plan

     The Ferrell Companies,  Inc. Profit Sharing and 401(k) Investment Plan is a
qualified  defined  contribution  plan which  includes  both profit  sharing and
matching  contributions.  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.  With the
establishment of the employee stock ownership plan in July 1998, the Partnership
suspended future profit sharing  contributions to the plan beginning with fiscal
year 1998. The 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 plan. The plan also provides for matching contributions under
a cash or deferred  arrangement  based upon  participant  salaries  and employee
contributions  to the plan.  Unlike  the  profit  sharing  contributions,  these
matching contributions were not eliminated with the establishment of the ESOP.

   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

     In April 2001, the  independent  board of directors  modified the amount of
compensation  paid to Mr. James E. Ferrell as Chairman,  Chief Executive Officer
and President of Ferrellgas,  Inc. pursuant to Mr. Ferrell's existing employment
agreement  dated July 17, 1998.  Effective  October 2000, Mr.  Ferrell's  annual
salary was increased to $500,000.  He is also  entitled to an annual bonus,  the
amount to be determined in the sole discretion of the independent board members.


                                       29
<PAGE>

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 stock option plan of Ferrell Companies.

     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,  following his  termination  of  employment,  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, 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  compensation paid for the prior three fiscal
years. The employment agreements also state that Messrs.  Chesterman,  Hake, and
Kelly will receive an annual  salary of not less than  $285,000,  $192,000,  and
$180,000, respectively.

     Messrs.  Chesterman,   Hake  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.

   Compensation of Directors

     Ferrellgas,  Inc. does not pay any additional remuneration to its employees
for serving as directors.  Directors who are not employees of  Ferrellgas,  Inc.
receive an annual  retainer of $16,000.  They also  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 September 28,
2001,  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.  Ferrellgas,  Inc. knows of no other person beneficially owning more
than  5% of the  common  units.  The  senior  units  currently  are  not  voting
securities  of the  Partnership  and  therefore  are not  presented in the table
below.


                                       30
<PAGE>
<TABLE>

<S>                       <C>                                <C>                  <C>

Ferrellgas Partners, L.P.
                                                                  Units
                          Name and Address of Beneficial      Beneficially         Percentage of
Title of Class            Owner                                   Owned                Class
------------------------  -------------------------------   -----------------     ----------------
Common Units              Employee Stock Ownership
                             Trust                                17,817,600                 49.6
                          James E. Ferrell                            15,000                    *
                          Patrick J. Chesterman                       30,200                    *
                          James M. Hake                               51,400                    *
                          Kevin T. Kelly                              10,700                    *
                          Elizabeth T. Solberg                         8,200                    *
                          A. Andrew Levison                           35,300                    *
                          Michael F. Morrissey                           775                    *

                          All Directors and Executive
                          Officers as a Group                        151,575                    *
<FN>

*    Less than one percent

     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.

</FN>
</TABLE>

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  $194,519,000 for the year ended July 31,
2001,  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,  Williams became a related party to the Partnership due
to the  Partnership's  issuance of 4,375,000  senior  units to a  subsidiary  of
Williams as part of the Thermogas acquisition.  In April 2001, Williams sold all
of their senior units to JEF Capital Management, Inc., an entity owned by James

                                       31
<PAGE>

E.  Ferrell,  Chairman,  Chief  Executive  Officer and  President of the General
Partner,  and thereafter,  ceased to be a related party of the Partnership.  See
further discussion of senior units and the Thermogas  acquisition in Notes G and
N of the Consolidated  Financial Statements provided herein.  During fiscal 2001
the  Partnership   recognized  wholesale  sales  of  $493,000  to  Williams.  In
connection  with its  normal  purchasing  and risk  management  activities,  the
Partnership  entered into,  with Williams as a counterparty,  certain  purchase,
forward, futures, option and swap contracts. During fiscal 2001, the Partnership
recognized a net  decrease to cost of sales of  $4,456,000  on the  consolidated
statements of earnings.  The Partnership  believes these transactions were under
terms that were no less favorable to the  Partnership  than those available with
third parties. At July 31, 2001, Williams was no longer a related party.

     On April 6, 2001 Williams  approved  amendments to the Ferrellgas  Partners
partnership  agreement  related to the terms of the senior units.  Williams then
sold all of those senior  units for a purchase  price of  $195,529,000  plus any
accrued and unpaid  distributions  to JEF Capital  Management.  The senior units
currently  have the same  terms  and  preference  rights  in  distributions  and
liquidation  as when they were  owned by  Williams.  As a member of  Ferrellgas,
Inc.'s board of directors and the board of directors of Ferrell  Companies,  Mr.
Ferrell abstained from voting on the April 2001 partnership agreement amendment,
leaving the approval to the  remaining  directors.  All of the other  members of
those respective boards of directors were independent, had no financial interest
in the amendments and voted unanimously in favor of the amendments.  Mr. Ferrell
has an  ongoing  interest  in the terms of the  senior  units and the  timing of
future redemptions of the senior units by the MLP.

     During  the fourth  quarter of fiscal  2001,  the  Partnership  paid to JEF
Capital  Management  $83,464,000 to redeem a total of 2,086,612 senior units and
$2,951,000 in senior unit  distributions.  As of July 31, 2001, the  Partnership
had recognized a senior unit  distribution of $2,801,622  payable to JEF Capital
Management on September 14, 2001.

     During   fiscal  2001,   two   affiliates  of  the   Partnership,   Ferrell
International Limited and FI Trading, Inc., which are owned by James E. Ferrell,
entered into certain forward,  option and swap contracts with the Partnership as
a counterparty.  In connection with these normal  purchasing and risk management
transactions,  the  Partnership  recognized  net  increase  to cost of  sales of
$28,329,000.  There  were no amounts  due from or due to  Ferrell  International
Limited or FI Trading at July 31,  2001.

     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 2001.  The  Partnership  believes these  transactions
were  under  terms that were no less  favorable  to the  Partnership  than those
available with third parties.

     The  Partnership  also leased propane tanks from Ferrell  Propane,  Inc., a
subsidiary of the  Ferrellgas,  Inc., the general  partner,  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
fiscal 2001.

     See Note I to the  Consolidated  Financial  Statements  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 filed five Form 8-Ks during the quarter ended July 31, 2001.

                  Items
Date of Report    Reported          Financial Statements Filed
--------------    ------------      ---------------------------
May 15, 2001      9                 None

May 23, 2001      5 and 7c          a) unaudited consolidated balance sheet as
                                       of 4/30/01
                                    b) unaudited consolidated statements of
                                       earnings for the three and nine
                                       months ended 4/30/01

May 29, 2001      7c                None

June 5, 2001      5 and 7c          None

June 5, 2001      5 and 7c          None





<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
                                                --------------------------------
                                                      Chairman, 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          Chairman, President and            10/19/01
                               Chief Executive Officer
                               (Principal Executive Officer)


/s/ A. Andrew Levison          Director                           10/19/01


/s/ Elizabeth T. Solberg       Director                           10/19/01


/s/ Michael F. Morrissey       Director                           10/19/01


/s/ Kevin T. Kelly             Senior Vice President and Chief    10/19/01
                               Financial Officer (Principal
                               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
                                                --------------------------------
                                                      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,       10/19/01
                               Sole Director (Principal
                               Executive Officer)






/s/ Kevin T. Kelly             Chief Financial Officer            10/19/01
                               (Principal Financial and
                               Accounting Officer)


<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., Ferrellgas,
          L.P and Williams  Natural Gas Liquids,  Inc.,  dated 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    First Amendment to Purchase Agreement,  dated as of December 17, 1999,
          by and among Ferrellgas Partners, L.P., Ferrellgas, L.P., and Williams
          Natural  Gas  Liquids,  Inc.  Incorporated  by  reference  to the same
          numbered Exhibit to the Registrant's  Current Report on Form 8-K filed
          December 29, 1999.

   2.3    Second  Amendment to Purchase  Agreement dated 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.

   2.4    Third Amendment to Purchase Agreement dated as of April 6, 2001 by and
          among  Ferrellgas  Partners,  L.P.,  Ferrellgas  L.P. and The Williams
          Companies,   Inc.   Incorporated  by  reference  to  Exhibit  10.1  to
          Registrant's Current Report on Form 8-K filed April 6, 2001.


   3.1    Third  Amended  and  Restated  Agreement  of  Limited  Partnership  of
          Ferrellgas Partners,  L.P., dated as of April 6, 2001. Incorporated by
          reference to the same numbered Exhibit to Registrant's  Current Report
          on Form 8-K filed April 6, 2001.

   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.

   4.2    Ferrellgas,  L.P.,  Note Purchase  Agreement  dated as of July 1, 1998
          relating to:
          $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,  and
          $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

                                       E-1
<PAGE>

 Exhibit
 Number   Description

   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 relating to: $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.

   4.6    Second  Amendment to the  Registration  Rights  Agreement  dated as of
          April  6,  2001  by and  between  Ferrellgas  Partners,  L.P.  and The
          Williams Companies,  Inc. Incorporated by reference to Exhibit 10.3 to
          Registrant's Current Report on Form 8-K filed April 6, 2001.

   4.7    Representations  Agreement  dated as of December 17, 1999 by and among
          Ferrellgas Partners,  L.P.,  Ferrellgas,  Inc.,  Ferrellgas,  L.P. and
          Williams  Natural Gas  Liquids,  Inc.  Incorporated  by  reference  to
          Exhibit 2.3 to Registrant's  Current Report on Form 8-K filed December
          29, 1999.

   4.8    First Amendment to Representations Agreement dated as of April 6, 2001
          by and among Ferrellgas Partners, L.P., Ferrellgas,  Inc., Ferrellgas,
          L.P. and The Williams  Companies,  Inc.  Incorporated  by reference to
          Exhibit 10.2 to Registrant's Current Report on Form 8-K filed April 6,
          2001.


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

#  10.2   Second  Amended  and  Restated  Ferrellgas,  Inc.  Unit  Option  Plan.
          Incorporated by reference to Exhibit 10.1 to Registrant's Current
          Report on Form 8-K filed on June 5, 2001.

   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. Exhibit Number Description

#  10.5   Ferrell   Companies,   Inc.  1998  Incentive   Compensation   Plan  -
          Incorporated by reference to 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  Exhibit 10.13 to
          Registrant's Annual Report on Form 10-K filed October 29, 1998.

   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.

                                       E-2
<PAGE>

 Exhibit
 Number   Description

   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
          purchasers  and lenders named  therein.  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  and lenders named  therein.  Incorporated  by reference to
          Exhibit 10.2 to Registrant's Current Report on Form 8-K filed December
          29, 1999

*  10.11  Omnibus  Amendment  Agreement  dated as of  February 4, 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.

*  10.12  Omnibus  Amendment  Agreement  dated  as of February 4,  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.

   10.13  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.


   10.14  Omnibus  Amendment  Agreement  No. 2,  Dated as of April  18,  2000 in
          respect of Thermogas  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.

   10.15  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.

   10.16  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.
                                       E-3
<PAGE>
 Exhibit
 Number   Description

   10.17  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

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

   10.19  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.

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

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

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

   10.23  First  Amendment to the Third  Amended and Restated  Credit  Agreement
          dated as of January 17,  2001,  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 March 14, 2001.

   10.24  Omnibus  Amendment  Agreement  No. 3, dated as of December 28, 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  10.2 to  Registrant's
          Quarterly Report on Form 10-Q filed March 14, 2001.

   10.25  Omnibus  Amendment  Agreement  No. 3, dated as of December 28, 2000 in
          respect of Thermogas  Trust No. 1999-A  Participation  Agreement Lease
          Intended  as Security  Loan  Agreement  each dated as of December  15,
          1999.  Incorporated  by  reference  to  Exhibit  10.3 to  Registrant's
          Quarterly Report on Form 10-Q filed March 14, 2001.

   10.26  First Amendment to the Receivable  Interest Sale Agreement dated as of
          January  17,  2001  between  Ferrellgas,   L.P.,  as  originator,  and
          Ferrellgas Receivables, L.L.C., as buyer. Incorporated by reference to
          Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q filed March
          14, 2001.

                                       E-4
<PAGE>

 Exhibit
 Number   Description

   10.27  First  Amendment to the  Receivables  Purchase  Agreement  dated as of
          January  17, 2001 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. Incorporated by reference to
          Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q filed March
          14, 2001.

*  10.28  Second  Amendment  to the Third  Amended  and  Restated  Credit
          Agreement  dated  as  of  July  16,  2001,  among  Ferrellgas,   L.P.,
          Ferrellgas,   Inc.,  Bank  of  America   National  Trust  and  Savings
          Association,  as agent,  and the other  financial  institutions  party
          thereto.

*  10.29  Second Amendment to the Receivables  Purchase Agreement dated as
          of September 25, 2001 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.

*  21.1   List of subsidiaries.

*  23.1   Consent of Deloitte & Touche, LLP, independent auditors.


--------------------------------------------------------------------------------
      *          Filed herewith

      #          Management contracts or compensatory plans.


                                       E-5
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page

Ferrellgas Partners, L.P. and Subsidiaries
      Independent Auditors' Report...........................................F-2
      Consolidated Balance Sheets - July 31, 2001 and 2000...................F-3
      Consolidated Statements of Earnings -
         Years ended July 31, 2001, 2000 and 1999............................F-4
      Consolidated Statements of Partners' Capital -
         Years ended July 31, 2001, 2000 and 1999............................F-5
      Consolidated Statements of Cash Flows -
         Years ended July 31, 2001, 2000 and 1999............................F-6
      Notes to Consolidated Financial Statements.............................F-7


Ferrellgas Partners Finance Corp.
      Independent Auditors' Report..........................................F-25
      Balance Sheets - July 31, 2001 and 2000...............................F-26
      Statements of Earnings -
         Years ended July 31, 2001, 2000 and 1999...........................F-27
      Statements of Stockholder's Equity -
         Years ended July 31, 2001, 2000 and 1999...........................F-28
      Statements of Cash Flows -
         Years ended July 31, 2001, 2000 and 1999...........................F-29
      Notes to Financial Statements.........................................F-30

                                      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, 2001 and
2000, and the related consolidated statements of earnings, partners' capital and
cash flows for each of the three years in the period ended July 31, 2001.  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, 2001 and 2000, and the results of their  operations
and their  cash flows for each of the three  years in the period  ended July 31,
2001, in conformity with accounting  principles generally accepted in the United
States of America.






DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 2001


                                      F-2
<PAGE>
<TABLE>

                            FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                                   CONSOLIDATED BALANCE SHEETS
                                 (in thousands, except unit data)


<S>                                                                      <C>            <C>

                                                                                  July 31,
                                                                          --------------------------
ASSETS                                                                      2001           2000
--------------------------------------------------------------------     ------------   -----------
Current Assets:
  Cash and cash equivalents                                                 $ 25,386      $ 14,838
  Accounts and notes receivable (net of
    allowance for doubtful accounts of $3,159 and
    $2,388 in 2001 and 2000, respectively)                                    56,772        89,801
  Inventories                                                                 65,284        71,979
  Prepaid expenses and other current assets                                   10,504         8,275
                                                                         ------------   -----------
    Total Current Assets                                                     157,946       184,893

Property, plant and equipment, net                                           491,194       516,183
Intangible assets, net                                                       230,918       256,476
Other assets, net                                                             16,101        10,355
                                                                         ------------   -----------
    Total Assets                                                            $896,159      $967,907
                                                                         ============   ===========


LIABILITIES AND PARTNERS' CAPITAL
--------------------------------------------------------------------
Current Liabilities:
  Accounts payable                                                           $58,274       $95,264
  Other current liabilities                                                   77,610        77,631
  Short-term borrowings                                                       -             18,342
                                                                         ------------   -----------
    Total Current Liabilities                                                135,884       191,237

Long-term debt                                                               704,782       718,118
Other liabilities                                                             15,472        16,176
Contingencies and commitments (Note J)                                        -             -
Minority interest                                                              2,034         2,032

Partners' Capital:
  Senior unitholder (2,801,622 and 4,652,691 units outstanding
    at 2001 and 2000, respectively - liquidation preference                  112,065       179,786
    $112,065 and $186,108, respectively)
  Common unitholders (35,908,366 and 31,307,116 units
    outstanding in 2001 and 2000, respectively)                              (12,959)      (80,931)
  General partner  (362,711 and 316,233 units outstanding at
   2001 and 2000, respectively)                                              (58,738)      (58,511)
  Accumulated other comprehensive income                                      (2,381)       -
                                                                         ------------   -----------
    Total Partners' Capital                                                   37,987        40,344
                                                                         ------------   -----------
    Total Liabilities and Partners' Capital                                 $896,159      $967,907
                                                                         ============   ===========

                         See notes to consolidated financial statements.
</TABLE>

                                      F-3
<PAGE>
                           FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF EARNINGS
                              (in thousands, except per unit data)


<TABLE>
<S>                                                        <C>           <C>          <C>

                                                                For the year ended July 31,
                                                           --------------------------------------
                                                               2001         2000         1999
                                                           ------------- -----------  -----------
Revenues:
  Gas liquids and related product sales                      $1,381,940    $879,380     $581,842
  Other                                                          86,730      79,643       51,507
                                                           ------------- -----------  -----------
    Total revenues                                            1,468,670     959,023      633,349

Cost of product sold (exclusive of
  depreciation, shown separately below)                         930,117     530,979      282,588
                                                           ------------- -----------  -----------
Gross profit                                                    538,553     428,044      350,761

Operating expense                                               288,258     255,838      205,720
Depreciation and amortization expense                            56,523      61,633       47,257
General and administrative expense                               25,508      24,587       19,174
Equipment lease expense                                          30,986      25,518       12,976
Employee stock ownership plan compensation charge                 4,843       3,733        3,295
Loss (gain) on disposal of assets and other                       5,744        (356)       1,842
                                                           ------------- -----------  -----------
Operating income                                                126,691      57,091       60,497

Interest expense                                                (61,544)    (58,298)     (46,621)
Interest income                                                   3,027       2,229        1,216
Other charges                                                    (3,277)     -            -
                                                           ------------- -----------  -----------
Earnings before minority interest
 and extraordinary loss                                          64,897       1,022       15,092

Minority interest                                                   829         162          309
                                                           ------------- -----------  -----------
Earnings before extraordinary loss                               64,068         860       14,783

Extraordinary loss on early extinguishment of debt,
   net of minority interest of $130                             -            -           (12,786)
                                                           ------------- -----------  -----------
Net earnings                                                     64,068         860        1,997

Distribution to senior unitholder                                18,013      11,108          N/A
Net earnings (loss) available to general partner                    461        (102)          20
                                                           ------------- -----------  -----------
Net earnings (loss) available to common and
   subordinated unitholders                                    $ 45,594    ($10,146)     $ 1,977
                                                           ============= ===========  ===========

Basic and diluted earnings (loss)
   per common and subordinated unit
Earnings (loss) before extraordinary loss                        $ 1.43     $ (0.32)      $ 0.47
Extraordinary loss                                              -             -            (0.41)
                                                           ------------- -----------  -----------
Net earnings (loss) available to common and
   subordinated unitholders                                      $ 1.43     $ (0.32)      $ 0.06
                                                           ============= ===========  ===========


                        See notes to consolidated financial statements.
</TABLE>

                                      F-4
<PAGE>

                                 FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                                   CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                                                  (in thousands)


<TABLE>
<S>                       <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>       <C>       <C>
                          Number of units                                                                        Accumulated
                          ---------------------------------                                                        other
                                                   Sub-     General                           Sub-      General   compre-   Total
                            Senior     Common   ordinated   partner     Senior     Common   ordinated   partner   hensive  partners'
                          unitholder unitholder unitholder unitholder unitholder unitholder unitholder unitholder  income  capital
                          ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------- --------
August 1, 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)

  Comprehensive income:
     Net earnings              -         -          -          -            -        2,223       (246)        20      -       1,997
     Pension liability
       adjustment              -         -          -          -            -          -          -          -       (797)     (797)
                                                                                                                           ---------
  Comprehensive income                                                                                                        1,200
                          ---------- ----------  --------- ---------- ---------- ---------- ---------- ---------- -------- ---------
July 31, 1999                  -      14,710.8   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 units       4,375.0      -          -           -       175,000        -          -        1,768       -    176,768
         Fees paid to issue
           senior units        -         -          -           -        (8,925)       -          -          -         -     (8,925)

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

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

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

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

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

 Comprehensive income:
     Net earnings              -         -          -           -           -          851        -            9      -         860
     Pension liability
       adjustment              -         -          -           -           -          -          -          -        797       797

                                                                                                                             -------
 Comprehensive income                                                                                                         1,657
                             -------- --------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
July 31, 2000                4,652.7  31,307.1      -          316.2    179,786    (80,931)       -      (58,511)     -      40,344

 Accretion of discount on
   senior units                -         -          -          -          6,321     (6,258)       -        (63)       -         -

 Contribution in connection
  with ESOP compensation
  charge                       -         -          -          -            -        4,745        -           48      -       4,793

 Common unit cash
   distributions               -         -          -          -            -      (62,645)       -         (632)     -     (63,277)

 Senior unit paid in kind
   distributions               235.5     -          -          -          9,422     (9,328)       -          (94)     -         -

 Senior unit cash and
   accrued distributions-      -         -          -          -            -       (8,535)       -         (144)     -      (8,679)

 Common unit options
   exercised                   -         101.3      -            1.0        -        1,701        -           17      -       1,718

 Common unit offering,
   net                         -       4,500.0      -           45.5        -       84,865        -          -        -      84,865

 Redemption of senior
   units                    (2,086.6)    -          -          -        (83,464)       -          -          -        -     (83,464)

 Comprehensive income:
    Net earnings               -         -          -          -            -       63,427        -          641      -      64,068
    Other comprehensive
        income:
      Cumulative effect
       of accounting change    -         -          -          -            -          -          -          -        709       -
      Risk management fair
        value adjustment       -         -          -          -            -          -          -          -       (289)      -
      Reclassification
        adjustment             -         -          -          -            -          -          -          -       (709)      -
      Pension liability
        adjustment             -         -          -          -            -          -          -          -     (2,092)   (2,381)
                                                                                                                           ---------
 Comprehensive income                                                                                                        61,687
                          ----------- --------- ---------- ---------- ---------- ---------- ---------- ---------- -------- ---------
July 31, 2001                2,801.6  35,908.4      -          362.7   $112,065   $(12,959) $     -    $ (58,738) $(2,381) $ 37,987
                          =========== ========= ========== ========== ========== ========== ========== ========== ======== =========


                See notes to consolidated financial statements.
</TABLE>

                                      F-5
<PAGE>
                       FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (in thousands)

<TABLE>
<S>                                                         <C>        <C>         <C>
                                                              For the year ended July 31,
                                                            ---------------------------------
                                                              2001       2000        1999
                                                            ---------- ----------  ----------
Cash Flows From Operating Activities:
 Net earnings                                                 $64,068      $ 860     $ 1,997
 Reconciliation of net earnings to net
  cash provided by operating activities:
  Depreciation and amortization                                56,523     61,633      47,257
  Employee stock ownership plan compensation charge             4,843      3,733       3,295
  Minority interest                                               829        162         309
  Extraordinary loss, net of minority interest                  -          -          12,786
  Other                                                         7,555      2,759       4,487
  Changes in operating assets and liabilities, net of
   effects from business acquisitions:
    Accounts and notes receivable, net of securitization       (9,121)   (12,609)     (9,565)
    Inventories                                                11,333    (25,423)     11,382
    Prepaid expenses and other current assets                  (2,071)      (731)      1,926
    Accounts payable                                          (39,792)    10,418      12,737
    Accrued interest expense                                    1,157      6,594       2,152
    Other current liabilities                                   2,233      7,140       4,235
    Other liabilities                                           2,302     (1,184)       (504)
                                                            ---------- ----------  ----------
      Net cash provided by operating activities                99,859     53,352      92,494
                                                            ---------- ----------  ----------

Cash Flows From Investing Activities:
 Business acquisitions, net of cash acquired                   (4,668)    47,656     (43,838)
 Cash paid for acquisition transaction fees                     -        (15,893)      -
 Capital expenditures                                         (15,248)   (20,755)    (25,743)
 Net proceeds from accounts receivable securitization          31,000      -           -
 Proceeds from sale leaseback transaction                       -         25,000       -
 Other                                                          1,652      5,743       3,286
                                                            ---------- ----------  ----------
      Net cash provided by (used in) investing
        activities                                             12,736     41,751     (66,295)
                                                            ---------- ----------  ----------

Cash Flows From Financing Activities:
 Distributions                                                (69,125)   (63,247)    (63,229)
 Issuance of common units, net of issuance costs               84,865      -           -
 Redemption of senior units                                   (83,464)     -           -
 Additions to long-term debt                                    9,843    226,490     408,113
 Reductions of long-term debt                                 (26,205)  (276,111)   (338,613)
 Net reductions to short-term borrowings                      (18,342)    (2,144)       (664)
 Cash paid for debt and lease financing costs                     (56)    (3,163)    (12,827)
 Minority interest activity                                      (848)     1,008        (810)
 Proceeds from exercise of common unit options                  1,718      -           -
 Cash contribution from general partner                         -          1,768       -
 Other                                                           (433)     -               4
                                                            ---------- ----------  ----------
      Net cash used in financing activities                  (102,047)  (115,399)     (8,026)
                                                            ---------- ----------  ----------

Increase (decrease) in cash and cash equivalents               10,548    (20,296)     18,173
Cash and cash equivalents - beginning of period                14,838     35,134      16,961
                                                            ---------- ----------  ----------
Cash and cash equivalents - end of period                     $25,386    $14,838     $35,134
                                                            ========== ==========  ==========

Cash paid for interest                                        $57,893    $49,176     $42,310
                                                            ========== ==========  ==========

                    See notes to consolidated financial statements.
</TABLE>

                                      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  (collectively  referred  to as the  "Partnership")  are both  Delaware
     limited partnerships.  Both the MLP and the OLP are governed by partnership
     agreements  that  were  made  effective  at the  time of  formation  of the
     partnerships.  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
     owns  17,817,600  of the  outstanding  MLP common  units.  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 an effective 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  MLP.  As
     contributions  are made by  Ferrell  to the ESOP in the  future,  shares of
     Ferrell are allocated to the Company employees' ESOP accounts.

     On December 17, 1999, the MLP's Partnership  Agreement was amended to allow
     for the issuance of a newly  created  senior unit,  in  connection  with an
     acquisition.  Generally,  these  senior  units  were to be  paid  quarterly
     distributions in additional senior units equal to 10 % per annum. Also, the
     senior units were  structured  to allow for a redemption  by the MLP at any
     time, in whole or in part, upon payment in cash of the liquidating value of
     the senior units,  currently  $40 per unit,  plus the amount of any accrued
     and  unpaid  distributions.  The  holder of the  senior  units also had the
     right, at dates in the future and subject to certain events and conditions,
     to convert any outstanding senior units into common units.

     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.  Prior to
     this amendment,  the Company was required to make capital  contributions to
     maintain  its  1%  general  partner  interest  with  the  issuance  of  any
     additional  MLP  equity.  Also  as  part of  this  amendment,  the  General
     Partner's  interest in the MLP's Common Units was converted  from a General
     Partner interest to General Partner units.

     On April 6, 2001,  the MLP's  Partnership  Agreement was amended to reflect
     modifications  made to the senior units,  previously issued on December 17,
     1999,  and the common  units owned by Ferrell.  The senior  units are to be
     paid quarterly distributions in cash equivalent to 10 % per annum or $4 per
     senior unit.  The amendment also granted the holder of the senior units the
     right, subject to certain events and conditions, to convert any outstanding
     senior  units into common units at the earlier of December 31, 2005 or upon
     the occurrence of a material event as defined by the Partnership Agreement.
     Also as part of the amendment,  Ferrell granted the Partnership the ability
     to defer  future  distributions  on the  common  units held by it, up to an
     aggregate outstanding amount of $36,000,000, until December 31, 2005.

                                      F-7
<PAGE>

B.  Summary of Significant Accounting Policies

     (1) Nature of  operations:  The  Partnership  is engaged  primarily  in the
     retail  distribution  of propane and related  equipment and supplies in the
     United  States.  The  retail  market is  seasonal  because  propane is used
     primarily  for  heating  in  residential  and  commercial  buildings.   The
     Partnership      serves      approximately      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  consolidated  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
     subsidiary, Ferrellgas Partners Finance Corp. The Company's 1.0101% General
     Partner  interest  in  Ferrellgas,  L.P.  is  accounted  for as a  minority
     interest. The wholly-owned  subsidiary of the OLP, Ferrellgas  Receivables,
     LLC, is accounted for using the equity method of  accounting.  All material
     intercompany profits, transactions and balances have been eliminated.

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

     (5)  Inventories:  Inventories  are  stated  at the lower of cost or market
     using average cost and actual cost  methods.  The  Partnership  enters into
     commodity  derivative  contracts  involving propane and related products to
     hedge, reduce risk and anticipate market movements. The fair value of these
     derivative contracts is classified as inventory.

     (6) Property, plant and equipment: 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 30 years.  In the first  quarter of fiscal  2001,  the
     Partnership  increased the estimate of the residual  values of its existing
     customer and storage  tanks.  This change in accounting  estimate  resulted
     from a review by  management  of its tank  values  established  through  an
     independent  tank  valuation   obtained  in  connection  with  a  financing
     completed in December 1999. The Partnership, using its best estimates based
     on  reasonable  and  supportable   assumptions  and  projections,   reviews
     long-lived   assets   for   impairment   whenever   events  or  changes  in
     circumstances  indicate that the carrying amount of its assets might not be
     recoverable.

     (7) Goodwill and intangible assets: Intangible assets, consisting primarily
     of  customer  lists,   trademarks,   assembled  workforce,   goodwill,  and
     noncompete notes, are stated at cost, net of amortization  calculated using
     either  straight-line or accelerated methods over periods ranging from five
     to  40  years.  The  Partnership  reviews   identifiable   intangibles  for
     impairment in a similar manner as with long-lived  assets. See "Adoption of
     new accounting standards" below for a related discussion of the effect of a
     new accounting  pronouncement,  Statement of Financial Accounting Standards
     (SFAS) No. 142, on goodwill and intangible assets.

                                      F-8
<PAGE>

     (8) Accounting for derivative commodity  contracts:  The Partnership enters
     into  commodity   options   involving   propane  and  related  products  to
     specifically hedge certain product cost risk. Any changes in the fair value
     of these  specific  cash flow hedge  positions are deferred and included in
     other  comprehensive  income and recognized as an adjustment to the overall
     purchase  price of product in the month the  purchase  contract is settled.
     The  Partnership  also  enters  into other  commodity  forward  and futures
     purchase/sale  agreements and commodity swaps and options involving propane
     and related  products,  which are not specific  hedges to a certain product
     cost risk, but are used for risk  management  purposes.  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 this valuation method,  derivatives are carried on the
     consolidated  balance  sheets at fair  value  with  changes  in that  value
     recognized in earnings.  The  Partnership  classifies  all gains and losses
     from these  derivative  commodity  contracts  entered into for product risk
     management purposes as cost of product sold on the consolidated  statements
     of earnings.

     (9) 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
     delivery  or  installation.  Revenues  from  repairs  and  maintenance  are
     recognized  upon completion of the service.  The Partnership  adopted Staff
     Accounting  Bulletin No. 101 entitled  "Revenue  Recognition"  in the first
     quarter of fiscal 2001. This new standard did not have a material affect on
     the Partnership's financial position, results of operations or cash flows.

     (10) Income taxes: The MLP is a limited partnership. As a result, the MLP's
     earnings or losses for Federal  income tax purposes are included in the tax
     returns of the individual partners,  the MLP unitholders.  Accordingly,  no
     recognition has been given to income taxes in the accompanying consolidated
     financial  statements  of  the  Partnership.  Net  earnings  for  financial
     statement purposes may differ  significantly from taxable income reportable
     to MLP  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.

     (11) 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 accrued and paid senior
     unit  distributions,  by the weighted average number of outstanding  common
     and subordinated units and the dilutive effect, if any, of outstanding unit
     options.  There was no effect on the dilutive earnings per unit calculation
     when making the assumption that all outstanding unit options were exercised
     into common units.

     (12) Unit and stock-based  compensation:  The Partnership  accounts for its
     Unit Option  Plan and the Ferrell  Companies  Incentive  Compensation  Plan
     using the  intrinsic  value  method  under  the  provisions  of  Accounting
     Principles Board (APB) No. 25,  "Accounting for Stock Issued to Employees,"
     and makes the fair value method pro forma  disclosures  required  under the
     provisions of SFAS No. 123, "Accounting for Stock-Based Compensation."

     (13) Segment information:  The Partnership is a single reportable operating
     segment  engaging  in  the  retail  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.

     (14)  Adoption  of  new  accounting  standards:  The  Financial  Accounting
     Standards   Board   (FASB)   recently   issued   SFAS  No.  141   "Business
     Combinations",  SFAS No. 142 "Goodwill and Other Intangible  Assets",  SFAS
     No. 143  "Accounting  for Asset  Retirement  Obligations"  and SFAS No. 144
     "Accounting for the Impairment or Disposal of Long-Lived Assets."

                                      F-9
<PAGE>

     SFAS No. 141 requirements  include,  among other things,  that all business
     combinations be accounted for by a single method - the purchase method.  It
     applies to all business  combinations  initiated  after June 30, 2001.  The
     Partnership has historically  accounted for business combinations using the
     purchase method,  therefore,  this new standard will not have a substantial
     impact on how the Partnership accounts for future combinations.

     SFAS No. 142 modifies the financial  accounting  and reporting for acquired
     goodwill  and other  intangible  assets,  including  the  requirement  that
     goodwill  and some  intangible  assets no longer  be  amortized.  Also some
     intangibles  will be reclassified to goodwill.  The Partnership has elected
     to adopt  SFAS No.  142  beginning  in the first  quarter  of fiscal  2002.
     Although there will be no cash flow effect,  the  Partnership  believes its
     amortization  expense will decrease by $10,600,000 in fiscal 2002, compared
     to the  amortization  that would have been recorded had the new  accounting
     standard not been issued.  This new standard also requires the  Partnership
     to test  goodwill  for  impairment  at the time the standard is adopted and
     also on an annual basis.  The Partnership  believes that the results of the
     initial  impairment test of goodwill  performed at the time the standard is
     adopted will not have a material effect on its financial position,  results
     of operations or cash flows.

     SFAS No. 143  requires  the  recognition  of a liability if a company has a
     legal or contractual financial obligation in connection with the retirement
     of a tangible  long-lived asset. The Partnership  expects to implement SFAS
     No. 143 beginning in the fiscal year ending July 31, 2003, and is currently
     assessing its effect on the Partnership's  financial  position,  results of
     operations and cash flows.

     SFAS No. 144 modifies the financial accounting and reporting for long-lived
     assets  to be  disposed  of by sale and it  broadens  the  presentation  of
     discontinued   operations  to  include  more  disposal  transactions.   The
     Partnership  expects to implement SFAS No. 144 beginning in the fiscal year
     ending  July  31,  2003,  and is  currently  assessing  its  effect  on the
     Partnership's financial position, results of operations and cash flows.

     (15)  Reclassifications:  In  fiscal  2001,  the  Partnership  applied  the
     provisions of Emerging Issues Task Force (EITF Issue) No. 99-19  "Reporting
     Revenue  Gross as a  Principal  versus Net as an Agent"  which  affects the
     presentation  of certain  revenue and cost of product sold items.  Prior to
     fiscal 2001, the Partnership had reported the results of certain activities
     on a net  margin  basis in other  revenue.  These  activities  include  the
     reporting of appliance sales,  material and parts sales, refined fuel sales
     and  certain  risk  management   activities.   In  fiscal  2001,  with  the
     application  of EITF No.  99-19,  the  Partnership  began  reporting  these
     activities  either gross as other  revenues and cost of product sold or net
     as cost of product  sold.  These  reclassifications  had no effect on gross
     profit or net  income  in any  fiscal  year  previously  reported.  Certain
     reclassifications have been made to the prior years' consolidated financial
     statements  to  conform  to  the  current  year's  consolidated   financial
     statements' presentation.


C.  Quarterly Distributions of Available Cash

     The Partnership makes quarterly cash distributions 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.

                                      F-10
<PAGE>

     Distributions  by the MLP in an amount equal to 100% of its available cash,
     as defined  in its  Partnership  Agreement,  will be made to the senior and
     common  unitholders and the general partner.  Additionally,  the payment of
     incentive  distributions  to the holders of incentive  distribution  rights
     will be made to the extent that certain target levels of cash distributions
     are achieved.  The senior units have certain  distribution  and  preference
     rights over the common  units.  The publicly held common units have certain
     distribution  preference  rights  over the  common  units  held by  Ferrell
     Companies.

     On April 6, 2001, the Partnership modified the structure of its outstanding
     senior units and increased the cash  distribution  coverage to its publicly
     held  common  unitholders.  Among  other  changes,  the  senior  units were
     modified  to allow the holder to be paid a quarterly  distribution  in cash
     instead  of  in  additional  senior  unit  distributions.  See  Note  A for
     additional  information  about the  modifications  to the senior units.  In
     addition,  Ferrell  Companies,  Inc., the owner of 17,817,600 common units,
     granted the  Partnership the ability to defer future  distributions  on the
     common  units  held  by  it  up  to  an  aggregate  outstanding  amount  of
     $36,000,000.  The ability to defer  distributions  to Ferrell  provides the
     MLP's public common  unitholders  distribution  support until  December 31,
     2005.  This new  distribution  support is  available  if the  Partnership's
     available  cash for any fiscal  quarter is  insufficient  to pay all of the
     common unitholders their quarterly  distribution.  The MLP will first pay a
     distribution  to the senior units and then will pay a  distribution  out of
     the  remaining  available  cash  to the  publicly-held  common  units.  Any
     remaining  available  cash will then be used to pay a  distribution  on the
     common units held by Ferrell.  Any quarterly  distribution paid per unit to
     the  publicly-held  common  units  that  is  not  able  to be  paid  on the
     Ferrell-owned  common units will be deferred,  within certain  limits,  and
     paid to Ferrell in future  quarters when available  cash is sufficient.  If
     insufficient  available  cash should exist for a particular  quarter or any
     previous  deferred   distributions  to  Ferrell  remain  outstanding,   the
     distribution  declared  per  common  unit may not be more than the  highest
     quarterly  distribution paid on the common units for any of the immediately
     preceding  four  fiscal  quarters.  If the  cumulative  amount of  deferred
     quarterly  distributions to Ferrell were to reach  $36,000,000,  the common
     units  held by  Ferrell  will  then be paid  in the  same  priority  as the
     publicly-held common units. After payment of all required distributions for
     any  subsequent  period,  the MLP will use any remaining  available cash to
     reduce any amount previously  deferred on the common units held by Ferrell.
     Reductions in amounts previously  deferred will then again be available for
     future  deferrals to Ferrell through  December 31, 2005. In connection with
     these transactions, the MLP incurred $3,277,000 in banking, legal and other
     professional  fees that are classified as other charges on the consolidated
     statements of earnings.  The MLP has also incurred and capitalized $774,000
     related to payments made to lenders. The capitalized fees are classified as
     other assets on the consolidated balance sheet.


D.  Supplemental Balance Sheet Information

    Inventories consist of:
<TABLE>
      <S>                                            <C>              <C>

      (in thousands)                                    2001             2000
                                                     ----------       ----------
      Liquefied propane gas and re                     $45,966          $50,868
      Appliances, parts and supplies                    19,318           21,111
                                                     ----------       ----------
                                                       $65,284          $71,979
                                                     ==========       ==========
</TABLE>


                                      F-11
<PAGE>

     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, 2001,  in addition to the  inventory on
     hand, the Partnership  had committed to take net delivery of  approximately
     3,754,000 gallons at a fixed price for its future retail propane sales.


    Property, plant and equipment consist of:
<TABLE>

      <S>                                            <C>              <C>
      (in thousands)                                    2001             2000
                                                     ----------     ----------
      Land and improvements                            $ 41,191      $ 40,761
      Buildings and improvements                         54,384        54,794
      Vehicles                                           76,611        78,490
      Furniture and fixtures                             35,138        32,844
      Bulk equipment and district facili                 90,930        88,289
      Tanks and customer equipment                      472,593       482,617
      Other                                               3,281         3,753
                                                      ----------    ----------
                                                        774,128       781,548
      Less:  accumulated depreciation                   282,934       265,365
                                                      ----------    ----------
                                                       $491,194      $516,183
                                                      ==========    ==========
</TABLE>


     Depreciation expense totaled $28,332,000,  $37,941,000, and $30,772,000 for
     the years ended July 31, 2001, 2000, and 1999,  respectively.  In the first
     quarter of fiscal  2001,  the  Partnership  increased  the  estimate of the
     residual  values of its existing  customer and storage  tanks.  Due to this
     change in the tank  residual  values,  depreciation  expense  decreased  by
     approximately  $12,000,000  or  $0.38  per  common  unit for  fiscal  2001,
     compared  to the  depreciation  that  would  have been  recorded  using the
     previously estimated residual values.


    Intangibles consist of:

<TABLE>

      <S>                                            <C>              <C>

      (in thousands)                                    2001             2000
                                                     ----------       ----------
       Customer lists                                 $207,667         $207,478
       Goodwill                                        142,921          141,326
       Non-compete agreements                           60,222           59,905
       Assembled workforce                               9,600            9,600
       Other                                               168              391
                                                     ----------       ----------
                                                       420,578          418,700
       Less:  accumulated amortization                 189,660          162,224
                                                     ----------       ----------
                                                      $230,918         $256,476
                                                     ==========       ==========

</TABLE>

     Amortization   expense   related  to   intangibles   totaled   $27,436,000,
$22,951,000 and  $15,712,000 for the years ended July 31, 2001,  2000, and 1999,
respectively.

                                      F-12

<PAGE>


     Other current liabilities consist of:
<TABLE>

      <S>                                            <C>              <C>

      (in thousands)                                    2001             2000
                                                     ----------       ----------
       Accrued interest                                $22,816          $21,659
       Accrued payroll                                  20,236           15,073
       Accrued insurance                                 8,056            4,770
       Other                                            26,502           36,129
                                                     ----------       ----------
                                                       $77,610         $77,631
                                                     ==========       ==========
</TABLE>


E.   Accounts Receivable Securitization

     On  September  26,  2000,  the  OLP  entered  into  an  account  receivable
     securitization  facility  with  Bank  One,  NA.  As part  of  this  364-day
     facility,  the OLP  transferred an interest in a pool of its trade accounts
     receivable to its  wholly-owned,  special  purpose  subsidiary,  Ferrellgas
     Receivables,  LLC.  Ferrellgas  Receivables  then  sold its  interest  to a
     commercial  paper  conduit  of Banc  One,  NA.  The  OLP  remits  daily  to
     Ferrellgas  Receivables  funds  collected on the pool of trade  receivables
     held by Ferrellgas Receivables.  The Partnership intends to renew effective
     September 25, 2001 for a one year  commitment  with Bank One, N.A. From the
     inception  of this  facility in September  2000 through July 31, 2001,  the
     cash  flows  related  to this  facility  between  the  OLP  and  Ferrellgas
     Receivables are detailed as follows:

<TABLE>

      <S>                                                                       <C>

      (in thousands)                                                               2001
                                                                                ----------
      Proceeds from new securitizations                                           $115,000
      Proceeds from collections reinvested in revolving period securitizations     725,955
      Remittance of amounts collected on securitizations                          (809,955)
                                                                                -----------
      Net proceeds from accounts receivable securitization                         $31,000
                                                                                ===========

      Cash invested in unconsolidated subsidiary                                   $ 3,399
                                                                                ===========
</TABLE>

     The level of funding  available from this facility is currently  limited to
     $60,000,000. In accordance with SFAS No. 140, "Accounting for Transfers and
     Servicing of Financial Assets and  Extinguishments  of  Liabilities,"  this
     transaction  is  reflected  on  the  Partnership's  consolidated  financial
     statements  as a  sale  of  accounts  receivable  and an  investment  in an
     unconsolidated  subsidiary. The OLP retained servicing rights and the right
     to collect finance charges,  however,  the assets related to these retained
     interests  at July 31,  2001,  had no material  effect on the  consolidated
     balance sheet.

     The investment in the  unconsolidated  subsidiary  related to this facility
     was $7,225,000 at July 31, 2001 and is classified  within "other assets" on
     the consolidated  balance sheet. The "loss (gain) on disposal of assets and
     other" on the  consolidated  statements of earnings for the year ended July
     31, 2001,  includes a $7,816,000 loss on sale of receivables,  a $2,205,000
     equity in earnings of  unconsolidated  subsidiary and $1,326,000 of service
     income.  These amounts reported on the consolidated  statements of earnings
     approximate the financing cost of issuing  commercial paper backed by these
     accounts receivable plus an allowance for doubtful accounts associated with
     the outstanding receivables transferred to Ferrellgas Receivables.

                                      F-13
<PAGE>

F.   Long-Term Debt
<TABLE>

     Long-term debt consists of:

      <S>                                            <C>              <C>

      (in thousands)                                    2001             2000
                                                     ----------       ----------
    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          184,000

    Credit Agreement
     Revolving credit loans 8.9% due 2003 (4)          -                 11,658

    Notes payable, 7.9% and 7.5% weighted average
     interest rates, respectively, due 2001 to 2009     12,566           15,988
                                                     ----------       ----------
                                                       706,566          721,646
    Less:  current portion, included in
            other current liabilities                    1,784            3,528
                                                     ----------       ----------
                                                      $704,782         $718,118
                                                     ==========       ==========

<FN>

     (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 OLP does not have the option to prepay
          the Notes prior to maturity without incurring prepayment penalties.

     (2)  The MLP fixed rate Senior Secured Notes ("MLP Senior Secured  Notes"),
          issued in April  1996,  are  redeemable  at the option of the MLP,  in
          whole or in part,  at any time  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.

     (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 OLP does not have the option to prepay the Notes prior to
          maturity without incurring prepayment penalties.

     (4)  At July 31, 2001,  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 % to 2.25 % or, b) the
          bank's base rate plus an applicable margin varying from 0.25 % to 1.25
          %. The bank's  base rate at July 31, 2001 and 2000 was 6.75% and 9.5%,
          respectively.
</FN>
</TABLE>
                                      F-14
<PAGE>

     On December 17, 1999,  in connection  with the purchase of  Thermogas,  LLC
     ("Thermogas acquisition") (see Note N), the OLP assumed a $183,000,000 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  loan. The additional  $1,000,000 in borrowings
     was used to fund debt issuance costs.

     Effective  April 27,  2000,  the MLP  entered  into an  interest  rate swap
     agreement with Bank of America, related to the semi-annual interest payment
     due on these  MLP  Senior  Secured  notes.  The swap  agreement,  which was
     terminated at the option of the counterparty on June 15, 2001, required the
     counterparty  to pay the stated fixed  interest  rate every six months.  In
     exchange,  the MLP was required to make  quarterly  floating  interest rate
     payments  based on an annual  interest  rate equal to the three month LIBOR
     interest  rate  plus  1.655%  applied  to  the  same  notional   amount  of
     $160,000,000. The Partnership resumed paying the stated fixed interest rate
     effective after June 15, 2001.

     At July 31, 2001 and 2000, $0 and $18,342,000,  respectively, of short-term
     borrowings were outstanding  under the credit  facility.  Letters of credit
     outstanding,  used primarily to secure  obligations under certain insurance
     arrangements, totaled $46,660,000 and $36,892,000,  respectively. Effective
     July 16,  2001,  the credit  facility was amended to increase the letter of
     credit sub-facility availability from $60,000,000 to $80,000,000.

     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 these debt agreements.

     The  scheduled  annual  principal  payments  on  long-term  debt  are to be
     $1,784,000 in 2002,  $2,068,000 in 2003,  $2,113,000 in 2004, $2,263,000 in
     2005, $271,260,000 in 2006 and $427,078,000 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.


G.   Partners' Capital

     On July 31, 2001, the  Partnership's  capital consisted of 2,801,622 senior
     units,  35,908,366  common units,  and a 1% General Partner  interest.  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 on December 17, 1999 (See Note
     N) , the Partnership  issued  4,375,000 senior units to a subsidiary of The
     Williams  Companies,  Inc.  ("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.  On April 6, 2001, an entity owned by James E. Ferrell,
     the Chairman, Chief Executive Officer and President of the General Partner,
     purchased all senior units held by Williams,  who prior to the  transaction

                                      F-15
<PAGE>

     agreed to certain  modifications  to the senior units.  See Note A for more
     information on the modifications to the senior units.

     The Partnership  maintains shelf  registration  statements for common units
     representing limited partner interests in the Partnership. One of the shelf
     registration  statements  allows for common units to 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.  On June 8,
     2001, the Partnership  received  $84,865,000 net of issuance costs pursuant
     to the issuance of 4,500,000  common units to the public.  The  Partnership
     then used these  proceeds  to redeem  2,048,697  senior  units and  related
     accrued but unpaid  distributions.  These common units issued to the public
     on June 8, 2001,  were entitled to the same  distribution to be paid to the
     already  outstanding  publicly held common units for the quarter ended July
     31, 2001. The Partnership  also made a redemption of 37,915 senior units in
     July 2001. During the fourth quarter of fiscal 2001, the Partnership issued
     101,250 common units pursuant to the unit option plan (see Note L).

     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  were  allowed  to be
     converted  to  common  units  once  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 ended July 31, 1999.

H.   Derivatives

     SFAS  No.  133   "Accounting   for  Derivative   Instruments   and  Hedging
     Activities",  as  amended by SFAS No. 137 and SFAS No.  138,  requires  all
     derivatives  (with  certain  exceptions),  whether  designated  in  hedging
     relationships or not, to be recorded on the  consolidated  balance sheet at
     fair value.  As a result of  implementing  SFAS No. 133 at the beginning of
     fiscal 2001,  the  Partnership  recognized  in its first  quarter of fiscal
     2001,   gains  totaling   $709,000  and  $299,000  in   accumulated   other
     comprehensive   income  and  the   consolidated   statements  of  earnings,
     respectively.  In addition,  beginning in the first quarter of fiscal 2001,
     the Partnership  recorded 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  consolidated
     statements of earnings.  The  Partnership's  overall objective for entering
     into  derivative  contracts  for the  purchase  of  product  is  related to
     hedging,   risk  reduction  and  to  anticipate  market  movements.   Other
     derivatives  are entered into to reduce  interest rate risk associated with
     long term debt and lease  obligations.  Fair value  hedges  are  derivative
     financial  instruments that hedge the exposure to changes in the fair value
     of an asset or a liability or an identified portion thereof attributable to
     a particular  risk. Cash flow hedges are derivative  financial  instruments
     that hedge the  exposure  to  variability  in  expected  future  cash flows
     attributable to a particular risk.

     The  Partnership  uses cash flow  hedges to  manage  exposures  to  product
     purchase price risk and uses both fair value and cash flow hedges to manage
     exposure to interest rate risks.

     Fluctuations  in the wholesale  cost of propane  expose the  Partnership to
     purchase price risk. The  Partnership  purchases  propane at various prices
     that are  eventually  sold to its  customers,  exposing the  Partnership to
     future product price  fluctuations.  Also, certain forecasted  transactions

                                      F-16
<PAGE>

     expose the Partnership to purchase price risk. The Partnership monitors its
     purchase price  exposures and utilizes  product hedges to mitigate the risk
     of future price  fluctuations.  Propane is the only product hedged with the
     use of product hedge positions. The Partnership uses derivative products to
     hedge a  portion  of its  forecasted  purchases  for up to one  year in the
     future.  These derivatives are designated as cash flow hedging instruments.
     Because these derivatives are designated as cash flow hedges, the effective
     portions  of changes in the fair value of the  derivative  are  recorded in
     other  comprehensive  income (OCI) and are  recognized in the  consolidated
     statements of earnings when the forecasted  transaction  impacts  earnings.
     The $289,000  risk  management  fair value  adjustment  classified as other
     comprehensive   income  at  July  31,  2001,  will  be  recognized  in  the
     consolidated statements of earnings during fiscal 2002. Changes in the fair
     value of cash flow hedges due to hedge  ineffectiveness  are  recognized in
     cost of product sold on the consolidated  statements of earnings.  The fair
     value of the  derivatives  related to purchase price risk are classified on
     the  consolidated  balance  sheets as  inventories.  The  Partnership  also
     purchases and sells derivatives that are not classified as hedges to manage
     other risks associated with commodity prices.  The changes in fair value of
     these  derivatives  are recognized as they occur in cost of product sold on
     the consolidated statements of earnings. During fiscal years ended July 31,
     2001,  2000  and  1999,  the  Partnership   recognized   gains  related  to
     derivatives  not  classified  as hedges of  $23,320,000,  $28,413,000,  and
     $7,699,000 respectively.

     The  Partnership  also uses forward  contracts,  not  designated as hedging
     instruments  under SFAS No. 133,  to help reduce the price risk  related to
     sales made to its  propane  customers.  These  forward  contracts  meet the
     requirement to qualify as normal purchases and sales as defined in SFAS No.
     133, as amended by SFAS No. 137 and SFAS No. 138, and thus are not adjusted
     to fair market value.

     As of July 31, 2001, the Partnership holds  $706,566,000 in primarily fixed
     rate debt and $157,600,000 in variable rate operating leases.  Fluctuations
     in interest rates subject the Partnership to interest rate risk.  Decreases
     in interest rates increase the fair value of the  Partnership's  fixed rate
     debt, while increases in interest rates subject the Partnership to the risk
     of  increased  interest  expense  related  to its  variable  rate  debt and
     operating leases.

     The Partnership  enters into fair value and cash flow hedges to help reduce
     its overall interest rate risk.  Interest rate swaps were used to hedge the
     exposure  to changes in the fair value of fixed rate debt due to changes in
     interest  rates.  The fair  value of  interest  rate  derivatives  that are
     considered  fair value or cash flow hedges are  classified  either as other
     current or long-term assets or as other current or long-term liabilities on
     the  consolidated  balance  sheets.  Changes in the fair value of the fixed
     rate debt and any related fair value hedges are recognized as they occur in
     interest expense on the consolidated statements of earnings.  There were no
     such fair value hedges outstanding at July 31, 2001. Interest rate caps are
     used to hedge the risk  associated  with  rising  interest  rates and their
     affect on forecasted  transactions  related to variable rate debt and lease
     obligations.  These  interest rate caps are  designated as cash flow hedges
     and are  outstanding  at July 31, 2001.  Thus,  the  effective  portions of
     changes  in the fair value of the  hedges  are  recorded  in OCI at interim
     periods  and  are  recognized  as  interest  expense  in  the  consolidated
     statements of earnings when the forecasted  transaction  impacts  earnings.
     Cash flow  hedges are assumed to hedge the risk of changes in cash flows of
     the hedged risk.

I.   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   $194,519,000,

                                      F-17
<PAGE>

     $179,033,000, and $143,850,000 for the years ended July 31, 2001, 2000, and
     1999, respectively,  include compensation and benefits paid to officers and
     employees of the General Partner and general and administrative costs.

     During fiscal 2000,  Williams became a related party to the Partnership due
     to the Partnership's  issuance of 4,375,000 senior units to a subsidiary of
     Williams as part of the Thermogas acquisition (See Notes G and N). In April
     2001, Williams sold all its senior units to JEF Capital  Management,  Inc.,
     an entity owned by James E. Ferrell,  Chairman, Chief Executive Officer and
     President of the General  Partner,  and thereafter,  ceased to be a related
     party of the  Partnership.  During  fiscal 2001 and 2000,  the  Partnership
     recognized   wholesale  sales  to  Williams  of  $493,000  and  $2,091,000,
     respectively.  In connection with its normal purchasing and risk management
     activities,  the Partnership entered into, with Williams as a counterparty,
     certain  purchase,  forward,  futures,  option and swap  contracts.  During
     fiscal 2001 and 2000 the Partnership  recognized a net increase  (decrease)
     to cost of sales of $(4,456,000) and $3,645,000,  respectively,  related to
     these activities.

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

     On April 6,  2001,  Williams  approved  amendments  to the MLP  partnership
     agreement related to certain terms of the senior units.  Williams then sold
     all of the senior units for a purchase price of  $195,529,000  plus accrued
     and unpaid  distributions  to JEF  Capital  Management.  The  senior  units
     currently  have all the same terms and preference  rights in  distributions
     and liquidation as when the units were owned by Williams.

     During the fourth quarter of fiscal 2001, the Partnership paid to
     JEF Capital Management $83,464,000 to redeem a total of 2,086,612
     senior units and $2,951,000 in senior unit distributions. In a noncash
     transaction the Partnership accrued a senior unit distribution of
     $2,801,622 payable to JEF Capital Management on September 14, 2001.

     During  fiscal  2001,  2000 and 1999,  Ferrell  International  Limited,  FI
     Trading,  Inc.  and  Ferrell  Resources,   LLC,  three  affiliates  of  the
     Partnership  which are owned by James E.  Ferrell,  paid the  Partnership a
     total of $40,000, $313,000 and $265,000,  respectively,  for accounting and
     administration  services. In connection with its normal purchasing and risk
     management   activities,   the  Partnership   entered  into,  with  Ferrell
     International  Limited and FI Trading as a counterparty,  certain  forward,
     option  and  swap  contracts.  During  fiscal  2001,  2000  and  1999,  the
     Partnership recognized net sales (purchases) of $28,329,000,  $(8,508,000),
     and  $20,414,000,  respectively.  These net sales  (purchases) with Ferrell
     International  Limited  and FI  Trading,  Inc.  are  classified  in cost of
     product sold.  Amounts due from Ferrell  International  Limited at July 31,
     2001 and 2000 were $0 and $1,826,000,  respectively. Amounts due to Ferrell
     International  Limited  at July 31,  2001 and 2000 were $0 and  $1,484,000,
     respectively.

     The  Partnership  also leased propane tanks from Ferrell  Propane,  Inc., a
     subsidiary of the General  Partner  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 2001, 2000, and 1999.

                                      F-18
<PAGE>

J.   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.  Currently,  the  Partnership  is not a  party  to  any  legal
     proceedings  other than various claims and lawsuits arising in the ordinary
     course of business.

     On December 6, 1999, the OLP entered into,  with Banc of America  Leasing &
     Capital LLC, a $25,000,000  operating lease involving the sale-leaseback of
     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 N),  Thermogas  entered  into,  with Banc of America
     Leasing & Capital LLC, a $135,000,000  operating  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 lease,  which
     has terms and  conditions  similar to the  December  6,  1999,  $25,000,000
     operating 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  three 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,
     2001 and 2000 was $157,600,000 and $159,200,000, respectively.

     The  2,801,621  senior  units  outstanding  as of  July  31,  2001  have  a
     liquidating  value of $40 per unit or  $112,065,000.  The senior  units are
     redeemable  by the  Partnership  at any  time,  in whole  or in part,  upon
     payment in cash of the liquidating value of the senior units, currently $40
     per unit,  plus the amount of any  accrued  and unpaid  distributions.  The
     holder of the  senior  units has the right,  subject to certain  events and
     conditions,  to convert any  outstanding  senior units into common units at
     the earlier of December 31, 2005 or upon the occurrence of a material event
     as  defined  by the  Partnership  Agreement.  Such  conversion  rights  are
     contingent upon the Partnership not previously redeeming such securities.

     Certain  property and  equipment is leased  under  noncancelable  operating
     leases which  require  fixed  monthly  rental  payments and which expire at
     various  dates  through 2020.  Rental  expense  under these leases  totaled
     $42,420,000,  $35,292,000,  and  $19,595,000  for the years  ended July 31,
     2001, 2000, and 1999,  respectively.  Future minimum lease  commitments for
     such leases in the next five years, including the aforementioned  operating
     tank leases, are $34,287,000 in 2002,  $28,594,000 in 2003,  $11,617,000 in
     2004, $8,279,000 in 2005 and $5,855,000 in 2006.

     In addition to the future minimum lease commitments,  the Partnership plans
     to purchase vehicles and computers at the end of their lease terms totaling
     $781,000 in 2002,  $1,203,000 in 2003,  $1,488,000  in 2004,  $1,342,000 in
     2005 and  $1,009,000  in  2006.  The  Partnership  intends  to renew  other

                                      F-19
<PAGE>

     vehicle, tank and computer leases that would have had buyouts of $5,137,000
     in 2002,  $161,109,000 in 2003, $3,789,000 in 2004, $2,744,000 in 2005, and
     $815,000 in 2006.


K.   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 the Partnership,  equivalent
     to the fair value of such  shares  allocated.  This  non-cash  compensation
     charge is reported separately on the Partnership's  consolidated statements
     of earnings and thus excluded from operating and general and administrative
     expenses. The Partnership is not obligated to fund or make contributions to
     the ESOT.

     The General Partner and its parent,  Ferrell,  have a defined  contribution
     profit-sharing  plan  which  includes  both  profit  sharing  and  matching
     contributions.  The plan covers  substantially all employees with more than
     one year of service.  With the  establishment of the ESOP in July 1998, the
     Company suspended future profit sharing contributions to the plan beginning
     with fiscal year 1998. The 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. Unlike the profit sharing  contributions,  these
     matching  contributions  were not eliminated with the  establishment of the
     ESOP. Contributions for the years ended July 31, 2001, 2000, and 1999, were
     $3,235,000,  $2,869,000,  and  $2,110,000,  respectively,  under the 401(k)
     provisions.

     The General Partner has a defined  benefit plan that provides  participants
     who were  covered  under a  previously  terminated  plan with a  guaranteed
     retirement  benefit at least equal to the benefit they would have  received
     under  the  terminated  plan.  Until  July 31,  1999,  benefits  under  the
     terminated  plan were  determined  by years of credited  service and salary
     levels.  As of July 31, 1999,  years of credited  service and salary levels
     were  frozen.  The  General  Partner's  funding  policy for this plan is to
     contribute  amounts  deductible  for Federal income tax purposes and invest
     the plan assets  primarily in  corporate  stocks and bonds,  U.S.  Treasury
     bonds  and  short-term  cash  investments.  As  of  July  31,  2001,  other
     comprehensive  income was reduced by  $2,092,000  due to the  recording  of
     $2,092,000  as an increase to other  liabilities,  because the  accumulated
     benefit obligation of this plan exceeded the fair value of plan assets.

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

     Prior to April 19, 2001, the  Ferrellgas,  Inc. Unit Option Plan (the "unit
     option  plan")  authorized  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 April 19, 2001, the unit option plan was
     amended to authorize the issuance of options covering an additional 500,000
     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 units at the time of the grant.  In general,  the options vest
     over a five year period, and expire on the tenth anniversary of the date of
     the grant.

                                      F-20
<PAGE>

<TABLE>
          <S>                                                   <C>               <C>                 <C>
                                                                    Number        Weighted Average      Weighted
                                                                      Of           Exercise Price     Average Fair
                                                                     Units                               Value
                                                                --------------    ----------------    ------------
          Outstanding, August 1, 1998                                 783,000          $18.21
          Granted                                                      40,000           18.54             $0.39
          Forfeited                                                   (40,975)          18.15
                                                                --------------
          Outstanding, July 31, 1999                                  782,025           18.23
          Granted                                                     -                  -                 -
          Forfeited                                                   (60,500)          19.38
                                                                --------------
          Outstanding, July 31, 2000                                  721,525           18.13
          Granted                                                     651,000           17.90              2.56
          Exercised                                                  (101,250)          16.80
          Forfeited                                                   (42,075)          19.27
                                                                --------------
          Outstanding, July 31, 2001                                1,229,200           18.08
                                                                --------------
          Options exercisable, July 31, 2001                          503,543           18.06
                                                                --------------


                                                                       Options Outstanding at July 31, 2001
                                                                ----------------------------------------------------
          Range of option prices at end of year                                    $16.80-$21.67
          Weighted average remaining contractual life                                7.2 Years

</TABLE>

     The Ferrell Companies,  Inc. nonqualified stock option plan (the "NQP") was
     established  by 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 of Ferrell, or the death, disability or retirement at the age of 65
     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.

     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 unit would have
     been adjusted as noted in the table below:

<TABLE>

      <S>                                             <C>              <C>             <C>

      (in thousands, except per unit amounts)            2001             2000           1999
                                                      ----------       ----------     ----------
          Net earnings (loss) available to common and
          subordinated unitholders as reported          $45,594         $(10,146)        $1,977

          Pro forma adjustment                             (498)             (79)          (465)
                                                      ----------       ----------     ----------

          Net earnings (loss) available to common and
          subordinated unitholders as adjusted           45,096         $(10,225)        $1,512
                                                      ==========       ==========     ==========

          Pro forma basic and diluted net earnings
            (loss) per common and subordinated unit       $1.41          $ (0.32)        $ 0.05
                                                      ==========       ==========     ==========
</TABLE>

                                      F-21
<PAGE>

     The fair value of the unit options  granted during the 2001 and 1999 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 2001 and 1999, b) average common unit price  volatilities  of 23.2% and
     18.1% for 2001 and 1999, respectively, c) the risk-free interest rates used
     were 4.4% and 5.5%,  for 2001 and 1999,  respectively  and d) the  expected
     life of the option used was five years for 2001 and 1999. The fair value of
     the Ferrell Companies, Inc. NQP stock options granted during the 2001, 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 13.2%,  10.1% and 10.6% used in 2001,  2000 and 1999,
     respectively,  c) the risk-free  interest rate used was 5.2%, 6.4% and 5.5%
     in 2001,  2000 and 1999,  respectively  and d) expected life of the options
     between six and 13 years.

M.   Disclosures About Fair Value of Financial Instruments

     The carrying amount of short-term financial  instruments  approximates fair
     value because of the short maturity of the instruments.  The estimated fair
     value of the Partnership's long-term financial instruments was $681,060,000
     and $698,082,000 as of July 31, 2001 and 2000, respectively. The fair value
     is estimated based on quoted market prices.

     Interest Rate Collar, Cap and Swap Agreements. The Partnership from time to
     time 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.  During fiscal 2001, an interest rate collar agreement expired and
     a swap agreement was terminated by a counterparty.  As of July 31, 2001, an
     interest rate cap agreement  with a counterparty  who is a large  financial
     institution  remained in place.  The fair value of this  interest  rate cap
     agreement at July 31, 2001 is de minimis.  The fair values for the interest
     rate  collar,  cap and swap  agreements  at July  31,  2000  were  $43,000,
     $(258,000), and $(561,000), respectively.


N.  Business Combinations

     On December 17, 1999, the Partnership purchased Thermogas from a subsidiary
     of Williams.  At closing the Partnership entered into the following noncash
     transactions:  a) issued  $175,000,000  in senior  units to the seller,  b)
     assumed a  $183,000,000  loan,  (see Note F) and c) assumed a  $135,000,000
     operating   lease   (see   Note  J).   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 paid
     $17,146,000  in additional  costs and fees related to the  acquisition.  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.  In fiscal 2000,  the  Partnership  had
     accrued $7,033,000 in involuntary  employee  termination  benefits and exit
     costs, which it expected to incur within twelve months from the acquisition
     date as it implemented  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.   The  Partnership  paid  $2,788,000  and
     $1,306,000  for  termination  benefits  and  $491,000 and $890,000 for exit
     costs in fiscal years 2001 and 2000, respectively.  The remaining liability
     for  termination  benefits  and exit costs was  reduced  in fiscal  2001 by
     $1,558,000 as an adjustment to goodwill.

                                      F-22
<PAGE>

     The total assets  contributed to the OLP (at the Partnership's  cost basis)
     have been allocated as follows:  (a) working  capital of  $16,870,000,  (b)
     property, plant and equipment of $140,284,000,  (c) $60,200,000 to customer
     list with an estimated useful life of 15 years, (d) $9,600,000 to assembled
     workforce  with an estimated  useful life of 15 years,  (e)  $3,071,000  to
     non-compete  agreements  with an estimated  useful life ranging from one to
     seven years, and (f) $86,475,000 to goodwill at an estimated useful life of
     15  years.  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, 1999 (unaudited):

<TABLE>
     <S>                                                                            <C>

                                                                                     For the year
                                                                                        ended
                                                                                       July 31,
     (in thousands, except per unit amounts)                                             2000
                                                                                    ----------------
     Total revenues                                                                      $1,055,031
     Net loss                                                                              (18,609)
     Common unitholders' interest in net loss                                              (18,423)
     Basic and diluted loss per common unit                                               $  (0.59)

</TABLE>

     During the year ended July 31, 2001, the Partnership  made  acquisitions of
     three  businesses  with an aggregate  value at  $418,000.  The purchase was
     funded by $200,000 of cash  payments  and,  in a noncash  transaction,  the
     issuance of $218,000 of notes payable to the seller.

     During the year ended July 31, 2000, the Partnership  made  acquisitions of
     two other businesses with an aggregate value of $7,183,000,  in addition to
     the  Thermogas  acquisition.  The purchase was funded by $6,338,000 of cash
     payments and the following noncash  transactions:  the issuance of $601,000
     of notes  payable to the seller,  $46,000 of common  units and  $198,000 of
     other costs and consideration.

     During the year ended July 31, 1999, the Partnership  made  acquisitions of
     11  businesses  with an  aggregate  value of  $50,049,000.  This amount was
     funded by  $43,838,000  of cash  payments,  $199,000  in  common  units and
     noncash  transactions  totaling $6,012,000 in the issuance of notes payable
     to the seller 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.

                                      F-23

<PAGE>


O.   Earnings Per Common and Subordinated Unit

     Below is a  calculation  of the basic and diluted  earnings per unit on the
     consolidated  statements  of  earnings.  In fiscal 2001 and 2000,  the unit
     options  were  antidilutive.  In fiscal  1999,  39,500  unit  options  were
     considered  dilutive,  however,  these  additional units caused less than a
     $0.01 change between the basic and dilutive  earnings per unit. For diluted
     earnings  per unit  purposes,  the senior  units were  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 order to compute the basic and diluted  earnings per
     common  and  subordinated  unit,  the  distributions  on  senior  units are
     subtracted  from net earnings to compute net  earnings  available to common
     and subordinated unitholders.
<TABLE>

(in thousands, except per unit data)
     <S>                                     <C>                  <C>                   <C>

                                                      For the year ended July 31,
                                                      ---------------------------
                                                2001                 2000                  1999
                                             ----------           ----------            ----------
     Net earnings (loss) available to
     common and subordinated unitholders       $45,594             $(10,146)              $ 1,977
                                             ----------           ----------            ----------

     Weighted average common and
     subordinated units outstanding           31,987.3             31,306.7              31,298.7

     Basic and diluted earnings (loss)
     per common and subordinated unit
     before extraordinary loss                 $  1.43              $ (0.32)               $  0.47
                                             ==========           ==========            ===========

     Basic and diluted earnings (loss)
     per common and subordinated unit          $  1.43              $ (0.32)               $  0.06
                                             ==========           ==========            ===========

</TABLE>




                                      F-24
<PAGE>


                          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,
2001, and 2000, and the related statements of earnings, stockholder's equity and
cash flows for each of the three years in the period ended July 31, 2001.  These
financial  statements are the responsibility of the 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, 2001 and 2000, and the results of its operations and its cash flows for each
of the  three  years in the  period  ended  July  31,  2001 in  conformity  with
accounting principles generally accepted in the United States of America.





DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 2001






                                      F-25
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                                 BALANCE SHEETS


<TABLE>
    <S>                                                                <C>        <C>
                                                                             July 31,
                                                                       --------------------
    ASSETS                                                               2001       2000
    ----------------------------------------------------------------   ---------  ---------
    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                                            1,662      1,237

    Accumulated deficit                                                  (1,662)    (1,237)
                                                                       ---------  ---------
    Total Stockholder's Equity                                           $1,000     $1,000
                                                                       =========  =========
</TABLE>

                                      F-26
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                             STATEMENTS OF EARNINGS

<TABLE>
<S>                                                  <C>          <C>         <C>
                                                        For the year ended July 31,
                                                     -----------------------------------
                                                       2001         2000        1999
                                                     ----------   ----------  ----------
Revenues                                                   $ -          $ -         $ -

General and administrative expense                         425          463         226
                                                     ----------   ----------  ----------
Net loss                                                $ (425)      $ (463)     $ (226)
                                                     ==========   ==========  ==========
</TABLE>

                                      F-27
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                       STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
  <S>                            <C>         <C>        <C>         <C>          <C>
                                     Common stock       Additional    Accum-          Total
                                 ----------------------  paid in      ulated       stockholder's
                                   Shares     Dollars    capital      deficit         equity
                                 ----------- ---------- ----------- ------------ -----------------

   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

   Capital contribution              -           -             425       -                    425

   Net loss                          -           -          -              (425)             (425)
                                 ----------- ---------- ----------- ------------ -----------------
   July 31, 2001                      1,000     $1,000      $1,662      $(1,662)           $1,000
                                 =========== ========== =========== ============ =================

</TABLE>

                                      F-28
<PAGE>
                        FERRELLGAS PARTNERS FINANCE CORP.
            (a wholly-owned subsidiary of Ferrellgas Partners, L.P.)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                      <C>          <C>         <C>
                                                            For the year ended July 31,
                                                         -----------------------------------
                                                            2001        2000        1999
                                                         -----------  ----------  ----------
Cash Flows From Operating Activities:
  Net loss                                                    $(425)      $(463)      $(226)
                                                         -----------  ----------  ----------
      Cash used by operating activities                        (425)       (463)       (226)
                                                         -----------  ----------  ----------


Cash Flows From Financing Activities:
  Capital contribution                                          425         463         226
                                                         -----------  ----------  ----------
      Cash provided by financing activities                     425         463         226
                                                         -----------  ----------  ----------

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

</TABLE>

                                      F-29
<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
          became  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 was  terminated by Bank of America on June 15, 2001,
          required 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  was 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
          Partnership  resumed  paying the stated fixed  interest rate effective
          June 16, 2001.

          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 $666  associated  with the current year net operating  loss
          carryforward of $1,711, which expire at various dates through July 31,
          2016, 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 years ended July 31, 2001,  2000 or 1999, and there is
          no net deferred tax asset as of July 31, 2001 and 2000.

                                      F-30
<PAGE>

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

Schedule I   Parent Company Only Balance Sheets as of July 31, 2001
             and 2000 and Statements of Earnings and Cash Flows for
             the years ended July 31, 2001, 2000 and 1999...................S-3

Schedule II  Valuation and Qualifying Accounts for the years ended
             July 31, 2001, 2000 and 1999...................................S-6


                                      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 (the  "Partnership") as of July 31, 2001 and 2000, and for
each of the three years in the period ended July 31,  2001,  and have issued our
report  thereon dated  September 14, 2001. 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.





DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 14, 2001

                                      S-2
<PAGE>

                           FERRELLGAS PARTNERS, L.P.                Schedule 1
                                  PARENT ONLY

                                 BALANCE SHEETS
                                 (in thousands)

<TABLE>
<S>                                                     <C>            <C>
                                                                  July 31,
                                                        ----------------------------
 ASSETS                                                     2001           2000
---------------------------------------------------     -------------  -------------
 Cash and cash equivalents                                     $ 215            $ 1
 Prepaid expenses and other current assets                       147         -
 Investment in Ferrellgas, L.P.                              196,737        199,086
 Other assets, net                                             3,019          2,962
                                                        -------------  -------------
    Total Assets                                            $200,118       $202,049
                                                        =============  =============



LIABILITIES AND PARTNERS' CAPITAL
---------------------------------------------------
Other current liabilities                                    $ 2,131        $ 1,705
Long term debt                                               160,000        160,000

Partners' Capital
  Senior unitholder                                          112,065        179,786
  Common unitholders                                         (12,959)       (80,931)
  General partner                                            (58,738)       (58,511)
  Accumulated other comprehensive income                      (2,381)        -
                                                        -------------  -------------
    Total Partners' Capital                                   37,987         40,344
                                                        -------------  -------------

    Total Liabilities and Partners' Capital                 $200,118       $202,049
                                                        =============  =============
</TABLE>

                                      S-3
<PAGE>
                            FERRELGAS PARTNERS, L.P.              Schedule 1
                                   PARENT ONLY

                             STATEMENT OF EARNINGS
                                 (in thousands)
<TABLE>
<S>                                      <C>            <C>              <C>


                                                  For the year ended July 31,
                                         -----------------------------------------------
                                            2001            2000              1999
                                         ------------   --------------   ---------------
Equity in earnings of Ferrellgas, L.P.      $ 81,203         $ 15,907          $ 17,511
Operating expense                                  -                -                 -
Interest expense                              13,858           15,047            15,514
Other charges                                  3,277                -                 -
                                         ------------   --------------   ---------------
  Net earnings                              $ 64,068            $ 860           $ 1,997
                                         ============   ==============   ===============
</TABLE>

                                      S-4
<PAGE>
                           FERRELLGAS PARTNERS, L.P.              Schedule 1
                                  PARENT ONLY

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
     <S>                                                         <C>           <C>           <C>

                                                                       For the year ended July 31,
                                                                 -----------------------------------------
                                                                    2001           2000          1999
                                                                 ------------  ------------- -------------
     Cash Flows From Operating Activities:
      Net earnings                                                  $ 64,068          $ 860       $ 1,997
      Reconciliation of net earnings to
      net cash used in operating activities:
         Amortization of capitalized financing costs                     523            515           513
         Other                                                           337              -        (1,200)
         Equity in earnings of Ferrellgas, L.P.                      (81,203)       (15,907)      (17,511)
         Increase (decrease) in accrued interest expense                 148           (183)            -
                                                                 ------------  ------------- -------------
           Net cash used in operating activities                     (16,127)       (14,715)      (16,201)
                                                                 ------------  ------------- -------------

     Cash Flows From Investing Activities:
      Distributions received from Ferrellgas, L.P.                    83,133         77,962        79,430
                                                                 ------------  ------------- -------------
           Net cash provided by investing activities                  83,133         77,962        79,430
                                                                 ------------  ------------- -------------

     Cash Flows From Financing Activities:
      Distributions to partners                                      (69,125)       (63,247)      (63,229)
      Issuance of common units, net of issuance costs                 84,865              -             -
      Redemption of senior units                                     (83,464)             -             -
      Proceeds from exercise of common unit options                    1,718              -             -
      Other                                                             (774)             -             -
      Net advance from affiliate                                         (12)             -             -
                                                                 ------------  ------------- -------------
           Net cash used by financing activities                     (66,792)       (63,247)      (63,229)
                                                                 ------------  ------------- -------------

     Increase in cash and cash equivalents                               214              -             -
     Cash and cash equivalents - beginning of period                       1              1             1
                                                                 ------------  ------------- -------------
     Cash and cash equivalents - end of period                         $ 215            $ 1           $ 1
                                                                 ============  ============= =============

</TABLE>

                                      S-5
<PAGE>
                    FERRELLGAS PARTNERS, L.P. AND SUBSIDIARY         Schedule II

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)
<TABLE>
<S>                                  <C>            <C>            <C>             <C>            <C>
                                     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, 2001

Allowance for doubtful accounts           $2,388         $3,029             $0         $(2,258)         $3,159

Accumulated amortization:

   Intangible assets                     162,224         27,436              0               0         189,660

   Other assets                            6,896          2,167              0          (2,122)          6,941

Year ended July 31, 2000

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

</TABLE>

                                      S-6